<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 14, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
VOICETEK CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MASSACHUSETTS 3661 04-2752861
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
19 ALPHA ROAD
CHELMSFORD, MA 01824
(508) 250-9393
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
SHELDON L. DINKES
Chief Executive Officer
VOICETEK CORPORATION
19 Alpha Road
Chelmsford, MA 01824
(508) 250-9393
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
------------------------
<TABLE>
<S> <C>
ANTHONY J. MEDAGLIA, JR., ESQUIRE PHILIP P. ROSSETTI, ESQUIRE
HUTCHINS, WHEELER & DITTMAR HALE AND DORR LLP
A Professional Corporation 60 State Street
101 Federal Street Boston, Massachusetts 02109
Boston, Massachusetts 02110 (617) 526-6000
(617) 951-6600
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to a dividend or interest reinvestment plan, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(2) FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value
per share................ 2,875,000 shares $12.00 $34,500,000 $10,455
- -------------------------------------------------------------------------------------------------
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</TABLE>
(1) Includes an aggregate of 375,000 shares which the Underwriters have the
option to purchase from the Selling Stockholders solely to cover
over-allotments, if any. See "Underwriting."
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
VOICETEK CORPORATION
CROSS-REFERENCE SHEET
(PURSUANT TO ITEM 501 OF REGULATION S-K SHOWING THE LOCATION IN
THE PROSPECTUS OF THE RESPONSES TO THE ITEMS IN PART I OF THE FORM S-1)
<TABLE>
<CAPTION>
ITEM NUMBER AND HEADING ON FORM S-1 LOCATION IN PROSPECTUS
------------------------------------------ --------------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus.... Outside Front Cover Page of Prospectus
2. Inside Front Cover and Outside Back Cover
Pages of Prospectus....................... Inside Front Cover and Outside Back Cover
Pages of Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges........ Prospectus Summary; Risk Factors
4. Use of Proceeds........................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price........... Outside Front Cover Page of Prospectus;
Underwriting
6. Dilution.................................. Risk Factors; Dilution
7. Selling Security Holders.................. Principal and Selling Stockholders
8. Plan of Distribution...................... Outside Front Cover Page; Underwriting
9. Description of Securities to be
Registered................................ Capitalization; Description of Capital Stock
10. Interests of Named Experts and Counsel.... Not Applicable
11. Information with Respect to the
Registrant................................ Outside Front Cover Page of Prospectus;
Prospectus Summary; Risk Factors; The
Company; Use of Proceeds; Dividend Policy;
Capitalization; Dilution; Selected Financial
Data; Management's Discussion and Analysis
of Financial Condition and Results of
Operations; Business; Management; Certain
Transactions; Principal and Selling
Stockholders; Description of Capital Stock;
Shares Eligible for Future Sale; Financial
Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not Applicable
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 14, 1997
2,500,000 SHARES
LOGO
COMMON STOCK
------------------------
Of the 2,500,000 shares of Common Stock offered hereby, 2,000,000 shares
are being sold by Voicetek Corporation ("Voicetek" or the "Company") and 500,000
shares are being sold by certain stockholders of the Company (the "Selling
Stockholders"). The Company will not receive any proceeds from the sale of
shares by the Selling Stockholders. See "Principal and Selling Stockholders."
Prior to this offering, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price will be
between $10.00 and $12.00 per share. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price. The
Company has applied for quotation of the Common Stock on the Nasdaq National
Market under the symbol "VCTK."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Per Share.............................. $ $ $ $
Total(3)............................... $ $ $ $
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</TABLE>
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(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other information.
(2) Before deducting offering expenses payable by the Company, estimated at
$750,000.
(3) The Selling Stockholders have granted an option to the Underwriters
exercisable within 30 days of the date hereof, to purchase up to 375,000
additional shares of Common Stock solely for the purpose of covering over-
allotments, if any. If the Underwriters exercise such option in full, the
total Price to Public, Underwriting Discount and Proceeds to Selling
Stockholders will be $ , $ and $ , respectively. See
"Underwriting."
------------------------
The shares of Common Stock are offered severally by the Underwriters when,
as and if delivered to and accepted by them, subject to their right to withdraw,
cancel or reject orders in whole or in part and subject to certain other
conditions. It is expected that delivery of the certificates representing the
shares of Common Stock will be made against payment on or about ,
1997, at the office of Oppenheimer & Co., Inc., Oppenheimer Tower, World
Financial Center, New York, New York 10281.
------------------------
OPPENHEIMER & CO., INC. FIRST ALBANY CORPORATION
The date of this Prospectus is , 1997
<PAGE> 4
[ARTWORK DEPICTING:
1. Various phrases referencing certain aspects of telecommunications
services;
2. Four photographs depicting people using telecommunications devices;
3. "Interactive communications for Business and its Customers. Voicetek
develops, markets and supports interactive communications systems. The
Company's products enable telecommunications service providers to
rapidly deploy value added services and commercial organizations to
extend the automation of information access, improve service, lower
operating costs and differentiate their service offerings to their
customers."
4. The Voicetek logo
5. Nine photographs depicting people using business solutions and network
services with telecommunications devices, and corporate enterprise
communications systems.
6. Schematic diagram representing the Company's interactive communications
system.
7. "Generations provides the software development tools and deployment
platform which permit rapid deployment, prototyping and development of
interactive communications applications in AIN, corporate enterprise and
call center environments. Interactive communications systems, integrated
with the AIN, have given Telcos the ability to deploy new product and
service offerings which leverage their installed customer and network
infrastructure base. Interactive communications systems are increasingly
being employed by organizations to provide broad, convenient and
efficient access to their enterprise information while helping to
differentiate their products and services and reduce costs."]
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
Generations(R) and VTK(R) are registered trademarks of the Company, and the
Voicetek logo is a trademark of the Company. This prospectus contains other
product names and trade names and trademarks of the Company and of other
organizations.
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and the notes thereto appearing elsewhere
in this Prospectus. Unless otherwise indicated, or the context otherwise
requires, all information in this Prospectus (i) assumes no exercise of the
Underwriters' over-allotment option, (ii) reflects the two-for-three stock split
of the Common Stock to be effected on March , 1997 and (iii) assumes the
conversion in full of the Company's outstanding Preferred Stock into shares of
Common Stock immediately prior to the consummation of this offering.
Voicetek Corporation ("Voicetek" or the "Company") develops, markets and
supports interactive communications systems. The Company's products enable
telecommunication service providers ("Telcos") to rapidly deploy value added
services and commercial organizations to extend the automation of information
access, improve service, lower operating costs and differentiate their service
offerings to their customers. The Company's Generations(R) software is a
scalable, client server platform which is open and fault resilient and provides
customers, employees and business partners with access to information, products
and services by using a variety of methods, including telephone, fax, electronic
mail, paging and Web browsers. Generations permits rapid development and
deployment of interactive communications applications for use in wireless and
wireline environments, Advanced Intelligent Networks ("AIN") and corporate
enterprise and call center environments. The Company integrates Generations with
its VTK family of telephony servers, or third-party servers, to support medium
to large-scale system deployments. Voicetek also provides consulting, training
and maintenance services for application development and on-going support of the
Company's products.
Interactive communications systems are increasingly being employed by
organizations to provide broad, convenient and efficient access to their
enterprise information while helping to differentiate their products and
services and reduce costs. At the same time, Telcos are facing a more
competitive and dynamic marketplace. New interactive communications systems
integrated with the AIN have given Telcos the ability to deploy new product and
service offerings which leverage their installed customer and network base. To
effectively provide automated access to an organization's broad information
infrastructure and maximize revenue generating potential, interactive
communications systems must (i) be scalable to support large volumes of
inquiries (both voice and data), (ii) be open to permit integration with a wide
variety of telephony and computing technologies, (iii) employ a wide range of
access methods and (iv) be flexible to adapt to the needs of the enterprise.
Voicetek employs a strategy of leveraged selling primarily through original
equipment manufacturers ("OEMs") (e.g., Open Development Corporation and
Microlog Corporation), telephone switch manufacturers (e.g., Rockwell
International), computer system vendors (e.g., Digital Equipment Corporation),
selected systems integrators and value added resellers ("VARs") (e.g., Andersen
Consulting and Logica) as well as direct selling to large organizations.
Representative applications include automated directory assistance, voice
dialing, personal number service, bank by phone, discount stock trading, stock
quotes, account inquiry order fulfillment, fax-on-demand, product information,
scheduling, labor reporting, service ordering and dispatch.
Voicetek was founded in 1981. The Company's address is 19 Alpha Road,
Chelmsford, Massachusetts 01824 and its telephone number is (508) 250-9393.
3
<PAGE> 6
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company..................... 2,000,000 shares
Common Stock offered by the Selling Stockholders........ 500,000 shares
Common Stock to be outstanding after the offering....... 7,028,885 shares(1)
Use of proceeds......................................... To repay an aggregate of approxi-
mately $3.1 million of senior
indebtedness and for working
capital and other general corporate
purposes. See "Use of Proceeds."
Proposed Nasdaq National Market symbol.................. VCTK
</TABLE>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues................................... $ 3,285 $ 4,769 $10,056 $15,721 $22,101
Income (loss) from operations.................... (1,983) (1,574) 886 1,301 922
Net income (loss)................................ (1,997) (1,588) 854 2,392 4,063
Pro forma net income (loss) per share(2)......... $ 0.72
Pro forma shares used in per share calculation... 5,680
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------
ACTUAL AS ADJUSTED(2)(3)
------ -----------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................................... $ -- $ 16,618
Working capital.................................................... 4,596 24,070
Total assets....................................................... 16,015 32,633
Redeemable convertible preferred stock............................. 11,297 --
Total stockholders' equity (deficit)............................... (3,126) 27,881
</TABLE>
- ---------------
(1) Excludes (i) 1,091,034 shares of Common Stock reserved for issuance under
the Company's 1992 Equity Incentive Plan (of which options to purchase
721,109 shares of Common Stock were outstanding and options to purchase
459,631 shares of Common Stock were exercisable at December 31, 1996); (ii)
333,333 shares of Common Stock reserved for issuance under the Company's
1996 Stock Option Plan (none of which was been granted at December 31,
1996); (iii) 60,000 shares of Common Stock reserved for issuance under the
Company's 1996 Stock Option Plan for Non-Employee Directors and Clerk (of
which options to purchase 38,666 shares of Common Stock have been granted,
none of which was exercisable at December 31, 1996); and (iv) 166,666 shares
of Common Stock reserved for issuance under the Company's 1997 Employee
Stock Purchase Plan. Includes 1,125 shares which were acquired upon the
exercise of options during January 1997. See "Management--Stock Option
Plans."
(2) Gives effect to the conversion of all outstanding shares of Preferred Stock
into an aggregate of 4,576,844 shares of Common Stock upon the consummation
of this offering.
(3) Adjusted to give effect to the issuance and sale of the 2,000,000 shares of
Common Stock offered hereby by the Company at an assumed initial public
offering price of $11.00 per share, less the underwriting discount and
estimated offering expenses payable by the Company, and the application of
the net proceeds therefrom. See "Use of Proceeds."
4
<PAGE> 7
RISK FACTORS
An investment in the Common Stock offered hereby is speculative in nature
and involves a high degree of risk. In addition to the other information
contained in this Prospectus, the following factors should be considered
carefully in evaluating the Company and its business before purchasing the
Common Stock offered hereby. This Prospectus contains forward-looking statements
within the meaning of Section 27A of the Securities Act. Discussions containing
such forward-looking statements may be found in the material set forth under
"Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business -- Strategy,"
"Business -- Sales and Marketing," and "Business -- Engineering, Research and
Product Development," as well as the Prospectus generally. Actual events or
results may differ materially from those discussed in the forward-looking
statements as a result of various factors, including, without limitation, the
risk factors set forth below and the matters set forth in the Prospectus
generally.
Fluctuations in Quarterly Operating Results. The Company's quarterly
operating results may fluctuate due to a variety of factors, including the
timing of new product announcements and introductions by the Company, its major
customers or its competitors, delays in new product introductions by the
Company, market acceptance of new or enhanced versions of the Company's
products, changes in the product or customer mix of sales, delay, cancellation
or acceleration of customer orders, changes in the level of operating expenses,
competitive pricing pressures, the gain or loss of significant customers,
increased research and development and sales and marketing expenses associated
with new product introductions, the mix of distribution channels through which
the Company's products are sold, purchasing patterns of OEMs, VARs, system
integrators and distributors and the hiring and training of additional staff as
well as general economic conditions. In addition, the Company has often
recognized a substantial portion of its revenues in the last month of a quarter.
As a result, product revenues in any quarter are substantially dependent on
orders booked and shipped in that quarter, and revenues for any future quarter
are not predictable with any degree of certainty. Any significant deferral of
purchases of the Company's products could have a material adverse effect on the
Company's business, financial condition and results of operations in any
particular quarter and, to the extent significant sales occur earlier than
expected, operating results for subsequent quarters may be adversely affected.
In addition, most of the Company's sales are in the form of large orders with
short delivery times and the Company's ability to determine the timing of
individual customer orders is limited. All of the above factors are difficult
for the Company to forecast and these and other factors can materially adversely
affect the Company's business, financial condition and results of operations for
one quarter or a series of quarters. The Company's expense levels are based in
part on its expectations regarding future sales and are fixed in the short term
to a large extent. Therefore, the Company may be unable to adjust spending in a
timely manner to compensate for any unexpected shortfall in sales. Any
significant decline in demand relative to the Company's expectations or any
material delay of customer orders could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The Company is typically able to deliver a standard interactive
communications system within 14 days of receipt of the order and, therefore,
does not customarily have a significant long-term backlog. To achieve its sales
objective, the Company is dependent upon obtaining orders in a quarter for
shipment in that quarter. Furthermore, the Company's agreements with its OEMs,
VARs, system integrators and distributors typically provide that they may change
delivery schedules and cancel orders within specified timeframes, typically up
to 30 days prior to the scheduled shipment date, without significant penalty.
The Company's OEMs, VARs, system integrators and distributors have in the past
built, and may in the future build, significant inventory for a number of
reasons. Decisions by such OEMs, VARs, system integrators and distributors to
reduce their inventory levels could lead to reductions in purchases from the
Company. These reductions, in turn, could cause fluctuations in the Company's
operating results and could have a material adverse effect on the Company's
business, financial condition and results of operations in the periods in which
the inventory is reduced.
There can be no assurance that the Company will be able to grow its level
of revenues or sustain its level of profitability, or even maintain
profitability, in the future. Increases in operating expenses are expected to
5
<PAGE> 8
continue and, together with pricing pressures, may result in a decrease in
operating income. In addition, it is possible that, in some future quarter, the
Company's operating results will be below the expectations of public market
analysts and investors. In such event the price of the Company's Common Stock
would likely be materially and adversely affected. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Reliance on Indirect Distribution. The Company markets and sells products
domestically and internationally primarily through resellers, such as OEMs,
VARs, systems integrators and distributors. The number of qualified resellers in
certain countries is limited. Resellers typically are not effective at selling
the Company's products until they have been trained and have successfully
completed several sales. The Company's performance depends in part on
attracting, retaining and motivating such resellers. Certain of the Company's
resellers may also act as resellers for competitors of the Company and could
devote greater effort and resources to marketing competitive products. The
Company's resellers are generally provided discounts and occasionally are
entitled to special pricing or distribution arrangements, the effect of which is
to decrease the Company's gross margins. Although the Company has contractual
relationships with many of its resellers, these agreements do not require the
resellers to purchase the Company's products and can generally be terminated on
short notice by the reseller. There can be no assurance that resellers will
continue to market the Company's products or devote the resources necessary to
provide effective sales and marketing support to the Company. In addition, the
Company is dependent on the continued viability and financial stability of its
resellers, many of which are small organizations with limited capital. The loss
of any key reseller could adversely affect the Company's business.
The Company's sales through OEMs, VARs, systems integrators and
distributors for the year ended December 31, 1996 accounted for approximately
50% of the Company's net sales. In addition, for the year ended December 31,
1996, sales to five customers accounted for approximately 58.9% of the Company's
net sales. Because of the Company's sales and marketing approach, these
percentages may not decrease in the near future. The Company, therefore, depends
on receiving large orders from large customers and there can be no assurance
that such sales will continue. Accordingly, there can be no assurance that these
factors will not materially adversely affect the Company's business, financial
condition and results of operations. See "Business -- Sales and Marketing."
Management of Growth. The Company has recently experienced and may
continue to experience growth in the number of its employees and scope of its
operations. In particular, the Company intends to increase its sales, marketing,
engineering and support staff. These increases will result in increased
responsibilities for management. To manage potential future growth effectively,
the Company must improve its operational, financial and management information
systems and must hire, train, motivate and manage a growing number of employees.
There can be no assurance that the Company will be able to effectively achieve
or manage any such growth, and failure to do so could delay product development
cycles or otherwise have a material adverse effect on the Company's business,
financial condition and results of operations.
Reliance on Key Personnel. The Company's success during the foreseeable
future will depend largely upon the continued services of its executive
officers, each of whom has entered into an employment agreement with the
Company. None of the employment agreements contains non-competition covenants.
The Company does not have key-man life insurance on its executive officers.
Although the Company's executive officers and key personnel have extensive
experience in the industry, the length of employment of certain employees at the
Company is relatively short. The Company's success will also depend in part on
its ability to attract and retain qualified managerial, technical and sales and
marketing personnel, for whom competition is intense. In particular, the current
availability of qualified sales and engineering personnel is limited. The
Company has recently hired a significant number of sales and marketing personnel
and the Company's success will depend in part on the Company's ability to train
and integrate new hires into the Company's business. The Company's business,
financial condition and results of operations could be materially adversely
affected if the Company were unable to attract, hire, assimilate and train these
personnel in a timely manner. See "Management."
Highly Competitive Market Environment. The market for interactive
communications systems is highly competitive. Certain of the Company's
competitors have substantially greater financial, technical, marketing
6
<PAGE> 9
and sales resources than the Company. There can be no assurance that the
Company's present or future competitors will not exert increased competitive
pressures on the Company. In particular, the Company may in the future
experience pricing pressures as the markets in which it competes mature, as new
technologies are introduced or for other reasons, and such price competition
could materially and adversely affect the Company's market share, business,
financial condition and results of operations. In addition, many suppliers of
voice mail systems and telecommunications suppliers have added interactive
communications capabilities to some of their product offerings and offer
interactive communications systems as a component or add-on of an overall sale
of a voice mail system or a telecommunications switch. The Company expects that
the average sales prices of its products will decline in the future primarily
due to increased competition and the introduction of new technologies.
Accordingly, the Company's ability to maintain or increase net sales and gross
margins will depend in part upon its ability to reduce its cost of sales, to
increase unit sales volumes of existing products and to introduce and sell new
products. Although the Company believes it has certain marketing, technical and
other advantages over many of its competitors, maintaining such advantages will
require continued investment by the Company in product innovation and
development as well as in sales, marketing and customer support. There can be no
assurance that the Company will be successful in such efforts. If the Company is
unable to maintain such advantages, it may have a material adverse effect on the
Company's business, financial condition and results of operations. See "Business
- -- Competition."
Technological Change, Changing Markets and New Products. The market in
which the Company operates is characterized by rapid continual technological
change and improvements in hardware and software technology. The Company
believes that its future success will depend, in part, upon its ability to
expand and enhance the features of its existing products and to develop and
introduce new products designed to meet changing customer needs on a
cost-effective and timely basis. Failure by the Company to respond on a timely
basis to technological developments, changes in industry standards or customer
requirement or the introduction or development of superior or alternative
technologies could render the Company's existing products, as well as products
currently under development, obsolete and unmarketable. There can be no
assurance that the Company will respond effectively to technological changes or
new product announcements by others or that the Company will be able to
successfully develop and market new products or product enhancements and that
any new product or product enhancement will gain market acceptance.
The Company's software products, as with software programs generally, may
contain undetected errors or "bugs" when introduced or as new versions are
released. Although the Company's current products have not experienced
post-release software errors that have had a significant financial or
operational impact on the Company, there can be no assurance that such problems
will not occur in the future, particularly as the Company's software systems
continue to become more complex and sophisticated. Such defective software may
result in loss of or delay in market acceptance of the Company's products,
warranty liability or product recalls.
The Company budgets research and development expenditures based on planned
product introductions and enhancements; however, actual expenditures may
significantly differ from budgeted expenditures. Inherent in the product
development process are a number or risks. The development of new,
technologically advanced products and product enhancements is a complex and
uncertain process requiring high levels of innovation, as well as the accurate
anticipation of technological and market trends. There can be no assurance that
the Company will successfully identify, develop or introduce new products or
product enhancements. In addition, modifications by the Company of its products
to comply with unique customer specifications may detract from its ongoing
product development efforts. Future delays in the introduction of new or
enhanced products, the inability of such products to gain market acceptance or
problems associated with new product transitions could adversely affect the
Company's operating results, particularly on a quarterly basis. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Lengthy Sales Cycle. The sales cycle for the Company's products
(particularly to Telcos) is lengthy and can range from approximately one month
to over one year, averaging six to nine months, and is subject to a number of
significant risks, including customers' budgetary constraints and internal
acceptance reviews, over which the Company has little or no control.
Consequently, if sales forecasted from a specific customer for a particular
quarter are not realized in that quarter, the Company may not be able to
generate revenue from
7
<PAGE> 10
alternate sources in time to compensate for the shortfall. As a result, a lost
or delayed sale could have a material adverse effect on the Company's quarterly
operating results. Moreover, to the extent that significant sales occur earlier
than expected, operating results for subsequent quarters may be adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
International Sales. Sales to customers outside the United States
accounted for approximately 11% of the Company's total sales for the year ended
December 31, 1996. The Company intends to expand its operations outside of the
United States and to enter additional international markets, which will require
significant management attention and financial resources. The Company expects to
commit additional time and development resources to customizing its products for
selected international markets and to developing international sales and support
channels. There can be no assurance that such efforts will be successful.
International operations are subject to a number or risks, including costs of
customizing products for foreign countries, dependence on independent resellers,
multiple and conflicting regulations regarding telecommunications, longer
payment cycles, unexpected changes in regulatory requirements, import and export
restrictions and tariffs, difficulties in staffing and managing foreign
operations, greater difficulty or delay in accounts receivable collection,
potentially adverse tax consequences, the burdens of complying with a variety of
foreign laws, the impact of possible recessionary environments in economies
outside the United States and political and economic instability. The Company's
export sales are currently denominated predominantly in United States dollars.
An increase in the value of the United States dollar relative to foreign
currencies could make the Company's products more expensive and, therefore,
potentially less competitive in foreign markets. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Reliance on Component Availability and Key Suppliers. In certain
instances, despite the availability of multiple supply sources, the Company
elects to procure certain components or parts from a single source to maintain
quality control or to develop a strategic relationship with a supplier. In
particular, Dialogic Corporation ("Dialogic") is the primary supplier of voice
boards for the Company's products. Although the Company has entered into supply
contracts with Dialogic and certain of its other vendors, the Company has no
assurance that components and parts will be available as required, or that
prices of such components and parts will not increase. If the Company were to
experience significant delays, interruptions or reductions in the supply of
certain components and parts purchased from such vendors, the Company's
business, financial condition and results of operations could be materially
adversely affected. See "Business -- Manufacturing."
Purchase orders from the Company's customers frequently require delivery
quickly after placement of the order. Because the Company does not maintain
significant component inventories, when purchase orders include hardware
deliverables, delay in shipment by a supplier could lead to lost sales. The
Company uses internal forecasts to determine its general materials and
components requirements. Lead times for materials and components may vary
significantly and depend on factors such as specific supplier performance,
contract terms and general market demand for components. If orders vary from
forecasts, the Company may experience excess or inadequate inventory of certain
materials and components. From time to time, the Company has experienced
shortages and allocations of certain components, resulting in delays in
fulfillment of customer orders. Such shortages and allocations could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Third-Party Claims of Infringement; Limited Protection of Proprietary
Rights. The industry in which the Company competes is characterized by a
significant level of use of proprietary technology and frequent litigation based
on allegations of infringement of such proprietary technologies. From time to
time, third parties may assert exclusive copyright, trademark and other
intellectual property rights to technologies that are important to the Company.
The Company is aware that certain segments of the voice processing industry,
particularly voice mail/voice messaging systems, are affected by active and
costly litigation, and there can be no assurance that as the Company's
interactive communications systems evolve (possibly to include certain voice
mail/voice messaging features), the Company will not be required to enter into
license agreements or become involved in, or otherwise be affected by,
litigation which may or may not be meritorious. In its distribution agreements,
the Company typically agrees to indemnify its customers for any expenses or
liabilities, generally without limitation, resulting from claimed infringements
of patents, trademarks or
8
<PAGE> 11
copyrights of third parties. In the event of litigation to determine the
validity of any third-party claims, such litigation, whether or not determined
in favor of the Company, could result in significant expense to the Company and
divert the efforts of the Company's technical and management personnel from
productive tasks. In the event of an adverse ruling in such litigation, the
Company might be required to discontinue the use and sale of infringing
products, expend significant resources to develop non-infringing technology or
obtain licenses from third parties. There can be no assurance that licenses from
third parties would be available on acceptable terms, if at all. In the event of
a successful claim against the Company and the failure of the Company to develop
or license a substitute technology, the Company's business, financial condition
and results of operations would be materially adversely affected.
The Company relies on a combination of patent, copyright, trademark and
trade secret laws, employee confidentiality and third-party nondisclosure
agreements and license agreements to protect its proprietary software
technology. Nonetheless, there can be no assurance that the steps taken by the
Company to protect its proprietary rights will be adequate to prevent
misappropriation of such rights or that third parties will not independently
develop functionally equivalent or superior software technology. The laws of
certain foreign countries in which the Company's products are or may be
developed, manufactured or sold may not protect the Company's products or
intellectual property rights to the same extent as do the laws of the United
States and thus make the possibility of misappropriation of the Company's
technology and products more likely. See "Business -- Patents and Other
Proprietary Rights."
Substantial Control By Insiders. After the sale of the shares of Common
Stock offered hereby, the Company's officers, directors and principal
stockholders will retain voting control of approximately 60.2% of the Company's
Common Stock (55.3% if the Underwriters' over-allotment option is exercised in
full) and, therefore, will be able to exercise substantial control over the
Company's affairs. Accordingly, if such persons act together, they will be able
to elect all directors and exercise control over the business policies and
affairs of the Company. See "Management -- Executive Officers and Directors" and
"Principal and Selling Stockholders."
Absence of Prior Trading Market; Potential Volatility of Stock
Price. Prior to this offering, there has been no public market for the
Company's Common Stock and there can be no assurance that following this
offering an active trading market will develop or be maintained. The initial
public offering price of the Common Stock will be determined by negotiations
between the Company and the Representatives of the Underwriters and may not be
indicative of the market price of the Common Stock in the future. For a
description of the factors to be considered in determining the initial public
offering price, see "Underwriting." The market price of the shares of the
Company's Common Stock may be highly volatile. Factors such as fluctuations in
the Company's quarterly operating results, announcements of technological
innovations or new commercial products by the Company or its competitors, and
conditions in the markets in which the Company and its customers compete, may
have a significant effect on the market price and marketability of the Common
Stock. Furthermore, the stock market historically has experienced volatility,
which has particularly affected the market prices of securities of many high
technology companies and which sometimes has been unrelated to the operating
performances of such companies. See "Underwriting."
Shares Eligible for Future Sale. Sales of the Company's Common Stock in
the public market following this offering could adversely affect the prevailing
market price of the Common Stock. Immediately after completion of the offering,
the Company will have 7,028,885 shares of Common Stock outstanding, of which the
2,500,000 shares offered hereby will be freely tradeable without restriction or
further registration under the Securities Act of 1933, as amended (the
"Securities Act"), unless purchased by "affiliates" of the Company as that term
is defined under Rule 144. The Company, its executive officers, directors and
certain current stockholders, who in the aggregate own beneficially 4,468,571 of
the remaining outstanding shares of Common Stock and stock options exercisable
for an additional 431,998 shares of Common Stock have agreed pursuant to lock-up
agreements that they will not sell or otherwise dispose of any shares of Common
Stock beneficially owned by them for a period of 180 days from the date of this
Prospectus. Such agreements provide that Oppenheimer & Co., Inc. may, in its
sole discretion and at any time without notice, release all or a portion of the
shares subject to these lock-up agreements. Upon the expiration of these lock-up
agreements, 4,900,569 of such shares, including shares issuable pursuant to the
exercise of stock options, will become immediately
9
<PAGE> 12
eligible for sale in the public market, subject in some cases to the volume and
other restrictions of Rule 144 or Rule 701 under the Securities Act. As soon as
practicable after the date of this Prospectus, the Company intends to register
on one or more registration statements on Form S-8 all shares of Common Stock
subject to outstanding stock options and Common Stock issuable pursuant to the
Company's stock and employee stock purchase plans that do not qualify for an
exemption under Rule 701 from the registration requirements of the Securities
Act. Shares covered by such registration statement will be eligible for sale in
the public market after the effective date of such registration. In addition,
the holders of 4,193,791 shares of Common Stock are entitled to certain
registration rights with respect to such shares. If such holders, by exercising
their registration rights, cause a large number of shares to be registered and
sold in the public market, such sales may have an adverse effect on the market
price for the Common Stock. In addition, if the Company is required to include
in a Company-initiated registration shares held by such holders pursuant to the
exercise of their "incidental" registration rights, such sales may have an
adverse effect on the Company's ability to raise needed capital. See
"Management," "Principal Stockholders," "Shares Eligible for Future Sale" and
"Underwriting."
Immediate and Substantial Dilution. The initial public offering price is
substantially higher than the net tangible book value per share of Common Stock.
Investors purchasing shares of Common Stock in this offering will, therefore,
incur immediate substantial dilution in net tangible book value per share. See
"Dilution."
No Expectation of Dividends. The Company currently intends to retain any
future earnings in its business and does not anticipate paying any cash
dividends on its Common Stock in the foreseeable future. See "Dividend Policy."
Anti-Takeover Provisions; Possible Issuance of Preferred Stock. The
Company's Restated Articles of Organization ("Articles of Organization") and
Amended and Restated By-laws ("By-laws") contain provisions that might diminish
the likelihood that a potential acquiror would make an offer for the Common
Stock, impede a transaction favorable to the interest of the stockholders or
increase the difficulty of removing members of the Board of Directors or
management. After the consummation of this offering, the Board of Directors will
have the authority, without further stockholder approval, to issue up to
1,000,000 shares of Preferred Stock in one or more series and to determine the
price, rights, preferences and privileges of those shares. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of shares of Preferred Stock, while potentially providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue shares of Preferred Stock.
Furthermore, certain provisions of the Articles of Organization, including
provisions that provide for the Board of Directors to be divided into three
classes to serve for staggered three-year terms, may have the effect of delaying
or preventing a change in control of the Company, which could adversely affect
the market price of the Common Stock. In addition, the Company is subject to
Chapters 110D and 110F of the Massachusetts General Laws, which prohibit the
Company from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. The application of such
provisions also could have the effect of delaying or preventing a change of
control in the Company. See "Description of Capital Stock -- Certain Articles of
Organization, By-law and Statutory Provisions Affecting Stockholders."
Discretion as to Use of Proceeds. The principal purposes of this offering
are to increase the Company's equity capital, to create a public market for the
Company's Common Stock, to increase the visibility of the company in the
marketplace and to facilitate future access to public equity markets. As of the
date of this Prospectus, the Company has no specific plans to use the net
proceeds from this offering other than for working capital and general corporate
purposes, including repayment of bank indebtedness. Accordingly, the Company's
management will retain broad discretion as to the allocation of the net proceeds
from this offering. Pending any such uses, the Company plans to invest the net
proceeds in the investment grade, interest-bearing securities. See "Use of
Proceeds."
10
<PAGE> 13
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby, based upon an assumed initial
offering price of $11.00 per share, after deducting underwriting discount and
estimated offering expenses payable by the Company, are expected to be
$19,710,000. The Company will not receive any proceeds from the sale of Common
Stock by the Selling Stockholders. See "Principal and Selling Stockholders."
The Company expects to use the net proceeds from this offering to repay all
of its indebtedness under the Company's Credit Facility with Fleet Bank and for
working capital and other general corporate purposes. Under the term portion of
the Credit Facility, the Company may borrow up to $1 million, which is due and
payable on September 1, 1999, with interest payable quarterly at a fluctuating
rate equal to Fleet Bank's prime rate plus one percent. In addition, the Credit
Facility allows the Company to borrow up to $5 million on a revolving basis. The
revolving portion of the Credit Facility expires, and all outstanding borrowings
thereunder are due and payable on September 1, 1997 with interest payable
quarterly at a fluctuating rate equal to Fleet Bank's prime rate plus
three-quarters of one percent. At December 31, 1996, $377,000 was outstanding
under the term portion, and $2.7 million was outstanding under the revolving
portion, of the Credit Facility. After giving effect to the application of
proceeds of this offering, the Company will have no outstanding long-term
indebtedness. The Company may also use a portion of the net proceeds to fund
acquisitions of complementary businesses, products or technologies. Although the
Company has in the past reviewed potential acquisition opportunities, there are
no current agreements or negotiations with respect to any such transactions.
Pending such uses, the net proceeds of this offering will be invested in
short-term investment grade, interest-bearing instruments.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock and currently intends to retain all available funds for use in the
operation and expansion of its business. The Company does not, therefore,
anticipate that any cash dividends will be declared or paid in the foreseeable
future. The Company's current loan agreement prohibits the payment of cash
dividends without the bank's consent.
11
<PAGE> 14
CAPITALIZATION
The following table sets forth (i) the Company's actual capitalization as
of December 31, 1996, (ii) the Company's capitalization as adjusted to give
effect to the sale of the 2,000,000 shares of Common Stock offered by the
Company hereby, at an assumed initial public offering price of $11.00 after
deducting the underwriting discount and estimated offering expenses payable by
the Company and the anticipated application of the net proceeds therefrom, and
(iii) after giving effect to the conversion of the Preferred Stock. See "Use of
Proceeds."
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------
(IN THOUSANDS)
ACTUAL AS ADJUSTED
-------- -----------
<S> <C> <C>
Short-term debt..................................................... $ 2,841 $ --
======== =========
Long-term debt...................................................... $ 236 $ --
--------
Redeemable Convertible Preferred Stock, $.01 par value; 10,000,000
shares authorized, 6,865,274 shares issued and outstanding actual;
10,000,000 shares authorized, no shares issued or outstanding as
adjusted.......................................................... 11,297 --
--------
Stockholders' equity (deficit):
Common Stock, $.01 par value; 20,000,000 shares authorized;
450,916 shares issued and outstanding actual; 30,000,000 shares
authorized, 7,027,760 shares issued and outstanding as
adjusted....................................................... 5 70
Additional paid-in capital........................................ 7,087 38,029
Accumulated deficit............................................... (10,218) (10,218)
-------- -----------
Total stockholders' equity (deficit).............................. (3,126) 27,881
-------- -----------
Total capitalization...................................... $ 8,407 $ 27,881
======== =========
</TABLE>
12
<PAGE> 15
DILUTION
As of December 31, 1996, the Company's pro forma net tangible book value
was approximately $8.1 million or approximately $1.62 per share. Pro forma net
tangible book value per share represents the total amount of tangible assets of
the Company reduced by the amount of total liabilities and divided by the total
number of shares of Common Stock outstanding after giving effect to the
conversion of all Preferred Stock. After giving effect to the sale by the
Company of 2,000,000 shares of Common Stock in this offering at an assumed
initial public offering price of $11.00 per share after deducting the
underwriting discount and estimated offering expenses payable by the Company,
the pro forma net tangible book value of the Company as of December 31, 1996
would have been approximately $27.9 million or $3.96 per share. This represents
an immediate increase in net tangible book value of $2.34 per share to existing
stockholders and an immediate dilution of $7.04 per share to new investors. The
following table illustrates this per share dilution in net tangible book value
to new investors.
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $11.00
Pro forma net tangible book value per share at December
31, 1996................................................ $ 1.62
Increase per share attributable to new investors.......... 2.34
------
Pro forma net tangible book value per share after this
offering..................................................... 3.96
------
Pro forma net tangible book value dilution per share to new
investors.................................................... $ 7.04
======
</TABLE>
The following table sets forth, as of December 31, 1996, the number of
shares purchased from the Company, the total consideration paid to the Company
and the average price per share paid by existing stockholders and new investors
purchasing Common Stock in this offering:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)............ 5,027,760 71.5% $14,136,498 39.1% $ 2.81
New investors(1).................... 2,000,000 28.5 22,000,000 60.9 $ 11.00
--------- ----- ----------- ------
Total.......................... 7,027,760 100.0% $36,136,498 100.0%
========= ===== =========== ======
</TABLE>
- ---------------
(1) Assumes no exercise of outstanding options after December 31, 1996. As of
December 31, 1996, options to purchase 759,775 shares of Common Stock were
outstanding, and an additional 397,262 shares were reserved for issuance
under the Company's stock option plans. Additionally, the Company has
reserved 166,666 shares for issuance under the Company's 1997 Employee Stock
Purchase Plan. See "Management -- Stock Option Plans" and Note 5 of Notes to
Financial Statements. The issuance of Common Stock under these plans could
result in further dilution to new investors.
13
<PAGE> 16
SELECTED FINANCIAL DATA
The selected financial data set forth below as of and for the years ended
December 31, 1994, 1995 and 1996 are derived from the financial statements of
the Company, included elsewhere in this Prospectus which have been audited by
Coopers & Lybrand L.L.P., independent public accountants. The selected financial
data as of and for the years ended December 31, 1992 and 1993 are derived from
audited financial statements of the Company not included in this prospectus. The
historical results are not necessarily indicative of the results of operations
to be expected in the future. The following selected financial data should be
read in conjunction with the Financial Statements and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Systems............................... $ 2,779 $ 3,626 $ 7,746 $11,477 $16,239
Services.............................. 506 1,143 2,310 4,244 5,862
------- ------- ------- ------- -------
Total revenues................... 3,285 4,769 10,056 15,721 22,101
Cost of revenues:
Systems............................... 911 1,618 2,393 3,704 5,183
Services.............................. 199 604 1,276 2,234 3,161
------- ------- ------- ------- -------
Total cost of revenues........... 1,110 2,222 3,669 5,938 8,344
------- ------- ------- ------- -------
Gross profit............................... 2,175 2,547 6,387 9,783 13,757
Operating expenses:
Research and development.............. 1,922 1,660 2,340 3,361 5,771
Sales and marketing................... 1,622 1,590 2,163 3,806 5,435
General and administrative............ 614 871 998 1,315 1,629
------- ------- ------- ------- -------
Total operating expenses......... 4,158 4,121 5,501 8,482 12,835
------- ------- ------- ------- -------
Income (loss) from operations.............. (1,983) (1,574) 886 1,301 922
Other income (expense), net................ (9) (14) (9) (70) (218)
------- ------- ------- ------- -------
Income (loss) before provision for income
taxes.................................... (1,992) (1,588) 877 1,231 704
Provision for (benefit from) income
taxes.................................... 5 -- 23 (1,161) (3,359)
------- ------- ------- ------- -------
Net income (loss).......................... $(1,997) $(1,588) $ 854 $ 2,392 $ 4,063
======= ======= ======= ======= =======
Pro forma net income per share............. $ 0.72
=======
Pro forma weighted average number of shares
outstanding.............................. 5,680
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................ $ (819) $(3,420) $ 1,170 $ 3,103 $ 4,596
Total assets............................... 1,742 1,911 3,383 7,271 16,015
Long-term debt, less current portion....... 115 -- -- -- 236
Redeemable convertible preferred stock..... 4,586 5,085 9,205 10,201 11,297
Total stockholders' equity (deficit)....... (4,776) (8,111) (7,663) (6,253) (3,126)
</TABLE>
14
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such a difference include, but are not limited to, those discussed
in "Risk Factors." The following discussion of the financial condition and
results of operations of the Company should be read in conjunction with the
Company's Financial Statements and Notes thereto, and the other financial
information included in this Prospectus.
OVERVIEW
The Company recognizes product and license revenues upon execution of a
contract and shipment to customers provided that no significant vendor
obligations remain outstanding and collection of the resulting receivable is
deemed probable by management. If insignificant vendor obligations remain after
shipment of the product, the Company accrues for the estimated costs of such
obligations. Additionally, the Company accrues the warranty costs upon shipment.
Revenue from post-customer support (maintenance) contracts is recognized ratably
over the life of the contract, generally one year. Revenue from training and
consulting is recognized as the services are provided. For certain contracts
eligible under AICPA Statement of Position No. 81-1, revenue is recognized using
the percentage-of-completion accounting method based upon an efforts-expended
method. In all cases, changes to total estimated costs and anticipated losses,
if any, are recognized in the period in which such changes are determined. The
percentage-of-completion method requires estimates of costs to complete which
may differ from actual costs.
In accordance with Statement of Financial Accounting Standards (SFAS) No.
86, the Company has carefully evaluated the establishment of technological
feasibility of its various products during the development phase. Based on the
Company's product development process, technological feasibility is established
upon completion of a working model. The time period during which costs could be
capitalized from the point of reaching technological feasibility until the time
of general product release is very short and, consequently, the amounts that
could be capitalized are not material to the Company's financial position or
results of operations. Therefore, the Company charges all research and
development expenses to operations in the period incurred.
Deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are
measured using enacted tax rates and laws that will be in effect when the
differences are expected to reverse. A valuation allowance is provided to reduce
the deferred tax asset to a level which, more likely than not, will be realized.
Management of the Company has evaluated the positive and negative evidence
impacting the realizability of its deferred tax assets as required by Statement
of Financial Accounting Standards No. 109. Management has considered its history
of profitable operations and concluded that it is more likely than not that it
will generate sufficient taxable income prior to the expiration of these items.
Management re-evaluates the positive and negative evidence on a quarterly basis
and therefore the amount of the deferred tax asset could be reduced in future
periods.
15
<PAGE> 18
RESULTS OF OPERATIONS
The following table sets forth certain items from the Company's statements
of operations data as a percentage of total revenues for the periods indicated.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Revenues:
Systems.............................................................. 77.0% 73.0% 73.5%
Services............................................................. 23.0 27.0 26.5
----- ----- -----
Total revenues.................................................. 100.0 100.0 100.0
Cost of revenues:
Systems.............................................................. 23.8 23.6 23.5
Services............................................................. 12.7 14.2 14.3
----- ----- -----
Total cost of revenues.......................................... 36.5 37.8 37.8
----- ----- -----
Gross profit............................................................. 63.5 62.2 62.2
Operating expenses:
Research and development............................................. 23.3 21.4 26.1
Sales and marketing.................................................. 21.5 24.2 24.6
General and administrative........................................... 9.9 8.4 7.4
----- ----- -----
Total operating expenses........................................ 54.7 54.0 58.1
----- ----- -----
Income (loss) from operations............................................ 8.8 8.2 4.1
Other income (expense), net.............................................. (0.1) (0.4) (1.0)
----- ----- -----
Income (loss) before provision for income taxes.......................... 8.7 7.8 3.1
Provision for (benefit from) income taxes................................ 0.2 (7.4) (15.2)
----- ----- -----
Net income (loss)........................................................ 8.5% 15.2% 18.3%
===== ===== =====
</TABLE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Total Revenues. Total revenues increased 40.6% to $22.1 million in 1996
from $15.7 million in 1995. The increase in revenue was due to a 39.9% increase
in domestic sales and a 46.9% increase in international sales. Systems revenue
increased 41.5% to $16.2 million in 1996 from $11.5 million in 1995. The
increase in systems revenue was primarily due to the increase in unit sales
volume. Service revenues consist of customization of software, maintenance,
installations, repairs and training. Service revenues increased 38.1% to $5.9
million in 1996 from $4.2 million in 1995, primarily due the addition of more
units to the service base, as well as an increase in the deployment of customer
applications.
Gross Profit. The Company's gross profit increased $4.0 million to $13.8
million in 1996 from $9.8 million in 1995. Gross margin was unchanged at 62.2%
in 1995 and 1996. Gross profit on system sales increased 42.2% to $11.1 million
in 1996 from $7.8 million in 1995. Gross margin on system sales increased to
68.1% in 1996 from 67.7% in 1995. This increase in gross margin percentage on
system sales was attributed to increased software license revenues on third
party platforms. Gross profit on service revenues increased 34.4% to $2.7
million in 1996 from $2.0 million in 1995. Gross margin on service revenues
decreased to 46.1% in 1996 from 47.4% in 1995. This decrease is primarily
attributable to increased costs related to continued investment by the Company
in application engineers to support growth resulting from increased sales of
customer applications.
Research and Development. Research and development expenses increased
71.1% to $5.8 million in 1996 (26.1% of total revenues) from $3.4 million in
1995 (21.4% of total revenues). Research and development expenses consist
primarily of salaries, consultants and other related expenses for research and
development personnel, including the cost of facilities and depreciation of
capital equipment. The increase in the dollar amount of research and development
expenses reflects the continued expansion of the Company's research and
development staff which increased to 57 on December 31, 1996 from 41 on December
31, 1995. The increase in research and development expenses as a percentage of
total revenues was primarily due to incremental investment in the development of
software products for the Telco marketplace. The Company believes that
significant investments in product development are required to remain
competitive. As a
16
<PAGE> 19
consequence, the Company expects that product development expenses will increase
in absolute dollars in the future.
Sales and Marketing. Sales and marketing expenses increased 42.8% to $5.4
million in 1996 (24.6% of total revenues) from $3.8 million in 1995 (24.2% of
total revenues). Sales and marketing expenses consist primarily of salaries,
commissions earned by sales personnel, travel and promotional expenses. The
increase in the dollar amount of the sales and marketing expenses was due
primarily to the expansion of the sales staff, which increased to 43 on December
31, 1996 from 26 on December 31, 1995. The increase in sales and marketing
expenses as a percentage of total revenues was due primarily to the
establishment of a separate Telco sales force. The Company expects to continue
to expand its field sales and marketing efforts, its third party distribution
channels and its operations outside the United States and, therefore,
anticipates that sales and marketing expenditures will increase in absolute
dollars in the future.
General and Administrative. General and administrative expenses increased
23.9% to $1.6 million in 1996 (7.4% of total revenues) from $1.3 million in 1995
(8.4% of total revenues). General and administrative expenses consist primarily
of salaries and other related expenses of administrative, executive and
financial personnel and outside professional fees. The increase in the dollar
amount of the general and administrative expenses was primarily due to the
addition of staff to support the growth of the Company's business. The reduction
in general and administrative expenses as a percentage of total revenues was due
primarily to the growth in total revenues. The Company expects that its general
and administrative expenses will increase in absolute dollars in the future as
the Company expands its staffing, information systems and other items related to
infrastructure and incurs additional costs associated with being a public
company.
Other Income (Expense), Net. Other expenses increased 211.4% to
approximately $218,000 in 1996 (1.0% of total revenues) from approximately
$70,000 in 1995 (0.4% of total revenues). Interest expense increased 175.9% to
approximately $229,000 in 1996 (1.0% of total revenues) from approximately
$83,000 in 1995 (0.5% of total revenues).
Provision for (Benefit from) Income Taxes. The net benefit from income
taxes increased to $3.4 million in 1996 from $1.2 million in 1995. This was
primarily due to the elimination of the remaining valuation allowance against
deferred tax assets of $3.8 million as compared to the partial reduction in the
valuation allowance against deferred tax assets of $1.2 million in 1995.
Management has considered its history of cumulative income and concluded, in
accordance with the applicable accounting standards, that it is more likely than
not that these deferred tax assets will be realized. The Company re-evaluates
the positive and negative information impacting the realizability of the
deferred tax assets on a quarterly basis and, accordingly, the deferred tax
asset could be reduced in future periods. As of December 31, 1996, the Company
had approximately $9.7 million of net operating loss carryforwards for federal
income tax purposes which expire in the years 2004 through 2009. The Company had
approximately $4.1 million of state operating losses which expire in the years
1997 through 2009. The Company has research and development credits for federal
and state income tax purposes of approximately $600,000 and $500,000,
respectively, which begin to expire in 1999.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Total Revenues. Total revenues increased 56.3% to $15.7 million in 1995
from $10.1 million in 1994. Systems revenue increased 48.2% to $11.5 million in
1995 from $7.7 million in 1994. The increase in system revenue was due to
increased unit volume which reflects the expansion of the Company's domestic
customer base and the development of the Company's OEM distribution channel.
Service revenues increased 83.7% to $4.2 million in 1995 from $2.3 million in
1994, primarily due to the addition of units and software licenses to the
service base and the deployment of customer applications. International revenues
increased 123.1% to $1.6 million in 1995 from approximately $719,000 in 1994.
The Company hired its first international salesman in May 1995.
Gross Profit. The Company's gross profit increased $3.4 million to $9.8
million in 1995 from $6.4 million in 1994. Gross margin decreased to 62.2% in
1995 from 63.5% in 1994. Gross profit on system sales increased 45.2% to $7.8
million in 1995 from $5.4 million in 1994. Gross margin on systems sales
decreased to
17
<PAGE> 20
67.7% in 1995 from 69.1% in 1994. This decrease was attributed to increased
revenues at lower margins from the Company's OEM distribution channel. Gross
profits on service revenues increased 94.4% to approximately $2.0 million in
1995 from approximately $1.0 million in 1994. Gross margin on service revenues
increased to 47.4% in 1995 from 44.8% in 1994. This increase is primarily
attributable to increased efficiencies of scale as a result of the growth in
systems added to the service base.
Research and Development. Research and development expenses increased
43.6% to $3.4 million in 1995 (21.4% of total revenues) from $2.3 million in
1994 (23.3% of total revenues). The increase in the dollar amount of research
and development expenses reflects the continued expansion of the Company's
research and development staff which increased to 41 on December 31, 1995 from
25 on December 31, 1994. The reduction in research and development expenses as a
percentage of total revenues was due primarily to the growth in total revenues.
Sales and Marketing. Sales and marketing expenses increased 76.0% to $3.8
million in 1995 (24.2% of total revenues) from $2.2 million in 1994 (21.5% of
total revenues). The increase in the dollar amount of the sales and marketing
expenses was due primarily to the addition of the international field sales
force, the expansion of the domestic field sales operations and increased
marketing activities. The increase in sales and marketing expenses as a
percentage of total revenues can be attributed to the addition of the
international field sales force.
General and Administrative. General and administrative expenses increased
31.8% to $1.3 million in 1995 (8.4% of total revenues) from $1.0 million in 1994
(9.9% of total revenues). The increase in the dollar amount of the general and
administrative expenses was primarily due to the addition of staff and the
increased costs associated with expansion of information systems to support the
growth of the Company's business. The reduction in general administrative
expenses as a percentage of total revenues was due primarily to the growth in
total revenues.
Other Income (Expense), Net. Other expenses increased to approximately
$70,000 in 1995 (0.4% of total revenues) from approximately $10,000 in 1994
(0.1% of total revenues). Interest expense increased to approximately $83,000 in
1995 (0.5% of total revenues) from approximately $18,000 in 1994 (0.1% of total
revenues). The increase in interest expense was primarily due to increased
borrowings.
Provision for (Benefit from) Income Taxes. The net benefit from income
taxes was approximately $1.2 million in 1995 compared to a provision for income
taxes of approximately $23,000 in 1994. This was primarily due to a $1.2 million
reduction in the Company's valuation allowance for deferred tax assets. The
Company determined that it was more likely than not that $1.2 million of
deferred tax assets would be realized under the applicable accounting standards.
Accordingly, a valuation allowance of $4.3 million was applied against deferred
tax assets at December 31, 1995.
18
<PAGE> 21
QUARTERLY RESULTS OF OPERATIONS
The following tables set forth certain unaudited statement of operations
data for each of the past eight quarters as well as the percentages of the
Company's total revenues represented by each item. The following selected
quarterly information includes all adjustments (consisting only of normal
recurring adjustments) that the Company considers necessary for a fair
presentation. The Company believes that quarter-to-quarter comparisons of its
financial results are not necessarily meaningful and that such comparisons
should not be relied upon as an indication of future performance.
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1995 1995 1995 1995 1996 1996 1996 1996
--------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Systems................... $ 2,040 $2,404 $ 2,984 $ 4,049 $ 3,153 $3,168 $ 4,646 $5,272
Services.................. 1,117 1,166 1,043 918 1,285 1,077 1,441 2,059
------ ------ ------ ------- ------ ------ ------ ------
Total revenues........ 3,157 3,570 4,027 4,967 4,438 4,245 6,087 7,331
Cost of revenues:
Systems................... 649 878 1,082 1,095 986 918 1,440 1,839
Services.................. 461 472 530 771 695 647 831 988
------ ------ ------ ------- ------ ------ ------ ------
Total cost of
revenues............ 1,110 1,350 1,612 1,866 1,681 1,565 2,271 2,827
------ ------ ------ ------- ------ ------ ------ ------
Gross profit.................. 2,047 2,220 2,415 3,101 2,757 2,680 3,816 4,504
Operating expenses:
Research and
development............. 742 823 765 1,031 1,146 1,382 1,570 1,673
Sales and marketing....... 859 841 921 1,185 1,026 1,144 1,466 1,799
General and
administrative.......... 263 311 328 413 344 416 413 456
------ ------ ------ ------- ------ ------ ------ ------
Total operating
expenses............ 1,864 1,975 2,014 2,629 2,516 2,942 3,449 3,928
------ ------ ------ ------- ------ ------ ------ ------
Income (loss) from
operations.................. 183 245 401 472 241 (262) 367 576
Other income (expense), net... (1) (11) (42) (16) (31) (42) (59) (86)
------ ------ ------ ------- ------ ------ ------ ------
Income (loss) before provision
for income taxes............ 182 234 359 456 210 (304) 308 490
Provision for (benefit from)
income taxes................ 8 18 24 (1,211) 12 12 15 (3,398)
------ ------ ------ ------- ------ ------ ------ ------
Net income (loss)............. $ 174 $ 216 $ 335 $ 1,667 $ 198 $ (316) $ 293 $3,888
====== ====== ====== ======= ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED
------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1995 1995 1995 1995 1996 1996 1996 1996
--------- -------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Systems................... 64.6% 67.3% 74.1% 81.5% 71.0% 74.6% 76.3% 71.9%
Services.................. 35.4 32.7 25.9 18.5 29.0 25.4 23.7 28.1
----- ----- ----- ----- ----- ----- ----- -----
Total revenues........ 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenues:
Systems................... 20.6 24.6 26.9 22.0 22.2 21.7 23.6 25.0
Services.................. 14.6 13.2 13.1 15.5 15.7 15.2 13.7 13.5
----- ----- ----- ----- ----- ----- ----- -----
Total cost of
revenues............ 35.2 37.8 40.0 37.5 37.9 36.9 37.3 38.5
----- ----- ----- ----- ----- ----- ----- -----
Gross profit.................. 64.8 62.2 60.0 62.5 62.1 63.1 62.7 61.5
Operating expenses:
Research and
development............. 23.5 23.0 19.0 20.8 25.8 32.6 25.8 22.9
Sales and marketing....... 27.2 23.6 22.9 23.9 23.1 26.9 24.1 24.5
General and
administrative.......... 8.3 8.7 8.1 8.3 7.8 9.8 6.8 6.2
----- ----- ----- ----- ----- ----- ----- -----
Total operating
expenses............ 59.0 55.3 50.0 53.0 56.7 69.3 56.7 53.6
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) from
operations.................. 5.8 6.9 10.0 9.5 5.4 (6.2) 6.0 7.9
Other income (expense), net... 0.0 (0.3) (1.1) (0.3) (0.7) (1.0) (1.0) (1.2)
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) before provision
for income taxes............ 5.8 6.6 8.9 9.2 4.7 (7.2) 5.0 6.7
Provision for (benefit from)
income taxes................ 0.3 0.5 0.6 (24.4) 0.3 0.3 0.2 (46.4)
----- ----- ----- ----- ----- ----- ----- -----
Net income (loss)............. 5.5% 6.1% 8.3% 33.6% 4.4% (7.5)% 4.8% 53.1%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
19
<PAGE> 22
The Company's quarterly operating results may fluctuate due to a variety of
factors, including the timing of new product announcements and introductions by
the Company, its major customers or its competitors, delays in new product
introductions by the Company, market acceptance of new or enhanced versions of
the Company's products, changes in the product or customer mix of sales, delay,
cancellation or acceleration of customer orders, changes in the level of
operating expenses, competitive pricing pressures, the gain or loss of
significant customers, increased research and development and sales and
marketing expenses associated with new product introductions, the mix of
distribution channels through which the Company's products are sold, purchasing
patterns of OEMs, VARs, system integrators and distributors and the hiring and
training of additional staff as well as general economic conditions. In
addition, the Company has often recognized a substantial portion of its revenues
in the last month of a quarter. As a result, product revenues in any quarter are
substantially dependent on orders booked and shipped in that quarter, and
revenues for any future quarter are not predictable with any degree of
certainty. Any significant deferral of purchases of the Company's products could
have a material adverse effect on the Company's business, financial condition
and results of operations in any particular quarter and, to the extent
significant sales occur earlier than expected, operating results for subsequent
quarters may be adversely affected.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal cash requirement to date has been to fund working
capital and capital expenditures in order to support the growth of revenues. The
Company has financed this requirement primarily through bank borrowings, trade
credit and the private sale of preferred stock. Cash flow from (used in)
operations was approximately $900,000, ($800,000) and ($500,000) in 1994, 1995
and 1996, respectively. At December 31, 1996, the Company had working capital of
$4.6 million. The Company expects its working capital needs to increase along
with future revenue growth.
Current assets and current liabilities at December 31, 1996 increased $8.7
million and $4.3 million, respectively, compared to December 31, 1995. Current
assets increased principally as a result of an increase in accounts receivable
due to higher operating levels and a trend towards transactions being booked
late in the quarter. Current liabilities increased primarily due to increased
short-term borrowings to support the growth in capital purchases.
In August 1996, the Company entered into a revolving credit agreement with
Fleet Bank to increase its revolving line of credit to $5.0 million. Interest on
borrowings under this credit facility is calculated at a fluctuating rate equal
to Fleet Bank's prime rate plus three-quarters of one percent. This credit
facility expires on September 1, 1997 . The Credit agreement requires the
Company to maintain minimum level of earnings and a minimum net worth ratio. As
of December 31, 1996, the Company had borrowed $2.7 million under this line of
credit. In addition, in August 1996, the Company entered into an equipment line
of credit of $1.0 million at a fluctuating interest rate equal to Fleet Bank's
prime rate plus one percent. As of December 31, 1996, the Company had borrowed
$377,000 under this line of credit. The Company intends to pay down its existing
indebtedness with the net proceeds of this offering.
The Company had capital expenditures totaling approximately $300,000,
$700,000 and $1.8 million during 1994, 1995 and 1996, respectively. The
Company's capital budget for 1997 is $2.5 million, which includes additional
computer equipment utilized for the development and testing of the Company's
products and leasehold improvements to support the Company's growth.
The Company believes the net proceeds from this offering, together with
funds generated from operations will be sufficient to fund its operations and
capital expenditures for at least 18 months following the consummation of this
offering.
20
<PAGE> 23
BUSINESS
Voicetek develops, markets and supports interactive communications systems.
The Company's products enable Telcos to rapidly deploy value added services and
commercial organizations to extend the automation of information access, improve
service, lower operating costs and differentiate their service offerings to
their customers. The Company's Generations software is a scalable, client server
platform which is open and fault resilient and provides customers, employees and
business partners with access to information, products and services by using a
variety of methods, including telephone, fax, electronic mail, paging and Web
browsers. Generations permits rapid development and deployment of interactive
communications applications for use in wireless and wireline environments, AIN
and corporate enterprise and call center environments. The Company integrates
Generations with its VTK family of telephony servers, or third party servers, to
support medium to large-scale system deployments. Voicetek also provides
consulting, training and maintenance services for application development and
on-going support of the Company's products.
Voicetek employs a strategy of leveraged selling primarily through OEMs
(e.g., Open Development Corporation and Microlog Corporation), telephone switch
manufacturers (e.g., Rockwell International), computer system vendors (e.g.,
Digital Equipment Corporation), selected system integrators and VARs (e.g.,
Andersen Consulting and Logica) as well as direct selling to large
organizations. Representative applications include automated directory
assistance, voice dialing, personal number service, bank by phone, discount
stock trading, stock quotes, account inquiry, order fulfillment, fax-on-demand,
product information, scheduling, labor reporting, service ordering and dispatch.
INDUSTRY BACKGROUND
In today's competitive global marketplace, organizations are investing in
and relying on information technology to maintain and enhance their competitive
position. Interactive communications systems are increasingly being employed to
provide broad, convenient and efficient access to the information technology
infrastructure by customers, employees and business partners. Interactive
communications systems have become mission critical components of an
organization's business, differentiating its products and services from those of
their competition while increasing the quality and types of services provided
and reducing costs.
Commercial enterprises initially sought to improve access to information
and to better control costs by using trained representatives or agents located
in call centers. However, the growth in demand for convenient and continuous
access to information highlighted the inefficiency, expense and lack of
reliability which results from reliance on a labor force to perform many
functions. Traditional automation systems, including many interactive voice
response systems, tend to be proprietary, problem-specific solutions and provide
limited access (such as the keypad of touch tone telephone) and limited
interaction. These proprietary stand-alone systems (i) do not leverage the
price/performance characteristics inherent to open systems, (ii) are difficult
to develop, deploy and maintain in a rapidly evolving operating environment,
(iii) are not easily integrated with products provided by other vendors and (iv)
are not able to be modified and expanded as a company's business grows.
The trend towards the privatization and deregulation of the global
telecommunications sector, since the breakup of AT&T in 1984, has heightened the
competition in the telecommunications marketplace. Long distance companies,
local exchange carriers and competitive access providers now compete with new
entrants such as cable television operators, wireless carriers and Internet
service providers in many segments, dramatically increasing the number of new
networks for voice and data traffic. Decreased telecommunications regulations
have given these companies the opportunity to utilize new technologies to deploy
the next generation network architecture, commonly referred to as the AIN. The
AIN provides the backbone to support and define services, which allow any type
of information (including voice, data and video) to pass through the telephone
network without special circuitry or long installation cycles. New interactive
communications systems integrated with the AIN have given Telcos the ability to
deploy new product and service offerings, such as voice activated dialing and
unified messaging, which leverage their installed customer and network
infrastructure base. To protect their installed base of customers and to
generate new customers,
21
<PAGE> 24
Telcos must be able to provide integrated products and services which
differentiate them from their competition while being more responsive to the
needs and requests of their customers.
To leverage automated access to an organization's broad information
infrastructure and maximize revenue generating potential, enterprise
organizations and Telcos require an interactive communications system that (i)
is scalable to support large volumes of inquiries (both voice and data), (ii) is
open to permit integration with a wide variety of telephony and computing
technologies, (iii) permits multiple service applications to be deployed and run
on the same system simultaneously, (iv) employs a wide range of access methods,
including telephones, Web browsers, fax, electronic mail and speech recognition
and (v) is flexible to adapt to the needs of the enterprise while allowing
information to be processed and disseminated efficiently and accurately. The
systems also need to be cost effective to operate and maintain, provide end-user
integration with the information technology infrastructure (including SQL and
legacy databases) and create a robust software development environment for the
rapid development and deployment of mission critical applications.
THE VOICETEK SOLUTION
Voicetek has developed an interactive communications system built on an
open architected software-based platform that is scalable, modular and flexible.
The software platform, Generations, together with the Company's VTK system or
third-party hardware, provide customers with an interactive communications
system designed for sophisticated operating environments. These products
integrate with the systems used by many of the major telephone switch
manufacturers and computer system vendors and provide end-users with a strong
integrated system solution.
Generations, which is available on multiple operating systems and computer
vendor hardware platforms, runs and manages mixed media applications, allowing
customers to choose the computer and operating system that best suits their
requirements. The software platform integrates industry standard technologies
such as network interfaces, host communications and SQL databases, enabling
Generations to provide access to information through mixed media technologies
(such as DTMF, pulse or ADSI (screen phone) telephones, fax, Web Browsers, voice
processing or speech recognition). Generations is extensible, easily
incorporating new technologies such as Web integration, large vocabulary speech
recognition, text-to-speech and simple network management protocols ("SNMP")
technologies. Generations is flexible and allows the user to extend the platform
by creating special processing functions required by an application.
Additionally, the Generations client server architecture is scalable, enabling
systems with as few as 24 ports up to many thousands of ports. This architecture
allows end users to offer multiple applications and services simultaneously and
provides companies with the ability to deploy only the capability they need
while permitting new or additional capabilities to be added at a later time,
instead of requiring an entirely new system.
The client server architecture of Generations enables companies to scale
the size of their interactive communications to meet their specific volume
requirements. Voicetek systems can be deployed either centrally or over a
geographically dispersed area. The Company believes that these features help
end-users to lower their operating costs through more efficient use of MIS
resources, improved application development and more efficient ongoing
maintenance and enhancement of applications.
Voicetek also provides Generations Developer, an integrated set of tools
within Generations to design, create, test and deploy applications. Using
object-oriented technology, Generations Developer allows customers to build
applications based on knowledge of their business workflow and processes without
the need for extensive computer programming skills. Using Generations Developer,
the Company believes that customers can create, test and deploy applications in
less time and at a lower cost than using conventional programming tools and
methods.
22
<PAGE> 25
STRATEGY
Voicetek's objective is to become a leading supplier of interactive
communications software platforms and applications solutions. To achieve this
objective, the Company is pursuing the following strategies:
Enhance Technology Leadership. Voicetek believes that it was one of
the first companies to deliver an open architected software platform for
the development and deployment of interactive communications applications.
To accommodate an increasingly complex technology infrastructure, the
Company intends to enhance its current platforms by (i) porting its
software platform to other operating systems such as Windows NT and other
UNIX derivatives, (ii) integrating new industry technologies such as SS7
and Internet protocols, large scale vocabulary speech recognition and
text-to-speech, (iii) continuing to develop strong system management and
fault resilient features in its products such as sophisticated SNMP
capabilities, system management applications and additional redundancy and
fail-safe features and (iv) adopting and implementing industry standards
such as S.100 in its products. Voicetek intends to continue to participate
in the evolution of industry standards by actively participating in
industry standard committees.
Focus on Mid-Range and High-End Systems. Voicetek's primary focus is
to provide interactive communications systems to enterprises for which
sophistication, openness, scalability and fault resilience are of paramount
importance. The Company's products can be configured for mid-size (24 to
300 ports) or large scale installations (in excess of 300 ports), including
networks of multiple systems to handle thousands of telephone ports.
Employ Leveraged Sales Channels. Voicetek currently employs a
strategy of leveraged selling primarily through a limited number of channel
partners, which is complemented by direct selling to large organizations.
Voicetek intends to continue to develop, market and support interactive
communications systems through relationships with original equipment
manufacturers and strategic partnering with telephone switch manufacturers
and computer system vendors, leveraging their installed customer base,
large sales forces and support organizations. The Company integrates its
Generations software with the channel partner's products, creating a long
term cooperative relationship and providing a strong end-to-end system
solution for the end-user. The partnering of Voicetek and its channel
partners requires a significant investment by the channel partners in
product development, training, support and sales functions. Voicetek seeks
to establish relationships with additional channel partners who will
provide access to their customer bases and vertical segment expertise.
Provide Enhanced Service Platforms and Applications to
Telcos. Leveraging off of its existing technology base, the Company
intends to implement new sales, marketing and engineering initiatives to
provide enhanced services to Telcos. Voicetek has developed alliances with
channel partners who deploy Generations and VTK systems to service both
internal operating groups and external customers. Voicetek intends to use
these alliances to develop new capabilities and applications for use by its
Telco customers, such as integrating into a single product offering
voice-activated dialing, personal communications services, Internet
provisioning, single number service and voice-mail.
Leverage Platform Capabilities into Applications Solutions. Voicetek
intends to leverage its large library of Generations application software
modules by packaging certain modules to address business-specific
application needs in a number of markets including banking, finance,
insurance and human resources. Voicetek believes that such customizable
application software packages will result in more rapid implementation of
end-user solutions and allow its channel partners to make multiple sales
with shorter sales cycles.
Increase International Revenue. The Company believes that
international markets offer significant growth opportunities as the
communications infrastructures in many foreign countries continue to
develop. The Company seeks to take advantage of these opportunities and has
established field sales offices in London, Hong Kong and Sao Paulo. In
addition, the Company intends to deploy sales, support, marketing and
development operations in selected areas such as Europe. The Company
intends to
23
<PAGE> 26
increase international revenues by leveraging current and new business
partners and by providing a local sales and support presence.
PRODUCTS
The Company's products consist of a sophisticated software platform and a
family of scalable telephony servers which can be configured for mid-size (24 to
300 ports) or large scale installations (in excess of 300 ports), including
networks of multiple systems to handle thousands of telephone ports. The Company
also provides custom application development and tools that provide various
administrative, systems management and application development capabilities.
Voicetek's customers can purchase an integrated system of software and hardware
or can license the Generations software and customize their systems to meet
specific business needs. Depending on system configuration, optional features
and custom programming, prices for the Company's interactive communications
system can range from $200 to $3,000 per port. An overview of the Company's
products is set forth below:
Generations
Generations is an open and extensible graphical platform of functions,
capabilities, integrated databases and shared resources. It is available on
multiple computer platforms to integrate easily into MIS environments.
Generations is designed to be portable and is supported on the most popular UNIX
processor platforms, including SCO UNIX, Sun Solaris, IBM AIX, HP-UX and Digital
UNIX. Generations applications developed on one supported processor platform can
generally be copied to any other supported platform for execution without
change, using the same user interfaces. Generations is also an integrated
platform through which multiple, mixed-media applications can be deployed,
administered and monitored. Using Generations, customers can program new
applications and maintain existing applications by drawing call flows using
graphical icons which represent the building blocks of telephony or computer
functions.
<TABLE>
<CAPTION>
GENERATIONS FAMILY FEATURES AND FUNCTIONS
<S> <C>
- --------------------------------------------------------------------------------------------
GENERATIONS DEVELOPER Generations Developer is a set of graphical,
object-oriented tools for application design, prototyping
and deployment. Generations Developer provides a
system-defined palette of cells which the user "drags and
drops" onto the page, laying out the call flow graphically.
Each cell has an associated set of parameter values, which
the developer can modify as necessary. Generations' Cell
Builder is an option used to create reusable customized
cells to represent special processing functions. An
application test facility provides the developer with trace
facilities and tools to analyze, debug and test
applications prior to implementation.
- --------------------------------------------------------------------------------------------
GENERATIONS RSP Generations Runtime Server Platform ("RSP") manages and
supports the developed applications solutions. RSP
communicates with Generations TSP to dynamically allocate
resources and manage application sessions. RSP provides
administration interfaces for application assignment,
performance optimization and SNMP support. RSP provides a
statistical reporting capability, prompt management and
database subsystem.
- --------------------------------------------------------------------------------------------
GENERATIONS TSP The Telephony Server Platform ("TSP") manages all available
channels and controls internal processes and resources. TSP
services the communications interface with the application
clients, dynamically allocates requisite resources (e.g.,
speech recognizers) to application requests and provides
the administration interface for configuring network
interfaces and modifying resource configurations. TSP
includes facilities for system troubleshooting, status
events, usage reports and test utilities.
- --------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 27
LOGO
Generations interfaces with technologies that provide fax, text-to-speech,
a choice of speaker independent small or large scale vocabulary automatic speech
recognition, relational database management systems, high performance LAN/WAN
networks and network management tools through a defined set of application
programming interfaces and Generations processes. Therefore, customers can
select from alternative technology options to best fit their application needs.
Access methods supported by Generations include technologies such as telephone
(pulse detection, DTMF and ADSI), Web browsers, fax, paging and electronic mail.
<TABLE>
<CAPTION>
EXTENDED FAMILIES FUNCTIONALITIES
<S> <C>
- --------------------------------------------------------------------------------------------
LINK FAMILY Provides connectivity to legacy host environments (SNA
3270, 5250, LU6.2 and VT100) and principal SQL databases.
- --------------------------------------------------------------------------------------------
SPEECH FAMILY Provides interfaces to automatic speech recognition and
text-to-speech solutions by leading vendors.
- --------------------------------------------------------------------------------------------
MIXED-MEDIA FAMILY Provides media interfaces to fax, ADSI, paging and
Internet.
- --------------------------------------------------------------------------------------------
TELEPHONY FAMILY Provides support for both analog (Loopstart and DID) and
digital (T1, E1, ISDN Pri and ISDN Bri) telephony network
interfaces and supports hardware interface cards and
drivers.
- --------------------------------------------------------------------------------------------
CTI FAMILY Provides integration to SMDI and computer telephony
integration middleware products.
- --------------------------------------------------------------------------------------------
AIN FAMILY Provides the necessary protocols (SS7) allowing Generations
to be deployed on an intelligent peripheral on the AIN.
- --------------------------------------------------------------------------------------------
MANAGEMENT FAMILY Provides for centralized and distributed Generations
systems to be managed from an open, industry standard SNMP
management platform.
- --------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 28
Generations Developer provides an integrated set of tools within
Generations for designing, creating, testing and deploying applications. Using
object-oriented technology, Generations Developer allows customers to build
applications based on knowledge of their business workflow and processes without
the need for extensive computer programming skills. Using Generations Developer,
programming new service applications is accomplished by drawing call flows using
graphical icons. These graphical icons or "cells" are presented on a cell
palette, and represent the functional building blocks or required computer or
telephony services. These cells provide the interface to standard call process
functions such as DTMF detection, prompt playback and message recording.
Additionally, the cells provide computer telephony integration links such as
ANI, DNIS, SS7 and various switch integrations. Existing applications can be
modified by inserting new functions in the appropriate location in the flow or
deleting unneeded cells. The integrity and reliability of a newly created or
modified application can be confirmed with debugging tools.
Generations has a complete set of management features which reduce system
maintenance efforts over widely dispersed networks. Administrative interfaces
provide the flexibility and control to configure and manage the Company's
interactive communications systems for optimal performance. Through this
interface, Generations can be directed to load, run or unload an application.
New versions of applications can be brought on-line or ports reassigned to a
different application without interrupting the system. Generations allows the
scheduling of multiple applications on a single platform. Statistics are
gathered and reported on the number of calls received by day, hour, and trunk,
as well as the events on all or any of the trunks. Prompts can be recorded and
then loaded into the telephony server platform without interrupting service.
VTK Family
The Company's VTK family of telephony servers employs a client server
architecture and is designed to support medium to large-scale system deployments
supporting configurations of many thousands of ports distributed over large
geographical regions or centrally located within a call center or corporate
enterprise environment. These servers are designed for reliability and include
features such as Network Equipment Building System compliance, redundant
components, alarms, AC or DC power, remote diagnostics and ease of maintenance.
The VTK servers provide all the necessary telephone company interfaces for
analog (Loopstart and DID) and digital (T1, E1, ISDN Pri and ISDN Bri)
communication, as well as other application resources such as fax, automatic
speech recognition and text-to-speech functions.
<TABLE>
<CAPTION>
INTEGRATED SYSTEMS FAMILY FEATURES AND FUNCTIONS
<S> <C>
- --------------------------------------------------------------------------------------------
VTK ONE An entry-level system for development and test environments,
low port density deployments and moderate traffic runtime
applications. The "Development" version of the product
provides a turn-key system with the Generations software
necessary to begin developing interactive communications
applications. VTK One can support up to 24 ports and can be
networked with additional VTK systems.
- --------------------------------------------------------------------------------------------
VTK 2000 This system is deployed in high traffic corporate
facilities, mid-sized call centers and small distributed
networks. It has a space saving tower, can support up to 48
ports and can be networked to provide additional capacity.
- --------------------------------------------------------------------------------------------
VTK 3000 A high-end fault resilient system that is deployed in
demanding sites such as high volume call centers and Telco
central office environments. Scalable, a single VTK 3000 can
provide 120 ports of network connectivity and multiple units
can be supported by a single application server.
- --------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 29
Custom Application Development
Voicetek provides application development, project management and
consulting services for its large customers that desire turn-key solutions. The
Company's consultants, who have a working knowledge of host connectivity,
database design, client server architectures and the latest mixed media
technologies, provide customers with specialized development assistance.
Consulting offerings include project management, product requirements and call
flow specifications, application design specifications, design reviews, custom
programming, external interface development, prompt creation and test plan
development.
CUSTOMERS AND APPLICATIONS
Customers
Some of the representative market, end-users and applications of Voicetek's
products are set forth below:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET END-USERS REPRESENTATIVE APPLICATIONS
<S> <C> <C>
- ---------------------------------------------------------------------------------------------
Financial Services Coast Federal Bank, Commerce Bank-by-phone, securities quotes and
Bank, First USA, Fleet Bank, trading orders, funds transfer,
Group Health Inc., Interactive current interest rates, loan
Transaction Partners, National application status, retirement plan
Discount Brokers, Oxford Health performance and status, account
Plans, Santa Monica Bank, VISA inquiry, plan eligibility
verification, claims status,
cardholder services
- ---------------------------------------------------------------------------------------------
Government Interstate Commerce Commission, Emergency heating service, tax
New York Housing Authority, U.S. filing
Patent and Trademark Office and refund status, classification
inquiry, labor reporting,
transportation rates and schedules
- ---------------------------------------------------------------------------------------------
Consumer Products Great Woods Institute for the Customer service hotline, event
and Services Performing Arts, Long Island ticket purchasing, billing and
Lighting Company, NEXT service inquiries, prescription
Ticketing, Packard Bell, Perrier refills, outbound telemarketing,
utility outage reporting, order
fulfillment
- ---------------------------------------------------------------------------------------------
Other Business Andersen Consulting, Comcast Employment opportunities, order
Cablevision, Digital Equipment fulfillment, seminar registration,
Corporation, Lockheed, Microlog fax-on- demand, product information,
Corporation, Rail Europe, Remedy scheduling, labor reporting, travel
Corporation, Rockwell route planning, employment services,
International, Sun Microsystems, product information, pay-per-view
Teletech, Softbank, University ordering, trouble reporting,
of Kentucky, Volt Delta installation/repair service
Resources scheduling, paging
- ---------------------------------------------------------------------------------------------
Telecommunications Bell Atlantic, GTE, Hong Kong Personal number service, audiotext,
Telecom, Pacific Bell Info account inquiry, repair scheduling,
Services, Southwestern Bell, service ordering, and disptach
U.S. West directory assistance, collect
calling, trouble reporting, fax back
service
- ---------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 30
Applications
Financial Services:
- A discount brokerage company sought to increase the effectiveness of its
customer service operations and to control service costs. Voicetek's
Generations and VTKs were deployed with applications that offer online
trading services including account history, stock quotes and securities
trading. The Company believes this system improved the range of the
brokerage's customer service while limiting the need to hire additional
operators or stock brokers. The Company believes Generations has helped
the organization maintain its position as a low cost broker.
Other Business:
- A leading supplier of personal computers and accessories needed to
streamline customer service and sales operations, manage a rapidly
growing business and control costs by limiting the number of new hires
required to support growth. This organization deployed Generations
software platform and VTK voice response servers to answer requests for
information about new products, upgrade existing products and
distribution channels and route service calls. The Generations system
responds to customer inquiries by making the appropriate person
accessible to the customer, promptly providing them with information they
need through a fax-back system and providing timely callbacks and
resolution of problems.
- A leading health insurance provider desired to automate a number of its
customer service processes as a means of lowering its operational
expenses and managing its rapid growth. The insurance company deployed
the Company's Generations software and VTK voice response servers with
applications which intelligently route calls to the appropriate customer
service representatives, indicating to the caller the number of calls
already in queue, offering the caller the option of waiting for an
available customer service representative or leaving a message informing
when to expect a return call. These processes are used to provide a range
of services to customers including claims status, patient eligibility and
endorsements. The Company believes that the Generations system has
provided the customer the opportunity to expand business without having
to hire additional staff and enabling some current staff to be redeployed
to focus on more complex business problems.
Telecommunications:
- A large telecommunications company sought to improve its competitive
position by using interactive communications systems to increase the
breadth and quality of services to control the cost of service delivery
and increase customer satisfaction. The Telco deployed a Generations
system with applications such as long-distance pre-subscription, billing
and payment inquiries, user assistance, calling card and directory
orders, service dispatch and custom calling services. The Company
believes that the customer used Generations to integrate existing
applications, provide an extensible platform on which it could create new
services, control operating costs, reduce headcount and increase the
capacity of its existing system.
- A significant part of an international cellular provider's customer
retention strategy is to increase its calling services. The cellular
company used Generations and VTKs to build a unique message storage
architecture and custom application. The Generations system allows end
user customers to realize the convenience and efficiency of a
network-based voice messaging system.
SALES AND MARKETING
Voicetek employs a strategy of leveraged selling primarily through a
limited number of channel partners such as OEMs, VARs, systems integrators and
distributors, as well as through direct selling to large organizations. Voicetek
leverages the installed customer base and large sales force of its channel
partners to sell directly to Telcos. Voicetek actively supports its channel
partners with a dedicated account manager and access to Voicetek's direct sales
and sales engineering resources. Voicetek's account managers work with
representatives of the Company's channel partners to coordinate the sales
process. The Company's sales representatives sell directly to end users and also
assist the channel partners with technical sales assistance.
28
<PAGE> 31
The Company has a network of sales and support personnel in North America,
Europe, Asia and South America. The Company's OEMs include Nortel, Rockwell
International, Digital Equipment Corporation, Volt Delta, Group 2000 and
Microlog Corporation and its VARs include Andersen Consulting, Logica, Open
Development Corporation and digiTrade.
The Company supports its sales and distribution efforts with a marketing
organization. This organization is responsible for traditional marketing
functions such as product management, market and competitive research, industry
marketing, sales and marketing programs, advertising and public relations.
Voicetek's marketing efforts focus on further penetrating its target markets and
expanding its presence in vertical markets, such as Telcos. Additionally, the
Company seeks to complement its existing channel partner relationships by
developing new strategic relationships that will allow it to expand its market
presence.
CUSTOMER SERVICE AND SUPPORT
Voicetek relies on its sales channel partners to provide the first level of
customer support to end users. End users rely primarily on the OEM or VAR for
the initial service call. If necessary, Voicetek provides service and support to
its customers and end users on a timely basis through its network of service and
support staff. The Company's technical support engineers, based at its
headquarters in Chelmsford, Massachusetts and its field service engineers are
experienced with all aspects of interactive communications systems, including
telecommunications, data communications and mixed media technologies. The
Company believes that the ease-of-use and comprehensive feature/function
attributes of Generations minimize ongoing system maintenance.
The Company offers customer support and services, including direct support
and remote access diagnostic testing. Voicetek technicians have the ability to
access a customer's system remotely to activate trace and diagnostic functions.
This allows technicians to assess and remedy a system failure for customers in
diverse locations. In addition, technicians provide support with installation
and maintenance when needed.
Voicetek provides education and training for all of its products at its
headquarters, customer sites or specified locations worldwide. Comprehensive
training programs are offered in system installation and support, basic
Generations capabilities, application development, advanced development and
other specific technologies. The cost for training programs is not included in
the purchase price of a system and is a fee option for customers.
ENGINEERING, RESEARCH AND PRODUCT DEVELOPMENT
The Company has made, and intends to continue to make, a substantial
investment in research and product development. For the year ended December 31,
1996, the Company spent $5.7 million on research and product development, which
is equal to 26.1% of total revenues for such period. The Company's growth and
future financial performance will depend in part upon its ability to (i) enhance
the Generations platform and existing applications to further solidify
acceptance in the Telco and commercial markets, (ii) develop and introduce new
applications which add value to the target markets and keep pace with
technological advances, (iii) meet changing customer requirements, (iv) respond
to competitive products and (v) achieve market acceptance. The Company works
with its customers to determine their requirements and to design enhancements
into new products and services to meet their needs.
The Company believes that the strength of its product is derived primarily
from its sophistication, combined with ease-of-use, openness and technology
integration. To maintain this technological advantage, the Company has several
product development efforts underway which it hopes will further its interactive
communications systems. The Company is developing a suite of packaged
applications for enhanced services for Telcos.
Building upon its custom application development expertise, the Company
intends to release pre-packaged applications targeted at the commercial market.
Voicetek hopes that these applications will allow customers to utilize the
expertise and functionality which the Company developed for specific proprietary
customers while avoiding the expenses associated with customer specific full
scale development. Vertically targeted market applications are expected to
address the financial, brokerage and health care industries, and
29
<PAGE> 32
horizontal applications may include call routing, mail and messaging and
Internet enabled call centers. See "Risk Factors -- Technological Change,
Changing Markets and New Products."
The Company believes that its future success is dependant in large part on
its ability to continue to develop new products and enhanced services for its
customers and end-users. To develop new products and services, the Company needs
to attract, retain and motivate highly skilled computer programmers and
engineers. There can be no assurance that the Company will be able to attract,
retain and motivate such personnel. See "Risk Factors -- Reliance on Key
Personnel."
MANUFACTURING
The Company's manufacturing activities, which consist primarily of material
requirement planning, purchasing, testing, system assembly and quality
assurance, are conducted at its Chelmsford, Massachusetts facility.
Most of the components and parts used in the Company's products are
available from more than one supplier. Certain components that are purchased
from one source can generally be replaced with parts available from other
sources. The Company currently purchases approximately 41.9% of certain
components of its VTK system from Dialogic, and there can be no assurance that
Dialogic will be able to continue to supply the Company with such components.
Although other manufacturers produce substantially similar components, a
disruption in the supply of such components from Dialogic could have a material
adverse effect on the Company. See "Risk Factors -- Reliance on Component
Availability and Key Suppliers." To date, when components have become
unavailable, the Company has been able to obtain functionally similar
substitutes and to accomplish any necessary redesign without a material
interruption in production, although there can be no assurance that this will
remain the case in the future.
COMPETITION
The market for telecommunications software products is intensely
competitive and subject to rapid technological change. The Company believes that
the principal competitive factors affecting its market are reputation,
reliability, system features, customer service, price and the effectiveness of
marketing and sales efforts. Additionally, the Company believes that to
distinguish itself in this marketplace, it must have the ability to anticipate
unmet customer needs and to introduce new features to address those needs on a
timely basis. Although the interactive communications industry is highly
competitive and certain of the Company's competitors have considerably greater
financial, technical, marketing and sales resources than the Company, the
Company believes that it competes favorably with respect to each of these
factors.
Although the Company's focus is on software based interactive
communications systems, the Company believes it competes in certain instances
with certain manufacturers of high end systems such as Periphonics, Inc.,
InterVoice Inc. and Brite Voice, Inc., which the Company believes have focused
on sales of hardware-based interactive voice response systems. In addition, many
suppliers of voice mail systems and telecommunications equipment have added some
capabilities similar to interactive communications to some of their product
offerings and generally sell these features as a component of or add-on to an
overall sale of a voice mail system or a telecommunications switch. In addition
to existing competitors, as the interactive communications market continues to
grow and mature, the Company expects to encounter additional competition from
companies which offer platforms for voice messaging, enhanced services or other
types of technology. Also, as the Company enters new market segments, it may
face competition from companies which have already established their position
and market share.
BACKLOG
Backlog includes all unshipped orders for which the Company has received a
firm purchase order. Orders for the Company's products are usually placed by
customers on an as-needed basis and the Company has typically been able to ship
a standard interactive communications system within 14 days after the customer
submits a firm purchase order. Because of the possibility of customer changes in
delivery schedules or
30
<PAGE> 33
cancellation of orders, the Company's backlog as of any particular date may not
be indicative of sales in any future period. See "Risk Factors -- Fluctuations
in Quarterly Operating Results."
PATENTS AND OTHER PROPRIETARY RIGHTS
The Company relies on a combination of patent, copyright, trademark and
trade secret laws, as well as employee confidentiality agreement, third-party
non-disclosure agreements and license agreements to protect its proprietary
rights. The Company has three patents relating to the architecture, operating
methodologies and interfaces of the Company's products. Nonetheless, there can
be no assurance that any patent relied upon by the Company will not be
challenged, invalidated or circumvented or that rights granted thereunder will
provide competitive advantages. Moreover, despite the Company's efforts, there
can be no assurance that the steps taken by the Company to protect its
proprietary rights will be adequate to prevent misappropriation of such rights
or that third parties will not independently develop functionally equivalent or
superior software technology. From time to time, third parties may assert
exclusive copyright, trademark and other intellectual property rights to
technologies that are important to the Company. The Company is aware that
certain segments of the voice processing industry, particularly voice mail/voice
messaging systems, are affected by active and costly litigation and there can be
no assurance that as the Company's interactive communications systems evolve
(possibly to include certain voice mail/voice messaging features), the Company
will not be required to enter into license agreements or become involved in, or
otherwise affected by, litigation which may or may not be meritorious. See "Risk
Factors -- Third-Party Claims of Infringement; Limited Protection of Proprietary
Rights."
The Company believes that due to the rapid pace of innovation within the
telecommunications industry, factors such as technological and creative skill of
personnel, knowledge and experience of management, reputation, maintenance and
support and the ability to develop and enhance systems, software products and
services are more important for establishing and maintaining a competitive
position within the industry than are patent, copyright and other legal
protections for its technology.
EMPLOYEES
As of January 31, 1997, the Company had 164 full time employees. As of such
date, there were 81 employees in the engineering department, 50 employees in the
sales and customer service area, 7 employees in the marketing department, 16
employees in the financial and administrative area and 9 employees in the
purchasing and operations area. The Company considers its employee relations to
be good. None of the Company's employees is covered by a collective bargaining
agreement.
The Company's success will also depend in part on its ability to attract
and retain qualified managerial, technical and sales and marketing personnel,
for whom competition is intense. In particular, the current availability of
qualified sales and engineering personnel is limited. The Company has recently
hired a significant number of sales and marketing personnel and the Company's
success will depend in part on the Company's ability to train and integrate new
hires into the Company's business.
PROPERTIES
The Company's headquarters are located in a 56,220 square foot leased
facility in Chelmsford, Massachusetts. This facility houses the Company's
management, marketing and sales personnel. The lease for this facility
terminates on October 31, 2003. In addition, the Company leases a sales office
in Hong Kong. The Company believes that its existing facilities are adequate to
meet its current needs and that suitable additional or alternative space will be
available on commercially reasonable terms as needed.
LEGAL MATTERS
The Company is not a party to any legal proceedings other than various
claims and lawsuits arising in the ordinary course of its business which, in the
opinion of the Company's management, are not individually or in the aggregate
material to its business.
31
<PAGE> 34
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
--------------------------------------- --- ---------------------------------------
<S> <C> <C>
Sheldon L. Dinkes...................... 51 President, Chief Executive Officer and
Director
Paul J. Gagne.......................... 43 Executive Vice President, Engineering
Roger N. Tuttle, Jr. .................. 49 Vice President, Chief Financial Officer
and Treasurer
Scott D. Ganson........................ 39 Vice President, Sales and Customer
Service
Daniel R. Poranski..................... 37 Vice President, Marketing
John A. Blaeser(1)(2).................. 55 Director
Sherman M. Wolf(1)..................... 70 Director
Alan Voulgaris(1)...................... 62 Director
Christopher W. Lynch(2)................ 46 Director
</TABLE>
- ---------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
The Board of Directors intends to appoint at least one additional director
who is not affiliated with the Company within 90 days of the consummation of
this offering.
SHELDON L. DINKES has served as President and Chief Executive Officer of
the Company since November 1990. Prior to joining the Company, Mr. Dinkes was
employed for over 12 years at Gould, Inc., a computer and electronics
manufacturing company, where he held financial and general management positions,
most recently serving as Vice President of Administration of Electronic Business
Systems. Mr. Dinkes is a Certified Public Accountant in the State of New York, a
member of the American Institute of Certified Public Accountants and the New
York State Society of Certified Public Accountants.
PAUL J. GAGNE has served as Executive Vice President, Engineering of the
Company since January 1991. Mr. Gagne joined the Company in November 1989 as
Manager of Software Development. From January 1988 to October 1989, Mr. Gagne
served as Vice President of Software Development of Softpert Systems, Ltd., a
software development company. Mr. Gagne was employed for over five years at Wang
Laboratories, where he most recently served as Department Manager, Software
Research and Development.
ROGER N. TUTTLE, JR. joined the Company in October 1994 as Vice President
and Chief Financial Officer. From January 1993 to September 1994, Mr. Tuttle
served as Chief Financial Officer of Proconics International, Inc., a supplier
of semiconductor fabrication automation equipment. From October 1991 to January
1993, Mr. Tuttle served as Chief Financial Officer of Aerodyne Products
Corporation. In February 1996, SI Automation, Inc., formerly Proconics
International, Inc., filed Chapter 11 bankruptcy proceedings, as did its
wholly-owned subsidiary, Stahl Research Laboratories, Inc., of which Mr. Tuttle
was a director.
SCOTT D. GANSON joined the Company as Vice President, Sales and Customer
Service in May 1993. From January 1992 to April 1993, Mr. Ganson worked as Vice
President of Sales for Remedy Corporation, a software development company. Prior
to 1992, Mr. Ganson was employed for over five years at Informix Software, Inc.,
a developer and distributor of relational database management software, where he
most recently served as Director of OEM Sales and Marketing.
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<PAGE> 35
DANIEL R. PORANSKI joined the Company in April 1996 as Vice President,
Marketing. From November 1994 to March 1996, Mr. Poranski served as Director,
Product Marketing with 3Com Corporation. From April 1993 to November 1994, Mr.
Poranski served as Senior Product Manager with Chipcom Corporation, which was
acquired by 3Com in September 1995. From January 1991 to March 1993, Mr.
Poranski served as a Senior Manager of Marketing with Avatar Technologies, Inc.,
a networking company.
JOHN A. BLAESER has served as a director of the Company since May 1989.
Since April 1995, Mr. Blaeser has been the President and Chief Executive Officer
of Concord Communications, a software development firm. Since January 1996, Mr.
Blaeser has served as managing general partner at EG&G Venture Management, a
venture capital fund focusing on high technology companies. Mr. Blaeser also
serves on the Boards of Datawatch Corporation, Dynaco Corporation and Net2Net
Corporation.
SHERMAN M. WOLF has served as a director of the Company since he founded
Voicetek in 1981. Mr. Wolf has served as Chairman of Phase One Development
Corporation, a privately owned investment company, since he founded the company
in July 1983. Mr. Wolf founded Great Woods Institute for the Performing Arts in
Mansfield, Massachusetts in March 1985, Harborlights entertainment facility in
Boston, Massachusetts in February 1994 and New England Express Ticketing, Inc.
("NEXT") in September 1995.
ALAN VOULGARIS has served as a director of the Company since 1986. Mr.
Voulgaris has served as the managing partner of Kearsarge Capital Fund, L.P.
since August 1986, and serves on the Boards of Dynaco Corporation and True
Basic, Inc.
CHRISTOPHER W. LYNCH has served as a director of the Company since 1989.
Mr. Lynch has served as Vice President and general partner of Pioneer Ventures
Limited Partnership since February 1986. He is also a director of Corax
Technologies Corporation, Medsafe, Inc. and Vibrint Technologies, Inc.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1996, Messrs. Blaeser, Wolf, Lynch and
Voulgaris each received options to purchase 8,000 shares of Common Stock at an
exercise price of $7.50 per share. Other than such options, the Company paid no
compensation to the directors for services rendered as a director during the
year ended December 31, 1996. The Company expects that following the closing of
this offering, its independent directors will be paid in a manner and at a level
consistent with industry practice.
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<PAGE> 36
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
for the year ended December 31, 1996 paid to the Company's Chief Executive
Officer and certain other officers whose total 1996 salary and bonus exceeded
$100,000 during such year (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITIONS SALARY BONUS COMPENSATION(1)
----------------------------------------------- -------- ------- ----------------
<S> <C> <C> <C>
Sheldon L. Dinkes.............................. $179,000 $58,500 --
President and Chief Executive Officer
Paul J. Gagne.................................. 151,500 39,545 --
Executive Vice President, Engineering
Roger N. Tuttle, Jr. .......................... 110,000 21,000 --
Chief Financial Officer, Treasurer
Scott D. Ganson................................ 149,500 33,345 --
Vice President, Sales and Customer Service
Daniel R. Poranski(2).......................... 93,750 4,687 --
Vice President, Marketing
</TABLE>
- ---------------
(1) The Company did not grant any restricted stock awards or stock appreciation
rights to the Named Executive Officers during the year ended December 31,
1996. Other annual compensation in the form of perquisites and other
personal benefits has been omitted because the aggregate amount of such
perquisites and other personal benefits constituted less than 10% of each
executive's total annual salary.
(2) Mr. Poranski commenced employment with the Company in April 1996. Mr.
Poranski's current Employment Agreement is described elsewhere in this
Prospectus. See "Management -- Employment Agreements."
The following table sets forth certain information regarding the option
grants made during the year ended December 31, 1996 to each of the Named
Executive Officers.
OPTION GRANTS IN LAST YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
------------------------------------------------------------------ STOCK PRICE
NUMBER OF APPRECIATION FOR
SECURITIES PERCENT OF TOTAL EXERCISE OR OPTION TERM (1)
UNDERLYING OPTIONS GRANTED TO BASE PRICE EXPIRATION ---------------------
NAME OPTIONS GRANTED EMPLOYEES IN YEAR PER SHARE DATE 5% 10%
- ------------------ --------------- ------------------ -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Daniel R.
Poranski........ 16,666 12.4% $ 6.00 4/11/96(2) $135,736 $216,137
</TABLE>
- ---------------
(1) Calculated according to the difference between the exercise price of the
options and the fair market value of the securities underlying the options
at December 31, 1996.
(2) Options become exercisable ratably over a four-year period.
34
<PAGE> 37
The following table sets forth information concerning exercise of stock
options and the number of options and value of unexercised options held at
December 31, 1996 by each of the Named Executive Officers. No options were
exercised during 1996 by such executives.
AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR END (#) AT YEAR END($)(1)
SHARES ACQUIRED VALUE ----------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ---------------- ------------ ------------ -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sheldon L. Dinkes...... -- -- 251,500 21,833 $2,728,012 $ 179,651
Roger N. Tuttle,
Jr. ................. -- -- 28,166 28,167 305,601 305,601
Paul J. Gagne.......... -- -- 39,666 28,167 420,269 268,474
Scott D. Ganson........ -- -- 84,500 28,166 923,162 307,714
Daniel R. Poranski..... -- -- -- 16,666 -- 83,330
</TABLE>
- ---------------
(1) Value is based on the difference between the option exercise price and an
assumed initial public offering price of $11.00 per share multiplied by the
number of shares of Common Stock underlying the option. No market existed
for the Common Stock prior to this offering.
EMPLOYMENT AGREEMENTS
Effective January 13, 1997, the Company entered into employment agreements
with each of Messrs. Dinkes, Tuttle, Ganson, Poranski and Gagne. Mr. Dinkes'
employment agreement provides for employment as President and Chief Executive
Officer at a base annual salary of $200,000. Mr. Tuttle's agreement provides for
employment as Vice President of Finance and Chief Financial Officer at a base
annual salary of $120,000. Mr. Ganson's agreement provides for employment as
Vice President, Sales and Customer Service at a base annual salary of $161,500.
Mr. Poranski's agreement provides for employment as Vice President, Marketing at
a base annual salary of $132,000. Mr. Gagne's agreement provides for employment
as Executive Vice President, Engineering at a base annual salary of $170,000. In
addition, Messrs. Dinkes, Tuttle, Poranski, Ganson and Gagne are eligible to
receive bonuses as determined by the Compensation Committee. Each of the
employment agreements extends until January 12, 2000 and provides that in the
event the Company undergoes a change of control, all options of these executive
officers to purchase Common Stock of the Company which otherwise would become
exercisable within one year following the date of the change of control shall
become exercisable upon the change of control, and the balance of such options
shall become exercisable one year earlier than provided for in the applicable
option grant.
STOCK OPTION PLANS
1992 Equity Incentive Plan
The Company's 1992 Equity Incentive Plan (the "1992 Incentive Plan") was
adopted by the Board of Directors of the Company in May 1992. The 1992 Incentive
Plan provides for the grant of stock options, stock appreciation rights,
performance shares and restricted stock awards to all employees of (including
officers who may be members of the Company's Board of Directors) and consultants
to the Company. Under the 1992 Incentive Plan, the Company could grant options
intended to qualify as incentive stock options within the meaning of Section
422A of the Internal Revenue Code of 1986, as amended (the "Code"), and options
not intended to qualify as incentive stock options. A total of 1,091,034 shares
of Common Stock were originally authorized for issuance under the 1992 Incentive
Plan. As of December 31, 1996, options to purchase a total of 721,109 shares of
Common Stock at exercise prices ranging from $0.075 to $7.50 per share were
outstanding under the 1992 Incentive Plan, of which options to purchase 459,631
shares of Common Stock were exercisable. Options outstanding expire at various
dates through January 2007.
The 1992 Incentive Plan is administered by the Compensation Committee of
the Board of Directors of the Company. Payment of the option price may be made
in cash, shares of Common Stock or a combination of cash and stock. Options are
not assignable or transferable except by will, under the laws of descent and
35
<PAGE> 38
distribution or pursuant to a qualified domestic relations order. No stock
appreciation rights, performance shares or restricted stock awards have been
granted under the 1992 Incentive Plan.
1996 Stock Option Plan
The Company's 1996 Stock Option Plan (the "1996 Option Plan") was adopted
by the Board of Directors of the Company in August 1996. The 1996 Option Plan
provides for the grant of stock options to key employees (including officers who
may be members of the Company's Board of Directors), directors who are not
employees and consultants to Company. Under the 1996 Option Plan, the Company
could grant options intended to qualify as incentive stock options within the
meaning of Section 422A of the Code, and options not intended to qualify as
incentive stock options. A total of 333,333 shares of Common Stock were
originally authorized for issuance under the 1996 Option Plan. Effective January
1, 1997 and each January 1 thereafter through January 1, 2006, the number of
shares of Common Stock authorized for issuance under the 1996 Option Plan shall
be increased cumulatively such that the number of shares of Common Stock subject
to the 1996 Option Plan shall equal 15% of the total number of fully diluted
shares of Common Stock (excluding shares of Common Stock issuable upon the
exercise of options to purchase Common Stock granted under the Company's 1996
Director Option Plan, as defined below) as of the close of business on December
31 of the preceding year. As of December 31, 1996, no options were outstanding
under the 1996 Option Plan.
The 1996 Option Plan is administered by the Compensation Committee of the
Board of Directors of the Company. Payment of the option price may be made in
cash, shares of Common Stock or a combination of cash and stock. Options are not
assignable or transferable except by will, under the laws of descent and
distribution or pursuant to a qualified domestic relations order. Options
granted to employees who subsequently cease to be employees of the Company are
exercisable only to the extent of vesting as of the date such optionee ceases to
be an employee of the Company. Options vest and become exercisable in accordance
with the terms of the option agreement evidencing the grant thereof. The
Compensation Committee has the right to accelerate the exercisability of options
granted under the 1996 Option Plan.
1996 Director Option Plan
The Company's 1996 Stock Option Plan for Non-Employee Directors and Clerk
(the "1996 Director Option Plan") was adopted by the Board of Directors of the
Company in August 1996. The 1996 Director Option Plan provides for the grant of
stock options to the Clerk and directors who are not employees of the Company.
Under the 1996 Director Option Plan, the Company could grant options not
intended to qualify as incentive stock options within the meaning of Section
422A of the Code. A total of 60,000 shares of Common Stock were originally
authorized for issuance under the 1996 Director Option Plan. As of December 31,
1996, options to purchase a total of 38,666 shares of Common Stock at an
exercise price of $7.50 were outstanding under the 1996 Option Plan, none of
which were exercisable. No options have been exercised to date and options
outstanding expire at various dates through August 2006.
The 1996 Director Option Plan is administered by the Compensation Committee
of the Board of Directors of the Company. The four non-employee directors of the
Company at the time of the adoption of the 1996 Director Option Plan and each
new non-employee directors elected prior to August 2001 shall be granted an
option to purchase 8,000 shares of Common Stock. The Clerk of the Company at the
time of the adoption of the 1996 Director Option Plan was granted an option to
purchase 6,666 shares of Common Stock. Effective August 1, 1997 and each August
1 thereafter during the term of the 1996 Plan, the number of shares of Common
Stock available for grants of stock options under this Plan shall be increased
cumulatively such that a sufficient number of shares subject to the 1996
Director Option Plan to accommodate additional annual grants of options to
purchase 7,333 to each non-employee director and 6,666 to the Clerk. Payment of
the option exercise price may be made in cash, shares of Common Stock or a
combination of cash and stock. Options are not assignable or transferable except
by will, under the laws of descent and distribution or pursuant to a qualified
domestic relations order. Options are exercisable only while the optionee
remains the Clerk or a director of the Company or for a short period of time
thereafter (unless the Clerk or director was terminated for cause, in which case
the option terminates immediately) and only to the extent of vesting as of the
date such optionee ceases to be the Clerk or a director.
36
<PAGE> 39
1997 Employee Stock Purchase Plan
The Company's 1997 Employee Stock Purchase Plan (the "1997 Purchase Plan")
is to be adopted by the Board of Directors of the Company in March 1997. The
1997 Purchase Plan will provide for the issuance of a maximum of 166,666 shares
of Common Stock pursuant to the exercise of nontransferable options granted to
participating employees of the Company. Employees who have been employed by the
Company for less than six months and those who own 5% or more of the capital
stock of the Company will not be eligible to participate in the 1997 Purchase
Plan.
The 1997 Purchase Plan will be administered by the Compensation Committee
of the Board of Directors of the Company. To participate in the 1997 Purchase
Plan, an employee must authorize the Company in writing to deduct an amount (not
less than 1% nor more than 10% of a participant's base compensation) from his or
her pay commencing on January 1 and July 1 of each year (each a "Purchase
Period"). The first Purchase Period is expected to commence on July 1, 1997. On
the first day of each Purchase Period, the Company grants to each participating
employee an option to purchase up to 1,333 shares of Common Stock. The exercise
price for the option for each Purchase Period is the lesser of 85% of the fair
market value of the Common Stock on the first or last business day of the
Purchase Period. The fair market value will be the closing selling price of the
Common Stock as quoted on the Nasdaq National Market. If an employee is not a
participant on the last day of the Purchase Period, such employee is not
entitled to exercise his or her option, and the amount of his or her accumulated
payroll deduction will be refunded to the employee. An employee's rights under
the 1997 Purchase Plan will terminate upon his or her voluntary withdrawal from
the Plan at any time or upon termination of employment.
Common Stock for the 1997 Purchase Plan will be made available either from
authorized but unissued shares of Common Stock or from shares of Common Stock
reacquired by the Company, including shares repurchased in the open market.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was established on August 1, 1996 and currently
consists of John A. Blaeser and Sherman M. Wolf. Mr. Dinkes participated in
deliberations of the Compensation Committee regarding compensation of other
executive officers, but did not participate in deliberations relating to his own
compensation.
37
<PAGE> 40
CERTAIN TRANSACTIONS
In 1995, the Company sold an interactive communications system to NEXT for
an aggregate purchase price of approximately $597,000. During 1996, NEXT
purchased additional components for such system for an aggregate of $16,000. As
of January 1, 1997, NEXT has entered into an agreement with the Company pursuant
to which the Company will provide certain on-going maintenance to NEXT for
approximately $57,000. The founder and a stockholder of NEXT is Sherman M. Wolf,
who is a director of the Company.
38
<PAGE> 41
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock prior to and after giving effect to this
offering by (i) each person known by the Company to be the beneficial owner of
more than 5% of the outstanding shares of Common Stock, (ii) each of the
Company's directors and executive officers, (iii) each Selling Stockholder and
(iv) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES OWNED PRIOR SHARES OWNED AFTER
TO OFFERING(1) THE OFFERING(1)
-------------------- NUMBER OF --------------------
BENEFICIAL OWNER(1) NUMBER PERCENT SHARES OFFERED NUMBER PERCENT
- ------------------------------------- --------- -------- --------------- --------- --------
<S> <C> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
- -------------------------------------
John A. Blaeser(2)................... 2,785,587 55.4 276,684 2,508,903 35.7
Christopher W. Lynch(3).............. 576,098 11.5 31,500 544,598 7.7
Alan Voulgaris(4).................... 483,113 9.6 45,000 438,113 6.2
Sherman M. Wolf(5)................... 310,592 6.2 -- 310,592 4.4
Sheldon L. Dinkes(6)................. 251,500 4.8 -- 251,500 3.5
Paul J. Gagne(7)..................... 131,166 2.6 -- 131,166 1.9
Scott D. Ganson(8)................... 84,500 1.7 -- 84,500 1.2
Roger N. Tuttle, Jr.(9).............. 28,166 * -- 28,166 *
Daniel R. Poranski................... -- -- -- -- --
SELLING AND 5% STOCKHOLDERS:
- -------------------------------------
EG&G Venture Partners
c/o Concord Communications
33 Boston Post Road West
Marlborough, MA 01752.............. 2,785,587 55.4 276,684 2,508,903 35.7
Kearsarge Capital Fund, L.P.
41 Brook Street
Manchester, NH 03104............... 483,113 9.6 45,000 438,113 7.7
Pioneer Ventures Limited Partnership
60 State Street
Boston, MA 02109................... 291,623 5.8 31,500 260,123 3.7
Massachusetts Technology Development
Corporation
148 State Street
Boston, MA 02109................... 239,042 4.8 60,000 179,042 2.5
Geneva Partners
c/o Pioneer Capital Corporation
60 State Street
Boston, MA 02109................... 127,900 2.5 21,500 106,400 1.5
NYNEX Development Company
c/o NYNEX Treasury
1095 Avenue of the Americas, Rm
3922
New York, NY 10036................. 65,316 1.3 65,316 -- --
All directors and executive officers
as a group (9 persons)............. 4,650,722 85.6 353,184 4,297,538 57.8
</TABLE>
- ---------------
* Less than one percent
39
<PAGE> 42
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission (the "Commission") and includes general
voting power or investment power with respect to securities. Shares of
Common Stock subject to options and warrants currently exercisable or
exercisable within 60 days of January 31, 1997 are deemed outstanding for
computing the percentage of the person holding such options, but are not
deemed outstanding for computing the percentage of any other person. Except
as otherwise specified below, the persons named in the table above have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them. Unless otherwise indicated, the
address of each of the beneficial owners identified is 19 Alpha Road,
Chelmsford, MA 01824.
(2) Mr. Blaeser is the General Partner of EG&G Venture Partners and accordingly
may be deemed to be the beneficial owner of the shares held by EG&G Venture
Partners. Mr. Blaeser disclaims such beneficial ownership. Mr. Blaeser's
address is Concord Communications, 33 Boston Post Road West, Marlborough,
MA 01752.
(3) Mr. Lynch is the Vice President of Pioneer Capital Corporation which has
entered into a management agreement with Pioneer Ventures Limited
Partnership, a partner of LPP Partners and a partner of Corning Partners II
and accordingly may be deemed to be the beneficial owner of the shares held
by each of Pioneer, LPP Partners and Corning Partners II. Mr. Lynch
disclaims such beneficial ownership. Mr. Lynch's address is Pioneer
Capital, 60 State Street, Boston, MA 02109.
(4) Mr. Voulgaris is the General Partner of Kearsarge Capital Fund, L.P. and
accordingly may be deemed to be the beneficial owner of the shares held by
Kearsage. Mr. Voulgaris disclaims such beneficial ownership. Mr. Voulgaris'
address is Kearsarge Capital Fund, 41 Brook Street, Manchester, NH 03104.
(5) Represents shares owned by Mr. Wolf's three children, Scott Wolf, Julie
Wolf and Steven Wolf. Mr. Wolf disclaims beneficial ownership of such
shares. Mr. Wolf's address is Phase One Development, 31 Msgr. O'Brien
Highway, Cambridge, MA 02141.
(6) Includes 251,500 shares subject to stock options exercisable within 60 days
of December 31, 1996.
(7) Includes 39,666 shares subject to stock options exercisable within 60 days
of December 31, 1996.
(8) Includes 84,500 shares subject to stock options exercisable within 60 days
of December 31, 1996.
(9) Includes 28,166 shares subject to stock options exercisable within 60 days
of December 31, 1996.
40
<PAGE> 43
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of 30,000,000 shares of
Common Stock, $.01 par value per share, and 10,000,000 shares of preferred
stock, $.01 par value per share. As of December 31, 1996, an aggregate of
450,916 shares of Common Stock were held of record by 73 stockholders, and
6,865,274 shares of Preferred Stock were outstanding and held of record by
twelve stockholders. All such shares of Preferred Stock will be converted into
Common Stock upon the completion of this offering. Copies of the proposed
Articles of Organization and the By-laws have been filed as exhibits to the
Registration Statement and are incorporated by reference herein.
COMMON STOCK
All outstanding shares of Common Stock are, and the Common Stock offered
hereby will be, fully paid and nonassessable. The holders of Common Stock are
entitled to one vote for each share held of record on all matters voted upon by
stockholders and may not cumulate votes. Subject to the rights of holders of any
future series of undesignated preferred stock which may be designated, each
share of the outstanding Common Stock is entitled to participate equally in any
distribution of net assets made to the stockholders in the liquidation,
dissolution or winding up of the Company and is entitled to participate equally
in dividends as and when declared by the Board of Directors. There are no
redemption, sinking fund, conversion or preemptive rights with respect to the
shares of Common Stock. All shares of Common Stock have equal rights and
preferences.
PREFERRED STOCK
After the completion of this offering, the Board of Directors will have the
authority, without further stockholder approval, to issue 1,000,000 shares of
preferred stock where defined in one or more series and to fix the relative
rights, preferences, privileges, qualifications, limitations and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting any series or the designation of such series. The
issuance of preferred stock, while potentially providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
have the effect of delaying, deferring or preventing a change in control of the
Company, may discourage bids for the Common Stock at a premium over the market
price of the Common Stock and may adversely affect the market price of, and the
voting and other rights of the holders of the Common Stock. No shares of
preferred stock will be outstanding immediately following the consummation of
this offering. The Company has no present plans to issue any shares of preferred
stock. See "Risk Factors -- Anti-Takeover Provisions; Possible Issuance of
Preferred Stock."
CERTAIN ARTICLES OF ORGANIZATION, BY-LAW AND STATUTORY PROVISIONS AFFECTING
STOCKHOLDERS
Classified Board and Other Matters. The Board of Directors will be divided
into three classes, each of which, after a transitional period, will serve for
three years, with one class being elected each year. Under the Massachusetts
General Laws, in the case of a corporation having a classified Board,
stockholders may remove a director only for cause. For the purpose of director
nominations, the By-laws require that stockholders provide the Clerk of the
Company with notice 60 days prior to the date of an annual meeting or special
meeting in lieu of an annual meeting and within 10 days following notice of a
special meeting not in lieu of an annual meeting. The Articles of Organization
provide that special meetings of stockholders of the Company may be called only
by the Board of Directors, the Chairman of the Board of Directors, the President
or 30% in interest of the stockholders. The Articles of Organization, as well as
applicable provisions of the Massachusetts General Laws, provide that no action
required or permitted to be taken at any annual or special meeting of the
stockholders of the Company may be taken without a meeting, unless the unanimous
consent of stockholders entitled to vote thereon is obtained. The affirmative
vote of the holders of at least 80% of the combined voting power of then
outstanding voting stock of the Company will be required to alter, amend or
repeal the foregoing provisions that might diminish the likelihood that a
potential acquiror would make an offer for the Common Stock, impede a
transaction favorable to the interest of the stockholders or increase the
difficulty of removing Board of Directors or management. See "Risk
Factors -- Anti-Takeover Provisions; Possible Issuance of Preferred Stock."
42
<PAGE> 44
Chapters 110D and 110F of Massachusetts General Laws. The Company is
subject to the provisions of Chapter 110F of the Massachusetts General Laws, an
anti-takeover law. In general, this statute prohibits a publicly held
Massachusetts corporation with sufficient ties to Massachusetts from engaging in
a "business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person becomes an
interested stockholder, unless either (i) the interested stockholder obtains the
approval of the board of directors prior to becoming an interested stockholder,
(ii) the interested stockholder acquires 90% of the outstanding voting stock of
the corporation (excluding shares held by certain affiliates of the corporation)
at the time he becomes an interested stockholder or (iii) the business
combination is approved by both the board of directors and two-thirds of the
outstanding voting stock of the corporation (excluding shares held by the
interested stockholder). An "interested stockholder" is a person who, together
with affiliates and associates, owns (or at any time within the prior three
years did own) 5% or more of the corporation's voting stock. A "business
combination" includes mergers, stock and asset sales and other transactions
resulting in a financial benefit to the stockholder. The Company may at any time
amend its Articles of Organization or By-laws to elect not to be governed by
Chapter 110F, by vote of the holders of a majority of its voting stock, but such
an amendment would not be effective for twelve months and would not apply to a
business combination with any person who became an interested stockholder prior
to the date of the amendment.
The Company is also subject to the provisions of Chapter 110D of the
Massachusetts General Laws, entitled "Regulation of Control Share Acquisitions."
This statute provides, in general, that any stockholder who acquires 20% or more
of the outstanding voting stock of a corporation subject to this statute may not
vote that stock unless the stockholders of the corporation so authorize. In
addition, Chapter 110D permits a corporation to provide in its articles of
organization or by-laws that the corporation may redeem (for fair value) all the
shares thereafter acquired in a control share acquisition if voting rights for
those shares were not authorized by the stockholders or if no control share
acquisition statement was delivered. The By-laws include a provision which
permits the Company to effect such redemptions. See "Risk Factors."
Directors Liability. The Articles of Organization provide that no director
shall be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for (i) any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) acts or
omissions which have been adjudicated not to have been in good faith or to have
involved intentional misconduct, (iii) pursuant to Chapter 156B, Section 61 or
Section 62 of the Massachusetts General Law or (iv) any transaction from which
such director derives improper personal benefit. The effect of this provision is
to eliminate the rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to recover monetary
damages against a director for breach of the fiduciary duty of care as a
director (including breaches resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (i) through (iv) above.
The limitations summarized above, however, do not affect the ability of the
Company or its stockholders to seek non-monetary based remedies, such as an
injunction or rescission, against a director for breach of his fiduciary duty
nor would such limitations limit liability under the federal securities laws.
The Articles of Organization provide that the Company shall, to the full extent
permitted by the Massachusetts General Laws as currently in effect, indemnify
and advance expenses to each of its currently acting and former directors,
officers, employees and agents arising in connection with their acting in such
capacities.
LISTING
Application has been made for quotation of the Common Stock on the Nasdaq
National Market under the symbol VCTK.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar of the Common Stock is Boston EquiServe.
43
<PAGE> 45
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have 7,028,885 shares of
Common Stock outstanding (assuming no exercise of outstanding options). Of these
shares, the 2,500,000 shares sold in this offering will be freely tradable
without restriction or further registration under the Securities Act of 1933, as
amended (the "Securities Act"), except that any shares purchased by "affiliates"
of the Company, as that term is defined in Rule 144 ("Rule 144") under the
Securities Act ("Affiliates"), may generally only be sold in compliance with the
limitations of Rule 144 described below.
The remaining shares of Common Stock outstanding upon completion of this
offering will be "restricted securities" as that term is defined in Rule 144
under the Securities Act ("Restricted Shares"). Restricted Shares may be sold in
the public market only if registered or if they qualify for an exemption from
registration under Rules 144 or 701 promulgated under the Securities Act, which
are summarized below. Sales of the Restricted Shares in the public market, or
the availability of such shares for sale, could adversely affect the market
price of the Common Stock.
The officers, directors and certain other holders of Common Stock have
entered into contractual "lock-up" agreements providing that they will not
offer, sell, contract to sell or grant any option to purchase or otherwise
dispose of the shares of Common Stock of the Company or any securities
exercisable for or convertible into the Company's Common Stock owned by them for
a period of 180 days after the effective date of this offering without the prior
written consent of Oppenheimer & Co., Inc. As a result of these contractual
restrictions, notwithstanding possible earlier eligibility for sale under the
provisions of Rules 144 and 701, shares subject to lock-up agreements will
generally not be saleable until such agreements expire. Beginning 180 days after
the date of this Prospectus, approximately 4,528,885 shares will be available
for immediate sale in the public market, subject in some cases to the volume and
other restrictions of Rule 144 or Rule 701 under the Securities Act.
SALES OF RESTRICTED SHARES
In general, under Rule 144 as currently in effect, beginning 90 days after
the effective date of this offering, a person (or persons whose shares are
aggregated) who has beneficially owned Restricted Shares for at least two years
(including the holding period of any prior owner except an affiliate) would be
entitled to sell within any three-month period a number of shares that does not
exceed the greater of (i) one percent of the number of shares of Common Stock
then outstanding (which will equal approximately 70,289 shares immediately after
this offering) or (ii) the average weekly trading volume of the Common Stock
during the four calendar weeks preceding the filing of a Form 144 with respect
to such sale. Sales under Rule 144 are also subject to certain manner of sale
provisions and notice requirements and to the availability of current public
information about the Company. Under Rule 144(k), a person who is not deemed to
have been an affiliate of the Company at any time during the 90 days preceding a
sale, and who has beneficially owned the shares proposed to be sold for at least
three years (including the holding period of any prior owner except an
affiliate), is entitled to sell such shares without complying with the manner of
sale, public information, volume limitation or notice provisions of Rule 144.
Approximately 6,262 shares of Common Stock (not subject to lock-up agreements)
will be eligible for sale in the public market immediately upon the effective
date of this offering in reliance of Rule 144(k).
OPTIONS
As of December 31, 1996, options to purchase a total of 759,775 shares of
Common Stock were outstanding, of which options to purchase 459,631 shares of
Common Stock were then exercisable. Of the total shares issuable pursuant to
such options, 431,998 are subject to lock-up agreements. An additional 563,929
shares of Common Stock are available for future grants under the Company's stock
option and employee stock purchase plans. See "Management--Stock Option Plans."
In general, under Rule 701 as currently in effect, beginning 90 days after
the effective date of this offering, certain shares issued upon exercise of
options granted by the Company prior to the date of this Prospectus will also be
available for sale in the public market. Any employee, officer or director of or
consultant to the Company who purchased his or her shares pursuant to a written
compensatory plan or
44
<PAGE> 46
contract may be entitled to rely on the resale provisions of Rule 701. Rule 701
permits affiliates to sell their Rule 701 shares under Rule 144 without
complying with the holding period requirements of Rule 144. Rule 701 further
provides that non-affiliates may sell such shares in reliance on Rule 144
without having to comply with the public information, volume limitation or
notice provisions of Rule 144. In both cases, a holder of Rule 701 shares is
required to wait until 90 days after the date of this Prospectus before selling
such shares.
The Company intends to file one or more registration statements on Form S-8
under the Securities Act to register all shares of Common Stock subject to
outstanding stock options and Common Stock issuable pursuant to the Company's
stock and employee stock purchase plans that do not qualify for an exemption
under Rule 701 from the registration requirements of the Securities Act. The
Company expects to file these registration statements as soon as practicable
after the date of this Prospectus, and such registration statements are expected
to become effective upon filing. Shares covered by these registration statements
will thereupon be eligible for sale in the public markets, subject to the
lock-up agreements, to the extent applicable.
LOCK-UP AGREEMENTS
The Company, certain holders and all executive officers and directors of
the Company, who in the aggregate hold 4,468,571 shares of Common Stock and
options to purchase 431,998 shares of Common Stock have agreed, pursuant to the
lock-up agreements, not to directly or indirectly, without the prior written
consent of Oppenheimer & Co., Inc., offer, sell, offer to sell, contract to
sell, or otherwise dispose of any shares of Common Stock beneficially owned by
them for a period of 180 days after the date of this Prospectus.
REGISTRATION RIGHTS
The holders of an aggregate of 4,193,741 shares of Common Stock will be
entitled to certain rights with respect to the registration of such shares under
the Securities Act. Under the terms of certain registration rights agreements,
if the Company proposes to register any of its securities under the Securities
Act, either for its own account or for the account of other securityholders
exercising registration rights, such holders are entitled to notice of such
registration and are entitled to include such shares of Common Stock in the
registration. The rights are subject to certain conditions and limitations,
among them the right of the underwriters of an offering subject to the
registration to limit the number of shares included in such registration.
Holders of Common Stock benefiting from these rights may also require the
Company to file a registration statement under the Securities Act at its expense
with respect to their shares of Common Stock, and the Company is required to use
its best efforts to effect such registration, subject to certain conditions and
limitations. Furthermore, such holders may require the Company to file
additional registration statements on Form S-3 subject to certain conditions and
limitations. In connection with this offering, the rights of such holders to
have shares of Common Stock registered under the Securities Act as part of this
offering were duly waived pursuant to the terms of the agreements providing for
such registration rights.
No predictions can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the
prevailing market price for the Common Stock. Sales of substantial amounts of
Common Stock, or the perception that such sales could occur, could adversely
affect prevailing market prices for the Common Stock and could impair the
Company's future ability to obtain capital through an offering of equity
securities.
44
<PAGE> 47
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") among the Company, the Selling Stockholders and
Oppenheimer & Co., Inc. and First Albany Corporation, as representatives (the
"Representatives") of the Underwriters of this offering, the Company and the
Selling Stockholders have agreed to sell to the Underwriters, and the
Underwriters have severally agreed to purchase from the Company and the Selling
Stockholders, the number of shares of Common Stock set forth opposite their
names below:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
------------------------------------------------------------------ ----------------
<S> <C>
Oppenheimer & Co., Inc............................................
First Albany Corporation..........................................
---------
Total........................................................ 2,500,000
=========
</TABLE>
The Underwriters propose to offer the shares of Common Stock directly to
the public initially at the public offering price set forth on the cover page of
this Prospectus and at such price less a concession of not in excess of $
per share to certain securities dealers of which a concession not in excess of
$ per share may be reallowed to certain other securities dealers. After
the shares are released for sale to the public, the public offering price,
allowances, concessions and other selling terms may be changed by the
Representatives of the Underwriters.
The Underwriting Agreement provides that the obligations of the
Underwriters to purchase Common Stock are subject to certain conditions,
including that if any shares of Common Stock are purchased by the Underwriters
pursuant to the Underwriting Agreement, all such shares must be so purchased.
The Selling Stockholders have granted an option to the Underwriters,
exercisable within 30 days after the date of this Prospectus, to purchase from
the Selling Stockholders up to an aggregate of 375,000 additional shares to
cover over-allotments, if any, at the initial public offering price less the
underwriting discount set forth on the cover page of this Prospectus. If the
Underwriters exercise their over-allotment option to purchase any of the
additional 375,000 shares of Common Stock, each of the Underwriters has
severally agreed, subject to certain conditions, to purchase approximately the
same percentage as the number of shares to be purchased by each of them bears to
the 2,500,000 shares of Common Stock offered hereby. The Selling Stockholders
will be obligated, pursuant to the over-allotment option, to sell Common Stock
to the Underwriters to the extent such over-allotment option is exercised.
Except for certain shares being sold by the Selling Stockholders in
connection with this offering, the Company's officers, directors and certain
stockholders (including all of the Selling Stockholders) have agreed not to
offer, sell, contract to sell, pledge or grant any option to purchase or
otherwise dispose of any shares of Common Stock, or any securities convertible
into or exercisable or exchangeable for Common Stock or any rights to acquire
Common Stock of the Company, for a period of 180 days after the date of this
Prospectus without the prior written consent of Oppenheimer & Co., Inc. Subject
to certain limited exceptions, the Company has also agreed not to offer, sell,
contract to sell or otherwise dispose of any shares of Common
45
<PAGE> 48
Stock, or any securities convertible into or exercisable or exchangeable for
Common Stock or any rights to acquire Common Stock (other than shares issuable
upon exercise of outstanding options), for a period of 180 days after the date
of this Prospectus, without the prior written consent of Oppenheimer & Co., Inc.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to certain payments the Underwriters may be
required to make in respect thereof.
The Representatives do not intend to confirm sales of the shares of Common
Stock to any account over which they exercise discretionary authority.
Prior to this offering, there has been no public market for the Common
Stock. There can be no assurance that an active trading market will develop for
the Common Stock or as to the price at which the Common Stock may trade in the
public market from time to time subsequent to the offering made hereby. The
initial price to the public for the Common Stock offered hereby will be
determined by negotiation among the Company and the Representatives. Among the
factors to be considered in determining the initial price to the public are (i)
the history of and the prospects for the industry in which the Company competes,
(ii) the ability of the Company's management, (iii) the past and present
operations of the Company, (iv) the historical results of operations of the
Company, (v) the prospects for future earnings and business potential of the
Company, (vi) the general condition of the securities markets at the time of
this offering, (vii) the recent market prices of securities of generally
comparable companies, (viii) the market capitalizations and stages of
development of other companies which the Company and the Representatives believe
to be comparable to the Company, and (ix) other factors deemed to be relevant.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Hutchins, Wheeler & Dittmar, A Professional Corporation,
Boston, Massachusetts. Anthony J. Medaglia, Jr., a Stockholder of Hutchins,
Wheeler & Dittmar and the Clerk of the Company, holds options to purchase 6,666
shares of Common Stock, none of which is currently exercisable. Certain legal
matters relating to the offering will be passed upon for the Underwriters by
Hale and Dorr LLP, Boston, Massachusetts.
EXPERTS
The balance sheets as of December 31, 1995 and 1996 and the statements of
operations, stockholders' deficit and cash flows for each of the three years in
the period ended December 31, 1996 included in this Prospectus have been
included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Common Stock offered hereby. This Prospectus, which constitutes a
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto. For
further information with respect to the Company and the Common Stock offered
hereby, reference is hereby made to such Registration Statement, exhibits and
schedules filed as part of the Registration Statement. Statements contained in
this Prospectus as to the contents of any contract or any other document
referred to are not necessarily complete and, in each instance, reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement or such other document. Each such statement is qualified
in all respects by such reference to such exhibit.
Upon completion of the offering, the Company will be subject to the
informational and reporting requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and in accordance
47
<PAGE> 49
therewith, will be required to file reports, proxy and information statements,
and other information with the Commission. Such reports, proxy statements and
other information, as well as the Registration Statement of which this
Prospectus is a part and the exhibits and schedules thereto, can be inspected
and copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at
the following regional offices: 7 World Trade Center, Suite 1300, New York, New
York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials also can be obtained from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Electronic reports, proxy and information
statements, and other information filed through the Commission's Electronic Data
Gathering, Analysis and Retrieval system, are publicly available through the
Commission's Web site (http://www.sec.gov).
47
<PAGE> 50
VOICETEK CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Accountants..................................................... F-2
Balance Sheets as of December 31, 1995 and 1996....................................... F-3
Statements of Operations for the years ended December 31, 1994, 1995 and 1996......... F-4
Statements of Stockholders' Deficit for the years ended December 31, 1994, 1995 and
1996................................................................................ F-5
Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996......... F-6
Notes to Financial Statements......................................................... F-7
</TABLE>
F-1
<PAGE> 51
This is the form of the report that we expect to issue upon the
effectiveness of the reverse stock split discussed in Note 11 of Notes to
Financial Statements.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Voicetek Corporation:
We have audited the accompanying balance sheets of Voicetek Corporation as
of December 31, 1995 and 1996, and the related statements of operations,
stockholders' deficit, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Voicetek Corporation as of
December 31, 1995 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
Boston, Massachusetts
February 3, 1997, except as to
the information presented in Note 11,
for which the date is February 12, 1997
F-2
<PAGE> 52
VOICETEK CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, DECEMBER
------------------- 31,
1995 1996 1996
-------- -------- -----------
(UNAUDITED)
(IN THOUSANDS) (NOTE 2)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 162 $ -- $ --
Accounts receivable, less allowances of $45 in 1995 and
$70
in 1996.............................................. 3,518 7,460 7,460
Unbilled accounts receivable........................... 508 440 440
Inventories............................................ 874 1,188 1,188
Other current assets................................... 164 388 388
Deferred taxes......................................... 1,200 2,728 2,728
-------- -------- --------
Total current assets.............................. 6,426 12,204 12,204
Property and equipment, net................................. 845 1,900 1,900
Deferred taxes.............................................. -- 1,886 1,886
Intangible asset............................................ -- 25 25
-------- -------- --------
Total assets...................................... $ 7,271 $ 16,015 $ 16,015
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Short-term debt........................................ $ 925 $ 2,841 $ 2,841
Notes payable -- related party......................... 104 -- --
Accounts payable....................................... 1,046 1,705 1,705
Accrued expenses....................................... 828 2,300 2,300
Deferred revenue....................................... 420 762 762
-------- -------- --------
Total current liabilities......................... 3,323 7,608 7,608
Long-term debt.............................................. -- 236 236
Redeemable convertible preferred stock, at liquidation
preference................................................ 10,201 11,297 --
Commitments and contingencies (Note 8)
Common stock, $.01 par value; 20,000,000 shares authorized,
380,698, 450,916 and 5,027,760 shares issued and
outstanding at December 31, 1995 and 1996 and on a pro
forma basis,
respectively.............................................. 4 5 50
Additional paid-in capital.................................. 8,024 7,087 18,339
Accumulated deficit......................................... (14,281) (10,218) (10,218)
-------- -------- --------
Total liabilities and stockholders' equity
(deficit)....................................... $ 7,271 $ 16,015 $ 16,015
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 53
VOICETEK CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Revenues:
Systems.................................................. $ 7,746 $11,477 $16,239
Services................................................. 2,310 4,244 5,862
------- ------- -------
Total revenues...................................... 10,056 15,721 22,101
Cost of revenues:
Systems.................................................. 2,393 3,704 5,183
Services................................................. 1,276 2,234 3,161
------- ------- -------
Total cost of revenues.............................. 3,669 5,938 8,344
------- ------- -------
Gross profit.................................................. 6,387 9,783 13,757
Operating expenses:
Research and development................................. 2,340 3,361 5,771
Sales and marketing...................................... 2,163 3,806 5,435
General and administrative............................... 998 1,315 1,629
------- ------- -------
Total operating expenses............................ 5,501 8,482 12,835
------- ------- -------
Income from operations........................................ 886 1,301 922
Interest expense.............................................. (18) (83) (229)
Interest income............................................... 9 13 11
------- ------- -------
Income before provision for (benefit from) income taxes....... 877 1,231 704
Provision for (benefit from) income taxes..................... 23 (1,161) (3,359)
------- ------- -------
Net income.................................................... 854 2,392 4,063
Accretion of redeemable convertible preferred stock to
redemption value............................................ 410 996 1,096
------- ------- -------
Net income available to common stockholders................... $ 444 $ 1,396 $ 2,967
======= ======= =======
Net income per share -- historical basis (Note 2)
Pro forma net income per share................................ $ 0.72
=======
Pro forma weighted average shares outstanding................. 5,680
=======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 54
VOICETEK CORPORATION
STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
---------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT DEFICIT
------ ------- ---------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993................. 143 $ 1 $9,415 $ (17,527) $(8,111)
Stock options exercised...................... 54 1 3 4
Accretion of redeemable convertible preferred
stock to redemption value.................. (410) (410)
Net income................................... 854 854
--- --- ------ -------- -------
Balance at December 31, 1994................. 197 2 9,008 (16,673) (7,663)
Stock options exercised...................... 184 2 12 14
Accretion of redeemable convertible preferred
stock to redemption value.................. (996) (996)
Net income................................... 2,392 2,392
--- --- ------ -------- -------
Balance at December 31, 1995................. 381 4 8,024 (14,281) (6,253)
Stock options exercised...................... 50 1 5 6
Conversion of stockholder note payable....... 20 154 154
Accretion of redeemable convertible preferred
stock to redemption value.................. (1,096) (1,096)
Net income................................... 4,063 4,063
--- --- ------ -------- -------
Balance at December 31, 1996................. 451 $ 5 $7,087 $ (10,218) $(3,126)
=== === ====== ======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 55
VOICETEK CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1994 1995 1996
------ ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 854 $ 2,392 $ 4,063
Adjustments to reconcile net income to net cash used for
operating activities:
Depreciation and amortization of property and
equipment.......................................... 295 386 716
Amortization of capitalized software development
costs.............................................. 50 -- --
Accrued interest converted into common stock......... -- -- 19
Deferred taxes....................................... -- (1,200) (3,414)
Changes in operating assets and liabilities:
Accounts receivable............................. (716) (1,580) (3,942)
Inventories..................................... (94) (602) (314)
Unbilled accounts receivable.................... -- (508) 68
Other current assets............................ (29) (93) (224)
Accounts payable................................ (14) 409 659
Accrued expenses................................ 155 41 1,503
Deferred revenue................................ 382 (83) 342
------ ------- -------
Net cash provided by (used for) operating
activities............................... 883 (838) (524)
------ ------- -------
Cash flows from investing activities:
Additions to property and equipment....................... (289) (712) (1,771)
Acquisition of intangible asset........................... -- -- (25)
------ ------- -------
Net cash used in investing activities...... (289) (712) (1,796)
------ ------- -------
Cash flows from financing activities:
Proceeds from short-term debt............................. -- 925 1,916
Proceeds from long-term debt.............................. -- -- 236
Proceeds from issuance of convertible equity instrument... 75 -- --
Proceeds from exercise of stock options................... 4 14 6
------ ------- -------
Net cash provided by financing
activities............................... 79 939 2,158
------ ------- -------
Net change in cash and cash equivalents........................ 673 (611) (162)
Cash and cash equivalents, beginning of year................... 100 773 162
------ ------- -------
Cash and cash equivalents, end of year......................... $ 773 $ 162 --
====== ======= =======
Supplemental disclosure of cash flow information:
Interest paid............................................. $ 8 $ 64 $ 217
Taxes paid................................................ -- $ 89 $ 50
Supplemental disclosure of noncash financing transactions:
Equipment acquired under capital leases................... $ 16 $ 163 --
Conversion of related party note payable to common
stock................................................... -- -- $ 154
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE> 56
VOICETEK CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND OPERATIONS:
Voicetek Corporation (a Massachusetts corporation) (the "Company") was
incorporated in 1981 and operates in one business segment. The Company develops,
markets and supports interactive communications systems. The Company's principal
market and its operations are located in the United States.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
RISKS AND UNCERTAINTIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables.
Concentrations of credit risk with respect to trade receivables include
receivables from significant customers. The Company's customers are concentrated
in one industry segment, the telecommunications industry, and, historically, a
significant portion of the Company's revenues have been to a limited number of
customers within this industry. The Company does not require collateral or other
security to support customer receivables. The Company maintains reserves for
credit losses and such losses have been within management's expectations. The
Company's allowances amounted to $25,000, $45,000 and $70,000 at December 31,
1994, 1995 and 1996, respectively. The provision charged to the Statement of
Operations was $34,000, $41,000 and $39,000 in 1994, 1995 and 1996,
respectively, and write-offs against the allowances were $34,000, $21,000 and
$14,000 in 1994, 1995 and 1996, respectively.
CASH AND CASH EQUIVALENTS
The Company's policy is to include amounts as cash and cash equivalents
that are short-term, highly liquid investments purchased with a maturity at
issuance of three months or less.
INVENTORIES
Inventories, consisting primarily of purchased components, include
materials, labor and overhead, are stated at the lower of cost or market. Cost
is determined using the first-in, first-out (FIFO) method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method based on the following estimated useful lives:
<TABLE>
<S> <C>
Equipment...................... 3 years
Furniture and fixtures......... 3 years
Leasehold improvements......... The shorter of the lease term or the life of the asset
</TABLE>
Expenditures for major improvements which substantially increase the useful
lives of assets are capitalized. Repair and maintenance costs are expensed as
incurred. When assets are sold or retired, the related cost and accumulated
depreciation are removed from the accounts and any gain or loss is included in
results of operations.
RESEARCH AND DEVELOPMENT AND SOFTWARE DEVELOPMENT COSTS
Costs incurred prior to the establishment of technological feasibility are
charged to research and development expense. Based on the Company's product
development process, technological feasibility is established upon completion of
a working model. Software development costs incurred subsequent to the
F-7
<PAGE> 57
VOICETEK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
establishment of technological feasibility and for significant product
enhancements are capitalized until the product is available for general release
to customers, and amortized to cost of revenues. Amortization of capitalized
software costs is recognized on the greater of the straight-line basis over the
estimated economic lives of the related products, or the ratio of current gross
revenues to total current and expected future gross revenues of the related
products. The Company did not capitalize any software development costs during
1994, 1995 and 1996 because the amounts eligible for capitalization were
immaterial.
REVENUE RECOGNITION
The Company recognizes product and license revenues upon execution of a
contract and shipment to customers provided that no significant vendor
obligations remain outstanding and collection of the resulting receivable is
deemed probable by management. If insignificant vendor obligations remain after
shipment of the product, the Company accrues for the estimated costs of such
obligations. Additionally, the Company accrues for warranty costs upon shipment.
Revenue from post-customer support (maintenance) contracts is recognized ratably
over the life of the contract, generally one year. Revenue from training and
consulting is recognized as the services are provided. For certain contracts
eligible under AICPA Statement of Position No. 81-1, revenue is recognized using
the percentage-of-completion accounting method based upon an efforts-expended
method. In all cases, changes to total estimated costs and anticipated losses,
if any, are recognized in the period in which determined. The
percentage-of-completion method requires estimates of costs to complete which
may differ from actual costs.
UNBILLED ACCOUNTS RECEIVABLE
Unbilled accounts receivable represents revenue recognized for contracts
accounted for under the percentage-of-completion method which had not been
billed at the balance sheet date. All amounts are expected to be collected
within one year. There are no amounts included in accounts receivable or
unbilled accounts receivable which represent retainages.
INCOME TAXES
The Company provides for income taxes using the liability method whereby
recognition of deferred tax liabilities and assets is based on expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement basis of
assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. The Company provides for a valuation
allowance against net deferred tax assets if, based upon the available evidence,
it is more likely than not that some or all of the deferred tax assets will not
be realized.
UNAUDITED PRO FORMA BALANCE SHEET
All outstanding shares of Preferred Stock shall automatically convert to
shares of common stock upon the closing of an underwritten public offering of
common stock on a "firm commitment" basis pursuant to a registration statement
on Form S-1 filed under the Securities Act of 1933, as amended, provided that
specified minimum per share and gross proceeds are received by the Company. The
unaudited pro forma balance sheet as of December 31, 1996 has been prepared
assuming the conversion of all the outstanding shares of Preferred Stock into
4,576,844 shares of common stock.
COMPUTATION OF INCOME PER SHARE
Net income per share is computed based upon the weighted average number of
common shares and common equivalent shares outstanding. Common equivalent shares
are included in per share calculations where the effect of their inclusion would
be dilutive. The preferred stock outstanding is not considered a common stock
equivalent based on its effective yield when issued. In accordance with the
Securities and
F-8
<PAGE> 58
VOICETEK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Exchange Commission Staff Accounting Bulletin No. 83, all common and common
equivalent shares (including stock options) issued during the twelve-month
period prior to the initial filing date in February 1997 of the Registration
Statement relating to the Company's initial public offering have been included
in the calculation as if they were outstanding for all periods presented, using
the treasury stock method at the midpoint of the range of the assumed initial
public offering price.
Net income per share on a pro forma basis is computed in the same manner as
net income per share on a historical basis except that, in the pro forma
calculation all outstanding shares of preferred stock are included in the
computation as if they had been converted into an equivalent number of shares of
common stock.
Net income per share on a historical basis is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1994 1995 1996
------ ------ ------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Net income per share....................... $ 1.26 $ 1.27 $ 2.69
====== ====== ======
Weighted average shares outstanding........ 351 1,096 1,103
====== ====== ======
</TABLE>
Fully diluted net income per share was $0.16, $0.40 and $0.71 in 1994, 1995
and 1996, respectively. Supplemental earnings per share reflecting the
elimination of the debt to be paid off with proceeds received from the proposed
initial public offering is $2.29 for the year ended December 31, 1996.
3. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
---------------------
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Equipment............................................... $3,054 $4,511
Furniture and fixtures.................................. 320 422
Leasehold improvements.................................. 46 258
------- -------
3,420 5,191
Less accumulated depreciation and amortization.......... 2,575 3,291
------- -------
$ 845 $1,900
======= =======
</TABLE>
Equipment under capital leases consists of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
---------------------
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Equipment............................................... $ 211 $ 211
Less accumulated amortization........................... 97 184
----- -----
$ 114 $ 27
===== =====
</TABLE>
F-9
<PAGE> 59
VOICETEK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. INVENTORIES:
Inventories consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Inventories:
Raw materials (purchased components)................... $599 $ 885
Work in process........................................ 131 67
Finished goods......................................... 144 236
---- ------
Total inventories................................. $874 $1,188
==== ======
</TABLE>
5. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT:
During 1996, the Company's Board of Directors voted to increase the number
of authorized shares of Common Stock to 30,000,000 shares, and to create a class
of 1,000,000 shares of "blank check" preferred stock which may be issued in one
or more series with such rights, terms and privileges as the Board of Directors
of the Company shall deem necessary or desirable. These actions are subject to
stockholder approval and have not been reflected in these financial statements.
1994 RECAPITALIZATION
In 1994, the preferred stockholders' ownership in the Company was
reallocated among the preferred stockholders pursuant to a recapitalization. The
Company raised $2,458,000 during 1992 and 1993 principally from certain existing
preferred stockholders. The accretion related to this financing, calculated
using the effective yield, amounted to approximately $1,252,000. This accretion
was charged to additional paid in capital and reduced net income available to
common stockholders principally in 1993. The ownership of common stockholders
was not affected by the recapitalization.
REDEEMABLE CONVERTIBLE PREFERRED STOCK
The outstanding preferred stock of the Company consists of Redeemable
Convertible Preferred Stock (issued and outstanding: 5,455,713 shares of Senior
Preferred ("Senior") and 679,803 shares of Junior Preferred Series 1 ("Junior
Series 1") and 729,758 shares of Junior Preferred Series 2 ("Junior Series 2"),
respectively) (together the "Preferred Stock").
The carrying amounts of the Preferred Stock were the same as the respective
redemption amounts, and were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Senior Preferred.............................. $5,885 $ 6,525 $ 7,228
Junior Series 1............................... 2,128 2,358 2,611
Junior Series 2............................... 1,192 1,318 1,458
------- ------- -------
Total............................... $9,205 $10,201 $11,297
======= ======= =======
</TABLE>
Voting
The Preferred Stock has the same voting rights as common stock on an
as-converted basis.
F-10
<PAGE> 60
VOICETEK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Dividends
The holders of Preferred Stock have the right to receive out of funds
legally available cumulative dividends, when and if declared by the Board of
Directors. The dividends for the Junior Series 1, Junior Series 2 and Senior
shares shall be at the annual rate of $0.25, $0.13 and $0.10 per share,
respectively. Holders of Senior, Junior Series 1 and Junior Series 2 Preferred
Stock shall also be entitled to an annual 10% interest on unpaid dividends, as
defined.
Liquidation
Upon any liquidation, dissolution or winding up of the Company the holders
of Preferred Stock are entitled to receive the liquidation preference (as
defined) plus any declared and unpaid dividends before any distribution may be
made to common stockholders.
Conversion
Each share of Senior, Junior Series 1 and Junior Series 2 Preferred Stock
is convertible, on a two-for-three basis, into shares of common stock at the
option of the holders. The conversion rate is adjustable for certain dilutive
events.
All outstanding shares of Preferred Stock shall automatically convert to
shares of common stock upon the closing of an underwritten public offering of
common stock on a "firm commitment" basis pursuant to a registration statement
on Form S-1 filed under the Securities Act of 1933, as amended, provided that
specified minimum per share and gross proceeds are received by the Company.
Redemption
The Preferred Stock is redeemable at the option of the holder at any time
on or after September 30, 1997 for Senior, Junior Series 1 and Junior Series 2
shares at redemption prices per share of $1.005785, $2.501729 and $1.329820,
respectively, plus all accrued but unpaid dividends at per share amounts of
$0.10, $0.25 and $0.13 for Senior, Junior Series 1 and Junior Series 2,
respectively, on a per annum basis plus 10% interest. (See also Note 11 for a
subsequent event).
STOCK OPTION PLANS
1992 Equity Incentive Plan
In 1992, the Company amended its previous qualified stock option plan and
established the 1992 Equity Incentive Plan (the "1992 Plan"). Options granted
under the 1992 Plan vest over a period of four years. The options expire ten
years from the date of grant.
The Company applies APB Opinion No. 25 and related Interpretations on
accounting for its plans, under which no compensation cost has been recognized
for stock option awards. Had compensation cost for the option grants been
determined consistent with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" ("SFAS 123"), the Company's pro forma
net income for 1995 and 1996 would have been approximately $2,359,000 and
$3,893,000, respectively. In calculating these pro forma disclosures, the fair
value of each option grant in 1995 and 1996 has been estimated on the date of
grant using the minimum value method with the following assumptions: risk-free
interest rate of 6.75% in 1995 and 1996, and expected lives of ten years.
F-11
<PAGE> 61
VOICETEK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Information related to stock option transactions under the 1992 plan is as
follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
-------- ----------------
<S> <C> <C>
Balance at December 31, 1993....................... 801,409 $.075
Granted....................................... 105,993 .127
Canceled...................................... (58,703) .075
Exercised..................................... (53,791) .075
---------
Balance at December 31, 1994....................... 794,908 .082
Granted....................................... 113,036 2.288
Canceled...................................... (10,146) .075
Exercised..................................... (183,724) .127
---------
Balance at December 31, 1995....................... 714,074 .432
Granted....................................... 117,161 6.489
Canceled...................................... (60,380) .111
Exercised..................................... (49,746) 2.957
---------
Balance at December 31, 1996....................... 721,109 $1.227
=========
</TABLE>
Information related to options outstanding and exercisable, including
options granted under the 1996 Option Plan, at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------- WEIGHTED AVERAGE --------------------------------
RANGE OF NUMBER REMAINING NUMBER WEIGHTED AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISABLE EXERCISE PRICE
- ---------------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
$.075 468,792 6.5 years 402,823 $ .075
.075-.150 71,546 8 years 33,000 .141
.375-4.50 85,627 9 years 23,808 2.509
5.25-7.50 133,810 10 years -- 6.564
----------- -----------
759,775 459,631
=========== ==========
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
likely to be indicative of the pro forma future effect on net income because it
does not take into consideration pro forma compensation expense related to
grants made prior to 1995.
The exercise price for each stock option grant was determined by the Board
of Directors of the Company to be equal to the fair value of the common stock on
the date of grant. In reaching this determination at the time of each such
grant, the Board considered a broad range of factors, including the illiquid
nature of an investment in the Company's common stock, the Company's historical
financial performance, the preferences (including liquidation) of the Company's
outstanding Preferred Stock and the Company's future prospects.
At December 31, 1996, there were 459,631 options exercisable under the
plan.
In January 1997, options to purchase 58,873 shares of Common Stock were
granted with exercise prices of $9.00 per share.
1996 Stock Option Plan
The Company's 1996 Stock Option Plan (the "1996 Option Plan") was adopted
by the Board of Directors of the Company in August 1996. The 1996 Option Plan
provides for the grant of stock options to key employees (including officers who
may be members of the Company's Board of Directors), directors who are not
employees and consultants to Company. Under the 1996 Option Plan, the Company
could grant options intended to qualify as incentive stock options within the
meaning of Section 422A of the Code, and options not
F-12
<PAGE> 62
VOICETEK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
intended to qualify as incentive stock options. A total of 333,333 shares of
Common Stock were originally authorized for issuance under the 1996 Option Plan.
Effective January 1, 1997 and each January 1 thereafter through January 1, 2006,
the number of shares of Common Stock authorized for issuance under the 1996
Option Plan shall be increased cumulatively such that the number of shares of
Common Stock subject to the 1996 Option Plan shall equal 15% of the total number
of fully diluted shares of Common Stock (excluding shares of Common Stock
issuable upon the exercise of options to purchase Common Stock granted under the
Company's 1996 Director Option Plan, as defined below) as of the close of
business on December 31 of the preceding year. As of December 31, 1996, no
options were outstanding under the 1996 Option Plan.
1996 Director Option Plan
The Company's 1996 Stock Option Plan for Non-Employee Directors and Clerk
(the "1996 Director Option Plan") was adopted by the Board of Directors of the
Company in August 1996. The 1996 Director Option Plan provides for the grant of
stock options to the Clerk and directors who are not employees of the Company.
Under the 1996 Director Option Plan, the Company could grant options not
intended to qualify as incentive stock options within the meaning of Section
422A of the Code. A total of 60,000 shares of Common Stock were originally
authorized for issuance under the 1996 Director Option Plan. During 1996,
options to purchase 38,666 shares of Common Stock, at an exercise price of $7.50
per share, were granted. As of December 31, 1996, these options remain
outstanding under the 1996 Option Plan, none of which were exercisable. No
options have been exercised to date and options outstanding expire at various
dates through August 2006.
RESERVED SHARES
The Company has reserved 5,733,851 shares of common stock for issuance upon
the conversion of the Preferred Stock and for issuance upon the exercise of
stock options under the Company's stock option plans.
6. INCOME TAXES:
The provision for (benefit from) income taxes consists of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1994 1995 1996
----- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal...................................... $ 18 $ 20 $ 22
State........................................ 5 19 33
--- ------- -------
23 39 55
--- ------- -------
Deferred:
Federal...................................... -- (905) (2,825)
State........................................ -- (295) (589)
--- ------- -------
-- (1,200) (3,414)
--- ------- -------
Total provision for (benefit from) income taxes... $ 23 $(1,161) $(3,359)
=== ======= =======
</TABLE>
The following is a reconciliation between the U.S. federal statutory tax
rate and the effective tax rate:
F-13
<PAGE> 63
VOICETEK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
U.S. federal statutory tax rate................. 34.0% 34.0% 34.0%
State income taxes, net of federal benefit...... 0.5 1.0 5.5
Nondeductible expenses.......................... 0.9 1.3 3.8
Alternative minimum tax......................... 2.1 -- --
Decrease in valuation allowance................. -- (97.4) (520.4)
Net operating losses and carryforward credits... (34.9) (31.0) --
----- ----- -----
Effective tax rate.............................. 2.6% (92.1)% (477.1)%
===== ===== =====
</TABLE>
The following represents the significant components of the Company's net
deferred tax assets:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax assets:
Federal net operating losses................. $ 3,725 $ 3,303
Tax credit carryforwards..................... 511 334
Depreciation and amortization................ 51 46
State tax credits and NOL, net of federal
benefit.................................... 933 473
Other temporary differences.................. 258 458
Valuation allowance for deferred tax
assets..................................... (4,278) --
------ ------
Net tax asset..................................... $ 1,200 $ 4,614
====== ======
</TABLE>
The Company eliminated its remaining valuation allowance of $3,773,000 in
the fourth quarter of 1996. Net operating losses expired in 1996 resulting in
the reduction of deferred tax assets of $505,000. Management has evaluated the
positive and negative evidence impacting the realizability of the Company's
deferred tax assets and concluded based upon the weight of available evidence
that it is more likely than not that it will generate taxable income prior to
the expiration of its federal and state net operating losses and tax credit
carryforwards. Accordingly, there is no valuation allowance against deferred tax
assets at December 31, 1996. Management re-evaluates the positive and negative
evidence on a quarterly basis, and accordingly, the deferred tax asset could be
reduced in future periods. The Company reduced its valuation allowance by
$1,228,000 in 1995 based upon Management's estimate of the amount of deferred
tax assets that were more likely than not to be realized.
As of December 31, 1996, the Company had approximately $9,700,000 of net
operating loss carryforwards for federal income tax purposes which expire in the
years 2004 through 2009. The Company had approximately $4,100,000 of state net
operating losses which expire in the years 1997 through 2009. The Company has
research and development credits for federal and state income tax purposes of
approximately $560,000 and $450,000, respectively, which begin to expire in
1999. The federal and state net operating losses and credits are subject to
certain limitations under IRC Section 382 which may affect the Company's ability
to utilize them prior to expiration.
7. DEBT:
In September 1996, the Company amended its revolving credit agreement with
a bank to increase its revolving line of credit to $5,000,000 at the prime rate
plus 0.75% (9.00% at December 31, 1996), expiring on September 1, 1997. The
outstanding balance at December 31, 1996 under the line of credit was
$2,700,000. The line of credit is collateralized by certain receivables of the
Company. The Company also entered into a term loan agreement with the bank.
Borrowings under the term loan are payable over three years. The interest rate
on borrowings under the term loan bear interest at the prime rate plus 1% (9.25%
at December 31, 1996).
F-14
<PAGE> 64
VOICETEK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The outstanding balance under the term loan was approximately $377,000 at
December 31, 1996. The term loan is collateralized by certain equipment of the
Company.
The Company is subject to certain financial covenants under the agreements
including specified debt to worth ratios and maintaining a certain capital base
and profitability, as defined.
In November 1988, the Company borrowed $250,000 from a stockholder and
issued a note, payable in 48 monthly installments with an interest rate of 10%
per annum. In April 1992, the original terms of the agreement were amended, and
the payment of interest and principal by the Company, in agreement with the
stockholder, was deferred until a future date. The principal balance of $104,176
and related accrued interest was converted into 20,488 shares of common stock in
December 1996.
At December 31, 1996, the Company had an immaterial cash overdraft balance.
8. COMMITMENTS AND CONTINGENCIES:
LEASE COMMITMENTS
The Company occupies manufacturing and office space under an operating
lease which expires in October 1999. The Company must pay insurance,
maintenance, utilities and a percentage of real estate taxes on the lease. The
Company also leases certain equipment under noncancelable capital leases that
mature at various dates. The future minimum payments under the capital leases
are immaterial.
Approximate future, minimum, noncancelable, annual payments under the
operating leases are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31, (IN THOUSANDS)
-----------------------------------------------------------------
<S> <C>
1997........................................................... $ 323
1998........................................................... 329
1999........................................................... 346
2000........................................................... 409
2001........................................................... 425
------
$1,832
======
</TABLE>
Rent expense under operating leases was approximately $109,000, $191,000
and $233,000 in 1994, 1995 and 1996, respectively.
9. EMPLOYEE PLAN:
As amended on January 1, 1988, the Company approved the establishment of
the Voicetek Corporation 401(k) Plan (the "Plan"). Employees are eligible to
participate in the Plan by meeting certain requirements, including length of
service and minimum age. The Company can elect to make discretionary matching
contributions. The annual contributions may not exceed the maximum allowed under
the applicable provisions of the Internal Revenue Code. The Company has provided
for contributions of approximately $28,000, $48,000 and $58,000 in 1994, 1995
and 1996, respectively.
F-15
<PAGE> 65
VOICETEK CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
10. SIGNIFICANT CUSTOMERS AND EXPORT SALES:
The following represents significant customer revenue:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Customer A.................................... 45% 25% 24%
Customer B.................................... 11 23 12
Customer C.................................... -- -- 12
</TABLE>
Export sales were approximately $719,000, $1,604,000 and $2,352,000 in
1994, 1995 and 1996, respectively.
11. SUBSEQUENT EVENTS:
On February 12, 1997, the Board of Directors approved a two-for-three stock
split of the Company's common stock. All share and per share amounts have been
restated in these financial statements to reflect this reverse stock split.
In February 1997, certain holders of Preferred Stock contractually agreed
to extend the redemption date on the Redeemable Convertible Preferred Stock to
July 31, 1998.
F-16
<PAGE> 66
[ARTWORK DEPICTING PHOTOGRAPH OF
COMPUTER SCREEN WHILE RUNNING
GENERATIONS APPLICATION DEVELOPER SOFTWARE]
<PAGE> 67
- ------------------------------------------------------------
- ------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................................... 3
Risk Factors.......................................... 5
Use of Proceeds....................................... 11
Dividend Policy....................................... 11
Capitalization........................................ 12
Dilution.............................................. 13
Selected Financial Data............................... 14
Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 15
Business.............................................. 21
Management............................................ 32
Certain Transactions.................................. 38
Principal and Selling Stockholders.................... 39
Description of Capital Stock.......................... 41
Shares Eligible for Future Sale....................... 43
Underwriting.......................................... 45
Legal Matters......................................... 46
Experts............................................... 46
Additional Information................................ 46
Index to Financial Statements......................... F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS FROM THE DATE OF THE PROSPECTUS), ALL DEALERS
EFFECTING TRANSAC-
TIONS IN THE SHARES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OF SUBSCRIPTIONS.
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
2,500,000 SHARES
LOGO
COMMON STOCK
------------------------
PROSPECTUS
------------------------
OPPENHEIMER & CO., INC.
FIRST ALBANY CORPORATION
, 1997
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE> 68
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses (other than underwriting discounts and commissions) payable in
connection with the sale of the Common Stock offered hereby (including the
Common Stock which may be issued pursuant to an over-allotment option) are as
follows:
<TABLE>
<CAPTION>
AMOUNTS
----------
<S> <C>
SEC Registration fee................................................... 10,455
NASD filing fee........................................................ 3,950
Nasdaq National Market fee............................................. 30,070
Printing Expenses...................................................... 150,000
Legal fees and expenses................................................ 250,000
Accounting Fees and expenses........................................... 250,000
Blue sky fees and expenses (including legal fees and expenses)......... 10,000
Transfer agent and registrar fees and expenses......................... 10,000
Miscellaneous.......................................................... 35,525
----------
Total............................................................. $ 750,000*
==========
</TABLE>
The Company will bear all expenses shown above.
- ---------------
* All amounts are estimated, except SEC Registration, NASD and Nasdaq National
Market Fees.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 67 of Chapter 156B of the Massachusetts Business Corporation Law,
which is applicable to the Company, provides as follows:
Indemnification of directors, officers, employees and other agents of a
corporation, and persons who serve at its request as directors, officers,
employees or other agents of another organization, or who serve at its request
in any capacity with respect to any employee benefit plan, may be provided by it
to whatever extent shall be specified in or authorized by (i) the articles of
organization or (ii) a by-law adopted by the stockholders or (iii) a vote
adopted by the holders of a majority of the shares of stock entitled to vote on
the election of directors. Except as the articles of organization or by-laws
otherwise require, indemnification of any persons referred to in the preceding
sentence who are not directors of the corporation may be provided by it to the
extent authorized by the directors. Such indemnification may include payment by
the corporation of expenses incurred in defending a civil or criminal action or
proceeding in advance of the final disposition of such action or proceeding,
upon receipt of an undertaking by the person indemnified to repay such payment
if he shall be adjudicated to be not entitled to indemnification under this
section which undertaking may be accepted without reference to the financial
ability of such person to make repayment. Any such indemnification may be
provided although the person to be indemnified is no longer an officer,
director, employee or agent of the corporation or of such other organization or
no longer serves with respect to any such employee benefit plan.
No indemnification shall be provided for any person with respect to any
matter as to which he shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his action was in the best
interest of the corporation or to the extent that such matter relates to service
with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan.
The absence of any express provision for indemnification shall not limit
any right of indemnification existing independently of this section.
A corporation shall have power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or other agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or other agent of another organization or with
respect to any employee benefit plan, against any liability incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability.
II-1
<PAGE> 69
In addition, pursuant to its Articles of Organization and By-laws, the
Company shall indemnify its directors and officers against expenses (including
judgments or amounts paid in settlement) incurred in any action, civil or
criminal, to which any such person is a party by reason of any alleged act or
failure to act in his capacity as such, except as to a matter as to which such
director or officer shall have been finally adjudged not to have acted in good
faith in the reasonable belief that his action was in the best interest of the
corporation.
The Underwriting Agreement provides that the Underwriters are obligated,
under certain circumstances, to indemnify directors, officers and controlling
persons of the Company against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Act"). Reference is made to the
form of Underwriting Agreement filed as Exhibit 1.1 hereto.
The Company maintains directors and officers liability insurance for the
benefit of its directors and certain of its officers and has entered into
indemnification agreements with its directors and certain of its officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, Voicetek has issued the following securities,
none of which have been registered under the Securities Act of 1933, as amended
(the "Act"):
(a) Since January 1, 1994, the Company has granted options to purchase
an aggregate of 374,856 shares of Common Stock, 144,999 of which have been
granted to executive officers and directors of the Company.
(b) Since January 1, 1994, the Company has issued 287,261 shares of
Common Stock upon the exercise of options at an average exercise price of
$0.08, of which 287,261 shares were issued to executive officers and
directors of the Corporation.
(c) In December 1996, the company issued 20,248 shares of Common Stock
to a current stockholder upon the conversion of outstanding principal
balance (and accrued interest) on a promissory note.
(d) In connection with the Company's Credit Facility, on September 30,
1996, the Company issued a promissory note in the original principal amount
of $1.0 million to Fleet Bank of Massachusetts, N.A.
(e) In December 1994, the Company issued 6,286 shares of Senior
Preferred Stock.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
A. EXHIBITS:
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Restated Articles of Organization
3.2 Amended and Restated By-laws
4.1 Specimen certificate representing the Common Stock*
5.1 Opinion of Hutchins, Wheeler & Dittmar, a Professional Corporation*
10.1 OEM Agreement between Northern Telecom, Inc. and Voicetek dated June 16, 1995**
10.2 Amendment No. 1 to OEM Agreement dated December 3, 1996**
10.3 Volume Purchase Agreement between Dialogic Corporation and Voicetek dated as of
September 20, 1995**
10.4 Distributor Agreement between Rockwell International, SSD and Voicetek as of
September 26, 1996**
10.5 Lease dated as of May 25, 1993 by and between Teachers Realty Corporation and
Voicetek
10.6 First Amendment to Lease dated August 8, 1994
10.7 Second Amendment to Lease dated March 25, 1996
10.8 Third Amendment to Lease dated November 8, 1996
10.9 Letter Agreement dated September 21, 1994 between Fleet Bank of Massachusetts,
N.A. and Voicetek
10.10 Third Loan Modification Agreement dated September 26, 1996 between Voicetek and
Fleet National Bank
10.11 Executive Employment Agreement dated as of January 13, 1997 between Voicetek and
Sheldon Dinkes
10.12 Executive Employment Agreement dated as of January 13, 1997 between Voicetek and
Roger Tuttle
</TABLE>
II-2
<PAGE> 70
<TABLE>
<CAPTION>
A. EXHIBITS:
<C> <S>
10.13 Executive Employment Agreement dated as of January 13, 1997 between Voicetek and
Paul Gagne
10.14 Executive Employment Agreement dated as of January 13, 1997 between Voicetek and
Scott Ganson
10.15 Executive Employment Agreement dated as of January 13, 1997 between Voicetek and
Daniel Poranski
10.16 Voicetek Corporation 1992 Equity Incentive Plan
10.17 Voicetek Corporation 1996 Stock Option Plan
10.18 Voicetek Corporation 1996 Stock Option Plan for Non-Employee Directors and Clerk
10.19 Voicetek Corporation 1997 Employee Stock Purchase Plan
10.20 Registration and First Refusal Rights Agreement dated as of December 22, 1992 by
and among Voicetek and the holders of the Company's Preferred Stock
11.1 Statement re: Computation of Per Share Earnings
23.1 Consent of Coopers & Lybrand, L.L.P.
23.2 Consent of Hutchins, Wheeler & Dittmar, A Professional Corporation (included in
Exhibit 5.1 above)
27.1 Financial Data Schedule
</TABLE>
- ---------------
* to be filed by amendment.
** Confidential treatment requested as to certain portions, which portions have
been omitted and filed separately with the Commission.
B. FINANCIAL STATEMENT SCHEDULES.
All schedules have been omitted because the information is not applicable
or because the information required is included in the Financial Statements or
the notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that: (1) For purposes of
determining any liability under the Securities Act, the information omitted from
the form of prospectus filed as part of his registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective; and (2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to provisions described in Item 14 above, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 71
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and has duly caused this registration
statement on Form S-1 to be signed on its behalf by the undersigned, thereunto
duly authorized, in Chelmsford, Massachusetts, on February 14, 1997.
VOICETEK CORPORATION
By: /s/ SHELDON L. DINKES
------------------------------------
SHELDON L. DINKES
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
We, the undersigned officers and directors of Voicetek Corporation, hereby
severally constitute and appoint Sheldon L. Dinkes and John A. Blaeser, and each
of them singly, our true and lawful attorneys, with full power to them and each
of them singly, to sign for us and in our names in the capacities indicated
below, the Registration Statement on Form S-1 filed herewith and any and all
pre-effective and post-effective amendments to said Registration Statement, and,
in connection with any registration of additional securities pursuant to Rule
462(b) under the Securities Act of 1933, to sign any abbreviated registration
statement and any and all amendments thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, in each case, with
the Securities and Exchange Commission, and generally to do all such things in
our names and on our behalf in our capacities with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
- ---------------------------------------- --------------------------------- ------------------
<C> <S> <C>
/s/ SHELDON L. DINKES President, Chief Executive February 14, 1997
- ---------------------------------------- Officer and Director
SHELDON L. DINKES
/s/ ROGER N. TUTTLE, JR. Vice President and Treasurer February 14, 1997
- ---------------------------------------- (principal accounting officer)
ROGER N. TUTTLE JR.
/s/ CHRISTOPHER W. LYNCH Director February 14, 1997
- ----------------------------------------
CHRISTOPHER W. LYNCH
/s/ SHERMAN M. WOLF Director February 14, 1997
- ----------------------------------------
SHERMAN M. WOLF
/s/ ALAN VOULGARIS Director February 14, 1997
- ----------------------------------------
ALAN VOULGARIS
/s/ JOHN A. BLAESER Director February 14, 1997
- ----------------------------------------
JOHN A. BLAESER
</TABLE>
II-4
<PAGE> 72
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ---------------------------------------------------------------------- ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement........................................
3.1 Restated Articles of Organization.....................................
3.2 Amended and Restated By-laws..........................................
4.1 Specimen certificate representing the Common Stock*...................
5.1 Opinion of Hutchins, Wheeler & Dittmar, a Professional Corporation*...
10.1 OEM Agreement between Northern Telecom, Inc. and Voicetek dated June
16, 1995**..........................................................
10.2 Amendment No. 1 to OEM Agreement dated December 3, 1996**.............
10.3 Volume Purchase Agreement between Dialogic Corporation and Voicetek
dated as of September 20, 1995**....................................
10.4 Distributor Agreement between Rockwell International, SSD and Voicetek
as of September 26, 1996**..........................................
10.5 Lease dated as of May 25, 1993 by and between Teachers Realty
Corporation and Voicetek............................................
10.6 First Amendment to Lease dated August 8, 1994.........................
10.7 Second Amendment to Lease dated March 25, 1996........................
10.8 Third Amendment to Lease dated November 8, 1996.......................
10.9 Letter Agreement dated September 21, 1994 between Fleet Bank of
Massachusetts, N.A. and Voicetek....................................
10.10 Third Loan Modification Agreement dated September 26, 1996............
10.11 Executive Employment Agreement dated as of January 13, 1997 between
Voicetek and Sheldon Dinkes.........................................
10.12 Executive Employment Agreement dated as of January 13, 1997 between
Voicetek and Roger Tuttle...........................................
10.13 Executive Employment Agreement dated as of January 13, 1997 between
Voicetek and Paul Gagne.............................................
10.14 Executive Employment Agreement dated as of January 13, 1997 between
Voicetek and Scott Ganson...........................................
10.15 Executive Employment Agreement dated as of January 13, 1997 between
Voicetek and Daniel Poranski........................................
10.16 Voicetek Corporation 1992 Equity Incentive Plan.......................
10.17 Voicetek Corporation 1996 Stock Option Plan...........................
10.18 Voicetek Corporation 1996 Stock Option Plan for Non-Employee Directors
and Clerk...........................................................
10.19 Voicetek Corporation 1997 Employee Stock Purchase Plan................
10.20 Registration and First Refusal Rights Agreement dated as of December
22, 1992 by and among Voicetek and the holders of the Company's
Preferred Stock.....................................................
11.1 Statement re: Computation of Per Share Earnings.......................
23.1 Consent of Coopers & Lybrand, L.L.P...................................
23.2 Consent of Hutchins, Wheeler & Dittmar, A Professional Corporation
(included in Exhibit 5.1 above).....................................
27.1 Financial Data Schedule...............................................
</TABLE>
- ---------------
* to be filed by amendment.
** Confidential Treatment Requested.
<PAGE> 1
EXHIBIT 1.1
[Form of Underwriting Agreement - To be negotiated]
2,500,000 Shares
VOICETEK CORPORATION
Common Stock
UNDERWRITING AGREEMENT
----------------------
March __, 1997
Oppenheimer & Co., Inc.
First Albany Corporation
c/o Oppenheimer & Co., Inc.
Oppenheimer Tower
World Financial Center
New York, New York 10281
On behalf of the Several Underwriters named on Schedule I attached
hereto.
Ladies and Gentlemen:
Voicetek Corporation, a Massachusetts corporation (the "Company"), and the
selling stockholders named on Schedule II attached to this Agreement (the
"Selling Stockholders") propose to sell to you and the other underwriters named
on Schedule I to this Agreement (the "Underwriters"), for whom you are acting as
Representatives, an aggregate of 2,500,000 shares (the "Firm Shares") of the
Company's Common Stock, $.01 par value (the "Common Stock"). Of the 2,500,000
Firm Shares, 2,000,000 are to be issued and sold by the Company and 500,000 are
to be sold by the Selling Stockholders. In addition, the Selling Stockholders
propose to grant to the Underwriters an option to purchase up to an additional
375,000 shares (the "Option Shares") of Common Stock from them for the purpose
of covering over-allotments in connection with the sale of the Firm Shares. The
Firm Shares and the Option Shares are together called the "Shares."
1. SALE AND PURCHASE OF THE SHARES. On the basis of the representations,
warranties and agreements contained in, and subject to the terms and conditions
of, this Agreement:
(a) The Company and the Selling Stockholders agree, severally and not
jointly, to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase, at $_____ per share (the
"Initial Price"), the number of Firm Shares (adjusted by the
Representatives to eliminate fractions) which bears the same proportion of
the total number of Firm Shares to be sold by the Company or the Selling
Stockholders, as the case may be, as the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule I attached to this
Agreement bears to the total number of Firm Shares to be sold by the
Company and the Selling Stockholders.
(b) The Selling Stockholders, severally and not jointly, grant to the
Underwriters an option to purchase, severally and not jointly, all or any
part of the
<PAGE> 2
Option Shares at the Initial Price. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage (adjusted by the
Representatives to eliminate fractions) of the total number of Option
Shares to be purchased by the Underwriters as such Underwriter is
purchasing of the Firm Shares. Such option may be exercised only to cover
over- allotments in the sales of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time on or before 12:00 noon,
New York City time, on the business day before the Firm Shares Closing Date
(as defined below), and only once thereafter within 30 days after the date
of this Agreement, in each case upon written or facsimile notice, or verbal
or telephonic notice confirmed by written or facsimile notice, by the
Representatives to the Company no later than 12:00 noon, New York City
time, on the business day before the Firm Shares Closing Date or at least
two business days before the Option Shares Closing Date (as defined below),
as the case may be, setting forth the number of Option Shares to be
purchased and the time and date (if other than the Firm Shares Closing
Date) of such purchase.
2. DELIVERY AND PAYMENT. Delivery of the certificates for the Firm Shares
shall be made by the Company and the Custodian (as hereinafter defined) on
behalf of the Selling Stockholders to the Representatives for the respective
accounts of the Underwriters, and payment of the purchase price by certified or
official bank check or checks payable in New York Clearing House (next day)
funds to the Company and the Custodian, respectively, shall take place at the
offices of Oppenheimer & Co., Inc., at Oppenheimer Tower, World Financial
Center, New York, New York 10281, at 10:00 a.m., New York City time, on the
third business day following the date of this Agreement; provided, however, that
if the Shares sold hereunder are priced and this Agreement is entered into after
4:30 p.m., New York City time, on any business day, payment and delivery in
respect of the Firm Shares shall take place on the fourth business day following
the date of this Agreement; in either case, unless another time and date, not
later than 10 business days after the date of this Agreement, shall be agreed
upon by the Company, the Selling Stockholders and the Representatives (such time
and date of delivery and payment are called the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares is exercised,
delivery of the certificates for the Option Shares shall be made by the
Custodian to the Representatives for the respective accounts of the
Underwriters, and payment of the purchase price by certified or official bank
check or checks payable in New York Clearing House (next day) funds to the
Selling Shareholders shall take place at the offices of Oppenheimer & Co., Inc.
specified above at the time and on the date (which may be the same date as, but
in no event shall be earlier than, the Firm Shares Closing Date) specified in
the notice referred to in Section 1(b) (such time and date of delivery and
payment are called the "Option Shares Closing Date"). The Firm Shares Closing
Date and the Option Shares Closing Date are called, individually, a "Closing
Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names and
shall be in such denominations as the Representatives shall request at least two
full business days before the Firm Shares Closing Date or, in the case of Option
Shares, on the day of notice of exercise of the option as described in Section
1(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
-2-
<PAGE> 3
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The Company has
prepared in conformity with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the published rules and regulations
thereunder (the "Rules") adopted by the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-____), including a
preliminary prospectus relating to the Shares, and has filed with the Commission
the Registration Statement (as hereinafter defined) and such amendments thereof
as may have been required to the date of this Agreement. Copies of such
Registration Statement (including all amendments thereof) and of the related
preliminary prospectus have heretofore been delivered by the Company to you. The
term "preliminary prospectus" means any preliminary prospectus (as described in
Rule 430 of the Rules) included at any time as a part of the Registration
Statement. The Registration Statement as amended at the time and on the date it
becomes effective (the "Effective Date"), including all exhibits and
information, if any, deemed to be part of the Registration Statement pursuant to
Rule 424(b) and Rule 430A of the Rules, is called the "Registration Statement."
The term "Prospectus" means the prospectus in the form first used to confirm
sales of the Shares (whether such prospectus was included in the Registration
Statement at the time of effectiveness or was subsequently filed with the
Commission pursuant to Rule 424(b) of the Rules).
The Company and the Selling Stockholders understand that the Underwriters
propose to make a public offering of the Shares, as set forth in and pursuant to
the Prospectus, as soon after the Effective Date and the date of this Agreement
as the Representatives deem advisable. The Company and the Selling Stockholders
hereby confirm that the Underwriters and dealers have been authorized to
distribute or cause to be distributed each preliminary prospectus and are
authorized to distribute the Prospectus (as from time to time amended or
supplemented if the Company furnishes amendments or supplements thereto to the
Underwriters).
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS. The Company and the Selling Stockholders hereby, jointly and
severally, represent and warrant to each Underwriter as follows:
(a) On the Effective Date the Registration Statement complied, and on
the date of the Prospectus, on the date any post-effective amendment to the
Registration Statement shall become effective, on the date any supplement
or amendment to the Prospectus is filed with the Commission and on each
Closing Date, the Registration Statement and the Prospectus (and any
amendment thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and the
Rules and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder; the
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and on the other dates referred to above neither
the Registration Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will contain any untrue statement of a material fact or
will omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. When any
related preliminary prospectus was first filed with the Commission (whether
filed as part of the Registration Statement or any amendment thereto or
pursuant to Rule 424(a) of the Rules) and when any amendment thereof or
supplement thereto was first filed with the Commission, such preliminary
prospectus as amended or supplemented complied in all material respects
with the applicable provisions of the Securities Act and the Rules and did
not contain any untrue statement of a material fact or
-3-
<PAGE> 4
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading. Notwithstanding the
foregoing, the Company and the Selling Stockholders make no representation
or warranty as to the last paragraph on the cover page of the Prospectus,
the paragraph with respect to stabilization on the inside front cover page
of the Prospectus and the statements contained under the caption
"Underwriting" in the Prospectus. The Company and the Selling Stockholders
acknowledge that the statements referred to in the previous sentence
constitute the only information furnished in writing by the Representatives
on behalf of the Underwriters specifically for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus.
(b) All contracts and other documents required to be filed as exhibits
to the Registration Statement have been filed with the Commission as
exhibits to the Registration Statement.
(c) The financial statements of the Company (including all notes and
schedules thereto) included in the Registration Statement and Prospectus
present fairly the financial position, results of operations and cash flows
and the stockholders' equity and the other information purported to be
shown therein of the Company at the respective dates and for the respective
periods to which they apply; and such financial statements have been
prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved, and all adjustments
necessary for a fair presentation of the results for such periods have been
made.
(d) Coopers & Lybrand LLP, whose reports filed with the Commission as
a part of the Registration Statement, are and, during the periods covered
by their reports, were independent public accountants as required by the
Securities Act and the Rules.
(e) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the Commonwealth of
Massachusetts. The Company has no subsidiaries and does not control,
directly or indirectly, any corporation, partnership, joint venture,
association or business. The Company is duly qualified and in good standing
as a foreign corporation in each jurisdiction in which the character or
location of its assets or properties (owned, leased or licensed) or the
nature of its business makes such qualification necessary except for such
jurisdictions where the failure to so qualify would not have a material
adverse effect on the assets or properties, business, results of operations
or financial condition of the Company. Except as disclosed in the
Registration Statement and the Prospectus, the Company does not own, lease
or license any asset or property or conduct any business outside the United
States of America. The Company has all requisite corporate power and
authority, and all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or
regulatory bodies or any other person or entity, to own, lease and license
its assets and properties and conduct its businesses as now being conducted
and as described in the Registration Statement and the Prospectus except
for such authorizations, approvals, consents, orders, material licenses,
certificates and permits the failure to so obtain would not have a material
adverse effect upon the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company;
no such authorization, approval, consent, order, license, certificate or
permit contains a materially burdensome restriction other than as disclosed
in the Registration Statement and the Prospectus; and the Company has all
such corporate power and
-4-
<PAGE> 5
authority, and such authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform this Agreement
and to issue and sell the Shares (except as may be required under state and
foreign Blue Sky laws).
(f) The Company owns or possesses adequate and enforceable rights to
use all patents, patent applications, trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge (collectively,
"Intangibles") described in the Registration Statement as owned or licensed
by the Company. To the Company's knowledge, there are no other Intangibles
necessary for the conduct of its business as described in the Registration
Statement and the Prospectus. The Company has not received any notice of,
and to its best knowledge is not aware of, any infringement of or conflict
with asserted rights of others with respect to any Intangibles owned or
licensed by the Company which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a material
adverse effect upon the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company.
(g) The Company has good title to each of the items of personal
property which are reflected in the financial statements referred to in
Section 4(c) or are referred to in the Registration Statement and the
Prospectus as being owned by it and valid and enforceable leasehold
interests in each of the items of real and personal property which are
referred to in the Registration Statement and the Prospectus as being
leased by it, in each case free and clear of all liens, encumbrances,
claims, security interests and defects, other than those described in the
Registration Statement and the Prospectus and those which do not and will
not have a material adverse effect upon the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of
the Company.
(h) There is no litigation or governmental or other proceeding or
investigation before any court or before or by any public body or board
pending or, to the Company's best knowledge, threatened against, or
involving the assets, properties or business of, the Company which, if
determined adversely to the Company, would materially adversely affect the
value or the operation of any such assets or properties or the business,
results of operations, prospects or condition (financial or otherwise) of
the Company.
(i) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as described
therein, (i) there has not been any material adverse change in the assets
or properties, business, results of operations, prospects or condition
(financial or otherwise), of the Company, whether or not arising from
transactions in the ordinary course of business; (ii) the Company has not
sustained any material loss or interference with its assets, businesses or
properties (whether owned or leased) from fire, explosion, earthquake,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or any court or legislative or other governmental action,
order or decree; and (iii) and since the date of the latest balance sheet
included in the Registration Statement and the Prospectus, except as
reflected in the Registration Statement or the Prospectus, the Company has
not (a) issued any securities or incurred any liability or obligation,
direct or contingent, for borrowed money, except such liabilities or
obligations incurred in the ordinary course of business,
-5-
<PAGE> 6
(b) entered into any transaction not in the ordinary course of business or
(c) declared or paid any dividend or made any distribution on any shares of
its stock or redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its stock.
(j) There is no document or contract of a character required to be
described in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. Each agreement listed in the Exhibits to the Registration
Statement is in full force and effect and is valid and enforceable by and
against the Company in accordance with its terms, assuming the due
authorization, execution and delivery thereof by each of the other parties
thereto. Neither the Company, nor, to the best of the Company's knowledge,
any other party is in default in the observance or performance of any term
or obligation to be performed by it under any such agreement, and no event
has occurred which with notice or lapse of time or both would constitute
such a default, in any such case which default or event would have a
material adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company.
No default exists, and no event has occurred which with notice or lapse of
time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company of any other
agreement or instrument to which the Company is a party or by which it or
its properties or business may be bound or affected which default or event
would have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of
the Company.
(k) The Company is not in violation of any term or provision of its
Articles of Organization, as amended, or By-Laws, as amended, or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation would have a material
adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the Company.
(l) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company
of the Shares and the sale by the Selling Stockholders of the Shares to be
sold by them) will give rise to a right to terminate or accelerate the due
date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or assets
of the Company pursuant to the terms of, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is a party or
by which it or any of its properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or violate any provision of the
Articles of Organization, as amended, or By-Laws, as amended, of the
Company, except for such consents or waivers which have already been
obtained and are in full force and effect.
(m) The Company has an authorized and outstanding capital stock as set
forth under the captions "Capitalization" and "Description of Capital
Stock" in the Prospectus. All of the outstanding shares of Common Stock
[and Series A
-6-
<PAGE> 7
Preferred Stock, par value $.01 per share,] have been duly and validly
issued and are fully paid and nonassessable and none of them was issued in
violation of any preemptive or other similar right. The Shares to be issued
and sold by the Company, when issued and sold by the Company pursuant to
this Agreement, and the Shares to be sold by the Selling Stockholders, when
sold by the Selling Stockholders pursuant to this Agreement, will be duly
and validly issued, fully paid and nonassessable and none of them will be
issued in violation of any preemptive or other similar right. Except as
disclosed in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of, and
there is no commitment, plan or arrangement to issue, any share of stock of
the Company or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock and the Shares conform in
all material respects to all statements in relation thereto contained in
the Registration Statement and the Prospectus.
(n) No holder of any security of the Company has the right to have any
security owned by such holder included in the Registration Statement or to
demand registration of any security owned by such holder during the period
ending 180 days after the date of this Agreement, other than rights which
have been waived. Each stockholder, director and executive officer of the
Company has delivered to the Representatives his enforceable written
agreement that he will not, for a period of 180 days after the date of this
Agreement, offer for sale, sell, distribute, grant any option for the sale
of, or otherwise dispose of, directly or indirectly, or exercise any
registration rights with respect to, any shares of Common Stock (or any
securities convertible into, exercisable for, or exchangeable for any
shares of Common Stock) owned by him, without the prior written consent of
Oppenheimer & Co., Inc., on behalf of the Underwriters.
(o) Each stockholder listed on Schedule III hereto, director and
executive officer of the Company has delivered to the Representatives his
or her enforceable written agreement that, except, in the case of the
Selling Stockholders, for the sale of the Shares to be sold by the Selling
Stockholders pursuant to the Registration Statement, he, she or it will
not, for a period of 180 days after the date of this Agreement, sell
(including "short sales"), loan, pledge, assign, transfer, encumber,
distribute, grant or other transfer or dispose of, directly or indirectly
(collectively, "Transfer"), or offer, contract or otherwise agree to
Transfer, any Common Stock or any other securities convertible into or
exchangeable for Common Stock or any other equity securities of the Company
owned by him, her or it, without the prior written consent of the
Representatives, except for (i) sales to the several Underwriters pursuant
to this Agreement or (ii) pursuant to will or the laws of intestate
succession, provided the transferee thereof agrees in writing to be bound
by such restrictions.
(p) All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of this
Agreement and the issuance and sale of the Shares. This Agreement has been
duly and validly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles and (ii)
to the extent that rights to indemnity or contribution under this Agreement
may be limited by Federal and state securities laws or the public policy
underlying such laws.
-7-
<PAGE> 8
(q) The Company is not involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which dispute
would have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise) of
the Company.
(r) No transaction has occurred between or among the Company and any
of its officers, directors or stockholders, as the case may be, or any
affiliate or affiliates of any such officer, director or stockholder, that
is required to be described in and is not described in the Registration
Statement and the Prospectus.
(s) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of any of the Shares.
(t) The Company has filed all Federal, state, local and foreign tax
returns which are required to be filed by it through the date hereof, or
has received extensions thereof, and has paid all taxes shown on such
returns and all assessments received by it to the extent that the same are
material and have become due.
(u) The Shares have been duly authorized for quotation on the National
Association of Securities Dealers Automated Quotation ("NASDAQ") National
Market System.
(v) The Company has complied with all of the requirements and filed
the required forms as specified in Florida Statutes Section 517.075.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each of the
Selling Stockholders, severally and not jointly, represents and warrants to each
Underwriter that:
(a) Such Selling Stockholder is, and on the Firm Shares Closing Date
will be, the sole lawful owner of the Shares to be sold by it hereunder,
and has, and on such date will have, good and marketable title to the
Shares to be sold by such Selling Stockholder hereunder, free and clear of
any lien, charge, claim, encumbrance, security interest, stockholders'
agreement, voting trust, restriction on transfer or other defect in title.
(b) Such Selling Stockholder has, and on the Firm Shares Closing Date
will have, full legal right, power and authority, and every approval,
authorization or other consent, required to sell, assign, transfer and
deliver such Shares in the manner provided in this Agreement; delivery of
certificates for the Shares to be sold by such Selling Stockholder pursuant
hereto will, upon payment therefor, pass good and marketable title thereto
to each Underwriter, free and clear of any lien, charge, claim,
encumbrance, security interest, stockholders' agreement, voting trust,
restriction on transfer or other defect in title; and there are no
outstanding options, warrants, rights or other agreements or arrangements
requiring such Selling Stockholder at an time to transfer any Shares which
may be sold to the Underwriters pursuant to this Agreement.
-8-
<PAGE> 9
(c) Such Selling Stockholder has duly executed and delivered a power
of attorney (the "Power of Attorney"), in the form heretofore delivered to
the Representatives, appointing __________________ and __________________,
as such Selling Stockholder's attorneys-in-fact (the "Attorneys-in-Fact"),
each of them, together or individually with full power and authority to
execute, deliver and perform this Agreement on behalf of such Selling
Stockholder.
(d) Such Selling Stockholder has duly executed and delivered a custody
agreement (the "Custody Agreement"), in the form heretofore delivered to
the Representatives pursuant to which certificates in negotiable form for
the Shares to be sold by such Selling Stockholder under this Agreement were
deposited with ___________________, as a custodian (the "Custodian"). The
Custody Agreement and the Custodian's authority thereunder and the
appointment of the Attorneys-in-Fact are irrevocable and the obligations of
such Selling Stockholder hereunder and under the Custody Agreement are not
subject to termination by such Selling Stockholder, except as provided in
this Agreement, the Power of Attorney or the Custody Agreement, or by
operation of law, whether by the death or incapacity of any trustee or
executor or the termination of any trust or estate (if such Selling
Stockholder is a trust or estate), the dissolution or liquidation of any
corporation or partnership (if such Selling Stockholder is a corporation or
a partnership), or the occurrence of any other event. If any event referred
to in the preceding sentence should occur before the deliver of the Shares
hereunder, the certificates for the Shares to be sold by such Selling
Stockholder in accordance with the terms and conditions of this Agreement
and the Custody Agreement, and action taken by the Custodian pursuant to
the Custody Agreement shall be as valid as if such event had not occurred,
whether or not the Custodian or the Attorneys-in-Fact, or any one of them,
shall have received notice of such event.
(e) The execution, delivery and performance of this Agreement, the
Power of Attorney and the Custody Agreement and the consummation of the
transactions to be performed by such Selling Stockholder contemplated
hereby and thereby, including the delivery and sale of the Shares to be
delivered and sold by such Selling Stockholder hereunder and thereunder,
will not conflict with or result in a breach or violation of, or constitute
a default (or an event which with notice or lapse of time or both would
constitute a default) under, any agreement, indenture or other instrument
to which such Selling Stockholder is a party or by which it is bound, or to
which any of its assets or properties are subject or affected, nor will the
performance by such Selling Stockholder of its obligations hereunder or
thereunder violate any statute, rule, regulation or order or decree of any
court or any governmental or regulatory agency, authority or body having
jurisdiction over such Selling Stockholder or any of its assets or
properties or result in the creation or imposition of any lien, charge,
claim, security interest, encumbrance or restriction whatsoever upon such
Shares.
(f) Except for permits and similar authorizations required under the
Securities Act, the securities or Blue Sky laws of certain jurisdictions,
and such permits and authorizations which have been obtained, no consent,
approval, authorization, license, permit or certificate or order of any
court, governmental or regulatory agency, authority or body or financial
institution is required in connection with the consummation of the
transactions to be performed by such Selling Stockholder contemplated by
this Agreement, including the delivery and sale of the Shares to be sold by
such Selling Stockholder.
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<PAGE> 10
(g) Each of this Agreement, the Power of Attorney and the Custody
Agreement has been duly and validly authorized, executed and delivered by
such Selling Stockholder and constitutes a legal, valid and binding
obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, except (i) as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles and (ii)
to the extent that rights to indemnity or contribution under this Agreement
may be limited by Federal and state securities laws or the public policy
underlying such laws.
(h) All information furnished to the Company by such Selling
Stockholder or on such Selling Stockholder's behalf for use in connection
with the preparation of the Registration Statement and Prospectus
(including, without limiting the generality of the foregoing, all
representations and warranties of such Selling Stockholder in such Selling
Stockholder's Power of Attorney and the information relating to such
Selling Stockholder which is set forth in the Registration Statement under
the caption "Principal and Selling Stockholders') is true and correct and
does not omit any material fact necessary to make such information not
misleading.
(i) The sale by such Selling Stockholder of Shares pursuant hereto is
not prompted by any adverse information concerning the Company.
(j) Such Selling Stockholder has not since the filing of the
Registration Statement (i) sold, bid for, purchased, attempted to induce
any person to purchase, or paid anyone any compensation for soliciting
purchases of, the Common Shares or (ii) paid or agreed to pay to any person
any compensation for soliciting another to purchase any securities of the
Company, except for the sale of the Shares by the Selling Stockholders
under this Agreement.
(k) Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Shares to
facilitate the sale or resale of the Shares.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 7(A)(a) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Representatives.
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<PAGE> 11
(c) The representations and warranties of the Company and the Selling
Stockholders contained in this Agreement and in the certificates delivered
pursuant to Section 6(d) and 6(e), respectively, shall be true and correct
when made and on and as of each Closing Date as if made on such date and
the Company and the Selling Stockholders shall have performed all covenants
and agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by it at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that the
signers of such certificate have carefully examined the Registration
Statement, the Prospectus and this Agreement and that the representations
and warranties of the Company in this Agreement are true and correct on and
as of such Closing Date with the same effect as if made on such Closing
Date and the Company has performed all covenants and agreements and
satisfied all conditions contained in this Agreement required to be
performed or satisfied by it at or prior to such Closing Date.
(e) The Representatives shall have received on the Firm Shares Closing
Date a certificate, addressed to the Representatives and dated such Closing
Date, of each Selling Stockholder, to the effect that such Selling
Stockholder has carefully examined the Registration Statement, the
Prospectus and this Agreement and that the representations and warranties
of such Selling Stockholder in this Agreement are true and correct on and
as of such Closing Date with the same effect as if made on such Closing
Date and such Selling Stockholder has performed all covenants and
agreements and satisfied all conditions contained in this Agreement
required to be performed or satisfied by such Selling Stockholder at or
prior to such Closing Date.
(f) The Representatives shall have received on the Effective Date, at
the time this Agreement is executed and on each Closing Date a signed
letter from Coopers & Lybrand LLP addressed to the Representatives and
dated, respectively, the Effective Date, the date of this Agreement and
each such Closing Date, in form and substance reasonably satisfactory to
the Representatives, confirming that they are independent accountants
within the meaning of the Securities Act and the Rules, that the response
to Item 10 of the Registration Statement is correct insofar as it relates
to them and stating in effect that:
(i) In their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and Rules;
(ii) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings "Summary
Financial Information" and "Selected Financial Data," carrying out
certain procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth
in such letter, a reading of the minutes of the meetings of the
stockholders and directors of the Company, and inquiries of certain
officials of the Company who have
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<PAGE> 12
responsibility for financial and accounting matters of the Company as
to transactions and events subsequent to the date of the latest
audited financial statements, except as disclosed in the Registration
Statement and the Prospectus, nothing came to their attention which
caused them to believe that:
(A) the amounts in "Summary Financial Information," and
"Selected Financial Data" included in the Registration Statement
and the Prospectus do not agree with the corresponding amounts in
the audited [and unaudited financial statements] from which such
amounts were derived; or
[(B) with respect to the Company, there were, at a specified
date not more than five business days prior to the date of the
letter, any increases in the current liabilities and long-term
liabilities of the Company or any decreases in net income or in
working capital or the stockholders' equity in the Company, as
compared with the amounts shown on the Company's audited balance
sheet for the year ended December 31, 1995 included in the
Registration Statement;]
(iii) they have performed certain other procedures as a result of
which they determined that certain information of an accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth in the Registration
Statement and the Prospectus and reasonably specified by the
Representatives agrees with the accounting records of the Company.
References to the Registration Statement and the Prospectus in this
paragraph (f) are to such documents as amended and supplemented at the
date of the letter.
(g) The Representatives shall have received on each Closing Date:
(i) an opinion from Hutchins, Wheeler & Dittmar, counsel for the
Company, addressed to the Representatives, dated each Closing Date,
stating in effect that:
(A) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Massachusetts. To the best of such counsel's
knowledge, the Company has no subsidiary and does not control,
directly or indirectly, any corporation, partnership, joint
venture, association or other business organization. The Company
is duly qualified and in good standing as a foreign corporation
in each jurisdiction in which the character or location of its
assets or properties (owned, leased or licensed) or the nature of
its businesses makes such qualification necessary, except for
such jurisdictions where the failure to so qualify would not have
a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company.
(B) The Company has all requisite corporate power and
authority to own, lease and license its assets and properties and
conduct its business as now being conducted and as described in
the
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<PAGE> 13
Registration Statement and the Prospectus; and the Company has
all requisite corporate power and authority and all necessary
authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform this
Agreement and to issue and sell the Shares other than those
required under state and foreign Blue Sky laws.
(C) The Company has authorized and issued capital stock as
set forth in the Registration Statement and the Prospectus; the
certificates evidencing the Shares are in due and proper legal
form and have been duly authorized for issuance by the Company;
all of the outstanding shares of Common Stock of the Company have
been duly and validly authorized and have been duly and validly
issued and are fully paid and nonassessable and none of them was
issued in violation of any preemptive or other similar right. The
Shares when issued and sold pursuant to this Agreement will be
duly and validly issued, outstanding, fully paid and
nonassessable and none of them will have been issued in violation
of any preemptive or other similar right. To the best of such
counsel's knowledge, except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any share of stock of
the Company or any security convertible into, exercisable for, or
exchangeable for stock of the Company. The Common Stock and the
Shares conform in all material respects to the descriptions
thereof contained in the Registration Statement and the
Prospectus.
(D) The agreement of the Company's stockholders set forth on
Schedule III to this Agreement and directors and officers stating
that (except in the case of the Selling Stockholders, for the
sale of the Shares to be sold by the Selling Stockholders
pursuant to the Registration Statement) for a period of 180 days
from the date of this Agreement they will not, without the
Representatives' prior written consent, directly or indirectly
Transfer, or offer, contract or otherwise agree to Transfer, any
Common Stock or any other securities convertible into or
exchangeable for Common Stock or any other equity securities
owned by them, except for (i) sales to the several Underwriters
pursuant to this Agreement or (ii) pursuant to will or the laws
of intestate succession, provided the transferee thereof agrees
in writing to be bound by such restrictions, has been duly and
validly executed and delivered by such persons and constitutes
the legal, valid and binding obligation of each such person
enforceable against each such person in accordance with its
terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles.
(E) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the
Shares. This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company enforceable against
the
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<PAGE> 14
Company in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (ii) to the
extent that rights to indemnity or contribution under this
Agreement may be limited by Federal or state securities laws or
the public policy underlying such laws.
(F) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation,
the issuance and sale by the Company of the Shares to be issued
and sold by the Company) will give rise to a right to terminate
or accelerate the due date of any payment due under, or conflict
with or result in the breach of any term or provision of, or
constitute a default (or any event which with notice or lapse of
time, or both, would constitute a default) under, or require
consent or waiver under, or result in the execution or imposition
of any lien, charge or encumbrance upon any properties or assets
of the Company pursuant to the terms of any indenture, mortgage,
deed of trust, note or other agreement or instrument of which
such counsel is aware and to which the Company is a party or by
which it or any of its properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute,
rule or regulation of which such counsel is aware or violate any
provision of the Articles of Organization, as amended, or
By-Laws, as amended, of the Company.
(G) To the best of such counsel's knowledge, no default
exists, and no event has occurred which with notice or lapse of
time, or both, would constitute a default, in the due performance
and observance of any term, covenant or condition by the Company
of any indenture, mortgage, deed of trust, note or any other
agreement or instrument to which the Company is a party or by
which it or any of its assets or properties or businesses may be
bound or affected, where the consequences of such default would
have a material adverse effect on the assets or properties,
businesses, results of operations, prospects or condition
(financial or otherwise) of the Company.
(H) To the best of such counsel's knowledge, the Company is
not in violation of any term or provision of its Articles of
Organization, as amended, or By-Laws, as amended, or any
franchise, license, permit, judgment, decree, order, statute,
rule or regulation, where the consequences of such violation
would have a material adverse effect on the assets or properties,
businesses, results of operations, prospects or condition
(financial or otherwise) of the Company.
(I) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
performance of this Agreement by the Company or the consummation
of the transactions contemplated hereby, except such
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<PAGE> 15
as have been obtained under the Securities Act and such as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the several
Underwriters.
(J) To the best of such counsel's knowledge, there is no
litigation or governmental or other proceeding or investigation,
before any court or before or by any public body or board pending
or threatened against, or involving the assets, properties or
businesses of, the Company which would have a material adverse
effect upon the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of
the Company.
(K) The statements in the Prospectus under the captions
"Description of Capital Stock," "Principal and Selling
Stockholders," "Certain Transactions," "Shares Eligible for
Future Sale" [and "________________________"] insofar as such
statements constitute a summary of documents referred to therein
or matters of law, are fair summaries in all material respects
and accurately present the information called for with respect to
such documents and matters. All contracts and other documents
required to be filed as exhibits to, or described in, the
Registration Statement have been so filed with the Commission or
are fairly described in the Registration Statement, as the case
may be.
(L) The Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto
(except for the financial statements and schedules and other
financial and statistical data included therein, as to which such
counsel need not express an opinion) comply as to form in all
material respects with the requirements of the Securities Act and
the Rules.
(M) The Registration Statement has become effective under
the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are
threatened, pending or contemplated.
To the extent deemed advisable by such counsel, they may rely as
to matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the State of New York, the Commonwealth of Massachusetts and the Federal laws of
the United States; provided that such counsel shall state that in their opinion
the Underwriters and they are justified in relying on such other opinions.
Copies of such certificates and other opinions shall be furnished to the
Representatives and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy,
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<PAGE> 16
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing opinion), on
the basis of the foregoing, no facts have come to the attention of such counsel
which lead such counsel to believe that the Registration Statement at the time
it became effective (except with respect to the financial statements and notes
and schedules thereto and other financial data, as to which such counsel need
express no belief) contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements and notes and
schedules thereto and other financial data, as to which such counsel need make
no statement) on the date thereof contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(i) an opinion from ____________________, counsel for the Selling
Stockholders, addressed to the Representatives, dated the Firm Shares
Closing Date, stating in effect that:
(A) Assuming that the Underwriters acquire their respective
interests in the Shares to be sold by the Selling Stockholders in
good faith and without notice of any adverse claims (within the
meaning of Section 8-302 of the Uniform Commercial Code), upon
delivery to the Underwriters of such Shares registered in their
names, the Underwriters will acquire good and marketable title to
such Shares free and clear of all liens, charges, claims,
security interests, encumbrances, pledges, stockholders'
agreements, voting trusts and any other restrictions whatsoever.
(B) The execution, delivery and performance of this
Agreement, the Power of Attorney and the Custody Agreement and
the consummation of the transactions to be performed by each such
Selling Stockholder contemplated hereby and thereby (including,
without limitation, the delivery and sale of the Shares to be
delivered and sold by such Selling Stockholder hereunder and
thereunder), will not give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict
with or result in the breach or violation of any term or
provision of, or constitute a default (or any event which with
notice or lapse of time, or both would constitute a default)
under, or require consent or waiver under, or result in the
execution or imposition of any lien, charge or encumbrance upon
any properties or assets of such Selling Stockholder pursuant to
the terms of any indenture, mortgage, deed of trust, note or
other agreement or instrument to which such Selling Stockholder
is a party or bound or by which it or any of such Selling
Stockholder's assets, properties or businesses are subject or
affected, or any franchise, license, consent, certificate,
permit, judgment, decree, order, notice, plan, code, statute,
rule or regulation of which such counsel is aware or result in
the creation of imposition of any lien, charge, claim,
encumbrance, security interest or restriction whatsoever upon the
Shares to be sold by such Selling Stockholder.
(C) No consent, approval, authorization, license,
certificate, permit or order of any court, governmental or
regulatory agency, authority or body or financial institution is
required in connection
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<PAGE> 17
with the performance of this Agreement by each Selling
Stockholder or the consummation of the transactions contemplated
hereby, by the Power of Attorney or by the Custody Agreement,
including the delivery and sale of the Shares to be delivered and
sold by such Selling Stockholder, except such as have been
obtained under the Securities Act and such as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the several
Underwriters.
(D) Each of this Agreement, the Power of Attorney and the
Custody Agreement has been duly and validly authorized, executed
and delivered by each Selling Stockholder and constitutes a
legal, valid, and binding obligation of such Selling Stockholder,
enforceable against such Selling Stockholder in accordance with
its terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) to the extent that rights to
indemnity or contribution under this Agreement may be limited by
Federal and state securities laws or the public policy underlying
such laws.
To the extent deemed advisable by such counsel, they may rely as
to matters of fact on certificates of the Selling Stockholders and on the
opinions of other counsel satisfactory to the Representatives as to matters
which are governed by laws other than the laws of the State of New York, the
Commonwealth of Massachusetts and the Federal laws of the United States;
provided that such counsel shall state that in their opinion the Underwriters
and they are justified in relying on such other opinions. Copies of such
certificates and other opinions shall be furnished to the Representatives and
counsel for the Underwriters.
(h) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives and their counsel
and the Underwriters shall have received from Hale and Dorr LLP a favorable
opinion, addressed to the Representatives and dated such Closing Date, with
respect to the Shares, the Registration Statement and the Prospectus, and
such other related matters, as the Representatives may reasonably request,
and the Company shall have furnished to Hale and Dorr LLP such documents as
they may reasonably request for the purpose of enabling them to pass upon
such matters.
(i) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives, and dated such Closing Date,
of an executive officer of the Company to the effect that the signer of
such certificate has reviewed and understands the provisions of Section
517.075 of the Florida Statutes, and represents that the Company has
complied, and at all times will comply, with all provisions of Section
517.075 and further, that as of such Closing Date, neither the Company nor
any of its affiliates does business with the government of Cuba or with any
person or affiliate located in Cuba.
(j) The Representatives shall have received from each of the
stockholders listed on schedule III hereto and each director and executive
officer of the Company the enforceable written agreements described in
Section 4(o).
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<PAGE> 18
7. Covenants of the Company.
------------------------
(A) The Company covenants and agrees as follows:
(a) The Company shall prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the
second business day following the execution and delivery of this Agreement,
or, if applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities Act, and shall promptly advise the Representatives (i)
when any amendment to the Registration Statement shall have become
effective, (ii) of any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any additional information,
(iii) of the prevention or suspension of the use of any preliminary
prospectus or the Prospectus or of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the institution or threatening of any proceeding for that purpose and (iv)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose. The
Company shall not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Company has furnished the
Representatives a copy for its review prior to filing and shall not file
any such proposed amendment or supplement to which the Representatives
reasonably object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Securities Act and the Rules, any event
occurs as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the
Securities Act or the Rules, the Company promptly shall prepare and file
with the Commission, subject to the second sentence of paragraph (a) of
this Section 7(A), an amendment or supplement which shall correct such
statement or omission or an amendment which shall effect such compliance.
(c) The Company shall make generally available to its security holders
and to the Representatives as soon as practicable, but not later than 45
days after the end of the 12-month period beginning at the end of the
fiscal quarter of the Company during which the Effective Date occurs (or 90
days if such 12-month period coincides with the Company's fiscal year), an
earning statement (which need not be audited) of the Company, covering such
12-month period, which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Rules.
(d) The Company shall furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Registration
Statement (including all exhibits thereto and amendments thereof), and to
each other Underwriter a copy of the Registration Statement (without
including all exhibits thereto and all amendments thereof), and, so long as
delivery of a prospectus by an underwriter or dealer may be required by the
Securities Act or the Rules, as
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<PAGE> 19
many copies of any preliminary prospectus and the Prospectus and any
amendments thereof and supplements thereto as the Representatives may
reasonably request.
(e) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale under the
laws of such jurisdictions as the Representatives may designate and shall
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided, however, that the Company shall not
be required in connection therewith, as a condition thereof, to qualify as
a foreign corporation or to execute a general consent to service of process
in any jurisdiction or subject itself to taxation as doing business in any
jurisdiction.
(f) For a period of five years after the date of this Agreement, the
Company shall supply to the Representatives and to each other Underwriter
who may so request in writing, copies of such financial statements and
other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock and
to furnish to the Representatives a copy of each annual or other report it
shall be required to file with the Commission (including the Report on Form
SR required by Rule 463 of the Rules).
(g) Without the prior written consent of the Representatives, for a
period of 180 days after the date of this Agreement, the Company shall not
issue, sell or register with the Commission (other than on Form S-8 or on
any successor form), or otherwise dispose of, directly or indirectly, any
equity securities of the Company (or any securities convertible into or
exercisable or exchangeable for equity securities of the Company), except
for the issuance of the Shares pursuant to the Registration Statement, and
the issuance of shares pursuant to the Company's existing stock option plan
or bonus plan. In the event that during this period, (i) any shares are
issued pursuant to the Company's existing stock option plan or bonus plan
or (ii) any registration is effected on Form S-8 or on any successor form,
the Company shall obtain the written agreement of such grantee or purchaser
or holder of such registered securities that, for a period of 180 days
after the date of this Agreement, such person will not, without the prior
written consent of the Representatives, offer for sale, sell, distribute,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, or exercise any registration rights with respect to, any shares
of Common Stock (or any securities convertible into, exercisable for, or
exchangeable for any shares of Common Stock) owned by such person.
(h) The Company shall cause each director and executive officer of the
Company and each stockholder set forth on Schedule III to this Agreement to
deliver to the Representatives his or her enforceable written agreement
that, except, in the case of a Selling Stockholder, for the sale of the
Shares to be sold by such Selling Stockholder pursuant to the Registration
Statement, he or she will not, without the prior written consent of
Oppenheimer & Co., Inc., directly or indirectly, Transfer, or offer,
contract or otherwise agree to Transfer, any Common Stock or any other
securities convertible into or exchangeable for Common Stock or any other
equity securities of the Company until 180 days after the date of this
Agreement, except for (i) sales to the several Underwriters pursuant to
this Agreement or (ii) pursuant to will or the laws of intestate
succession, provided the transferee thereof agrees in writing to be bound
by such restrictions.
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<PAGE> 20
(i) On or before completion of this offering, the Company shall make
all filings required under applicable securities laws and by the NASDAQ
National Market System (including any required registration under the
Exchange Act).
(B) The Company agrees to pay, or reimburse if reasonably paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company and of the Selling Stockholders under this Agreement including those
relating to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the Registration
Statement and the Prospectus, and the printing, filing and distribution of this
Agreement; (ii) the preparation and delivery of certificates for the Shares to
the Underwriters; (iii) the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the various
jurisdictions referred to in Section 7(A)(e), including the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
registration and qualification and the preparation, distribution and shipment of
preliminary and supplementary Blue Sky memoranda; (iv) the furnishing (including
costs of shipping and mailing) to the Representatives and to the Underwriters of
copies of each preliminary prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by this
Section to be so furnished, as may be reasonably requested for use in connection
with the offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold; (v) the filing fees of the National Association of
Securities Dealers, Inc. in connection with its review of the terms of the
public offering; (vi) the furnishing (including costs of shipping and mailing)
to the Representatives and to the Underwriters of copies of all reports and
information required by Section 7(A)(f); (vii) inclusion of the Shares for
quotation on the NASDAQ National Market System; and (viii) all transfer taxes,
if any, with respect to the sale and delivery of the Shares by the Company and
the Selling Stockholders to the Underwriters. Subject to the provisions of
Section 10, the Underwriters agree to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated, all costs
and expenses incident to the performance of the obligations of the Underwriters
under this Agreement not payable by the Company pursuant to the preceding
sentence, including, without limitation, the fees and disbursements of counsel
for the Underwriters.
8. Indemnification.
---------------
(a) The Company and each Selling Stockholder agree, jointly and
severally, to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act against any and all
losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding
or any claim asserted), to which they, or any of them, may become subject
under the Securities Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment
thereof or supplement thereto, or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that such indemnity shall not inure to the
benefit of any Underwriter (or
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<PAGE> 21
any person controlling such Underwriter) on account of any losses, claims,
damages or liabilities arising from the sale of the Shares to any person by
such Underwriter if such untrue statement or omission or alleged untrue
statement or omission was made in such preliminary prospectus, the
Registration Statement or the Prospectus, or such amendment or supplement,
in reliance upon and in conformity with information furnished in writing to
the Company by the Representatives on behalf of any Underwriter
specifically for use therein. Notwithstanding the foregoing, the liability
of each Selling Stockholder pursuant to the provisions of this Section 8(a)
shall be limited to an amount equal to the aggregate net proceeds received
by such Selling Stockholder from the sale of the Shares sold by such
Selling Stockholder hereunder. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Stockholders, each person, if
any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of the
Company, and each officer of the Company who signs the Registration
Statement, to the same extent as the foregoing indemnity from the Company
or such Selling Stockholder to each Underwriter, but only insofar as such
losses, claims, damages or liabilities arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission which
was made in any preliminary prospectus, the Registration Statement or the
Prospectus, or any amendment thereof or supplement thereto, contained in
the last paragraph of the cover page of the Prospectus, in the paragraph
relating to stabilization on the inside front cover page of the Prospectus
and the first four paragraphs under the caption "Underwriting" in the
Prospectus; provided, however, that the obligation of each Underwriter to
indemnify the Company or any Selling Stockholder (including any controlling
person, director or officer thereof) shall be limited to the net proceeds
received by the Company or the Selling Stockholder, as the case may be,
from such Underwriter.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 8(a) or 8(b) shall be available to
any party who shall fail to give notice as provided in this Section 8(c) if
the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
that it may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and the approval by
the indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except as
provided below and except for the reasonable costs of investigation
-21-
<PAGE> 22
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the indemnifying
parties and the indemnified party in the conduct of the defense of such
action (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or
(iii) the indemnifying parties shall not have employed counsel to assume
the defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action,
suit, proceeding or claim effected without its written consent.
9. CONTRIBUTION. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section 8(a) or 8(b)
for any reason is unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b), then each indemnifying party shall contribute
to the aggregate losses, claims, damages and liabilities (including any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claims asserted) to which the indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other from the offering of the Shares or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 8 hereof,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company and the Selling
Stockholders on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, the Selling Stockholders and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts but before deducting
expenses) received by the Company or the Selling Stockholders, as set forth in
the table on the cover page of the Prospectus, bear to (y) the underwriting
discounts received by the Underwriters, as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company, the Selling
Stockholders or the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
related to information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Selling Stockholders and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 9, (i) in no case shall any Underwriter (except as may be provided
in the Agreement Among Underwriters) be liable or responsible for any amount in
excess of the underwriting discount applicable to the Shares purchased by such
Underwriter hereunder, (ii) the Company shall be liable and responsible for any
amount in excess of such underwriting discount and (iii) in no case shall any
Selling Stockholder be liable and responsible for any amount in excess of the
aggregate net proceeds of the sale of Shares received by such
-22-
<PAGE> 23
Selling Stockholder hereunder; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act shall have the
same rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of the Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i), (ii) and (iii) in the immediately preceding sentence of this Section 9. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section, notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties from whom
contribution may be sought shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section. No party shall be liable for
contribution, with respect to any action, suit, proceeding or claim settled
without its written consent. The Underwriter's obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
10. TERMINATION. This Agreement may be terminated with respect to the
Shares to be purchased on a Closing Date by the Representatives by notifying the
Company or the Selling Stockholders at any time
(a) in the absolute discretion of the Representatives at or before any
Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any new outbreak or
material escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as to make
it, in the judgment of the Representatives, inadvisable to proceed with the
offering; (iii) if there shall be such a material adverse change in general
financial, political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as to make
it, in the judgment of the Representatives, inadvisable or impracticable to
market the Shares; (iv) if trading in the Shares has been suspended by the
Commission or trading generally on the New York Stock Exchange, Inc., on
the American Stock Exchange, Inc. or on the NASDAQ National Market System
has been suspended or limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for
securities have been required, by said exchanges or by order of the
Commission, the National Association of Securities Dealers, Inc., or any
other governmental or regulatory authority; or (v) if a banking moratorium
has been declared by any state or Federal authority, or
(b) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as required
by this Agreement.
If this Agreement is terminated pursuant to any of its provisions, neither
the Company nor any of the Selling Stockholders shall be under any liability to
any Underwriter (except as set forth in Section 7(B) and Sections 8 and 9), and
no Underwriter shall be under any liability to the Company, except that (y) if
this Agreement is terminated by the Representatives or the Underwriters because
of any
-23-
<PAGE> 24
failure, refusal or inability on the part of the Company or the Selling
Stockholders to comply with the terms or to fulfill any of the conditions of
this Agreement, the Company will reimburse the Underwriters for all
out-of-pocket expenses (including the reasonable fees and disbursements of their
counsel) incurred by them in connection with the proposed purchase and sale of
the Shares or in contemplation of performing their obligations hereunder and (z)
no Underwriter who shall have failed or refused to purchase the Shares agreed to
be purchased by it under this Agreement, without some reason sufficient
hereunder to justify cancellation or termination of its obligations under this
Agreement, shall be relieved of liability to the Company, the Selling
Stockholders or to the other Underwriters for damages occasioned by its failure
or refusal.
11. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters shall
fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 10) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase such
Shares on the terms herein set forth in proportion to their respective
obligations hereunder; provided, that in no event shall the maximum number
of Shares that any Underwriter has agreed to purchase pursuant to Section 1
be increased pursuant to this Section 11 by more than one-ninth of such
number of Shares without the written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to an additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares upon
the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall have the
right to postpone the applicable Closing Date for a period of not more than five
business days in order that necessary changes and arrangements (including any
necessary amendments or supplements to the Registration Statement or Prospectus)
may be effected by the Representatives and the Company. If the number of Shares
to be purchased on such Closing Date by such defaulting Underwriter or
Underwriters shall exceed 10% of the Shares that all the Underwriters are
obligated to purchase on such Closing Date, and none of the nondefaulting
Underwriters or the Company shall make arrangements pursuant to this Section
within the period stated for the purchase of the Shares that the defaulting
Underwriters agreed to purchase, this Agreement shall terminate with respect to
the Shares to be purchased on such Closing Date without liability on the part of
any nondefaulting Underwriter to the Company or the Selling Stockholders and
without liability on the part of the Company or the Selling Stockholders, except
in both cases as
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<PAGE> 25
provided in Sections 7(B), 8, 9 and 10. The provisions of this Section shall not
in any way affect the liability of any defaulting Underwriter to the Company,
the Selling Stockholders or to the nondefaulting Underwriters arising out of
such default. A substitute underwriter hereunder shall become an Underwriter for
all purposes of this Agreement.
12. MISCELLANEOUS. The respective agreements, representations, warranties,
indemnities and other statements of the Company or its directors or officers, of
the Selling Stockholders and the Underwriters set forth in or made pursuant to
this Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or the
Selling Stockholders or any of the officers, directors or controlling persons
referred to in Sections 8 and 9 hereof, and shall survive delivery of and
payment for the Shares. The provisions of Sections 7(B), 8, 9 and 10 shall
survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters,
the Company and the Selling Stockholders and their respective successors and
assigns, and, to the extent expressed herein, for the benefit of persons
controlling any of the Underwriters, or the Company, and directors and officers
of the Company, and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser of Shares from any
Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Representatives, c/o Oppenheimer & Co., Inc., Oppenheimer Tower, World
Financial Center, New York, New York 10281 Attention: Stanley B. Stern; (b) if
to the Company, to its agent for service as such agent's address appears on the
cover page of the Registration Statement; and (c) if to a Selling Stockholder,
to the Attorneys-in-Fact, c/o ______________.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflict of laws.
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<PAGE> 26
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among
us.
Very truly yours,
VOICETEK CORPORATION
By:
--------------------------
Name: Sheldon L. Dinkes
Title: Chief Executive
Officer
Confirmed:
OPPENHEIMER & CO., INC.
FIRST ALBANY CORPORATION
Acting severally on behalf of
themselves and as Representatives
of the several Underwriters named
in Schedule I annexed hereto
OPPENHEIMER & CO., INC.
By:
---------------------------------------
Name: Stanley B. Stern
Title: Managing Director
FIRST ALBANY CORPORATION
By:
---------------------------------------
Name: Kenneth Mabbs
Title: Director - Corporate Finance
-26-
<PAGE> 27
SCHEDULE I
NUMBER OF FIRM SHARES TO
NAME BE PURCHASED
---- ------------------------
Oppenheimer & Co., Inc.
First Albany Corporation
Total
-----
-27-
<PAGE> 28
SCHEDULE II
SELLING STOCKHOLDERS
NUMBER OF FIRM SHARES TO
SELLING STOCKHOLDER BE SOLD
------------------- ------------------------
Total
-----
-28-
<PAGE> 29
SCHEDULE III
STOCKHOLDERS EXECUTING CERTAIN
AGREEMENTS PURSUANT TO SECTION 7(A)(h)
-29-
<PAGE> 1
EXHIBIT 3.1
THE COMMONWEALTH OF MASSACHUSETTS
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth FEDERAL IDENTIFICATION
ONE ASHBURTON PLACE, BOSTON, MASS: 02108 NO. 04-2675674
----------
RESTATED ARTICLES OF ORGANIZATION
GENERAL LAWS, CHAPTER 156B, SECTION 74
This certificate must be submitted to the Secretary of the Commonwealth
within sixty days after the date of the vote of stockholders adopting the
restated articles of organization. The fee for filing this certificate is
prescribed by General Laws, Chapter 156B, Section 114. Make check payable to the
Commonwealth of Massachusetts.
----------
We, Sheldon L. Dinkes , President and
Anthony J. Medaglia, Jr. , Clerk of
Voicetek Corporation
- --------------------------------------------------------------------------------
(Name of Corporation)
located at 19 Alpha Road, Chemlsford, MA 01824
---------------------------------------------------------------------
do hereby certify that the following restatement of the articles of organization
of the corporation was duly adopted at a meeting held on __________, 199__, by
vote of
Common
- --------- shares of ---------------- out of ------------ shares outstanding
(Class of Stock)
Preferred
- --------- shares of ---------------- out of ------------ shares outstanding, and
(Class of Stock)
- --------- shares of ---------------- out of ------------ shares outstanding.
(Class of Stock)
being at least two-thirds of each class of stock outstanding and entitled to
vote and of each class or series of stock adversely affected thereby:
1. THE NAME BY WHICH THE CORPORATION SHALL BE KNOWN IS:
Voicetek Corporation
2. THE PURPOSES FOR WHICH THE CORPORATION IS FORMED ARE AS FOLLOWS:
See continuation sheets attached.
<PAGE> 2
3. THE TOTAL NUMBER OF SHARES AND THE PAR VALUE, IF ANY, OF EACH
CLASS OF STOCK WHICH THE CORPORATION IS AUTHORIZED TO ISSUE IS AS
FOLLOWS:
WITHOUT PAR VALUE WITH PAR VALUE
----------------- --------------
CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
- -------------- ---------------- ---------------- ---------
PREFERRED None 1,000,000 $ .01
COMMON 30,000,000 $.01
*4. IF MORE THAN ONE CLASS IS AUTHORIZED, A DESCRIPTION OF EACH OF THE
DIFFERENT CLASSES OF STOCK WITH, IF ANY, THE PREFERENCES, VOTING
POWERS, QUALIFICATIONS, SPECIAL OR RELATIVE RIGHTS OR PRIVILEGES
AS TO EACH CLASS THEREOF AND ANY SERIES NOW ESTABLISHED:
See continuation sheet attached.
*5. THE RESTRICTIONS, IF ANY, IMPOSED BY THE ARTICLES OF ORGANIZATION
UPON THE TRANSFER OF SHARES OF STOCK OF ANY CLASS ARE AS FOLLOWS:
None.
*6. OTHER LAWFUL PROVISIONS, IF ANY, FOR THE CONDUCT AND REGULATION OF
THE BUSINESS AND AFFAIRS OF THE CORPORATION, FOR ITS VOLUNTARY
DISSOLUTION, OR FOR DEFINING, OR REGULATING THE POWERS OF THE
CORPORATION, OR OF ITS DIRECTORS OR STOCKHOLDERS, OR OF ANY CLASS
OF STOCKHOLDERS:
See continuation sheets attached.
* IF THERE ARE NO SUCH PROVISIONS, STATE "NONE".
<PAGE> 3
Articles of Organization
of
VOICETEK CORPORATION
Continuation Sheet
------------------
Article 2 continued:
The purposes of the Corporation shall be:
To engage in the business of developing, marketing and supplying
interactive communication systems; to make and enter into all kinds of
contracts, agreements and obligations by or with any persons, firms,
associations and corporations in furtherance of such activities, and, generally,
to perform any and all acts connected therewith, or incidental thereto, and all
acts proper or necessary for the purposes of this business.
To carry on any business or other activity which may lawfully be carried on
by a corporation organized under Chapter 156B of the Massachusetts General Laws
(the "Business Corporation Law"), whether or not related to those referred to in
the foregoing paragraph, whether or not related or similar to the activities
described in the preceding paragraph.
To carry on any business, operation or activity through a wholly owned or
partly owned subsidiary.
To carry on any business, operation or activity referred to in the
foregoing paragraphs to the same extent as might an individual, whether as
principal, agent, contractor or otherwise, and either alone or as a partner,
trustee, participant, member or stockholder of or in any form of partnership,
joint venture, corporation, association, trust, limited liability company or
other form of entity or with any individual, and, without limiting the
generality of the foregoing, to be a limited and/or general partner of any
partnership organized to carry on any business or activity of the type described
herein.
To have as additional purposes all powers granted and conferred by the laws
of The Commonwealth of Massachusetts upon business corporations organized under
the Business Corporation Law.
In these provisions, the enumeration of specific purposes or powers shall
not be construed to limit other statements of purposes or powers which this
Corporation may otherwise have under applicable law, all of the same being
separate and cumulative, and all of the same may be carried on, promoted and
pursued, transacted or exercised in any place in the world whatsoever.
<PAGE> 4
Continuation Sheet
------------------
DESCRIPTION OF CAPITAL STOCK
----------------------------
Article 4.
----------
A. AUTHORIZED SHARES. The aggregate number of shares which this
Corporation shall have authority to issue is: 40,000,000 shares of common stock
having no par value per share (the "Common Stock") and 1,000,000 shares of
preferred stock having a par value of $.01 per share (the "Series Preferred
Stock").
B. SERIES PREFERRED STOCK. Shares of Series Preferred Stock may be issued
from time to time in one or more series as may from time to time be determined
by the Board of Directors, each of said series to be distinctly designated. All
shares of any one series of the Series Preferred Stock shall be alike in every
particular, except that there may be different dates from which dividends, if
any, thereon shall be cumulative, if made cumulative. The voting powers, if any,
and the designations, preferences and relative, participating, optional or other
special rights or privileges of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding; and, subject to the provisions of
subparagraph 1 of Paragraph D hereof, there is hereby expressly vested in the
Board of Directors of the Corporation the authority to issue one or more series
of the Series Preferred Stock and to fix in the resolution or resolutions
providing for the issue of such stock adopted by the Board of Directors of the
Corporation the Voting powers, if any, and the designations, preferences and
relative, participating, optional or other special rights or privileges, and the
qualifications, limitations or restrictions of such series, including, but
without limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of, the
Series Preferred Stock which shall constitute such series. The
designation of a series of preferred stock need not include the words
"preferred" or "preference" and may be designated "special" or other
distinctive term. Unless otherwise provided in the resolution issuing
such series, the number of shares of any series of the Series
Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the Board of Directors
in the manner prescribed by law;
(2) The rate and times at which, and the terms and conditions upon
which, dividends, if any, on the Series Preferred Stock of such series
shall be paid, the extent of the preference or relation, if any, of
such dividends to the dividends payable on any other class or classes,
or series of the same or other classes of stock and whether such
dividends shall be cumulative or non-cumulative and, if cumulative,
the date from which such dividends shall be cumulative;
(3) Whether the series shall be convertible into, or exchangeable
for, at the option of the holders of the Series Preferred Stock of
such series or the Corporation or upon the happening of a specified
event, shares of any other class or classes or any other series of the
same or any other class or classes of stock of the Corporation, and
the
<PAGE> 5
terms and conditions of such conversion or exchange, including
provisions for the adjustment of any such conversion rate in such
events as the Board of Directors shall determine;
(4) Whether or not the Series Preferred Stock of such series shall be
subject to redemption at the option of the Corporation or the holders
of such series or upon the happening of a specified event, and the
redemption price or prices and the time or times at which, and the
terms and conditions upon which, the Series Preferred Stock of such
series may be redeemed;
(5) The rights, if any, of the holders of the Series Preferred Stock
of such series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation;
(6) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for the Series Preferred Stock of such series;
and
(7) Subject to subparagraph 5 of Paragraph D hereof, whether such
series of the Series Preferred Stock shall have full, limited or no
voting powers including, without limiting the generality of the
foregoing, whether such series shall have the right, voting as a
series by itself or together with other series of the Series Preferred
Stock or all series of the Series Preferred Stock as a class, to elect
one or more directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series of the
Series Preferred Stock or under such other circumstances and on such
conditions as the Board of Directors may determine.
C. Common Stock.
------------
(1) After the Corporation has complied with the requirements, if any,
fixed in accordance with the provisions of Paragraph B hereof with
respect to (a) dividends on series of the Series Preferred Stock (in
accordance with the relative preferences among such series), and (b)
the setting aside of sums as sinking funds or redemption or purchase
accounts for series of the Series Preferred Stock (in accordance with
the relative preferences among such series), and subject further to
any other conditions which may be fixed in accordance with the
provisions of Paragraph B hereof, then, and not otherwise, the holders
of Common Stock shall be entitled to receive such dividends (either in
cash, stock or otherwise) as may be declared from time to time by the
Board of Directors out of assets of the Corporation legally available
therefor and the holders of the Series Preferred Stock shall not be
entitled to participate in any such dividends.
(2) After distribution in full of the preferential amount, if any, to
be distributed to the holders of series of the Series Preferred Stock
(in accordance with the relative preferences among such series) in the
event of voluntary or involuntary liquidation,
- 3 -
<PAGE> 6
distribution, dissolution or winding-up, of the Corporation, the
holders of the Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and intangible, of
whatever kind available for distribution to shareholders, ratably in
proportion to the number of shares of Common Stock held by them
respectively.
(3) Except as may otherwise be required by law, each holder of Common
Stock shall have one vote in respect of each share of Common Stock
held by him on all matters voted upon by the shareholders.
D. Other Provisions.
----------------
(1) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class
or series of stock or of other securities of the Corporation shall
have any preemptive right to purchase or subscribe for any unissued
stock of any class or series or any additional shares of any class or
series to be issued by reason of any increase of the authorized
capital stock of the Corporation of any class or series, or bonds,
certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock of the Corporation of any
class or series, or carrying any right to purchase stock of any class
or series, but any such unissued stock, additional authorized issue of
shares of any class or series of stock or securities convertible into
or exchangeable for stock, or carrying any right to purchase stock,
may be issued and disposed of pursuant to resolution of the Board of
Directors to such persons, firms, corporations or associations
(including such holders or others) and upon such terms as may be
deemed advisable by the Board of Directors in the exercise of its sole
discretion.
(2) The relative powers, preferences and rights of each series of the
Series Preferred Stock in relation to the powers, preferences and
rights of each other series of the Series Preferred Stock shall, in
each case, be as fixed from time to time by the Board of Directors in
the resolution or resolutions adopted pursuant to authority granted in
Paragraph B hereof. The consent, by class or series vote or otherwise,
of the holders of such of the series of the Series Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of the Series
Preferred Stock whether or not the powers, preferences and rights of
such other series shall be fixed by the Board of Directors as senior
to, or on a parity with, the powers, preferences and rights of such
outstanding series, or any of them; provided, however, that the Board
of Directors may provide in the resolution or resolutions as to any
series of the Series Preferred Stock adopted pursuant to Paragraph B
hereof, the conditions, if any, under which the consent of the holders
of a majority (or such greater proportion as shall be fixed therein)
of the outstanding shares of such series shall be require for the
issuance of any or all other series of the Series Preferred Stock.
- 4 -
<PAGE> 7
(3) Subject to the provisions of subparagraph 2 of this Paragraph D,
shares of any series of the series Preferred Stock may be issued from
time to time as the Board of Directors of the Corporation shall
determine and on such terms and for such consideration as shall be
fixed by the Board of Directors.
(4) Shares of authorized Common Stock may be issued from time to time
as the Board of Directors of the Corporation shall determine and on
such terms and for such consideration as shall be fixed by the Board
of Directors.
(5) The number of authorized shares of Common Stock and of the Series
Preferred Stock, without a class or series vote, may be increased or
decreased from time to time (but not below the number of shares
thereof then outstanding) by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
(6) Notwithstanding any other provisions of these Articles of
Organization or the by-laws of the Corporation or the fact that a
lesser percentage may be specified by law, these Articles of
Organization or the by-laws of the Corporation, the affirmative vote
of the holders of at least eighty (80%) percent of the combined voting
power of the outstanding stock of the Corporation entitled to vote
generally in the election of Directors ("Voting Stock"), voting
together as a single class, shall be required to amend, alter, adopt
any provision inconsistent with or to repeal this provision.
- 5 -
<PAGE> 8
ARTICLE 6. Other lawful provisions for the conduct and regulation of
the business and affairs of the Corporation, for its voluntary dissolution or
for limiting, defining or regulating the powers of the Corporation, or of its
Directors or stockholders, or of any class of stockholders:
No Director or officer shall be disqualified by his office from dealing or
contracting as vendor, purchaser or otherwise, whether in his individual
capacity or through any other corporation, trust, association or firm in which
he is interested as stockholder, director, trustee, partner or otherwise, with
the Corporation or any corporation, trust, association or firm in which the
Corporation shall be a stockholder or otherwise interested or which shall hold
stock or be otherwise interested in the Corporation, nor shall any such dealing
or contract be avoided, nor shall any Director or officer so dealing or
contracting be liable to account for any profit or benefit realized through any
such dealing or contract to the Corporation or to any stockholder or creditor
thereof solely because of the fiduciary relationship established by reason of
his holding such Directorship or office. Any such interest of a Director shall
not disqualify him from being counted in determining the existence of a quorum
at any meeting nor shall any such interest disqualify him from voting or
consenting as a Director or having his vote or consent counted in connection
with any such dealing or contract.
No stockholder shall be disqualified from dealing or contracting as vendor,
purchaser or otherwise, either in his individual capacity or through any other
corporation, trust, association or firm in which he is interested as a
stockholder, Director, trustee, partner or otherwise, with the Corporation or
any corporation, trust, association or firm in which the Corporation shall be a
stockholder or otherwise interested or which shall hold stock or be otherwise
interested in the Corporation, nor shall any such dealing or contract be
avoided, nor shall any stockholder so dealing or contracting be liable to
account for any profit or benefit realized through any such contract or dealing
to the Corporation or to any stockholder or creditor thereof by reason of such
stockholder holding stock in the Corporation to any amount, nor shall any
fiduciary relationship be deemed to be established by such stock holdings.
Meetings of the stockholders of the Corporation may be held at any place
within the United States.
Special meetings of stockholders of the Corporation may be called only by
the Board of Directors, the Chairman of the Board of Directors or the President.
No action required or permitted to be taken at any annual or special
meetings of the stockholders of the Corporation may be taken without a meeting,
unless the unanimous consent of stockholders entitled to vote thereon is
obtained. The Corporation may be a partner in any business enterprise it would
have power to conduct by itself.
The Directors may make, amend or repeal the by-laws in whole or in part,
except with respect to any provision thereof which by law, these Amended and
Restated Articles of Organization or the by-laws requires action by the
stockholders.
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<PAGE> 9
No Director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a Director
notwithstanding any statutory provision or other law imposing such liability,
except for liability of a Director (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section sixty-one or sixty-two of Chapter 156B of the
Massachusetts General Laws, or (iv) for any transaction from which the Director
derived an improper personal benefit.
Classified Board of Directors
(1) The Directors of the Corporation shall be divided into three classes:
Class I, Class II and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the whole number of the Board of Directors. If the
number of Directors is not evenly divisible by three, the Board of Directors
shall determine the number of Directors to be elected initially into each class.
The election of directors at a Special Meeting of stockholders held on March ,
1997 will determine the directors and their respective classes. Thereafter,
Class I Directors will hold office for a term to expire at the first annual
meeting of stockholders thereafter. Thereafter, Class II Directors will hold
office for a term to expire at the second annual meeting of stockholders
thereafter. Thereafter, Class III Directors will hold office for a term to
expire at the third annual meeting of stockholders thereafter. After the March
10, 1997 Special Meeting of Stockholders, the Directors elected to succeed those
whose terms expire shall be identified as being of the same class as the
Directors they succeed and shall be elected to hold office for a term to expire
at the third annual meeting of the stockholders after their election, and until
their respective successors are duly elected and qualified. If the number of
Directors changes, any increase or decrease in Directors shall be apportioned
among the classes so as to maintain all classes as equal in number as possible,
and any additional Director elected to any class shall hold office for a term
which shall coincide with the terms of the other Directors in such class and
until his successor is duly elected and qualified.
(2) Notwithstanding any other provisions of these Articles of Organization
or the by-laws of the Corporation or the fact that a lesser percentage may be
specified by law, these Articles of Organization or the by-laws of the
Corporation, the affirmative vote of the holders of at least eighty (80%)
percent of the combined voting power of the outstanding Voting Stock, voting
together as a single class, shall be required to amend, alter, adopt any
provision inconsistent with or to repeal this provision.
Vote Required for Certain Business Combinations
(A) In addition to any affirmative vote required by law or these Articles
of Organization, and except as otherwise expressly provided in Paragraph (B) of
this Provision:
1. any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (a) an Interested Stockholder (as hereinafter
defined) or (b) any other Corporation
- 7 -
<PAGE> 10
(whether or not itself an Interested Stockholder) which is, or after such merger
or consolidation would be, an Affiliate (as such term is hereinafter defined) of
an Interested Stockholder; or
2. any sale, lease, exchange, mortgage, pledge, grant of a security
interest, transfer or other disposition (in one transaction or a series of
transactions) to or with (a) an Interested Stockholder or (b) or any other
person (whether or not itself an Interested Stockholder) which is, or after such
sale, lease, exchange, mortgage, pledge, grant of security interest, transfer or
other disposition would be, an Affiliate of an Interested Stockholder, directly
or indirectly, of substantially all of the assets of the Corporation (including,
without limitation, any voting securities of a Subsidiary) or any Subsidiary; or
3. the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary, or both, to (a) an Interested Stockholder or (b)
any other person (whether or not itself an Interested Stockholder) which is, or
after such issuance or transfer would be, an Affiliate of an Interested
Stockholder in exchange for cash, securities or other property (or a combination
thereof); or
4. the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of an Interested Stockholder; or
5. any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or consolidation
of the Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving an Interested Stockholder)
which has the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary directly or indirectly beneficially owned
by (a) an Interested Stockholder or (b) any other person (whether or not itself
an Interested Stockholder) which is, or after such reclassification,
recapitalization, merger or consolidation or other transaction would be, an
Affiliate of an Interested Stockholder shall not be consummated unless such
consummation shall have been approved by the affirmative vote of the holders of
at least eighty (80%) percent of the combined voting power of the then
outstanding shares of Voting Stock (as hereinafter defined), voting together as
a single class. Such affirmative vote shall be required notwithstanding the
fact that no vote may be required, or that a lesser percentage may be
specified, by law, in these Articles of Organization or in any agreement with
any national securities exchange or otherwise.
(B) The provisions of Paragraph (A) of this Provision shall not be
applicable to any particular Business Combination (as hereinafter defined) and
such Business Combination shall require only such affirmative votes required by
law if the Business Combination shall have been approved by a majority of the
Continuing Directors (as hereinafter defined) or all of the following conditions
shall have been met:
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<PAGE> 11
1. The transaction constituting the Business Combination shall
provide for a consideration to be received by all holders of Common Stock in
exchange for all their shares of Common Stock, and the aggregate amount of the
cash and the Fair Market Value as of the date of the consummation of the
Business Combination of consideration other than cash to be received per share
by holders of Common Stock in such Business Combination shall be at least equal
to the higher of the following:
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid in
order to acquire any shares of Common Stock beneficially owned by an Interested
Stockholder (i) within the two-year period immediately prior to the Announcement
Date (as hereinafter defined), (ii) within the two-year period immediately prior
to the Determination Date (as hereinafter defined) or (iii) in the transaction
in which it became an Interested Stockholder, whichever is highest; or
(b) the Fair Market Value per share of Common Stock on the
Announcement Date or on the Determination Date, whichever is higher;
2. If the transaction constituting the Business Combination shall
provide for a consideration to be received by holders of any class or series of
outstanding Voting Stock other than Common Stock, the aggregate amount of the
cash and the Fair Market Value as of the date of the consummation of the
Business Combination of consideration other than cash to be received per share
by holders of shares of such class or series of Voting Stock shall be at least
equal to the highest of the following (it being intended that the requirements
of this subparagraph 2 shall be required to be met with respect to every class
or series of outstanding Voting Stock, whether or not an Interested Stockholder
has previously acquired any shares of a particular class of Voting Stock):
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers, fees) paid in
order to acquire any shares of-such class or series of Voting Stock beneficially
owned by an Interested Stockholder (i) within the two-year period immediately
prior to the Announcement Date, (ii) within the two-year period immediately
prior to the Determination Date, or (ii) in the transaction in which it became
an Interested Stockholder, whichever is highest; or
(b) the Fair Market Value per share of such class or series of
Voting Stock on the Announcement Date or the Determination Date, whichever is
higher; or
(c) (if applicable) the highest preferential amount per share to
which the holders of shares of such class or series of Voting Stock are entitled
in the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation;
3. The consideration to be received by holders of a particular class
or series of outstanding Voting Stock (including Common Stock) shall be in cash
or in the same form as was previously paid in order to acquire shares of such
class or series of Voting Stock which are beneficially
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<PAGE> 12
owned by an Interested Stockholder and, if an Interested Stockholder
beneficially owns shares of any class or series of Voting Stock which were
acquired with varying forms of consideration, the form of consideration for such
class or series of Voting Stock shall be either cash or the form used to acquire
the largest number of shares of such class or series of Voting Stock
beneficially owned by it. The price determination in accordance with
subparagraphs 1 and 2 of this Paragraph (B) shall be subject to appropriate
adjustment in the event of any recapitalization, stock dividend, stock split,
combination of shares or similar event;
4. After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business Combination:
(a) except as approved by a majority of the Continuing
Directors, there shall have been no failure to declare and pay at the regular
date therefor the full amount of any dividends (whether or not cumulative)
payable on any outstanding preferred stock;
(b) there shall have been (i) no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary to reflect any
subdivision of the Common Stock) other than as approved by a majority of the
Continuing Directors and (ii) an increase in such annual rate of dividends as
necessary to prevent any such reduction in the event of any reclassification
(including any reverse stock split), recapitalization, reorganization or any
similar transaction which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure so to increase such annual rate
is approved by a majority of the Continuing Directors;
(c) such Interested Stockholder shall not have become the
beneficial owner of any additional shares of Voting Stock at a price lower than
that paid in the transaction in which it became an Interested Stockholder.
5. After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the benefit,
directly or indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided the Corporation, whether in anticipation of or
in connection with such Business Combination or otherwise; and
6. A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder (or any subsequent
provisions replacing such act, rules or regulations) shall be mailed to the
stockholders of the Corporation, no later than the earlier of (a) thirty (30)
days prior to any vote on the proposed Business Combination or (b) if no vote on
such Business Combination is required, sixty (60) days prior to the consummation
of such Business Combination (whether or not such proxy or information statement
is required to be mailed pursuant to such Act or subsequent provisions). Such
proxy statement shall contain at the front thereof, in a prominent place, any
recommendations as to the advisability (or inadvisability) of the Business
Combination which the Continuing Directors, or any of them, may have furnished
in writing and, if
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<PAGE> 13
deemed advisable by a majority of the Continuing Directors, an opinion of a
reputable investment banking firm as to the fairness (or lack of fairness) of
the terms of such Business Combination, from the point of view of the holder of
Voting Stock other than an Interested Stockholder (such investment banking firm
to be selected by a majority of the Continuing Directors, to be furnished with
all information it reasonably requests and to be paid a reasonable fee for its
services upon receipt by the Corporation of such opinion).
(C) For the purposes of this Provision:
1. "Business Combination" shall mean any transaction which is
referred to in any one or more of subparagraphs 1 through 5 of Paragraph (A) of
this Provision.
2. "Voting Stock" shall mean stock of all classes and series of the
Corporation entitled to vote generally in the election of Directors.
3. "Person" shall mean any individual, firm, trust, partnership,
association, Corporation or other entity.
4. "Interested Stockholder" shall mean any person (other than the
Corporation or any Subsidiary or any person who was a stockholder of the
Corporation on October 10, 1996) who or which:
(a) is the beneficial owner, directly or indirectly, of more
than ten (10%) percent of the combined voting power of the then outstanding
Voting Stock; or
(b) is an Affiliate of the Corporation and at any time within
the two-year period immediately prior to the date in question was the beneficial
owner, directly or indirectly, of more than ten (10%) percent of the combined
voting power of the then outstanding Voting Stock; or
(c) is an assignee of or has otherwise succeeded to the
beneficial ownership of any shares of Voting Stock which were at any time within
the two-year period immediately prior to the date in question beneficially owned
by an Interested Stockholder, unless such assignment or succession shall have
occurred pursuant to a Public Transaction (as hereinafter defined) or any series
of transactions involving a Public Transaction.
For the purposes of determining whether a person is an Interested
Stockholder, the number of shares of Voting Stock deemed to be outstanding shall
include shares deemed owned through application of subparagraph 6 below but
shall not include any other shares of Voting Stock which may be issuable
pursuant to any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or option, or otherwise.
5. "Public Transaction" shall mean any (a) purchase of shares
offered pursuant to an effective registration statement under the Securities Act
of 1933 or (b) open-market purchase of
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<PAGE> 14
shares on a national securities exchange if, in either such case, the price and
other terms of sale are not negotiated by the purchaser and the seller of the
beneficial interest in the shares.
6. A person shall be a "beneficial owner" of any Voting Stock:
(a) which such person or any of its Affiliates beneficially
owns, directly or indirectly; or
(b) which such person or any of its Affiliates has (i) the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or options, or
otherwise or (ii) the right to vote or to direct the voting thereof pursuant to
any agreement, arrangement or understanding; or
(c) which is beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
7. "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as in effect on June 27, 1989.
8. "Subsidiary" shall mean any Corporation of which a majority of
any class of equity security (as defined in Rule 12b-1 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on May 13,
1991) is owned, directly or indirectly, by the Corporation; provided, however,
that for the purposes of the definition of Interested Stockholder set forth in
subparagraph 4, the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or indirectly, by
the Corporation.
9. "Continuing Director" shall mean any member of the Board of
Directors of the Corporation who is unaffiliated with, and not a nominee of, an
Interested Stockholder and was a member of the Board prior to the time that such
Interested Stockholder became an Interested Stockholder, and any successor of a
Continuing Director who is unaffiliated with, and not a nominee of, an
Interested Stockholder and is recommended to succeed a Continuing Director by a
majority of Continuing Directors then on the Board.
10. "Announcement Date" shall mean the date of the first public
announcement of the proposed Business Combination.
11. "Determination Date" shall mean the date on which an Interested
Stockholder became an Interested Stockholder.
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<PAGE> 15
12. "Fair Market Value" shall mean: (a) in the case of stock, the
highest closing sale price during the thirty period immediately preceding the
date in question of a share of such stock on the National Market System of the
National Association of Securities Dealers Automated Quotation System or any
system then in use on any national securities exchange or automated quotation
system, or if no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by a majority of the
Continuing Directors in good faith; and (b) in the case of property other than
cash or stock, the fair market value of such property on the date in question as
determined by a majority of the Continuing Directors in good faith.
(D) A majority of the Continuing Directors shall have the power and duty
to determine for the purposes of this Provision, on the basis of information
known to them after reasonable inquiry, all facts necessary to determine
compliance with this Provision, including, without limitation, (1) whether a
person is an Interested Stockholder, (2) the number of shares of Voting Stock
beneficially owned by any person, (3) whether a person is an Affiliate of
another, (4) whether the requirements of Paragraph (B) of this Provision have
been met and (5) such other matters with respect to which a determination is
required under this Provision. The good faith determination of a majority of the
Continuing Directors on such matters shall be conclusive and binding for all
purposes of this Provision.
(E) Nothing contained in this Provision shall be construed to relieve an
Interested Stockholder of any fiduciary obligation imposed by law.
(F) Notwithstanding any other provisions of these Articles of Organization
or the By-laws of the Corporation or the fact that a lesser percentage may be
specified by law, the affirmative vote of the holders of at least eighty (80%)
percent of the combined voting power of the then outstanding Voting Stock,
voting together as a single class, shall be required to amend, alter, adopt any
provision inconsistent with or repeal this Provision.
Redemption of Shares
In accordance with Section 6 of Chapter 110D of the General Laws of the
Commonwealth of Massachusetts, the Corporation by action of its Board of
Directors is authorized, at the option of the Corporation by such Board action
but without requiring agreement of the person who has made a control share
acquisition (as defined in said Chapter 110D), to redeem all but not less than
all shares acquired in such a control share acquisition in accordance with and
subject to the limitations contained in said Chapter 110D including Section 6
thereof.
*We further certify that the foregoing restated articles of organization
effect no amendments to the articles of organization of the corporation as
heretofore amended, except amendments to the following articles
2,3,4,6.
- -------
(*If there are no such amendments, state "None".)
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<PAGE> 16
Briefly describe amendments in space below:
Article 2. Article 2 has been amended to include additional purposes of
---------- the Corporation.
Article 3. Article 3 has been amended to add a new class of preferred
---------- stock.
Article 4. Article 4 has been added to set forth the preferences,
---------- voting powers, qualifications and special or relative rights
of each class and series of authorized stock.
Article 6. Article 6 has been amended(i) to allow for otherwise lawful
---------- transactions between the Corporation and officers, directors
and/or stockholders; (ii) to create a staggered Board of
Directors and (iii) to address business combinations between
the Corporation and interested stockholders.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto
signed our names this __ day of February in the year 1997.
Sheldon L. Dinkes President
--------------------------------------------------------
Anthony J. Medaglia Clerk
--------------------------------------------------------
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<PAGE> 17
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
I hereby approve the within
restated articles of organization and, the
filing fee in the amount of _____ having
been paid, said articles are deemed to
have been filed with me this ____ day of
February, 1997.
_____________________________
William Francis Galvin
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF RESTATED ARTICLES OF ORGANIZATION TO BE SENT
TO:
Joseph Listengart, Esq.
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
101 Federal Street
Boston, MA 02110
Telephone: (617) 951-6600
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<PAGE> 1
EXHIBIT 3.2
BY-LAWS
of
VOICETEK CORPORATION
(A Massachusetts corporation)
<PAGE> 2
BY-LAWS
of
VOICETEK CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 Articles of Organization.....................................................1
ARTICLE 2 Fiscal Year..................................................................1
ARTICLE 3 Meetings of Stockholders.....................................................1
Section 3.1 Annual Meeting...............................................................1
Section 3.2 Special Meetings.............................................................3
Section 3.3 Place of Meetings............................................................3
Section 3.4 Notice of Meetings...........................................................4
Section 3.5 Quorum.......................................................................4
Section 3.6 Action without Meeting.......................................................5
Section 3.7 Proxies and Voting...........................................................6
ARTICLE 4 Directors....................................................................6
Section 4.1 Enumeration, Election and
Term of Office.............................................................6
Section 4.2 Powers.......................................................................8
Section 4.3 Meetings of Directors........................................................9
Section 4.4 Quorum of Directors..........................................................9
Section 4.5 Consent in Lieu of Meeting and Participation
in Meetings by Communications Equipment..................................10
Section 4.6 Committees..................................................................10
ARTICLE 5 Officers....................................................................11
Section 5.1 Enumeration, Election and
Term of Office............................................................11
Section 5.2 President and Chairman of the Board.........................................12
Section 5.3 Treasurer and Assistant Treasurer...........................................12
Section 5.4 Clerk and Assistant Clerk...................................................13
Section 5.5 Secretary of the Board and Assistant Secretary............................. 13
Section 5.6 Temporary Clerk and Temporary Secretary.....................................14
Section 5.7 Other Powers and Duties.....................................................14
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 6 Resignations, Removals and Vacancies........................................14
Section 6.1 Resignations................................................................14
Section 6.2 Removals....................................................................14
Section 6.3 Vacancies...................................................................15
ARTICLE 7 Indemnification of Directors and Others.....................................16
Section 7.1 Definitions.................................................................16
Section 7.2 Right to Indemnification....................................................17
Section 7.3 Indemnification Not Available...............................................17
Section 7.4 Compromise or Settlement....................................................17
Section 7.5 Advances....................................................................18
Section 7.6 Not Exclusive...............................................................18
Section 7.7 Insurance...................................................................18
ARTICLE 8 Stock.......................................................................18
Section 8.1 Stock Authorized............................................................18
Section 8.2 Issue of Authorized Unissued Capital Stock..................................19
Section 8.3 Certificates of Stock.......................................................19
Section 8.4 Replacement Certificate.....................................................20
Section 8.5 Transfers...................................................................20
Section 8.6 Record Date.................................................................21
ARTICLE 9 Miscellaneous Provisions....................................................22
Section 9.1 Execution of Papers.........................................................22
Section 9.2 Voting of Securities........................................................22
Section 9.3 Corporate Seal..............................................................22
Section 9.4 Corporate Records...........................................................22
ARTICLE 10 Amendments..................................................................23
</TABLE>
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<PAGE> 4
BY-LAWS
of
VOICETEK CORPORATION
ARTICLE 1
Articles of Organization
The name and purposes of the Corporation shall be as set forth in the
Articles of Organization. These By-Laws, the powers of the Corporation and its
Directors and stockholders, and all matters concerning the conduct and
regulation of the business of the Corporation, shall be subject to such
provisions in regard thereto, if any, as are set forth in the Articles of
Organization. All references in these By-Laws to the Articles of Organization
shall be construed to mean the Articles of Organization of the Corporation as
from time to time amended or restated.
ARTICLE 2
Fiscal Year
Except as from time to time otherwise determined by the Directors, the
fiscal year of the Corporation shall be the twelve months ending on December 31.
ARTICLE 3
Meetings of Stockholders
Section 3.1 Annual Meeting
The annual meeting of the stockholders shall be held at 10:00 o'clock
A.M. on the 2nd Tuesday of April in each year. Purposes for which an annual
meeting is to be held, additional to those prescribed by law and by these
By-Laws, may be specified by the President or by the Directors.
<PAGE> 5
If such annual meeting has not been held on the day herein provided
therefor, a special meeting of the stockholders in lieu of the annual meeting
may be held, and any business transacted or elections held at such special
meeting shall have the same effect as if transacted or held at the annual
meeting, and in such case all references in these By-Laws, except in this
Section 3.1, to the annual meeting of the stockholders shall be deemed to refer
to such special meeting. Any such special meeting shall be called, and the
purposes thereof shall be specified in the call, as provided in Section 3.2 of
this Article 3.
To be properly brought before the meeting, business must be of a nature
that is appropriate for consideration at an annual meeting and must be (i)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (ii) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (iii) otherwise
properly brought before the meeting by a stockholder. In addition to any other
applicable requirements, for business to be properly brought before the annual
meeting by a stockholder, the stockholder must have given timely notice thereof
in writing to the Clerk of the Corporation. To be timely, each such notice must
be given either by personal delivery or by United States mail, postage prepaid,
to the Clerk of the Corporation not later than (1) with respect to a matter to
be brought before an annual meeting of stockholders or special meeting in lieu
of an annual meeting, sixty (60) days prior to the date set forth in the By-Laws
for the annual meeting and (2) with respect to a matter to be brought before a
special meeting of the stockholders not in lieu of an annual meeting, the close
of business on the tenth (10th) day following the date on which notice of such
meeting is first given to stockholders. The notice shall set forth (i)
information concerning the stockholder, including his or her name and address;
(ii) a representation that the stockholder is
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<PAGE> 6
entitled to vote at such meeting and intends to appear in person or by proxy at
the meeting to present the matter specified in the notice, and (iii) such other
information as would be required to be included in a proxy statement soliciting
proxies for the presentation of such matter to the meeting.
Notwithstanding anything in these By-Laws to the contrary, no business
shall be transacted at the annual meeting except in accordance with the
procedures set forth in this Section; provided, however, that nothing in this
Section shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting in accordance with these
By-Laws.
Section 3.2 Special Meetings
A special meeting of the stockholders may be called at any time by the
President, or by a majority of the Directors acting by vote or by written
instrument or instruments signed by them. A special meeting of the stockholders
shall be called by the Clerk, or in the case of the death, absence, incapacity
or refusal of the Clerk, by any other officer, upon written application of one
or more stockholders who hold at least thirty (30) percent in interest of the
capital stock entitled to vote thereat. Such call shall state the time, place
and purposes of the meeting. In the event that none of the officers is able or
willing to call a special meeting, the supreme judicial or superior court, upon
application of one or more stockholders who hold at least thirty (30) percent in
interest of the capital stock entitled to vote thereat, shall have jurisdiction
in equity to authorize one or more of such stockholders to call a meeting by
giving notice as is required by law.
Section 3.3 Place of Meetings
All meetings of the stockholders shall be held at the principal office
of the Corporation in Massachusetts, unless a different place within
Massachusetts or, if permitted by the Articles of
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<PAGE> 7
Organization, elsewhere within the United States is designated by the President,
or by a majority of the Directors acting by vote or by written instrument or
instruments signed by them. Any adjourned session of any meeting of the
stockholders shall be held at such place within Massachusetts or, if permitted
by the Articles of Organization, elsewhere within the United States as is
designated in the vote of adjournment.
Section 3.4 Notice of Meetings
A written notice of the place, date and hour of all meetings of
stockholders stating the purposes of the meeting shall be given at least seven
(7) days before the meeting to each stockholder entitled to vote thereat, by
leaving such notice with him or at his residence or usual place of business, or
by mailing it, postage prepaid, and addressed to such stockholder at his address
as it appears in the records of the Corporation. Such notice shall be given by
the Clerk, or in the case of the death, absence, incapacity or refusal of the
Clerk, by any other officer or by a person designated either by the Clerk, by
the person or persons calling the meeting, by any stockholder or group of
stockholders applying for such meeting pursuant to Section 3.2 of Article 3 of
these By-Laws or by the Board of Directors. Whenever notice of a meeting is
required to be given a stockholder under any provision of law, of the Articles
of Organization, or of these By-Laws, a written waiver thereof, executed before
or after the meeting by such stockholder or his attorney thereunto authorized,
and filed with the records of the meeting, shall be deemed equivalent to such
notice.
Section 3.5 Quorum
At any meeting of the stockholders, a quorum for the election of any
Director or for the consideration of any question shall consist of a majority in
interest of all stock issued, outstanding
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<PAGE> 8
and entitled to vote at such election or upon such question, respectively,
except that if two or more classes of stock are entitled to vote as separate
classes for the election of any Director or upon any question, then in the case
of each such class a quorum for the election of any Director or for the
consideration of such question shall consist of a majority in interest of all
stock of that class issued, outstanding and entitled to vote thereon. Stock
owned by the Corporation, if any, shall be disregarded in determining any
quorum. Whether or not a quorum is present, any meeting may be adjourned from
time to time by a majority of the votes properly cast upon the question, and the
meeting may be held as adjourned without further notice.
When a quorum for an election is present at any meeting, a plurality of
the votes properly cast for any office shall elect such office. When a quorum
for the consideration of a question is present at any meeting, a majority of the
votes properly cast upon the question shall decide the question; except that if
two or more classes of stock are entitled to vote as separate classes upon such
question, then in the case of each such class a majority of the votes of such
class properly cast upon the question shall decide the vote of that class upon
the question; and except in any case where a larger vote is required by law or
by the Articles of Organization.
Section 3.6 Action without Meeting
Any action required or permitted to be taken at any meeting of the
stockholders may be taken without a meeting if all stockholders entitled to vote
on the matter consent to the action in writing and the written consents are
filed with the records of the meetings of stockholders. Such consents shall be
treated for all purposes as a vote at a meeting.
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<PAGE> 9
Section 3.7 Proxies and Voting
Except as may otherwise be provided in the Articles of Organization,
stockholders entitled to vote shall have one vote for each share of stock
entitled to vote owned by them. Stockholders entitled to vote may vote in person
or by proxy. No proxy dated more than six (6) months before the meeting named
therein shall be valid and no proxy shall be valid after the final adjournment
of such meeting; provided, however, that a proxy coupled with an interest
sufficient in law to support an irrevocable power, including, without
limitation, an interest in the shares or in the Corporation generally, may be
irrevocable if it so provides, need not specify the meeting to which it relates,
and shall be valid and enforceable until the interest terminates, or for such
shorter period as may be specified in the proxy. A proxy with respect to stock
held in the name of two or more persons shall be valid if executed by any one of
them unless at or prior to the exercise of the proxy the Corporation receives
specific written notice to the contrary from any one of them. A proxy purporting
to be executed by or on behalf of a stockholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Proxies shall be filed with the Clerk, or person
performing the duties of clerk, at the meeting, or any adjournment thereof,
before being voted.
The Corporation shall not, directly or indirectly, vote upon any share
of its own stock.
ARTICLE 4
Directors
Section 4.1 Enumeration, Election and Term of Office
The business and affairs of this corporation shall be managed under the
direction of a Board of Directors consisting of not fewer than three (3) nor
more than fifteen (15) Directors, the
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<PAGE> 10
exact number to be determined from time to time by resolution adopted by the
affirmative vote of a majority of the entire Board of Directors, such Board of
Directors to be divided into such classes and elected by such stockholders as
have the right to vote thereon, for such terms as are provided in the Articles
of Organization. Each Director shall hold office until his successor shall have
been elected and qualified, subject to Article 6 of these By-Laws. Whenever used
in these By-Laws, the phrase "entire Board of Directors" shall mean that number
of Directors fixed by the most recent resolution adopted pursuant to the
preceding sentence prior to the date as of which a determination of the number
of Directors then constituting the entire Board of Directors shall be relevant
for any purpose under these By-Laws. Subject to the foregoing limitations and
the requirements of the Articles of Organization, the Board of Directors may be
enlarged by the stockholders at any meeting or by the affirmative vote of a
majority of the entire Board of Directors then in office.
Nominations for the election of Directors may be made by the Board of
Directors or a committee appointed by the Board of Directors or by any
stockholder entitled to vote generally in the election of Directors. However,
any stockholder entitled to vote generally in the election of Directors may
nominate one or more persons for election as Directors at a meeting only if
written notice of such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid, to the Clerk of the Corporation not later than (1) with
respect to an election to be held at an annual meeting of stockholders or
special meeting in lieu of an annual meeting, sixty (60) days prior to the date
for the annual meeting set forth in the By-Laws and (2) with respect to an
election to be held at a special meeting of stockholders not in lieu of an
annual meeting, the close of business on the tenth (10th) day
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<PAGE> 11
following the date on which notice of such meeting is first given to
stockholders. Each such notice to the Clerk shall set forth (i) the name and
address of the stockholder and each of his or her nominees; (ii) a
representation that the stockholder is entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (iii) a description of all arrangements or
understandings between the stockholder and each such nominee; (iv) such other
information as would be required to be included in a proxy statement soliciting
proxies or the election of the nominees of such stockholder; and (v) the consent
of each nominee to serve as a Director of the Corporation if so elected. The
Corporation may require any proposed nominee to furnish such other information
as may reasonably be required by the Corporation to determine the eligibility of
such proposed nominee to serve as a Director of the Corporation. The presiding
officer of the meeting may, if the facts warrant, determine that a nomination
was not made in accordance with the foregoing procedure, and if such officer
should so determine, he or she shall so declare to the meeting and the defective
nomination shall be disregarded.
No Director need be a stockholder. Any election of Directors by the
stockholders shall be by ballot if so requested by any stockholder entitled to
vote thereon.
Section 4.2 Powers
The business of the Corporation shall be managed by the Board of
Directors, which shall exercise all the powers of the Corporation except as
otherwise required by law, by the Articles of Organization or by these By-Laws.
In the event of one or more vacancies in the Board of Directors, the remaining
Directors, if at least two (2) Directors still remain in office, may exercise
the powers of the full Board until such vacancy or vacancies are filled.
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<PAGE> 12
Section 4.3 Meetings of Directors
Regular meetings of the Directors may be held without notice at such
places and at such times as may be fixed from time to time by the Directors. A
regular meeting of the Directors may be held without notice immediately
following an annual meeting of stockholders or any special meeting held in lieu
thereof.
Special meetings of Directors may be called by the Chairman of the
Board, the President, the Treasurer or any two (2) or more Directors, or if
there shall be less than three (3) Directors, by any one (1) Director, and shall
be held at such time and place as specified in the call. Reasonable notice of
each special meeting of the Directors shall be given to each Director. Such
notice may be given by the Secretary or Assistant Secretary of the Board, the
Clerk or any Assistant Clerk or by the officer or one of the Directors calling
the meeting. Notice to a Director shall in any case be sufficient if sent by
telegram or telecopier at least forty-eight (48) hours or by mail at least
ninety-six (96) hours before the meeting addressed to the Director at his or her
usual or last known business or residence address, or if given to him or her at
least forty-eight (48) hours before the meeting in person or by telephone or by
handing him or her a written notice. Notice of a meeting need not be given to
any Director if a written waiver of notice, executed by him or her before or
after the meeting, is filed with the records of the meeting, or to any Director
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him or her. A notice or waiver of notice need not specify
the purposes of the meeting.
Section 4.4 Quorum of Directors
At any meeting of the Directors, a quorum for any election or for the
consideration of any question shall consist of a majority of the Directors then
in office. Whether or not a quorum is
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<PAGE> 13
present any meeting may be adjourned from time to time by a majority of the
votes properly cast upon the question, and the meeting may be held as adjourned
without further notice. When a quorum is present at any meeting, the votes of a
majority of the Directors present shall be requisite and sufficient for election
to any office and shall decide any question brought before such meeting, except
in any case where a larger vote is required by law, by the Articles of
Organization or by these By-Laws.
Section 4.5 Consent in Lieu of Meeting and Participation
in Meetings by Communications Equipment
Any action required or permitted to be taken at any meeting of the
Directors may be taken without a meeting if all the Directors consent to the
action in writing and the written consents are filed with the records of the
meetings of the Directors. Such consents shall be treated for all purposes as a
vote of the Directors at a meeting.
Members of the Board of Directors or any Committee designated thereby
may participate in a meeting of such Board or Committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting.
Section 4.6 Committees
By vote of a majority of the Directors then in office, the Directors
may elect from their own number an Executive Committee or other Committees and
may by like vote delegate to any such Committee some or all of their powers
except those which by law may not be delegated.
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<PAGE> 14
ARTICLE 5
Officers
Section 5.1 Enumeration, Election and Term of Office
The officers of the Corporation shall include a President, a Treasurer
and a Clerk, who shall be chosen by the Directors at their first meeting
following an annual meeting of the stockholders. Each of the officers shall hold
office until the next annual election to the office which he or she holds and
until his or her successor is chosen and qualified or until he or she sooner
dies, resigns, is removed or becomes disqualified. The Directors may choose one
of their number to be Chairman of the Board and determine his or her powers,
duties and term of office. The Directors may at any time appoint such other
officers, including one or more Vice Presidents, Assistant Treasurers, Assistant
Clerks, a Secretary of the Board and an Assistant Secretary of the Board as they
deem wise, and may determine their respective powers, duties and terms of
office.
The Corporation may also designate individuals as divisional, group, or
segment vice presidents or vice presidents of a particular function, which
individual shall carry such title on a non-executive basis and not as an
executive officer of the Corporation. Said non-executive vice presidents may be
designated by the Board of Directors or by the President pursuant to Board
resolutions so-authorizing the President to appoint non-executive vice
presidents on a particular occasion or from time to time in his or her
discretion, said honorary vice presidents to be titled "Vice President (specific
area of function)."
No officer need be a stockholder or a Director except that the Chairman
of the Board shall be a Director. The same person may hold more than one office,
except that no person shall be both President and Clerk.
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<PAGE> 15
Section 5.2 President and Chairman of the Board
The President shall be the Chief Executive Officer of the Corporation
and, subject to the control and direction of the Directors, shall have general
supervision and control of the business of the Corporation. The President shall
preside at all meetings of the stockholders at which he or she is present, and,
if the President is a Director, at all meetings of the Directors, if there shall
be no Chairman of the Board or in the absence of the Chairman of the Board.
If there shall be a Chairman of the Board, such person shall make his
or her counsel available to the other officers of the Corporation, and shall
have such other duties and powers as may from time to time be conferred on him
or her by the Directors. The Chairman of the Board shall preside at all meetings
of the Directors at which he or she is present, and, in the absence of the
President, at all meetings of stockholders.
Section 5.3 Treasurer and Assistant Treasurer
The Treasurer shall have the custody of the funds and valuable books
and papers of the Corporation, except such as are directed by these By-Laws to
be kept by the Clerk or by the Secretary of the Board. The Treasurer shall
perform all other duties usually incident to such office, and shall be at all
times subject to the control and direction of the Directors. If required by the
Directors, the Treasurer shall give bond in such form and amount and with such
sureties as shall be determined by the Directors.
If the Treasurer is absent or unavailable, any Assistant Treasurer
shall have the duties and powers of Treasurer and shall have such further duties
and powers as the Directors shall from time to time determine.
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<PAGE> 16
Section 5.4 Clerk and Assistant Clerk
If the Corporation shall not have a resident agent appointed pursuant
to law, the Clerk shall be a resident of the Commonwealth of Massachusetts. The
Clerk shall record all proceedings of the stockholders in a book to be kept
therefor. In case a Secretary of the Board is not elected, the Clerk shall also
record all proceedings of the Directors in a book to be kept therefor.
If the Corporation shall not have a transfer agent, the Clerk shall
also keep or cause to be kept the stock and transfer records of the Corporation,
which shall contain the names of all stockholders and the record address and the
amount of stock held by each.
If the Clerk is absent or unavailable, any Assistant Clerk shall have
the duties and powers of the Clerk and shall have such further duties and powers
as the Directors shall from time to time determine.
Section 5.5 Secretary of the Board and Assistant Secretary
If a Secretary of the Board is elected, such person shall record all
proceedings of the Directors in a book to be kept therefor.
If the Secretary of the Board is absent or unavailable, any Assistant
Secretary shall have the duties and powers of the Secretary and shall have such
further duties and powers as the Directors shall from time to time determine.
If no Secretary or Assistant Secretary has been elected, or if, having
been elected, no Secretary or Assistant Secretary is present at a meeting of the
Directors, the Clerk or an Assistant Clerk shall record the proceedings of the
Directors.
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<PAGE> 17
Section 5.6 Temporary Clerk and Temporary Secretary
If no Clerk or Assistant Clerk shall be present at any meeting of the
stockholders, or if no Secretary, Assistant Secretary, Clerk or Assistant Clerk
shall be present at any meeting of the Directors, the person presiding at the
meeting shall designate a Temporary Clerk or Secretary to perform the duties of
Clerk or Secretary.
Section 5.7 Other Powers and Duties
Each officer shall, subject to these By-Laws and to the control and
direction of the Directors, have in addition to the duties and powers
specifically set forth in these By-Laws, such duties and powers as are
customarily incident to such office and such additional duties and powers as the
Directors may from time to time determine.
ARTICLE 6
Resignations, Removals and Vacancies
Section 6.1 Resignations
Any Director or officer may resign at any time by delivering his or her
resignation in writing to the President or the Clerk or to a meeting of the
Directors. Such resignations shall take effect at such time as is specified
therein, or if no such time is so specified, then upon delivery thereof to the
President or the Clerk or to a meeting of the Directors.
Section 6.2 Removals
Directors, including Directors elected by the Directors to fill
vacancies in the Board, may be removed from office (a) with cause by vote of the
holders of a majority of the shares issued and outstanding and entitled to vote
generally in the election of Directors; (b) with or without cause by vote of the
holders of at least 80% of the votes entitled to be cast by the holders of all
shares of the
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<PAGE> 18
Corporation entitled to vote generally in the election of Directors, voting
together as a single class; (c) with cause by vote of a.majority of the
Directors then in office; or (d) without cause by vote of at least 80% of the
Directors then in office (including the Director to be removed in calculating
said percentage); provided that the Directors of a class elected by a particular
class of stockholders may be removed only by vote of the holders of a majority
of the shares of such class.
The Directors may terminate or modify the authority of any agent or
employee. The Directors may remove any officer from office with or without
assignment of cause by vote of a majority of the Directors then in office.
If cause is assigned for removal of any Director or officer, such
Director or officer may be removed only after reasonable notice and opportunity
to be heard before the body proposing to remove him.
No Director or officer who resigns or is removed shall have any right
to any compensation as such Director or officer for any period following his
resignation or removal, or any right to damages on account of such removal,
whether his compensation be by the month or by the year or otherwise; provided,
however, that the foregoing provision shall not prevent such Director or officer
from obtaining damages for breach of any contract of employment legally binding
upon the Corporation.
Section 6.3 Vacancies
Any vacancy in the Board of Directors, including a vacancy resulting
from an enlargement of the Board, may be filled by the Directors by vote of a
majority of the remaining Directors then in office, though less than a quorum,
or by the stockholders at a meeting called for the purpose, provided that any
vacancy created by the stockholders may be filled by the stockholders at the
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<PAGE> 19
same meeting. Any Director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term of the class of Directors
in which the new Directorship was created or the vacancy occurred and until such
Directors' successor shall have been elected and qualified or until he or she
sooner dies, resigns, is removed or becomes disqualified.
If the office of any officer becomes vacant, the Directors may choose
or appoint a successor by vote of a majority of the Directors present at the
meeting at which such choice or appointment is made.
Each such successor shall hold office for the unexpired term of the
Director's predecessor and until a successor shall be chosen or appointed and
qualified, or until he or she sooner dies, resigns, is removed or becomes
disqualified.
ARTICLE 7
Indemnification of Directors and Others
Section 7.1 Definitions
For purposes of this Article 7:
(a) "Director/officer" means any person who is serving or has served as
a Director, officer or employee of the Corporation appointed or elected by the
Board of Directors or the stockholders of the Corporation, or any Director,
officer or employee of the Corporation who is serving or has served at the
request of the Corporation as a Director, officer, trustee, principal, partner,
employee or other agent of any other organization.
(b) "Proceeding" means any action, suit or proceeding, civil or
criminal, brought or threatened in or before any court, tribunal, administrative
or legislative body or agency.
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<PAGE> 20
(c) "Expense" means any fine or penalty, and any liability fixed by a
judgment, order, decree or award in a Proceeding, any amount reasonably paid in
settlement of a Proceeding and any professional fees and other disbursements
reasonably incurred in connection with a Proceeding.
Section 7.2 Right to Indemnification
Except as limited by law or as provided in Sections 7.3 and 7.4 of this
Article 7, each Director/officer (and his heirs and personal representatives)
shall be indemnified by the Corporation against any Expense incurred by such
Director/officer in connection with each Proceeding in which he or she is
involved as a result of his or her serving or having served as a
Director/officer.
Section 7.3 Indemnification not Available
No indemnification shall be provided to a Director/officer with respect
to a Proceeding as to which it shall have been adjudicated that he or she did
not act in good faith in the reasonable belief that his or her action was in the
best interests of the Corporation.
Section 7.4 Compromise or Settlement
In the event that a Proceeding is compromised or settled so as to
impose any liability or obligation on a Director/officer or upon the
Corporation, no indemnification shall be provided as to said Director/officer
with respect to such Proceeding if such Director/officer shall have been
adjudicated not to have acted in good faith in the reasonable belief that his or
her action was in the best interests of the Corporation.
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<PAGE> 21
Section 7.5 Advances
The Corporation shall pay sums on account of indemnification in advance
of a final disposition of a Proceeding upon receipt of an undertaking by the
Director/officer to repay such sums if it is subsequently established that he or
she is not entitled to indemnification pursuant to Sections 7.3 and 7.4 hereof,
which undertaking may be accepted without reference to the financial ability of
such person to make repayment.
Section 7.6 Not Exclusive
Nothing in this Article 7 shall limit any lawful rights to
indemnification existing independently of this Article 7.
Section 7.7 Insurance
The provisions of this Article 7 shall not limit the power of the Board
of Directors to authorize the purchase and maintenance of insurance on behalf of
any Director/officer against any Expense, whether or not the Corporation would
have the power to indemnify such Director/officer against such Expense under
this Article 7.
ARTICLE 8
Stock
Section 8.1 Stock Authorized
The total number of shares and the par value, if any, of each class of
stock which the Corporation is authorized to issue, and if more than one class
is authorized, the descriptions, preferences, voting powers, qualifications and
special and relative rights and privileges as to each class and any series
thereof, shall be as stated in the Articles of Organization.
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<PAGE> 22
Section 8.2 Issue of Authorized Unissued Capital Stock
Any unissued capital stock from time to time authorized under the
Articles of Organization and amendments thereto may be issued by vote of the
Directors. No stock shall be issued unless the cash, so far as due, or the
property, services or expenses for which it was authorized to be issued, has
been actually received or incurred by, or conveyed or rendered to, the
Corporation, or is in its possession as surplus.
Section 8.3 Certificates of Stock
Each stockholder shall be entitled to a certificate in such form as may
be prescribed from time to time by the Directors, stating the number and the
class and the designation of the series, if any, of the shares held by such
stockholder. Such certificates shall be signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer. Such signatures may be
facsimiles if the certificate is signed by a transfer agent, or by a registrar,
other than a Director, officer or employee of the Corporation. In case any
officer who has signed or whose facsimile signature has been placed on such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he or she
were such officer at the time of its issue.
Every certificate issued by the Corporation for shares of stock at a
time when such shares are subject to any restriction on transfer pursuant to the
Articles of Organization, the By-Laws or any agreement to which the Corporation
is a party, shall have the restriction noted conspicuously on the certificate
and shall also set forth on the face or back of the certificate either the full
text of the restriction, or a statement of the existence of such restriction and
a statement that the Corporation will furnish a copy thereof to the holder of
such certificate upon written request and
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<PAGE> 23
without charge. Every stock certificate issued by the Corporation at a time when
it is authorized to issue more than one class or series of stock shall set forth
upon the face or back of the certificate either the full text of the
preferences, voting powers, qualifications and special and relative rights of
the shares of each class and series, if any, authorized to be issued, as set
forth in the Articles of Organization, or a statement of the existence of such
preferences, powers, qualifications and rights and a statement that the
Corporation will furnish a copy thereof to the holder of such certificate upon
written request and without charge.
Section 8.4 Replacement Certificate
In case of the alleged loss or destruction or the mutilation of a
certificate of stock, a new certificate may be issued in place thereof, upon
such conditions as the Directors may determine.
Section 8.5 Transfers
Subject to the restrictions, if any, imposed by the Articles of
Organization, the By-Laws or any agreement to which the Corporation is a party,
shares of stock shall be transferred on the books of the Corporation only by the
surrender to the Corporation or its transfer agent of the certificate
representing such shares properly endorsed or accompanied by a written
assignment of such shares or by a written power of attorney to sell, assign or
transfer such shares, properly executed, with necessary transfer stamps affixed,
and with such proof that the endorsement, assignment or power of attorney is
genuine and effective as the Corporation or its transfer agent may reasonably
require. Except as may otherwise be required by law, the Corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the right
to vote with respect thereto, regardless of any transfer, pledge or other
disposition of such stock, until the shares have been transferred on
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<PAGE> 24
the books of the Corporation in accordance with the requirements of these
By-Laws. It shall be the duty of each stockholder to notify the Corporation of
his or her post office address.
Section 8.6 Record Date
The Directors may fix in advance a time, which shall be not more than
sixty (60) days before the date of any meeting of stockholders or the date for
the payment of any dividend or the making of any distribution to stockholders or
the last day on which the consent or dissent of stockholders may be effectively
expressed for any purpose, as the record date for determining the stockholders
having the right to notice of and to vote at such meeting and any adjournment
thereof or the right to receive such dividend or distribution or the right to
give such consent or dissent, and in such case only stockholders of record on
such date shall have such right, notwithstanding any transfer of stock on the
books of the Corporation after the record date; or without fixing such record
date the Directors may for any such purposes close the transfer books for all or
any part of such period.
If no record date is fixed and the transfer books are not closed:
(1) The record date for determining stockholders having the right to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given.
(2) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
acts with respect thereto.
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ARTICLE 9
Miscellaneous Provisions
Section 9.1 Execution of Papers
All deeds, leases, transfers, contracts, bonds, notes, releases,
checks, drafts and other obligations authorized to be executed on behalf of the
Corporation shall be signed by the President or the Treasurer except as the
Directors may generally or in particular cases otherwise determine.
Section 9.2 Voting of Securities
Except as the Directors may generally or in particular cases otherwise
determine, the President or the Treasurer may, on behalf of the Corporation (i)
waive notice of any meeting of stockholders or shareholders of any other
corporation, or of any association, trust or firm, of which any securities are
held by this Corporation; (ii) appoint any person or persons to act as proxy or
attorney-in-fact for the Corporation, with or without substitution, at any such
meeting; and (iii) execute instruments of consent to stockholder or shareholder
action taken without a meeting.
Section 9.3 Corporate Seal
The seal of the Corporation shall be a circular die with the name of
the Corporation, the word "Massachusetts" and the year of its incorporation cut
or engraved thereon, or shall be in such other form as the Board of Directors or
the stockholders may from time to time determine.
Section 9.4 Corporate Records
The original, or attested copies, of the Articles of Organization,
By-Laws, and the records of all meetings of incorporators and stockholders, and
the stock and transfer records, which shall contain the names of all
stockholders and the record address and the amount of stock held by each, shall
be kept in Massachusetts for inspection by the stockholders at the principal
office of the
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<PAGE> 26
Corporation or at an office of the Clerk, or if the Corporation shall have a
transfer agent or a resident agent, at an office of either of them. Said copies
and records need not all be kept in the same office.
ARTICLE 10
Amendments
These By-Laws may be altered, amended or repealed or new By-Laws
enacted by the affirmative vote of a majority of the entire Board of Directors
(if notice of the proposed alteration or amendment is contained in the notice of
the meeting at which such vote is taken or if all Directors are present) or at
any regular meeting of the stockholders (or at any special meeting thereof duly
called for that purpose) by the affirmative vote of a majority of the shares
represented and entitled to vote at such meeting (if notice of the proposed
alteration or amendment is contained in the notice of such meeting).
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<PAGE> 1
EXHIBIT 10.1
OEM AGREEMENT
BETWEEN
NORTHERN TELECOM INC.
AND
VOICETEK CORPORATION
Page 1
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 2
THIS OEM AGREEMENT is made and entered into by and between Northern Telecom
Inc., a Delaware corporation, with offices located at 2305 Mission College
Boulevard, Santa Clara, California 95054-1591 (hereinafter "NTI") and Voicetek
Corporation, a Massachusetts corporation, having its principal place of business
at 19 Alpha Road, Chelmsford, Massachusetts 01824-4175
(hereinafter "VOICETEK").
RECITALS
WHEREAS, NTI shall assume the role of an original equipment manufacturer that
procures products from VOICETEK for incorporation into a number of Northern
Telecom applications;
AND WHEREAS, NTI wishes to obtain the nonexclusive rights and VOICETEK agrees to
extend nonexclusive rights to NTI to purchase, resell and distribute VOICETEK's
standard product(s) and/or services at NTI's option as enumerated in VOICETEK's
Price List;
AND WHEREAS, NTI wishes to obtain exclusive rights and VOICETEK agrees to extend
exclusive rights to NTI to purchase, resell, and distribute VOICETEK's
product(s) and/or services which VOICETEK has, or will in the future, as the
case may be, modify according to specifications agreed upon by NTI and VOICETEK
and for which NTI has paid development fees to VOICETEK under one or more
development agreements and/or annexes applicable to development agreements
unless otherwise negotiated;
AND WHEREAS, NTI wishes to obtain the nonexclusive rights and VOICETEK agrees to
extend nonexclusive rights to NTI to purchase hardware not manufactured by
VOICETEK (an example of which is Dialogic-manufactured circuit pack assemblies),
direct from VOICETEK's external supplier(s) for installation in and use with
SELF-HOSTED UNITS only, without such direct purchase and installation by NTI or
NTI's qualified technicians of such non-VOICETEK-manufactured hardware voiding
and/or negatively affecting any and all warranties granted to NTI, NORTHERN
TELECOM COMPANIES or MANUFACTURING LICENSEES for SELF-HOSTED UNITS herein;
AND WHEREAS, the procured products have specific utilitarian functions to carry
out within the Northern Telecom applications into which they are incorporated;
AND WHEREAS, the parties desire to establish a stable and dependable business
relationship to ensure the smooth flow of products between the parties and
timely resolution of performance-related issues identified in the products
supplied by VOICETEK;
NOW THEREFORE, in consideration of the mutual covenants and obligations
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, THE PARTIES HERETO
AGREE AS FOLLOWS:
ARTICLE I - DEFINITIONS
Terms in the Agreement (other than names of parties and Article headings) which
are in capital letters shall have the meanings set forth in this Article I for
all purposes in connection with the Agreement.
1.1 "AGREEMENT" as used herein shall mean this OEM Agreement, as amended,
modified, supplemented or otherwise altered from time to time.
1.2 "ANNUAL SUPPORT SERVICES PERIOD" as used herein shall mean the particular
twelve (12) month period for which NTI has paid the requisite annual fee
for RESELLER SUPPORT SERVICES.
1.3 "APPLICATION PROCESSOR" or "APPLICATION PROCESSORS" as used herein shall
mean the computing platform used specifically to develop and/or execute
GENERATIONS-based software in a client-server environment.
1.4 "AUTHORIZED DISTRIBUTOR" or "AUTHORIZED DISTRIBUTORS" as used herein shall
mean any company which has signed a Distributorship Agreement (or the
equivalent) with NTI, a NORTHERN TELECOM COMPANY or a MANUFACTURING
LICENSEE granting such company the right to distribute one or more of the
Northern Telecom product lines.
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<PAGE> 3
1.5 "AUTHORIZED TERRITORY" as used herein shall mean the countries listed in
Schedule A, which is attached hereto and is by this reference made a part
of the AGREEMENT.
1.6 "BLANKET ORDER" or "BLANKET ORDERS" as used herein shall mean an ORDER
which does not set forth a DELIVERY DATE.
1.7 "CANCELLATION PERIOD" as used herein shall mean the period commencing on
VOICETEK's receipt of an ORDER or ORDER RELEASE and ending thirty (30) days
immediately prior to the SHIPMENT DATE thereof.
1.8 "CRITICAL PROBLEM" or "CRITICAL PROBLEMS" as used herein shall mean
problems characterized by one or more of the following: (i) system is
inoperable, or (ii) causes software reloads or initializations, or (iii)
substantially impairs a major application feature, or (iv) an error in USER
DOCUMENTATION and/or MODIFIED USER DOCUMENTATION which requires an
immediate revision and/or an immediate letter to NTI, and/or NORTHERN
TELECOM COMPANIES and/or MANUFACTURING LICENSEES and/or AUTHORIZED
DISTRIBUTORS in order to correct such problem(s).
1.9 "DELIVERY DATE" as used herein shall mean the date when PRODUCTS shall be
delivered to the DELIVERY LOCATION.
1.10 "DELIVERY LOCATION" as used herein shall mean the NTI, NORTHERN TELECOM
COMPANY or MANUFACTURING LICENSEE location where PRODUCTS shall be
delivered.
1.11 "EFFECTIVE DATE" as used herein shall mean the date upon which the latter
of the parties to execute the AGREEMENT performs that function.
1.12 "GENERAL AVAILABILITY" as used herein shall mean the date when the
PRODUCTS, or any of them, have been released for unrestricted commercial
sale and are available for sale by AUTHORIZED DISTRIBUTORS in any part of
the AUTHORIZED TERRITORY.
1.13 "GENERATIONS" as used herein shall mean the object-oriented applications
development and runtime environment developed and owned by VOICETEK.
1.14 "HARDWARE" as used herein shall mean all items that are designated as
hardware in a PRICE LIST including, but not limited to, VTK Base Systems,
Voice Ports/Network Interfaces, Voice Storage, APPLICATION PROCESSORS,
Parts and Spares, Technical Documentation, KEYLOCKS, VOICE RESPONSE UNITS,
SELF-HOSTED UNITS and Marketing Materials.
1.15 "HARDWARE PRODUCTS" as used herein shall mean either STANDARD HARDWARE
PRODUCTS or MODIFIED HARDWARE PRODUCTS or both, as the context requires.
1.16 "KEYLOCK" or "KEYLOCKS" as used herein shall mean the VOICETEK-supplied
hardware and keycode in object form functioning as a software lock and
preventing unauthorized use and/or duplication of SOFTWARE PRODUCTS
purchased by NTI, NORTHERN TELECOM COMPANIES or MANUFACTURING LICENSEES
hereunder.
1.17 "MANUFACTURING LICENSEE" or "MANUFACTURING LICENSEES"as used herein shall
mean those third parties properly authorized and empowered by NTI or a
NORTHERN TELECOM COMPANY to manufacture and market product lines
including, but not limited to, Northern Telecom proprietary hardware
systems such as the Meridian 1 PBX, under its or their own corporate
name(s), under a private brand, or under a Northern Telecom name and, as a
result, require certain rights to SOFTWARE PRODUCTS which are
substantially similar in scope to those granted directly to NTI by the
AGREEMENT.
1.18 "MARKS" as used herein shall mean the trademarks, trade names and service
marks now owned by, licensed to, or hereafter obtained by VOICETEK as may
from time to time be added to Schedule C, which is attached hereto and by
this reference made a part of the AGREEMENT.
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<PAGE> 4
1.19 "MAXIMUM DELIVERY PERIOD" as used herein shall mean thirty (30) days for
HARDWARE PRODUCTS and two (2) days or less for SOFTWARE PRODUCTS commencing
on the date that VOICETEK receives an ORDER or an ORDER RELEASE therefor.
1.20 "MINOR PROBLEM" or "MINOR PROBLEMS" as used herein shall mean a problem
with the SOFTWARE PRODUCTS which causes or may cause degradation of feature
operation, or a problem with USER DOCUMENTATION, respectively, both for
which an acceptable workaround is available and the problem can persist
without customer complaint for a limited time.
1.21 "MODIFIED HARDWARE PRODUCT or "MODIFIED HARDWARE PRODUCTS" as used herein
shall mean any and all HARDWARE modified at NTI's direction and expense
under one or more Technology Development Agreements and annexes or addenda
thereto, and which may or may not be enumerated in Schedules D and/or E
which are attached hereto and are by this reference made a part of the
AGREEMENT and which are products VOICETEK sells exclusively to NTI,
NORTHERN TELECOM COMPANIES and MANUFACTURING LICENSEES.
1.22 "MODIFIED PRODUCT" or "MODIFIED PRODUCTS" as used herein shall mean either
MODIFIED HARDWARE PRODUCTS or MODIFIED SOFTWARE PRODUCTS or both, as the
context requires.
1.23 "MODIFIED SOFTWARE PRODUCT" or "MODIFIED SOFTWARE PRODUCTS" as used herein
shall mean any and all SIGNATURES, USER DOCUMENTATION, and software
modified at NTI's direction and expense under one or more Technology
Development Agreements and annexes or addenda thereto, and which may or may
not be enumerated in Schedules D and/or E and which are products VOICETEK
sells exclusively to NTI, NORTHERN TELECOM COMPANIES and MANUFACTURING
LICENSEES.
1.24 "MODIFIED USER DOCUMENTATION" as used herein shall mean USER DOCUMENTATION
and/or user manuals created by VOICETEK for the PRODUCTS and modified at
NTI's direction to reflect, but are not restricted to, such changes as
NTI's naming convention, product names, NTI-supplied platforms and removal
of options or features not sold by NTI and which may contain all or parts
of the USER DOCUMENTATION and/or user manuals.
1.25 "NORTHERN TELECOM COMPANY" or "NORTHERN TELECOM COMPANIES" as used herein
shall mean Northern Telecom Limited, the parent company of NTI, and all
subsidiaries or affiliates wholly or at least majority owned, directly or
indirectly, by Northern Telecom Limited, but not including NTI.
1.26 "OPTION PERIOD" as used herein shall mean the three (3) month period
immediately following conclusion of the TERM for which NTI can elect to
extend the AGREEMENT on these stated terms while a renewal hereof or a new
agreement are being negotiated by the parties.
1.27 "ORDER" or "ORDERS" as used herein shall mean the document issued or output
of an electronic "paperless" process initiated by NTI by which PRODUCTS are
ordered.
1.28 "ORDER RELEASE" or "ORDER RELEASES" as used herein shall mean the document
issued or output of an electronic "paperless" process initiated by NTI
pursuant to a BLANKET ORDER by which the DELIVERY DATE for such BLANKET
ORDER, or a portion thereof, is established.
1.29 "POINT RELEASE" or "POINT RELEASES" as used herein shall mean revision(s)
of any SOFTWARE PRODUCTS included as part of the applicable cost of
RESELLER SUPPORT SERVICES and supplied by VOICETEK at no additional charge
to NTI, NORTHERN TELECOM COMPANIES or MANUFACTURING LICENSEES, the
principle function of which is to provide bug fixes to the SOFTWARE
PRODUCTS but which can include minor new functionality, an example of which
would be a change from 3.xx to 3.xy.
1.30 "PRICE LIST" as used herein shall mean the Voicetek Corporation Price Book
For North America and Asia, and the Voicetek Corporation International
Pricebook, respectively, identified and incorporated by reference in
Schedule 8, that are in effect at the time NTI or NORTHERN
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<PAGE> 5
TELECOM COMPANIES or MANUFACTURING LICENSEES procure(s) STANDARD PRODUCTS
from VOICETEK.
1.31 "PRODUCT" or "PRODUCTS" as used herein shall mean either STANDARD PRODUCTS
or MODIFIED PRODUCTS or both, as the context requires.
1.32 "RESCHEDULING PERIOD" as used herein shall mean the period commencing on
VOICETEK's receipt of an ORDER or ORDER RELEASE and ending thirty (30)
days immediately prior to the SHIPMENT DATE thereof.
1.33 "RESELLER SUPPORT SERVICES" as used herein shall mean those support
services enumerated in Article XIII and Schedule F, which is attached
hereto and is by this reference made a part of the AGREEMENT.
1.34 "RMA" as used herein shall mean Return Material Authorization.
1.35 "SELF-HOSTED UNIT" or "SELF-HOSTED UNITS" as used herein shall mean any
SYSTEM configuration comprised of SOFTWARE PRODUCTS executable on a single
hardware platform performing the combined functions of APPLICATION
PROCESSOR and VOICE RESPONSE UNIT.
1.36 "SERIOUS PROBLEM" or "SERIOUS PROBLEMS" as used herein shall mean a
problem that is characterized by a substantial reduction in service and/or
missing or incorrect USER DOCUMENTATION and/or MODIFIED USER DOCUMENTATION
of major functionality for which there is not an acceptable workaround or
interim solution available.
1.37 "SHIPMENT DATE" as used herein shall mean the date when PRODUCTS shall be
shipped by VOICETEK to the DELIVERY LOCATION.
1.38 "SIGNATURE" or "SIGNATURES" as used herein shall mean the
VOICETEK-supplied code(s) which are branded into the firmware of HARDWARE
components not manufactured by VOICETEK (examples of which are Dialogic
boards) which enable PRODUCTS (HARDWARE and software combined) to
compatibly perform their functions together as a SYSTEM.
1.39 "SOFTWARE PRODUCTS" as used herein shall mean either STANDARD SOFTWARE
PRODUCTS or MODIFIED SOFTWARE PRODUCTS or both, as the context requires.
1.40 "SOURCE CODE MATERIALS" as used herein shall mean the first version of the
following items and all subsequent POINT RELEASES, UPDATES, VERSION
RELEASES and enhancements thereof: (a) one copy of the source code of
SOFTWARE PRODUCTS in machine-readable form, and (b) one copy of all
development tools, editors and compilers normally supplied by VOICETEK in
making use of source code of the SOFTWARE PRODUCTS, and (c) any
documentation describing source code of SOFTWARE PRODUCTS normally
supplied by VOICETEK in making use of source code of SOFTWARE PRODUCTS.
1.41 "SPECIFICATIONS" as used herein shall mean the most current version of the
document or documents published by VOICETEK and applicable to PRODUCTS
that define the applicable PRODUCTS including, but not limited to,
materials, dimensions, quality performance criteria, Mean Time Between
Failures (MTBF), SYSTEM architecture, physical configuration, product
capabilities, functionality, functional parameters, performance standards,
operating characteristics and compliance with corresponding commercial and
regulatory requirements.
1.42 "STANDARD HARDWARE PRODUCT" or "STANDARD HARDWARE PRODUCTS" as used herein
shall mean HARDWARE as enumerated in the PRICE LIST and/or Schedule D
and/or Schedule E which are the same products VOICETEK sells to its
general customer base and which products have not been modified by
VOICETEK in any unique and/or specific manner to suit any NTI customer or
specific group of NTI customers.
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1.43 "STANDARD PRODUCT" or "STANDARD PRODUCTS" as used herein shall mean either
STANDARD HARDWARE PRODUCTS or STANDARD SOFTWARE PRODUCTS or both, as the
context requires.
1.44 "STANDARD SOFTWARE PRODUCT" or "STANDARD SOFTWARE PRODUCTS" as used herein
shall mean software and USER DOCUMENTATION as enumerated in the PRICE LIST
and/or Schedule D and/or Schedule E which are the same products VOICETEK
sells to its general customer base and which products have not been
modified by VOICETEK in any unique and/or specific manner to suit any NTI
customer or specific group of NTI customers.
1.45 "SUPPORT ORGANIZATION" as used herein shall mean the identified NTI or
NORTHERN TELECOM COMPANY or MANUFACTURING LICENSEE whose primary contact
persons are authorized to contact VOICETEK for warranty service during the
WARRANTY PERIOD or for RESELLER SUPPORT SERVICES thereafter, as the case
may be.
1.46 "SYSTEM" or "SYSTEMS" as used herein shall mean any combination of
PRODUCTS, USER DOCUMENTATION and/or MODIFIED USER DOCUMENTATION together
required to assemble, (load in the case of software), install and operate
as fully functional interactive voice response product(s).
1.47 "TERM" as used herein shall mean the three (3) year period from and
after the EFFECTIVE DATE.
1.48 "TRAINING MATERIALS" as used herein shall mean available course materials
such as instructor's notes, presentation materials, binders, slides,
videos and software examples, but not including equipment or HARDWARE.
1.49 "TRAINING PROGRAM" or "TRAINING PROGRAMS" as used herein shall mean the
VOICETEK-supplied instruction courses covering the subjects of, but not
limited to, Administration, Applications Development and Installation
and Maintenance.
1.50 "UPDATE" or "UPDATES" as used herein shall mean a release included as part
of the applicable cost of RESELLER SUPPORT SERVICES and supplied by
VOICETEK to NTI, NORTHERN TELECOM COMPANIES or MANUFACTURING LICENSEES of
SOFTWARE PRODUCTS in which minor new functionality has been added in
addition to the normal complement of bug fixes supplied, an example of
which would be a change from 3.x to 3.y.
1.51 "USER DOCUMENTATION" as used herein shall mean VOICETEK's user manuals,
technical manuals, release notes including advisements for PRODUCTS,
installation and operation, promotional materials and other data and
documentation describing the use of PRODUCTS normally supplied to
customers of VOICETEK.
1.52 "VERSION RELEASE" or "VERSION RELEASES" as used herein shall mean a
release of SOFTWARE PRODUCTS that is not included in the scope of RESELLER
SUPPORT SERVICES in which major new functionality has been added in
addition to any complement of bug fixes supplied, an example of which
would be a release from 3.x to 4.x, and for which NTI or NORTHERN TELECOM
COMPANIES or MANUFACTURING LICENSEES would be expected to pay a fee in
addition to the requisite annual fee for RESELLER SUPPORT SERVICES.
1.53 "VOICE RESPONSE UNIT" or "VOICE RESPONSE UNITS" as used herein shall mean
the computing platform used to execute VRS.
1.54 "VRS" as used herein shall mean the voice response server software, also
known as TSP, developed and owned by VOICETEK and executable on VOICE
RESPONSE UNITS whether supplied by NTI or VOICETEK.
1.55 "WARRANTY PERIOD" as used herein shall mean fifteen (15) months in the
case of SOFTWARE PRODUCTS and twelve (12) months in the case of HARDWARE
PRODUCTS beginning on the date of receipt thereof (in the case of SOFTWARE
PRODUCTS duplicated by NTI on the date of receipt of gold standard master)
by NTI, NORTHERN TELECOM COMPANIES, or MANUFACTURING LICENSEES.
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1.56 "WARRANTY REPAIR PERIOD" as used herein shall mean ten (10) calendar days
which shall commence on the date that VOICETEK receives HARDWARE PRODUCTS
which do not conform to the warranty set forth in Section 11.1 at
VOICETEK's repair facility in Chelmsford, Massachusetts, except that in
the case of HARDWARE PRODUCTS destined for locations outside of the United
States and Canada, the understanding is that the repaired or replaced item
will have been shipped but not necessarily received by a NORTHERN TELECOM
COMPANY or a MANUFACTURING LICENSEE within the ten (10) day period as
stated herein due to potential extended transit time for shipments outside
of North America and which actual transit time would be the shortest
period of time available from the carrier designated by NTI, NORTHERN
TELECOM COMPANIES or MANUFACTURING LICENSEES.
ARTICLE II - WARRANTIES OF OWNERSHIP
2.1 VOICETEK warrants that it has developed, it is the owner of, and/or it
possesses all necessary rights to market the use of STANDARD SOFTWARE
PRODUCTS and owns and/or has the right to use as of the EFFECTIVE DATE
certain MARKS and VOICETEK's goodwill of the businesses symbolized
thereby.
2.2 VOICETEK warrants and represents that STANDARD SOFTWARE PRODUCTS, or any
substantial portions thereof, have not been published or otherwise made
available to third parties without appropriate copyright and/or other
proprietary notices to preserve VOICETEK's ownership and proprietary or
licensed rights therein.
2.3 VOICETEK warrants that it is either the owner, or is otherwise in
possession of sufficient licensed rights pertaining to any portion of the
proprietary and intellectual property rights owned by third parties, of
all proprietary and intellectual property rights in and to all STANDARD
HARDWARE PRODUCTS. VOICETEK further warrants that title to all STANDARD
HARDWARE PRODUCTS shipped to NTI and/or NORTHERN TELECOM COMPANIES and/or
MANUFACTURING LICENSEES pursuant to the AGREEMENT shall pass to NTI or a
NORTHERN TELECOM COMPANY or a MANUFACTURING LICENSEE, as the case may be,
free and clear of any liens, charges, encumbrances, restrictions or rights
created in, by or against the STANDARD HARDWARE PRODUCTS or against
VOICETEK, except any intellectual property rights of VOICETEK and/or one
or more of VOICETEK's licensors in the STANDARD HARDWARE PRODUCTS, if any.
Without investigating the nature and scope of any intellectual property
rights that may exist in or to the STANDARD HARDWARE PRODUCTS, the parties
agree that NTI undertakes no obligation to protect any such intellectual
property rights as may be claimed by VOICETEK and/or one or more of
VOICETEK's licensors in the STANDARD HARDWARE PRODUCTS in connection with
purchase and sale of STANDARD HARDWARE PRODUCTS pursuant to the AGREEMENT.
2.4 VOICETEK warrants that USER DOCUMENTATION or any substantial portions
thereof, have not been published or otherwise made available to third
parties without appropriate copyright and/or other proprietary notices to
preserve VOICETEK's ownership and proprietary or licensed rights therein.
2.5 VOICETEK warrants and represents that no prior license or other agreement
is violated by or is inconsistent with the terms and conditions of the
AGREEMENT.
ARTICLE III - GRANT OF NONEXCLUSIVE RIGHTS
3.1 In accordance with and subject to the terms and conditions of the
AGREEMENT, VOICETEK hereby grants to NTI the nonexclusive right:
(a) to market and distribute STANDARD HARDWARE PRODUCTS and to market and
sublicense STANDARD SOFTWARE PRODUCTS only in object form and/or USER
DOCUMENTATION under the MARKS respectively applicable, if any, or, at
NTI's option, under NTI's trademarks and/or trade dress, directly or
indirectly, as components of a Northern Telecom-manufactured
application to AUTHORIZED DISTRIBUTORS and/or
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end-user customers in the AUTHORIZED TERRITORY, and to grant these
same rights to MANUFACTURING LICENSEES.
(b) to use, adapt, merge, copy and incorporate, as necessary, the
STANDARD SOFTWARE PRODUCTS, or portions thereof, as a part of a
Northern Telecom-manufactured application, and to grant these same
rights to MANUFACTURING LICENSEES. The right to reproduce copies of
STANDARD SOFTWARE PRODUCTS, or portions thereof, shall include the
right to have such reproduction performed by another party on NTI's
behalf, provided such party has signed a substantially unmodified
version of NTI's Reproduction Services Agreement, a copy of which is
attached hereto as Schedule G and is by this reference made a part
hereof.
(c) to use, modify, translate, reproduce and distribute, either directly,
or through AUTHORIZED DISTRIBUTORS to customers in the AUTHORIZED
TERRITORY, and to use, translate and reproduce for internal use,
copies of the USER DOCUMENTATION delivered to NTI under the AGREEMENT
and to grant all of these same rights to MANUFACTURING LICENSEES. The
right to reproduce copies of USER DOCUMENTATION shall include the
right to have such reproduction performed by another party on NTI's
behalf, provided such party has signed a substantially unmodified
version of NTI's Reproduction Services Agreement.
(d) to manufacture and distribute copies of POINT RELEASES, UPDATES and
VERSION RELEASES [for STANDARD SOFTWARE PRODUCTS only] either
directly or indirectly, to end-user customers in the AUTHORIZED
TERRITORY.
(e) to purchase HARDWARE not manufactured by VOICETEK (an example of
which is Dialogic-manufactured circuit pack assemblies), direct from
VOICETEK's external supplier(s) for installation and use in
VOICETEK-supplied components without such direct purchase, sale,
distribution and installation by NTI or NTI's qualified technicians
of such HARDWARE not manufactured by VOICETEK voiding and/or
negatively affecting in any way the warranties granted to NTI,
NORTHERN TELECOM COMPANIES or MANUFACTURING LICENSEES elsewhere in
the AGREEMENT.
(f) to brand SIGNATURES for any HARDWARE purchased under the rights
granted to NTI under subsection (e) above at NTI's option and at no
additional cost to NTI, NORTHERN TELECOM COMPANIES and MANUFACTURING
LICENSEES and to have such branding of SIGNATURES not void and/or
negatively affect in any way the warranties granted to NTI elsewhere
in the AGREEMENT.
ARTICLE IV - GRANT OF EXCLUSIVE RIGHTS
4.1 In accordance with and subject to the terms and conditions of the
AGREEMENT, VOICETEK hereby grants to NTI the exclusive right:
(a) to market and distribute MODIFIED HARDWARE PRODUCTS and to market and
sublicense MODIFIED SOFTWARE PRODUCTS only in object form and/or
MODIFIED USER DOCUMENTATION under NTI's trademarks and/or trade
dress, directly or indirectly, as components of a Northern Telecom
application to AUTHORIZED DISTRIBUTORS and/or end-user customers in
the AUTHORIZED TERRITORY, and to grant these same rights to
MANUFACTURING LICENSEES.
(b) to use, adapt, merge, copy and incorporate, as necessary, the
MODIFIED SOFTWARE PRODUCTS, or portions thereof, as a part of a
Northern Telecom application, and to grant these same rights to
MANUFACTURING LICENSEES. The right to reproduce copies of MODIFIED
SOFTWARE PRODUCTS shall include the right to have such reproduction
performed by another party on NTI's behalf, provided such party has
signed a substantially unmodified version of NTI's Reproduction
Services Agreement.
(c) to use, modify, translate, reproduce and distribute, either directly,
or through AUTHORIZED DISTRIBUTORS to customers in the AUTHORIZED
TERRITORY, and to
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use, translate and reproduce for internal use, copies of the MODIFIED
USER DOCUMENTATION and to grant all of these same rights to
MANUFACTURING LICENSEES. The right to reproduce copies of MODIFIED
USER DOCUMENTATION shall include the right to have such reproduction
performed by another party on NTI's behalf, provided such party has
signed a substantially unmodified version of NTI's Reproduction
Services Agreement.
(d) to manufacture and distribute copies of POINT RELEASES, UPDATES and
VERSION RELEASES [for MODIFIED SOFTWARE PRODUCTS only], either
directly or indirectly, to end-user customers in the AUTHORIZED
TERRITORY.
ARTICLE V - DISTRIBUTION AND SUBLICENSING
5.1 Subject to the terms and conditions set forth herein, VOICETEK agrees to
sell [or license, in the case of SOFTWARE PRODUCTS] and NTI shall have the
right to purchase or otherwise procure, as the case may be, PRODUCTS at
the license fees and/or prices set forth in Schedule B, Schedule D or
Schedule E, as the case may be, during the TERM.
5.2 Except as may otherwise be required by VOICETEK's agreements with its
suppliers of STANDARD PRODUCTS, NTI reserves the right to market and
distribute HARDWARE PRODUCTS and to market and sublicense SOFTWARE
PRODUCTS in object form under its own trademarks, service marks and/or
trade dress associated with the various Northern Telecom applications into
which such PRODUCTS are incorporated. NTI and/or NORTHERN TELECOM
COMPANIES and/or MANUFACTURING LICENSEES may request that a Northern
Telecom logo or other form of trade dress be placed on MODIFIED PRODUCTS
by NTI or a NORTHERN TELECOM COMPANY or MANUFACTURING LICENSEE itself or
by VOICETEK. Regardless of which party places a Northern Telecom logo or
other form of trade dress on MODIFIED PRODUCTS, it is the understanding of
the parties that any MODIFIED PRODUCTS provided with a warranty pursuant
to the AGREEMENT shall carry the same warranty from VOICETEK whether or
not Northern Telecom logos and/or trade dress are applied thereto.
5.3 If NTI or any NORTHERN TELECOM COMPANY, MANUFACTURING LICENSEE OR
AUTHORIZED DISTRIBUTOR desires to distribute the PRODUCTS in object form
in countries outside of the AUTHORIZED TERRITORY, NTI shall first submit
the name of such country or countries to VOICETEK for VOICETEK's prior
written approval, which approval shall not be unreasonably withheld. In
the event a particular country is not approved by VOICETEK, the parties
shall arrange to discuss the merits of proceeding with the proposed
distribution in such country and the reservations and/or objections of
VOICETEK in an effort to reach a mutually satisfactory resolution.
5.4 NTI understands and agrees that the PRODUCTS, and any copies thereof
acquired or reproduced hereunder, and any direct product thereof, are
subject to the export control laws and regulations of the United States,
and any amendments thereof. NTI hereby assures (and shall require any
NORTHERN TELECOM COMPANIES and/or MANUFACTURING LICENSEES and/or
AUTHORIZED DISTRIBUTORS receiving rights directly or indirectly from NTI
hereunder) VOICETEK that it does not intend to and will not knowingly,
without the prior written consent, if required, of the Office of Export
Licensing of the U.S. Department of Commerce, P.O. Box 273, Washington,
D.C. 20230, transmit directly or indirectly:
(i) PRODUCTS and/or technical information provided in relation to
PRODUCTS; or
(ii) any immediate products (including processes and services) produced
directly by the use of PRODUCTS and/or associated technical
information;
to (1) Afghanistan, The Federal Republic of Yugoslavia (Serbia and
Montenegro), Haiti, Iraq, the People's Republic of China or any Group Q,
S, W, Y or Z country specified in Supplement No. 1 to Part 370 of the
Export Administration Regulations issued by the U.S. Department of
Commerce or (2) any citizen or resident of the foregoing countries.
Country Groups Q, S, W, Y and Z currently include the following: Albania,
Armenia, Azerbaijan, Belarus, Bulgaria, Cambodia, Cuba, the Czech
Republic, Estonia, Laos, Latvia, Libya, Lithuania, Mongolia, North Korea,
Poland, Romania,
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Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan and Vietnam. NTI
further assures VOICETEK that it will not transmit, sell, convey or
transfer any PRODUCTS or any other commodities or technical information
received under or in connection with the AGREEMENT to any individuals or
entities listed in the Table of Denial orders as published in Supplement
Nos. 1 and 2 to Part 788 of the above-referenced regulations.
5.5 NTI and all NORTHERN TELECOM COMPANIES and MANUFACTURING LICENSEES agree
to reproduce, upon each copy of the SOFTWARE PRODUCTS in object form and
the USER DOCUMENTATION and MODIFIED USER DOCUMENTATION, respectively,
made, the copyright notice attributing ownership of the copyright rights
therein as delivered to NTI under Article VII of the AGREEMENT. In the
event that NTI and/or a NORTHERN TELECOM COMPANY and/or a MANUFACTURING
LICENSEE creates modifications to the USER DOCUMENTATION, NTI and/or such
NORTHERN TELECOM COMPANY and/or such MANUFACTURING LICENSEE shall have the
right to include its own copyright notice therewith in addition to
VOICETEK's or VOICETEK's suppliers' copyright notice, if any, which
VOICETEK requires to be used under the terms of this Section 5.5.
5.6 For SOFTWARE PRODUCTS in object form which NTI distributes either (i)
directly to end-user customers, or (ii) indirectly through NORTHERN
TELECOM COMPANIES, MANUFACTURING LICENSEES and through AUTHORIZED
DISTRIBUTORS, NTI shall, as appropriate, require every such end-user
customer to execute or contractually impose upon such NORTHERN TELECOM
COMPANIES, MANUFACTURING LICENSEES and AUTHORIZED DISTRIBUTORS the
obligation to distribute SOFTWARE PRODUCTS to their end-user customers
under the software agreement (or an agreement in which such language is
contained) that NTI uses in distributing NTI's own proprietary software
applications, as set forth in Schedule H, which is attached hereto and is
by this reference made a part of the AGREEMENT. Any MANUFACTURING LICENSEE
receiving rights through NTI pursuant to Section 3.1 and Section 4.1 shall
be bound in a written sublicense by terms and conditions no less stringent
than those applicable to NTI herein.
5.7 The parties understand and acknowledge that NTI may elect to license the
SOFTWARE PRODUCTS to United States government customers. In order to
obviate the unintentional grant of rights to such customers pursuant to
existing federal regulations, the parties hereby agree that the following
legend shall appear on copies of the SOFTWARE PRODUCTS distributed to
United States government customers:
RESTRICTED RIGHTS LEGEND
Use, duplication, or disclosure by the U.S. Government is subject to
restrictions as set forth in subdivision (c)(1) of FAR 52.227-19 or
(c)(1)(ii) of DFAR 52.227-7013.
Northern Telecom Inc., 2305 Mission College Blvd., Dept. 0521,
Santa Clara, CA 95054-1591.
5.8 NTI, and any NORTHERN TELECOM COMPANIES, MANUFACTURING LICENSEES and
AUTHORIZED DISTRIBUTORS receiving rights to the SOFTWARE PRODUCTS directly
or indirectly from NTI, may transfer rights to use copies of the SOFTWARE
PRODUCTS in object form to their customers for any fee which NTI, and said
NORTHERN TELECOM COMPANIES, MANUFACTURING LICENSEES and AUTHORIZED
DISTRIBUTORS individually deem appropriate.
5.9 VOICETEK hereby grants to NORTHERN TELECOM COMPANIES the same scope of
rights as are granted by VOICETEK to NTI in the AGREEMENT, subject to such
NORTHERN TELECOM COMPANIES being bound in a written sublicense by NTI to
terms and conditions equivalent to those set forth in the AGREEMENT or by
manifesting their consent to abide by the terms and conditions of the
AGREEMENT in a signed writing directed to VOICETEK referencing the name,
date and parties to the AGREEMENT. Any MANUFACTURING LICENSEES receiving
rights through NTI pursuant to Section 5.2 and Section 5.3 or through a
NORTHERN TELECOM COMPANY pursuant to this Section 5.9 and/or Section 3.1
and/or Section 4.1 shall also be bound in a written sublicense by terms
and conditions no less stringent than those applicable to
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NTI herein. A grant of rights by NTI or a NORTHERN TELECOM COMPANY to a
MANUFACTURING LICENSEE shall not relieve NTI or such NORTHERN TELECOM
COMPANY of its obligations under the AGREEMENT.
5.10 Except as provided herein, VOICETEK reserves all rights, title and
interest in and to the SOFTWARE PRODUCTS, including the underlying ideas,
inventions, processes and data embodied in the SOFTWARE PRODUCTS, and NTI
acknowledges that no rights, title or interest in or to the SOFTWARE
PRODUCTS is granted under the AGREEMENT other than the specified limited
rights set forth in Articles III and IV, which, subject to Section 18.4,
shall continue only so long as the AGREEMENT remains in effect.
ARTICLE VI - MARKS
6.1 VOICETEK warrants that it owns and/or has the right to use, as of the
EFFECTIVE DATE, certain MARKS and VOICETEK's and/or VOICETEK's suppliers'
goodwill of the businesses symbolized thereby.
6.2 VOICETEK hereby grants to NTI the nonexclusive right during the TERM to
use for itself, and to grant directly or indirectly to NORTHERN TELECOM
COMPANIES and AUTHORIZED DISTRIBUTORS, the right to use the MARKS listed
in Schedule C of the AGREEMENT in association with the advertising and
distribution of PRODUCTS in the AUTHORIZED TERRITORY subject to VOICETEK
quality control review. Upon the request of VOICETEK, NTI, a NORTHERN
TELECOM COMPANY or an AUTHORIZED DISTRIBUTOR shall deliver to VOICETEK any
media containing the MARKS to be used by NTI or a NORTHERN TELECOM COMPANY
or an AUTHORIZED DISTRIBUTOR, as the case may be, in advertising or
promotional materials. NTI, NORTHERN TELECOM COMPANIES and AUTHORIZED
DISTRIBUTORS shall abide by any and all guidelines promulgated by VOICETEK
regarding use of the MARKS in such advertising and promotions. VOICETEK
may advise NTI or a NORTHERN TELECOM COMPANY or an AUTHORIZED DISTRIBUTOR
of any corrections or modifications to such use of the MARKS, and NTI or
the NORTHERN TELECOM COMPANY or the AUTHORIZED DISTRIBUTOR shall effect
such changes within a reasonable period of time. NTI, NORTHERN TELECOM
COMPANIES and AUTHORIZED DISTRIBUTORS shall at least once in the most
prominent first usage of the MARKS, cause "TM" to be placed adjacent to
the MARKS on all advertising, marketing and other promotional material
and, when so instructed by VOICETEK, shall cause "(R)" to replace "TM"
within a reasonable period of time.
6.3 NTI and NORTHERN TELECOM COMPANIES hereby acknowledge and agree that
nothing herein gives them any right, title or interest in the MARKS and
that, upon termination of the AGREEMENT by expiration or for any other
reason, NTI, NORTHERN TELECOM COMPANIES and AUTHORIZED DISTRIBUTORS shall
no longer use the MARKS in advertising or in any other manner. NTI,
NORTHERN TELECOM COMPANIES and AUTHORIZED DISTRIBUTORS shall not challenge
the validity of VOICETEK's ownership of or right to use any of the MARKS,
nor otherwise impair the interest of VOICETEK in the MARKS. NTI, NORTHERN
TELECOM COMPANIES and AUTHORIZED DISTRIBUTORS shall not use any MARK which
is confusingly similar to, or a colorable imitation of, any MARK.
6.4 In the event NTI and/or NORTHERN TELECOM COMPANIES discover apparent
infringing activity involving the MARKS by third parties, then NTI,
NORTHERN TELECOM COMPANIES and/or MANUFACTURING LICENSEES, as the case may
be, shall promptly notify VOICETEK of such apparent infringing activity.
ARTICLE VII - ORDERING AND DELIVERY
7.1 With one exception, NTI may, but shall not be obligated to, issue ORDERS
during the TERM. Regardless of other considerations, NTI shall issue an
ORDER for RESELLER SUPPORT SERVICES as specifically enumerated in
paragraph 1 of Schedule F no later than GENERAL AVAILABILITY. ORDERS may
also be issued directly by one or more NORTHERN TELECOM COMPANIES that
have been sublicensed by NTI pursuant to the terms of Section 5.9 of the
AGREEMENT. In the event NTI provides VOICETEK with a forecast or estimate
of the quantity
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that may be ordered, whether set forth in Schedule B or otherwise,
VOICETEK acknowledges that NTI shall not be obligated to submit an ORDER
for any portion of such forecast or estimate.
7.2 VOICETEK shall accept any ORDER issued by NTI, provided such ORDER is
consistent with the AGREEMENT. The AGREEMENT shall continue to apply to
any ORDER issued during the TERM until all obligations herein are
performed. The terms and conditions of the AGREEMENT shall supersede any
preprinted terms and conditions appearing on any purchase order form used
by NTI and/or any NORTHERN TELECOM COMPANY and/or MANUFACTURING LICENSEE.
7.3 An ORDER shall reference the AGREEMENT and shall set forth a description
of the following: (a) PRODUCTS and/or TRAINING MATERIALS and/or TRAINING
PROGRAMS ordered, (b) price, (c) DELIVERY LOCATION, (d) the location where
the invoice shall be rendered for payment, (e) method of shipment, (f)
quantity and (g) SHIPMENT DATE.
7.4 Within two (2) business days of the date of VOICETEK's receipt of an ORDER
or an ORDER RELEASE or a modification by NTI to ORDERS or ORDER RELEASES,
VOICETEK shall either provide verbal confirmation of the SHIPMENT DATE or
propose an alternate SHIPMENT DATE. Any verbal confirmations issued by
VOICETEK pursuant to this Section 7.4 shall be followed up by a written or
electronic acknowledgment within ten (10) calendar days of the date of
VOICETEK's receipt of such ORDER or ORDER RELEASE and/or modifications
thereto. If VOICETEK fails to respond, it shall be deemed to have agreed
to the SHIPMENT DATE and/or modification(s) set forth by NTI. If VOICETEK
proposes an alternate SHIPMENT DATE, then NTI shall within two (2)
business days of its receipt of notice of such alternate SHIPMENT DATE
notify VOICETEK that either such alternate SHIPMENT DATE is acceptable or
that such ORDER or ORDER RELEASE is canceled. Notwithstanding the above,
VOICETEK shall comply with any SHIPMENT DATE specified by NTI which is to
occur on or after the end of the MAXIMUM DELIVERY PERIOD.
7.5 An ORDER or an ORDER RELEASE may not be delivered in partial shipments
unless otherwise specified by NTI. In the event VOICETEK fails to ship (or
present in the case of TRAINING PROGRAMS) PRODUCTS and/or TRAINING
MATERIALS and/or TRAINING PROGRAMS by the SHIPMENT DATE, NTI may cancel,
without charge, the ORDER or ORDER RELEASE, as the case may be, or
applicable portion thereof, seven (7) calendar days following the SHIPMENT
DATE therefor.
7.6 Except as provided in Subsection 7.6.1 below, NTI may, without charge,
postpone the SHIPMENT DATE for an ORDER or an ORDER RELEASE at any time
during the RESCHEDULING PERIOD applicable to such ORDER or ORDER RELEASE.
If NTI cancels an ORDER or an ORDER RELEASE during the CANCELLATION PERIOD
for such ORDER or ORDER RELEASE there shall be no charge to NTI, except as
provided in Subsection 7.6.1 below. No cancellations shall occur after a
CANCELLATION PERIOD unless mutually agreed upon by the parties.
7.6.1 The following PRODUCTS are excepted out from the rescheduling and
cancellation rights afforded to NTI in Section 7.6:
Order Code Product Description
---------- -------------------
HL-5250-HW-S 5250 Synchronous Interface (SSI HW & SW)
HL-5250-HW-TR 5250 Token Ring Interface (SSI HW & SW)
HL-3270-HW-S 3270 Synchronous Interface (SSI HW & SW)
HL-3270-HW-TR 3270 Token Ring Interface (SSI HW & SW)
HCOM-SC08-VT100 VT100 for 8 ports on the PC
HCOM-SC016-VT100 VT100 for 16 ports on the PC
HCOM-SC032-VT100 VT100 for 32 ports on the PC
17-852066-02 2 Channel Fax Option
17-852066-01 4 Channel Fax Option
17-852066-00 8 Channel Fax Option
17-852062-00 DMX Option
PMT-000-NT Notch Filter
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Order Code Product Description
---------- -------------------
TTS-04-LH TTS 4-port Assembly
17-852072-00 Audio Interface Unit
PT-30-E1 E1 Interface Card (Aculab)
Also, single orders for 15 or more Rackmount units or 30 or more
Tower units will not be candidates for unlimited rescheduling or
cancellation without charge.
7.7 During the RESCHEDULING PERIOD NTI may modify ORDERS and/or ORDER RELEASES
and VOICETEK shall confirm such ORDERS and/or ORDER RELEASES at the prices
set forth in the AGREEMENT.
7.8 Upon providing VOICETEK at least thirty (30) days notice prior to the end
of the TERM, NTI shall have the right to extend the TERM for the OPTION
PERIOD, in which event NTI and VOICETEK shall have the rights and
obligations in the AGREEMENT during the OPTION PERIOD, including, without
limitation, NTI's right to purchase at the prices and applicable discount
levels set forth or incorporated by reference, as the case may be, in
Schedules B, D, E and/or G, the last of which is attached hereto and is by
this reference made a part of the AGREEMENT.
7.9 Except in the case of a change for health or safety reasons, VOICETEK
shall notify NTI at least one hundred twenty (120) days prior to
implementing any change which affects the form, fit or function of any
STANDARD PRODUCTS. Changes which do not affect form, fit or function, and
changes made to HARDWARE PRODUCTS for health or safety reasons may be
implemented at any time. In the event a change to HARDWARE PRODUCTS is
made for health or safety reasons, VOICETEK shall retrofit NTI's existing
inventory of such HARDWARE PRODUCTS purchased from VOICETEK, free of
charge, with such retrofit being limited to the replacement of the
specific item that is deemed to be the cause of the retrofit. Unless a
change is designed by VOICETEK to eliminate or reduce a safety or health
hazard, NTI, at its option, may issue ORDERS or ORDER RELEASES under the
terms and conditions of the AGREEMENT for such PRODUCTS as they existed
prior to the change in form, fit or function, for a period of at least one
hundred eighty (180) days following the date of NTI's receipt of
VOICETEK's change notification.
ARTICLE VIII - PRICE, PAYMENT AND RISK OF LOSS
8.1 Prices for PRODUCTS, RESELLER SUPPORT SERVICES, TRAINING MATERIALS and
TRAINING PROGRAMS, respectively, purchased and/or licensed hereunder shall
be list price according to the then current PRICE LIST or the prices set
forth in Schedule E, as the case may be, less the current discount level
where applicable as established in Schedule 1, which is attached hereto
and is by this reference made a part of the AGREEMENT.
8.2 Special pricing for PRODUCTS, RESELLER SUPPORT SERVICES, TRAINING
MATERIALS and TRAINING PROGRAMS, respectively, purchased and/or licensed
hereunder which may or may not be included in the then current PRICE LIST
shall be as indicated in Schedule E.
8.3 Prices for SYSTEMS, RESELLER SUPPORT SERVICES, TRAINING MATERIALS and
TRAINING PROGRAMS, respectively, for internal use by NTI, NORTHERN TELECOM
COMPANIES or MANUFACTURING LICENSEES shall be as set forth in Schedule D
and shall be applicable only up to a total quantity of twenty-five (25)
SYSTEMS. The allocation of SYSTEMS for internal use by NTI, NORTHERN
TELECOM COMPANIES and/or MANUFACTURING LICENSEES shall be as directed by
the NTI contact designated in Section 26.2.
8.4 Subject to any applicable discount as enumerated in Schedule 1, prices for
(i) products and/or services, and (ii) right-to-use fees not enumerated in
Schedule B, Schedule D and/or Schedule E shall be as mutually agreed upon
by the parties prior to the time NTI issues ORDERS and/or ORDER RELEASES
therefor.
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8.5 Prices and license fees set forth in Schedules B, D, and/or E or otherwise
agreed upon pursuant to Section 8.4 are (a) in U.S. dollars and shall
apply during the TERM; (b) exclusive of any applicable excise and sales
taxes now existing or hereafter imposed by any applicable taxing
authority; (c) exclusive of the transportation charges and duty applicable
between the SHIPPING LOCATION and the DELIVERY LOCATION; and (d) inclusive
of all other taxes, transportation charges, duties and charges for
packaging and handling. Such taxes, transportation charges and duty for
which NTI is liable shall be separately stated on the invoice. VOICETEK
agrees not to assess any applicable excise or sales tax where NTI
furnishes VOICETEK a tax exemption certificate, a certificate of
authority, a direct pay permit and/or any equivalent acceptable to the
applicable taxing authority.
8.6 VOICETEK may issue invoices to NTI, NORTHERN TELECOM COMPANIES and
MANUFACTURING LICENSEES, respectively, issuing ORDERS and/or ORDER
RELEASES for PRODUCTS and/or TRAINING MATERIALS upon consignment to the
carrier designated by NTI for such PRODUCTS and/or TRAINING MATERIALS.
[*]
8.7 VOICETEK may issue invoices to NTI, NORTHERN TELECOM COMPANIES or
MANUFACTURING LICENSEES, respectively, issuing ORDERS and/or ORDER
RELEASES for RESELLER SUPPORT SERVICES and/or TRAINING PROGRAMS at the
beginning of an ANNUAL SUPPORT SERVICES PERIOD and, in the case of
TRAINING PROGRAMS, upon presentation of such TRAINING PROGRAMS. [*]
8.8 For copies of SOFTWARE PRODUCTS manufactured by NTI, NORTHERN TELECOM
COMPANIES and MANUFACTURING LICENSEES, respectively, VOICETEK shall, upon
receipt of quarterly notices from a copying location, as set forth in
Section 9.1, invoice such copying location for the total amount of per
copy fees due, if any, for the period covered by the notice. Any
MANUFACTURING LICENSEE copying location shall be required to report its
activity to the NORTHERN TELECOM COMPANY by which it was sublicensed to
make copies of SOFTWARE PRODUCTS in sufficient time to enable such
NORTHERN TELECOM COMPANY to include the details of such activity in its
quarterly notice to VOICETEK. [*]
ARTICLE IX - REPORTS; AUDITS
9.1 Within fifteen (15) calendar days after the end of each calendar quarter,
each copying location will send to VOICETEK a written report summarizing
its internal use and its external distribution of copies of the SOFTWARE
PRODUCTS in object form manufactured under the AGREEMENT. Each quarterly
report will specify:
(a) The total number of copies of the SOFTWARE PRODUCTS by individual
product in object form made and distributed during the reporting
period by a copying location for any of the following purposes:
- for internal use by NTI, or by NORTHERN TELECOM COMPANIES or
MANUFACTURING LICENSEES granted manufacturing rights directly
or indirectly by such copying location;
- for distribution by a copying location directly to end users;
- for distribution by a copying location for further
distribution by NORTHERN TELECOM COMPANIES, by MANUFACTURING
LICENSEES or by AUTHORIZED DISTRIBUTORS to end users.
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS
<PAGE> 15
(b) The total amount of license fees due to VOICETEK for the reporting
period from the copying location submitting the report, which shall
be determined by multiplying the total number of copies reported
under Section 9.1 a) by the applicable license fee(s) referenced in
Article VIII.
9.2 Upon VOICETEK's written request, NTI will, not more frequently than once
during each twelve (12) month period of the AGREEMENT, cause an authorized
representative of NTI to certify to VOICETEK the accuracy of the quarterly
reporting of the number of copies of the SOFTWARE PRODUCTS in object form
made by NTI, NORTHERN TELECOM COMPANIES and MANUFACTURING LICENSEES for
distribution to customers or to internal use sites during such twelve
(12) month period. Further, upon VOICETEK's written request, NTI will
permit, at the end of each twelve (12) month period of the AGREEMENT, a
mutually acceptable independent certified public accountant paid by
VOICETEK to examine the necessary books and records of NTI to audit such
quarterly reporting, provided such accountant shall undertake in writing
with NTI to protect the confidentiality of the business data and records
of NTI and to disclose to VOICETEK only the accuracy or inaccuracy of the
reporting hereunder. In the event an audit reveals a discrepancy between
what is properly due to VOICETEK and what has been reported and paid to
VOICETEK, and such discrepancy results in a shortfall in the amounts paid
to VOICETEK that is both (i) a minimum of twenty (20) units, and (ii) at
least ten percent (10%) of the amount actually due to VOICETEK for the
twelve (12) months covered by the audit, then in addition to full payment
by NTI of such shortfall NTI shall reimburse VOICETEK for all reasonable
and customary costs incurred by VOICETEK related to such audit.
9.3 For all MANUFACTURING LICENSEES that are authorized by NTI or a NORTHERN
TELECOM COMPANY to make copies of the SOFTWARE PRODUCTS in object form,
NTI shall either:
(i) retain for itself, or require that the NORTHERN TELECOM COMPANY
granting rights to a MANUFACTURING LICENSEE retain, the right to
audit the books and records of any such MANUFACTURING LICENSEE; or
(ii) require that the MANUFACTURING LICENSEE agree, in writing, to
permit, upon the written request of VOICETEK to NTI, a mutually
acceptable independent certified public accountant paid by NTI
or such MANUFACTURING LICENSEE to examine the necessary books
and records of any such MANUFACTURING LICENSEE, provided that
such accountant shall undertake in writing to such
MANUFACTURING LICENSEE to protect the confidentiality of the
business data and records of such MANUFACTURING LICENSEE and to
disclose to VOICETEK only the accuracy or inaccuracy of the
reporting required hereunder. Where such audits are requested
by VOICETEK, they shall be arranged through NTI.
In no event shall the identities of any MANUFACTURING LICENSEE and/or
end-users be disclosed to VOICETEK.
ARTICLE X - SOFTWARE PERFORMANCE WARRANTY
10.1 VOICETEK warrants that, during the WARRANTY PERIOD, SOFTWARE PRODUCTS,
as delivered to NTI
(i) will be compatible with and will operate in accordance with
VOICETEK's then most current USER DOCUMENTATION delivered with
SOFTWARE PRODUCTS for the then most recent release of SOFTWARE
PRODUCTS, and
(ii) to the best of VOICETEK's knowledge, shall be substantially free
of CRITICAL PROBLEMS and SERIOUS PROBLEMS, and
(iii) that the accompanying USER DOCUMENTATION shall be substantively
complete and accurate.
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10.2 During the WARRANTY PERIOD for SOFTWARE PRODUCTS, VOICETEK shall provide
to NTI promptly, upon release by VOICETEK, a copy of all corresponding
POINT RELEASES and UPDATES.
10.3 During the WARRANTY PERIOD, VOICETEK shall provide unlimited telephone
support between the hours of 8:00 a.m. and 6:00 p.m. Monday through Friday
(EDT or EST, as applicable) to the SUPPORT ORGANIZATION for SOFTWARE
PRODUCTS. VOICETEK's telephone "hotline" shall be staffed by technical
personnel with a detailed, working knowledge of the PRODUCTS. VOICETEK
shall make all reasonable efforts to have each call made on the "hotline"
returned by a qualified technical expert possessing the ability to discuss
the details of problems as follows:
(a) CRITICAL PROBLEMS = less than 30 minutes;
(b) SERIOUS PROBLEMS = less than 2 hours;
(c) MINOR PROBLEMS = less than 2 days;
VOICETEK shall issue a call number to each problem reported by NTI. A bug
report must contain sufficient information, on machine readable media if
possible, for VOICETEK to reproduce the bug on VOICETEK premises. As a
follow-up to any bug reports the SUPPORT ORGANIZATION may issue verbally
to VOICETEK through the telephone "hotline," the SUPPORT ORGANIZATION
shall provide such bug report details in writing to VOICETEK in a timely
manner. VOICETEK's telephone "hotline' support shall be available for
unlimited use by the SUPPORT ORGANIZATION for the PRODUCTS during the
WARRANTY PERIOD.
10.4 Upon receiving notice from NTI of a bug or error in any SOFTWARE PRODUCTS
during the WARRANTY PERIOD therefor, VOICETEK shall verbally acknowledge
receipt of such notice. A bug report must contain sufficient information,
on machine-readable media if possible, for VOICETEK to reproduce the bug
on VOICETEK premises. VOICETEK's acknowledgment shall contain a unique
number identifying the particular bug or error for tracking purposes.
VOICETEK shall provide NTI with a status on any bug or error logged for
NTI, provided that NTI identifies the particular bug or error by the
tracking number assigned to it by VOICETEK. NTI may make inquiries
regarding the status of any bug or error logged for NTI either orally or
in writing. VOICETEK shall provide NTI with a response (i) verbally via
the SUPPORT ORGANIZATION, or (ii) in writing, by number, describing the
closing resolution of the bug or error, including the projected date that
the necessary fix will be released and the nature of any known workaround.
Each bug or error logged for NTI shall remain open until closure
notification is received by NTI.
10.5 Patches or workarounds, made to fix reliability or specific performance
deficiencies not reported by NTI in SOFTWARE PRODUCTS, may be made by
VOICETEK when required, and, upon request, shall be either delivered to
NTI within fourteen (14) days or made available to NTI through electronic
means or electronic bulletin board (BBS) (e.g. Compuserve, Internet), if
requested. Each patch and/or workaround requires a written description of
the problem that the patch and/or workaround addresses and the requisite
installation procedure.
10.6 VOICETEK shall make all reasonable efforts to provide a workaround or
resolution for SOFTWARE PRODUCTS and any associated changes to the
accompanying USER DOCUMENTATION, or MODIFIED USER DOCUMENTATION as
applicable according to the following schedule:
(a) CRITICAL PROBLEMS - within twenty-four (24) hours of receipt of
notice of existence from NTI;
(b) SERIOUS PROBLEMS - within five (5) days of receipt of notice of
existence from NTI;
(c) MINOR PROBLEMS - fixed in the next POINT RELEASE or UPDATE issued by
VOICETEK.
The parties acknowledge and understand the potentially idiosyncratic
nature of any bug or error in SOFTWARE PRODUCTS. Recognizing this, the
turnaround times set forth previously in this
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Section 10.6 constitute targeted goals of warranty services to be provided
by VOICETEK to NTI. Repetitive failure to meet these targeted goals, as
implied by the language of Section 10.7, is required before NTI is
entitled to pursue its remedies as set forth in Section 10.7 and/or
Article XVIII of the AGREEMENT. Sporadic failures by VOICETEK to meet or
beat these targeted turnaround times do not constitute a default on the
AGREEMENT.
10.7 In the event that, while NTI is receiving services under Article X for any
SOFTWARE PRODUCTS from VOICETEK during a WARRANTY PERIOD, VOICETEK
repeatedly fails to perform its obligations (after written notice to
VOICETEK to such effect and specification of the nature of such failures)
or VOICETEK unilaterally decides to discontinue warranty support for one
or more SOFTWARE PRODUCTS so as to seriously jeopardize the ability of NTI
to support the use of SOFTWARE PRODUCTS by NORTHERN TELECOM COMPANIES,
MANUFACTURING LICENSEES, AUTHORIZED DISTRIBUTORS and/or end-user
customers, then NTI shall have the right, after giving notice of its
intentions to VOICETEK, to send one (1) or more qualified engineering
personnel to VOICETEK's facilities, where such personnel shall have access
to the source code form of the SOFTWARE PRODUCTS to which the failure to
receive required warranty support pertains, the remaining SOURCE CODE
MATERIALS related to such SOFTWARE PRODUCTS and the assistance of
VOICETEK's engineering personnel in connection with such failure.
VOICETEK's and NTI's engineering personnel shall have sixty (60) days from
the date of arrival of the NTI engineering personnel to remedy the
consequences of failure to receive the required warranty services from
VOICETEK. Access to the source code form of any SOFTWARE PRODUCTS and the
remaining SOURCE CODE MATERIALS related to such SOFTWARE PRODUCTS granted
to NTI's engineering personnel pursuant to this Section 10.7 shall not
include the right to retain any copies thereof upon leaving VOICETEK's
facilities.
10.8 All notifications required pursuant to this Article X, except those sent
pursuant to Section 10.7 shall be sent to NTI at the address set forth for
other communications in Section 26.1.
10.9 VOICETEK has established a written formal escalation procedure, as set
forth in Schedule J, which is attached hereto and is by this reference
made a part of the AGREEMENT, that identifies contact persons and
telephone numbers within VOICETEK's management that NTI may notify in the
event VOICETEK personnel fail to:
(a) provide a response within two (2) hours to a CRITICAL PROBLEM and/or
a SERIOUS PROBLEM;
(b) provide a workaround or resolution within twenty-four (24) hours to a
CRITICAL PROBLEM;
(c) deliver a workaround or resolution that fixes a SERIOUS PROBLEM
within five (5) days.
10.10 The exclusive remedy of NTI or a NORTHERN TELECOM COMPANY and the sole
measure of recoverable damage by NTI or a NORTHERN TELECOM COMPANY for
breach of the performance warranty on SOFTWARE PRODUCTS is, in VOICETEK's
sole discretion, to provide NTI with (i) instructions for curing such
nonconformity, or (ii) updated versions of SOFTWARE PRODUCTS which are
free of such nonconformity, or (iii) a functionally equivalent software
package which is free of such nonconformity and which, following delivery,
will be regarded as a particular STANDARD SOFTWARE PRODUCT and/or MODIFIED
SOFTWARE PRODUCT under the AGREEMENT. In the event VOICETEK is unable to
accomplish (i), (ii) and/or (iii) above, it shall accept a return of the
SOFTWARE PRODUCTS in question and fully refund to NTI the license and/or
sublicense fees paid therefor pursuant to Article VIII.
ARTICLE XI - HARDWARE PERFORMANCE WARRANTY
11.1 VOICETEK warrants to NTI (or a NORTHERN TELECOM COMPANY) that each unit of
HARDWARE PRODUCTS as delivered by VOICETEK hereunder will, under normal
use and service, be free from defects in materials and workmanship during
the WARRANTY PERIOD and shall conform to the SPECIFICATIONS in effect on
the SHIPMENT DATE. VOICETEK's sole obligation and NTI's sole remedy under
this HARDWARE performance warranty are limited to the
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repair or replacement, at VOICETEK's option, of the defective HARDWARE
PRODUCTS. VOICETEK's obligation and NTI's remedy under this Section 11.1
are conditioned upon:
(a) VOICETEK's receipt of written notice of a defect in HARDWARE PRODUCTS
from NTI within the WARRANTY PERIOD; and
(b) the HARDWARE PRODUCTS not having been altered or repaired BY others
without VOICETEK's written consent except in cases where NTI
purchases hardware not manufactured BY VOICETEK direct from
VOICETEK's suppliers) and such direct purchase and installation is
undertaken by NTI or NTI's qualified technicians; and
(c) the alleged defect not being the result of mishandling, improper
servicing or improper operation (including use in conjunction with
hardware electrically or mechanically incompatible).
This warranty shall survive inspection, acceptance and payment.
11.2 VOICETEK warrants to NTI and/or NORTHERN TELECOM COMPANIES that all
HARDWARE PRODUCTS shipped pursuant to the AGREEMENT will be manufactured
and/or assembled from new and unused components.
11.3 No HARDWARE PRODUCTS shall be returned to VOICETEK without VOICETEK's
authorization pursuant to an RMA issued by VOICETEK's designated repair
coordinator. The costs and risk of loss associated with shipping defective
HARDWARE PRODUCTS to VOICETEK's factory shall be borne by NTI, a NORTHERN
TELECOM COMPANY or MANUFACTURING LICENSEE. Costs and risk of loss
associated with returning repaired or replacement HARDWARE PRODUCTS to NTI
or a NORTHERN TELECOM COMPANY or MANUFACTURING LICENSEE shall be borne by
VOICETEK. VOICETEK shall return the repaired HARDWARE PRODUCTS or a
replacement within the WARRANTY REPAIR PERIOD. In all cases, an RMA shall
be issued within one (1) business day of a request therefor by NTI or a
NORTHERN TELECOM COMPANY or MANUFACTURING LICENSEE.
11.4 In the event NTI or a NORTHERN TELECOM COMPANY or MANUFACTURING LICENSEE
contacts VOICETEK and requests an RMA, and the defective HARDWARE PRODUCTS
are circuit boards under warranty, VOICETEK shall upon request by NTI,
NORTHERN TELECOM COMPANIES or MANUFACTURING LICENSEES ship replacement
boards within twenty-four (24) hours to the requesting office of NTI or
NORTHERN TELECOM COMPANIES or MANUFACTURING LICENSEES or AUTHORIZED
DISTRIBUTORS, as the case may be. In the event the original boards are not
received by VOICETEK within ten (10) calendar days, VOICETEK shall have
the right to invoice the NTI, NORTHERN TELECOM COMPANY or MANUFACTURING
LICENSEE location requesting the replacement boards.
ARTICLE XII - LIMITATION OF WARRANTY
12.1 EXCEPT IN THE CASE OF WARRANTIES OF OWNERSHIP SET FORTH IN ARTICLE II, THE
WARRANTIES SET FORTH IN ARTICLE X AND ARTICLE XI OF THE AGREEMENT ARE MADE
TO AND FOR THE BENEFIT OF NTI ONLY, EXCEPT THAT VOICETEK ACKNOWLEDGES THAT
NTI SHALL RELY UPON SUCH WARRANTIES IN PROVIDING WARRANTIES TO NORTHERN
TELECOM COMPANIES, MANUFACTURING LICENSEES, AUTHORIZED DISTRIBUTORS AND
END-USER CUSTOMERS. SUCH WARRANTIES CONSTITUTE THE ONLY LIABILITIES OF
VOICETEK FOR BREACH OF WARRANTY AND ARE IN LIEU OF ALL OTHER WARRANTIES,
WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED IN REGARD TO STANDARD
PRODUCTS AND/OR MODIFIED PRODUCTS, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WHICH ARE HEREBY
DISCLAIMED BY VOICETEK AND EXCLUDED FROM THE AGREEMENT.
ARTICLE XIII - RESELLER SUPPORT SERVICES
13.1 Upon payment of the requisite annual fee by NTI, VOICETEK shall provide
RESELLER SUPPORT SERVICES to NTI for an ANNUAL SUPPORT SERVICES PERIOD in
accordance with
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the terms and conditions of the support program set forth in Schedule F.
RESELLER SUPPORT SERVICES shall not include support for application
development which is available at standard rates as described in the PRICE
LIST.
13.2 In consideration of the provision of RESELLER SUPPORT SERVICES, NTI shall
pay VOICETEK in accordance with the RESELLER SUPPORT SERVICES pricing
structure set forth in Schedule F.
13.3 During an ANNUAL SUPPORT SERVICES PERIOD for which NTI has paid the
requisite annual fee, VOICETEK shall provide RESELLER SUPPORT SERVICES
with respect to the current VERSION RELEASE and for the last two (2)
VERSION RELEASES immediately prior to the current one.
13.4 From time to time VOICETEK may develop corrections, enhancements and major
improvements to SOFTWARE PRODUCTS. After the WARRANTY PERIOD has expired
and in the event NTI does not request and pay for RESELLER SUPPORT
SERVICES, then VOICETEK shall be under no obligation to issue any further
POINT RELEASES and UPDATES to NTI. However, promptly upon issuance of any
such POINT RELEASES and UPDATES by VOICETEK to any licensee holding a
license similar in scope to the AGREEMENT, VOICETEK shall offer such POINT
RELEASES and UPDATES to NTI.
13.5 Fees for POINT RELEASES and UPDATES shall be included in the annual fee
paid by NTI for an ANNUAL SUPPORT SERVICES PERIOD, but in the event NTI
has elected not to purchase RESELLER SUPPORT SERVICES, then the applicable
fee for POINT RELEASES and UPDATES shall be as specified in Schedule B or
as otherwise agreed upon in writing by VOICETEK and NTI. Each POINT
RELEASE and UPDATE shall be regarded as the applicable SOFTWARE PRODUCT as
denoted in the PRICE LIST or elsewhere, and shall upon release to NTI be
subject to all of the terms and conditions of the AGREEMENT.
ARTICLE XIV - ACCEPTANCE
14.1 The acceptance of PRODUCTS is subject to inspection at the DELIVERY
LOCATION and such acceptance shall be deemed to occur thirty (30) days
after receipt of such PRODUCTS at the DELIVERY LOCATION unless NTI shall
have provided VOICETEK with notice of nonacceptance within such period.
14.2 HARDWARE PRODUCTS will be inspected by NTI for major defects, with major
defect being defined as (i) any functional failure, or (ii) a workmanship
defect that is highly likely to cause infant mortality or significantly
reduced product life, or (iii) a cosmetic or visual defect that is highly
likely to cause the customer to request a replacement unit.
14.3 SOFTWARE PRODUCTS will be inspected by NTI for major defects, with major
defects being defined as (i) SOFTWARE PRODUCTS missing labels, or (ii)
SOFTWARE PRODUCTS with labels lacking accurate information as to the
identity and POINT RELEASE, UPDATE or VERSION RELEASE contained therein,
or (iii) defective media.
14.4 It any unit of PRODUCT does not conform to the requirements of an ORDER or
an ORDER RELEASE or to the warranties set forth in Articles X and XI, as
determined by NTI's inspection pursuant to the terms stated in Section
14.2 and Section 14.3, the entire quantity delivered with such PRODUCT may
be returned to VOICETEK at VOICETEK's expense, subject to failure
verification by VOICETEK, unless the only defect found by NTI's inspection
pursuant to the terms of Section 14.3 is a quantity of media with labels
missing in which case NTI shall work with VOICETEK to obtain such label(s)
without returning the entire quantity of PRODUCTS to VOICETEK. Payment
shall neither be deemed to constitute acceptance nor be a waiver to NTI's
right to cancel any ORDER or ORDER RELEASE.
ARTICLE XV - INTELLECTUAL PROPERTY INFRINGEMENT INDEMNITY
15.1 VOICETEK shall defend, indemnify and hold NTI, NORTHERN TELECOM COMPANIES,
MANUFACTURING LICENSEES and AUTHORIZED DISTRIBUTORS receiving rights
directly or
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indirectly (from NORTHERN TELECOM COMPANIES, MANUFACTURING LICENSEES
and/or AUTHORIZED DISTRIBUTORS) through NTI harmless from any and all
claims, costs, expenses, damages or other liability, including reasonable
and customary attorneys' fees, which is the result of patent, trademark or
copyright infringement claims or claims based on misappropriation OF trade
secret rights arising out of or relating to the use, copying or
distribution of any of the SOFTWARE PRODUCTS in the AUTHORIZED TERRITORY
or damages resulting from use of the MARKS in connection with such
distribution in the AUTHORIZED TERRITORY. NTI, NORTHERN TELECOM COMPANIES,
MANUFACTURING LICENSEES and/or AUTHORIZED DISTRIBUTORS shall notify
VOICETEK promptly, in writing, In the event of any such claim, and grant
to VOICETEK the right, at VOICETEK's expense, to control the defense
thereof, including the sole right to settle any such claim or suit on such
terms as VOICETEK shall deem desirable. If the use, copying or
distribution of any SOFTWARE PRODUCTS or use of the MARKS under which the
SOFTWARE PRODUCTS are distributed is held to constitute an infringement
and enjoined in one or more countries within the AUTHORIZED TERRITORY,
VOICETEK shall, at its own expense and option, (i) procure for NTI,
NORTHERN TELECOM COMPANIES, MANUFACTURING LICENSEES and AUTHORIZED
DISTRIBUTORS the right to continue using and distributing the allegedly
infringing SOFTWARE PRODUCTS, or (ii) modify the allegedly infringing
SOFTWARE PRODUCTS so that they become noninfringing, while maintaining to
the extent possible the same form and function, or (iii) replace the
allegedly infringing SOFTWARE PRODUCTS with noninfringing substitutes,
while maintaining to the extent possible the same form and function, or
(iv) arrange for the return of all allegedly infringing SOFTWARE PRODUCTS
shipped to NTI, NORTHERN TELECOM COMPANIES, MANUFACTURING LICENSEES and/or
AUTHORIZED DISTRIBUTORS the total amount of license fees paid therefor
plus all transportation and handling costs incurred for cooperating in the
return effort.
15.1.1 VOICETEK shall not have any liability to NTI under Section 15.1
for infringement and/or misappropriation, or claims thereof,
that are based upon (i) the use of SOFTWARE PRODUCTS in
combination with hardware and/or software furnished to NTI or a
NORTHERN TELECOM COMPANY or a MANUFACTURING LICENSEE or an
AUTHORIZED DISTRIBUTOR by a third party (unless approved by
VOICETEK) if such infringement and/or misappropriation, or
claim thereof, would have been avoided by the use of SOFTWARE
PRODUCTS in combination with different hardware and/or software
or, to the extent such use is possible, use of the SOFTWARE
PRODUCTS without any combination, or (ii) the modification
and/or enhancement of the SOFTWARE PRODUCTS by NTI, a NORTHERN
TELECOM COMPANY, a MANUFACTURING LICENSEE, an AUTHORIZED
DISTRIBUTOR or an end-user customer of any of the foregoing if
such infringement and/or misappropriation, or claim thereof,
would have been avoided by using the SOFTWARE PRODUCTS in their
unmodified or unenhanced form.
15.2 VOICETEK shall defend, indemnify and hold NTI, NORTHERN TELECOM COMPANIES,
MANUFACTURING LICENSEES, AUTHORIZED DISTRIBUTORS and, if applicable, their
end-user customers harmless from any and all claims, costs, expenses,
damages or other liability, including reasonable and customary attorneys'
fees, which is the result of patent or trademark infringement claims
arising out of or relating to the use, sale and/or distribution of
HARDWARE PRODUCTS in the AUTHORIZED TERRITORY or damages resulting from
use of the MARKS in connection with such distribution in the AUTHORIZED
TERRITORY. NTI, a NORTHERN TELECOM COMPANY, a MANUFACTURING LICENSEE or an
AUTHORIZED DISTRIBUTOR, as the case may be, shall notify VOICETEK
promptly, in writing, in the event of any such claim, and grant to
VOICETEK the right, at VOICETEK's expense, to control the defense thereof,
including the sole right to settle any such claim or suit on such terms as
VOICETEK shall deem desirable. If the use, sale and/or distribution of
HARDWARE PRODUCTS or use of the MARKS under which the HARDWARE PRODUCTS is
distributed are held to constitute an infringement and enjoined in one or
more countries within the AUTHORIZED TERRITORY, VOICETEK shall, at its own
expense and option, (i) procure for NTI, NORTHERN TELECOM COMPANIES,
MANUFACTURING LICENSEES and AUTHORIZED DISTRIBUTORS the right to continue
using, selling and distributing the allegedly infringing HARDWARE
PRODUCTS, or (ii) modify the allegedly infringing HARDWARE PRODUCTS so
that it becomes noninfringing, while maintaining to the extent possible
the same form and function, or (iii) provide a noninfringing substitute
for HARDWARE PRODUCTS which is acceptable to NTI, or (iv) arrange for the
return of all allegedly infringing HARDWARE PRODUCTS
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shipped to NTI, NORTHERN TELECOM COMPANIES, MANUFACTURING LICENSEES and
AUTHORIZED DISTRIBUTORS pursuant to the AGREEMENT in the countries within
the AUTHORIZED TERRITORY in which the injunction is in effect and
reimburse NTI, NORTHERN TELECOM COMPANIES, MANUFACTURING LICENSEES and/or
AUTHORIZED DISTRIBUTORS the total purchase price therefor plus all
transportation and handling costs incurred for cooperating in the return
effort.
15.2.1 VOICETEK shall not have any liability to NTI, NORTHERN TELECOM
COMPANIES, MANUFACTURING LICENSEES and/or AUTHORIZED DISTRIBUTORS
under Section 15.2 for infringement, or claims thereof, that are
based upon the use of HARDWARE PRODUCTS in combination with
hardware and/or software furnished to NTI or a NORTHERN TELECOM
COMPANY or a MANUFACTURING LICENSEE or an AUTHORIZED DISTRIBUTOR
by a third party if such infringement, or claim thereof, would
have been avoided by the use of HARDWARE PRODUCTS in combination
with different hardware and/or software or, to the extent such use
is possible, use of the HARDWARE PRODUCTS without any combination,
or (ii) the modification of the HARDWARE PRODUCTS by NTI, a
NORTHERN TELECOM COMPANY, a MANUFACTURING LICENSEE, an AUTHORIZED
DISTRIBUTOR or an end-user customer of any of the foregoing if
such infringement and/or misappropriation, or claim thereof, would
have been avoided by using the HARDWARE PRODUCTS in its unmodified
or unenhanced form.
15.3 SECTION 15.1 THROUGH SUBSECTION 15.2.1 INCLUSIVE STATE THE ENTIRE AND SOLE
LIABILITY OF VOICETEK TO NTI AND OF NTI TO VOICETEK WITH RESPECT TO
INFRINGEMENT AND/OR MISAPPROPRIATION OF INTELLECTUAL PROPERTY RIGHTS
PURSUANT TO THIS AGREEMENT.
15.4 The indemnity obligations set forth in Section 15.1 through Subsection
15.2.1, inclusive, of the AGREEMENT shall survive the termination or
expiration of the AGREEMENT.
ARTICLE XVI - LIMITATION OF LIABILITY AND DAMAGES
16.1 EXCEPT AS PROVIDED IN ARTICLE II AND ARTICLE XV, RESPECTIVELY, IN NO EVENT
WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGE OR LOSS OF ANY NATURE (e.g., DAMAGE TO
PROPERTY, LOSS OF PROFITS, BUSINESS INTERRUPTION, LOST SAVINGS, LOSS OF
USE, LOST OR DAMAGED FILES OR DATA, INJURY TO PERSON, OR ANY CLAIMS OF
THOSE NOT A PARTY TO THE AGREEMENT) WHICH MAY ARISE IN CONNECTION WITH THE
USE, ADAPTATION, MERGER, INCORPORATION, DISTRIBUTION, INSTALLATION,
REMOVAL OR SUPPORT OF STANDARD PRODUCTS AND/OR MODIFIED PRODUCTS
(SEPARATELY OR IN COMBINATION WITH OTHER HARDWARE OR SOFTWARE NOT PROVIDED
BY VOICETEK) BY NTI, NORTHERN TELECOM COMPANIES, MANUFACTURING LICENSEES
AND AUTHORIZED DISTRIBUTORS PURSUANT TO THE AGREEMENT, REGARDLESS OF
WHETHER SUCH CLAIMS ARE BASED OR REMEDIES ARE SOUGHT IN WARRANTY,
CONTRACT, NEGLIGENCE, STRICT TORT, PRODUCTS LIABILITY OR OTHERWISE, EVEN
IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE OR LOSS.
EXCEPT AS PROVIDED IN ARTICLE II AND ARTICLE XV, RESPECTIVELY, THE MAXIMUM
LIABILITY FOR ANY BREACH OF THE AGREEMENT BY EITHER PARTY SHALL IN NO
EVENT EXCEED THE SUM OF ONE MILLION DOLLARS ($1,000,000.00) OR THE
AGGREGATE AMOUNT OF PRICES AND/OR LICENSE FEES PAID UNDER THE AGREEMENT
OVER THE IMMEDIATELY PRECEDING FOUR CONSECUTIVE QUARTERS, WHICHEVER IS
GREATER.
ARTICLE XVII - REGULATORY COMPLIANCE
17.1 To the extent applicable, and unless otherwise provided in Schedule B
and/or Schedule D and/or Schedule E, all HARDWARE PRODUCTS delivered to
NTI or a NORTHERN TELECOM COMPANY by VOICETEK under the AGREEMENT shall :
(a) be approved and listed by Underwriter's Laboratories ("U.L.") and
bear appropriate U.L. approval labeling;
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(b) be approved and listed by the Canadian Standards Association
("C.S.A.") and bear appropriate C.S.A. approval labeling;
(c) be verified, accepted, approved and in compliance with Class A
limits, as applicable, under Part 15 of the Regulations of the U.S.
Federal Communications Commission and bear the appropriate labels and
warning notices as required;
(d) be verified, accepted, approved and in compliance with Part 68 of the
Regulations of the U.S. Federal Communications Commission and bear
the appropriate labels and warning notices as required;
(e) be verified, accepted, approved and in compliance with each of the
following European Union (EU) regulatory requirements:
(i) EN 60 950 Safety
(ii) EN 55 022 Class B EMC
(iii) EN 50 082-1 EMC
(f) be verified, accepted, approved and in compliance with other EU
regulatory requirements provided that NTI has requested VOICETEK to
secure such compliance and has paid to VOICETEK the requisite fee
specified in the applicable development agreement and applicable
annexes and addenda thereto to cover (TUV) testing and administrative
costs as agreed by NTI and VOICETEK thereunder.
17.2 To the extent applicable, all user manuals or other operator manuals
and/or written material supplied with the HARDWARE PRODUCTS shall contain
any warning notices required by any of the regulatory or testing bodies
referenced in Section 17.1.
17.3 Upon the EFFECTIVE DATE, both parties acknowledge that if all approvals
have not been issued by the appropriate agencies as defined in Section
17.1 above, and in the event any of the agencies fail to certify such
HARDWARE PRODUCTS within ninety (90) days of the EFFECTIVE DATE, provided
any delay in approvals is attributable solely to VOICETEK's obligations
hereunder and not delayed by the appropriate agencies or NTI, the
AGREEMENT may be terminated at the option of NTI. VOICETEK agrees that it
shall ship no HARDWARE PRODUCTS prior to issuance of the approvals as set
forth in Section 17.1 without the prior written consent of NTI.
17.4 Subject to the terms of Subsection 17.4.1, VOICETEK agrees that any
HARDWARE PRODUCTS shipped prior to securing all of the necessary
certificates, as defined in Section 17.1 above, will be made to comply
with those respective agency requirements. VOICETEK will bear any cost
necessary to modify or update any STANDARD HARDWARE PRODUCTS delivered to
meet those specifications relative to any HARDWARE delivered to NTI, a
NORTHERN TELECOM COMPANY or MANUFACTURING LICENSEE. VOICETEK shall
indemnify and hold NTI, NORTHERN TELECOM COMPANIES, MANUFACTURING
LICENSEES and AUTHORIZED DISTRIBUTORS harmless from any and all claims,
suits, or actions brought against NTI, NORTHERN TELECOM COMPANIES,
MANUFACTURING LICENSEES, and/or AUTHORIZED DISTRIBUTORS by end-user
customers for any damages, including reasonable and customary attorney's
fees, for the failure of VOICETEK to obtain the necessary certificates, as
defined in Section 17.1, prior to shipment of any STANDARD HARDWARE
PRODUCTS.
17.4.1 In the event of any shipment having been made at NTI's written
request, as described in Section 17.3, NTI, NORTHERN TELECOM
COMPANIES, MANUFACTURING LICENSEES, or AUTHORIZED DISTRIBUTORS
shall indemnify and hold VOICETEK harmless from any and all
claims, suits, or actions brought against NTI, NORTHERN TELECOM
COMPANIES, MANUFACTURING LICENSEES, or AUTHORIZED DISTRIBUTORS by
end-user customers, for any damages including reasonable and
customary attorney's fees, for the failure of VOICETEK to obtain
the necessary certificates as defined in Section 17.1, prior to
the shipment of any STANDARD HARDWARE PRODUCTS.
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ARTICLE XVIII - DEFAULT AND TERMINATION
18.1 Any of the following shall constitute sufficient cause for a party to the
AGREEMENT to seek the remedies available to a nondefaulting party, as
provided in Sections 18.2 through 18.4:
(a) The failure of the other party to perform any material term, condition
or covenant of the AGREEMENT, which shall constitute a default of the
AGREEMENT, and such default has not been corrected within thirty (30)
days of the date of receipt of written notice of such default given by
the nondefaulting party;
(b) The other party is or becomes insolvent, or a party to any bankruptcy
or receivership proceeding or any similar action affecting the
financial condition of such other party, or seeks to make a
compromise, arrangement or assignment for the benefit of its
creditors, or ceases doing business in the normal course.
18.2 In the event any act of default constituting sufficient cause pursuant to
either Section 18.1(a) or Section 18.1(b) shall occur, the party not in
default shall have the right to and may elect any or all of the following
remedies, which shall be cumulative and not exclusive:
(a) Declare the AGREEMENT to be immediately terminated;
(b) Pursue each and every remedy available at law and in equity.
18.3 In the event VOICETEK is the defaulting party pursuant to Section 18.1(b)
above, NTI shall, in lieu of terminating the AGREEMENT, have the option of
furnishing written notice to VOICETEK of NTI's intention to continue to
perform the AGREEMENT under the following terms and conditions:
(i) Each end-user customer's rights, with respect to any and all copies
of SOFTWARE PRODUCTS distributed directly or indirectly (through
NORTHERN TELECOM COMPANIES, MANUFACTURING LICENSEES or AUTHORIZED
DISTRIBUTORS) to end-user customers, pursuant to the AGREEMENT, shall
remain in full force and effect;
(ii) With the exception of any SOURCE CODE MATERIALS not proprietary to
VOICETEK (unless the required rights to such have been granted to
VOICETEK by VOICETEK's suppliers), NTI shall have a right of access,
by written notice given to VOICETEK, to gain possession of the source
code form of the SOFTWARE PRODUCTS and the remaining SOURCE CODE
MATERIALS and make use of them free of charge solely for the purposes
of directly granting rights to use copies of SOFTWARE PRODUCTS
incorporated into HARDWARE PRODUCTS to customers and for support
activities. Upon receipt of written notice, VOICETEK or its trustee
or receiver in bankruptcy, as the case may be, shall immediately and
forthwith deliver SOURCE CODE MATERIALS, including specifically the
source code form of SOFTWARE PRODUCTS, to NTI. NTI shall have the
right to use, make bug fixes in and recompile the source code form of
SOFTWARE PRODUCTS and the right to distribute object code copies of
SOFTWARE PRODUCTS to customers in the AUTHORIZED TERRITORY, either
directly or through NORTHERN TELECOM COMPANIES, MANUFACTURING
LICENSEES and AUTHORIZED DISTRIBUTORS, provided NTI pays to VOICETEK
right-to-use fees for such SOFTWARE PRODUCTS at the prices set forth
in Schedule B or Schedule E, subject to application of the applicable
discount levels set forth in Schedule H. VOICETEK hereby agrees and
acknowledges that either the failure of VOICETEK or its trustee or
receiver in bankruptcy to deliver all SOURCE CODE MATERIALS,
including specifically the source code form of SOFTWARE PRODUCTS
hereunder or, in the event SOURCE CODE MATERIALS for SOFTWARE
PRODUCTS are deposited in escrow, affirmative actions or omissions by
VOICETEK in any way hindering the release of SOURCE CODE MATERIALS
from escrow will cause irreparable harm to NTI for which there is no
adequate remedy at law and, therefore, NTI shall be entitled to
specific performance of such delivery obligation and, in addition,
and without being an election of remedies, NTI may pursue each and
every remedy available at law or in equity;
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<PAGE> 24
(iii) In the event VOICETEK's Section 18.1(b) default is resolved in such
a way that VOICETEK resumes its operations as they pertain to NTI in
a manner substantially equivalent to its operations prior to the
occurrence of such default, NTI shall promptly return the source
code form of SOFTWARE PRODUCTS and the other SOURCE CODE MATERIALS
made available to NTI by VOICETEK solely pursuant to Section
18.2(b), Section 18.3(ii) and/or Section 19.2, but not otherwise.
18.4 In the event the AGREEMENT is terminated by VOICETEK for default by NTI,
VOICETEK shall permit NTI to retain limited rights to use the SOFTWARE
PRODUCTS thereafter for up to one (1) year following the date of
termination of the AGREEMENT by VOICETEK in order to allow NTI to satisfy
its then existing contractual obligations for support for SOFTWARE
PRODUCTS to NORTHERN TELECOM COMPANIES, MANUFACTURING LICENSEES,
AUTHORIZED DISTRIBUTORS and end-user customers. Exceptions to VOICETEK's
obligation to permit NTI to continue to exercise such limited rights shall
include the case where such default by NTI relates to the payment of
applicable prices or license fees, as set forth in Sections 8.1 through
8.8 inclusive, which are not reasonably in dispute, or any obligation that
would unreasonably jeopardize VOICETEK's intellectual property rights in
one or more SOFTWARE PRODUCTS or VOICETEK's confidential information in
which event only the SOFTWARE PRODUCTS to which intellectual property
rights in jeopardy and/or VOICETEK's confidential information pertain
would not be subject to the continued exercise of limited rights by NTI.
The limited rights to use the SOFTWARE PRODUCTS, as provided in this
Section 18.4, shall survive the termination or expiration of the AGREEMENT
for up to one (1) year.
18.5 Subject to the provisions of Section 18.3 and Section 18.4, respectively,
it is understood that, upon termination of the AGREEMENT, NTI shall,
within thirty (30) days following such termination, destroy its copies of
the SOFTWARE PRODUCTS and any whole or partial reproductions thereof in
any form, and all materials related to the SOFTWARE PRODUCTS which are
still under the control of NTI, and so certify in writing to VOICETEK,
except that NTI may retain a sufficient number of copies of such SOFTWARE
PRODUCTS as is reasonably necessary for NTI to fulfill its contractual
obligations, as set forth in Section 18.4.
ARTICLE XIX - SOURCE CODE ESCROW OPTION
19.1 NTI shall, in its sole discretion, have the option to require that the
SOURCE CODE MATERIALS (excluding those not proprietary to VOICETEK unless
the right to deposit them in escrow has been granted to VOICETEK by
VOICETEK's suppliers) for any or all SOFTWARE PRODUCTS be deposited in
escrow. If requested by NTI, the parties shall, in good faith, negotiate
the selection of a fair, impartial and competent escrow agent and deposit
the SOURCE CODE MATERIALS for any or all SOFTWARE PRODUCTS in escrow for
the benefit of NTI or, if such SOURCE CODE MATERIALS were previously
deposited by VOICETEK, designate NTI as a registered beneficiary. The
express purpose for depositing the SOURCE CODE MATERIALS in escrow or
designating NTI as a registered beneficiary, as the case may be, shall be
to secure a means of access to all materials reasonably necessary or
useful in enabling NTI to maintain, modify, enhance and/or support the
SOFTWARE PRODUCTS in order to maintain the functionality of the SOFTWARE
PRODUCTS with limited assistance or without assistance from VOICETEK. In
any event, NTI shall pay the costs and expenses assessed for the deposit
of any SOURCE CODE MATERIALS not proprietary to VOICETEK into escrow. In
no event shall NTI be required to pay more than the proportionate costs
and expenses attributable to the deposit of VOICETEK's proprietary SOURCE
CODE MATERIALS into escrow, if all or any portion of VOICETEK's
proprietary SOURCE CODE MATERIALS have been, or during the TERM are,
deposited into escrow at the request of and for the benefit of any third
party.
19.2 In the event VOICETEK is or becomes insolvent, or a party to any
bankruptcy or receivership proceeding or any similar action affecting the
financial condition of VOICETEK, or seeks to make a compromise,
arrangement or assignment for the benefit of its creditors, or ceases
doing business in the normal course, and NTI provides written notice to
VOICETEK, as required by Section 18.3(ii), NTI shall be given access to
and rights to use the SOURCE CODE MATERIALS held in escrow, beginning ten
(10) days after receipt by VOICETEK of NTI's written notice demanding
access to such SOURCE CODE MATERIALS.
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ARTICLE XX - FORCE MAJEURE
20.1 If the performance of the AGREEMENT (including, without limitation, any
deliveries hereunder) is interfered with by reason of any circumstance
beyond the reasonable control of the party affected including, without
limitation, fire, act of God, labor unrest, and discontinuance of
manufacture of sole-sourced components, then the party affected shall be
excused from such performance on a day-for-day basis to the extent of such
interference (and the other party shall likewise be excused from
performance on a day-for-day basis to the extent such party's obligations
relate to the performance so interfered with; provided that the party so
affected shall use reasonable efforts to remove such causes of
nonperformance.
ARTICLE XXI - CONFIDENTIALITY
21.1 Any information designated as "Confidential", "Restricted" or
"Proprietary" in writing by the disclosing party prior to disclosure shall
be considered confidential information under the AGREEMENT. In the case of
any oral disclosure of confidential information, such information shall be
treated as confidential if the disclosing party (a) states that such
information is confidential at the time of disclosure, and (b) summarizes
such information in a writing setting forth the date, nature and extent of
the oral disclosure and indicating the same to be confidential, and
delivers such written summary to the other party within thirty (30) days
after the date of such oral disclosure.
21.2 The parties shall use reasonable efforts and at least the same care that
each uses to protect its own confidential information of like importance,
to prevent unauthorized dissemination or disclosure of the other party's
confidential information during and for three (3) years following the last
day of the TERM.
21.3 The confidentiality obligations set forth in this Article XXI will not
apply to any information that:
(a) becomes known to the general public without fault or breach on
the part of the receiving party;
(b) either party, disclosing its own confidential information,
customarily provided to others without restriction on disclosure;
(c) the receiving party obtains from a third party without breach of
a nondisclosure obligation and without restriction on disclosure;
(d) is furnished to a third party by the disclosing party without a
similar restriction on such third party's rights;
(e) can by written records be shown to have been known by the
receiving party at the time of disclosure;
(f) can by written records be shown to have been developed independently
by the receiving party without using any information as defined in
Section 21.1 which is received from the disclosing party.
21.4 The parties agree and acknowledge that any confidential and proprietary
information of the other party in its possession shall, upon termination
of the AGREEMENT and upon the request of the other party, be returned to
the disclosing party.
21.5 Neither party shall publicly disclose any information regarding the terms
and conditions contained herein without having received prior approval, in
writing, from the other party.
21.6 NTI agrees not to (a) attempt to reverse engineer, decompile, or reverse
assemble the SOFTWARE PRODUCTS, or create or attempt to create any
derivative work of the SOFTWARE PRODUCTS, nor (b) directly or indirectly,
through a third party, use the SOFTWARE PRODUCTS, or a derivative thereof,
or any confidential or proprietary information of VOICETEK to create any
computer software program or documentation which is functionally,
visually, or otherwise
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<PAGE> 26
substantially similar to any SOFTWARE PRODUCT, whether or not such
SOFTWARE PRODUCT is then available for license or sale by VOICETEK.
ARTICLE XXII - LAWS AND REGULATIONS
22.1 At no additional charge to NTI, VOICETEK shall comply with and obtain all
licenses and permits required by, and PRODUCTS shall be in conformance
with, all applicable laws and governmental orders and regulations in
effect at the time of shipment of PRODUCTS including without limitation
the following United States laws and regulations:
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, Consumer Product Safety Act, Toxic Substances Control Act,
Occupational Safety and Health Act of 1970, Radiation Control for
Health and Safety Act of 1968, Resource Conservation and Recovery
Act of 1976, Clean Air Act, Clean Water Act, Hazardous Materials
Transportation Act, Vietnam Era Veterans Readjustment Assistance Act
of 1972, Rehabilitation Act of 1973 and the clauses set forth in
Federal Acquisition Regulations (subject to "Contractor,"
"Subcontractor" and "Contract' used in such clauses meaning NTI,
VOICETEK and AGREEMENT, respectively) 52.219-8, 52.219-9, 52.219-13,
52.220-3, 52.220-4, 52.222-1, 52.222-4, 52.222-20, 52.222-21,
52.222-26 (subparagraphs b(l) - b(11), 52.222-35 and 52.222-36,
which clauses are incorporated by reference, with the same force and
effect as it they were given in full text.
ARTICLE XXIII - INSURANCE
23.1 VOICETEK shall maintain during its performance under the AGREEMENT General
Liability Insurance, including contractual, products liability and broad
form vendors' property damage endorsement with the limits of either
$5,000,000.00 combined single limit per occurrence for bodily injury and
property damage or $3,000,000.00 bodily injury per occurrence and
$2,000,000.00 property damage per occurrence.
23.2 Insurance requirements stated in Section 23.1 shall be primary and
noncontributory with respect to any insurance which NTI may have, and NTI
shall under such insurance be named as an additional insured with a
cross-liability endorsement. Prior to the commencement of the TERM,
VOICETEK shall furnish to NTI a certificate of insurance evidencing that
such insurance is in effect. The certificate shall also state that NTI
shall be notified by VOICETEK's insurance carrier(s) within thirty (30)
days of any cancellation, material change or exhaustion of the
aforementioned limits. VOICETEK shall in such event furnish a new
certificate in the event of cancellation or expiration of any insurance.
ARTICLE XXIV - EXPORTERS CERTIFICATE OF ORIGIN
24.1 With the assistance of NTI, VOICETEK shall initially provide and update,
as necessary, any certificates as may be required for any PRODUCTS which
qualify under the North American Free Trade Agreement between the United
States, Canada, and Mexico, or to any other Free Trade Agreements of which
the United States is or may become a party.
ARTICLE XXV - INDEPENDENT CONTRACTORS
25.1 VOICETEK and NTI are independent contractors in all relationships and
actions under and contemplated by the AGREEMENT. The AGREEMENT is not to
be construed to create, or to authorize the creation of, any employment,
partnership, or agency relation or to authorize NTI or any NORTHERN
TELECOM COMPANIES, MANUFACTURING LICENSEES or AUTHORIZED DISTRIBUTORS to
enter into any commitment or agreement binding on VOICETEK or to allow one
party to accept service of any legal process addressed to, or intended
for, the other party. NTI and the NORTHERN TELECOM COMPANIES,
MANUFACTURING LICENSEES and AUTHORIZED DISTRIBUTORS shall not make any
warranties, guarantees or any other commitments on behalf of VOICETEK
pursuant to the AGREEMENT.
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ARTICLE XXVI - NOTICES AND REQUESTS
26.1 All official or formal notices required or otherwise provided under the
AGREEMENT shall be sent by certified or registered mail (return receipt
requested), postage prepaid, or by cable, telegram, facsimile, telex or
hand delivery to the other party at the address listed below for the other
party and addressed as follows:
NTI: NORTHERN TELECOM INC.
2305 Mission College Boulevard
Santa Clara, California 95054-1591
Attention: Manager, Technology Acquisition
Dept. 0521
VOICETEK: VOICETEK CORPORATION
19 Alpha Road
Chelmsford, Massachusetts 01824-4175
Attention: Contracts Manager
or to such other address as the party to receive the notice so designates
by written notice to the other party.
26.2 All other written communications required or otherwise provided hereunder
by one party to the other shall be mailed by First Class Mail, postage
prepaid, to the following addresses or to such changed address as either
party entitled to notice hereunder shall have communicated in writing to
the other party:
NTI: NORTHERN TELECOM INC.
2305 Mission College Boulevard
Santa Clara, California 95054-1591
Attention: Art Hazeldine
Dept. 0521
VOICETEK: VOICETEK CORPORATION
19 Alpha Road
Chelmsford, Massachusetts 01824-4175
Attention: Contracts Manager
26.3 Except in the case of notices sent by certified or registered mail (return
receipt requested), notices given pursuant to Article XXVI shall be deemed
to have been received five (5) days after mailing if given by First Class
Mail, and one (1) business day after sending if given by cable, telegram,
facsimile, telex and upon delivery if given by hand.
ARTICLE XXVII - GENERAL
27.1 The interpretation of the AGREEMENT and the rights and obligations of the
parties shall be governed by the laws of the State of California, except
as to patent, copyright and trademark matters, which are governed by
federal law. The parties agree that Santa Clara, California, is both the
place of making and the place of performance of the AGREEMENT for all
purposes.
27.2 The AGREEMENT, including all applicable Schedules constitutes the entire
agreement between the parties and supersedes any and all prior or
contemporaneous oral and written communications, understandings or
agreements relating to the subject matter hereof. Any amendments, or
alternative or supplementary provisions, must be made in writing and be
duly executed by an authorized representative or agent of each of the
parties hereto. The provisions of the Software License and Distribution
Agreement dated 31 July 1992 shall not be superseded
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<PAGE> 28
in any respect by the AGREEMENT. The parties hereby agree that a
resolution to any and all unfulfilled obligations of the parties, as set
forth in Technology Development Agreement 2 between them, shall be
mutually agreed upon, with the results being set forth in a Master
Technology Development Agreement and Annexes applicable to specific
projects, which is to be executed by NTI and VOICETEK.
27.3 The AGREEMENT shall inure to the benefit of and be binding upon the
respective successors and assigns, if any, of the parties hereto.
27.4 The invalidity of any provision of the AGREEMENT shall not affect the
validity of any other provision thereof.
27.5 Neither party shall, in any advertising, sales promotion materials, press
releases or any other publicity matters use the name of the other party,
any subsidiary or affiliate of the other party or any variation of the
foregoing or language from which the connection of said names may be
implied without such other party's prior written approval.
27.6 The AGREEMENT may be executed in one or more counterparts, each of which
shall constitute one and the same instrument.
27.7 Neither party shall assign the AGREEMENT or any rights received hereunder
without the prior written consent of the other party. Notwithstanding the
foregoing, either party may assign the AGREEMENT or any rights received
hereunder to a subsidiary or affiliate in which it owns at least a
majority interest or to an affiliate that owns a majority interest in such
party without such prior written consent, but upon notice to the other
party. In addition, VOICETEK may assign the AGREEMENT or any rights
received hereunder to its successor in interest by virtue of a merger or
corporate reorganization or to the purchaser of substantially all of
VOICETEK's assets, without prior written consent, but upon notice to NTI.
In the event VOICETEK should merge with, or be acquired by, or sell
substantially all its assets to, a direct competitor of NTI, NTI may
terminate the AGREEMENT, subject only to the obligations set forth in
those provisions of the AGREEMENT which, by their terms or clear intent,
survive termination hereof.
27.8 No provision of the AGREEMENT shall be deemed waived, amended or modified
by either party, unless such waiver, amendment or modification be in
writing and signed by the party against whom enforcement of the waiver,
amendment or modification is sought. Any such amendment or modification
shall be binding with or without tender of any consideration.
27.9 The headings used herein are for convenience only and shall not be deemed
to be part of the AGREEMENT or used to construe or interpret any of the
provisions hereof.
27.10 Each party to the AGREEMENT hereby represents to the other that it has
full power and authority to enter into and perform the AGREEMENT and that
the person signing the AGREEMENT on its behalf has been properly
authorized and empowered to do so. Each party further acknowledges that it
has read the AGREEMENT, that it understands the terms and conditions
hereof, and that it agrees to be bound by the AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have, by their duly authorized
representatives, executed the AGREEMENT as of the day and year of the latter
signature set forth below.
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NORTHERN TELECOM INC. VOICETEK CORPORATION
By: /s/J. Michael Camp By: /s/Roger Tuttle
_______________________________ _______________________________
Name: J. Michael Camp Name: Roger Tuttle
_____________________________ _____________________________
(type/print) (type/print)
Title: Vice President Title: V.P. Finance
____________________________ ____________________________
(type/print) (type/print)
Date: 6/16/95 Date: 16 JUNE 1995
_____________________________ ______________________________
- ------------------------
| APPROVED AS |
| TO LEGAL FORM |
|--------------------- |
| BY: Joel M. Erickson |
- ------------------------
15 JUNE 1995
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SCHEDULE A
AUTHORIZED TERRITORY
Canada United States (U.S.)
NORTHERN TELECOM INC. VOICETEK CORPORATION
BY: /s/J. Michael Camp By: /s/Roger Tuttle
____________________________ ________________________________
Name: J. Michael Camp Name: Roger Tuttle
__________________________ ______________________________
(type/print) (type/print)
Title: Vice President Title: V.P. Finance
_________________________ _____________________________
(type/print) (type/print)
Date: 6/16/95 Date: 16 June 1995
__________________________ ______________________________
- ------------------------
| APPROVED AS |
| TO LEGAL FORM |
|--------------------- |
| BY: Joel M. Erickson |
- ------------------------
15 JUNE 1995
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SCHEDULE B
PRICE LIST
PAGE 33
<PAGE> 32
SCHEDULE C
MARKS
Voicetek(R)
VTK(R)
Generations(TM)
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<PAGE> 33
SCHEDULE D
INTERNAL USE PRICING
Under the terms of the AGREEMENT, NTI, NORTHERN TELECOM COMPANIES and
MANUFACTURING LICENSEES may purchase SYSTEMS to be used internally at the prices
enumerated in Schedule B and/or Schedule E, as qualified by the applicable
discount level set forth in Schedule 1. The prices for SYSTEMS for NTI's
internal use will include:
- VTK-Base System with twelve (12) ports Loopstart eight (8) ports
ISDN/BRI, or twenty-four (24) ports T1 and forty (40) hours of
voice storage
- GENERATIONS Development/Runtime Licenses
- All optional software features enabled
- Full set of USER DOCUMENTATION (including all optional features
USER DOCUMENTATION)
- Warranties as provided by VOICETEK under the AGREEMENT
Under the terms of the AGREEMENT, NTI, NORTHERN TELECOM COMPANIES and
MANUFACTURING LICENSEES may purchase GENERATIONS Development licenses for
SELF-HOSTED UNITS to be used internally at the prices set forth in Schedule B
and/or Schedule E, as qualified by the applicable discount level set forth in
Schedule 1. The price for the GENERATIONS Development license intended for use
with SELF-HOSTED UNITS to be used internally will include:
- GENERATIONS Development License;
- All Optional software features enabled; and
- Warranties as provided by VOICETEK under the AGREEMENT.
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SCHEDULE E
* PRICING
<TABLE>
<CAPTION>
Order Code Product Description Price
<S> <C> <C>
PT-04-ESC D-41ESC 4-Port Assembly $ *
PT-12-LS Loopstart 12-Port Assembly $ *
PT-08-BRI BRI8-Port Assembly $ *
VR-02-VCS Continuous ASR $ *
(2-Port Assembly)
VR-02-VCSE Continuous ASR Expansion $ *
(2-Port Expansion)
PT-24-T1 T1 24-Port Assembly $ *
PT-30-E1 E1 30-Port Assembly $ *
PT-60-E1 E1 60-Port Assembly $ *
PT-04-NS D41 Northstar Assembly $ *
TSP-SW TSP Runtime License $ *
TTS-04-LH TTS 4-Port Assembly $ *
(HW & SW)
TTS-04-LE TTS 4-Port Expansion $ *
(SW only)
VR-04-VCS-D Discrete ASR 4-Port Expansion $ *
(HW & SW)
HL-5250-HW-S 5250 Synchronous I/F $ *
(SSI HW & SW)
HL-5250-HW-TR 5250 Token Ring I/F $ *
(SSI HW & SW)
HL-3270-HW-S 3270 Synchronous I/F $ *
(SSI HW & SW)
HL-3270-HW-TR 3270 Token Ring I/F $ *
(SSI HW & SW)
HL-5250-SW TRS 5250 Software $ *
HL-3270-SW TRS 3270 Software $ *
HL-VT100-SW TRS VT100 Software $ *
RED-AP-SW Redundant AP Software $ *
</TABLE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
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<PAGE> 35
SCHEDULE E
* PRICING
(Continued)
<TABLE>
<CAPTION>
Order Code Product Description Price
<S> <C> <C>
RW-OPT Report Writer Software *
(Customized Version)
PBX-RM Rolm ACD I/F *
PBX-NT Ml ACD I/F *
PBX-C1 Customized PBX I/F *
VR-04-VCS-DSO Discrete ASR SW Only *
TTS-04-LHSO TTS Software Only *
FAX-02-BTSO Fax SW Only *
RM-CAB-01 Rack Cabinet *
PT-12-DID 12-Port Assembly *
(D(D)
TBD SMDI Software *
TBD UPS Software Support *
N Non-discountable
</TABLE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
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<PAGE> 36
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<PAGE> 37
SCHEDULE G
REPRODUCTION SERVICES AGREEMENT
THIS REPRODUCTION SERVICES AGREEMENT (hereinafter 'Agreement") is made and
executed by and between ,
a corporation
with offices at (hereinafter "CONTRACTOR")
and
N0RTHERN TELEC0M INC., a Delaware corporation with offices at
(hereinafter "NTI") this _
day of 199___.
RECITALS
WHEREAS, NTI requires the services of a contractor to perform certain
reproduction tasks involving computer programs, user documentation and technical
documentation, among other things;
AND WHEREAS, CONTRACTOR is in the business of providing services such as volume
reproduction of an assortment of items, including computer programs and written
materials of various kinds;
NOW THEREFORE, in consideration of the mutual terms and conditions hereinafter
set forth, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, THE PARTIES HERETO AGREE AS
FOLLOWS:
ARTICLE I - DEFINITIONS
1.1 "CAMERA-READY COPY" or "CAMERA-READY COPIES" shall mean a professional
quality reproducible master copy of a WORK OF AUTHORSHIP other than a
COMPUTER PROGRAM.
1.2 "COMPUTER PROGRAM" or "COMPUTER PROGRAMS" shall mean a set of statements
or instructions to be used directly or indirectly in a computer in order
to bring about a certain result.
1.3 "REPRODUCIBLE MASTER" or "REPRODUCIBLE MASTERS" shall mean a reproducible
master copy of a COMPUTER PROGRAM.
1.4 "WORK OF AUTHORSHIP" or "WORKS OF AUTHORSHIP" shall mean works expressed
in words, numbers, or other verbal or numerical symbols or indicia,
regardless of the nature of the material objects, such as books,
periodicals, manuscripts, tapes, disks, or cards in which they are
embodied.
ARTICLE II - NTI WARRANTIES AND REPRESENTATIONS
2.1 NTI warrants and represents that, as of the date of delivery of a
REPRODUCIBLE MASTER and/or a CAMERA-READY COPY by NTI to CONTRACTOR
hereunder, the COMPUTER PROGRAM embodied in such REPRODUCIBLE MASTER
and/or the WORK OF AUTHORSHIP embodied in such CAMERA-READY COPY is/are
not known by NTI to be the subject of any claims of infringement of any
patent, trademark, copyright and/or trade dress or of any claims of
misappropriation of any trade secret of any third party. NTI warrants and
represents that, to the best of its knowledge, NTI either owns or
otherwise has been granted the necessary rights to authorize and/or grant
all necessary rights to make reproductions of each REPRODUCIBLE MASTER
and/or CAMERA-READY COPY provided to CONTRACTOR hereunder.
ARTICLE III - GRANT OF RIGHTS
3.1 In accordance with and subject to the terms and conditions of this
Agreement, NTI hereby grants to CONTRACTOR a personal, nonexclusive,
nontransferable license:
(a) to make copies from each REPRODUCIBLE MASTER delivered by NTI to
CONTRACTOR for such purpose.
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(b) to make copies from each CAMERA-READY COPY delivered by NTI to
CONTRACTOR for such purpose.
ARTICLE IV - DELIVERABLES
4.1 NTI shall deliver purchase orders to CONTRACTOR either accompanied by the
REPRODUCIBLE MASTER and/or CAMERA-READY COPY of which copies are being
ordered or referencing the appropriate REPRODUCIBLE MASTER and/or CAM-
ERA-READY COPY already in the custody of the CONTRACTOR to the following
address:
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
ARTICLE V - PRICE; PAYMENT
5.1 Upon the latter of the actual date of delivery of copies of COMPUTER
PROGRAMS and/or WORKS OF AUTHORSHIP to NTI and the date of receipt of the
invoice therefor by NTI, payment for such copies shall be due and payable
by NTI to CONTRACTOR within forty-five (45) days. NTI shall make its
payments to CONTRACTOR as provided herein, in lawful United States currency
at the registered office of CONTRACTOR in .
ARTICLE VI - DISCLAIMER OF WARRANTY AND LIMITED WARRANTY
6.1 THE REPRODUCIBLE MASTERS AND/OR CAMERA-READY COPIES ARE PROVIDED "AS IS"
WITHOUT WARRANTY OF ANY KIND BY NTI TO CONTRACTOR IN THE FIRST INSTANCE
AND BY CONTRACTOR TO NTI DURING THE RETURN OF SUCH REPRODUCIBLE MASTERS
AND/OR CAMERA-READY COPIES. NEITHER PARTY WARRANTS, GUARANTEES, OR MAKES
ANY REPRESENTATIONS TO THE OTHER REGARDING THE USE, OR THE RESULTS OF THE
USE, OF THE REPRODUCIBLE MASTERS AND/OR CAMERA-READY COPIES IN TERMS OF
CORRECTNESS, ACCURACY, RELIABILITY, CURRENTNESS OR OTHERWISE.
6.2 THE ENTIRE RISK AS TO COST OF ALL REPAIR AND/OR CORRECTION OF DEFECTIVE
COPIES OF COMPUTER PROGRAMS AND/OR WORKS OF AUTHORSHIP ASSUMED HEREUNDER
SHALL BE ALLOCATED TO NTI IF IT CAN BE ESTABLISHED THAT THE REPRODUCIBLE
MASTER AND/OR CAMERA-READY COPY WAS DEFECTIVE AT THE TIME OF ITS DELIVERY
TO CONTRACTOR. THE ENTIRE RISK AS TO COST OF ALL REPAIR AND/OR CORRECTION
OF DEFECTIVE COPIES OF COMPUTER PROGRAMS AND/OR WORKS OF AUTHORSHIP
ASSUMED HEREUNDER SHALL BE ALLOCATED TO CONTRACTOR IF IT CAN BE
ESTABLISHED THAT THE REPRODUCIBLE MASTER AND/OR THE CAMERA-READY COPY WAS
NOT DEFECTIVE AS OF THE DATE OF ITS DELIVERY BY NTI TO CONTRACTOR PURSUANT
TO SECTION 4.1 OF THIS AGREEMENT.
6.3 CONTRACTOR warrants to NTI that each unit of storage media on which a copy
of a COMPUTER PROGRAM is recorded is free from defects in materials and
workmanship under normal use and service for a period of ninety (90) days
from the date of delivery of such unit of storage media to NTI, as
evidenced by a copy of the packing slip. Further, CONTRACTOR hereby limits
the duration of any implied warranty on each unit of storage media to the
period stated above.
6.4 In the case where risk as to cost of all repair and/or correction of
defective copies of COMPUTER PROGRAMS is allocated to CONTRACTOR under
Section 6.2 of this Agreement, CONTRACTOR's entire liability and NTI's
exclusive remedy as to the units of storage media shall be replacement of
the units of storage media that do not meet CONTRACTOR's Limited Warranty
as set forth in Section 6.3 and which are returned to CONTRACTOR. If
failure of a unit of storage media has resulted from accident, abuse, or
misapplication, CONTRACTOR shall have no responsibility to replace such
unit of storage media. Any replacement unit of storage media will be
warranted for the remainder of the original warranty period or thirty (30)
days, whichever is longer.
Page 41
<PAGE> 39
6.5 EXCEPT AS SET FORTH IN ARTICLE II OF THIS AGREEMENT, THE ABOVE ARE THE
ONLY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, THAT ARE MADE BY CONTRACTOR TO NTI AND BY NTI TO
CONTRACTOR PURSUANT TO THIS AGREEMENT.
ARTICLE VII - ALLEGATION OF INFRINGEMENT; LITIGATION
7.1 In the event a COMPUTER PROGRAM embodied in a REPRODUCIBLE MASTER and/or
a WORK OF AUTHORSHIP embodied in a CAMERA-READY COPY provided by NTI to
CONTRACTOR for reproduction under this Agreement becomes the subject of
claims of intellectual property infringement and/or infringement
litigation, CONTRACTOR shall have the right to cease performance of its
obligations pursuant to this Agreement, except with respect to
CONTRACTOR's confidentiality obligations, declare this Agreement to be
immediately terminated and return to NTI all REPRODUCIBLE MASTERS and all
CAMERA-READY COPIES received from NTI together with any existing inventory
of COMPUTER PROGRAMS and/or WORKS OF AUTHORSHIP already reproduced for NTI
ARTICLE VIII - LIMITATION OF LIABILITY
8.1 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER
ARISING OUT OF THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
ARTICLE IX - TERM
9.1 This Agreement shall become effective on the date of signature by the
latter of the parties to sign, and extend for a period of five (5) years,
unless earlier terminated pursuant to the terms of Section 10.1.
ARTICLE X - CONFIDENTIALITY
10.1 CONTRACTOR understands that the REPRODUCIBLE MASTERS and the CAMERA-READY
COPIES supplied by NTI to CONTRACTOR pursuant to this Agreement contain
proprietary information of NTI and/or NTI's suppliers, and that such
REPRODUCIBLE MASTERS and CAMERA-READY COPIES are protected by copyright.
CONTRACTOR agrees not to use, copy and/or distribute copies made from such
REPRODUCIBLE MASTERS and/or CAMERA-READY COPIES other than as authorized
to do so by NTI pursuant to this Agreement.
ARTICLE XI - MARKING; LABELING
11.1 CONTRACTOR agrees to affix, upon each copy of each COMPUTER PROGRAM made
from a REPRODUCIBLE MASTER delivered by NTI, the appropriate label,
including the copyright notice, which copyright notice and/or label either
appears on the REPRODUCIBLE MASTER of such COMPUTER PROGRAM supplied by
NTI to CONTRACTOR or is provided to CONTRACTOR along with instructions
regarding placement by CONTRACTOR on all copies of such COMPUTER PROGRAM
made by CONTRACTOR for NTI.
11.2 In connection with its handling and reproduction of the COMPUTER PROGRAMS
and/or WORKS OF AUTHORSHIP supplied to CONTRACTOR by NTI pursuant to this
Agreement, CONTRACTOR shall not alter or modify the copyright notice
supplied by NTI for placement by CONTRACTOR on each copy of such COMPUTER
PROGRAMS and/or WORKS OF AUTHORSHIP made by CONTRACTOR for NTI in
accordance with the provisions of the U.S. Copyright Act, 17 U.S.C. 101,
et. seq., specifically 17 U.S.C. 401 through 406.
ARTICLE XII - OWNERSHIP OF TRADEMARKS AND COPYRIGHTS
12.1 CONTRACTOR hereby acknowledges and agrees that nothing herein gives
CONTRACTOR any right, title or interest in the trademarks and/or
copyrights of NTI and/or NTI's suppliers pertaining to
Page 42
<PAGE> 40
the REPRODUCIBLE MASTERS and/or CAMERA-READY COPIES supplied by NTI to
CONTRACTOR, nor in any copies of the same made by CONTRACTOR at the
direction of NTI. Upon termination of this Agreement by expiration or for
any other reason, CONTRACTOR shall no longer use the trademarks and
copyrights associated with the REPRODUCIBLE MASTERS and/or CAMERA-READY
COPIES supplied by NTI to CONTRACTOR in the making of any copies the same
or in any other manner. Except as set forth in Section 3.1 of this
Agreement, no license or other grant is expressed or implied to CONTRACTOR
to produce, reproduce, copy or in any other manner use the REPRODUCIBLE
MASTERS and/or the CAMERA-READY COPIES supplied to CONTRACTOR by NTI
pursuant to this Agreement.
ARTICLE XIII - INSPECTION; ACCEPTANCE
13.1 The acceptance by NTI of copies of COMPUTER PROGRAMS and/or WORKS OF
AUTHORSHIP reproduced by CONTRACTOR is subject to inspection at the
delivery location and such acceptance shall be deemed to occur ten (10)
days after receipt of such copies at the delivery location unless NTI shall
have provided CONTRACTOR with notice of nonacceptance within such period.
If one or more copies do not conform to the requirements of a purchase
order issued by NTI to CONTRACTOR or, in the case of COMPUTER PROGRAMS, to
the warranty set forth in Section 6.3, the entire quantity of copies
delivered with the defective copy or copies may be returned to CONTRACTOR
at CONTRACTOR's expense.
ARTICLE XIV - TERMINATION; REMEDIES
14.1 Except as provided to the contrary in Section 7.1, in the event either
party fails to perform any term, condition or covenant of this Agreement
and such failure continues uncorrected for at least fifteen (15) days
following the date of receipt by the nonperforming party of written notice
of the specific failure to perform from the other party, the nonperforming
party shall be deemed to be in default of this Agreement. Upon the
occurrence of a default of this Agreement, the party not in default shall
have the right to and may elect to declare this Agreement to be
immediately terminated and/or pursue each and every available remedy at
law and in equity.
14.2 CONTRACTOR acknowledges that the COMPUTER PROGRAMS and/or WORKS OF
AUTHORSHIP provided by NTI to CONTRACTOR hereunder are the confidential
and proprietary property of NTI and/or NTI's suppliers, that a violation
in any material respect of Section 10.1, 11.1 and 11.2, respectively, of
this Agreement by CONTRACTOR would cause NTI irreparable injury for which
NTI would have no adequate remedy at law, and that NTI shall be entitled
to preliminary and other injunctive relief against any such violation by
CONTRACTOR. Such injunctive relief shall be in addition to, and in no way
in limitation of, any and all other rights and remedies which NTI may have
at law or in equity.
ARTICLE XV - INDEPENDENT CONTRACTORS
15.1 CONTRACTOR and NTI are independent contractors in all relationships and
actions under and contemplated by this Agreement. This Agreement is not to
be construed to create, or to authorize the creation of, any employment,
partnership, or agency relation or to authorize CONTRACTOR to enter into
any commitment or agreement binding on NTI or to allow one party to accept
service of any legal process addressed to, or intended for, the other
party.
ARTICLE XVI - NOTICES
16.1 All notices required or provided hereunder by one party to the other party
shall be in writing and shall be mailed by First Class United States Mail,
postage prepaid, and in the case of a notice of default or termination also
by Certified or Registered Mail, return receipt requested, to the following
addresses or to such changed address as either party entitled to notice
herein shall have communicated in writing to the other party:
Page 43
<PAGE> 41
For CONTRACTOR:
----------------------------------------
----------------------------------------
----------------------------------------
Attn:
---------------------------------
For NTI: Northern Telecom Inc.
----------------------------------------
----------------------------------------
Attn:
---------------------------------
All written notices, properly addressed and mailed, shall be deemed given
when actually received by the addressee.
ARTICLE XVII - GENERAL
17.1 This Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns, if any, of the parties hereto.
17.2 This Agreement constitutes the entire understanding and agreement between
the parties and supersedes any and all prior or contemporaneous oral and
written communications, understandings or agreements relating to the
subject matter hereof. To the extent that the terms and conditions
appearing on any purchase order issued by NTI to CONTRACTOR or on any
acknowledgement issued by CONTRACTOR to NTI conflict with the terms and
conditions set forth in this Agreement, the terms and conditions of this
Agreement shall be deemed to control and the conflicting terms appearing
in any such purchase order or acknowledgement shall be null and void.
17.3 Neither party shall either (a) assign this Agreement or any purchase order
or any rights under either, or (b) subcontract any of its obligations
under this Agreement or any purchase order, without the prior written
consent of the other party. Notwithstanding the foregoing, NTI may assign
this Agreement or any purchase order or any rights under either to its
parent company, Northern Telecom Limited, or to any company which is
majority owned on a class by class basis of its voting stock by Northern
Telecom Limited without such prior written consent but upon notice to
CONTRACTOR.
17.4 The interpretation of this Agreement and the rights and obligations of the
parties shall be governed by the laws of the State of California.
17.5 Each party to this Agreement hereby represents to the other that it has
full power and authority to enter into and perform this Agreement and that
the person signing this Agreement on its behalf has been properly
authorized and empowered to do so. Each party further acknowledges that it
has read this Agreement, that it understands the terms and conditions
hereof, and that it agrees to be bound by this Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
by their duly authorized corporate officers and consider this Agreement to be
effective as of the day and year first set forth above.
Page 44
<PAGE> 42
NORTHERN TELECOM INC. CONTRACTOR:
By: By:
--------------------------- --------------------------------
Name: Name:
----------------------- ----------------------------
Title: Title:
----------------------- ----------------------------
Date: Date:
----------------------- ----------------------------
Page 45
<PAGE> 43
SCHEDULE H
END-USER SOFTWARE LICENSE AGREEMENT
Page 46
<PAGE> 44
ANNEX G
MERIDIAN SOFTWARE LICENSE
NORTHERN TELECOM INC. ("NTI") TELECOMMUNICATIONS PRODUCTS
THIS LEGAL DOCUMENT IS A LICENSE AGREEMENT ("LICENSE") BETWEEN YOU, THE END-USER
("CUSTOMER") AND NORTHERN TELECOM INC. ("NTI"). BY OPENING THE SEALED DISK
PACKAGE WHICH CONTAINS THE SOFTWARE DISKETTE(S), OR BY EXECUTING A CONTRACT FOR
PURCHASE OF A SYSTEM WHICH INCORPORATES THIS USER SOFTWARE AGREEMENT, YOU, THE
CUSTOMER, AGREE TO BE BOUND BY THE TERMS OF THIS LICENSE.
Subject to the terms hereinafter set forth, NTI grants to CUSTOMER and/or
representatives, with a "need to know," a personal, non-exclusive license (1) to
use certain Licensed Software, proprietary to NTI or its suppliers, contained as
an integral part of the Hardware; and (2) to install and use each item of
Licensed Software not an integral part of the Hardware; and (3) to use the
associated documentation. CUSTOMER is granted no title or ownership rights, in
or to the Licensed Software, in whole or in part, and CUSTOMER acknowledges that
title to and all copyrights, patents, trade secrets and/or any other
intellectual property rights to and in all such Licensed Software and associated
documentation are and shall remain the property of NTI and/or NTI's suppliers.
The right to use Licensed Software may be restricted by a measure of usage of
applications based upon number of lines, number of ports, number of terminal
numbers assigned, number of users, or some similar measure. Expansion beyond
the specified usage level may require payment of an incremental charge or
another license fee.
NTI considers the Licensed Software to contain "trade secrets" of NTI and/or its
suppliers. Such "trade secrets" include, without limitation thereto, the
specific design, structure and logic of individual Licensed Software programs,
their interactions with other portions of Licensed Software, both internal and
external, and the programming techniques employed therein. In order to maintain
the "trade secret" status of the information contained within the Licensed
Software, the Licensed Software is being delivered to CUSTOMER in object code
form only.
NTI or any of its suppliers holding any intellectual property rights in any
Licensed Software, and/or any third party owning any intellectual property
rights in software from which the Licensed Software was derived, are intended
third party beneficiaries of this License. All grants of rights to use
intellectual property intended to be accomplished by this License are explicitly
stated. No other grants of such rights shall be inferred or shall arise by
implication.
CUSTOMER warrants to NTI that CUSTOMER is not purchasing the rights granted by
this License in anticipation of reselling those rights.
CUSTOMER shall:
- - Hold the Licensed Software in confidence for the benefit of NTI and/or NTI's
suppliers using no less a degree of care than it uses to protect its own
most confidential and valuable information; and
- - Keep a current record of the location of each copy of Licensed Software
made by it; and
- - Use each copy of Licensed Software only on a single CPU at a time (for this
purpose, single CPU shall include systems with redundant processing units);
and
- - Affix to each copy of Licensed Software made by it, in the same form and
location, a reproduction of the copyright notices, trademarks, and all other
proprietary legends and/or logos of NTI and/or NTI's suppliers, appearing on
the original copy of such Licensed Software delivered to CUSTOMER; and
retain the same without alteration on all original copies; and
- - Issue instructions to each of its authorized employees, agents,. and/or
representatives to whom Licensed Software is disclosed, advising them of
confidential nature of such Licensed Software and to provide them with a
summary of the requirements of this License; and
- - Return the Licensed Software and all copies through an Authorized
Distributor to NTI at such time as CUSTOMER chooses to permanently cease
using it.
CUSTOMER shall not:
- - Use licensed Software (i) for any purpose other than CUSTOMER's own internal
business purposes and (ii) other than as provided by this License; or
- - Allow anyone other than CUSTOMER's employees, agents and/or representatives
with a "need to know" to have physical access to Licensed Software; or
- - Make any copies of Licensed Software except such limited number of object
code copies in machine readable form only, as may be reasonably necessary
for execution or archival purposes only; or
- - Make any modifications, enhancements, adaptations, or translations to or
of Licensed Software, except as may result from those CUSTOMER interactions
with the Licensed Software associated with normal use and explained in the
associated documentation; or
- - Attempt to reverse engineer, disassemble, reverse translate, decompile, or
in any other manner decode Licensed Software, in order to derive the source
code form or for any other reason; or
- - Make full or partial copies of any documentation or other similar printed or
machine-readable matter provided with Licensed Software unless the same has
been supplied in a form by NTI intended for periodic reproduction of partial
copies; or
- - Export or re-export Licensed Software and/or associated documentation from
the fifty states of the United States and the District of Columbia.
- - NOTE: notwithstanding the above restrictions, if Customer has licensed the
Licensed Software under a "site license" option as set forth in Customer's
Purchase Agreement, Customer is authorized to make a limited number of
copies of the Licensed Software and documentation to support additional
users as specified in Customer's Purchase Agreement.
CUSTOMER may assign collectively its rights under this License to any subsequent
owner of the Hardware, but not otherwise, subject to the payment of the then
current license fee for new users, if any. No such assignment shall be valid
until CUSTOMER (1) has delegated all of its obligations under this License to
the assignee; and (2) has obtained from the assignee an unconditional written
assumption of all such obligations; and (3) has provided NTI a copy of such
assignment, delegation and assumption; and (4) has transferred physical
possession of all Licensed Software and all associated documentation to the
assignee and destroyed all archival copies. Except as provided, neither this
License nor any rights acquired by CUSTOMER through this License are assignable.
Any attempted assignment of rights and/or transfer of Licensed Software not
specifically allowed shall be void and conclusively presumed a material breach
of this License.
If NTI (i) claims a material breach of this License, and (ii) provides written
notice of such claimed material breach to CUSTOMER and (iii) observes that such
claimed material breach remains uncorrected and/or unmitigated more than thirty
(30) days following CUSTOMER's receipt of written notice specifying in
reasonable detail the nature of the claimed material breach, then CUSTOMER
acknowledges that this License may be immediately terminated by NTI and CUSTOMER
further acknowledges that any such termination shall be without prejudice to any
other rights and remedies that NTI may have at law or in equity.
EXPRESS LIMITED WARRANTIES FOR ANY ITEM OF LICENSED SOFTWARE, IF ANY, WILL BE
SOLELY THOSE GRANTED DIRECTLY TO CUSTOMER BY DISTRIBUTOR AS DESCRIBED IN THE
BODY OF THE AGREEMENT TO WHICH THIS LICENSE IS ATTACHED OR, IN THE CASE OF
LICENSED SOFTWARE DISTRIBUTED IN A SEALED DISK PACKAGE, THOSE WHICH APPEAR AT
THE END OF THIS LICENSE AGREEMENT. OTHER THAN AS SET FORTH THEREIN, THIS LICENSE
DOES NOT CONFER OR GRANT ANY WARRANTY TO CUSTOMER FROM OR BY NTI; THE LICENSED
SOFTWARE IS PROVIDED BY NTI "AS IS" AND WITHOUT WARRANTY OF ANY KIND OR NATURE,
WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING (WITHOUT LIMITATION) THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE. THIS
LIMITATION OF WARRANTIES WAS A MATERIAL FACTOR IN THE ESTABLISHMENT OF THE
LICENSE FEE CHARGED FOR EACH SPECIFIC ITEM OF SOFTWARE LICENSED.
IN NO EVENT WILL NTI AND/OR NTI'S SUPPLIERS AND THEIR DIRECTORS, OFFICERS,
EMPLOYEES OR AGENTS BE LIABLE TO OR THROUGH CUSTOMER FOR INCIDENTAL, INDIRECT,
SPECIAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES OF ANY KIND, INCLUDING
LOST PROFITS, LOSS OF BUSINESS OR BUSINESS INFORMATION, BUSINESS INTERRUPTION,
OR OTHER ECONOMIC DAMAGE, AND FURTHER INCLUDING INJURY TO PROPERTY, AS A RESULT
OF USE OR INABILITY TO USE THE LICENSED SOFTWARE OR
PLEASE REFER TO THE REVERSE SIDE
<PAGE> 45
BREACH OF ANY WARRANTY OR OTHER TERM OF THIS LICENSE, REGARDLESS OF WHETHER NTI
AND/OR NTI'S SUPPLIERS WERE ADVISED, HAD OTHER REASON TO KNOW, OR IN FACT KNEW
OF THE POSSIBILITY THEREOF, CUSTOMER ACKNOWLEDGES THAT THE FOREGOING SENTENCE
REFLECTS AN INFORMED, VOLUNTARY ALLOCATION BETWEEN THE PARTIES OF THE RISKS
(KNOWN AND UNKNOWN) THAT MAY EXIST IN CONNECTION WITH THIS LICENSE, THAT SUCH
VOLUNTARY RISK ALLOCATION WAS A MATERIAL PART OF THE BARGAIN BETWEEN THE
PARTIES, AND THAT THE ECONOMIC AND OTHER TERMS OF THIS LICENSE WERE NEGOTIATED
AND AGREED TO BY THE PARTIES IN RELIANCE ON SUCH VOLUNTARY RISK ALLOCATION.
IN THE EVENT CUSTOMER HAS NOT EXECUTED A SEPARATE PURCHASE AGREEMENT WITH A
DISTRIBUTOR, AND THIS LICENSE BECOMES EFFECTIVE BY REASON OF YOUR OPENING A
SEALED DISK PACKAGE, THE ADDITIONAL WARRANTY PROVISIONS AND LIMITATIONS LISTED
BELOW APPLY:
- - "LICENSED SOFTWARE" SHALL MEAN THE COMPUTER PROGRAMS WHICH ARE EITHER OWNED
BY OR LICENSED TO NTI AND WHICH ARE CONTAINED ON THE DISKS SUPPLIED TO
CUSTOMER. "HARDWARE" SHALL MEAN EQUIPMENT ON WHICH CUSTOMER USES THE
LICENSED SOFTWARE.
- - NTI WARRANTS THAT THE DISKS ON WHICH THE LICENSED SOFTWARE IS RECORDED WILL
BE FREE FROM DEFECTS IN MATERIALS AND WORKMANSHIP UNDER NORMAL USE FOR A
PERIOD OF NINETY (90) DAYS AS EVIDENCED BY A COPY OF THE RECEIPT. NTI'S
ENTIRE LIABILITY AND YOUR EXCLUSIVE REMEDY WILL BE REPLACEMENT OF THE DISK
NOT MEETING NTI'S LIMITED WARRANTY AND WHICH IS RETURNED TO NTI OR AN NTI
AUTHORIZED REPRESENTATIVE WITH A COPY OF THE RECEIPT. NTI WILL HAVE NO
RESPONSIBILITY TO REPLACE A DISK DAMAGED BY ACCIDENT, ABUSE OR
MISAPPLICATION.
- - IN PARTICULAR, NO WARRANTY IS BEING PROVIDED ON SOFTWARE DEVELOPED BY THIRD
PARTY SOFTWARE SUPPLIERS. SUCH SOFTWARE SUPPLIERS MAKE NO WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, REGARDING THE
SOFTWARE. NTI'S SOFTWARE SUPPLIERS DO NOT WARRANT, GUARANTEE OR MAKE ANY
REPRESENTATIONS REGARDING THE USE OR THE RESULTS OF THE USE OF THE SOFTWARE
IN TERMS OF ITS CORRECTNESS, ACCURACY, RELIABILITY, OR OTHERWISE. THE
ENTIRE RISK AS TO THE RESULTS AND PERFORMANCE OF ANY SUCH SOFTWARE
DEVELOPED BY SOFTWARE SUPPLIERS IS ASSUMED BY YOU. THE EXCLUSION OF IMPLIED
WARRANTIES IS NOT PERMITTED BY SOME JURISDICTIONS. THE ABOVE EXCLUSION MAY
NOT APPLY TO YOU.
- - BECAUSE SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF
LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES, THE ABOVE LIMITATIONS
MAY NOT APPLY TO YOU. NTI'S AND NTI'S SOFTWARE SUPPLIERS COMBINED LIABILITY
TO YOU FOR ACTUAL DAMAGES FROM ANY CAUSE WHATSOEVER, AND REGARDLESS OF THE
FORM OF THE ACTION (WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE),
PRODUCT LIABILITY OR OTHERWISE), WILL BE LIMITED TO $50.
- - THE RIGHTS AND OBLIGATIONS ARISING UNDER THIS LICENSE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS.
CUSTOMER HEREBY AGREES TO ADHERE TO THE TERMS AND
CONDITIONS OF THIS MERIDIAN SOFTWARE LICENSE AGREEMENT:
CUSTOMER SIGNATURE:
------------------------------------
PRINTED NAME:
------------------------------------------
DATE:
---------------------------------------------------
NORTHERN TELECOM INC.
Rick P. Faletti
President, Multimedia Communication Systems
Northern Telecom Inc.
Meridian Software License Version 5.00
Northern Telecom Inc. Products 1994
<PAGE> 46
SCHEDULE I
DISCOUNT LEVEL
<TABLE>
<S> <C>
***** Base Systems
***** Discountable standard products:
- including all discountable products
listed in Schedule B
- including all discountable products
listed in Schedule F
***** Discountable spares and spares kits
</TABLE>
Page 47
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 47
SCHEDULE J
ESCALATION PROCEDURE
<TABLE>
<S> <C>
1. First point of contact Voicetek Corporation Hotline
2. Second point of contact Technical Support Manager
3. Third point of contact Engineering Manager
4. Fourth point of contact Senior Staff
5. Fifth point of contact Chief Operating Officer
</TABLE>
Page 48
<PAGE> 48
SCHEDULE F
RESELLER SUPPORT SERVICES
PART I: SOFTWARE PRODUCTS (EXCLUDING GENERATIONS DEVELOPER)
A. VOICETEK shall provide RESELLER SUPPORT SERVICES which shall be
identical in scope to the software support services set forth in
Article XIII together with the additional out-of-warranty HARDWARE
repair services set forth in Part III of this Schedule F to SUPPORT
ORGANIZATION(s) for each ANNUAL SUPPORT SERVICES PERIOD during the TERM
for which NTI, or any NORTHERN TELECOM COMPANY or any MANUFACTURING
LICENSEE, as the case may be, elects to pay the requisite annual fee(s)
for the desired level(s) of service, the available options of which are
enumerated for the respective calendar years as indicated in the tables
below:
RESELLER SUPPORT SERVICES fees for calendar year 1995 are as follows:
<TABLE>
<CAPTION>
Service Level Hours (EDT or Days NTI Price Additional Northern
EST as applicable) Per Week Telecom Company
Direct Support Price
<S> <C> <C> <C> <C>
Basic 8:00 a.m. - 6:00 p.m. M-F * *
Optional 7:00 a.m. - 10:00 p.m. M-F * *
Extended
Twenty-four Twenty-four hours M-Su * *
hour
</TABLE>
* Not available at this price if NTI is not paying for RESELLER SUPPORT SERVICES
at the time this service is ordered.
Renewal fees for RESELLER SUPPORT SERVICES for calendar year 1996 will be as
follows:
<TABLE>
<CAPTION>
Service Level Hours (EDT or Days NTI Price Additional Northern
EST as applicable) Per Week Telecom Company
Direct Support Price
<S> <C> <C> <C> <C>
Basic 8:00 a.m. - 6:00 p.m. M-F * *
Optional 7:00 a.m. - 10:00 p.m. M-F * *
Extended
Twenty-four Twenty-four hours M-Su * *
hour
</TABLE>
*Not available at this price if NTI is not paying for RESELLER SUPPORT
SERVICES at the time this service is ordered.
Fees for RESELLER SUPPORT SERVICES can be paid to VOICETEK by NTI and/or
NORTHERN TELECOM COMPANIES and/or MANUFACTURING LICENSEES, as the case
may be, on a quarterly basis. In the event any entity ordering RESELLER
SUPPORT SERVICES elects to pay the requisite fee to VOICETEK on a
quarterly basis, then VOICETEK shall invoice such ordering entity for each
quarterly payment forty-five (45) days prior to the start of each calendar
quarter and such ordering entity shall pay such invoices, pursuant to the
payment terms set forth in Section 8.7.
Renewal fees for RESELLER SUPPORT SERVICES for calendar years 1997 and
beyond will be based on the total software revenue to VOICETEK generated
during the last calendar quarter immediately preceding a now ANNUAL
SUPPORT SERVICES PERIOD. The renewal fees will be as follows:
<TABLE>
<CAPTION>
Previous Quarter Service Level NTI Annual Additional Northern
software revenue Renewal Fee Telecom Company
Direct Support Price
<S> <C> <C> <C>
* Basic $* $*
" " " " Optional extended $* $*
</TABLE>
Page 38
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 49
<TABLE>
<S> <C> <C> <C>
" " " " Twenty-four hours ***** *****
***** Basic ***** *****
" " " " Optional extended ***** *****
" " " " Twenty-four hours ***** *****
***** Basic ***** *****
" " " " Optional extended ***** *****
" " " " Twenty-four hours ***** *****
Less than $***** Basic ***** *****
" " " " Optional extended ***** *****
" " " " Twenty-four hours ***** *****
</TABLE>
For the purpose of determining how to apply the software revenue levels
set forth in the table above, software revenue generated will be
calculated on all software licenses (development and runtime),
software-only options and the software-only component of hardware/software
packaged PRODUCTS (e.g., ASR, TTS and FAX).
B. Under all service level options, VOICETEK shall provide unlimited
telephone consultation on the use of PRODUCTS including, but not limited
to, advice on use, diagnosis of user problems, diagnosis of possible
problems in PRODUCTS and direction or remedies to be employed until
problems are corrected. POINT RELEASES and UPDATES are to be included at
no additional charge as part of RESELLER SUPPORT SERVICES.
PART II: OUT-OF-WARRANTY HARDWARE REPAIR
A. During an ANNUAL SUPPORT SERVICES PERIOD for which NTI or any NORTHERN
TELECOM COMPANY or MANUFACTURING LICENSEE has/have paid to VOICETEK the
requisite annual fee for any level of RESELLER SUPPORT SERVICES, VOICETEK
shall provide out-of-warranty repair service to such entity on any and all
HARDWARE ordered during the TERM in accordance with the terms set forth in
Section 11.3, provided that such entity (requesting an RMA for
out-of-warranty repair) simultaneously issues to VOICETEK a "no charge"
ORDER. Subsequently, VOICETEK, within three (3) business days following
receipt of the HARDWARE for out-of-warranty repair services, shall provide
to the requesting entity a quotation for the out-of-warranty repair of
such HARDWARE, which quotation may either be accepted or rejected by the
requesting entity.
In the event the out-of-warranty repair quotation is accepted by NTI, or a
NORTHERN TELECOM COMPANY or MANUFACTURING LICENSEE, then the requesting
entity shall issue a change to the applicable "no charge" ORDER which sets
forth the price quoted by VOICETEK for the out-of-warranty repair.
In the event a requesting entity decides not to proceed with the
out-of-warranty repair, then such entity shall direct VOICETEK to return
the out-of-warranty HARDWARE in question to the requesting entity F.O.B.
VOICETEK, freight colled to NTI, or the NORTHERN TELECOM COMPANY or
MANUFACTURING LICENSEE, as the case may be.
NORTHERN TELECOM INC. VOICETEK CORPORATION
By: By: /s/ Sheldon L. Dinkes
------------------------------ ----------------------------
Name: Name: SHELDON L. DINKES
--------------------------- --------------------------
(type/print) (type/print)
Title: Title: President
--------------------------- --------------------------
(type/print) (type/print)
Date: Date: June 20, 1995
--------------------------- --------------------------
APPROVED AS
TO LEGAL FORM
BY: /s/ Joel M.Erickson
-----------------------
16 June 1995
Page 39
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 50
SCHEDULE F
RESELLER SUPPORT SERVICES
PART I: SOFTWARE PRODUCTS (EXCLUDING GENERATIONS DEVELOPER)
A. VOICETEK shall provide RESELLER SUPPORT SERVICES which shall be
identical in scope to the software support services set forth in
Article XIII together with the additional out-of-warranty HARDWARE
repair services set forth in Part III of this Schedule F to SUPPORT
ORGANIZATION(s) for each ANNUAL SUPPORT SERVICES PERIOD during the TERM
for which NTI, or any NORTHERN TELECOM COMPANY or any MANUFACTURING
LICENSEE, as the case may be, elects to pay the requisite annual fee(s)
for the desired level(s) of service, the available options of which are
enumerated for the respective calendar years as indicated in the tables
below:
RESELLER SUPPORT SERVICES fees for calendar year 1995 are as follows:
<TABLE>
<CAPTION>
Service Level Hours (EDT or Days NTI Price Additional Northern
EST as applicable) Per Week Telecom Company
Direct Support Price
<S> <C> <C> <C> <C>
Basic 8:00 a.m. - 6:00 p.m. M-F $********* $**********
Optional 7:00 a.m. - 10:00 p.m. M-F $********* $**********
Extended
Twenty-four Twenty-four hours M-Su $********* $**********
hour
</TABLE>
* Not available at this price if NTI is not paying for RESELLER SUPPORT SERVICES
at the time this service is ordered.
Renewal fees for RESELLER SUPPORT SERVICES for calendar year 1996 will be as
follows:
<TABLE>
<CAPTION>
Service Level Hours (EDT or Days NTI Price Additional Northern
EST as applicable) Per Week Telecom Company
Direct Support Price
<S> <C> <C> <C> <C>
Basic 8:00 a.m. - 6:00 p.m. M-F $********** $**********
Optional 7:00 a.m. - 10:00 p.m. M-F $********** $**********
Extended
Twenty-four Twenty-four hours M-Su $********** $**********
hour
</TABLE>
*Not available at this price if NTI is not paying for RESELLER SUPPORT
SERVICES at the time this service is ordered.
Fees for RESELLER SUPPORT SERVICES can be paid to VOICETEK by NTI and/or
NORTHERN TELECOM COMPANIES and/or MANUFACTURING LICENSEES, as the case
may be, on a quarterly basis. In the event any entity ordering RESELLER
SUPPORT SERVICES elects to pay the requisite fee to VOICETEK on a
quarterly basis, then VOICETEK shall invoice such ordering entity for each
quarterly payment forty-five (45) days prior to the start of each calendar
quarter and such ordering entity shall pay such invoices, pursuant to the
payment terms set forth in Section 8.7.
Renewal fees for RESELLER SUPPORT SERVICES for calendar years 1997 and
beyond will be based on the total software revenue to VOICETEK generated
during the last calendar quarter immediately preceding a now ANNUAL
SUPPORT SERVICES PERIOD. The renewal fees will be as follows:
<TABLE>
<CAPTION>
Previous Quarter Service Level NTI Annual Additional Northern
software revenue Renewal Fee Telecom Company
Direct Support Price
<S> <C> <C> <C>
$********** or greater Basic $********* $*********
</TABLE>
Page 1
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 51
<TABLE>
<S> <C> <C> <C>
" " " " Optional extended [*] [*]
" " " " Twenty-four hours [*] [*]
$[*] Basic [*] [*]
" " " " Optional extended [*] [*]
" " " " Twenty-four hours [*] [*]
$[*] Basic [*] [*]
" " " " Optional extended [*] [*]
" " " " Twenty-four hours [*] [*]
Less than $[*] Basic [*] [*]
" " " " Optional extended [*] [*]
" " " " Twenty-four hours [*] [*]
</TABLE>
For the purpose of determining how to apply the software revenue levels
set forth in the table above, software revenue generated will be
calculated on all software licenses (development and runtime),
software-only options and the software-only component of hardware/software
packaged PRODUCTS (e.g., ASR, TTS and FAX).
B. Under all service level options, VOICETEK shall provide unlimited
telephone consultation on the use of PRODUCTS including, but not limited
to, advice on use, diagnosis of user problems, diagnosis of possible
problems in PRODUCTS and direction or remedies to be employed until
problems are corrected. POINT RELEASES and UPDATES are to be included at
no additional charge as part of RESELLER SUPPORT SERVICES.
PART II: OUT-OF-WARRANTY HARDWARE REPAIR
A. During an ANNUAL SUPPORT SERVICES PERIOD for which NTI or any NORTHERN
TELECOM COMPANY or MANUFACTURING LICENSEE has/have paid to VOICETEK the
requisite annual fee for any level of RESELLER SUPPORT SERVICES, VOICETEK
shall provide out-of-warranty repair service to such entity on any and all
HARDWARE ordered during the TERM in accordance with the terms set forth in
Section 11.3, provided that such entity (requesting an RMA for
out-of-warranty repair) simultaneously issues to VOICETEK a "no charge"
ORDER. Subsequently, VOICETEK, within three (3) business days following
receipt of the HARDWARE for out-of-warranty repair services, shall provide
to the requesting entity a quotation for the out-of-warranty repair of
such HARDWARE, which quotation may either be accepted or rejected by the
requesting entity.
In the event the out-of-warranty repair quotation is accepted by NTI, or a
NORTHERN TELECOM COMPANY or MANUFACTURING LICENSEE, then the requesting
entity shall issue a change to the applicable "no charge" ORDER which sets
forth the price quoted by VOICETEK for the out-of-warranty repair.
In the event a requesting entity decides not to proceed with the
out-of-warranty repair, then such entity shall direct VOICETEK to return
the out-of-warranty HARDWARE in question to the requesting entity F.O.B.
VOICETEK, freight collect to NTI, or the NORTHERN TELECOM COMPANY or
MANUFACTURING LICENSEE, as the case may be.
NORTHERN TELECOM INC. VOICETEK CORPORATION
By: /s/ J. Michael Camp By: /s/ Sheldon Dinkes
------------------------------ ----------------------------
Name: J. Michael Camp Name: Sheldon Dinkes
--------------------------- --------------------------
(type/print) (type/print)
Title: Vice President, MBA Title: President
--------------------------- --------------------------
(type/print) (type/print)
Date: 8/31/95 Date: 8-28-95
--------------------------- --------------------------
APPROVED AS
TO LEGAL FORM
BY: /s/ Joel M.Erickson
-----------------------
24 August 1995
Page 2
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATEY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS
<PAGE> 52
ADDENDUM
This Addendum ("ADDENDUM") to the OEM Agreement between Northern Telecom Inc.
("NTI") and Voicetek Corporation ("VOICETEK") which was executed on June 16,1995
(the "AGREEMENT") hereby adds the substantive terms of support pertaining only
to the SOFTWARE PRODUCT identified as GENERATIONS Developer and addresses an
upgrade offer pertaining to the SOFTWARE PRODUCTS identified as GENERATIONS and
VRS, respectively. The entirety of the ADDENDUM shall constitute the text of
what shall be called Schedule F-1, which shall be attached to and become a part
of the AGREEMENT as of the date of the latter signature set forth below.
SCHEDULE F-1
PART I: OPTIONAL GENERATIONS DEVELOPER SUPPORT SERVICE AND FEE
A. VOICETEK shall provide to NTI optional support services covering
GENERATIONS Developer which shall be equivalent in scope to RESELLER
SUPPORT SERVICES pertaining to all other SOFTWARE PRODUCTS in
consideration of, and in the event NTI elects to remit NTI's payment of
the requisite annual optional support services fee ("Requisite Annual
Fee"). The Requisite Annual Fee payable for the support of GENERATIONS
Developer shall be calculated by determining the amount equal to seven
percent (7%) of the total of all GENERATIONS Developer software license
fees paid cumulatively by NTI from the EFFECTIVE DATE until the date
upon which NTI notifies VOICETEK of its desire to have VOICETEK
commence the provision of optional support services covering
GENERATIONS Developer. The Requisite Annual Fee for renewing optional
support services covering GENERATIONS Developer shall be determined by
establishing a total of GENERATIONS Developer licenses in place on the
anniversary date of the commencement of optional support services for
GENERATIONS Developer and using the seven percent (7%) multiplier with
the new total of GENERATIONS Developer software license fees.
B. In contrast to the arrangement for RESELLER SUPPORT SERVICES for the
balance of SOFTWARE PRODUCTS, which expressly excludes VERSION RELEASES,
NTI shall receive, when commercially available, a copy of all VERSION
RELEASES for GENERATIONS Developer and for VRS, respectively, released
during any ANNUAL SUPPORT SERVICES PERIOD for which NTI has paid the
Requisite Annual Fee, as described in Paragraph A.
PART II: ONE-TIME UPGRADE OFFER
As part of the AGREEMENT, when the first VERSION RELEASE of the SOFTWARE
PRODUCTS known as GENERATIONS and VRS, respectively, (referred to as 2.1/3.0) to
be released following the EFFECTIVE DATE becomes commercially available from
VOICETEK, VOICETEK will allow NTI six (6) months from the date of NTI's receipt
of a copy of such VERSION RELEASE to migrate NTI's installed base customers to
such VERSION RELEASE at no charge to NTI.
IN WITNESS WHEREOF, the parties hereto have, by their duly authorized
representatives, executed this ADDENDUM to the AGREEMENT as of the day and year
set forth below.
NORTHERN TELECOM INC. VOICETEK CORPORATION
By: /s/ J. Michael Camp By: /s/ Sheldon Dinkes
------------------------------ ----------------------------
Name: J. Michael Camp Name: Sheldon Dinkes
--------------------------- --------------------------
(type/print) (type/print)
Title: Vice President, MBA Title: President
--------------------------- --------------------------
(type/print) (type/print)
Date: 8/31/95 Date: 8-28-95
--------------------------- --------------------------
APPROVED AS
TO LEGAL FORM
BY: /s/ Joel M.Erickson
-----------------------
24 August 1995
Page 1
<PAGE> 53
SCHEDULE A
AUTHORIZED TERRITORY
<TABLE>
<S> <C>
Canada United States (U.S.)
</TABLE>
<TABLE>
<CAPTION>
Europe Region CALA Region Asia/Pacific Region
<S> <C> <C> <C>
United Kingdom Brazil Australia
France Mexico Bahrain
Holland Chile Hong Kong
Sweden Columbia India
Denmark Argentina Indonesia
Norway Antigua Japan
Iceland Bahamas Kuwait
Germany Barbados Malaysia
Switzerland Br. Virgin Islands Oman
Austria Costa Rica Pakistan
Belgium Dominica China
Finland Dominican Republic Philippines
United Arab Emirates Ecuador Russia
Greece El Salvador Saudi Arabia
Ireland Guadeloupe Singapore
Israel Guatemala South Korea
Italy Honduras Syria
Netherlands Jamaica Taiwan
Poland Jordan Thailand
Portugal Martinique New Zealand
Spain Netherlands Antilles
Turkey St. Kitts & Nevis
Trinidad St. Lucia
Nicaragua St. Vincent
Turks & Caicos Is. Panama
Paraguay
Peru
Puerto Rico
Virgin Islands
U.S. Virgin Islands
</TABLE>
NORTHERN TELECOM INC. VOICETEK CORPORATION
By: /s/ John A. Ryan By: /s/ Sheldon L. Dinkes
------------------------------ ----------------------------
Name: John A. Ryan Name: Sheldon L. Dinkes
--------------------------- --------------------------
(type/print) (type/print)
Title: VP/GM, MBA Title: President
--------------------------- --------------------------
(type/print) (type/print)
Date: 2/5/96 Date: January 1, 1996
--------------------------- --------------------------
APPROVED AS
TO LEGAL FORM
BY: /s/ Joel M.Erickson
-----------------------
Page 1
<PAGE> 1
EXHIBIT 10.2
AMENDMENT NO. 1
THIS AMENDMENT NO. 1 effective as of the date of the latter signature set forth
below, hereby modifies and amends the OEM Agreement between Northern Telecom
Inc. (hereinafter "NTI") and Voicetek Corporation (hereinafter "VOICETEK")
effective 16 June 1995, including the Addendum dated 31 August 1995 hereinafter
the "ADDENDUM") and the revised Schedule A effective 7 February 1996
(collectively referred to hereinafter as the "AGREEMENT").
RECITALS
WHEREAS, NTI and VOICETEK have negotiated and agreed upon new pricing for a
number of VOICETEK's products and/or services;
AND WHEREAS, NTI and VOICETEK elect to have such new pricing set forth in
Schedule E of the AGREEMENT;
NOW THEREFORE, in consideration of the mutual promises and obligations
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, THE AGREEMENT IS HEREBY
AMENDED AS FOLLOWS:
1. Revised Schedule A, in effect from and after 7 February 1996, is hereby
deleted in its entirety and is replaced by a new Schedule A, which is
attached hereto and is by this reference made a part of the AGREEMENT.
2. The existing language of Schedule E is hereby deleted in its entirety
and is replaced by the following language resulting in new pages 36
through 42, with the pages containing the existing Schedule F being
renumbered as pages 43 and 44, the ADDENDUM containing Schedule F-1
renumbered as page 45, Schedule G being renumbered as pages 46 through
51, Schedule H being renumbered as pages 52 through 54, Schedule I
being renumbered as page 55 and Schedule J being renumbered as page 56,
respectively:
Page 1
CONFIDENTIAL MATERIAL OMITTED AND
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS
<PAGE> 2
SCHEDULE A
AUTHORIZED TERRITORY
Antigua Malaysia
Argentina Martinique
Australia Mexico
Austria
Netherlands
Bahamas Netherlands Antilles
Bahrain New Zealand
Barbados Nicaragua
Belgium Norway
Bolivia
Brazil Oman
British Virgin Islands
Pakistan
Canada Panama
Chile Paraguay
Colombia People's Republic of China
Costa Rica Peru
Philippines
Denmark Poland
Dominica Portugal
Dominican Republic Puerto Rico
Ecuador Russia
El Salvador
Saudi Arabia
Finland Singapore
France South Korea
Spain
Germany St. Kitts & Nevis
Greece St. Lucia
Grenada St. Vincent
Guadeloupe Sweden
Guatemala Switzerland
Guyana Syria
Haiti Taiwan
Honduras Thailand
Hong Kong Trinidad & Tobago
Turkey
Iceland Turks & Caicos Islands
India
Indonesia United Arab Emirates
Ireland United Kingdom
Israel United States (U.S.)
Italy U.S. Virgin Islands
Uraguay
Jamaica
Japan Venezuela
Jordan Virgin Islands
Kuwait
Page 2
<PAGE> 3
NORTHERN TELECOM, INC. VOICETEK CORPORATION
By: /s/ R.L. Kelly By: /s/ Sheldon Dinkes
--------------------------- -------------------------
Name: Radford L. Kelly Name: Sheldon Dinkes
----------------------- ---------------------
(type/print) (type/print)
Title: AVP, Contracts and Title: President
Market Channel Mgmt. ---------------------
--------------------- (type/print)
(type/print)
Date: 12/03/96 Date: November 11, 1996
--------------------- ---------------------
Approved as to legal form
By: Joel M. Erickson
8 November 1996
Page 3
<PAGE> 4
Except as set forth herein, all other terms and conditions of the AGREEMENT
remain unchanged. In the event that a conflict arises between the language of
the AGREEMENT and this Amendment No. 1 to the AGREEMENT, the language of this
Amendment No. 1 shall take precedence over the Addendum dated 31 August 1995,
and the AGREEMENT dated 16 June 1995 in descending order in the resolution of
any such conflict. All unmodified terms and conditions of the AGREEMENT shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have, by their duly authorized
representatives, executed this Amendment No. 1 to the AGREEMENT as of the date
of the latter signature set forth below.
NORTHERN TELECOM, INC. VOICETEK CORPORATION
By: /s/ R.L. Kelly By: /s/ Sheldon Dinkes
--------------------------- -------------------------
Name: Radford L. Kelly Name: Sheldon Dinkes
------------------------- -----------------------
Title: AVP, Contracts and Title: President
Market Channel Mgmt. ----------------------
-----------------------
Date: 12/03/96 Date: November 11, 1996
----------------------- ---------------------
Approved as to legal form
By: Joel M. Erickson
8 November 1996
Page 11
<PAGE> 5
SCHEDULE E
SPECIAL PRICING
<TABLE>
<CAPTION>
SYSTEMS PRODUCT DESCRIPTION PRICE
- ------- ------------------- -----
<S> <C> <C>
MRS/Tower Base Includes: VTK 2000 (either 486 or Pentium), LSI/120 [*]
System (12 port LS) network card, D/121B voice card, 12 TSP and 12 RSP
licenses, modem (28.8K bps or faster) and cable, Hard
Disk (1 GB or higher), PEB cable (10 drops), Terminal
cable, Loopstart cable.
MRS/Tower Base System Includes: VTK 2000 (either 486 or Pentium), [*]
(24 port Tl) D/240SC-Tl network/voice interface, 24 TSP licenses,
24 RSP licenses, modem (28.8K bps or faster) and
cable, Hard Disk (1 GB or higher), PEB cable (10
drops), Terminal cable.
MRS/Tower Base System Includes: VTK 2000 (486 or Pentium), Acculab El [*]
(30 port El) network card with or without daughter card, D/32OSC
voice card, 30 TSP and 30 RSP licenses, Hard Disk (1
GB or higher), PEB cable (10 drops), Terminal cable,
DPNSS License.
MRS/Tower Base System Includes: VTK 2000 (486 or Pentium), Acculab El [*]
(60 port El) network card with or without daughter card, 2 x
D/320SC voice card, 60 TSP and 60 RSP licenses, Hard
Disk (1 GB or higher), PEB cable (10 drops),
Terminal cable, DPNSS License.
MRS/Rack AC Base Includes: VTK AC Rack (486 or Pentium), LSI/l20 [*]
System (12 port LS) network interface, D/121B voice card, 12 TSP and 12
RSP licenses, modem (28.8K bps or faster) and cable,
Hard Disk (1 GB or higher), PEB cable (1O drops),
Terminal cable, Loopstart cable.
MRS/Rack AC Base Includes: VTK AC Rack (486 or Pentium), D/240SC-Tl [*]
System (24 port Tl) network interface card, 24 TSP and 24 RSP licenses,
modem (28.8K bps or faster) and cable, Hard Disk (1
GB or higher), PEB cable (10 drops), Terminal cable.
MRS/Rack AC Base Includes: VTK AC Rack (486 or Pentium), Acculab [*]
System (30 port El) El network card with or without daughter card,
D/32OSC voice card, 30 TSP & 30 RSP licenses, Hard
Disk (1 GB or higher), PEB cable (10 drops),
Terminal cable.
MRS/Rack AC Base Includes: VTK AC Rack (486 or Pentium), Acculab [*]
System (60 port El) El network interface with or without daughter card, 2
x D/320SC voice card, 60 TSP & 60 RSP licenses, Hard
Disk (1 GB or higher), PEB cable (10 drops), Terminal
cable.
MRS/Rack DC Base Includes: VTK DC Rack (486 or Pentium), LSI/120 [*]
System (12 port LS) network interface, D/121B voice card, 12 TSP and 12
RSP licenses, modem (28.8K bps or faster) and cable,
Hard Disk (1 GB or higher), PEB cable (10 drops),
Terminal cable, Loopstart cable.
MRS/Rack DC Base Includes: VTK DC Rack (486 or Pentium), D/240SC-Tl [*]
System (24 port T1) network interface card, 24 TSP and 24 RSP licenses,
modem (28.8K bps or faster) and cable, Hard Disk (1
GB or higher), PEB cable (10 drops), Terminal cable.
MRS/Rack DC Base Includes: VTK DC Rack (486 or Pentium), Acculab El [*]
System (30 port El) network card with or without daughter card, D/320SC
voice card, 30 TSP & 30 RSP licenses, Hard Disk (1 GB
or higher), PEB cable (10 drops), Terminal cable.
</TABLE>
Page 4
[*] CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 6
SCHEDULE E
SPECIAL PRICING
(continued)
<TABLE>
<CAPTION>
SYSTEMS PRODUCT DESCRIPTION PRICE
------- ------------------- -----
<S> <C> <C>
MRS/Rack DC Base Includes: VTK DC Rack (486 or Pentium), Acculab El [*]
System (60 port El) network interface with or without daughter card, 2 x
D/320SC voice card, 60 TSP & 60 RSP licenses, Hard
Disk (1 GB or higher), PEB cable (10 drops),
Terminal cable.
Zero Port International Includes: VTK 2000 (either 486 or Pentium), Hard [*]
Tower Disk (1 GB or higher), PEB cable (10 drops), Terminal
cable. Note. Orders for zero port systems must include
the appropriate network interface card ordered as a
separate line item.
Zero Port International Includes: VTK AC or DC Rack (486 or Pentium), Hard [*]
Rack Disk (1 GB or higher), PEB cable (10 drops), Terminal
cable. Note: Orders for zero port systems must
include the appropriate network interface card
ordered as a separate item.
8-Port Loopstart Includes: VTK 2000 (either 486 or Pentium), LSI/80 [*]
International Tower network card, D/81 A voice card, 8 TSP and 8 RSP
licenses, Hard Disk (1 GB or higher), PEB cable (10
drops), Terminal cable, Loopstart cable.
16-Port Loopstart Includes: VTK 2000 (either 486 or Pentium), 2 x [*]
International Tower LSI/80 network card, 2 x D/81A voice card, 16 TSP and
16 RSP licenses, Hard Disk (lGB or higher), PEB cable
(10 drops), Terminal cable, 2 x Loopstart cable.
24-Port Loopstart Includes: VTK 2000 (either 486 or Pentium), 3 x [*]
International Tower LSI/80 network card, 3 x D/81 A voice card, 24 TSP
and 24 RSP licenses, Hard Disk (lGB or higher), PEB
cable (10 drops), Terminal cable, 3 x Loopstart
cable.
<CAPTION>
PORT ASSEMBLIES PRODUCT DESCRIPTION PRICE
--------------- ------------------- -----
(INCLUDING TSP AND
RSP LICENSES)
<S> <C> <C>
Loopstart Port Assembly Includes: LSI/120 network card, D/121B voice card, 12 [*]
(12 ports) TSP & 12 RSP licenses, Loopstart cable, PEB cable (10
drops).
Loopstart Port Assembly Includes: LSI/80 network card, D/81A voice card, 8 [*]
(8 ports) TSP & 8 RSP licenses, Loopstart cable, PEB cable (10
drops).
Tl Port Assembly Includes: D/240SC-T1 Network/Voice card, 24 TSP & 24 [*]
(24 ports) RSP licenses, PEB cable (10 drops).
El Port Assembly Includes: Acculab El network card with or without [*]
(30 ports) daughter card, D/320SC voice card, 30 TSP & 30 RSP
licenses, PEB cable (10 drops), DPNSS License.
El Port Assembly Includes: Acculab (60 port) El network card with or [*]
(60 ports) without daughter card, D/320SC voice card, 60 TSP &
60 RSP licenses, PEB cable (10 drops), DPNSS License.
D/41 ESCPort Includes: D/41 ESC Network/Voice card, 4 TSP & 4 RSP [*]
Assembly (4 Ports) licenses, PEB cable (10 drops).
</TABLE>
Page 5
[*] CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 7
SCHEDULE E
SPECIAL PRICING
(continued)
<TABLE>
<CAPTION>
PORT ASSEMBLIES PRODUCT DESCRIPTION PRICE
- --------------- ------------------- -----
(WITHOUT TSP AND
RSP LICENSES)
<S> <C> <C>
Loopstart Port Assembly Includes: LSI/120 network card, D/121 B voice card, [*]
(12 ports) without TSP Loopstart cable, PEB cable (10 drops).
and RSP licenses
Loopstart Port Assembly Includes: LSI/80 network card, D/81 A voice card, [*]
(8 ports) without TSP Loopstart cable, PEB cable (10 drops).
and RSP licenses
Tl Port Assembly Includes: D/240SC-Tl Network/Voice card, PEB cable [*]
(24 ports) without TSP (10 drops).
and RSP licenses
El Port Assembly Includes: Acculab El network card with or without [*]
(30 ports) without TSP daughter card, D/320SC voice card, DPNSS License.
and RSP licenses
El Port Assembly Includes: Acculab (60 port) El network card with or [*]
(60 Ports) without TSP without daughter card, D/320SC voice card, PEB cable
and RSP licenses (10 drops), DPNSS License.
D/41 ESC Port Includes: D/41 ESC Network/Voice card, PEB cable (10 [*]
Assembly (4 Ports) drops).
without TSP and RSP
licenses
<CAPTION>
SOFTWARE PRODUCT DESCRIPTION PRICE
- -------- ------------------- -----
(DEVELOPMENT AND
RUNTIME LICENSES)
<S> <C> <C>
IVR Generator 2.0/S Single User SCO Generations Developers License for [*]
Developer Single-User MRS/Tower or MRS/Rack configurations (no RSP).
License
IVR Generator 2.0/S Four-User SCO Generations Developers License for [*]
Developer 4-user MRS/Tower or MRS/Rack configurations (no RSP).
License
IVR Generator 2.0/S Four-User SCO Generations Developers License for [*]
Developer 4-user Nortel VADs ONLY. Includes Prompt Manager.
License for VADs
***SPECIAL**'
IVR Generator 2.0/S Generations RSP License (per port). Price when [*]
Runtime License purchased in quantities less than 336 ports (per
port).
MRS Software License TSP License (per port). Price when purchased in [*]
(per port) quantities less than 336 ports.
IVR Generator Runtime Per Port Runtime Licenses will be reduced to [*] per [*]
and MRS License BULK port for each of TSP and Generations RSP when
PURCHASES purchased in quantities of combined licenses
[*] [*]).
</TABLE>
Page 6
[*] CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 8
SCHEDULE E
SPECIAL PRICING
(continued)
<TABLE>
<CAPTION>
SOFTWARE PRODUCT DESCRIPTION PRICE
- -------- ------------------- -----
(DEVELOPMENT AND
RUNTIME LICENSES)
<S> <C> <C>
IVR Generator 2.0/S Single user development license will be reduced to [*]
Developer Single-User [*] when purchased in quantities of 25 [*]
License BULK [*]
PURCHASES
<CAPTION>
HOST PRODUCT DESCRIPTION PRICE
- ---- ------------------- -----
COMMUNICATIONS
OPTIONS
<S> <C> <C>
VT100 Communications Includes: VT100 Communications board (8 ports), [*]
(8 ports) and TRS VOICETEK's Host Link Software ([*]/port).
VT100 Communications Includes: VT100 Communications board (16 [*]
(16 ports) and TRS ports), VOICETEK's Host Link Software
([*]/port).
VT100 Communications Includes: VT100 Communications board (32 ports), & [*]
(32 ports) and TRS VOICETEK's Host Link Software ([*]/port).
32 Session Expansion Includes: Apertus 32 session (LU) software license [*]
for 3270 or 5250 and VOICETEK 32 session Host Link software.
3270 Communications Includes: Apertus Sync. or Token Ring Adapter, [*]
(4 LUs, TRS, TR or Apertus 3270 software, Apertus 4 session (LU)
SDLC) software license, 4 session VOICETEK Host Link
software license ([*]/port).
3270 Communications Includes: Apertus Sync. or Token Ring Adapter, [*]
(8 LUs, TRS, TR or Apertus 3270 software, Apertus 8 session (LU)
SDLC) software license, 8 session VOICETEK Host Link
software license ([*]/port).
3270 Communications Includes: Apertus Sync. or Token Ring Adapter, [*]
(16 LUs, TRS, TR or Apertus 3270 software, Apertus 16 session (LU)
SDLC) software license, 16 session VOICETEK Host Link
software license ([*]/port).
3270 Communications Includes: Apertus Sync. or Token Ring Adapter, [*]
(32 LUs, TRS, TR or Apertus 3270 software, Apertus 32 session (LU)
SDLC) software license, 32 session VOICETEK Host Link
software license ([*]/port).
5250 Communications Includes: Apertus Sync. or Token Ring Adapter, [*]
(4 LUs, TRS, TR or Apertus 5250 software, Apertus 4 session (LU)
SDLC software license, 4 session VOICETEK Host Link
software license ([*]/port).
5250 Communications Includes: Apertus Sync. or Token Ring Adapter, [*]
(8 LUs, TRS, TR or Apertus 5250 software, Apertus 8 session (LU)
SDLC) software license, 8 session VOICETEK Host Link
software license ([*]/port).
5250 Communications Includes: Apertus Sync. or Token Ring Adapter, [*]
(16 LUs, TRS, TR or Apertus 5250 software, Apertus 16 session (LU)
SDLC) software license, 16 session VOICETEK Host Link
software license ([*]/port).
5250 Communications Includes: Apertus Sync. or Token Ring Adapter, [*]
(32 LUs, TRS, TR or Apertus 5250 software, Apertus 32 session (LU)
SDLC) software license, 32 session VOICETEK Host Link
software license ([*]/port).
</TABLE>
Page 7
[*] CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 9
SCHEDULE E
SPECIAL PRICING
(continued)
<TABLE>
<CAPTION>
HOST PRODUCT DESCRIPTION PRICE
- ---- ------------------- -----
COMMUNICATIONS
OPTIONS
<S> <C> <C>
4 to 8 Port LU Expansion Includes: Apertus 4 session (LU) software license, 4 session [*]
VOICETEK Host Link software license.
8 to 16 Port LU Includes: Apertus 8 session (LU) software license, 8 session [*]
Expansion VOICETEK Host Link software license.
16 to 32 Port LU Includes: Apertus 8 session (LU) software license, 16 session [*]
Expansion VOICETEK Host Link software license.
<CAPTION>
ADVANCED PRODUCT DESCRIPTION PRICE
- -------- ------------------- -----
OPTIONS
<S> <C> <C>
Text-to-Speech Includes: Antares DSP card & configured KEYLOCK, 4 port L&H TTS [*]
(4 ports) license, 4 port Generations TTS License ([*]/port).
Text-to-Speech Includes: Newly configured KEYLOCK, 4 port L&H TTS license, 4 port [*]
Expansion (4 ports) Generations TTS License ([*]/port).
Discrete Speech Rec Includes: VRP base board, VRM/40 daughter card, 4 port Generations [*]
(4 ports) Discrete Voice Recognition License ([*]/port).
Discrete Speech Rec Includes: VRM/40 daughter card, 4 port Generations Discrete Voice [*]
Expansion (4 ports) Recognition License ([*]/port).
Continuous Speech Rec Includes: VRP base board, VRM/2C daughter card, 2 port Generations [*]
(2 ports) Continuous Voice Recognition License ([*]/port).
Continuous Speech Rec Includes: VRM/2C daughter card, 2 port Generations Continuous [*]
Expansion (2 ports) Voice Recognition License ([*]/port).
Fax (2 ports) Includes: Brooktrout 2-port fax card, 2 port Generations Fax License [*]
([*]/port).
Fax (4 ports) Includes: Brooktrout 4-port fax card, 4 port Generations Fax License [*]
([*]/port).
Fax (8 ports) Includes: Brooktrout 8-port fax card, 8 port Generations Fax License [*]
([*]/port).
SQL Link Software Includes: License (per AP) for VOICETEK Generations SQL Link [*]
software on SCO for Ingres, Informix, Oracle, or Sybase.
SQL Link Software SQL License will be reduced to [*] per Application Processor when [*]
BULK PURCHASE purchased in quantities of 20 ([*]).
ADSI Software Support Includes: License (per AP) for VOICETEK Generations ADSI software [*]
for SCO.
ADSI Software Support ADSI license will be reduced to [*] per Application Processor [*]
BULK PURCHASE when purchased in quantities of 5 ([*]).
</TABLE>
Page 8
[*] CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 10
SCHEDULE E
SPECIAL PRICING
(continued)
<TABLE>
<CAPTION>
ADVANCED PRODUCT DESCRIPTION PRICE
- -------- ------------------- -----
OPTIONS
<S> <C> <C>
Disk Mirroring Includes: License for VOICETEK Disk Mirroring software option (based [*]
on Veritas software).
Redundant Power Includes: Redundant power supply and associated components, [*]
Supply for DC-powered VOICETEK License for redundant DC power software option.
MRS/Rack
Prompt Manager Includes: License for VOICETEK Prompt Management software. [*]
Software
Audio Interface Unit Includes: Audio interface unit. [*]
<CAPTION>
OTHER PRODUCT DESCRIPTION PRICE
- ----- ------------------- -----
<S> <C> <C>
Rack Cabinet Includes: Rack cabinet, one set of Rack Cabinet Rails. [*]
Rack Cabinet Rails Includes: One set of Rack Cabinet Rails. [*]
1 GB Hard Disk for Includes: 1GB hard disk drive. [*]
MRS/Tower or MRS/Rack
Security KEYLOCK Includes: Security KEYLOCK. [*]
DMX Option Includes: DMX card, VOICETEK DMX support software. [*]
Tower Spares Kit Includes: CPU (486 or Pentium) module and 32MB memory, AC [*]
Power Supply, Serial I/0 card, SCSI controller, Ethernet controller,
SCSI cable, Floppy cable.
AC Rack Spares Kit Includes: CPU (486 or Pentium) module and 32MB memory, AC Power [*]
Supply, Serial I/0 card, SCSI controller, Ethernet controller, SCSI
cable, Floppy cable.
DC Rack Spares Kit Includes: CPU (486 or Pentium) module and 32MB memory, AC Power [*]
Supply, Serial I/0 card, SCSI controller, Ethernet controller, SCSI
cable, Floppy cable.
<CAPTION>
RETAINED FROM
PREVIOUS VERSION
SCHEDULE E PRODUCT DESCRIPTION PRICE
- ------------- ------------------- -----
<S> <C> <C>
D41 (Norstar) Norstar PT-04-NS [*]
Voice Port Assembly
Redundant AP Software RED-AP-SW [*]
Report Writer Software RW-OPT [*]
(Customized Version)
Rolm ACD Interface PBX-RM [*]
Meridian 1 ACD Interface PBX-NT [*]
</TABLE>
Page 9
[*] CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 11
SCHEDULE E
SPECIAL PRICING
(continued)
<TABLE>
<CAPTION>
RETAINED FROM PRODUCT DESCRIPTION PRICE
- ------------- ------------------- -----
PREVIOUS VERSION
SCHEDULE E
<S> <C> <C>
Customized PBX PBX-C1 [*]
Interface
SMDI Software Includes: RTU License for Voicetek SMDI support software. [*]
UPS Software Support Includes: RTU License for Voicetek UPS support software on MRS. [*]
</TABLE>
[*]
Page 10
[*] CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 1
EXHIBIT 10.3
[DIALOGIC LOGO]
201-993-3000
201-993-3093 FAX
DIALOGIC CORPORATION
1515 Route Ten, Parsippany, New Jersey 07054
DIALOGIC VOLUME PURCHASE AGREEMENT
This Agreement is between Dialogic Corporation ("Dialogic"), headquartered at
1515 Route 10 East, Parsippany, New Jersey, and
Voicetek Corporation, located at 19 Alpha Road, Chelmsford, Massachusetts,
further known for the purposes of this Agreement as "Buyer".
The purpose of this Agreement is to afford Buyer the opportunity to obtain a
volume discount based on the total amount of purchases of certain products over
a one-year period. This Agreement is intended for use by Buyer if Buyer has
demonstrated the ability consistently to purchase products totaling at least 400
ports per year.
The parties hereby agree as follows:
Attachment #1 contains the pricing schedule for, and a list of the products that
may be covered by this Volume Purchase Agreement ("Products"). In order to take
advantage of a volume discount, Buyer must present Dialogic with a completed
Equipment Delivery Schedule (in the form provided by Dialogic, a copy of which
is attached) for each Product Buyer will purchase. Each completed Equipment
Delivery Schedule will represent Buyer's good faith forecast of the quantity of
each Product Buyer intends to purchase over the course of this Agreement.
In addition, Buyer will present to Dialogic, upon execution of this Agreement, a
written purchase order detailing exact quantities and ship dates for all
Products forecasted for shipment within the first three months of the Agreement.
Buyer will also issue to Dialogic, 30 days prior to the end of a quarter, a
written purchase order detailing the exact quantities and ship dates for all
Product forecasted for the subsequent quarter.
There is one Equipment Delivery Schedule included in this Agreement, all of
which taken together is Attachment #2 to this Agreement. * Voicetek agrees to
provide written statement of indirect sales, including customer and Dialogic
products sold, within 1 month after the end of each quarter.
This Agreement will be retroactive to the date of September 20, 1995.
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 2
Dialogic Volume Purchase Agreement, page 2
1. SALES CONDITIONS
All purchases of Products by Buyer from Dialogic shall reference this Agreement
and shall be governed by the terms and conditions of this Agreement
notwithstanding the presence of different or additional provisions on Buyer's
standard purchase order form.
Buyer represents that all purchases of Products under this Agreement are for end
use or for resale only when sold with Buyer's software or system. Buyer further
represents that Products purchased under this Agreement will not be sold
independently of software or systems except in the case of supplying spare
parts.
2. ORDERING AND TITLE
The Equipment Delivery Schedule(s) for each Product on Attachment #2 of this
Agreement represent Buyer's good faith forecast for the term of the Agreement.
UPON EXECUTION OF THE AGREEMENT BUYER IS REQUIRED TO FURNISH DIALOGIC WITH A
WRITTEN PURCHASE ORDER FOR PRODUCTS FORECASTED FOR SHIPMENT WITHIN THE FIRST 90
DAYS OF THIS AGREEMENT. Buyer shall also issue written purchase orders to
Dialogic, for the subsequent 90-day periods of this Agreement at least 30 days
prior to the start of that 90-day period. Dialogic will ship Products covered
by this Agreement in accordance with instructions on Buyer's written purchase
order. Changes to the written purchase order shall be made in accordance with
Section 6 of this Agreement. No Equipment Delivery Schedule or purchase order is
accepted until Dialogic issues a written confirmation thereof to Buyer.
Confirmation shall not be unreasonably withheld, but Dialogic reserves the right
to reject any Equipment Delivery Schedule with a growth rate of 5% or more per
month. All shipments by Dialogic are F.O.B. point of shipment by Dialogic. Title
to Products and risk of loss pass to Buyer upon delivery to carrier at shipping
point. Dialogic will select the carrier if Buyer does not.
Claims for shortages must be made within ten (10) days after arrival. In the
event of foreign delivery, Buyer shall be responsible for obtaining any and all
export licenses and other international trade documents required by United
States laws and all applicable laws of other jurisdictions and Buyer shall at
all times comply with all such laws regarding the Products.
<PAGE> 3
Dialogic Volume Purchase Agreement, page 3
3. TERM
The term of this Agreement shall commence on the first day of the earliest month
listed on Attachment #2 and continue for a term of 12 months.
4. PAYMENT TERMS AND CONDITIONS
Payment to Dialogic from Buyer for all Products shall be made in certified funds
prior to shipment of Products unless other payment terms are negotiated between
Buyer and Dialogic.
5. PRICING
The unit price Dialogic shall charge Buyer for the Products is calculated using
the Volume Price Schedule (Attachment #1), and all of the Equipment Delivery
Schedules for each Product. The sum of all the port totals for all the
Products specified on Attachment #2 shall determine, for the first 90 days of
this Agreement, the unit price, as shown on Attachment #1, for each Product.
Instructions for calculating the total number of ports are included on
Attachment #2.
6. SCHEDULE CHANGES
Buyer may cancel or reschedule any order for standard Products, provided written
notice is received by Dialogic 30 days before scheduled ship date. If 30-day
notice is not received by Dialogic, the following cancellation/reschedule
charges shall apply: A charge of 20% of the purchase price for the Product(s) in
the affected shipment will be applicable for cancellation/reschedule notices
received less than 14 days before the scheduled ship date, and a charge of 10%
will be applicable for notices received less than 30, but more than 14 days
before the scheduled ship date.
Products not scheduled in the original Attachment #2 may be added at any time
during the term of this Agreement, upon the following conditions: Buyer may be
required to amend Attachment #2 or one or more Equipment Delivery Schedule(s) to
include added Product if (a) Dialogic determines that the added Product
represents a large volume that is being shipped on a regular basis; or (b)
Dialogic determines that the quantity of added Product requested affects
Dialogic's ability to supply the Product; or (c) the total number of ports
specified in the original Attachment #2 plus the added Product quantity results
in a change in the price level. Equipment Delivery Schedules for added Product
are required only for the remainder of the term of this Agreement.
<PAGE> 4
Dialogic Volume Purchase Agreement, page 4
Other changes to the Equipment Delivery Schedules may result in changes in the
unit price of Products under the terms and conditions of Section 7 of this
Agreement.
7. MINIMUM PURCHASE REQUIREMENTS
Buyer is required to meet minimum quarterly purchase requirements in order to
maintain the volume pricing determined under Section 5. Table 1 lists these
quarterly minimum purchase requirements. The quarterly figures are cumulative.
TABLE 1. Minimum Quarterly Port Purchase to Maintain Discount
<TABLE>
<CAPTION>
By end of Per cent of
quarter total port commitment
-------------------------------------------------
<S> <C>
Q1 *
Q2 *
Q3 *
</TABLE>
Progress toward the stated goal will be measured at the end of each quarter (90
days; 180 days; and 270 days from the effective date of this Agreement).
If, at any measuring point, Buyer has not achieved the minimum quarterly
purchase requirement, subsequent shipments will be priced at the level shown in
Attachment #1 that reflects actual shipment history. Notification of any pricing
change, if applicable, will occur within seven (7) days of each measuring point.
If actual purchases of Products by Buyer during any one quarter result in a
price increase of more than one level, as shown in Attachment #1, this Agreement
will be void and of no further effect and Buyer shall not be entitled to any
subsequent volume discount.
Buyer may achieve a greater discount if, at any measuring point, Buyer has
purchased sufficient ports to meet the minimum purchase requirements for a lower
price shown on Attachment #1.
In order to obtain this higher discount, Buyer must present to Dialogic one or
more amended Equipment Delivery Schedule(s) covering the balance of the term of
this Agreement. The total number of ports outlined in the amended Equipment
Delivery Schedule(s), added to the total number of ports already purchased by
Buyer, must equal the number of ports required for the lower price.
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 5
Dialogic Volume Purchase Agreement, page 5
8. WARRANTY
Products purchased under this Agreement are subject to all the terms and
conditions set forth in the Limited Warranty published in the documentation for
the individual Products.
9. PATENTS AND COPYRIGHTS
Neither this Agreement nor the sale of any Product or part thereof by Dialogic
in accordance with this Agreement confers upon Buyer any license or other right
under any patent, trademark, copyright or other intellectual property right
pertaining to that Product.
Dialogic computer programs and documentation therefore are patented or are
copyrighted or both, and all rights are reserved by Dialogic Corporation. No
Dialogic Product or documentation may, in whole or in part, be copied,
photocopied, translated, or reduced to any electronic medium without the express
prior written permission of Dialogic Corporation.
10. LIABILITY
Dialogic shall not be liable for any costs or damages, and Buyer will indemnify,
defend, and hold Dialogic harmless from any expenses, damages, costs, or losses
resulting from any suit or proceeding based upon a claim arising from (a) a
modification of any Product by a party other than Dialogic after delivery by
Dialogic; or (b) compliance with Buyer's designs, specifications, or
instructions; or (c) the use of any Product or part thereof furnished hereunder
with any other product.
11. CONTINGENCIES
Dialogic shall not be responsible for any failure to perform under this
Agreement due to unforeseen circumstances or causes beyond Dialogic's reasonable
control. Dialogic may defer delivery for a period equal to the delay caused by
such an unforeseen or uncontrollable contingency.
<PAGE> 6
Dialogic Volume Purchase Agreement, page 6
12. MODIFICATION AND JURISDICTION
This Agreement sets forth the entire understanding of the parties and supersedes
all prior agreements and understandings relating to the subject matter hereof.
No modifications or additions to or deletions from these terms shall be binding
upon either party unless accepted in writing by an authorized representative of
each party. Buyer shall not delegate any obligations hereunder nor assign any
interest or rights without prior written consent of Dialogic. This Agreement
shall be governed by the laws of the State of New Jersey, and this Agreement
shall be deemed to have been entered into and wholly performed in New Jersey.
BUYER'S SHIPPING ADDRESS:
Company Name: Voicetek Corporation
------------------------------------------------------------------
Street: 19 Alpha Road
------------------------------------------------------------------------
City: Chelmsford St: MA Zip: 01824-4175
---------- -- ----------
BILLING ADDRESS:
Company Name: Same as Above
------------------------------------------------------------------
Address
------------------------------------------------------------------------
City St. Zip
---------------------------------- --------------- ----------------
PURCHASING CONTACT:
Name: Michael Stahl Title: Operations Manager
------------- ------------------
Telephone (508) 250-7949 Ext.
-------------- --------------------
FOR DIALOGIC CORPORATION: FOR BUYER:
<PAGE> 7
Dialogic Volume Purchase Agreement, page 7
Signed: /s/ Michael Stahl Signed: /s/
--------------------------------- ---------------------------
Name: Michael Stahl Name:
----------------------------------- -----------------------------
Title: Manager of Operations Title:
---------------------------------- ----------------------------
Date: 11-3-95 Date: 10/14/95
----------------------------------- ---------------------------------
<PAGE> 8
Attachment #2
-------------
Equipment Delivery Schedule
*
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 9
ATTACHMENT 1:
-------------
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
=========================================================================================
<S> <C> <C> <C>
ISA VOICE PRODUCTS W/ ON BOARD TELEPHONE INTERFACE
Quickstart Development Platform *
D/240SC-T1 24.0 *
D/160SC-LS 16.0 *
D/300SC-E1 30.0 *
D/320SC+DTI/212 pkg 30.0 *
D/21D 2.0 *
D/41D 4.0 *
D/41E 4.0 *
D/41ESC 4.0 *
D/42-NS 4.0 *
D/42-SL 4.0 *
D/41D Starter Kit 4.0 *
D/41E Starter Kit 4.0 *
ISA TELEPHONE NETWORK INTERFACES
DTI/240SC **New Product** 12.0 A *
DTI/241SC **New Product** 16.0 A *
DTI/300SC **New Product** 15.0 A *
DTI/301SC **New Product** 20.0 A *
LSI/161SC **New Product** 8.0 A *
LSI/81SC **New Product** 4.0 A *
DID/120 12.0 *
DID/120-PM 2.0 *
DTI/124 12.0 *
DTI/211 12.0 *
LSI/120 6.0 *
ISA SHARABLE VOICE RESOURCES
D/121B 6.0 *
D/240SC 12.0 *
D/320SC 16.0 *
D/81A 4.0 *
D/160SC **New Product** 8.0 A *
D/80SC **New Product** 4.0 A *
</TABLE>
**Note: A: Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
All PRICES ARE IN US $, FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
Page 1
<PAGE> 10
ATTACHMENT 1:
-------------
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
=================================================================
<S> <C> <C> <C>
ISA SWITCHING COMPONENTS
MSI/160SC - Preliminary 16.0 *
MSI/240SC - Preliminary 24.0 *
MSI/80SC - Preliminary 8.0 *
SI/80 - Preliminary 8.0 *
AMX/81 2.0 *
DMX 4.0 *
MSI Baseboard 12.0 *
MSI Power Module *
MSI Station Interface 2.0 *
SA/240 Station Adapter *
AMX ESD Assy *
VME VOICE PRODUCTS
V/S24T1 - Preliminary 24.0 *
V/S30E1 - Preliminary 30.0 *
OPEN DSP PLATFORMS
Antares DOS Software 6.0 *
Antares SDK 80.0 *
Antares/2000x33 12.0 *
Lernout & Hauspie ASR 0.5 *
Lernout & Hauspie TTS 0.5 *
Spox Debugger 20.0 *
Spox Kernel 40.0 *
ISA COMPLEMENTARY PRODUCTS
D/41E-IDPD 8.0 *
FAX/120 12.0 *
TTS/20 8.0 *
TTS/40 16.0 *
TTS/80 24.0 *
VR/40 12.0 *
VRP 8.0 *
VRM/40 4.0 *
VR/40p 12.0 *
</TABLE>
**Note: A: Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
ALL PRICES ARE IN US $, FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
Page 2
<PAGE> 11
ATTACHMENT 1:
-------------
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
========================================================================
<S> <C> <C> <C>
VR/80p 16.0 *
VR/120p 20.0 *
VR/160p 24.0 *
VRM2C 4.0 *
VFX/40SC 8.0 *
VFX40ESC 8.0 *
MICRO CHANNEL PRODUCTS
D/81-MC 4.0 *
LSI/80-MC 4.0 *
TTS/40-MC 4.0 *
TTS/80-MC 8.0 *
VR/81-MC 16.0 *
ENHANCED PLATFORMS
DTP 486/33-AC 12.0 C *
DTP 486DX2/66-AC 12.0 C *
DTP Pentium 90-AC 12.0 C *
DTP 486/33-DC 12.0 C *
DTP 486DX2/66-DC 12.0 C *
DTP Pentium 90-DC 12.0 C *
DTP/FR 486/33-AC 12.0 C *
DTP/FR 486DX2/66-AC 12.0 C *
DTP/FR Pentium 90-AC 12.0 C *
DTP/FR 486/33-DC 12.0 C *
DTP/FR 486DX2/66-DC 12.0 C *
DTP/FR Pentium 90-DC 12.0 C *
i486 256k cache upgrade
OPEN DEVELOPMENT PROGRAM
AEB Interface Development Package *
PEB Interface Development Package *
SCSA Spec Updates Service *
SC2000 Development Kit *
SC2000 chip only *
</TABLE>
**Note: A: Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
ALL PRICES ARE IN US $, FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
Page 3
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 12
ATTACHMENT 1:
-------------
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
=======================================================================================
<S> <C> <C> <C>
SYSTEMS SOFTWARE
Dos Voice Driver Z
OS/2 Voice Driver $ *
Unix Voice Driver $ *
App Server Lite 4.0 $ *
App Server Plus 8.0 $ *
AIX Voice Driver $ *
Win NT Voice Driver $ *
Solaris Voice Driver $ *
Extra Driver Packages $ *
Extra Documentation Packages $ *
CT - DIVISION SOFTWARE PRODUCTS
CT Connect V1.0 Full System C $ *
CT Connect V1.0 Full System Maintenance C $ *
CT Connect V1.0 Desk Top System C $ *
CT Connect V1.0 Desk Top System Maintenance C $ *
CT Connect V1.0 Desk Top Lite System C $ *
CT Connect V1.0 Desk Top Lite System Maintenance C $ *
CT Connect Documentation Set $ *
CT Site Implementation Services $ *
TOOLS/UTILITIES
AC/101 Audio Coupler $ *
AIA/2 Audio Interface Adapter $ *
DID/120 Station Adapter $ *
SA/120 Station Adapter (LSI/120) $ *
SA/102 Station Adapter (AMX/81) $ *
PHED (Phase Editor for Unix) 1.0 $ *
VFEdit (Windows Prompt Editor) 1.0 $ *
VBASE/40 (DOS Prompt Editor) $ *
Promptmaster (Audio Coupler) 1.0 $ *
Voice Editing Toolkit $ *
ISA INTERNATIONAL PRODUCTS
D/21D-AN 2.0 $ *
</TABLE>
**NOTE: A: Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
ALL PRICES ARE IN US $, FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
Page 4
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS
<PAGE> 13
ATTACHMENT 1:
-------------
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
==================================================
<S> <C> <C> <C>
D/21D-JP 2.0 *
D/21D-SG 2.0 *
D/21E-CH 2.0 *
D/21E-DE 2.0 *
D/21E-DK 2.0 *
D/21E-FR 2.0 *
D/21E-NL 2.0 *
D/21E-SE 2.0 *
D/21E-UK 2.0 *
D/41D-AN 4.0 *
D/41D-CY 4.0 *
D/41D-CZ 4.0 *
D/41D-DK 4.0 *
D/41D-ES 4.0 *
D/41D-HK 4.0 *
D/41D-HU 4.0 *
D/41D-IL 4.0 *
D/41D-IT 4.0 *
D/41D-JP 4.0 *
D/41D-KR 4.0 *
D/41D-MA 4.0 *
D/41D-NO 4.0 *
D/41D-PT 4.0 *
D/41D-SE 4.0 *
D/41D-TR 4.0 *
D/41E-AN 4.0 *
D/41E-AT 4.0 *
D/41E-BE 4.0 *
D/41E-CH 4.0 *
D/41E-DE 4.0 *
D/41E-FI 4.0 *
D/41E-FR 4.0 *
D/41E-JP 4.0 *
D/41E-LU 4.0 *
D/41E-NL 4.0 *
D/41E-NO 4.0 *
D/41E-PO 4.0 *
D/41E-SE 4.0 *
D/41E-SG 4.0 *
D/41E-UK 4.0 *
D/41ESC-AT 4.0 *
D/41ESC-DEN 4.0 *
D/41ESC-ES 4.0 *
D/41ESC-FI 4.0 *
</TABLE>
**NOTE: A. Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
ALL PRICES ARE IN US , FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
Page 5
<PAGE> 14
ATTACHMENT 1:
-------------
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
=======================================================
<S> <C> <C> <C> <C>
D/41ESC-IT 4.0 *
D/41ESC-LUX 4.0 *
D/41ESC-NO 4.0 *
D/41ESC-MY 4.0 *
D/41ESC-PO 4.0 *
D/41ESC-SG 4.0 *
DID/120-HK 12.0 *
DPD/120-JP 12.0 *
DTI/212 15.0 *
DTI/212-AN 15.0 *
DTI/212-AT 15.0 *
DTI/212-AU 15.0 *
DTI/212-BE 15.0 *
DTI/212-CZ 15.0 *
DTI/212-ES 15.0 *
DTI/212-FI 15.0 *
DTI/212-HU 15.0 *
DTI/212-IL 15.0 *
DTI/212-IT 15.0 *
DTI/212-LU 15.0 *
DTI/212-NL 15.0 *
DTI/212-NO 15.0 *
DTI/212-SE 15.0 *
DTI/212-TK 15.0 *
DTI/212-UK 15.0 *
D/300SC-E1-AN 30.0 *
FM/80 1.0 *
LSI/120-ES 6.0 *
LSI/120-HK 6.0 *
LSI/120-JP 6.0 *
LSI/80-AT 4.0 *
LSI/80-AU 4.0 *
LSI/80-BE 4.0 *
LSI/80-CH 4.0 *
LSI/80-DE 4.0 *
LSI/80-FI 4.0 *
LSI/80-IT 4.0 *
LSI/80-LU 4.0 *
LSI/80-NL 4.0 *
LSI/80-UK 4.0 *
PRI/212-DE 15.0 *
PRI/212-NL 15.0 *
</TABLE>
**NOTE: A: Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
ALL PRICES ARE IN US $, FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
Page 6
<PAGE> 15
ATTACHMENT 1:
-------------
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
====================================================================
<S> <C> <C> <C> <C>
GAMMAFAX SINGLE LINE HARDWARE
CPI 2.0 *
CPi/100 *New Product* 2.0 *
XPI 1.0 *
CPIMC 2.0 *
CPD 2.0 *
CP 2.0 *
XP 1.0 *
CP MC 2.0 *
GAMMAFAX MULTI-LINE HARDWARE
CP-4/AEB (14.4) 8.0 *
CP4/LSI 8.0 *
CP-4/MVIP 8.0 *
CP-4/MVIP/E 8.0 *
ML-MVIP (Daughterboard) 0.0 *
ML-MVIP/E (Daughterboard) 0.0 *
CP4/SC 8.0 *
CP-6/SC 12.0 *
CP-12/SC 24.0 *
CP-12/SC Daughterboard 12.0 *
GAMMAFAX SOFTWARE
Gammapage 0.0 *
GPI for MS-DOS, 5.1 0.0 *
GPI for MS-DOS, 5.0 0.0 *
GPI for MS-DOS, 4.5 0.0 *
GPI for OS/2, 5.1 0.0 *
GPI for OS/2, 5.0 0.0 *
GPI for OS/2, 4.5 0.0 *
GDK for SCO Unix 0.0 *
GDK for Interactive Unix 0.0 *
GDK for UnixWare 0.0 *
GAMMAFAX UPGRADES
Hardware and Software upgrade 0.0 *
</TABLE>
**NOTE: A: Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
ALL PRICES ARE IN US $, FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTES OMISSIONS
Page 7
<PAGE> 16
ATTACHMENT 1:
-------------
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
======================================================================
<S> <C> <C> <C>
CP GFax SW & Manuals DOS 5.2 0.0 *
Gammapage upgrade 5.2 0.0 *
GPF for MS-DOS, 5.2 0.0 *
GPI upgrade for MS-DOS, 5.0 0.0 *
GPI upgrade for MS-DOS, 4.5 0.0 *
GPI upgrade for OS/2, 5.1 0.0 *
GPI upgrade for OS/2, 5.0 0.0 *
GPI upgrade for OS/2, 4.5 0.0 *
GFax SW & Manuals OS/2 5.1 0.0 *
GAMMAFAX SPECIAL VARIATIONS
CPI - KDK 2.0 *
CP - KDK 2.0 *
CPI Canon 2.0 *
RFAX/4000 4.0 *
CPI bundle for Optus FACSYS 2.0 *
XPI bundle for Optus FACSYS 1.0 *
CPI bundle for Rightfax 2.0 *
XPI bundle for Rightfax 1.0 *
CPI bundle for Alcom 2.0 *
XPI bundle for Alcom 1.0 *
GAMMAFAX INTERNATIONAL VERSIONS
CPI-AU 2.0 *
XPI-AU 1.0 *
CP-AU 2.0 *
XP-AU 1.0 *
CP MC-AU 2.0 *
CPI-AU (w/ PTT label) 2.0 *
XPI-AU (w/ PTT label) 1.0 *
CP-AU (w/ PTT label) 2.0 *
XP-AU (w/ PTT label) 1.0 *
CP MC-AU (w/ PTT label) 2.0 *
CP-AT 2.0 *
XP-AT 1.0 *
CPMC-AT 2.0 *
CP-AT (w/ PTT label) 2.0 *
XP-AT (w/ PTT label) 1.0 *
CPMC-AT (w/ PTT label) 2.0 *
</TABLE>
**NOTE: A: Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
ALL PRICES ARE IN US $, FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
Page 8
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 17
ATTACHMENT 1:
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
===============================================================
<S> <C> <C> <C>
CPI-BH 2.0 *
CP-BE 2.0 *
XP-BE 1.0 *
CP MC-BE 2.0 *
CPI-CA 2.0 *
XPI-CA 1.0 *
CPI MC-CA 2.0 *
CPD-CA 2.0 *
CP4/LSI-CA 8.0 *
CP-CS 2.0 *
XP-CS 1.0 *
CP-DK 2.0 *
XP-DK 1.0 *
CP MC-DK 2.0 *
CP-DK (w/ PTT label) 2.0 *
XP-DK (w/ PTT label) 1.0 *
CP MC-DK (w/ PTT label) 2.0 *
CP-FI 2.0 *
XP-FI 1.0 *
CP-FR 2.0 *
XP-FR 2.0
CPI-FR 2.0 *
CP-DE 2.0 *
XP-DE 1.0 *
CPI-GB 2.0 *
XPI-GB 1.0 *
CP-HK 2.0 *
XP-HK 1.0 *
CP MC-HK 2.0 *
CP-HU 2.0 *
XP-HU 1.0 *
CP-IS 2.0 *
XP-IS 1.0 *
CP-IN 2.0 *
XP-IN 1.0 *
CP-IL 2.0 *
CPI-IT 2.0 *
XPI-IT 1.0 *
CP-IT 2.0 *
XP-IT 1.0 *
CP MC-IT 2.0 *
CP-IT (w/ PTT label) 2.0 *
XP-IT (w/ PTT label) 1.0 *
CP MC-IT (w/ PTT label) 2.0 *
</TABLE>
**NOTE: A: Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
ALL PRICES ARE IN US $, FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTES OMISSIONS
Page 9
<PAGE> 18
ATTACHMENT 1:
-------------
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
=================================================================
<S> <C> <C> <C>
CP-JP 2.0 *
XP-JP 1.0 *
CP-JP (w/ PTT label) 2.0 *
XP-JP (w/ PTT label) 1.0 *
CPI-KO 2.0 *
XPI-KO 1.0 *
CP-LU 2.0 *
XP-LU 1.0 *
CP MC-LU 2.0 *
CP-MY 2.0 *
XP-MY 1.0 *
CP MC-MY 2.0 *
CP-MX 2.0 *
XP-MX 1.0 *
CP-NL 2.0 *
XP-NL 1.0 *
CP MC-NL 2.0 *
CP-NL (w/ PTT label) 2.0 *
XP-NL (w/ PTT label) 1.0 *
CP-NL (w/ PTT label) 2.0 *
CPI-NZ 2.0 *
XPI-NZ 1.0 *
CP MC-NZ 2.0 *
CPI-NZ (w/ PTT label) 2.0 *
XPI-NZ (w/ PTT label) 1.0 *
CP MC-NZ(w/ PTT label) 2.0 *
CP-NO 2.0 *
XP-NO 1.0 *
CP-NO (w/ PTT label) 2.0 *
XP-NO (w/ PTT label) 1.0 *
CP-SG 2.0 *
XP-SG 1.0 *
CPI-ZA 2.0 *
XPI-ZA 1.0 *
CP-ES 2.0 *
XP-ES 1.0 *
CPISE 2.0 *
XPI-SE 1.0 *
CP-TH 2.0 *
XP-TH 1.0 *
CPI-Non USA and Canada 2.0 *
XPI Non USA and Canada 1.0 *
CPIMC-Non USA and Canada 2.0 *
CPMC-Non USA and Canada 2.0 *
</TABLE>
**NOTE: A: Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
ALL PRICES ARE IN US $, FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
Page 10
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 19
ATTACHMENT 1:
-------------
Dialogic Volume Pricing Schedule
<TABLE>
<CAPTION>
Product Ports **Note 15000 Port Price
============================================================
<S> <C> <C> <C>
CP Non USA and Canada 2.0 *
XP Non USA and Canada 1.0 *
</TABLE>
**NOTE: A: Call your Dialogic Sales Representative for further details
C: Additional price discounts available, please contact your Dialogic
Sales Representative for more details
Z: First copy at no additional cost with the purchase of Dialogic
hardware
ALL PRICES ARE IN US $, FOR STANDARD BOARDS, FOB PARSIPPANY. SHIPPING AND
HANDLING NOT INCLUDED. PRICES SUBJECT TO CHANGE WITHOUT NOTICE.
Dialogic Corporation: July 1995
Page 11
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 1
EXHIBIT 10.4
DISTRIBUTOR AGREEMENT
BETWEEN
ROCKWELL INTERNATIONAL, SSD
AND
VOICETEK CORPORATION
9/26/96
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 2
<TABLE>
<S> <C>
DISTRIBUTOR AGREEMENT................................................................... 4
RECITALS................................................................................ 4
1.0 SOLE AND ENTIRE AGREEMENT........................................................... 4
2.0 DEFINITIONS......................................................................... 4
3.0 LICENSE AND APPOINTMENT AS RESELLER................................................. 5
4.0 TERM................................................................................ 6
5.0 DUTIES OF VOICETEK.................................................................. 6
6.0 DUTIES OF ROCKWELL.................................................................. 8
7.0 TRADE NAMES, TRADEMARKS AND PRIVATE LABELS.......................................... 9
8.0 PRICING AND DISCOUNTS............................................................... 9
9.0 FIELD TESTING....................................................................... 10
10.0 SALES AND PRE-SALES SUPPORT........................................................ 11
11.0 ORDERING AND DELIVERY.............................................................. 11
12.0 WARRANTY........................................................................... 13
13.0 INDEMNIFICATION.................................................................... 13
14.0 TRAINING........................................................................... 14
15.0 TERMINATION........................................................................ 15
16.0 CONFIDENTIALITY.................................................................... 15
17.0 ESCROW............................................................................. 16
18.0 CUSTOM APPLICATIONS AND SCRIPTING.................................................. 17
</TABLE>
2
9/26/96
<PAGE> 3
19.0 LIMITED LIABILITY............................................. 18
20.0 GENERAL TERMS................................................. 18
21.0 SURVIVAL...................................................... 19
EXHIBIT A UNIT PRICE LIST AND DISCOUNT TERMS.............. 21
EXHIBIT B TERRITORY....................................... 22
EXHIBIT C TRAINING AND CONSULTING PRICE SCHEDULE.......... 23
EXHIBIT D CANCELLATIONS................................... 24
EXHIBIT E HARDWARE WARRANTY............................... 25
EXHIBIT F SOFTWARE PROGRAM LICENSE AND WARRANTY........... 26
EXHIBIT G ROCKWELL GENERAL TERMS AND CONDITIONS........... 30
EXHIBIT I VOICETEK SUPPORT SERVICE........................ XX
3
<PAGE> 4
DISTRIBUTOR AGREEMENT
This Agreement is made and entered into this 1st day of October, 1996, by and
between VOICETEK CORPORATION, a Massachusetts corporation with its principal
place of business at 19 Alpha Road, Chelmsford, MA 01824 ("VOICETEK") and
ROCKWELL International Corporation, Switching Systems Division, a Delaware
corporation with its principal place of business at 1431 Opus Place, Downers
Grove, Illinois 60515 ("ROCKWELL").
RECITALS
WHEREAS, Rockwell manufactures, markets and sells Automatic Call Distributor
("ACD") products known as Galaxy and Spectrum ACD Systems;
WHEREAS, Voicetek manufactures, markets, and sells certain computer hardware and
licenses certain software families known as Generations which can be used in
connection with the ROCKWELL Galaxy and Spectrum ACD systems:
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree to
enter into this Agreement as follows:
1.0 SOLE AND ENTIRE AGREEMENT
This Agreement, which constitutes the entire agreement between the parties,
supersedes and replaces any and all prior or contemporaneous understandings or
agreements. This Agreement may be amended, modified, or revoked only by a
written instrument executed by both ROCKWELL and VOICETEK.
2.0 DEFINITIONS
As used in this Agreement, the following terms shall have the designated meaning
detailed below:
2.1 "ROCKWELL PRODUCT" shall mean the Galaxy and Spectrum ACDs as the same may
be modified, revised, or enhanced from time to time.
2.2 "VOICETEK SOFTWARE" shall mean the Generations family of software and
firmware (in object code form) as described in Exhibit A including all
modifications, revisions, and enhancements thereto.
2.3 "VOICETEK HARDWARE" shall mean the hardware as listed in Exhibit A,
including all modifications, revisions, and enhancements thereto.
4
<PAGE> 5
2.4 "VOICETEK PRODUCT" shall mean the VOICETEK Hardware and the VOICETEK
Software.
2.5 "VOICETEK PRODUCT DOCUMENTATION" shall mean the user documentation for the
VOICETEK Hardware and VOICETEK Software, including but not limited to the
VOICETEK Installation, Training, Users', and Maintenance Manual, release notes
and updated installation instructions and user guides.
2.6 "CUSTOMER" shall mean ROCKWELL'S direct-end users customers to whom
Product(s) are supplied and licensed for internal use, and also shall mean
ROCKWELL's agents appointed for distribution or resale of Product(s), and
referred to in this Agreement as "End User/Agent.
3.0 LICENSE AND APPOINTMENT AS RESELLER
3.1 NON-EXCLUSIVE LICENSE TO ROCKWELL Subject to the terms and conditions
hereinafter set forth, VOICETEK hereby grants to and ROCKWELL hereby accepts
from VOICETEK, an unrestricted worldwide, non-exclusive, and non-transferable
license to resell, directly or indirectly, the VOICETEK Hardware and a
worldwide, non-exclusive and non-transferable license to sublicense the VOICETEK
Software, for use with standalone and networked Rockwell ACD equipment, and/or
applications, to End User/Agent during the term of this Agreement.
3.2 NATURE OF AGREEMENT The license granted in Section 3.1 only grants to
ROCKWELL a license to distribute VOICETEK Software and does not transfer any
right, title or interest to any VOICETEK Software to ROCKWELL or ROCKWELL'S End
User/Agents. VOICETEK will transfer title only to the VOICETEK Hardware. The
VOICETEK Software will be licensed to Rockwell and its End User/Agents on a
right to use in perpetuity basis with all intellectual property rights remaining
the property of VOICETEK. Use of the terms "sell," "license," "purchase,"
"license fees" and "price" will be interpreted in accordance with this Section.
3.3 INDEPENDENT CONTRACTORS The parties have entered into this Agreement solely
as independent Contractors and nothing contained herein shall be construed as
giving rise to a partnership, joint venture, or any other form of business
organization. Nothing contained in this Agreement shall be construed as giving
either party any exclusive rights to any products or technology of the other
party, as all rights and obligations under this Agreement are of a nonexclusive
nature. Subject to their respective confidentiality and related obligations set
forth in this Agreement, each party shall be free to market and sell its
products to and in conjunction with, and disclose its own unrestricted
technology to, competitors of the other party hereto.
3.4 ASSIGNMENT This Agreement is not assignable by either party in whole or in
part without prior written consent of both parties. Such consent shall not be
unreasonably withheld
5
<PAGE> 6
by either party. Neither change in ownership or control of either party nor
assignment of this Contract by either party shall be a valid basis for
termination of this Agreement.
3.5 ADDED DEVELOPMENT This Agreement may be altered from time to time by
mutually agreed to tasks for development by the parties. Costs for such
development as well as a definitive statement of the work to be accomplished
will be reduced to writing and signed by both parties in advance of any actual
work accomplishment or payment of funds.
3.6 APPROVAL OF SUBCONTRACTORS It is expressly agreed by the Parties that
VOICETEK intends, where applicable and reasonable, to effect manufacture of
assemblies through contract manufacturers who are ISO 9000 certified/registered.
It is agreed by the Parties that VOICETEK will inform ROCKWELL if VOICETEK
enters into any major long term relationship with a manufacturing contractor who
is not ISO 9000 certified/registered. VOICETEK shall manage subcontractor(s)
issues and to fully execute the Contractual obligations of VOICETEK, including
but not limited to cost and schedule matters, under this Agreement. It is
expressly agreed that VOICETEK may obtain emergency components and assemblies to
support immediate production requirements from vendors VOICETEK deems
appropriate.
4.0 TERM
4.1 The initial term of this Agreement shall be for a period of three (3) years
from the date of execution by both parties and, upon expiration of such term,
shall renew itself for (2) successive periods of one (1) year each unless the
parties mutually agree in writing a minimum of 90 days in advance that the
Agreement shall be canceled.
5.0 DUTIES OF VOICETEK
VOICETEK shall, at its own expense and without remuneration from ROCKWELL,
perform the following during the term and the option period, if exercised, of
this Agreement:
5.1 DEMONSTRATION SETS VOICETEK shall supply for ROCKWELL'S use
for the period of this Agreement, and, upon ROCKWELL request, may continue to
supply during the extensions thereto, one (1) demonstration system and one (1)
application system, complete product documentation, installation instructions,
user manuals, and suitable quantities of sales support materials to perform
application development, and demonstrate the system in ROCKWELL'S demo center.
Up to 50 copies of additional collateral material and 2 manuals may be
reasonably requested by ROCKWELL and be supplied by VOICETEK. All copies will be
updated by VOICETEK within a reasonable time after the effective date of each
release. ROCKWELL at its own expense with prior permission by VOICETEK,
reproduce for internal use only any such printed or electronically recorded
material pertaining to Demonstration Sets and manuals which were
6
<PAGE> 7
originally supplied by VOICETEK. VOICETEK may, at its option and its expense,
lease a communication link to establish a connection with ROCKWELL'S test bed,
the use of which shall be coordinated and approved by ROCKWELL in advance.
VOICETEK shall not have access to any embedded software in ROCKWELL'S test bed.
Upon the expiration or termination of the Agreement, each party will return to
the other party in good condition, wear and tear excepted, all supplied hardware
and software. All documentation, whether in hard copy or soft files, shall be
returned by each party to the other party or destroyed, as the other party may
direct.
5.2 MARKETING REPORTS VOICETEK shall provide ROCKWELL on-line or physical
access to reports detailing marketing or technical information on products
competitive comparisons, special sales or service suggestions, competitive
announcements, and new marketing or technical support material for the VOICETEK
Product. VOICETEK shall respond reasonably to all inquiries and reasonable
requests for sales support from ROCKWELL.
5.3 WARRANTY SUPPORT VOICETEK will provide Hardware warranty support to
ROCKWELL'S End User/Agent for a 1 year period of warranty measured from the date
product is installed and accepted or fifteen (15) months from date of shipment
by VOICETEK, which ever period occurs first. Software will be warranted from 90
days after customer acceptance or 180 days from shipment, which ever occurs
first. In the event a Customer chooses to purchase support services directly
from VOICETEK, VOICETEK will also be responsible to take first call during any
warranty period. The procedural steps for warranty service shall be as set forth
in Exhibits E, F and I of this Agreement.
5.4 VOICETEK PRODUCT SUPPORT VOICETEK shall provide to ROCKWELL enhancements
and updates to the VOICETEK Product when changes occur. All proposed
enhancements and updates will be subjected to a reasonable compatibility check
with the ROCKWELL Product prior to release. Such compatibility test shall be
conducted by VOICETEK and verified by ROCKWELL. VOICETEK will provide a Product
Change Notice a minimum of thirty (30) days in advance of a new release or the
deletion of any feature(s). Engineering Change Notices and adequate sustaining
technical support for all interfaces encompassed under this Agreement for its
term shall be provided to ROCKWELL at no cost so long as VOICETEK continues to
support such interfaces.
5.5 PRODUCT DISCONTINUANCE VOICETEK may discontinue the production or
availability of any Product at any time during the term of the Agreement by
twelve (12) months prior written notice. In the event of a Product
discontinuance hereunder, VOICETEK shall at the option of ROCKWELL either
provide substitute Products which under normal and proper use: (i) shall not
materially or adversely affect physical or functional interchangeability or
performance
7
<PAGE> 8
(except where there is written agreement between the parties that specific
characteristics will be so affected), (ii) shall not detract from the safety of
the Product or allow ROCKWELL to make an end of cycle buy of such discontinued
product the manufacture of which shall not extend beyond twenty four (24) months
from the time notice is given. VOICETEK agrees to provide repair services of any
such product for a period of five (5) years from date of notification.
6.0 DUTIES OF ROCKWELL
ROCKWELL shall, at its own expense and without remuneration from VOICETEK,
perform the following during the entire period of this Agreement:
6.1 SALES AND MARKETING ROCKWELL shall maintain a sufficient world-wide
marketing and sales program augmented by outside third party sales and marketing
arrangements as Rockwell may determine to be appropriate to sell the VOICETEK
Products, perform all necessary promotion and advertising of the VOICETEK
Products, and use its diligent efforts to effect the maximum amount of gross
sales of the VOICETEK Products. This will include provisions for VOICETEK to
participate in Rockwell sponsored trade shows, user group forums and product
demonstrations subject to availability and approval by Rockwell.
6.2 SALES FORECASTS ROCKWELL shall submit a rolling six-month non-binding sales
forecast as specified in Exhibit A, solely for the purpose of VOICETEK internal
planning.
6.3 TERMS AND CONDITIONS OF RESALE For each unit of the VOICETEK Product sold
ROCKWELL will obtain from End User/Agent its customer a fully executed ROCKWELL
standard General Terms and Conditions of Sale document attached hereto as
Exhibit G. End User/Agents shall receive no interest in the VOICETEK Software
other than a sublicense. Title to the VOICETEK Software shall not be transferred
to End User/Agent. All ROCKWELL End Users will be prohibited from re-license of
the VOICETEK Software or further distribution of the VOICETEK Hardware.
6.4 PRODUCT SUPPORT ROCKWELL will promptly provide information regarding
enhancements and updates of the ROCKWELL Products to the extent they will impact
the operation or functionality of the VOICETEK Product, when such changes occur.
Pertinent Engineering Change Notices and adequate sustaining technical support
shall be provided to VOICETEK at no cost so long as ROCKWELL continues to
support such interfaces.
6.5 ASSIGNMENT OF LIAISON ROCKWELL agrees to assign a technical, service and
sales individual to act as the focal point and liaison with VOICETEK.
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<PAGE> 9
6.6 SEMIANNUAL REVIEWS ROCKWELL agrees to meet with representatives on a
semiannual basis to review the relationship between ROCKWELL and VOICETEK, sales
opportunities, service status and product requirement. This meeting will take
place at a mutually agreed upon time and location, the location to alternate
between each companies facilities.
7.0 TRADE NAMES, TRADEMARKS AND PRIVATE LABELS
7.1 USE OF VOICETEK TRADEMARKS During the term of this Agreement, ROCKWELL
shall have the right to use the trade names and trademarks of VOICETEK applied
to the VOICETEK Products by VOICETEK whether registered or not, in advertising
and promotional literature solely in connection with ROCKWELL's sales of the
VOICETEK Products. Such use shall identify the trade names and trademarks as the
exclusive property of VOICETEK. Upon termination or expiration of this
Agreement, ROCKWELL shall immediately cease and desist from use of all trade
names and trademarks of VOICETEK in any manner whatsoever for new installations.
VOICETEK shall have the same rights to Rockwell Tradenames and Trademarks with
respect to this section, except that such use shall be subject to prior review
and approval by Rockwell.
7.3 PROPRIETARY RIGHTS ROCKWELL acknowledges that VOICETEK owns and retains all
trade names and trademarks and other proprietary rights in or associated with
the VOICETEK Product, and agrees that it will not at any time during or after
this Agreement assert or claim any interest in or do anything that may adversely
affect the validity of, or cause confusion in the ownership of, any Mark or
copyright belonging to or licensed to VOICETEK (including, without limitation,
any act which may infringe or lead to the infringement of any of VOICETEK'S
proprietary rights).
7.4 OBLIGATION TO PROTECT ROCKWELL agrees to use reasonable efforts to protect
VOICETEK's proprietary rights and to cooperate in VOICETEK'S efforts to protect
its proprietary rights. ROCKWELL agrees to promptly notify VOICETEK of any known
or suspected breach of VOICETEK's proprietary rights that comes to ROCKWELL's
attention.
8.0 PRICING AND DISCOUNTS
8.1 PRICE STABILITY * from date the Agreement is signed, after which
VOICETEK may adjust prices for increased production costs, but limited to a
* for the prior year, upon no less than ninety (90) days prior written notice
to ROCKWELL. No such increase shall be effective for any ROCKWELL order accepted
from an End User/Agent or for any proposal to an End User/Agent which was dated
prior to the date notice of such increase was received by ROCKWELL, provided
that ROCKWELL notifies VOICETEK upon receipt of notice of such increase which
End User/Agent orders and/or
9
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 10
proposals are outstanding, and provided further that ROCKWELL places all orders
to VOICETEK resulting from such outstanding orders and/or proposals within 180
days of the date notice of such increase was received by ROCKWELL.
8.2 MOST FAVORED CUSTOMER VOICETEK represents that the charges, fees, costs,
and discounts set forth in this Agreement are no less favorable to ROCKWELL than
the most favorable terms given to any other distributor or like type of
strategic alliance with like quantities and commitments and with similar terms
and conditions entered into by VOICETEK as of the Effective Date of this
Agreement. If, during the term of this Agreement, VOICETEK, in its sales to
other End User/Agents, reduces prices for like quantities of the same or
essentially the same component or materials or labor embodied in the VOICETEK
Product under similar terms and conditions to a level below the prices
established by this Agreement and detailed in Exhibit A, then VOICETEK will
immediately adjust its price(s) to ROCKWELL for any open or future orders to
equal the levels charged to such other customer(s) providing ROCKWELL's
purchases represent similar terms, quantities, and conditions.
8.3 DISCOUNTS VOICETEK agrees that sales and licenses of VOICETEK Products to
ROCKWELL shall be at the "ROCKWELL Purchase Price" as detailed in Exhibit A.
VOICETEK agrees to explore and identify cost reduction opportunities in the
Products provided. Any cost savings generated by Voicetek shall be shared in a
reduction in the unit price of the Product supplied under this Agreement,
effective at a mutually agreed upon time.
8.4 ******.
8.5 MAINTENANCE RELEASES Sets of VOICETEK Product Documentation and software
media for all maintenance updates and releases will be provided by VOICETEK
throughout the warranty and maintenance periods as set forth in Exhibits E and
F.
9.0 FIELD TESTING
Upon mutual agreement, VOICETEK and ROCKWELL may jointly conduct a field test of
the VOICETEK Product for a ROCKWELL End User. VOICETEK will provide reasonable
sales, engineering, and marketing support in a close technical working
relationship with ROCKWELL for the designated customer.
10.0 SALES AND PRE-SALES SUPPORT
10.1 JOINT SALES PRESENTATIONS VOICETEK and ROCKWELL mutually agree that it
will be in the best interests of both parties to make joint presentations to End
User/Agent prospects. VOICETEK and ROCKWELL agree that neither party will
unreasonably decline to support joint sales
10
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS
<PAGE> 11
presentations. Each party shall be responsible for its respective sales
expenses. Any sales prospect for which ROCKWELL requested joint sales effort
shall not be solicited by VOICETEK alone, unless mutually agreed to in writing.
10.2 PRE-SALES SUPPORT ROCKWELL shall provide primary pre-sales application,
engineering and configuration support for ROCKWELL Products. ROCKWELL shall to
the best of its ability pre-qualify prospective customers of VOICETEK products,
and upon mutual agreement, VOICETEK shall provide pre-sales support to ROCKWELL
at a place and time reasonably requested by ROCKWELL. As described herein, the
term pre-sales shall mean any systems engineering, configuration design,
technical application support related to customer evaluation of the VOICETEK
product prior to submission of an order by a customer. VOICETEK shall provide
and maintain a highly-trained and qualified pre-sales technical capability for
the primary purpose of technically configuring and presenting VOICETEK solutions
to ROCKWELL customers. VOICETEK shall prepare and submit quotations
incorporating final configurations and installation requirements to ROCKWELL'S
Sales Support personnel for their approval prior to any submission of pricing
and availability to ROCKWELL'S customer.
10.3 POST SALES SUPPORT VOICETEK shall provide post-sales support and maintain
a customer support center for any VOICETEK Products(s) described in Exhibit A
sold by ROCKWELL. The term "post-sales" shall mean any activity related to
delivery of warranty services or Product(s) support for VOICETEK Product(s).
VOICETEK will continue to provide the support service detailed in Exhibits E, F
and I for post-Warranty VOICETEK PRODUCT services to all ROCKWELL End
User/Agents for which VOICETEK has authorized an annual maintenance Contract.
VOICETEK will provide said services as may be in effect and offered to its other
End User/Agents at the time of Contract.
11.0 ORDERING AND DELIVERY
11.1 FOB/RISK OF LOSS Prices for the VOICETEK Products are FOB Chelmsford,
Massachusetts. Risk of loss for all VOICETEK Products sold shall pass from
VOICETEK to ROCKWELL upon delivery of the VOICETEK Products to the designated
freight carrier at the FOB point.
11.2 DELIVERY PERIOD VOICETEK shall use its best commercially reasonable
efforts to deliver the VOICETEK Product to the customer site within thirty (30)
days of the date the order is accepted providing that such products are
substantially as forecasted.
11.3 VOICETEK PRODUCT CONFIGURATION & SUPPORT VOICETEK may modify the VOICETEK
Product and availability as detailed in Exhibit A upon ninety (90) days prior
written
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<PAGE> 12
notice to ROCKWELL. VOICETEK shall provide support for any VOICETEK Product sold
and installed under this Contract for a period of not less than five (5) years
from the Effective Date of the contract
11.4 ORDERS ROCKWELL may purchase VOICETEK Products listed in Exhibit A during
the term of this Agreement by written purchase order. Any new product or
applications developed by VOICETEK shall be outside the scope of this agreement
unless they are added to Exhibit A by mutual written consent of the parties.
Each written order shall include (as a minimum): the name of the Product(s)
ordered; VOICETEK Product code(s); price(s) net of the then applicable discount;
quantity(s); and, desired delivery date(s). All purchase orders are subject to
acceptance by VOICETEK. ROCKWELL'S order shall be deemed to have been accepted
unless VOICETEK provides written notice of order rejection within seven (7)
business days after receipt of the ROCKWELL order by Voicetek. ROCKWELL shall
have no obligation to purchase any VOICETEK Products hereunder except to the
extent as may be incorporated in written orders placed subject to this
Agreement. Cancellation or rescheduling of any order is subject to a restocking
fee as specified in Exhibit D.
11.5 TERMS & CONDITIONS OF ORDER All VOICETEK Product(s) ordered by ROCKWELL
from VOICETEK pursuant to this Agreement shall be subject solely to the
provisions of this Agreement and any other provisions in addition to or not
specifically covered by this Agreement shall be governed by ROCKWELL'S standard
purchase order terms and conditions then in effect.
11.6 SHIPMENTS All ordered VOICETEK Product(s) shall be prepared for shipment
in accordance with VOICETEK's standard practices in a manner to assure the
VOICETEK Product is not damaged in transit and shipped using a ROCKWELL approved
carrier listed in ROCKWELL'S routing instructions. ROCKWELL shall pay all
freight costs, however, no shipments will be insured unless specific written
instructions are issued by ROCKWELL prior to shipment.
11.7 INSTALLATION Upon shipment of Products from VOICETEK'S facility, VOICETEK
agrees to assume full responsibility for project management, system programming,
equipment integration, installation and maintenance, as specified on the
ROCKWELL purchase order to VOICETEK, provided Rockwell pays for these services.
11.8 PERMITS & APPROVALS VOICETEK agrees to determine the permits and approvals
necessary to import, export, buy, sell and maintain the VOICETEK Product in a
country for which VOICETEK Product is not approved at the time a marketing
opportunity may present itself. Upon agreement by ROCKWELL and VOICETEK that it
is in the best interest of both parties to do so, VOICETEK shall, at its own
expense, obtain all necessary governmental permits and approvals necessary for
ROCKWELL to import, export, buy, sell and maintain the VOICETEK Product or
12
<PAGE> 13
otherwise fully perform its obligations under this Agreement. ROCKWELL agrees to
provide as much advance notice as possible to VOICETEK with regard to new
countries into which ROCKWELL intends to market the VOICETEK Product and to work
with VOICETEK to obtain required approvals.
12.0 WARRANTY
12.1 CONFIGURATION COMPLIANCE VOICETEK warrants the Hardware Products for a
period of (1) year and Software Products for a period of (90) ninety days as
specified in Exhibits A, E and F.
12.2 PRODUCT LICENSE VOICETEK warrants that ROCKWELL or its End User/Agent, as
the case may be, shall acquire a license to the VOICETEK Product(s) (software)
purchased free and clear of all encumbrances.
12.3 LIENS & INFRINGEMENTS VOICETEK warrants that it has and will guarantee to
ROCKWELL or its End User/Agent, the right, title, and interest to convey the
VOICETEK Products free of all liens and encumbrances, and that the VOICETEK
Products or any part thereof, do not infringe on any intellectual property
interest. If at any time VOICETEK shall incur any indebtedness that has become a
lien upon such VOICETEK Products or any part thereof or which may become a claim
against ROCKWELL, VOICETEK shall immediately pay such claim or indebtedness, or
cause such lien to be released and discharged by giving bond or otherwise at
VOICETEK'S sole expense.
12.4 LIMITATIONS Except as expressly provided in this Agreement, all WARRANTIES
shall be void as to any VOICETEK Product damaged or rendered unserviceable by:
improper or inadequate maintenance by anyone other than VOICETEK; unauthorized
modifications or physical or electrical abuse to the VOICETEK Product by anyone
other than VOICETEK; unreasonable refusal to comply with engineering change
notice programs; negligence by other than VOICETEK or VOICETEK'S
representative(s); theft; water or other perils; damage caused by containment
and/or operation outside the environmental specifications; and, alteration or
connection of the VOICETEK Product to other machines, equipment, or devices
(other than VOICETEK'S approved devices) without the prior written approval of
VOICETEK.
13.0 INDEMNIFICATION
13.1 NEGLIGENCE INDEMNIFICATION Each party (the "Indemnitor") hereby
indemnifies and holds the other party (the "Indemnitee"), its directors,
officers, agents and employees harmless against any and all claims, actions and
damages, liabilities or expenses, including attorney's fees and other legal
costs for injury to or death to any person, and for loss of
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<PAGE> 14
or damage to any and all property arising out of the negligent acts or omissions
of the Indemnitor under this Agreement.
13.2 INTELLECTUAL PROPERTY INDEMNIFICATION VOICETEK shall defend, at its
expense, any claim against ROCKWELL alleging that the VOICECTEK Product, or any
part thereof, infringes any patent, copyright, trademark, trade name, trade
secret, mask work, or other intellectual property interest in any country and
shall pay all costs and damages awarded, provided that VOICETEK is promptly
informed in writing and furnished with a copy of each communication, notice, or
other action relating to the alleged infringement and is given authority,
information, and assistance necessary to defend or settle such claim. If an
injunction against ROCKWELL'S use, sale, lease, license, other distribution of
the VOICETEK Product, or any part thereof, results from such a claim (or if
ROCKWELL reasonably believes such an injunction is likely), VOICETEK shall, at
its option, (and in addition to VOICETEK'S other obligations hereunder) (i)
procure for ROCKWELL the right to continue using, selling, leasing, or licensing
the VOICETEK Product or part thereof; (ii) replace such Voicetek Product or
part thereof with non-infringing substitutes otherwise complying substantially
with all the requirements of this Agreement; or (iii) credit the purchase price,
less a charge equal to one-thirty-sixth (1/36) of the purchase price of the
VOICETEK Product for each month that ROCKWELL enjoyed beneficial use, and accept
the return of such equipment. Any unused and unopened stock may be returned for
full credit. The provisions of this section shall not apply to any claim for
infringement resulting solely from VOICETEK'S compliance with ROCKWELL'S
detailed design specifications, where provided. THIS SECTION 13.2 STATES THE
SOLE AND EXCLUSIVE LIABILITY OF THE PARTIES TO THIS AGREEMENT FOR PATENT,
COPYRIGHT, TRADE SECRET, OR OTHER PROPRIETARY RIGHTS INFRINGEMENT AND IS IN LIEU
OF ALL CONDITIONS OR WARRANTIES EXPRESS, IMPLIED, OR STATUTORY, IN REGARD
THERETO.
14.0 TRAINING
14.1 TRAINING VOICETEK will provide training courses as described in Exhibit C.
14.2 TRAINING MATERIALS VOICETEK shall provide ROCKWELL, * to ROCKWELL, with
VOICETEK developed training documentation and materials for the VOICETEK
Products in electronic format for ROCKWELL'S internal training purposes only,
during the term of this Agreement.
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
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<PAGE> 15
15.0 TERMINATION
15.1 BANKRUPTCY Either party shall have the right to terminate this Agreement
immediately upon written notice in the event either party files or has filed
against it any bankruptcy or similar proceedings or enters into any form of
arrangement with and/or for the benefit of its creditors.
15.2 BREACH In the event either party materially breaches this Agreement, the
non-breaching party may provide written notice of such breach to the other
party. Should the party asserted to be in breach fail to cure such breach within
a period of sixty (60) days from the date of such notice, the non-breaching
party shall have the right to terminate this Agreement immediately upon written
notice to the other party. In addition, if one party commits three (3) or more
material breaches of this Agreement the non-breaching party shall have the right
to terminate this Agreement immediately upon written notice to the breaching
party.
15.3 EFFECT OF TERMINATION Upon the termination or expiration of this
Agreement: (i) each party will return to the other party all of the Confidential
Information received hereunder in such party's possession or control; (ii) in
the event of a Breach, all unshipped orders will automatically be canceled, and
(iii) VOICETEK will have the option, in its sole discretion of electing to offer
support for ROCKWELL'S End User/Agents or permitting ROCKWELL to continue to
provide maintenance and support for the VOICETEK Products to the extent needed
to. provide such services pursuant to a written agreement to be promptly
executed by the parties allowing ROCKWELL to purchase the VOICETEK Hardware and
license the VOICETEK Software only for the purpose of providing such services.
15
<PAGE> 16
information for its own account (except in connection with this Agreement),
until and unless such information:
(i) is lawfully disclosed in such manner as is not a
breach of this Section ;
(ii) is otherwise available in the public domain;
(iii) is released from the restrictions imposed in this
Section by written consent of the disclosing party;
(iv) shall be established to have been lawfully known to
the receiving party prior to receipt of such information from
the disclosing party;
(v) is previously and independently developed by the
receiving party, which the receiving party can prove with
written evidence;
(vi) is required to be released by law or such order of a
governmental agency or a court of law or equity.
Each party acknowledge that the Confidential Information contains trade
secrets of the other party, the disclosure of which would cause substantial harm
to such other party that could not be remedied by the payment of damages alone.
Accordingly, each party will be entitled to preliminary and permanent injunctive
relief and other equitable relief for any breach of this Section 16.
17.0 ESCROW
VOICETEK agrees to place with its escrow agent all machine processed and printed
materials, data, and other information constituting the source code and any
documentation for the VOICETEK Software listed in Exhibit A which shall include
but not be limited to all existing user manuals, control procedures, record
layouts, and program listings throughout the term of this Agreement. During the
term of this Agreement, VOICETEK shall deposit with the Escrow Agent the source
code, listings, and related programmer-level documentation for every update,
correction, or new release of the VOICETEK Software released to ROCKWELL or its
End User/Agents in object code form. VOICETEK shall provide that the copy of the
source code placed in the Escrow Agent's vault will be reproduced in a magnetic
medium compatible with the equipment on which ROCKWELL maintains the VOICETEK
Product. When a change is made to the source code by VOICETEK during the term of
this Agreement, the revised source code as well as the immediately preceding
version of the source code shall be deposited by VOICETEK into the Escrow
Agent's vault promptly after the source code has been revised. ROCKWELL shall be
permitted access to the source code solely to provide service ROCKWELL'S
existing customer base, without the need for
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<PAGE> 17
VOICETEK'S concurrence, immediately upon VOICETEK'S failure to support such
VOICETEK Software.
18.0 CUSTOM APPLICATIONS AND SCRIPTING
For custom software application services developed by VOICETEK, on behalf of a
ROCKWELL customer order, VOICETEK shall provide the same quality of
documentation normally developed to support its own customers and a copy of the
software to ROCKWELL, which will enable ROCKWELL to support its customer, if
required.
18.1 ROCKWELL at its option, may provide similar custom application services to
ROCKWELL's customers and will also be responsible for any documentation and
support required.
19.0 LIMITED LIABILITY
19.1 DAMAGES AND LOST PROFITS
REGARDLESS WHETHER ANY REMEDY SET FORTH HEREIN OR IN VOICETEK'S LIMITED WARRANTY
ACCOMPANYING DELIVERY OF VOICETEK PRODUCTS FAILS OF ITS ESSENTIAL PURPOSE OR
OTHERWISE, VOICETEK WILL NOT BE LIABLE FOR ANY LOST PROFITS OR FOR ANY DIRECT,
INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR OTHER SPECIAL DAMAGES SUFFERED
BY ROCKWELL, ITS END USER/AGENTS OR OTHERS ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE VOICETEK PRODUCTS, FOR ALL CAUSES OF ACTION OF ANY KIND
(INCLUDING TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, AND BREACH OF WARRANTY)
EVEN IF VOICETEK HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
19.2 CUMULATIVE LIABILITY
EXCEPT FOR LIABILITY FOR PERSONAL INJURY OR PROPERTY DAMAGE ARISING FROM
VOICETEK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IN NO EVENT WILL VOICETEK'S
TOTAL CUMULATIVE LIABILITY IN CONNECTION WITH THIS AGREEMENT OR VOICETEK
PRODUCTS, FROM ALL CAUSES OF ACTION OF ANY KIND, INCLUDING TORT, CONTRACT,
NEGLIGENCE, STRICT LIABILITY AND BREACH OF WARRANTY, EXCEED THE PRECEDING 12
MONTH DOLLAR VOLUME PURCHASED BY ROCKWELL.
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<PAGE> 18
20.0 GENERAL TERMS
20.1 COMPLIANCE WITH LAWS & RULES In all of their respective operations related
to this Agreement, the parties shall comply with all applicable federal, state,
and local laws, rules, and regulations, including but not limited to export
control laws. Each party also agrees to indemnify and hold harmless the other
party from any and all damages and liabilities assessed against the other party
as a result of party's non-compliance therewith. Any permission required to be
included herein shall be deemed included as a part of this Agreement whether or
not specifically referenced.
20.2 GOVERNING LAW This Agreement and any Purchase Order(s) issued hereunder
shall be governed by and interpreted in accordance with the laws of the
Commonwealth of Massachusetts.
20.3 CONTINUED PERFORMANCE Any dispute arising under this Agreement which is not
resolved by VOICETEK and ROCKWELL shall be decided by a court of law under the
terms of this Section. Pending settlement of the final decision by the court,
each party shall proceed diligently with the performance of the Agreement in
accordance with the other party's direction.
20.4 TAXES, DUTIES, & FEES All amounts payable under this Agreement are
exclusive of all sales, use, value-added, withholding, and other taxes and
duties. ROCKWELL shall be responsible for the payment of, and shall indemnify
and hold harmless VOICETEK from, any and all such taxes, duties, customs
charges, or other costs or charges of any nature arising in any manner out of
the sale, use, storage, or delivery of the VOICETEK Product(s), except taxes
based upon the income of VOICETEK. VOICETEK will be promptly reimbursed by
ROCKWELL for any and all taxes or duties that VOICETEK may be required to pay in
connection with this Agreement or its performance.
20.5 WAIVER No waiver by either party of any default or breach by the other
party of any of the previsions hereof shall constitute a waiver of any prior or
subsequent default or breach hereunder.
20.6 FORCE MAJEURE Neither party shall be liable for failure to perform any of
its obligations under this Agreement during any period in which such party
cannot perform due to matters beyond their control, including, but not limited
to, labor disputes, strike, fire, flood, or other natural disaster, war,
embargo, or riot provided that the party so delayed immediately notifies the
other party of such delay. If VOICETEK'S performance is delayed for these
reasons for a cumulative period of thirty (30) days or more, ROCKWELL may
terminate this Agreement and/or any Purchase Order hereunder by giving VOICETEK
written notice, which termination shall become effective upon receipt of such
notice. If ROCKWELL terminates, its sole liability under this
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<PAGE> 19
Agreement or any Purchase Orders issued hereunder will be to pay any balances
due for conforming Product(s): (a.) delivered by VOICETEK before receipt of
ROCKWELL'S termination notice; and, (b.) ordered by ROCKWELL for delivery and
actually delivered within fifteen (15) days after receipt of ROCKWELL'S
termination notice.
20.7 CONFLICT IN TERMS If any conflict arises with the terms and conditions in
the exhibits or attachments to this document, the terms and conditions contained
within the body of this Distributor Agreement will prevail.
20.8 NOTICES Any notices under this Agreement shall be sent in writing to the
parties at their following addresses, by registered mail, provided either party
may change such address by providing notice of same to the other party:
For VOICETEK:
VOICETEK COMMUNICATIONS INC.
19 Alpha Road
Chelmsford, MA 01824
Telephone: 508-250-7875 Facsimile: 508-250-7926
For ROCKWELL:
ROCKWELL INTERNATIONAL CORPORATION
1431 Opus Place
P.O. Box 1494
Downers Grove, IL 60515
Attn: OEM Supplier Management
Telephone: 708-960-8536 Facsimile: 708-769-1641
20.8 VALIDITY If any provision of this Agreement shall be rendered invalid, then
such invalidity shall not affect the remainder of this Agreement which shall
remain in full force and effect.
20.9 EXHIBITS The Exhibits attached hereto are incorporated into this Agreement
by reference and made a part of this Agreement as though they were recited
herein in their entirety.
21.0 SURVIVAL
The provisions of Sections 1 (Sole and Entire Agreement), 3.2 (Nature of
Agreement), 7 (Trade Names, Trademarks, and Private Labels), 12 (Warranty), 13
(Indemnification), 16 (Confidentiality), 17 (Escrow), 19 (Limited Liability), 20
(General), and this Section 21 (Survival) shall survive termination or
expiration of this Agreement.
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<PAGE> 20
IN CONSIDERATION of the mutual covenants and conditions herein set forth, the
parties have executed this Agreement as of the day and year written below.
VOICETEK CORPORATION ROCKWELL INTERNATIONAL CORP.
By: /s/ Scott Ganson By: /s/ Robert K. Nash
------------------------- ------------------------------
Typed Name: Scott Ganson Typed Name: Robert K. Nash
-------------------- ----------------------
Title: VP Sales Title: Sr. Subcontract Mgr.
-------------------- ----------------------
Date: 10/1/96 Date: 9-26-96
-------------------- ----------------------
20
<PAGE> 21
EXHIBIT A UNIT PRICE LIST AND DISCOUNT TERMS
1. Within thirty (30) days of the effective date of this Agreement,
ROCKWELL shall make a good faith estimate (the Forecast) as to ROCKWELL'S likely
sales volume of Products under this Agreement for the first twelve (12) month
period.
2. ROCKWELL agrees to provide VOICETEK with a quarterly six (6) month
forecast within twenty-one (21) calendar days after the start of each new
quarter.
SEE HARD COPY OF CONTRACT EXHIBIT "A" AND PRICE BOOK FOR PRODUCT
LIST AND DISCOUNT SCHEDULE AND TERMS
21
<PAGE> 22
EXHIBIT A OCTOBER 1, 1996
Rockwell Telecommunications / Voicetek Corporation
Discount Agreement Terms and Conditions
3 YEAR AGREEMENT
<TABLE>
<CAPTION>
Year Voicetek Sales Volume Discount
<S> <C> <C>
1 * from Oct. 1 - Sept 31, 1997 *
* in FY97 *
2 * in FY98 *
3 * in FY99 *
</TABLE>
For example: In year two Rockwell successfully sells * of Voicetek
products and services. Rockwell will be entitled to a * discount in year
three. If Rockwell sells * of Voicetek products and services in year two,
the Rockwell discount for year three is *.
The above discount terms are provided under the following conditions:
1. In order to qualify for the above discount terms in the second and third
years, the sales volumes must be met in the prior year or the discount
offered will be * for the following year.
2. *
3. The above discounts will be applied to the current price book in effect at
the date of the agreement.
4. The Voicetek product and services are listed in the price book as
discountable and non-discountable. The following is a sample list of
Voicetek products that qualify for a discount. (This list may not be all
inclusive):
_ *
_ *
_ *
_ *
_ *
_ *
_ *
The following is a sample list of Voicetek products that are not discountable.
(This list may not be all inclusive):
_ *
_ *
_ *
_ * *
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 23
EXHIBIT A OCTOBER 1, 1996
_ *
_ *
_ *
_ *
_ *
_ *
5. Sales of all Voicetek products and services listed in the current
price book catalog apply toward the sales volume levels required for
the discount.
6. Sales of Application Development & Software Consulting will be
discounted to Rockwell at * or * per hour per the current
price list.
7. Spares will be discounted at the rate of *.
8. Sales of Voicetek maintenance and software support agreements will be
discounted to Rockwell based on Voicetek Sales volume as follows:
<TABLE>
<CAPTION>
Year Voicetek Sales Volume Discount
<S> <C> <C>
1 * from Oct. 1 - Sept 31, 1997 *
* in FY97 *
2 * in FY98 *
Sales above * *
3 * in FY 99 *
sales above * *
</TABLE>
CONFIDENTIAL MATERIAL OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS.
<PAGE> 24
EXHIBIT B TERRITORY
ROCKWELL will have the non-exclusive rights to market the Product
worldwide under its own label or VOICETEKS' label subject to the terms and
conditions set forth in this Agreement.
COMPLIANCE WITH THE LAW
In General. If ROCKWELL markets the Products outside the United States, ROCKWELL
will be solely responsible, and agrees to comply with all laws, rules,
regulations, orders, decrees, judgments and other governmental acts of the
United States of America and any country or territory, and their political
subdivisions and agencies, that may be applicable to the ROCKWELL and its
activities hereunder. This includes without limitation any approval,
registration or testing of the Products for this Agreement in which VOICETEK has
not received such approvals or registration. VOICETEK expressly agrees that
VOICETEK shall be solely responsible for identification of and compliance with
any applicable laws, rules, regulations, orders, decrees, and regulatory
requirements of any nature in any area named by ROCKWELL which is in addition to
the areas covered by Exhibit J providing the parties have agreed to obtain such
approvals as described in Article 11.7 of the main Agreement. VOICETEK shall be
under no obligation to ship Products to ROCKWELL for marketing outside the U.S.
until ROCKWELL has provided VOICETEK with satisfactory evidence that such
approval, registration or testing is not required or that it has been obtained.
ROCKWELL shall indemnify and hold VOICETEK harmless for any loss or damages
suffered by VOICETEK as a result of ROCKWELL'S failure to comply with this
section. This indemnity shall continue in force whether or not VOICETEK asks
ROCKWELL to verify its compliance with any laws or regulations before shipping
Products.
United States Export Laws. ROCKWELL acknowledges and agrees that the Products
and other technical data delivered by VOICETEK are subject to the United States
Export Administration Act of 1979, as amended (the "Act") and all the
regulations promulgated thereunder.
Taxes. ROCKWELL shall remit 100 percent (100%) of the fees owed to VOICETEK
without the deduction of withholding, customs, import or export, or other taxes.
VOICETEK agrees to provide ROCKWELL with a list of all relevant approvals or
certifications received by VOICETEK.
22
<PAGE> 25
EXHIBIT C
Training
INITIAL TRAINING
VOICETEK will provide a one day training session in the United States for
ROCKWELL sales and marketing personnel at *. ROCKWELL is responsible
for travel and living expenses of VOICETEK personnel assigned to perform this
training. Training will be conducted at a site mutually agreed upon.
ROCKWELL personnel may attend up to a total of 10 class seats in VOICETEK'S
scheduled classes at *. Additional class seats will be made available at *. A
limit of up to two (2) ROCKWELL personnel may attend the same class at the same
time. ROCKWELL is responsible for their own travel and living expenses. If this
training is held at ROCKWELL facilities, travel expenses as incurred by
VOICETEK will be invoiced.
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
23
<PAGE> 26
EXHIBIT D CANCELLATIONS
1. Cancellation policy:
a) Less than 31 days prior to scheduled shipment date - *
b) Less than 60 days prior to scheduled shipment date - *
c) Less than 90 days prior to scheduled shipment date - *
2. Return Authorization for warranty returns on stock updates shall be
accomplished by following the procedures outlined in Exhibit E.
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
24
<PAGE> 27
EXHIBIT E HARDWARE WARRANTY
1. All Product is warranted to perform, when given normal, proper and
intended usage, substantially in accordance with the published release
specifications for each Product and, except for Licensed Software, against
defects in materials and workmanship.
2. VOICETEK warrants that all hardware Product delivered shall be free from
defects under normal use in material and workmanship for a period of one
(1) year from customer acceptance. VOICETEK shall, at its option replace or
repair, free of charge, any equipment covered by this warranty which shall
be returned to the original shipping point, transportation charges prepaid,
within one (1) year from the date of customer acceptance. If material upon
examination proves to be damaged due to an accident, misuse, neglect,
alteration, improper installation, repair, or improper testing, the
warranty will not be applicable and voided. If VOICETEK elects to repair or
replace such equipment, VOICETEK shall have reasonable time to make such
repairs or replace such equipment. This warranty shall not apply to any
equipment, or parts thereof, which has been repaired or altered, without
VOICETEK'S written consent, by anyone other than VOICETEK'S employees or
trained personnel, or has not been operated in accordance with VOICETEK'S
printed instructions or has been operated under conditions more severe
than, or otherwise exceeding, those set forth in the specifications for
such equipment.
3. If during the stated warranty period any defect in material, or workmanship
is discovered in any Product covered by the above warranty, VOICETEK shall,
at the request of ROCKWELL, immediately advance replacement of any such
products provided that (a) VOICETEK is promptly notified in writing
immediately upon discovery of such defect, which notice shall contain a
detailed explanation of any alleged deficiency, (b) such Product is
returned to VOICETEK no more than fifteen (15) days after issuance of a
return material authorization (RMA) by VOICETEK, freight prepaid to
VOICETEK'S Customer Service Department, and (c) VOICETEK is satisfied upon
examination that claimed deficiencies actually exist and were not caused by
accident, misuse, neglect, alteration, improper installation, improper
repair, improper testing, lightning, power surges, fire, flood, or
earthquake. Unauthorized modification or unauthorized or improper
alteration of Products shall invalidate this warranty. If the failed
product is not returned within fifteen (15) days to VOICETEK, ROCKWELL
will be invoiced at the then current discounted List Price and ROCKWELL
agrees to pay such invoice.
4. EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS AGREEMENT, VOICETEK
DISCLAIMS ALL WARRANTIES ON PRODUCTS FURNISHED UNDER THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE; AND THE EXPRESS WARRANTIES IN THIS
AGREEMENT ARE IN LIEU OF ALL OBLIGATIONS OR LIABILITIES ON THE PART OF
VOICETEK ARISING OUT OF OR IN CONNECTION WITH THE PERFORMANCE OF THE
PRODUCT. THE FOREGOING WARRANTIES EXTEND ONLY TO ROCKWELL AND SHALL NOT BE
ASSIGNABLE TO ANY OTHER PARTY.
25
<PAGE> 28
EXHIBIT F SOFTWARE PROGRAM LICENSE AND WARRANTY
1. LICENSE
1.1 Subject to the following terms and conditions VOICETEK grants to ROCKWELL
and ROCKWELL accepts a perpetual, non-exclusive license to use the object code
software provided by VOICETEK (the Software Product only within VOICETEK
equipment with all copyright, patent and intellectual property rights remaining
the sole property of VOICETEK.
1.2 ROCKWELL shall receive software support and upgrades for the Software
Product in accordance with the applicable then current VOICETEK software support
policy in effect and upon payment of any applicable discounted software
maintenance fees, should ROCKWELL elect to implement the upgrades.
2. PROTECTION AND SECURITY OF SOFTWARE PRODUCTS
2.1 ROCKWELL acknowledges and agrees that the Software Product contains
proprietary and confidential information of VOICETEK and/or its third party
supplier. ROCKWELL agrees to protect the confidential and proprietary nature of
the Software Product in the same manner that it protects its own confidential
information of like value, provided that ROCKWELL will in all cases use
reasonable care to protect the Software Product.
2.2 ROCKWELL shall not use, print, copy, translate, adapt, create derivative
works from, record, transmit, display, disclose, publish, encumber by way of
security interest or otherwise pledge or transfer, modify, assign, distribute,
rent, loan or make available to any third party the Software Product in whole or
in part, except as expressly provided in this Agreement.
2.3 ROCKWELL shall refrain from and shall prevent others from decompiling or
applying any procedure to the Software Product, including reverse engineering or
any similar process, in order to derive and/or appropriate for use, the source
code or source listings for the Software Product.
3. TERM
3.1 This Agreement shall become effective for each Software Product upon
delivery of the Software Product to ROCKWELL.
3.2 VOICETEK may terminate this Agreement and the license upon notice to
ROCKWELL if any amount payable by ROCKWELL in respect of any of the Software
Products is not paid in accordance with Article 8.4 of the main Contract, or if
ROCKWELL otherwise breaches any provision of this Agreement and fails to cure
such breach within thirty (30) days of notice thereof, or if ROCKWELL becomes
bankrupt, makes an assignment for the benefit of creditors or a trustee is
appointed for ROCKWELL, or if the assets of ROCKWELL vest in or become subject
to the rights of any trustee, receiver, board, tribunal, commission or any body,
corporate or person, other than ROCKWELL, or if bankruptcy, reorganization or
insolvency proceedings are instituted against ROCKWELL and are not dismissed
within 30 days.
26
<PAGE> 29
4. LIMITED WARRANTIES
4.1 VOICETEK warrants for a period of 90 days, from the date when the Software
Product is successfully installed and accepted at a customer's site, or 180 days
from date of shipment, whichever occurs first, that it substantially conforms to
the functional specifications and shall be substantially free from errors,
provided, however, that this warranty shall apply only to those portions of the
Software Product, or its replacement, that incorporate all programs corrections
and Enhancements, if any, delivered to ROCKWELL, and provided, further that its
warranty shall not apply to any physical form or part thereof which has been
abused or misused, or which shall have been modified by End-user/Agent except as
supplied by VOICETEK.
VOICETEK'S sole obligation hereunder shall be to remedy
any such non-conformance of the software Product when reported to VOICETEK by
End-user/Agent and this shall be completed in accordance with exhibit I, after
VOICETEK has agreed that the product does not meet VOICETEK'S specifications.
4.2 THE WARRANTY SET OUT IN SECTION 4.1 SHALL CONSTITUTE THE SOLE LIABILITY OF
VOICETEK AND THE SOLE REMEDY OF ROCKWELL FOR ANY FAILURE OF ANY PROGRAM TO
FUNCTION AS WARRANTED.
4.3 EXCEPT AS EXPRESSLY PROVIDED HEREIN THERE ARE NO WARRANTIES, CONDITIONS OR
REPRESENTATIONS EXPRESS OR IMPLIED BY STATUTE, USAGE, CUSTOM OF THE TRADE OR
OTHERWISE WITH RESPECT TO THE SOFTWARE PRODUCTS PROVIDED BY VOICETEK HEREUNDER,
INCLUDING BUT NOT LIMITED TO, WARRANTIES OR REPRESENTATIONS OF WORKMANSHIP,
MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR DURABILITY,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, VOICETEK DOES NOT WARRANT THAT
THE SOFTWARE PRODUCT WILL MEET ALL OF ROCKWELL'S NEEDS OR THAT OPERATION OF THE
SOFTWARE PRODUCT WILL BE ERROR FREE.
5. LIMITATION OF LIABILITY
5.1 IN NO EVENT WHATSOEVER, REGARDLESS OF THE FORM OR CAUSE OF ACTION WHETHER IN
CONTRACT OR TORT (INCLUDING NEGLIGENCE) OR THE NUMBER OF CLAIMS ASSERTED, SHALL
VOICETEK, ITS EMPLOYEES, DIRECTORS, OFFICERS AND AGENTS TOTAL COLLECTIVE
LIABILITY TO ROCKWELL FOR ALL CLAIMS EXCEED THE AMOUNT PAID UNDER THIS AGREEMENT
FOR THE SOFTWARE PRODUCT THAT IS THE SUBJECT MATTER OF OR THAT IS DIRECTLY
RELATED TO CAUSE OF ACTION, PROVIDED THAT IN NO EVENT SHALL THE TOTAL COLLECTIVE
LIABILITY OF VOICETEK, ITS EMPLOYEES, OFFICERS, AGENTS AND DIRECTORS EXCEED THE
AMOUNT PAID TO VOICETEK PURSUANT TO THIS AGREEMENT.
5.2 VOICETEK, ITS EMPLOYEES, AGENTS, OFFICERS AND DIRECTORS SHALL NOT BE LIABLE
IN ANY WAY WHATSOEVER, WHETHER AS A RESULT OF A CLAIM OR
27
<PAGE> 30
ACTION IN CONTRACT OR TORT, INCLUDING NEGLIGENCE OR OTHERWISE FOR ANY INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO, LOST PROFITS OR
LOST BUSINESS REVENUE, LOST BUSINESS, FAILURE TO REALIZE EXPECTED SAVINGS, OR
OTHER COMMERCIAL OR ECONOMIC LOSS OF ANY KIND WHATSOEVER, OR FOR ANY DAMAGES,
DIRECT OR INDIRECT, SPECIAL OR CONSEQUENTIAL ARISING OUT OF ANY CLAIM AGAINST
ROCKWELL BY ANY PERSON WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE AND WHETHER
OR NOT VOICETEK, ITS EMPLOYEES, AGENTS, OFFICERS OR DIRECTORS HAVE BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES WHICH ARE IN ANY WAY RELATED TO THIS
AGREEMENT OR THE SOFTWARE PRODUCT.
5.3 THE FOREGOING PROVISIONS LIMITING THE LIABILITY OF VOICETEK EMPLOYEES,
AGENTS, OFFICERS AND DIRECTORS SHALL BE DEEMED TO BE TRUST PROVISIONS FOR THE
BENEFIT OF SUCH EMPLOYEES, OFFICERS, DIRECTORS AND AGENTS AND SHALL BE
ENFORCEABLE BY SUCH AS TRUST BENEFICIARIES.
6. PATENT, COPYRIGHT, TRADE NAME AND TRADE SECRET INFRINGEMENT
6.1 VOICETEK shall defend any suit alleging the infringement of any patent,
copyright or trade secret which is brought against ROCKWELL on account of its
use of the Software Product and shall pay all reasonable legal costs and
expenses incurred by ROCKWELL in conjunction therewith and satisfy all monetary
judgments and decrees against ROCKWELL, provided that ROCKWELL notifies VOICETEK
within ten (10) business days of the date any such claim becomes known to
ROCKWELL, that VOICETEK shall have sole control of the defense or settlement of
such actions, and that ROCKWELL provides such assistance and cooperation to
VOICETEK as is reasonably requested.
6.2 In the event ROCKWELL is enjoined from its use of VOICETEK'S Software
Product due to proceeding based upon any infringement of any patent, copyright
or trade secret, VOICETEK shall either:
(i) promptly render the Software Product non-infringing and
capable of providing services as intended, or
(ii) procure for ROCKWELL the right to continue using the Software
Product, or
(iii) replace the Software Product with a non-infringing version, or
(iv) remove the Software Product and refund the purchase price,
less a monthly usage fee equal to one sixtieth of the license
for each month that ROCKWELL has had use of the Software
Product.
6.3 The foregoing constitutes the entire liability of VOICETEK to ROCKWELL with
respect to infringement of patents, copyrights, and trade secrets for Products
purchased pursuant to this Agreement and VOICETEK hereby disclaims any implied
warranty of non-infringement.
28
<PAGE> 31
7. MISCELLANEOUS
7.1 Notwithstanding anything else in this Exhibit, VOICETEK shall not, in any
way whatsoever, be held liable or responsible for any failure by it to meet its
obligations or responsibilities under this Exhibit where such failure results
from causes beyond VOICETEK'S reasonable control.
7.2 This Exhibit constitutes the entire understanding between VOICETEK and
ROCKWELL with respect to the licensing of the Software Products to ROCKWELL by
VOICETEK and supersedes all prior oral and written communications with respect
to the Software Products licensed under this Exhibit. This Exhibit may be
amended or modified only by means of a written Agreement signed by both VOICETEK
and ROCKWELL.
7.3 If any provision of this Exhibit shall be held to be invalid, illegal or
unenforceable, such provision shall be served therefrom and the validity,
legality or enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
7.4 ROCKWELL shall comply with all export regulations pertaining to the Software
Product in effect from time to time. In particular, without limiting the
generality of the foregoing, ROCKWELL hereby warrants that it will not directly
or indirectly export, re-export or transship the Software Product or such other
information, media or products in violation of or otherwise in contravention of
the export laws, rules and regulations.
29
<PAGE> 1
EXHIBIT 10.5
LEASE
LANDLORD: Teachers Realty Corporation
TENANT: Voicetek Corporation
PREMISES: 19 Alpha Road
Chelmsford, Massachusetts
DATED: As of May 25, 1993
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE CAPTION PAGE
<S> <C> <C>
I. BASIC LEASE PROVISIONS 1
1.1 Introduction 1
1.2 Basic Data 1
1.3 Additional Definitions 2
II. PREMISES AND APPURTENANT RIGHTS 3
2.1 Lease of Premises 3
2.2 Appurtenant Rights and Reservations 3
III. BASIC RENT 4
3.1 Payment 4
IV. COMMENCEMENT AND CONDITION 5
4.1 Commencement Date 5
4.2 Condition of the Premises 5
V. USE OF PREMISES 5
5.1 Permitted Use 5
5.2 Installation and Alterations by Tenant 6
VI. ASSIGNMENT AND SUBLETTING 9
6.1 Prohibition 9
VII. RESPONSIBILITY FOR REPAIRS AND CONDITIONS 10
OF PREMISES; SERVICES TO BE FURNISHED BY LANDLORD
7.1 Landlord Repairs 10
7.2 Tenant's Agreement 11
7.3 Floor Load - Heavy Machinery 12
7.4 Building Services 12
7.5 Electricity 13
VIII. REAL ESTATE TAXES 17
8.1 Payments on Account of Real 17
Estate Taxes
8.2 Abatement 18
8.3 Alternate Taxes 18
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE CAPTION PAGE
<S> <C> <C>
IX. OPERATING EXPENSES 18
9.1 Definitions 18
9.2 Tenant's Payments 19
X. INDEMNITY AND PUBLIC LIABIITY INSURANCE 20
10.1 Tenant's Indemnity 20
10.2 Public Liability Insurance 21
10.3 Tenant's Risk 21
10.4 Injury Caused by Third Parties 22
XI. LANDLORD'S ACCESS TO PREMISES 22
11.1 Landlord's Rights 22
XII. FIRE, EMINENT DOMAIN, ETC. 22
12.1 Abatement of Rent 22
12.2 Landlord's Right of Termination 23
12.3 Restoration 23
12.4 Award 23
XIII. DEFAULT 24
13.1 Tenant's Default 24
13.2 Landlord's Default 27
XIV. MISCELLANEOUS PROVISIONS 27
14.1 Extra Hazardous Use 27
14.2 Waiver 28
14.3 Covenant of Quiet Enjoyment 28
14.4 Landlord's Liability 28
14.5 Notice to Mortgagee or Ground Lessor 29
14.6 Assignment of Rents and Transfer 30
of Title
14.7 Rules and Regulations 30
14.8 Additional Charges 31
14.9 Invalidity of Particular Provisions 31
14.10 Provisions Binding, Etc. 31
14.11 Recording 31
14.12 Notices 31
14.13 When Lease Becomes Binding 32
14.14 Paragraph Headings 32
14.15 Rights of Mortgagee or 32
Ground Lessor
14.16 Status Report 33
14.17 Security Deposit 33
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE CAPTION PAGE
<S> <C> <C>
14.18 Remedying Defaults 34
14.19 Holding Over 34
14.20 Waiver of Subrogation 34
14.21 Surrender of Premises 35
14.22 Substitute Space 35
14.23 Brokerage 35
14.24 Special Taxation Provisions 35
14.25 Hazardous Materials 36
14.26 Governing Law 37
</TABLE>
-iii-
<PAGE> 5
L E A S E
Preamble
THIS INSTRUMENT IS A LEASE, dated as of May 25, 1993 in which the Landlord and
the Tenant are the parties hereinafter named, and which relates to space in the
building (the "Building") known and numbered as 19 Alpha Road, Chelmsford,
Massachusetts. The parties to this instrument hereby agree with each other as
follows:
ARTICLE I
BASIC LEASE PROVISIONS
1.1 INTRODUCTION. The following terms and provisions set forth basic
data and, where appropriate, constitute definitions of the terms
hereinafter listed:
1.2 BASIC DATA.
Landlord: Teachers Realty Corporation
Landlord's Original Address:
c/o Finard & Company, Inc.
Three Burlington Woods Drive
Burlington, MA 01803
Tenant: Voicetek Corporation, a Massachusetts corporation
Tenant's Original Address: 19 Alpha Road, Chelmsford, MA 01824
Guarantor: N/A
Basic Rent: The sum of $89,464.50 ($4.50 per square foot of
Premises Rentable Area) per annum.
Premises Rentable Area: Approximately 19,881 square feet.
Permitted Uses: Office and light manufacturing, but specifically
excluding any use which would cause any portion of the Premises to
be deemed a "place of public accommodation" as defined in the
Americans with Disabilities Act of 1990, as amended.
Escalation Factor: 32.57%, as computed in accordance with the
Escalation Factor Computation.
Initial Term: Three (3) years commencing on the Commencement Date
and expiring at the close of the day immediately preceding the
third anniversary of the
<PAGE> 6
Commencement Date, except that if the Commencement Date shall be
other than the first day of a calendar month the expiration of the
Initial Term shall be at the close of the day on the last day of
the calendar month on which such anniversary date shall fall.
Security Deposit: $22,366.12.
1.3 ADDITIONAL DEFINITIONS.
Manager: Finard & Company, Inc.
Building Rentable Area: 64,250 rentable square feet.
Business Days: All days except Saturday, Sunday, New Year's Day,
Washington's Birthday, Patriot's Day, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day,
Christmas Day (and the following day when any such day occurs on
Sunday).
Commencement Date: As defined in Section 4. 1.
Default of Tenant: As defined in Section 13.1.
Escalation Charges: The amounts prescribed in Sections 8.1 and 9.2.
Escalation Factor Computation: Premises Rentable Area divided by
95% of the Building Rentable Area.
Force Majeure: Collectively and individually, strike or other labor
trouble, fire or other casualty, governmental preemption of
priorities or other controls in connection with a national or other
public emergency or shortages of, or inability to obtain, fuel,
supplies or labor resulting therefrom, or any other cause, whether
similar or dissimilar, beyond Landlord's reasonable control.
Initial Public Liability Insurance: $1,000,000 per person;
$3,000,000 per occurrence (combined single limit) for property
damage, bodily injury or death.
Operating Expenses: As set forth in Section 9.1.
Operating Year: As defined in Section 9.1.
Premises: A portion of the Building as shown on Exhibit A annexed
hereto.
Property: The Building and the land parcels on which it is located
(including adjacent sidewalks).
Tax Year: As defined in Section 8.1.
-2-
<PAGE> 7
Taxes: As determined in accordance with Section 8. 1.
Tenants Removable Property: As defined in Section 5.2.
Term of this Lease: The Initial Term and any extension thereof in
accordance with the provisions hereof.
Utility Expenses: As defined in Section 9.1.
Exhibits: The following Exhibits are annexed to this Lease and
incorporated herein by this reference:
Exhibit A - Plan showing Premises
Exhibit B - Plan Showing location of "new loading dock area"
Exhibit C - Rules and Regulations
Exhibit D - Intentionally Omitted
Exhibit E - Operating Expenses
Exhibit F - Tenant's Janitorial Specifications
ARTICLE II
PREMISES AND APPURTENANT RIGHTS.
2.1 LEASE OF PREMISES. Landlord hereby demises and leases to Tenant for
the Term of this Lease and upon the terms and conditions
hereinafter set forth, and Tenant hereby accepts from Landlord, the
Premises.
2.2 APPURTENANT RIGHTS AND RESERVATIONS. (a) Tenant shall have, as
appurtenant to the Premises, the non-exclusive right to use, and
permit its invitees to use in common with others, public or common
lobbies, hallways, and common walkways necessary for access to the
Building, and if the portion of the Premises on any floor includes
less than the entire floor, the common toilets, corridors and
elevator lobby of such floor; but Tenant shall have no other
appurtenant rights and all such rights shall always be subject to
reasonable rules and regulations from time to time established by
Landlord pursuant to Section 14.7 and to the right of Landlord to
designate and change from time to time areas and facilities so to
be used.
(b) Excepted and excluded from the Premises are the ceiling, floor,
perimeter walls and exterior windows, except the inner surfaces
thereof, but the entry doors (and related glass and finish work) to
the Premises are a part thereof; and Tenant agrees that Landlord
shall have the right to place in the Premises (but in such manner
as to reduce to a minimum interference with Tenant's use of the
Premises) interior storm windows, subcontrol devices (by way of
illustration, an electric sub panel, etc.), utility lines, pipes,
equipment and the like, in, over
-3-
<PAGE> 8
and upon the Premises. Tenant shall install and maintain, as
Landlord may require, proper access panels in any hung ceilings or
walls as may be installed by Tenant in the Premises to afford
access to any facilities above the ceiling or within or behind the
walls.
ARTICLE III
BASIC RENT
3.1 PAYMENT. (a) Tenant agrees to pay to Landlord, or as directed by
Landlord, commencing on the Commencement Date without offset,
abatement, deduction or demand, the Basic Rent and the monthly
installment of the Reimbursement Rent. Such Basic Rent shall be
payable in equal monthly installments, in advance, on the first day
of each and every calendar month during the Term of this Lease, at
Landlord's Original Address, or at such other place as Landlord
shall from time to time designate by notice to Tenant, in lawful
money of the United States. In the event that any installment of
Basic Rent is not paid when due, Tenant shall pay, in addition to
any Escalation Charges or other additional charges due under this
Lease, an administrative fee equal to 5% of the overdue payment.
(b) Basic Rent for any partial month shall be pro-rated on a daily
basis, and if the first day on which Tenant must pay Basic Rent
shall be other than the first day of a calendar month, the first
payment which Tenant shall make to Landlord shall be equal to a
proportionate part of the monthly installment of Basic Rent for the
partial month from the first day on which Tenant must pay Basic
Rent to the last day of the month in which such day occurs, plus
the installment of Basic Rent for the succeeding calendar month.
(c) As an Additional Charge hereunder, Tenant hereby covenants and
agrees to pay the Landlord the amount of $25,000.00 over the three
year Initial Term of this Lease (the "Reimbursement Rent"). The
Reimbursement Rent represents payment of back due rents payable to
Landlord as the result of use and occupancy of the Premises by
Tenant, which amounts have been earned and are presently due and
owing to Landlord notwithstanding any expiration or earlier
termination of this Lease. The Reimbursement Rent shall be payable
to Landlord as and when payments of Basic Rent are due and payable
hereunder without offset, deduction, abatement or demand. The
Reimbursement Rent shall be paid to Landlord in equal monthly
installments of $694.44. Landlord shall have the same rights and
remedies against Tenant for failure to pay any monthly installment
of Reimbursement Rent as Landlord has against
-4-
<PAGE> 9
Tenant for failure to pay Basic Rent when due, including, without
limitation, all sums and charges prescribed in Section 14.18 of the
Lease, the 5% administrative fee payable pursuant to the last
sentence of Section 3.1(a) hereof and all rights and remedies
reserved unto Landlord pursuant to Article XIII of this Lease.
ARTICLE IV
COMMENCEMENT AND CONDITION
4.1 COMMENCEMENT DATE. The Commencement Date shall be the Date of
execution of this Lease by the last party executing this Lease as
evidenced on the signature page hereof.
4.2 CONDITION OF THE PREMISES. Tenant hereby acknowledges and agrees to
accept the Premises on the Commencement Date in its then "as is"
condition without representation or warranty of Landlord of any
kind, either express or implied. Tenant is currently occupying the
Premises under certain other arrangements with Landlord and
therefore it is agreed and understood that Landlord shall not be
required to make or pay for any improvements to the Premises at or
prior to the Commencement Date. Notwithstanding the foregoing to
the contrary, Landlord hereby agrees to demise the Premises from
the immediately adjacent and currently vacant space and to cut an
opening in the exterior wall of the building and install one 8'x8'
overhead roll-up door in that portion, of the Premises identified
as the "new loading dock area" on Exhibit B to this Lease. It is
agreed and understood that the work required to be performed by
Landlord hereunder may be performed after the Commencement Date and
Tenant agrees to allow Landlord's contractor to enter the Premises
for completing such work.
ARTICLE V
USE OF PREMISES
5.1 PERMITTED USE. (a) Tenant agrees that the Premises shall be
used and occupied by Tenant only for Permitted Uses.
(b) Tenant agrees to conform to the following provisions during the
Term of this Lease:
(i) Tenant shall cause all freight to be delivered to or
removed from the Building and the Premises in
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accordance with reasonable rules and regulations established by
Landlord therefor;
(ii) Tenant will not place on the exterior of the
Premises (including both interior and exterior surfaces of doors
and interior surfaces of windows) or on any part of the Building
outside the Premises, any signs, symbol, advertisements or the like
visible to public VIEW outside of the Premises. Landlord will not
unreasonably withhold consent for signs or lettering on the entry
doors to the Premises provided such signs conform to building
standards adopted by Landlord and Tenant has submitted a sketch of
the sign to be placed on such entry doors.
(iii) Tenant shall not perform any act or carry on any
practice which may injure the Premises, or any other part of the
Building, or cause offensive odors or loud noise or constitute a
nuisance or menace to any other tenant or tenants or other persons
in the Building;
(iv) Tenant shall, in its use of the Premises., comply
with the requirements of all applicable governmental laws, rules
and regulations including, without limitation, the Americans with
Disabilities Act of 1990, as amended; and
(v) Tenant shall continuously throughout the Term of this
Lease occupy the Premises for the Permitted Uses and for no other
purposes.
5.2 INSTALLATION AND ALTERATIONS BY TENANT. (a) Tenant shall make no
alterations, additions (including, for the purposes hereof,
wall-to-wall carpeting), or improvements in or to the Premises
without Landlord's prior written consent. Any such alterations,
additions or improvements shall (i) be in accordance with complete
plans and specifications prepared by Tenant and approved in advance
by Landlord; (ii) be performed in a good and workmanlike manner and
in compliance with all applicable laws; (iii) be performed and
completed in the manner required in Section 5.2(d) hereof; (iv) be
made at Tenant's sole expense and at such times as Landlord may
from time to time designate; and (v) become a part of the Premises
and the property of Landlord. It is agreed and understood that
Landlord shall have the right to review and approve all changes
to any plans which Landlord shall have approved pursuant to this
Section 5.2(a). It is also agreed and understood that Landlord
shall not be deemed to be unreasonable in denying its consent to
alterations, additions and improvements to the Premises which
affect "Base Building Systems" (as said term is hereafter defined).
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As used herein, the term "Base Building Systems" shall mean (i) any
mechanical, electrical or plumbing system or component of the
Building (including the Premises) (ii) the exterior of the Building
(iii) the Building HVAC distribution system (iii) any fire safety
prevention/suppression system and (iv) any structural element or
component of the Building.
(b) All articles of personal property and all business fixtures,
machinery and equipment and furniture owned or installed by Tenant
solely at its expense in the Premises ("Tenant's Removable
Property") shall remain the property of Tenant and may be removed
by Tenant at any time prior to the expiration of this Lease,
provided that Tenant, at its expense, shall repair any damage to
the Building caused by such removal.
(c) Notice is hereby given that Landlord shall not be liable for
any labor or materials furnished or to be furnished to Tenant upon
credit, and that no mechanic's or other lien for any such labor or
materials shall attach to or affect the reversion or other estate
or interest of Landlord in and to the Premises. Whenever and as
often as any mechanic's lien shall have been filed against the
Premises based upon any act or interest of Tenant or of anyone
claiming through Tenant, Tenant shall forthwith take such actions
by bonding, deposit or payment as will remove or satisfy the lien.
(d) All of the Tenant's alterations, additions and installation of
furnishings shall be coordinated with any work being performed by
Landlord and in such manner as to maintain harmonious labor
relations and not damage the Property or interfere with Building
construction or operation and, except for installation of
furnishings, shall be performed by Landlord's general contractor
or, at Landlord's election, by contractors or workmen first
approved by Landlord. Installation and moving of furnishings,
equipment and the like shall be performed only with labor
compatible with that being employed by Landlord for work in or to
the Building and not to employ or permit the use of any labor or
otherwise take any action which might result in a labor dispute
involving personnel providing services in the Building. Except for
work by Landlord's general contractor, Tenant before its work is
started shall: secure all licenses and permits necessary therefor;
deliver to Landlord a statement of the names of all its contractors
and subcontractors and the estimated cost of all labor and material
to be furnished by them; and cause each contractor to carry
workmen's compensation insurance in statutory amounts covering all
the contractor's and subcontractor's employees and comprehensive
public liability insurance and property damage insurance with such
limits as
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Landlord may reasonably require but in no event less than a
combined single limit of Two Million and No/100ths ($2,000,000.00)
Dollars (all such insurance to be written in companies approved by
Landlord and insuring Landlord and Tenant as well as the
contractors), and to deliver to Landlord certificates of all such
insurance. Tenant agrees to pay promptly when due the entire cost
of any work done on the Premises by Tenant, its agents, employees,
or independent contractors, and not to cause or permit any liens
for labor or materials performed or furnished in connection
therewith to attach to the Premises or the Property and immediately
to discharge any such liens which may so attach and, at the request
of Landlord to deliver to Landlord security satisfactory to
Landlord against liens arising out of the furnishing of such labor
and material. Upon completion of any work done on the Premises by
Tenant, its agents, employees, or independent contractors, Tenant
shall promptly deliver to Landlord original lien releases and
waivers executed by each contractor, subcontractor, supplier,
materialmen, architect, engineer or other party which furnished
labor, materials or other services in connection with such work and
pursuant to which all liens, claims and other rights of such party
with respect to labor, material or services furnished in connection
with such work are unconditionally released and waived. Tenant
shall pay within fourteen (14) days after being billed therefor by
Landlord, as an additional charge hereunder, one hundred percent
(100%) of any increase in real estate taxes on the Property not
otherwise billed to Tenant which shall, at any time after
commencement of the Term, result from any alteration, addition or
improvement to the Premises made by or on behalf of Tenant
(including Tenant's original installation and Tenant's subsequent
alterations, additions, substitutions and improvements), whether
done prior to or after the commencement of the Term of this Lease.
(e) In connection with the performance of any alterations,.
improvements, changes or additions to the Premises as contemplated
by Article IV or Section 5.2 of this Lease, in the event that any
such improvement, alteration, change or addition to the Premises to
be performed by Tenant ("Work') affects so-called "Base Building
Building Systems" and to the extent that such Work is not performed
by Landlord or a general contractor employed directly by Landlord,
Tenant hereby agrees to use the services of a construction
management firm designated by Landlord to oversee, coordinate and
review all aspects of any such Work. The cost and expense of the
services of such construction manager shall be borne by Tenant but
only to the extent that such costs and expenses are comparable to
and competitive with the costs and expenses charged by other firms
engaged in
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construction management and oversight services in the general
geographic location of the Building for services of a similar scope
and type.
ARTICLE VI
ASSIGNMENT AND SUBLETTING
6.1 PROHIBITION. (a) Tenant covenants and agrees that whether
voluntarily, involuntarily, by operation of law or otherwise,
neither this Lease nor the term and estate hereby granted, nor any
interest herein or therein, will be assigned, mortgaged, pledged,
encumbered or otherwise transferred and that neither the Premises
nor any part thereof will be encumbered in any manner by reason of
any act or omission on the part of Tenant, or used or occupied, by
anyone other than Tenant, or for any use or purpose other than a
Permitted Use, or be sublet (which term, without limitation, shall
include granting of concessions, licenses and the like) in whole or
in part, or be offered or advertised for assignment or subletting.
(b) The provisions of paragraph (a) of this Section shall apply to
a transfer (by one or more transfers) of a majority of the stock or
partnership interests, or other evidences of ownership of Tenant as
if such transfer were an assignment of this Lease; but such
provisions shall not apply to transactions with an entity into or
with which Tenant is merged or consolidated or to which
substantially all of Tenant's assets are transferred or to any
entity which controls or is controlled by Tenant or is under common
control with Tenant, provided that in any of such events (i) the
successor to Tenant has a net worth computed in accordance with
generally accepted accounting principles at least equal to the net
worth of Tenant immediately prior to such merger, consolidation or
transfer, (ii) proof satisfactory to Landlord of such net worth
shall have been delivered to Landlord at least 10 days prior TO the
effective date of any such transaction, and (iii) the assignee
agrees directly with Landlord, by written instrument in form
satisfactory to Landlord, to be bound by all the obligations of
Tenant hereunder including, without limitation, the covenant
against further assignment or subletting.
(c) If this Lease be assigned, or if the Premises or any part
thereof be sublet or occupied by anyone other than Tenant, Landlord
may, at any time and from time to time, collect rent and other
charges from the assignee, subtenant or occupant, and apply the net
amount collected to the rent and other charges herein reserved, but
no
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such assignment, subletting, occupancy, collection or modification
of any provisions of this Lease shall be deemed a waiver of this
covenant, or the acceptance of the assignee, subtenant or occupant
as a tenant or a release of the original named Tenant from the
further performance by the original named Tenant hereunder. No
assignment or subletting hereunder shall relieve Tenant obligations
hereunder and Tenant shall remain from its fully and primarily
liable therefor. No assignment or subletting, or occupancy shall
affect Permitted Uses.
ARTICLE VII
RESPONSIBILITY FOR REPAIRS AND CONDITIONS OF PREMISES;
SERVICES TO BE FURNISHED BY LANDLORD
7.1 LANDLORD REPAIRS. (a) Except as otherwise provided in this Lease,
Landlord agrees to keep in good order, condition and repair the
roof, public areas, exterior walls (including exterior glass) and
structure of the Building (including plumbing, mechanical and
electrical systems installed by Landlord but excluding any systems
installed specifically for Tenant's benefit or used exclusively by
Tenant) and the HVAC system serving the Premises, all insofar as
they affect the Premises, except that Landlord shall in no event be
responsible to Tenant for the condition of glass in the Premises or
for the doors (or related glass and finish work) leading to, the
Premises, or for any condition in the Premises or the Building
caused by any act or neglect of Tenant, its agents, employees,
invitees or contractors. Landlord shall not be responsible to make
any improvements or repairs to the Building other than as expressly
in this Section 7.1 provided, unless expressly provided otherwise
in this Lease. All costs and expenses incurred by Landlord in
performing its obligations under this Section 7.1 shall be included
in Operating Expenses (as said term is hereafter defined) except
that Tenant shall, as an additional charge hereunder and within 15
days of being invoiced by Landlord, reimburse Landlord directly for
all costs and expenses incurred by Landlord in repairing or
maintaining the roof top HVAC units servicing the Premises.
(b) Landlord shall never be liable for any failure to make repairs
which Landlord has undertaken to make under the provisions of this
Section 7.1 or elsewhere in this Lease, unless Tenant has given
notice to Landlord of the need to make such repairs, and Landlord
has failed to commence to make such repairs within a reasonable
time
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after receipt of such notice, or fails to proceed with reasonable
diligence to complete such repairs.
(c) Any services which Landlord is required to furnish pursuant to
the provisions of this Lease may, at Landlord's option be furnished
from time to time, in whole or in part, by employees of Landlord or
by the Manager of the Property or by one or more third persons and
Landlord further reserves the right to require Tenant to enter into
agreements with such persons in form and content approved by
Landlord for the furnishing of such services. Landlord shall cause
the paved portions of the Property to be kept reasonably free and
clear of snow, ice and refuse and shall cause the landscaped areas
of the Property to be maintained in a reasonably attractive
appearance.
7.2 TENANT'S AGREEMENT. (a) Tenant will keep neat and clean and
maintain in good order, condition and repair the Premises and every
part thereof, excepting only those repairs for which Landlord is
responsible under the terms of this Lease, reasonable wear and tear
of the Premises, and damage by fire or other casualty and as a
consequence of the exercise of the power of eminent domain; and
shall surrender the Premises, at the end of the Term, in such
condition. Without limitation, Tenant shall continually during the
Term of this Lease maintain the Premises in accordance with all
laws, codes and ordinances from time to time in effect and all
directions, rules and regulations of the proper officers of
governmental agencies having jurisdiction, and of the Boston Board
of Fire Underwriters, and shall, at Tenant's own expense, obtain
all permits, licenses and the like required by applicable law.
Notwithstanding the foregoing or the provisions of Article XII,
Tenant shall be responsible for the cost of repairs which may be
necessary by reason of damage to the Building caused by any act or
neglect of Tenant or its agents, employees, contractors or invitees
(including any damage by fire or any other casualty arising
therefrom). Tenant shall be responsible for the payment of all
charges for gas or other utilities used or consumed in the
Premises. Tenant shall be responsible for the removal and disposal
of all refuse and waste generated from the Premises and shall
maintain a dumpster service contract with a reputable dumpster
service company throughout the Term of this Lease. The location of
such dumpster shall be subject to the reasonable approval of
Landlord. In no event shall such dumpster be visable from the
street or interfere with the use of the parking or loading areas on
the Property and shall be in compliance with all applicable codes,
by-laws and ordinances.
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(b) If repairs are required to be made by Tenant pursuant to the
terms hereof, Landlord may demand that Tenant make the same
forthwith, and if Tenant refuses or neglects to commence such
repairs and complete the same with reasonable dispatch after such
demand, Landlord may (but shall not be required to do so) make or
cause such repairs to be made (the provisions of Section 14.18
being applicable to the costs thereof) and shall not be responsible
to Tenant for any loss or damage that may accrue to Tenant's stock
or business by reason thereof. Notwithstanding the foregoing,
Landlord may elect to take action hereunder immediately and without
notice to Tenant if Landlord reasonably believes an emergency to
exist.
7.3 FLOOR LOAD - HEAVY MACHINERY. (a) Tenant shall not place a load
upon any floor in the Premises exceeding the floor load per square
foot of area which such floor was designed to carry and which is
allowed by law. Landlord reserves the right to prescribe the weight
and position of all business machines and mechanical equipment,
including safes, which shall be placed so as to distribute the
weight. Business machines and mechanical equipment shall be placed
and maintained by Tenant at Tenant's expense in settings
sufficient, in Landlord's judgment, to absorb and prevent
vibration, noise and annoyance. Tenant shall not move any safe,
heavy machinery, heavy equipment, freight, bulky matter or fixtures
into or out of the Building without Landlord's prior consent, which
consent may include a requirement to provide insurance, naming
Landlord as an insured, in such amounts as Landlord may deem
reasonable.
(b) If such safe, machinery, equipment, freight, bulky matter or
fixtures requires special handling, Tenant agrees to employ only
persons holding a Master Rigger's License to do such work, and that
all work in connection therewith shall comply with applicable laws
and regulations. Any such moving shall be at the sole risk and
hazard of Tenant, and Tenant will exonerate, indemnity and save
Landlord harmless against and from any liability, loss, injury,
claim or suit resulting directly or indirectly from such moving.
7.4 BUILDING SERVICES. (a) Landlord shall also provide:
(i) Cold water (at temperatures supplied by the Town of
Chelmsford) for drinking, lavatory and toilet purposes. If Tenant
uses water for any purpose other than for ordinary lavatory and
drinking purposes, Landlord may assess a reasonable charge for the
additional water so used, or install a water meter and thereby
measure Tenant's water consumption for all purposes. In the latter
event, Tenant shall pay the cost of the meter and the cost of
installation thereof and
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shall keep such meter and installation equipment in good working
order and repair. Tenant agrees to pay for water consumed, as shown
on such meter, together with the sewer charge based on such meter
charges, as and when bills are rendered, and in default in making
such payment Landlord may pay such charges and collect the same
from Tenant as an additional charge.
(ii) Access to the Premises twenty-four hours per day,
subject to reasonable security restrictions and restrictions based
on emergency conditions and all other applicable provisions of this
Lease.
(b) Landlord reserves the right to curtail, suspend, interrupt
and/or stop the supply of water, sewage, electrical current,
cleaning, and other services, and to curtail, suspend, interrupt
and/or stop use of entrances and/or lobbies serving access to the
Building, without thereby incurring any liability to Tenant, when
necessary by reason of accident or emergency, or for repairs,
alterations, replacements or improvements in the judgment of
Landlord desirable or necessary, or when prevented from supplying
such services or use by strikes, lockouts, difficulty in obtaining
materials, accidents or any other cause beyond Landlord's control,
or by laws, orders or inability, by exercise of reasonable
diligence, to obtain electricity, water, gas, steam, coal, oil or
other suitable fuel or power. No diminution or abatement of rent or
other compensation, nor any direct, indirect or consequential
damages shall or will be claimed by Tenant as a result of, nor
shall this Lease or any of the obligations of Tenant be affected or
reduced by reason of, any such interruption, curtailment,
suspension or stoppage in the furnishing of the foregoing services
or use, irrespective of the cause thereof. Failure or omission on
the part of Landlord to furnish any of the foregoing services or
use shall not be construed as an eviction of Tenant, actual or
constructive, nor entitle Tenant to an abatement of rent, nor to
render the Landlord liable in damages, nor release Tenant from
prompt fulfillment of any of its covenants under this Lease.
7.5 ELECTRICITY. (a) Landlord shall permit Landlord's existing wires,
pipes, risers, conduits and other electrical equipment of Landlord
to be used for the purpose of providing electrical service to the
Premises. Tenant covenants and agrees that its electrical usage and
consumption will not disproportionately "siphon off" electrical
service necessary for other tenants of the Building and that its
total connected load will not exceed the maximum load from time to
time permitted by applicable governmental regulations nor the
design criteria of the existing Building electrical capacity.
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Landlord shall not in any way be liable or responsible to Tenant
for any loss or damage or expense which Tenant may sustain or incur
if, during the Term of this Lease, either the quantity or character
of electric current is changed or electric current is no longer
available or suitable for Tenant's requirements due to a factor or
cause beyond Landlord's control. Tenant shall purchase and install
all lamps, tubes, bulbs, starters and ballasts. Tenant shall pay
all charges for electricity, gas and other utilities used or
consumed in the Premises. Tenant shall bear the cost of repair and
maintenance of any electric or gas meter used or to be installed in
(or serving) the Premises.
(b) In order to insure that the foregoing requirements are not
exceeded and to avert possible adverse affect on the Building's
electrical system, Tenant shall not, without Landlord's prior
consent, connect any fixtures, appliances or equipment to the
Building's electrical distribution system, which operates on a
voltage in excess of 120 volts nominal. If Landlord shall consent
to the connection of any such fixtures, appliances or equipment,
all additional risers or other electrical facilities or equipment
required therefor shall be provided by Landlord and the cost
thereof shall be paid by tenant upon Landlord's demand as
Additional Rent. From time to time during the Term of this Lease,
Landlord shall have the right to have an electrical consultant
selected by Landlord make a survey of Tenant's electric usage, the
result of which shall be conclusive and binding upon Landlord and
Tenant. In the event that such survey shows that Tenant has
exceeded the requirements set forth in paragraph (a), in addition
to any other rights Landlord may have hereunder, Tenant shall, upon
demand, reimburse Landlord for the costs of such survey.
(c) Electricity and Gas Consumption.
(i) Electricity and Natural Gas used and consummed in the Premises
is measured by a single gas meter (the "Existing Gas Meter") and a
single Electric Meter (the "Existing Electric Meter"). In addition
to measuring consumption of Natural Gas and Electricity in the
Premises, the Existing Gas Meter and Existing Electric Meter
measure consumption of those utilities used and consumed in a
portion of the Building which is immediately adjacent to the
Premises and comprised of 13,619 rentable square feet (the
"Adjacent Space"). The Adjacent Space is presently vacant and
unoccupied and is not a portion of the Premises demised to Tenant
under this Lease. The provisions of this paragraph 7.5(c) are
intended to allocate certain responsibilities as to the payment of
electricity and natural gas costs and expenses between Landlord
(with respect to the Adjacent Space) and
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Tenant (with respect to the Premises) as measured by the Existing
Gas Meter and the Existing Electric Meter.
(ii) Tenant hereby acknowledges that the Tenant is the
current named billing party with respect to the Existing Gas
Meter and the Existing Electricity Meter. Tenant hereby acknowleges
and agrees that subject to the terms and provisions hereafter set
forth and until receipt of written notice from the Landlord to the
contrary, all electricity and natural gas used and consumed in the
Adjacent Space shall be provided through the Existing Gas Meter and
the Existing Electric Meter with the allocation of expenses
resulting from such meters between Landlord and Tenant as
hereafter provided. Landlord and Tenant hereby acknowledge and
agree that the aggregate per square foot cost of providing natural
gas and electric service to the Adjacent Space is $0.20 per
rentable square foot contained in the Adjacent Space per annum.
(hereafter the "Per Square Foot Utility Cost"). The Per Square Foot
Utility Cost is based upon the assumption that the Adjacent Space
is vacant and unoccupied and is comprised of $0.12 per rentable
square foot per annum with respect to electricity and $0.08 per
rentable square foot per annum with respect to natural gas. Until
further written notice from Landlord as hereafter set forth, Tenant
shall be responsible for payment of all costs and expenses for gas
and electricity billed to the Existing Electric Meter and the
Existing Gas Meter for such time as the Existing Electric Meter
and/or the Existing Gas Meter shall remain in Tenant's name.
In order to reimburse Tenant for the cost of electricity
and gas used and consumed in the Adjacent Space, Landlord shall
pay Tenant an amount (the "Landlord's Utility Cost") equal to the
number of rentable square feet contained in the Adjacent Space
which shall from time to time be vacant (as designated by Landlord
in a "Landlord's Utility Statement" as hereafter defined)
multiplied by the Per Square Foot Utility Cost. Tenant shall from
time to time, but not more often than once every three full
calendar months while all or any portion of the Adjacent Space
shall remain unoccupied (or until further notice from Landlord)
invoice Landlord for the Landlord's Utility Cost attributable to
the three full calendar month period setting forth the number of of
such invoice (provided that the LST, such invoice shall be
applicable only to the three full calendar month period immediately
following the Commencement Date hereunder). Upon the written
request of Tenant, or at any time at the Landlord's election,
Landlord shall provide Tenant with a written calculation of the
Landlord's Utility Costs applicable to any such three full-calendar
month period setting forth the number of rentable square feet of
the Adjacent Space which was
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unoccupied during such three month period and the actual number of
days of vacancy ("Landlord's Utility Statement"). Landlord's
Utility Statement shall be conclusive and binding upon Landlord and
Tenant. At Landlord's option, Landlord shall be entitled to offset
Landlord's Utility Costs against and apply amounts owing to Tenant
hereunder against obligations of Tenant to Landlord under this
Lease. Any failure by Tenant to pay amounts due and owing to the
applicable utilities for gas and electricity billed to the Existing
Gas Meter and/or the Existing Electric Meter shall entitle Landlord
to the same rights and remedies against Tenant as Landlord has for
a failure by Tenant to pay Basic Rent when due under this Lease.
(iii) Notwithstanding the terms and provisions contained
in paragraphs (i) and (ii) of this paragraph (c) to the contrary,
at such time as Landlord shall procure a tenant to occupy all or
any portion of the Adjacent Space, Landlord's obligation to pay
Landlord's Utility Costs with respect to the portion of the
Adjacent Space occupied by such third party shall cease and come to
an end. At Landlord's option, Landlord shall be entitled to
continue paying Landlord's Utility Cost with respect to any portion
of the Adjacent Space which would then remain unoccupied based upon
the number of rentable square feet contained in the Adjacent Space
as shall then be unoccupied and the provisions of paragraphs (i)
and (ii) of this paragraph (c) shall remain in force and effect and
shall be applicable to such portions of the Adjacent Space as
remain vacant.
(iv) Tenant hereby acknowledges and agrees, and Landlord
hereby reserves unto Landlord the right, exercisable by Landlord at
any time and from time to time during the Term of this Lease to
cause the Existing Electric Meter and the Existing Gas Meter (or
either of them) to be placed in Landlord's name for billing
purposes. In the event Landlord shall elect to implement the
procedure described in the first sentence of this paragraph (iv),
Landlord shall provide Tenant with written notice of such election
and Tenant hereby agrees to execute such documents and instruments
as may be required in order to effect a change of the named
billing party on the Existing Electric Meter and the Existing Gas
Meter (or either of them) to Landlord's name. The change of named
party provided herein shall be deemed effective as of the date
such change is made effective by the applicable utility (the
"Change Date"). Tenant shall be responsible for all bills for the
applicable utility being changed to Landlord's name prior to the
Change Date. From and after the Change Date, Landlord shall have
the right to cause electricity and natural gas used and consummed
in the Premises to be check-metered off of
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the Existing Gas Meter and/or the Existing Electric Meter, as
applicable. As an additional charge hereunder, Tenant shall
reimburse Landlord for the cost of electricty and/or gas used and
consummed in the Premises as measured by the applicable check meter
within 15 days after being billed therefor by Landlord. Landlord
shall have the right to collect from Tenant monthly estimated
payments of the amounts Landlord reasonably estimates will be
sufficient to pay Tenant's electricity and/or gas bills resulting
from the Existing Gas Meter and the Existing Electric Meter
pursuant to this paragraph (iv).
ARTICLE VIII
REAL ESTATE TAXES
8.1 PAYMENTS ON ACCOUNT OF REAL ESTATE TAXES. (a) For the purposes of
this Article, the term "Tax Year" shall mean the twelve-month
period commencing on the July 1 immediately preceding the
Commencement Date and each twelve-month period thereafter
commencing during the Term of this Lease; and the term "Taxes"
shall mean all real estate taxes, special assessments and
betterment assessments assessed with respect to the Property for
any Tax Year.
(b) Tenant shall pay to Landlord, as an Escalation Charge, an
amount equal to (i) Taxes for each Tax Year (or partial Tax Year)
falling within the Term of this Lease, multiplied by (ii) the
Escalation Factor, such amount to be apportioned for any fraction
of a Tax Year in which the Commencement Date falls or the Term of
this Lease ends.
(c) Estimated payments by Tenant on account of Taxes shall be made
monthly and at the time and in the fashion herein provided for the
payment of Basic Rent. The monthly amount so to be paid to Landlord
shall be sufficient to provide Landlord by the time real estate
tax payments are due a sum equal to Tenant's required payments, as
estimated by Landlord from time to time, on account of Taxes for
the then current Tax Year. Promptly after receipt by Landlord of
bills for such Taxes, Landlord shall advise Tenant of the amount
thereof and the computation of Tenant's payment on account thereof.
If estimated payments theretofore made by Tenant for the Tax Year
covered by such bills exceed the required payments on account
thereof for such Year, Landlord shall credit the amount of
overpayment against subsequent obligations of Tenant on account of
Taxes (or refund such overpayment if the Term of this Lease has
ended and Tenant has no further obligation to Landlord); but if the
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required payments on account thereof for such Year are greater than
estimated payments theretofore made on account thereof for such
Year, Tenant shall make payment to Landlord within 30 days after
being so advised by Landlord. Landlord shall have the same rights
and remedies for the non-payment by Tenant of any payments due on
account of Taxes as Landlord has hereunder for the failure of
Tenant to pay Basic Rent.
8.2 ABATEMENT. If Landlord shall receive any tax refund or
reimbursement of Taxes or sum in lieu thereof with respect to any
Tax Year which is not due to vacancies in the Building, then out of
any balance remaining thereof after deducting Landlord's expenses
reasonably incurred in obtaining such refund, Landlord shall,
provided there does not then exist a Default of Tenant, credit an
amount equal to such refund or reimbursement or sum in lieu thereof
(exclusive of any interest) multiplied by the Escalation Factor
against the obligations of Tenant next falling due under this
Article VIII; provided, that in no event shall Tenant be entitled
to receive a credit equal to more than the payments made by Tenant
on account of real estate tax increases for such Year pursuant to
paragraph (b) of Section 8.1 or to receive any payments or
abatement of Basic Rent if Taxes for any Year are less than Base
Taxes or Base Taxes are abated.
8.3 ALTERNATE TAXES. (a) If some method or type of taxation shall
replace the current method of assessment of real estate taxes in
whole or in part, or the type thereof, or if additional types of
taxes are imposed upon the Property or Landlord relating to the
Property, Tenant agrees that Tenant shall pay a proportionate share
of the same as an additional charge computed in a fashion
consistent with the method of computation herein provided, to the
end that Tenant's share thereof shall be, to the maximum extent
practicable, comparable to that which Tenant would bear under the
foregoing provisions.
(b) If a tax (other than Federal or State net income tax) is
assessed on account of the rents or other charges payable by
Tenant to Landlord under this Lease, Tenant agrees to pay the
same as an additional charge within ten (10) days after billing
therefor, unless applicable law prohibits the payment of such tax
by Tenant.
ARTICLE IX
OPERATING EXPENSES
9.1 DEFINITIONS. For the purposes of this Article, the following terms
shall have the following respective meanings:
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(i) Operating Year: Each calendar year in which any part
of the Term of this Lease shall fall.
(ii) Operating Expenses: The aggregate costs or expenses
reasonably incurred by Landlord with respect to the operation,
administration, cleaning, repair, maintenance and management of the
Property (but specifically excluding Utility Expenses) all as set
forth in Exhibit E annexed hereto, provided that, if during any
portion of the Operating Year for which Operating Expenses are
being computed, less than all of Building Rentable Area was
occupied by tenants or if Landlord is not supplying all tenants
with the services being supplied hereunder, actual Operating
Expenses incurred shall be reasonably extrapolated by Landlord on
an item by item basis to the estimated Operating Expenses that
would have been incurred if the Building were fully occupied for
such Year and such services were being supplied to all tenants, and
such extrapolated amount shall, for the purposes hereof, be deemed
to be the Operating Expenses for such Year.
(iii) Utility Expenses: The aggregate costs or expenses
reasonably incurred by Landlord with respect to supplying
electricity (other than electricity supplied to those portions of
the Building leased to tenants), oil, steam, gas, water and sewer
and other utilities supplied to the Property and not paid for
directly by tenants, provided that, if during any portion of the
Operating Year for which Utility Expenses are being computed, less
than all Building Rentable Area was occupied by tenants or if
Landlord is not supplying all tenants with the utilities being
supplied hereunder, actual utility expenses incurred shall be
reasonably extrapolated by Landlord on an item-by-item basis to the
estimated Utility Expenses that would have been incurred if the
Building were fully occupied for such Year and such utilities were
being supplied to all tenants, and such extrapolated amount shall,
for the purposes hereof, be deemed to be the Utility Expenses for
such Year.
9.2 TENANT'S PAYMENTS. (a) Tenant shall pay to Landlord, as an
Escalation Charge, an amount equal to (i) Operating Expenses for
each Operating Year (or partial Operating Year) falling within in
the Term of this Lease multiplied by (ii) the Escalation Factor,
such amount to be apportioned for any partial Operating Year in
which the Commencement Date falls or the Term of this Lease ends.
(b) Tenant shall pay to Landlord, as an Escalation Charge, an
amount equal to (i) Utility Expenses for each Operating Year (or
partial Operating Year) falling within the Term of this Lease
multiplied by (ii) the Escalation Factor, such amount to be
apportioned for any partial
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Operating Year in which the Commencement Date falls or the Term of
this Lease ends.
(c) Estimated payments by Tenant on account of Operating Expenses
shall be made monthly and at the time and in the fashion herein
provided for the payment of Basic Rent. The monthly amount so to be
paid to Landlord shall be sufficient to provide Landlord by the end
of each Operating Year a sum equal to Tenant's required payments,
as estimated by Landlord from time to time during each Operating
Year, on account of Operating Expenses and Utility Expenses for
such Operating Year. After the end of each Operating Year, Landlord
shall submit to Tenant a reasonably detailed accounting of
Operating Expenses and Utility Expenses for such Year, and Landlord
shall certify to the accuracy thereof. If estimated payments
theretofore made for such Year by Tenant exceed Tenant's required
payment on account thereof for such Year, according to such
statement, Landlord shall credit the amount of overpayment against
subsequent obligations of Tenant with respect to Operating Expenses
and Utility Expenses (or refund such overpayment if the Term of
this Lease has ended and Tenant has no further obligation to
Landlord), but, if the required payments on account thereof for
such Year are greater than the estimated payments (if any)
theretofore made on account thereof for such Year, Tenant shall
make payment to Landlord within thirty (30) days after being so
advised by Landlord. Landlord shall have the same rights and
remedies for the nonpayment by Tenant of any payments due on
account of Operating Expenses and Utility Expenses as Landlord has
hereunder for the failure of Tenant to pay Basic Rent.
ARTICLE X
INDEMNITY AND PUBLIC LIABILITY INSURANCE
10.1 TENANT'S INDEMNITY. To the maximum extent this agreement may be
made effective according to law, Tenant agrees to defend,
indemnify and save harmless Landlord from and against all claims,
loss, liability, costs and damages of whatever nature arising
from any default by Tenant under this Lease and the following: (i)
from any accident, injury, death or damage whatsoever to any
person, or to the property of any person, occurring in or about
the Premises; (ii) from any accident, injury, death or damage
occurring outside of the Premises but on the Property, where such
accident, damage or injury results or is claimed to have resulted
from an act or omission on the part of Tenant or Tenant's agents,
employees, invitees or independent contractors; or (iii) in
connection with the conduct or management of the Premises or of
any business
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therein, or any thing or work whatsoever done, or any condition created
(other than by Landlord) in or about the Premises; and, in any case,
occurring after the date of this Lease, until the end of the Term of
this Lease, and thereafter so long as Tenant is in occupancy of the
Premises. This indemnity and hold harmless agreement shall include
indemnity against all costs, expenses and liabilities incurred in, or
in connection with, any such claim or proceeding brought thereon, and
the defense thereof, including, without limitation, reasonable
attorneys' fees and costs at both the trial and appellate levels. The
provisions of this Section 10.1 shall survive the expiration or any
earlier termination of this Lease.
10.2 PUBLIC LIABILITY INSURANCE. Tenant agrees to maintain in full force
from the date upon which Tenant first enters the Premises for any
reason, throughout the Term of this Lease, and thereafter so long as
Tenant is in occupancy of any part of the Premises, a policy of general
liability and property damage insurance (including broad form
contractual liability, independent contractor's hazard and completed
operations coverage) under which Landlord, Manager (and such other
persons as are in privity of estate with Landlord as may be set out in
notice from time to time) and Tenant are named as insureds, and under
which the insurer agrees to defend, indemnify and hold Landlord,
Manager, and those in privity of estate with Landlord, harmless from
and against all cost, expense and/or liability arising out of or based
upon any and all claims, accidents, injuries and damages set forth in
Section 10.1. Each such policy shall be non-cancellable and
non-amendable with respect to Landlord, Manager and Landlord's said
designees without thirty (30) days' prior notice to Landlord and shall
be in at least the amounts of the Initial Public Liability Insurance
specified in Section 1.3 or such greater amounts as Landlord shall from
time to time request, and a duplicate original or certificate thereof
shall be delivered to Landlord.
10.3 TENANT'S RISK. To the maximum extent this agreement may be made
effective according to law, Tenant agrees to use and occupy the
Premises and to use such other portions of the Property as Tenant is
herein given the right to use at Tenant's own risk; and Landlord shall
have no responsibility or liability for any loss of or damage to
Tenant's Removable Property or for any inconvenience, annoyance,
interruption or injury to business arising from Landlord's making any
repairs or changes which Landlord is permitted by this Lease or
required by law to make in or to any portion of the Premises or other
sections of the Property, or in or to the fixtures, equipment or
appurtenances thereof. Tenant shall carry
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"all-risk" property insurance on a "replacement cost" basis (including
so-called improvements and betterments), and provide a waiver of
subrogation as required in Section 14.20. The provisions of this
Section 10.3 shall be applicable from and after the execution of this
Lease and until the end of the Term of this Lease, and during such
further period as Tenant may use or be in occupancy of any part of the
Premises or of the Building.
10.4 INJURY CAUSED BY THIRD PARTIES. To the maximum extent this agreement
may be made effective according to law, Tenant agrees that Landlord
shall not be responsible or liable to Tenant, or to those claiming by,
through or under Tenant, for any loss or damage that may be occasioned
by or through the acts or omissions of persons occupying adjoining
premises or any part of the premises adjacent to or connecting with the
Premises or any part of the Property or otherwise. The provisions of
this Section 10.4 shall survive the expiration or any earlier
termination of this Lease.
ARTICLE XI
LANDLORD'S ACCESS TO PREMISES
11.1 LANDLORD'S RIGHTS. Landlord shall have the right to enter the Premises
at all reasonable hours for the purpose of inspecting or making repairs
to the same, and Landlord shall also have the right to make access
available at all reasonable hours to prospective or existing
mortgagees, purchasers or tenants of any part of the Property.
ARTICLE XII
FIRE, EMINENT DOMAIN, ETC.
12.1 ABATEMENT OF RENT. If the Premises shall be damaged by fire or
casualty, Basic Rent and Escalation Charges payable by Tenant shall
abate proportionately for the period in which, by reason of such
damage, there is substantial interference with Tenant's use of the
Premises, having regard to the extent to which Tenant may be required
to discontinue Tenant's use of all or a portion of the Premises, but
such abatement or reduction shall end if and when Landlord shall have
substantially restored the Premises (excluding any alterations,
additions or improvements made by Tenant pursuant to Section 5.2) to
the condition in which they were prior to such damage. If the Premises
shall be affected by any
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exercise of the power of eminent domain, Basic Rent and Escalation
Charges payable by Tenant shall be justly and equitably abated and
reduced according to the nature and extent of the loss of use thereof
suffered by Tenant. In no event shall Landlord have any liability for
damages to Tenant for inconvenience., annoyance, or interruption of
business arising from such fire, casualty or eminent domain.
12.2 LANDLORD'S RIGHT OF TERMINATION. If the Premises or the Building are
substantially damaged by fire or casualty (the term "substantially
damaged" meaning damage of such a character that the same cannot, in
ordinary course, reasonably be expected to be repaired within sixty
(60) days from the time the repair work would commence), or if any part
of the Building is taken by any exercise of the right of eminent
domain, then Landlord shall have the right to terminate this Lease
(even if Landlord's entire interest in the Premises may have been
divested) by giving notice of Landlord's election so to do within 90
days after the occurrence of such casualty or the effective date of
such taking, whereupon this Lease shall terminate thirty (30) days
after the date of such notice with the same force and effect as if such
date were the date originally established as the expiration date
hereof.
12.3 RESTORATION, If this Lease shall not be terminated pursuant to Section
12.2, Landlord shall thereafter use due diligence to restore the
Premises (excluding any alterations, additions or improvements made by
Tenant) to proper condition for Tenant's use and occupation, provided
that Landlord's obligation shall be limited to the amount of insurance
proceeds available therefor. If, for any reason, such restoration shall
not be substantially completed within six months after the expiration
of the 90-day period referred to in Section 12.2 (which six-month
period may be extended for such periods of time as Landlord is
prevented from proceeding with or completing such restoration for any
cause beyond Landlord's reasonable control, but in no event for more
than an additional three months), Tenant shall have the right to
terminate this Lease by giving notice to Landlord thereof within thirty
(30) days after the expiration of such period (as so extended). Upon
the giving of such notice, this Lease shall cease and come to an end
without further liability or obligation on the part of either party
unless, within such 30-day period, Landlord substantially completes
such restoration. Such right of termination shall be Tenant's sole and
exclusive remedy at law or in equity for Landlord's failure so to
complete such restoration.
12.4 AWARD. Landlord shall have and hereby reserves and excepts, and Tenant
hereby grants and assigns to
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Landlord, all rights to recover for damages to the Property and the
leasehold interest hereby created, and to compensation accrued or
hereafter to accrue by reason of such taking, damage or destruction,
and by way of confirming the foregoing, Tenant hereby grants and
assigns, and covenants with Landlord to grant and assign to Landlord,
all rights to such damages or compensation. Nothing contained herein
shall be construed to prevent Tenant from, at its sole cost and
expense, prosecuting a separate condemnation proceeding with respect to
a claim for the value of any of Tenant's Removable Property installed
in the Premises by Tenant at Tenant's expense and for relocation
expenses, provided that such action shall not affect the amount of
compensation otherwise recoverable by Landlord from the taking
authority.
ARTICLE XIII
DEFAULT
13.1 TENANT'S DEFAULT. (a) If at any time subsequent to the date of this
Lease any one or more of the following events (herein referred to as a
"Default of Tenant") shall happen:
(i) Tenant shall fail to pay the Basic Rent, Reimbursement
Rent, Escalation Charges or other sums payable as additional charges
hereunder when due; or
(ii) Tenant shall neglect or fail to perform or observe any
other covenant herein contained on Tenant's part to be performed or
observed, or Tenant shall desert or abandon the Premises or the
Premises shall become, or appear to have become vacant (regardless
whether the keys shall have been surrendered or the rent and all other
sums due shall have been paid), and Tenant shall fail to remedy the
same within thirty (30) days after notice to Tenant specifying such
neglect or failure, or if such failure is of such a nature that Tenant
cannot reasonably remedy the same within such thirty (30) day period,
Tenant shall fail to commence promptly to remedy the same and to
prosecute such remedy to completion with diligence and continuity; or
(iii) Tenant's leasehold interest in the Premises shall be
taken on execution or by other process of law directed against Tenant;
or
(iv) Tenant shall make an assignment for the benefit of
creditors or shall file a voluntary petition in bankruptcy or shall be
adjudicated bankrupt or insolvent, or shall file any petition or answer
seeking
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any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present
or future Federal, State or other statute, law or regulation for the
relief of debtors, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of Tenant or of all
or any substantial part of its properties, or shall admit in writing
its inability to pay its debts generally as they become due; or
(v) A petition shall be filed against Tenant in bankruptcy or
under any other law seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief
under any present or future Federal, State or other statute, law or
regulation and shall remain undismissed or unstayed for an aggregate of
sixty (60) days (whether or not consecutive), or if any debtor in
possession (whether or not Tenant) trustee, receiver or liquidator of
Tenant or of all or any substantial part of its properties or of the
Premises shall be appointed without the consent or acquiescence of
Tenant and such appointment shall remain unvacated or unstayed for an
aggregate of sixty (60) days (whether or not consecutive); or
(vi) If a Default of Tenant of the kind set forth in clauses
(i) or (ii) above shall occur and if either (a) Tenant shall cure such
Default within the applicable grace period or (b) Landlord shall, in
its sole discretion , permit Tenant to cure such Default after the
applicable grace period has expired, and an event which would
constitute a similar Default if not cured within the applicable grace
period shall occur more than once within the next 365 days, whether or
not such event is cured within the applicable grace period;
then in any such case (1) if such Default of Tenant shall occur prior to the
Commencement Date, this Lease shall ipso facto, and without further act on the
part of Landlord, terminate, and (2) if such Default of Tenant shall occur after
the Commencement Date, Landlord may terminate this Lease by notice to Tenant,
and thereupon this Lease shall come to an end as fully and completely as if such
date were the date herein originally fixed for the expiration of the Term of
this Lease, and Tenant will then quit and surrender the Premises to Landlord,
but Tenant shall remain liable as hereinafter provided.
(b) If this Lease shall be terminated as provided in this Article, or if any
execution or attachment shall be issued against Tenant or any of Tenant's
property whereupon the Premises shall be taken or occupied by someone other than
Tenant, then Landlord may, without notice, re-enter the Premises, either by
force, summary
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proceedings, ejectment or otherwise, and remove and dispossess Tenant and all
other persons and any and all property from the same, as if this Lease had not
been made, and Tenant hereby waives the service of notice of intention to
re-enter or to institute legal proceedings to that end.
(c) in the event of any termination, Tenant shall pay the Basic Rent, Escalation
Charges and other sums payable hereunder up to the time of such termination, and
thereafter Tenant, until the end of what would have been the Term of this Lease
in the absence of such termination, and whether or not the Premises shall have
been relet, shall be liable to Landlord for, and shall pay to Landlord, as
liquidated current damages, the Basic Rent, Escalation Charges and other sums
which would be payable hereunder if such termination had not occurred, less the
net proceeds, if any, of any reletting of the Premises, after deducting all
expenses in connection with such reletting, including, without limitation, all
repossession costs, brokerage commissions, legal expenses, attorneys' fees,
advertising, expenses of employees, alteration costs and expenses of preparation
for such reletting. Tenant shall pay such current damages to Landlord monthly on
the days which the Basic Rent would have been payable hereunder if this Lease
had not been terminated.
(d) At any time after such termination, whether or not Landlord shall have
collected any such current damages, as liquidated final damages and in lieu of
all such current damages beyond the date of such demand, at Landlord's election
Tenant shall pay to Landlord and amount equal to the excess, if any, of the
Basic Rent, Escalation Charges and other sums as hereinbefore provided which
would be payable hereunder from the date of such demand (assuming that, for the
purposes of this paragraph, annual payments by Tenant on account of Taxes,
Utility Expenses and Operating Expenses would be the same as the payments
required for the immediately preceding Operating or Tax Year) for what would be
the then unexpired Term of this Lease if the same had remained in effect, over
the then fair net rental value of the Premises for the same period.
(e) In the case of any Default by Tenant, re-entry, expiration and dispossession
by summary proceeding or otherwise, Landlord may (i) re-let the Premises or any
part or parts thereof, either in the name of Landlord or otherwise, for a term
or terms which may at Landlord's option be equal to or less than or exceed the
period which would otherwise have constituted the balance of the Term of this
Lease and may grant concessions or free rent to the extent that Landlord
considers advisable and
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necessary to re-let the same and (ii) may make such reasonable
alterations, repairs and decorations in the Premises as Landlord in its
sole judgment considers advisable and necessary for the purpose of
reletting the Premises; and the making of such alterations, repairs and
decorations shall not operate or be construed to release Tenant from
liability hereunder as aforesaid. Landlord shall in no event be liable
in any way whatsoever for failure to re-let the Premises, or, in the
event that the Premises are re-let, for failure to collect the rent
under such re-letting. Tenant hereby expressly waives any and, all
rights of redemption granted by or under any present or future laws in
the event of Tenant being evicted or dispossessed, or in the event of
Landlord obtaining possession of the Premises, by reason of the
violation by Tenant of any of the covenants and conditions of this
Lease.
(f) If a Guarantor of this Lease is named in Section 1.2, the happening
of any of the events described in paragraphs (a)(iv) or (a)(v) of this
Section 13.1 with respect to the Guarantor shall constitute a Default
of Tenant hereunder.
(g) The specified remedies to which Landlord may resort hereunder are
not intended to be exclusive of any remedies or means of redress to
which Landlord may at any time be entitled to lawfully, and Landlord
may invoke any remedy (including the remedy of specific performance)
allowed at law or in equity as if specific remedies were not herein
provided for.
(h) All costs and expenses incurred by or on behalf of Landlord
(including, without limitation, attorneys' fees and expenses) in
enforcing its rights hereunder or occasioned by any Default of Tenant
shall be paid by Tenant.
13.2 LANDLORD'S DEFAULT. Landlord shall in no event be in default of the
performance of any of Landlord's obligations hereunder unless and until
Landlord shall have unreasonably failed to perform such obligation
within a period of time reasonably required to correct any such
default, after notice by Tenant to Landlord specifying wherein Landlord
has failed TO perform any such obligations.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 EXTRA HAZARDOUS USE. Tenant covenants and agrees that Tenant will
not do or permit anything to be done in or
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upon the Premises, or bring in anything or keep anything therein, which
shall increase the rate of property or liability insurance on the
Premises or of the Building above the standard rate applicable to
premises being occupied for Permitted Uses; and Tenant further agrees
that, in the event that Tenant shall do any of the foregoing, Tenant
will promptly pay to Landlord, on demand, any such increase resulting
therefrom, which shall be due and payable as an additional charge
hereunder.
14.2 WAIVER. (a) Failure on the part of Landlord or Tenant to complain of
any action or non-action on the part of the other, no matter how long
the same may continue, shall never be a waiver by Tenant or Landlord,
respectively, of any of the other's rights hereunder. Further, no
waiver at any time of any of the provisions hereof by Landlord or
Tenant shall be construed as a waiver of any of the other provisions
hereof, and a waiver at any time of any of the provisions hereof shall
not be construed as a waiver at any subsequent time of the same
provisions. The consent or approval of Landlord or Tenant to or of any
action by the other requiring such consent or approval shall not be
construed to waive or render unnecessary Landlord's or Tenant's consent
or approval to or of any subsequent similar act by the other.
(b) No payment by Tenant, or acceptance by Landlord, of a lesser amount
than shall be due from Tenant to Landlord shall be treated otherwise
than as a payment on account of the earliest installment of any payment
due from Tenant under the provisions hereof. The acceptance by Landlord
of a check for a lesser amount with an endorsement or statement
thereon, or upon any letter accompanying such check, that such lesser
amount is payment in full, shall be given no effect, and Landlord may,
accept such check without prejudice to any other rights or remedies
which Landlord may have against Tenant.
14.3 COVENANT OF QUIET ENJOYMENT. Tenant, subject to the terms and
provisions of this Lease, on payment of the Basic Rent and Escalation
Charges and observing, keeping and performing all of the other terms
and provisions of this Lease on Tenant's part to be observed, kept and
performed, shall lawfully, peaceably and quietly have, hold, occupy
and enjoy the Premises during the term hereof, without hindrance or
ejection by any persons lawfully claiming under Landlord to have title
to the Premises superior to Tenant; the foregoing covenant of quiet
enjoyment is in lieu of any other covenant, express or implied.
14.4 LANDLORD'S LIABILITY. (a) Tenant specifically agrees to look solely to
Landlord's then equity interest in the
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Property at the time owned, for recovery of any judgment from Landlord;
it being specifically agreed that Landlord (original or successor)
shall never be personally liable for any such judgment, or for the
payment of any monetary obligation to Tenant. The provision contained
in the foregoing sentence is not intended to, and shall not, limit any
right that Tenant might otherwise have to obtain injunctive relief
against Landlord or Landlord's successors in interest, or to take any
action not involving the personal liability of Landlord (original or
successor) to respond in monetary damages from Landlord's assets other
than Landlord's equity interest in the Property.
(b) With respect to any services or utilities to be furnished by
Landlord to Tenant, Landlord shall in no event be liable for failure to
furnish the same when prevented from doing so by Force Majeure, strike,
lockout, breakdown, accident, order or regulation of or by any
governmental authority, or failure of supply, or inability by the
exercise of reasonable diligence to obtain supplies, parts or employees
necessary to furnish such services, or because of war or other
emergency, or for any cause beyond Landlord's reasonable control, or
for any cause due to any act or neglect of Tenant or Tenant's servants,
agents, employees, licensees or any person claiming by, through or
under Tenant; nor shall any such failure give rise to any claim in
Tenant's favor that Tenant has been evicted, either constructively or
actually, partially or wholly.
(c) In no event shall Landlord ever be liable to Tenant for any loss of
business or any other indirect or consequential damages suffered by
Tenant from whatever cause.
(d) With respect to any repairs or restoration which are required or
permitted to be made by Landlord, the same may be made during normal
business hours and Landlord shall have no liability for damages to
Tenant for inconvenience, annoyance or interruption of business arising
therefrom.
14.5 NOTICE TO MORTGAGEE OR GROUND LESSOR. After receiving notice from any
person, firm or other entity that it holds a mortgage or a ground
lease which includes the Premises, no notice from Tenant to Landlord
alleging any default by Landlord shall be effective unless and until a
copy of the same is given to such holder or ground lessor (provided
Tenant shall have been furnished with the name and address of such
holder or ground lessor), and the curing of any of Landlord's defaults
by such holder or ground lessor shall be treated as performance by
Landlord.
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14.6 ASSIGNMENT OF RENTS AND TRANSFER OF TITLE. (a) With reference to any
assignment by Landlord of Landlord's interest in this Lease, or the
rents payable hereunder, conditional in nature or otherwise, which
assignment is made to the holder of a mortgage on property which
includes the Premises, Tenant agrees that the execution thereof by
Landlord, and the acceptance thereof by the holder of such mortgage,
shall never be treated as an assumption by such holder of any of the
obligations of Landlord hereunder unless such holder shall, by notice
sent to Tenant, specifically otherwise elect and that, except as
aforesaid, such holder shall be treated as having assumed Landlord's
obligations hereunder only upon foreclosure of such holder's mortgage
and the taking of possession of the Premises.
(b) In no event shall the acquisition of Landlord's interest in the
Property by a purchaser which, simultaneously therewith, leases
Landlord's entire interest in the Property back to the seller thereof
be treated as an assumption by operation of law or otherwise, of
Landlord's obligations hereunder, but Tenant shall look solely to such
seller-lessee, and its successors from time to time in title, for
performance of Landlord's obligations hereunder. In any such event,
this Lease shall be subject and subordinate to the lease to such
purchaser. For all purposes, such seller-lessee, and its successors in
title, shall be the Landlord hereunder unless and until Landlord's
position shall have been assumed by such purchaser-lessor.
(c) Except as provided in paragraph (b) of this Section, in the event
of any transfer of title to the Property by Landlord, Landlord shall
thereafter be entirely freed and relieved from the performance and
observance of all covenants and obligations hereunder.
14.7 RULES AND REGULATIONS. Tenant shall abide by rules and regulations set
forth in Exhibit C attached hereto and those rules and regulations from
time to time established by Landlord, it being agreed that such rules
and regulations will established and applied by Landlord in a non-
discriminatory fashion, such that all rules and regulations shall be
generally applicable to other tenants of the Building of similar nature
to the Tenant named herein. Landlord agrees to use reasonable efforts
to insure that any such rules and regulations are uniformly enforced,
but Landlord shall not be liable to Tenant for violation of the same by
any other tenant or occupant of the Building, or persons having
business with them. In the event that there shall be any conflict
between such rules and regulations and the provisions of this Lease,
the provisions of this Lease shall control.
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<PAGE> 35
14.8 ADDITIONAL CHARGES. If Tenant shall fail to pay when due any sums under
this Lease designated or payable as an additional charge, Landlord
shall have the same rights and remedies as Landlord has hereunder for
failure to pay Basic Rent.
14.9 INVALIDITY OF PARTICULAR PROVISIONS. If any term or provision of this
Lease, or the application thereof to any person or circumstance shall,
to any extent, be invalid or unenforceable, the remainder of this
Lease, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest
extent permitted by Law.
14.10 PROVISIONS BINDING, ETC. Except as herein otherwise provided, the terms
hereof shall be binding upon and shall inure to the benefit of the
successors and assigns, respectively, of Landlord and Tenant and, if
Tenant shall be an individual, upon and to his heirs, executors,
administrators, successors and assigns. Each term and each provision of
this Lease to be performed by Tenant shall be construed to be both a
covenant and a condition. The reference contained to successors and
assigns of Tenant is not intended to constitute a consent to assignment
by Tenant, but has reference only to those instances in which Landlord
may later give consent to a particular assignment as required by those
provisions of Article VI hereof.
14.11 RECORDING. Tenant agrees not to record this Lease, but each party
hereto agrees, on the request of the other, to execute a so-called
notice of lease in form recordable and complying with applicable law
and reasonably satisfactory to Landlord's attorneys. In no event shall
such document set forth the rent or other charges payable by Tenant
under this Lease; and any such document shall expressly state that it
is executed pursuant to the provisions contained in this Lease, and is
not intended to vary the terms and conditions of this Lease.
14.12 NOTICES. Whenever, by the terms of this Lease, notices, consents or
approvals shall or may by given either to Landlord or to Tenant, such
notices, consents or approvals shall be in writing and shall be sent by
registered or certified mail, return receipt requested, postage
prepaid:
If intended for Landlord, addressed to Landlord at Landlord's Original
Address with a copy Addressed to Landlord at 730 Third Avenue, New
York, New York 10017 Attention: Douglas Lawrence (or to such other
address as
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<PAGE> 36
may from time to time hereafter by designated by Landlord by like
notice).
If intended for Tenant, addressed to Tenant at Tenant's original
Address until the Commencement Date and thereafter to the Premises (or
to such other address or addresses as may from time to time hereafter
be designated by Tenant by like notice.)
All such notices shall be effective when deposited in the United States
Mail within the Continental United States, provided that the same are
received in ordinary course at the address to which the same were sent.
14.13 WHEN LEASE BECOMES BINDING. The submission of this document for
examination and negotiation does not constitute an offer to lease, or a
reservation of, or option for, the Premises, and this document shall
become effective and binding only upon the execution and delivery
hereof by both Landlord and Tenant. All negotiations, considerations,
representations and understandings between Landlord and Tenant are
incorporated herein and this Lease expressly supersedes any proposals
or other written documents relating hereto. this Lease may be modified
or altered only by written agreement between Landlord and Tenant, and
no act or omission of any employee or agent of Landlord shall alter,
change or modify any of the provisions hereof.
14.14 PARAGRAPH HEADINGS. The paragraph headings throughout this instrument
are for convenience and reference only, and the words contained therein
shall in no way be held to explain, modify, amplify or aid in the
interpretation, construction, or meaning of the provisions of this
Lease.
14.15 RIGHTS OF MORTGAGEE OR GROUND LESSOR. This Lease shall be subordinate
to any mortgage or ground lease from time to time encumbering the
Premises, whether executed and delivered prior to or subsequent to the
date of this Lease, if the holder of such mortgage or ground lease
shall so elect. If this Lease is subordinate to any mortgage or ground
lease and the holder thereof (or successor) shall succeed to the
interest of Landlord, at the election of such holder (or successor)
Tenant shall attorn to such holder and this Lease shall continue in
full force and effect between such holder (or successor) and Tenant.
Tenant agrees to execute such instruments of subordination or
attornment in confirmation of the foregoing agreement as such holder
may request, and Tenant hereby appoints such holder as Tenant's
attorney-in-fact to execute such subordination or attornment agreement
upon default of Tenant in complying with such holder's request.
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<PAGE> 37
14.16 STATUS REPORT. Recognizing that both parties may find it necessary to
establish to third parties, such as accountants, banks, mortgagees,
ground lessors, or the like, the then current status of performance
hereunder, either party, on the request of the other made from time to
time, will promptly furnish to Landlord, or the holder of any mortgage
or ground lease encumbering the Premises, or to Tenant, as the case may
be, a statement of the status of any matter pertaining to this Lease,
including, without limitation, acknowledgement that (or the extent to
which) each party is in compliance with its obligations under the terms
of this Lease.
14.17 SECURITY DEPOSIT. Concurrently with the execution and delivery of this
Lease, Tenant shall deposit the Security Deposit specified in Section
1.2 hereof and that Landlord shall hold the same throughout the Term of
this Lease as security for the performance by Tenant of all obligations
on the part of Tenant hereunder. Landlord shall have the right from
time to time without prejudice to any other remedy Landlord may have on
account thereof, to apply such deposit, or any part thereof, to
Landlord's damages arising from, or to cure, any Default of Tenant. If
Landlord shall so apply any or all of such deposit, Tenant shall
immediately deposit with Landlord the amount so applied to be held as
security hereunder. There then existing no Default of Tenant, Landlord
shall return the deposit, or so much thereof as shall theretofore not
been applied in accordance with the terms of this Section 14.17, to
Tenant on the expiration or earlier termination of the Term of this
Lease and surrender of possession of the Premises by Tenant to
Landlord at such time. While Landlord holds such deposit, Landlord
shall have no obligation to pay interest on the same and shall have the
right to commingle the same with Landlord's other funds. If Landlord
conveys Landlord's interest under this Lease, the deposit, or any part
thereof not previously applied, may be turned over by Landlord to
Landlord's grantee, and, if so turned over, Tenant agrees to look
solely to such grantee for proper application of the deposit in
accordance with the terms of this Section 14.17, and the return thereof
in accordance therewith. The holder of a mortgage shall not be
responsible to Tenant for the return or application of any such
deposit, whether or not it succeeds to the position of Landlord
hereunder, unless such deposit shall have been received in hand by such
holder.
Provided that Tenant is not otherwise in default in the performance or
observance of any term, covenant, condition or agreement to be
performed or observed by Tenant hereunder, Tenant shall be permitted to
apply a portion (namely $7,455.37) of the Security Deposit held by
Landlord hereunder against the Basic Rent obligation
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<PAGE> 38
for and with respect to the last month of the Initial Term.
14.18 REMEDYING DEFAULTS. Landlord shall have the right, but shall not be
required, to pay such sums or to do any act which requires the
expenditure of monies which may be necessary or appropriate by reason
of the failure or neglect of Tenant to perform any of the provisions of
this Lease, and in the event of the exercise of such right by Landlord,
Tenant agrees to pay to Landlord forthwith upon demand all such sums,
together with interest thereon at a rate equal to 3% over the prime
rate in effect from time to time at the Bank of Boston (but in no event
less than 18% per annum), as an additional charge. Any payment of Fixed
Rent, Escalation Charges or other sums payable hereunder not paid when
due shall, at the option of Landlord, bear interest at a rate equal to
3% over the prime rate in effect from time to time at the Bank of
Boston (but in no event less than 18% per annum) from the due date
thereof and shall be payable forthwith on demand by Landlord, as an
additional charge.
14.19 HOLDING OVER. Any holding over by Tenant after the expiration of the
Term of this Lease shall be treated as a daily tenancy at sufferance at
a rate equal to the then fair rental value of the Premises but in no
event less twice the sum of (i) Fixed Rent and (ii) Escalation Charges
in effect on the expiration date. Tenant shall also pay to Landlord all
damages, direct and/or indirect (including any loss of a tenant or
rental income), sustained by reason of any such holding over.
Otherwise, such holding over shall be on the terms and conditions set
forth in this Lease as far as applicable. The Landlord may, but shall
not be required to, and only on written notice to Tenant after the
expiration of the Term hereof, elect to treat such holding over as an
extension of the Term of this Lease for a period of up to one (1) year,
as designated by Landlord, such extension to be on the terms and
conditions set forth in this Section 14.19.
14.20 WAIVER OF SUBROGATION. Insofar as, and to the extent that, the
following provision shall not make it impossible to secure insurance
coverage obtainable from responsible insurance companies doing
business in the locality in which the Property is located (even though
extra premium may result therefrom) Landlord and Tenant mutually agree
that any property damage insurance carried by either shall provide
for the waiver by the insurance carrier of any right of subrogation
against the other, and they further mutually agree that, with respect
to any damage to property, the loss from which is covered by insurance
then being carried by them, respectively, the one carrying such
insurance and suffering such loss releases the other of and from any
and all claims with
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<PAGE> 39
respect to such loss to the extent of the insurance proceeds paid with
respect thereto.
4.21 SURRENDER OF PREMISES. Upon the expiration or earlier termination of
the Term of this Lease, Tenant shall peaceably quit and surrender to
Landlord the Premises in neat and clean condition and in good order,
condition and repair, together with all alterations, additions and
improvements which may have been made or installed in, on or to the
Premises prior to or during the Term of this Lease, excepting only
ordinary wear and use and damage by fire or other casualty for which,
under other provisions of this Lease, Tenant has no responsibility of
repair and restoration. Tenant shall remove all of Tenant's Removable
Property and, to the extent specified by Landlord, all alterations and
additions made by Tenant and all partitions wholly within the Premises;
and shall repair any damage to the Premises or the Building caused by
such removal. Any Tenant's Removable Property which shall remain in the
Building or on the Premises after the expiration or termination of the
Term of this Lease shall be deemed conclusively to have been abandoned,
and either may be retained by Landlord as its property or may be
disposed of in such manner as Landlord may see fit, at Tenant's sole
cost and expense.
14.22 SUBSTITUTE SPACE. If Landlord so requests, Tenant shall vacate the
Premises and relinquish its rights with respect to the same provided
that Landlord shall provide to Tenant substitute space in the Building,
such space to be reasonably comparable in size, layout, finish and
utility to the Premises, and further provided that Landlord shall, at
its sole cost and expense, move Tenant and its Removable Property from
the Premises to such new space in such manner as will minimize, to the
greatest extent practicable, undue interference with the business or
operation of Tenant. Any such substitute space shall, from and after
such relocation, be treated as the Premises demised under this Lease,
and shall be occupied by Tenant under the same terms, provisions and
conditions as are set forth in this Lease.
14.23 BROKERAGE. Tenant warrants and represents that Tenant has dealt with no
broker in connection with the consummation of this Lease and, in the
event of any brokerage claims against Landlord predicated upon prior
dealings with Tenant, Tenant agrees to defend the same and indemnify
Landlord against any such claim (except any claim by the Broker).
14.24 SPECIAL TAXATION PROVISIONS. Landlord shall have the right at any time
and from time to time, to unilaterally amend the provisions of this
Lease if Landlord is advised by its Counsel that all or any portion of
the monies paid
-35-
<PAGE> 40
by Tenant to Landlord hereunder are, or may be deemed to be, unrelated
business income within the meaning of the United States Internal
Revenue Code, or regulation issued thereunder, and Tenant agrees that
it will execute all documents or instruments necessary to effect such
amendment or amendments, provided that no such amendment shall result
in Tenant having to pay in the aggregate more money on account of its
occupancy of the demised premises under the provisions of this Lease as
so amended and provided further, that no such amendment or amendments
shall result in Tenant receiving under the provisions of this Lease
less services than it is entitled to receive nor services of a lesser
quality. Anything contained in the foregoing provisions of this Lease
(including, without limitation, Article VI hereof) to the contrary
notwithstanding, neither Tenant nor any other person having an interest
in the possession, use, occupancy or utilization of the Premises, shall
enter into any lease, sublease, license, concession or other agreement
for use, occupancy, utilization of space in the Premises which provides
for rental or other payment for such use, occupancy or utilization of
space, in whole or in part, on the net income or profits derived by any
person from the Premises leased, used, occupied or utilized (other than
an amount based on a fixed percentage or percentage of receipts for
sales) and any such recorded lease, sublease, license, concession or
other agreement shall be absolutely void and ineffective as a
conveyance of any right or interest in the possession, use, occupancy
or utilization of any part of the Premises.
14.25 HAZARDOUS MATERIALS. Tenant shall not (either with or without
negligence) cause or permit the escape, disposal, release or threat of
release of any biologically or chemically active or other Hazardous
Materials (as said term is hereafter defined) on, in, upon or under the
Property or the Premises. Tenant shall not allow the generation,
storage, use or disposal of such Hazardous Materials in any manner not
sanctioned by law or by the highest standards prevailing in the
industry for the generation, storage, use and disposal of such
Hazardous Materials, nor allow to be brought into the Property any such
Hazardous Materials except for use in the ordinary course of Tenant's
business, and then only after written notice is given to Landlord of
the identity of such Hazardous Materials. Hazardous Materials shall
include, without limitation, any material or substance which is (i)
petroleum, (ii) asbestos, (iii) designated as a "hazardous substance"
pursuant to Section 311 of the Federal Water Pollution Control Act, 33
U.S.C. SS 1251 et seq. (33 U.S.C. SS 1321) or listed pursuant to SS 307
of the Federal Water Pollution Control Act (33 U.S.C. SS 1317), (iv)
defined as a "hazardous waste" pursuant to
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<PAGE> 41
Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C.
SS 6901 et seq. (42 U.S.C. SS 6903), (v) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. SS 9601 et seq.
(42 U.S.C. SS 9601), as amended, or (vi) defined as "oil" or a
"hazardous waste", a "hazardous substance", a "hazardous material" or a
"toxic material" under any other law, rule or regulation applicable to
the Property, including, without limitation, Chapter 21E of the
Massachusetts General Laws, as amended. If any lender or governmental
agency shall ever require testing to ascertain whether or not there has
been any release of Hazardous Materials, then the reasonable costs
thereof shall be reimbursed by Tenant to Landlord upon demand as
additional charges but only if such requirement applies to the Premises
or may be the result of the acts or omissions of Tenant. In addition,
Tenant shall execute affidavits, representations and the like, from
time to time, at Landlord's request concerning Tenant's best knowledge
and belief regarding the presence of Hazardous Materials on the
Premises. In all events, Tenant shall indemnify and save Landlord
harmless from any release on threat of release on the presence or
existence of Hazardous Materials on the Premises occurring while Tenant
is in possession, or elsewhere on the Property if caused by Tenant or
persons acting under Tenant. The within covenants and indemnity shall
survive the expiration or earlier termination of the Term of this
Lease. Landlord expressly reserves the right to enter the Premises to
perform regular inspections.
14.26 GOVERNING LAW. This Lease shall be governed exclusively by the
provisions hereof and by the laws of the Commonwealth of Massachusetts,
as the same may from time to time exist.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
duly executed, under seal, by persons hereunto duly
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<PAGE> 42
authorized, in multiple copies, each to be considered an original hereof, as of
the date first set forth above.
TENANT:
VOICETEK CORPORATION
Dated: May 25, 1993 By: /s/ Stephen A. Gorgal
--------------- -----------------------------
Its: Treasurer
-----------------------------
LANDLORD:
TEACHERS REALTY CORPORATION
Dated: May 25, 1993 By: /s/ Richard J. Usas
--------------- -----------------------------
Its: Director
----------------------------
<PAGE> 43
EXHIBIT A
[VOICETEK FLOOR PLAN]
<PAGE> 44
EXHIBIT B
[VOICETEK PARTIAL FLOOR PLAN]
<PAGE> 45
EXHIBIT C
RULES AND REGULATIONS
1. The sidewalks, paved and/or landscaped areas shall not be obstructed
or encumbered by Tenant or used for any purpose other than ingress and egress to
and from the demised premises.
2. No sign, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by Tenant on any part of the demised
premises or Building so as to be visible from outside the demised premises
without the prior written consent of Landlord, which will not be unreasonably
withheld or delayed
In the event of the violation of this paragraph,
Landlord may remove same without any liability, and may charge the expense
incurred in such removal to Tenant, as additional rent.
3. No awnings, curtains, blinds, shades, screens or other projections
shall be attached to or hung in, or used in connection with, any window of the
demised premises or any outside wall of the Building without the prior written
consent of Landlord, which will not be unreasonably withheld or delayed so long
as said awning or other item conforms to similar items installed in or upon
other portions of the Building. Such awnings, curtains, blinds, shades, screens
or other projections must be of a quality, type, design and color, and attached
in the manner, approved by Landlord. If any portion of the demised premises
which is not used for office purposes shall have windows, such windows shall be
equipped with curtains, blinds or shades approved by Landlord, and curtains,
blinds or shades shall be kept closed said at all times.
4. The water and wash closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were designed and
constructed, and no sweepings, rubbish, rags, acids, chemicals, process water,
cooling water or like substances shall be deposited therein. Said plumbing
fixtures and the plumbing system of the Building shall be used only for the
discharge of so-called sanitary waste. All damage resulting from any misuse of
said fixtures and/or plumbing system by Tenant or anyone claiming under Tenant
shall be borne by Tenant.
5. Tenant must, upon the termination of its tenancy, return to Landlord
all locks, cylinders and keys to the demised premises and any offices therein.
6. Tenant shall keep any sidewalks and planters in front of the demised
premises reasonably free and clear of litter and refuse, regardless of the
source thereof.
7. Tenant shall, at Tenant's expense, provide artificial light and
electric current for the employees of Landlord and/or Landlord's contractors
while making repairs or alterations in the demised premises.
<PAGE> 46
8. Tenant shall not make, or permit to be made, any unseemly or
disturbing odors or noises or disturb or interfere with occupants of the
Building or those having business with them, whether by use, of any musical
instrument, radio, machine, or in any other way.
9. Canvassing, soliciting, and peddling in the Building are prohibited
and Tenant shall cooperate to prevent the same.
10. Tenant shall keep the demised premises free at all time of pests,
rodents and other vermin, and Tenant shall keep all trash and rubbish stored in
containers of a type approved by Landlord, such containers to be kept at
locations designated by Landlord. Tenant shall cause such containers to be
emptied whenever necessary to prevent them from overflowing or from producing
any objectionable odors.
11. Landlord reserves the right to rescind, alter, waive and/or
establish any reasonable rules and regulations of uniform application to all
tenants which, in its judgment, are necessary, desirable or proper for its best
interests and the best interests of the occupants of the Building.
12. The access roads, driveways, entrances and exits shall not be
obstructed or encumbered by Tenant or used for any purpose other than ingress
and egress.
<PAGE> 47
EXHIBIT E
(ITEMS INCLUDED IN BUILDING/
UTILITY COSTS AND OPERATING EXPENSES)
A. Without limitation, Building Energy/Utility Costs shall include:
Costs for electricity, fuel, oil, gas, steam, water and sewer use
charges and other utilities supplied to the Property and not paid for
directly by tenants.
B. Without limitation, Operating Expenses shall include:
1. All expenses incurred by Landlord or Landlord's agents which
shall be directly related to employment of personnel,
including amounts incurred for wages, salaries and other
compensation for services, payroll, social security,
unemployment and similar taxes, workmen's compensation
insurance, disability benefits, pensions, hospitalization,
retirement plans and group insurance, uniforms and working
clothes and the cleaning thereof, and expenses imposed on
Landlord or Landlord's agents in connection with the
operation, repair, maintenance, cleaning, and protection of
the Property, and its mechanical systems including, without
limitation, day and night supervisors, janitors, carpenters,
engineers, mechanics, electricians and plumbers and personnel
engaged in supervision of any of the persons mentioned above:
provided that, if any such employee is also employed on other
property of Landlord, such compensation shall be suitably
allocated by Landlord among the Property and such other
properties.
2. The cost of services, materials and supplies furnished or used
in the operation, repair, maintenance, cleaning, and
protection of the Property including, without limitation, fees
and assessments, if any, imposed upon Landlord, or charged to
the Property, by any governmental agency or authority or other
duly authorized private or public entity on account of public
safety services, transit, housing, police, fire, sanitation or
other services or purported benefits.
3. The cost of replacements for tools and other similar equipment
used in the repair, maintenance, cleaning and protection of
the Property, provided that, in the case of any such equipment
used jointly on other property of Landlord, such costs shall
be allocated by Landlord among the Property and such other
properties.
4. Premiums for insurance against damage or loss to the Building
from such hazards as shall from time to time be generally
required by institutional mortgagees in the Boston area for
similar properties, including, but not by way of limitation,
insurance covering loss of rent attributable to any such
hazards, and public liability insurance.
<PAGE> 48
EXHIBIT F
TENANT'S JANITORIAL SPECIFICATIONS
EACH VISIT
1. Empty all trash.
2. Replace liners as needed.
3. Empty and wash all ashtrays.
4. Dust all flat surfaces and cleared desks.
5. Clean glass doors.
6. Clean kitchen and coffee areas.
7. Thoroughly clean restrooms; and restock with soap and paper supplies.
8. Vacuum all carpeting.
9. Dust mop tile floors.
10. Damp mop tile floors.
11. Spray buff tile floors: as needed.
12. Turn off all lights, lock doors and leave premises in orderly
condition.
The above services are done on Tuesday, Thursday and Saturday of each week.
<PAGE> 49
5. Intentionally Omitted.
6. If, during the Term of this Lease, Landlord shall make a capital
expenditure, the total cost of which is not properly includable in
Operating Expenses for the Operating Year in which it was made, there
shall nevertheless be included in such Operating Expenses for the
Operating Year in which it was made and in Operating Expenses for each
succeeding Operating Year, an annual charge-off of such capital
expenditure. The annual charge-off shall be determined by dividing the
original capital expenditure plus an interest factor, reasonably
determined by Landlord, as being the interest rate then being charged
for long-term mortgages, by institutional lenders on like properties
within the locality in which the Building is located, by the number of
years of useful life of the capital expenditure, and the useful life
shall be determined reasonably by Landlord in accordance with generally
accepted accounting principles and practices in effect at the time of
making such expenditure.
7. Betterment or special assessments provided the same are apportioned
equally over the longest period permitted by law.
8. Amounts paid to independent contractors for services, materials and
supplies furnished for the operation, repair, maintenance, cleaning and
protection of the Property.
9. Management Fees payable to contractors or managers for operation and
management of the Building.
<PAGE> 1
EXHIBIT 10.6
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to Lease Agreement ("First Amendment") is made as
of this 8 day of August 1994 by and between Teachers Realty Corporation
("Landlord") and Voicetek Corporation ("Tenant").
WHEREAS, Landlord and Tenant have heretofore executed a certain Lease
Agreement dated May 25,1993 ("Lease") pursuant to which Tenant has leased 19,881
rentable square feet of area (the "Original Premises") in a building (the
"Building") known as 19 Alpha Road, Chelmsford, MA; and
WHEREAS, Landlord and Tenant have agreed that Tenant shall be permitted
to expand the Original Premises and to lease an additional 13,619 rentable
square feet of area in the Building, as more particularly shown on Exhibit A to
this First Amendment (the "New Premises") subject to the terms, covenants and
provisions of the Lease as amended hereby; and
WHEREAS, the three (3) year Initial Term of the Lease is scheduled to
expire on May 31,1996; and
WHEREAS, Landlord and Tenant are now desirous of extending the Term of
the Lease a period of five (5) years beginning on the New Premises Commencement
Date (as hereafter defined); and
WHEREAS, Landlord and Tenant have agreed to enter into this First
Amendment to memorialize their agreements and to otherwise modify and amend the
Lease to (i) reflect the increase in the size of the Premises demised under the
Lease as a result of the addition of the New Premises (ii) to extend the Term of
the Lease for the period of five (5) years beginning on the New Premises
Commencement Date and (iii) to otherwise modify and amend the Lease as
hereinafter set forth.
NOW, THEREFORE, in consideration of Ten ($10.00) Dollars and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, Tenant and Landlord hereby agree as follows:
1. Changes in Basic Lease Provisions. Effective as of the New Premises
Commencement Date (as hereinafter defined), the information provided in
Article I of the Lease captioned "Basic Lease Provisions" will be changed and
amended in the following respects:
(a) The definition of the term "Premises Rentable Area" shall be
amended by deleting the reference to "19,881 square feet" and inserting in its
place and stead the number "33,500 square feet".
<PAGE> 2
(b) The definition of the term "Basic Rent" shall be amended by
deleting the entire schedule of Basic Rent set forth on the cover page of the
Lease and replacing it with the following:
<TABLE>
<CAPTION>
Period Basic Rent Monthly Payment
- ------ (per period) ---------------
------------
<S> <C> <C>
"A. The period beginning on the $89,464.50 $ 7,455.38
Commencement Date (as defined in Section
4.1 of the Lease) through the date
immediately preceding the New Premises
Commencement Date (pro-rated on a daily
basis for any partial calendar month in
which the New Premises Commencement Date
shall fall)
B. The approximately two year period $144,050.00 $12,004.17
beginning on the New Premises
Commencement Date through and including
the last day of the calendar month in
which the Second Anniversary of the New
Premises Commencement Date shall fall
(pro-rated on. a daily basis for any
partial calendar month in which the New
Premises Commencement Date shall fall)
$150,750.00 $12,562.50"
C. The three year period beginning on
the day immediately following expiration
of the period described in "B" above
through and including the last day of
the Term of this Lease as it is extended
pursuant to paragraph 1(d) of this First
Amendment
</TABLE>
Tenant shall continue to make the monthly payments of the Reimbursement
Rent as defined under Article III, Section 3.1(c) of the Lease and these
payments shall remain unchanged by this First Amendment.
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<PAGE> 3
(c) The definition of the term "Security Deposit" shall be amended and
increased by deleting the reference to "$22,366.12" and inserting in its place
and stead the number "$32,366.12". Simultaneously with the execution and
delivery of the First Amendment, Tenant shall deposit the additional amount of
$10,000.00 with Landlord to be held (together with the amounts previously
deposited) as security for Tenant's obligations under the Lease pursuant to
Section 14.17 of the Lease. Provided that Tenant is not in default under the
Lease, the Landlord shall apply $10,788.00 (rather than $7,455.37 as stated in
the last sentence of Section 14.17) of the Security Deposit toward the Tenant's
Basic Rent obligation for the last month of the Initial Term.
(d) The definition of the term "Initial Term" shall be amended and
extended for a period of five (5) years beginning upon the New Premises
Commencement Date; provided, however, that if the New Premises Commencement Date
shall fall on other than the first day of a calendar month, the Initial Term
shall expire on the last day of the calendar month in which the fifth (5th)
anniversary of the New Premises Commencement Date shall fall.
(e) The definition of the term "Escalation Factor" shall be amended by
deleting "32.57%" and inserting the number "54.88%" in its place and stead.
2. Utilities. The Tenant shall be responsible for the payment of all utilities
servicing the Premises. Notwithstanding anything contained in Section 7.5(c) of
the Lease to the contrary, effective as of the New Premises Commencement Date,
Landlord shall no longer be obligated to pay Landlord's Utility Cost applicable
to gas and electricity used and consumed in the Adjacent Space. Tenant shall be
responsible for all electricity and gas used and consumed in the Premises as
amended as measured in the existing meters
3. Expansion; Generally. Effective as of the New Premises Commencement Date, the
13,619 rentable square feet of area shown on Exhibit A to this First Amendment
shall be added to and included in the Premises demised under the Lease for the
balance of the Term of this Lease and the term "Premises" wherever used in the
Lease shall be deemed to mean and include the New Premises together with the
Original Premises and the terms "Premises Rentable Area" and "Basic Rent" shall
have the meanings ascribed to them in paragraph 1 of this First Amendment.
Accordingly, monthly and annual payments of the Operating Expenses and
Escalation Charges shall be increased to reflect the increase in the size of the
Premises by the addition of the New Premises.
4. Landlord's Expansion Work; New Premises Commencement Date.
4.1 Commencement Date. The provisions of Article IV of the Lease shall not be
applicable to the New Premises and Landlord shall have no obligation whatsoever
to perform the work described in Section 4.2 on page 5 of the Lease. All
construction to be performed by Landlord in the New Premises and the Original
Premises shall be governed by the provisions of this paragraph 4 of this First
Amendment. The New Premises Commencement Date shall be the day following the
date on which the New Premises are "ready for occupancy" as provided in Section
4.2 of this First Amendment Notwithstanding the foregoing, if Tenant's personnel
shall occupy all or any part of the
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New Premises for the conduct of its business prior to the New Premises
Commencement Date, such date shall for all purposes of this Lease be the New
Premises Commencement Date. The Tenant shall, upon demand of the Landlord,
execute a certificate confirming the New Premises Commencement Date as it is
determined in accordance with the provisions of Section 4.2.
4.2 Preparation of the Premises. (a) Landlord shall exercise all reasonable
efforts to complete the work necessary to prepare the New Premises for Tenant's
occupancy and to otherwise alter the Original Premises pursuant to the Plans and
Specifications attached hereto as Exhibit B ("Landlord's Expansion Work"), and
in accordance with Landlord's building standards, but Tenant shall have no claim
against Landlord for failure to complete such Work. Tenant hereby approves all
matters set forth in Exhibit B. The New Premises shall be deemed "ready for
occupancy" on the date upon which Landlord has substantially completed the
Landlord's Expansion Work as certified to Tenant by Landlord by written notice.
To the extent that the requirements of Landlord's Expansion Work, including,
without limitation, the cost of all permits, architectural and engineering fees,
and construction supervision fees, shall exceed a cost of $47,000.00, Tenant
shall pay the cost of such excess requirements (the "OBS Costs") to Landlord as
an additional charge hereunder. Tenant shall pay 1/2 of the OBS Costs prior to
Landlord commencing Landlord's Expansion Work and the other 1/2 of OBS Costs
shall be paid upon completion of Landlord's Expansion Work. Tenant shall, if
requested by Landlord, execute a work letter confirming such excess costs prior
to the time Landlord shall be required to commence work. Failure of Tenant to
timely pay Landlord the amounts required to be paid pursuant to this Section 4.2
shall entitle Landlord to the same rights and remedies as Landlord has against
Tenant for failure to pay Basic Rent when due.
4.3 Conclusiveness of Landlord's Performance. Unless Tenant shall have given
Landlord written notice by the end of the first full calendar month after the
New Premises Commencement Date of specific respects in which Landlord has not
performed Landlord's Expansion Work in compliance with the matters set forth in
Exhibit B, Tenant shall have no claim that Landlord has failed to perform any of
the Landlord's Expansion Work. Except for Landlord's Expansion Work, the
Premises are being leased in their condition, "as is" without warranty or
representation by Landlord. Tenant acknowledges that it has inspected the New
Premises and common areas of the Building and, except for Landlord's Expansion
Work, has found the same to be satisfactory.
5. No Brokers. Tenant warrants and represents that Tenant has dealt with no
broker in connection with the consummation of this Lease and, in the event of
any brokerage claims against Landlord predicated upon prior dealings with
Tenant, Tenant agrees to defend the same and indemnify Landlord against any such
claim.
6. Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Lease.
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<PAGE> 5
7. Except as herein modified, all terms, covenants and provisions of the Lease
are hereby ratified and affirmed.
WITNESS our hands and seals on the day and year first above written.
LANDLORD:
TEACHERS REALTY CORPORATION
By: /s/ S. Marc Flannery
-------------------------
S. Marc Flannery
Its: Assistant Secretary
------------------------
TENANT:
VOICETEK CORPORATION
By: /s/ Stephen A. Gorgal
------------------------
Its: Controller
-----------------------
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<PAGE> 6
EXHIBIT A
[VOICETEK FLOOR PLAN]
<PAGE> 7
EXHIBIT B
VOICETEK CORPORATION
19 ALPHA ROAD
CHELMSFORD, MASSACHUSETTS
"SCOPE OF WORK"
The following work will be performed by Landlord as specified hereunder and in
accordance with the floor plan dated May 25, 1994 ("Plan").
DEMOLITION
Existing improvements shall be demolished as necessary to accommodate the
proposed layout shown on the Plan. The demolition of the closets adjacent to the
lobby area (as shown on the Plan) has been deleted from the Scope of Work.
Tenant shall be responsible for dismantling and relocating the existing cage
area located at the rear of the Original Premises. All debris shall be removed
from the property and those areas of the Premises affected by construction shall
be cleaned as required during construction and upon completion of construction.
PARTITION
New drywall partitions and soffit will be installed as per the Plan and shall
consist of 2 1/2" metal studs, With 1/2" sheet rock each side, insulated with
fiber glass blanket, taped and ready for finish. All new partitions, unless
otherwise specified on the Plan, will extend to the underside of the existing
ceilings.
Demising wall separating the Premises from the adjoining premises shall be made
to comply with building code requirements.
Minor patching and repairs shall be made to existing walls prior to painting.
CEILING
Existing suspended acoustic ceiling will be patched and repaired as
required to accommodate the layout and renovations indicated on the Plan. Any
new ceiling tiles or grid shall match existing style.
DOORS
To the extent feasible, existing doors, which are to be eliminated, shall be
relocated to those areas where new doors have been specified on the Plan. A
total of three (3) new doors together with hardware will be furnished of a
quality and finish equivalent to existing doors within the space.
<PAGE> 8
FLOORING
New carpet will be provided to those areas indicated on the Plan. Allowance will
be $13.50 per square yard installed. Existing flooring, including vinyl
composition tile (V.C.T.), shall be patched as specified on the Plan.
Vinyl base will be installed to those areas which will receive new carpet and as
necessary in those areas where walls are newly constructed or demolished.
WALL FINISHES
All walls and doors to be finished as specified on the Plan. Tenant shall be
responsible for promptly removing all wall hangings in the Original Premises
prior to painting. Additionally Tenant shall disconnect and move any computer
equipment as required to facilitate painting. Tenant shall provide contractor
access to the Premises during non-business hours to complete the painting.
HVAC
New ductwork distribution and diffusers will be furnished and installed as
required in accordance with new layout. Existing diffusers shall be reused to
the greatest extent possible. No special air conditioning (i.e. computer room)
is included in the Scope of Work.
SPRINKLERS
New sprinkler heads Will be provided to satisfy landlord's underwriter and in
accordance with tenant's new layout.
ELECTRICAL
Lighting:
Existing 2'x4' fluorescent light fixtures will be relocated consistent with
Tenant's layout. A total of ten new 2'x4' fluorescent fixtures will be provided
to match existing fixtures. Each newly constructed office shall have a single
pole light switch.
<PAGE> 9
Power
Thirty standard and five dedicated duplex outlets will be provided to areas of
new construction in locations to be specified by Tenant
Exit signs and emergency lighting will be provided and/or modified as required
by code.
/s/ Stephen A. Gorgal
<PAGE> 1
EXHIBIT 10.7
C SECOND AMENDMENT TO LEASE AGREEMENT
This Second Amendment to Lease Agreement ("Second Amendment") is made as
of this 25th day of March, 1996 by and between Teachers Realty Corporation
("Landlord") and Voicetek Corporation ("Tenant").
WHEREAS, Landlord and Tenant have heretofore executed a certain Lease
Agreement dated May 25, 1993, which Lease Agreement has been amended by that
certain First Amendment to Lease Agreement (the "First Amendment") dated August
8, 1994 (said Lease Agreement as amended by the First Amendment is hereafter the
"Lease") pursuant to which Tenant has leased 33,500 rentable square feet of area
(comprised of the 19,881 square foot "Original Premises" originally leased to
Tenant under the Lease Agreement and the 13,619 square foot "New Premises"
demised to Tenant under the First Amendment) in a building (the "Building")
known as 19 Alpha Road, Chelmsford, MA; and
WHEREAS, Landlord and Tenant have agreed to further expand the Premises
on two occasions so that Tenant shall lease (i) an additional 3,520 rentable
square feet of area (the "Second Expansion Space") and (ii) an additional 13,700
rentable square feet of area (the "Third Expansion Space"), all as more
particularly shown on Exhibit A to this Second Amendment subject to the terms,
covenants and provisions of the Lease as amended hereby; and
WHEREAS, the Initial Term of the Lease (as extended by the First
Amendment) is scheduled to expire on October 31, 1999; and
WHEREAS, Landlord and Tenant have agreed to enter into this Second
Amendment in order to memorialize their agreements and to otherwise modify and
amend the Lease to (i) reflect the increases in the size of the Premises demised
under the Lease from time to time as a result of the addition of the Second
Expansion Space and the Third Expansion Space and (ii) to otherwise modify and
amend the Lease as hereinafter set forth.
NOW, THEREFORE, in consideration of Ten ($10.00) Dollars and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, Tenant and Landlord hereby agree as follows:
1. Second Expansion Space; Changes in Basic Lease Provisions. Effective as of
March 25,1996 (the "Second Expansion Commencement Date"), the information
provided in Article I of the Lease captioned "Basic Lease Provisions" (as
previously amended) will be changed and the Lease shall be deemed amended in the
following respects:
(a) The definition of the term "Premises Rentable Area" shall be
amended by deleting the reference to "33,500 rentable square feet" and inserting
in its place and stead the number "37,020 rentable square feet".
<PAGE> 2
(b) The definition of the term "Basic Rent" shall be amended by
inserting the phrase "plus the Second Expansion Rent" after the numbers set
forth in the "Basic Rent" and "Monthly Payment" columns of paragraph 1(b) B.
and 1(b) C. of the First Amendment.
As used herein, the term "Second Expansion Rent" shall mean (a) for the
period beginning on the Second Expansion Commencement Date and ending on October
31, 1996, $15,136.00 per annum ($4.30 per square foot contained in the Second
Expansion Space) payable in equal monthly installments of $1,261.33 (pro rated
for any partial month in which the Second Expansion Commencement Date shall
fall) and (b) for the period beginning on November 1, 1996 through the last day
of Initial Term (October 31, 1999) the amount of $15,840.00 per annum ($4.50 per
square foot contained in the Second Expansion Space) payable in equal monthly
installments of $1,320.00. All such Second Expansion Rent shall be payable on
the first day of each calendar month (pro rated as of the Second Expansion
Commencement Date as aforementioned) without deduction, offset, abatement or
demand.
In addition to the increases in the Basic Rent as it is amended by the
provisions of paragraphs 1(b) and 4(b) of this Second Amendment, Tenant shall
continue to make the monthly payments of the Reimbursement Rent as defined under
Article III, Section 3.1(c) of the Lease as and when required by the terms of
said Section 3.1(c) of the Lease and these payments of Reimbursement Rent shall
remain unchanged by this Second Amendment.
(c) The definition of the term "Security Deposit" shall be amended and
increased in the amounts described in paragraph 7 of this Second Amendment.
(d) The definition of the term "Building Rentable Area" shall be deemed
amended by deleting "64,250 rentable square feet" and inserting in its place and
stead "63,220 rentable square feet".
(e) The definition of the term "Escalation Factor" shall be amended by
deleting "54.88%" and inserting the number "61.64%" in its place and stead.
2. Second Expansion Space Expansion; Generally. Effective as of the Second
Expansion Commencement Date, the Second Expansion Space shall be deemed added to
and included in the Premises demised under the Lease for the balance of the Term
of this Lease and, until the Third Expansion Commencement Date, the term
"Premises" wherever used in the Lease shall be deemed to mean and include the
Second Expansion Space together with the Original Premises and the New Premises.
Accordingly, monthly and annual payments on account of Escalation Charges shall
be increased to reflect the increase in the size of the Premises resulting from
the addition of the Second Expansion Space.
3. Landlord's Second Expansion Work Deemed Completed. It is agreed and
understood that the provisions of Article IV of the Lease and paragraph 4 of the
First
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<PAGE> 3
Amendment shall not be applicable to the Second Expansion Space and Landlord
shall have no obligation whatsoever to perform the work described therein.
Tenant hereby acknowledges and agrees that Landlord has, as of the date
of this Second Amendment, completed the work described in Exhibit B to this
Second Amendment ("Landlord's Second Expansion Work").
Tenant hereby approves all work performed by Landlord in the Second
Expansion Space. Accordingly, the Second Expansion Space is being leased in its
condition as of the date of this Second Amendment, "as is" without warranty or
representation by Landlord. Tenant acknowledges that it has inspected the Second
Expansion Space and Landlord's Second Expansion Work and has found the same to
be satisfactory and complete.
4. Third Expansion Space; Changes in Basic Lease Provisions. Effective as
of the Third Expansion Commencement Date (as hereinafter defined), the
information provided in Article I of the Lease captioned "Basic Lease
Provisions" (as previously amended) will be changed and the Lease shall be
deemed amended in the following respects:
(a) The definition of the term "Premises Rentable Area" (as amended by
paragraph 1 of this Second Amendment) shall be amended by deleting the reference
to "37,020 rentable square feet" and inserting in its place and stead the number
"50,720 rentable square feet".
(b) The definition of the term "Basic Rent" shall be amended by
inserting the phrase "and the Third Expansion Rent" (in addition to the phrase
"plus the Second Expansion Rent" after the numbers set forth in the Basic Rent
and Monthly Payment columns of paragraph 1(b) B. and 1(b) C. of the First
Amendment (as they have been amended by paragraph 1(b) of this Second
Amendment).
As used herein, the term "Third Expansion Rent" shall mean (a) for the
period beginning on the Third Expansion Commencement Date and ending on the last
day of the calendar month in which the first (1st) anniversary of the Third
Expansion Commencement Date shall fall, $95,900.00 ($7.00 per rentable square
foot contained in the Third Expansion Space) payable in equal monthly
installments of $7,991.67 (pro rated for any partial calendar month in which the
Third Expansion Commencement Date should fall), (b) for the twelve (12) calendar
month period immediately following the period described in (a) above, $99,325.00
per annum ($7.25 per rentable square foot contained in the Third Expansion
Space) payable in equal monthly installments of $8,277.08, and (c) for the
period commencing immediately following the period described in (b) above and
thereafter for the remainder of the Initial Term (October 31, 1999), $102,750.00
per annum ($7.50 per rentable square foot contained in the Third Expansion
Space) payable in equal monthly installments of $8,562.50. All such Third
Expansion Rent shall be payable on the first day of each calendar month (pro
rated as of the Third Expansion Commencement Date as aforementioned) without
deduction, offset, abatement or demand.
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<PAGE> 4
(c) The definition of the term "Escalation Factor" shall be amended by
deleting "61.64%" (as increased and adjusted by the provisions of paragraph 1(e)
of this Second Amendment") and inserting the number "84.45%" in its place and
stead.
5. Third Expansion Space Expansion; Generally. Effective as of the Third
Expansion Commencement Date, the Third Expansion Space shall be added to and
included in the Premises demised under the Lease for the balance of the Term of
this Lease and the term "Premises" wherever used in the Lease shall be deemed to
mean and include the Third Expansion Space together with the Original Premises,
the New Premises and the Second Expansion Space. Accordingly, monthly and annual
payments on account of Escalation Charges shall be increased to reflect the
increase in the size of the Premises resulting from the addition of the Third
Expansion Space.
6. Landlord's Third Expansion Work; Third Expansion Commencement Date.
6.1 Commencement Date. (a) The Third Expansion Commencement Date shall be
the earlier of (i) that date (the "Target Date") which is sixty (60) days after
the Delivery Date (as said term is hereafter defined) irrespective of whether
Tenant has completed Tenant's Work or obtained a Certificate of Occupancy, or
(ii) that date on which Tenant commences occupancy of the Third Expansion Space
for the Permitted Uses, whichever first occurs.
Each of the parties hereto agrees, upon demand of the other, to execute
a declaration expressing the Third Expansion Commencement Date as soon as the
Third Expansion Commencement Date has been determined. As used herein, the term
"Delivery Date" shall mean that date upon which Landlord shall deliver
possession of the Third Expansion Space to Tenant as set forth in a written
notice from Landlord to Tenant (a "Delivery Notice"). The Delivery Date shall
not occur until Landlord and Tenant have each executed and delivered this Second
Amendment and all existing tenants of any portion of the Third Expansion Space
(if any there may be) have vacated the Third Expansion Space.
6.2 Tenant's Third Expansion Plans.
(a) Tenant hereby agrees to accept the Third Expansion Spaces in its
"as is" condition on the Delivery Date, with all faults and without
representation or warranty by Landlord of any kind. All work, construction and
improvements to be performed in the Third Expansion Space for use and occupancy
by Tenant shall be provided and installed by Tenant at Tenant's sole cost and
expense (subject to Landlord's obligation to fund the Allowance in accordance
with the provisions of this Paragraph 6). Prior to commencement of any work by
Tenant, Tenant shall deliver to Landlord a detailed floor plan layout together
with detailed construction drawings, detailed specifications and written
instructions (herein called "Tenant's Third Expansion Plans") reflecting the
partitions, improvements, mechanical, electrical and other work and alterations
desired by Tenant in the Third Expansion Space. Landlord shall not unreasonably
withhold or delay its approval of Tenant's Third Expansion Plans.
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<PAGE> 5
6.3 Tenant's Work.
(a) Landlord's approval of Tenant's Third Expansion Plans and
specifications shall, in no event, unless expressly set forth in such approval,
be deemed to create any obligation on the part of Landlord to do any work or
make any installations in or about the Third Expansion Space nor to authorize
Tenant to make any further additions, improvements or alterations to the Third
Expansion Space. Tenant shall be responsible for the construction of all work
and improvements necessary for Tenant to occupy the Third Expansion Space.
Without limitation of the foregoing, Tenant shall be responsible for completing
(at Tenant's sole cost and expense) all work necessary to separately meter
utilities used and consumed in the Third Expansion Space (to the extent not
already separately metered) and shall arrange for such services directly with
the applicable utilities. All utilities used or consumed in the Premises during
performance of Tenant's Third Expansion Work shall also be the responsibility of
Tenant.
(b) Tenant shall perform, at its sole cost and expense, all of the work
(the "Tenant's Third Expansion Work") shown on Tenant's Third Expansion Plans
strictly in accordance with Tenant's Third Expansion Plans. Any changes to
Tenant's Third Expansion Plans shall be subject to the approval of Landlord
which approval will not be unreasonably withheld or delayed. Tenant's Third
Expansion Work shall be performed by Tenant strictly in compliance with and
subject to the provisions of Section 5.2 of the Lease. Without limitation of
Landlord's rights to approve all aspects of Tenant's Third Expansion Work and
Tenant's Third Expansion Plans, Landlord hereby approves the location of the
windows shown on that certain Space Plan by King Design Associates, Inc. dated
June 5, 1996. Notwithstanding the foregoing to the contrary, Landlord hereby
expressly reserves the right to review and approve any structural changes to the
Building necessary to effect installation of such windows, the actual materials
and windows used and the appearance and aesthetic impact on the Building
resulting from the installation of such windows. In addition to and without
limitation of any other provision of this Lease, Landlord hereby reserves the
right to require that Tenant, at its sole cost and expense, remove such windows
from the Building upon expiration or earlier termination of this Lease. If
Landlord shall elect to require that Tenant remove such windows as aforesaid,
Tenant hereby agrees to remove same and restore the Building to its condition
prior to installation of such windows. The provisions of this paragraph (b)
shall survive expiration or earlier termination of the Term of this Lease.
(c) Prior to commencing occupancy of all or any portion of the Third
Expansion Space, Tenant shall, at its sole expense, procure a Certificate of
Occupancy and any other permit or approval required by the Town of Chelmsford or
the Commonwealth of Massachusetts for its use and occupancy of the Third
Expansion Space and Tenant shall deliver copies thereof to Landlord. Subject to
all applicable provisions of this Lease, entry of the Third Expansion Space by
Tenant or its agents or contractors prior to the Third Expansion Commencement
Date for the limited purpose of performing Tenant's Third Expansion Work shall
be permitted. In no event shall the Third Expansion Commencement Date be delayed
by reason of Tenant's failure to complete the Tenant's
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<PAGE> 6
Third Expansion Work prior to the Target Date. Tenant shall not damage or deface
the Building or any part thereof in connection with the Tenant's Third
Expansion Work and Tenant shall promptly reimburse Landlord for the cost of
repairing any damage to the Building caused by Tenant, its employees, workmen,
contractors, subcontractors, materialmen and all other parties who are involved
in performing all or any part of Tenant's Third Expansion Work.
Tenant shall, at its sole cost and expense, cause Tenant's Third
Expansion Work to be guaranteed and bonded for completion. Tenant hereby agrees
that Tenant's Third Expansion Work shall be completed in accordance with
Tenant's Third Expansion Plans first approved by Finard & Company, Inc.
("Landlord's Construction Representative").
To the maximum extent this Agreement may be made effective according to
law, Tenant agrees to indemnify, defend and save Landlord harmless from and
against any and all loss, cost, penalties, liabilities, damages and claims
arising from any act, omission or negligence of Tenant or Tenant's General
Contractor or any contractors or workman employed by either of them ("Tenant's
Subs") or their respective contractors, licensees, agents, servants or employees
arising from the performance of Tenant's Third Expansion Work caused to any
person or to the property of any person, the Building, or the Property. This
indemnity shall, to the maximum extent this agreement may be made effective
according to law, also extend to all loss, cost, penalties, liability, damage,
claims or whatever nature asserted against the Landlord arising out of the use
or occupancy or passage or travel over or upon, the Property by Tenant or by any
person claiming by, through or under Tenant including, without limitation,
Tenant's General Contractor and Tenant's Subs and their respective agents,
employees and contractors and customers or arising out of any delivery to or
service applied to the Third Expansion Space or the Building or on account of or
based on anything whatsoever done on the Property. The indemnities contained in
this paragraph shall (i) include indemnity against all cost, expenses and
liabilities incurred in or in connection with any such claim or proceeding
brought thereon and the defense thereof with counsel approved by the Landlord
and (ii) survive expiration or earlier termination of this Lease.
6.4 Landlord's Allowance; Payment.
(a) Landlord shall make a dollar contribution (hereafter the
"Allowance") toward the cost of completing Tenant's Work (including, without
limitation, labor, materials, construction supervision, permitting,
architectural fees and engineering fees) in an amount not to exceed Eighty Two
Thousand Two Hundred and No/100ths ($82,200.00) Dollars. The total cost of the
Tenant's Work in excess of the amount of the Allowance (such excess costs being
hereafter the "Excess Costs") shall be borne by Tenant. The Allowance shall not
be applied to payment for office furniture or equipment or related expenses.
(b) Payment. Provided that no Default of Tenant shall exist and be
continuing, periodically, but not more than once per calendar month and within
thirty (30) days after (i) Tenant's General Contractor or Tenant has submitted
to Landlord's Construction Representative approved applications or invoices for
Tenant's Third Expansion Work
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<PAGE> 7
performed and completed and materials in place during such period on Standard
AIA Requisition Forms with appropriate line item break-downs (a "Requisition")
and (ii) delivery to Landlord of appropriate partial lien waivers from Tenant's
General Contractors which includes subcontractors' invoices for Tenant's Third
Expansion Work performed to date and appropriate partial lien waivers from
Tenant's Subs on Lien Waiver forms acceptable to Landlord's Construction
Representative and (iii) in each case, a certification from Tenant's Architect
certifying as to the state of completion of such work and installation of such
materials, Landlord shall pay to Tenant's General Contractor out of the
Allowance, the cost of the Tenant's Third Expansion Work performed to date as
shown on the Requisition (subject to the usual 10% retainage). No sooner than
thirty (30) days after the Commencement Date and after Tenant has submitted to
Landlord (i) the final Requisition, (ii) appropriate final lien waivers from
Tenant's General Contractor which includes final subcontractors' invoices and
appropriate final lien waivers from Tenant's Subs, (iii) a Certificate from
Tenant and Tenant's Architect that the Tenant's Third Expansion Work has been
completed in compliance with Tenant's Third Expansion Plans and (iv) upon
acceptance of Tenant's Third Expansion Work by Landlord, Landlord shall pay the
amount of the final Requisition from the Allowance, if any amounts are so
available. It is agreed and understood that Landlord's contribution toward the
total cost of Tenant's Third Expansion Work shall not exceed the Allowance. All
costs and expenses incurred in connection with Tenant's Third Expansion Work in
excess of the Allowance shall be borne by Tenant. Landlord shall be entitled to
retain any portion of the Allowance not needed to complete Tenant's Third
Expansion Work.
Tenant shall not permit any mechanics' lien, materialmen's lien, or any
other lien to be filed against the Premises, the Building, the Property or
Landlord by reason of Tenant's Third Expansion Work or by reason of any other
work performed by Tenant, Tenant's General Contractor or Tenant's Subs or
suppliers. Tenant shall indemnify and hold Landlord wholly harmless from and
against all loss, cost, expense, liability and damage resulting from any failure
of Tenant to pay for the Tenant's Third Expansion Work including, without
limitation, legal fees incurred in connection with such failure to pay.
6.5 Demolition Allowance.
In addition to the Allowance, subject to the provisions hereof,
Landlord will bear the cost and expense of performing Demolition Work in the
Third Expansion Space in conjunction with the Third Expansion Work ("Demolition
Costs") up to the amount of the "Demolition Allowance" (as hereafter defined).
In no event shall Landlord be obligated to pay for any Demolition Costs in
excess of the Demolition Allowance (as said term is hereinafter defined). As
used herein, the term "Demolition Allowance" shall mean $18,500.00 ($1.35 per
rentable square foot) contained in the Third Expansion Space. Tenant shall pay
for all Demolition Costs in excess of the Demolition Allowance as and when
billed therefor. Landlord shall be entitled to retain any portion of the
Demolition Allowance not needed for Demolition Work necessary to prepare the
Third Expansion Space for Tenant's Third Expansion Work. The Demolition
Allowance will be disbursed
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<PAGE> 8
in the same manner as applies to disbursements of the Allowance pursuant to
Section 6.4 hereof.
7. Security Deposit Increase. Effective as of the date of this Second Amendment,
the Security Deposit held by Landlord pursuant to the Lease shall be increased
by the additional amount of $23,240.00 representing increases in the Security
Deposit in the amount of (i) $2,640.00 with respect to the Second Expansion
Space and (ii) $20,600.00 with respect to the Third Expansion Space.
Accordingly, Tenant shall deposit the necessary additional amounts to be added
to the Security Deposit so that from and after the date of this Second
Amendment, the amount of the Security Deposit deposited with Landlord under the
Lease shall be in the aggregate amount of $55,606.12 and the definition of the
term "Security Deposit" shall be increased and adjusted to be $55,606.12 for all
purposes under the Lease. Such additional amounts as may be necessary to be
deposited with Landlord hereunder shall be paid to Landlord simultaneously with
the execution and delivery of this Lease.
8. No Brokers. Tenant warrants and represents that Tenant has dealt with no
broker in connection with the consummation of this Second Amendment and, in the
event of any brokerage claims against Landlord predicated upon prior dealings
with Tenant, Tenant agrees to defend the same and indemnify Landlord against any
such claim.
9. Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Lease. Except as herein modified, all terms,
covenants and provisions of the Lease are hereby ratified and affirmed.
WITNESS our hands and seals on the day and year first above written.
LANDLORD:
TEACHERS REALTY CORPORATION
By: /s/ Richard J. Usas
------------------------
Its: Director
-----------------------
TENANT:
VOICETEK CORPORATION
By: /s/ Roger Tuttle
------------------------
Its:
-----------------------
-8-
<PAGE> 9
EXHIBIT A
[VOICETEK FLOOR PLAN]
<PAGE> 1
EXHIBIT 10.8
THIRD AMENDMENT TO LEASE AGREEMENT
(Adding Fourth and Fifth Expansion Spaces)
This Third Amendment to Lease Agreement ("Third Amendment") is made as
of this 8th day of November, 1996 by and between Teachers Realty Corporation
("Landlord") and Voicetek Corporation ("Tenant").
WHEREAS, Landlord and Tenant have heretofore executed a certain Lease
Agreement dated May 25,1993, which Lease Agreement has been amended by that
certain First Amendment to Lease Agreement (the "First Amendment") dated August
8, 1994 and that certain Second Amendment to Lease Agreement (the "Second
Amendment") dated as of March 25,1996 (said Lease Agreement as amended by the
First Amendment and the Second Amendment is hereafter the "Lease") pursuant to
which Tenant has leased or committed to Lease the aggregate amount of 50,720
rentable square feet of area (comprised of (a) the 19,881 square foot "Original
Premises" originally leased to Tenant under the Lease Agreement, (b) the 13,619
square foot "New Premises" demised to Tenant under the First Amendment, (c) the
3,520 square foot Second Expansion Space and 13,700 square foot Third Expansion
Space demised to Tenant pursuant to the Second Amendment; provided, however,
that Landlord and Tenant hereby acknowledge that as of the date of this Third
Amendment, the Third Expansion Space is not yet a portion of the Premises and
will become a portion of the Premises on December 1, 1996 which the parties
hereby acknowledge and agree will be the Third Expansion Commencement Date for
purposes of the Second Amendment) in a building (the "Building") known as 19
Alpha Road, Chelmsford, MA; and
WHEREAS, Landlord and Tenant have agreed that Tenant shall further
expand the Premises on two occasions so that Tenant shall lease (i) an
additional 5,500 rentable square feet of area (the "Fourth Expansion Space")
beginning on the Fourth Expansion Commencement Date (as herein defined) and
(ii) an additional 7,000 rentable square feet of area (the "Fifth Expansion
Space") beginning on the Fifth Expansion Commencement Date (as hereafter
defined), all such space being more particularly shown on Exhibit A to this
Third Amendment subject to the terms, covenants and provisions of the Lease as
amended hereby; and
WHEREAS, the Initial Term of the Lease (as extended by the First
Amendment) is scheduled to expire on October 31, 1999 and the parties desire to
extend the Term of this Lease for an additional four (4) year period beginning
on November 1, 1999 and expiring on October 31, 2003; and
WHEREAS Landlord and Tenant have agreed to enter into this Third
Amendment in order to memorialize their agreements and to otherwise modify and
amend the Lease to (i) reflect the increases in the size of the Premises demised
under the Lease from time to time as a result of the addition of the Fourth
Expansion Space and the Fifth Expansion Space, (ii) to extend the "Term of this
Lease" through October 31, 2003 and (iii) to otherwise modify and amend the
Lease as hereinafter set forth.
<PAGE> 2
NOW, THEREFORE, in consideration of Ten ($10.00) Dollars and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, Tenant and Landlord hereby agree as follows:
1. Fourth Expansion Space; Changes in Basic Lease Provisions. Effective as of
the date which is the first to occur of (i) February 1, 1997 or (ii) the date
Tenant occupies the Fourth Expansion Space for the Permitted Uses (rather than
for the "Construction Purposes" as defined in paragraph 3 of this Third
Amendment) (the "Fourth Expansion Commencement Date"), the information provided
in Article I of the Lease captioned "Basic Lease Provisions" (as previously
amended) will be changed and the Lease shall be deemed amended in the following
respects:
(a) The definition of the term "Premises Rentable Area" shall be
amended by deleting the reference to "50,720 rentable square feet" and inserting
in its place and stead the number "56,220 rentable square feet" reflecting an
increase in the size of the Premises Rentable Area by the number of rentable
square feet contained in the Fourth Expansion Space (namely 5,500 rentable
square feet).
(b) The definition of the term "Basic Rent" shall be amended by
inserting the following chart in its place and stead:
<TABLE>
<CAPTION>
Period Basic Rent Payment
------ (rate per annum) -------
----------------
<S> <C> <C> <C>
Commencement Date of the As set forth in the Lease As set forth in the
Lease through the day amended by the First Lease as amended by
immediately preceding the Amendment and the Second the First Amendment
Fourth Expansion Amendment (the parties and the Second
Commencement Date hereby acknowledging and Amendment
agreeing that the Basic
Rent shall increase
during this period due to
the occurrence of the
Third Expansion
Commencement Date on
December 1, 1996)
Fourth Expansion $289,990.00 $24,165.83 per month
Commencement Date 37,020 rsf @ $4.50
through October 31, 1997 13,700 rsf @ $7.00
5,500 rsf @ $5.00
November 1, 1997 through $294,790.00 $24,565.83 per month
October 31, 1998 37,020 rsf @ $4.50
13,700 rsf @ $7.25
5,500 rsf @ $5.25
</TABLE>
-2-
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
November 1, 1998 through $299,590.00 $24,965.83 per month
October 31, 1999 37,020 rsf @ $4.50
13,700 rsf @ $7.50
5,500 rsf @ $5.50
November 1, 1998 through $365,430.00 $30,452.50 per month
October 31, 2000 56,220 rsf @ $6.50
November 1, 2000 through $379,485.00 $31,623.75 per month
October 31, 2001 56,220 rsf @ $6.75
November 1, 2001 through $393,540.00 $32,795.00 per month
October 31, 2002 56,220 rsf @ $7.00
November 1, 2002 through $407,595.00 $33,966.25 per month
October 31, 2003 56,220 rsf @ $7.25
</TABLE>
All such Basic Rent shall be payable on the first day of each calendar
month without deduction, offset, abatement or demand.
In addition to the increases in the Basic Rent as it is amended by the
provisions of paragraphs 1(b) and 4(b) of this Third Amendment, Tenant shall
continue to make the monthly payments of the Reimbursement Rent as defined under
Article III, Section 3.1(c) of the Lease as and when required by the terms of
said Section 3.1(c) of the Lease and these payments of Reimbursement Rent shall
remain unchanged by this Third Amendment.
(c) The definition of the term "Security Deposit" shall be amended and
increased in the amounts described in paragraph 7 of this Third Amendment.
(d) The definition of the term "Escalation Factor" shall be amended by
deleting "84.45%" and inserting the number "93.61%" in its place and stead.
2. Fourth Expansion Space Expansion; Generally. Effective as of the Fourth
Expansion Commencement Date, the Fourth Expansion Space shall be deemed added to
and included in the Premises demised under the Lease for the balance of the Term
of this Lease until the Fifth Expansion Commencement Date, the term "Premises"
wherever used in the Lease shall be deemed to mean and include the Fourth
Expansion Space together with the Original Premises, the New Premises, the
Second Expansion Space and the Third Expansion Space. Accordingly, monthly and
annual payments on account of Escalation Charges shall be increased to reflect
the increase in the size of the Premises resulting from the addition of the
Fourth Expansion Space.
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<PAGE> 4
3. Landlord's Fourth Expansion Work. It is agreed and understood that the
provisions of Article IV of the Lease, paragraph 4 of the First Amendment and
the provisions of the Second Amendment regarding initial improvements to the
Second Expansion Space and the Third Expansion Space shall not be applicable to
the Fourth Expansion Space and Landlord shall have no obligation whatsoever to
perform the work described therein. The Fourth Expansion Space is being leased
in its condition as of the date of this Third Amendment, "as is" without
warranty or representation by Landlord. Tenant acknowledges that it has
inspected the Fourth Expansion Space and except for Landlord's Fourth Expansion
Work (as hereafter defined) has found the same to be satisfactory and complete.
As used herein, the term "Landlord's Fourth Expansion Work" shall mean that
Landlord shall, at its sole cost and expense, demolish and pave the outdoor
playground area formerly used by the day care facility tenant as and when
weather conditions reasonably permit. Notwithstanding anything contained in this
Third Amendment to the contrary, Landlord shall deliver possession of the Fourth
Expansion Space to Tenant on December 1, 1996 for purposes of allowing Tenant to
prepare same for its use and occupancy ("Construction Purposes"). Upon such
delivery, all of the terms and provisions contained in the Lease including,
without limitation, Article V and Article X shall be applicable to and shall
govern Tenant's entry of the Premises for the limited purposes set forth herein
except that Tenant shall not be required to pay Basic Rent nor Escalation
Charges with respect to the Fourth Expansion Space until the Fourth Expansion
Commencement Date, all as provided in paragraph 1 of this Third Amendment.
4. Fifth Expansion Space; Changes in Basic Lease Provisions. Effective as of the
Fifth Expansion Commencement Date (as hereinafter defined), the information
provided in Article I of the Lease captioned "Basic Lease Provisions" (as
previously amended by paragraph 1 of this Third Amendment) will be changed and
the Lease shall be deemed amended in the following respects:
(a) The definition of the term "Premises Rentable Area" (as amended by
paragraph 1(a) of this Third Amendment) shall be amended by deleting the
reference to "56,220 rentable square feet" and inserting in its place and stead
the number "63,220 rentable square feet".
(b) The definition of the term "Basic Rent" (as amended by paragraph
1(b) of this Third Amendment shall be amended by inserting the following chart
in its place and stead:
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<PAGE> 5
<TABLE>
<CAPTION>
Period Basic Rent Payment
(rate per annum)
<S> <C> <C>
Commencement Date of the as set forth in the Lease as As set forth in the
Lease through the day amended by the First Lease as amended by
immediately preceding the Amendment, the Second the First Amendment,
Fifth Expansion Amendment and paragraph the Second Amend-
Commencement Date 1 of this Third Amendment ment and paragraph 1
of this Third
Amendment
Fifth Expansion $324,990.00 $27,082.50 per month
Commencement Date 37,020 rsf @ $450 pro rated for any
through October 31, 1997 13,700 @$7.00 partial calendar
12,500 @ $5.00 month in which the
Fifth Expansion
Commencement Date
shall fall)
November 1, 1997 through $331,540.00 $27,628.33 per month
October 31, 1998 37,020 rsf @ $4.50
13,700 rsf @ $7.25
12,500 rsf @ $5.25
November 1, 1998 through $338,090.00 $28,174.17 per month
October 31, 1999 37,020 rsf @ $4.50
13,700 rsf @ $7.50
12,500 rsf @ $5.50
November 1, 1999 through $410,930.00 $34,244.17 per month
October 31, 2000 63,220 rsf @ $6.50
November 1, 2000 through $426,735.00 $35,561.25 per month
October 31, 2001 63,220 rsf @ $6.75
November 1, 2001 through $442,540.00 $36,878.33 per month
October 31, 2002 63,220 rsf @ $7.00
November 1, 2002 through $458,345.00 $38,195.42 per month
October 31, 2003 63,220 rsf @ $7.25
</TABLE>
All such Basic Rent shall be payable on the first day of each calendar
month (pro rated as of the Fifth Expansion Commencement Date as aforementioned)
without deduction, offset, abatement or demand.
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<PAGE> 6
(c) The definition of the term "Escalation Factor" shall be deemed
amended by deleting "93.61%" and inserting the number "100%" in its place and
stead.
(d) The definition and amount of the term "Security Deposit" shall be
amended and increased in accordance with the provisions of Section 7 of this
Third Amendment").
5. Fifth Expansion Space Expansion, Generally. Effective as of the Fifth
Expansion Commencement Date, the Fifth Expansion Space shall be added to and
included in the Premises demised under the Lease for the balance of the Term of
this Lease and the term "Premises" wherever used in the Lease shall be deemed to
mean and include the Fifth Expansion Space together with the Original Premises,
the New Premises, the Second Expansion Space, the Third Expansion Space, the
Fourth Expansion Space and the Fifth Expansion Space. Accordingly, monthly and
annual payments on account of Escalation Charges shall be increased to reflect
the increase in the size of the Premises resulting from the addition of the
Fifth Expansion Space.
6. Fifth Expansion Commencement Date.
6.1 Fifth Expansion Commenceme nt Date. (a) The Fifth Expansion Commencement
Date shall be that date upon which Landlord shall deliver possession of the
Fifth Expansion Space to Tenant. Landlord shall provide Tenant with written
notice of the Fifth Expansion Commencement Date.
Each of the parties hereto agrees, upon demand of the other, to execute
a declaration expressing the Fifth Expansion Commencement Date as soon as the
Fifth Expansion Cormmencement Date has been determined. It is agreed and
understood that the Fifth Expansion Commencement Date shall not occur until the
existing tenants of the Fifth Expansion Space (if any there may be) have vacated
the Fifth Expansion Space.
6.2 Condition of Fifth Expansion Space.
(a) Tenant hereby agrees to accept the Fifth Expansion Spaces in its "as
is" condition, with all faults and without representation or warranty by
Landlord of any kind. Landlord shall not be required to perform any work,
construction or improvements in the Fifth Expansion Space in order to prepare
same for use and occupancy by Tenant.
7. Security Deposit Increase. Effective as of the date of this Third Amendment,
Tenant shall deposit an additional $6,875.00 representing an increase in the
Security Deposit held by Landlord pursuant to the Lease with respect to the
Fourth Expansion Space. Effective as of the Fifth Expansion Commencement Date,
Tenant shall deposit an additional $8,750.00 with Landlord thus further
increasing the amount of the Security Deposit due to the addition of the Fifth
Expansion Space to the Premises. Accordingly, effective as of the Fifth
Expansion Commencement Date, the definition of the term "Security Deposit" shall
be increased and adjusted to be $71,231.12 for all purposes under the Lease.
Such additional amounts as may be necessary to be deposited with
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<PAGE> 7
Landlord hereunder shall be paid to Landlord as a condition of Tenant's right to
use and occupy respectively the Fourth Expansion Space and the Fifth Expansion
Space, which condition may be waived by Landlord in its sole and absolute
discretion.
8. Extension of Term of this Lease; Confirmation of Third Expansion Commencement
Date. Effective as of the date of this Third Amendment, the term "Term of this
Lease" shall be deemed amended to include the additional Period November 1, 1999
through and including October 31, 2003. AU of the terms, covenants and
agreements contained in the Lease as amended by this Third Amendment shall be
applicable during the extension period.
Landlord and Tenant each hereby acknowledge and agree that the Third
Expansion Commencement Date shall be December 1, 1996 for all purposes under the
Lease.
9. No Brokers. Tenant warrants and represents that Tenant has dealt with no
broker in connection with the consummation of this Third Amendment and, in the
event of any brokerage claims against Landlord predicated upon prior dealings
with Tenant, Tenant agrees to defend the same and indemnify Landlord against any
such claim.
10. Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to them in the Lease. Except as herein modified, all
terms, covenants and provisions of the Lease are hereby ratified and affirmed.
WITNESS our hands and seals on the day and year first above written.
LANDLORD:
TEACHERS REALTY CORPORATION
By: /s/ Richard J. Usas
-----------------------
Richard J. Usas
Its:
-----------------------
TENANT:
VOICETEK CORPORATION
By: /s/ Roger Tuttle
-----------------------
Its: V.P. Finance
-----------------------
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<PAGE> 1
EXHIBIT 10.9
VOICETEK CORPORATION
19 Alpha Road
Chelmsford, MA 01824
September 21, 1994
Fleet Bank of Massachusetts, N.A.
75 State Street
Boston, MA 02109
Gentlemen:
This letter agreement will set forth certain understandings between
Voicetek Corporation, a Massachusetts corporation (the "Borrower") and Fleet
Bank of Massachusetts, N.A. (the "Bank") with respect to Revolving Loans
(hereinafter defined) to be made by the Bank to the Borrower and with respect
to letters of credit which may hereafter be issued by the Bank for the account
of the Borrower. In consideration of the mutual promises contained herein and in
the other documents referred to below, and for other good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged, the
Borrower and the Bank agree as follows:
I. AMOUNTS AND TERMS
1.1. Reference to Documents. Reference is made to (i) that certain
$1,000,000 principal amount promissory note (the "Revolving Note") of even date
herewith made by the Borrower and payable to the order of the Bank, (ii) that
certain Inventory, Accounts Receivable and Intangibles Security Agreement and
that certain Supplementary Security Agreement - Security Interest in Goods and
Chattels, each of even date herewith, from the Borrower to the Bank
(collectively, the "Security Agreement"), and (iii) assignments and notices of
assignment (collectively, the "Intellectual Property Assignments") from the
Borrower to the Bank relating to the Borrower's registered trademarks, patents
and copyrights, if any.
1.2. The Borrowing; Revolving Note. Subject to the terms and conditions
hereinafter set forth, the Bank will make loans ("Revolving Loans") to the
Borrower, in such amounts as the Borrower may request, at the Principal Office
of the Bank on any Business Day prior to the first to occur of (i) the
Expiration Date, or (ii) the earlier termination of the within-described
revolving financing arrangements pursuant to Section 5.2 or Section 6.7;
provided, however, that (1) the aggregate principal amount of Revolving Loans
outstanding shall at no time exceed the Maximum Revolving Amount (hereinafter
defined) and (2) the Aggregate Bank Liabilities (hereinafter defined) shall at
no time exceed the Borrowing Base (hereinafter defined). Within such limits, and
subject to the terms and conditions hereof, the Borrower may
<PAGE> 2
obtain Revolving Loans, repay Revolving Loans and obtain Revolving Loans again
on one or more occasions. The Revolving Loans shall be evidenced by the
Revolving Note and interest thereon shall be payable at the times and at the
rate provided in the Revolving Note. Overdue principal of the Revolving Loans
and, to the extent permitted by law, overdue interest shall bear interest at a
fluctuating rate per annum which at all times shall be equal to the sum of (i)
two (2%) percent per annum plus (ii) the per annum rate otherwise payable under
the Revolving Note (but in no event in excess of the maximum rate from time to
time permitted by then applicable law), compounded monthly and payable on
demand. The Borrower hereby irrevocably authorizes the Bank to make or cause to
be made, on a schedule attached to the Revolving Note or on the books of the
Bank, at or following the time of making each Revolving Loan and of receiving
any payment of principal, an appropriate notation reflecting such transaction
and the then aggregate unpaid principal balance of the Revolving Loans. The
amount so noted shall constitute presumptive evidence as to the amount owed by
the Borrower with respect to principal of the Revolving Loans. Failure of the
Bank to make any such notation shall not, however, affect any obligation of the
Borrower or any right of the Bank hereunder or under the Revolving Note. All
payments of interest, principal and any other sum payable hereunder and/or under
the Revolving Note shall be made to the Bank at its Principal Office, in
immediately available funds. All payments received by the Bank after 2:00 p.m.
on any day shall be deemed received as of the next succeeding Business Day. All
monies received by the Bank shall be applied first to fees, charges, costs and
expenses payable to the Bank under this letter agreement, the Revolving Note
and/or any of the other Loan Documents, next to interest then accrued on account
of any Revolving Loans or letter of credit reimbursement obligations and only
thereafter to principal of the Revolving Loans and letter of credit
reimbursement obligations. All interest and fees payable hereunder and/or under
the Revolving Note shall be calculated on the basis of a 360-day year for the
actual number of days elapsed.
1.3. Repayment; Renewal. The Borrower shall repay in full all Revolving
Loans and all interest thereon upon the first to occur of: (i) the Expiration
Date or (ii) an acceleration under Section 5.2(a) following an Event of Default.
The Borrower may repay, at any time, without penalty or premium, the whole or
any portion of any Revolving Loan. In addition, if at any time the Borrowing
Base is in an amount which is less than the then outstanding Aggregate Bank
Liabilities, the Borrower will forthwith prepay so much of the Revolving Loans
as may be required (or arrange for the termination of such letters of credit as
may be required) so that the Aggregate Bank Liabilities will not exceed the
Borrowing Base. The Bank may, at its sole discretion, renew the financing
arrangements described in this letter agreement by extending the Expiration Date
in a writing signed by the Bank and accepted by the Borrower. Neither the
inclusion in this letter agreement or elsewhere of covenants relating to periods
of time after the Expiration Date, nor any other provision hereof, nor any
action
-2-
<PAGE> 3
(except a written extension pursuant to the immediately preceding sentence),
non-action or course of dealing on the part of the Bank will be deemed an
extension of, or agreement on the part of the Bank to extend, the Expiration
Date.
1.4. Advances and Payments. The proceeds of all Revolving Loans shall be
credited by the Bank to a general deposit account maintained by the Borrower
with the Bank. The proceeds of each Revolving Loan will be used by the Borrower
solely for working capital purposes and, in the ordinary course, for other
general corporate purposes.
The Bank may charge any general deposit account of the Borrower at the
Bank with the amount of all payments of interest, principal and other sums due,
from time to time, under this letter agreement and/or the Revolving Note and/or
with respect to any letter of credit; and will thereafter notify the Borrower of
the amount so charged. The failure of the Bank so to charge any account or to
give any such notice shall not affect the obligation of the Borrower to pay
interest, principal or other sums as provided herein or in the Revolving Note or
with respect to any letter of credit.
Whenever any payment to be made to the Bank hereunder or under the
Revolving Note or with respect to any letter of credit shall be stated to be due
on a day which is not a Business Day, such payment may be made on the next
succeeding Business Day, and interest payable on each such date shall include
the amount thereof which shall accrue during the period of such extension of
time. All payments by the Borrower hereunder and/or in respect of the Revolving
Note and/or with respect to any letter of credit shall be made net of any
impositions or taxes and without deduction, set-off or counterclaim,
notwithstanding any claim which the Borrower may now or at any time hereafter
have against the Bank.
1.5. Letters of Credit. The Bank may, from time to time, in its sole
discretion issue one or more letters of credit for the account of the Borrower;
provided that at the time of such issuance and after giving effect thereto the
Aggregate Bank Liabilities will in no event exceed the lesser of (i) $1,000,000
or (ii) the then effective Borrowing Base. Any such letter of credit will be
issued for such fee and upon such terms and conditions as may be agreed to by
the Bank and the Borrower at the time of issuance. The Borrower hereby
authorizes the Bank, without further request from the Borrower, to cause the
Borrower's liability to the Bank for reimbursement of funds drawn under any such
letter of credit to be repaid from the proceeds of a Revolving Loan to be made
hereunder, unless such liability has been otherwise paid from any other source
made available by the Borrower to the Bank. The Borrower hereby irrevocably
requests that such Revolving Loans be made.
1.6. Conditions to Advance. Prior to the making of the initial
Revolving Loan or the issuance of any letter of credit
-3-
<PAGE> 4
hereunder, the Borrower shall deliver to the Bank duly executed copies of this
letter agreement, the Security Agreement, the Intellectual Property Assignments,
the Revolving Note and the documents and other items listed on the Closing
Agenda delivered herewith by the Bank to the Borrower, all of which, as well as
all legal matters incident to the transactions contemplated hereby, shall be
satisfactory in form and substance to the Bank and its counsel.
Without limiting the foregoing, any Revolving Loan or letter of credit
issuance (including the initial Revolving Loan or letter of credit issuance) is
subject to the further conditions precedent that on the date on which such
Revolving Loan is made or such letter of credit is issued (and after giving
effect thereto):
(a) All statements, representations and warranties of the Borrower made
in this letter agreement and/or the Security Agreement shall continue to be
correct in all material respects as of the date of such Revolving Loan or the
date of issuance of such letter of credit, as the case may be.
(b) All covenants and agreements of the Borrower contained herein
and/or in any of the other Loan Documents shall have been complied with in all
material respects on and as of the date of such Revolving Loan or the date of
issuance of such letter of credit, as the case may be.
(c) No event which constitutes, or which with notice or lapse of time
or both would constitute, an Event of Default shall have occurred and be
continuing.
(d) No material adverse change shall have occurred in the financial
condition of the Borrower from that disclosed in the financial statements then
most recently furnished to the Bank.
Each request by the Borrower for any Revolving Loan or letter of credit
issuance, and each acceptance by the Borrower of the proceeds of any Revolving
Loan or delivery of a letter of credit, will be deemed a representation and
warranty by the Borrower that at the date of such Revolving Loan or the date of
issuance of such letter, as the case may be, and after giving effect thereto all
of the conditions set forth in the foregoing clauses (a)-(d) of this Section
1.6 will be satisfied. Each request for a Revolving Loan or letter of credit
issuance will be accompanied by a borrowing base certificate on a form
satisfactory to the Bank, executed by the chief financial officer of the
Borrower, unless such a certificate shall have been previously furnished
setting forth the Borrowing Base as at a date not more than 30 days prior to
the date of the requested borrowing.
II. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties. In order to induce the Bank to
enter into this letter agreement and to make Revolving
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<PAGE> 5
Loans hereunder and/or issue letters of credit hereunder, the Borrower warrants
and represents to the Bank as follows:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of Massachusetts. The Borrower has full
corporate power to own its property and conduct its business as now conducted
and as contemplated to be conducted, to grant the security interests
contemplated by the Security Agreement and the Intellectual Property Assignments
and to enter into and perform this letter agreement and the other Loan
Documents. The Borrower is duly qualified to do business and in good standing in
each jurisdiction in which the Borrower maintains any facility, sales office,
warehouse or other location and in each other jurisdiction where such
qualification is required by the nature of the Borrower's business (except any
such other jurisdiction in which failure so to qualify would not, singly or in
the aggregate with all other such failures, have a material adverse effect on
the Borrower), all such jurisdictions in which the Borrower is so qualified
being listed on item 2.1(a) of the attached Disclosure Schedule. At the date
hereof, the Borrower has no Subsidiaries. The Borrower is not a member of any
partnership or joint venture.
(b) At the date of this letter agreement, all of the outstanding
capital stock of the Borrower is owned, of record and beneficially, as set forth
on item 2.1(b) of the attached Disclosure Schedule.
(c) The execution, delivery and performance by the Borrower of this
letter agreement and each of the other Loan Documents have been duly authorized
by all necessary corporate and other action and do not and will not:
(i) violate any provision of, or require any filings (other than
filings under the Uniform Commercial Code), registration, consent or
approval under, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower;
(ii) violate any provision of the charter or By-laws of the
Borrower, or result in a breach of or constitute a default or require
any waiver or consent under any indenture or loan or credit agreement
or any other material agreement, lease or instrument to which the
Borrower is a party or by which the Borrower or any of its properties
may be bound or affected or require any other consent of any Person; or
(iii) result in, or require, the creation or imposition of any
lien, security interest or other encumbrance (other than in favor of
the Bank), upon or with respect to any of the properties now owned or
hereafter acquired by the Borrower.
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<PAGE> 6
(d) This letter agreement and each of the other Loan Documents has been
duly executed and delivered by the Borrower and each is a legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its respective terms.
(e) Except as described in item 2.1(e) of the attached Disclosure
Schedule, there are no actions, suits, proceedings or investigations pending or,
to the knowledge of the Borrower, threatened by or against the Borrower before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which could hinder or prevent the
consummation of the transactions contemplated hereby or call into question the
validity of this letter agreement or any of the other Loan Documents or any
action taken or to be taken in connection with the transactions contemplated
hereby or thereby or which in any single case or in the aggregate might result
in any material adverse change in the business, prospects, condition, affairs or
operations of the Borrower.
(f) Except as described in item 2.1(f) of the attached Disclosure
Schedule, the Borrower is not in violation of any term of its charter or Bylaws
as now in effect. Except as described in item 2.1(f) of the attached Disclosure
Schedule, the Borrower is not in material violation of any term of any mortgage,
indenture or judgment, decree or order, or any other instrument, contract or
agreement to which it is a party or by which any of its property is bound.
(g) The Borrower has filed all federal, state and local tax returns,
reports and estimates required to be filed by the Borrower. All such filed
returns, reports and estimates are proper and accurate and the Borrower has paid
all taxes, assessments, impositions, fees and other governmental charges
required to be paid in respect of the periods covered by such returns, reports
or estimates. No deficiencies for any tax, assessment or governmental charge
have been asserted or assessed, and the Borrower knows of no material tax
liability or basis therefor.
(h) The Borrower is in compliance with all requirements of law,
federal, state and local, and all requirements of all governmental bodies or
agencies having jurisdiction over it, the conduct of its business, the use of
its properties and assets, and all premises occupied by it, failure to comply
with any of which could (singly or in the aggregate with all other such
failures) have a material adverse effect upon the assets, business, financial
condition or prospects of the Borrower. Without limiting the foregoing, the
Borrower has all the franchises, licenses, leases, permits, certificates and
authorizations needed for the conduct of its business and the use of its
properties and all premises occupied by it, as now conducted, owned and used.
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<PAGE> 7
(i) The management-generated financial statements of the Borrower as at
December 31, 1993 and the management-generated statements as at June 30, 1994,
each heretofore delivered to the Bank, are complete and accurate in all material
respects and fairly present the financial condition of the Borrower as at the
respective dates thereof and for the periods covered thereby, except that
management-generated statements do not have footnotes and thus do not present
the information which would normally be contained in footnotes to financial
statements. The Borrower has no liability, contingent or otherwise, not
disclosed in the aforesaid financial statements or in any notes thereto that
could materially affect the financial condition of the Borrower. Since December
31, 1993, there has been no material adverse development in the business,
condition or prospects of the Borrower and the Borrower has not entered into any
transaction other than in the ordinary course.
(j) The principal place of business and chief executive offices of the
Borrower are located at 19 Alpha Road, Chelmsford, MA 01824 (the "Premises").
All of the books and records of the Borrower are located at the Premises. Except
as described in item 2.1(j) of the attached Disclosure Schedule, no assets of
the Borrower are located at any other address; provided that items of inventory
and equipment of the Borrower with an aggregate value not in excess of $100,000
may be located off-site, such items being in the possession of the Borrower's
salesmen and/or customers and used for demonstration, evaluation and testing
purposes. Said item 2.1(j) of the attached Disclosure Schedule sets forth the
names and addresses of all record owners of the Premises.
(k) The Borrower owns or has a valid right to use all of the patents,
licenses, copyrights, trademarks, trade names and franchises ("Intellectual
Property") now being used or necessary to conduct its business, all of which are
described on Item 2.1(k) of the attached Disclosure Schedule. None of the
Intellectual Property owned by the Borrower is represented by a registered
copyright, trademark, patent or other federal or state registration, except as
shown on said Item 2.1(k). To the best of the Borrower's knowledge, the conduct
of the Borrower's business as now operated does not conflict with valid patents,
licenses, copyrights, trademarks, trade names or franchises of others in any
manner that could materially adversely affect the business, prospects, assets or
condition, financial or otherwise, of the Borrower.
(1) To the best of the Borrower's knowledge, none of the executive
officers or key employees of the Borrower is subject to any agreement in favor
of anyone other than the Borrower which limits or restricts that person's right
to engage in the type of business activity conducted or proposed to be conducted
by the Borrower or which grants to anyone other than the Borrower any rights in
any inventions or other ideas susceptible to legal protection developed or
conceived by any such officer or key employee.
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<PAGE> 8
(m) The Borrower is not a party to any contract or agreement which now
has or, as far as can be foreseen by the Borrower at the date hereof, may have a
material adverse effect on the financial condition, business, prospects or
properties of the Borrower.
III. AFFIRMATIVE COVENANTS AND REPORTING REQUIREMENTS
Without limitation of any covenants and agreements contained in the
Security Agreement or elsewhere, the Borrower agrees that so long as the
financing arrangements contemplated hereby are in effect or any Revolving Loan
or any of the other Obligations shall be outstanding or any letter of credit
issued hereunder shall be outstanding:
3.1. Legal Existence; Qualification; Compliance. The Borrower will
maintain (and will cause each Subsidiary of the Borrower to maintain) its
corporate existence and good standing in the jurisdiction of its incorporation.
The Borrower will qualify to do business and will remain qualified and in good
standing (and the Borrower will cause each Subsidiary of the Borrower to qualify
and remain qualified and in good standing) in each jurisdiction where the
Borrower or such Subsidiary, as the case may be, maintains any facility, sales
office, warehouse or other location and in each other jurisdiction in which the
failure so to qualify could (singly or in the aggregate with all other such
failures) have a material adverse effect on the financial condition, business or
prospects of the Borrower or any such Subsidiary. The Borrower will comply (and
will cause each Subsidiary of the Borrower to comply) with its charter documents
and by-laws and, in all material respects, with all contractual requirements by
which it or any of its properties may be bound. The Borrower will comply with
(and will cause each Subsidiary of the Borrower to comply with) all applicable
laws, rules and regulations (including, without limitation, ERISA and those
relating to environmental protection) other than (i) laws, rules or regulations
the validity or applicability of which the Borrower or such Subsidiary shall be
contesting in good faith by proceedings which serve as a matter of law to stay
the enforcement thereof and (ii) those laws, rules and regulations the failure
to comply with any of which could not (singly or in the aggregate) have a
material adverse effect on the financial condition, business or prospects of the
Borrower or any such Subsidiary.
3.2. Maintenance of Property; Insurance. The Borrower will maintain and
preserve (and cause each Subsidiary of the Borrower to maintain and preserve)
all of its properties in good working order and condition, ordinary wear and
tear excepted, making all necessary repairs thereto and replacements thereof.
The Borrower will maintain all such insurance as may be required under the
Security Agreement and will also maintain, with financially sound and reputable
insurers, insurance with respect to its property and business against such
liabilities, casualties and contingencies and of such types and in such amounts
as shall be
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<PAGE> 9
reasonably satisfactory to the Bank from time to time and in any event all such
insurance as may from time to time be customary for companies conducting a
business similar to that of the Borrower in similar locales.
3.3. Payment of Taxes and Charges. The Borrower will pay and discharge
(and will cause each Subsidiary of the Borrower to pay and discharge) all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or property, including, without limitation, taxes, assessments, charges
or levies relating to real and personal property, franchises, income,
unemployment, old age benefits, withholding, or sales or use, prior to the date
on which penalties would attach thereto, and all lawful claims (whether for any
of the foregoing or otherwise) which, if unpaid, might give rise to a lien upon
any property of the Borrower or any such Subsidiary, except any of the foregoing
which is being contested in good faith and by appropriate proceedings which
serve as a matter of law to stay the enforcement thereof and for which the
Borrower has established and is maintaining adequate reserves. The Borrower will
pay, and will cause each of its Subsidiaries to pay, in a timely manner, all
lease obligations, all trade debt, purchase money obligations, equipment lease
obligations and all of its other Indebtedness. The Borrower will perform and
fulfill all covenants and agreements under any leases of real estate, agreements
relating to purchase money debt, equipment leases and other material contracts.
The Borrower will maintain in full force and effect, and comply with the terms
and conditions of, all permits, permissions and licenses necessary or desirable
for its business.
3.4. Accounts. The Borrower will maintain its principal depository and
operating accounts with the Bank.
3.5. Conduct of Business. The Borrower will conduct, in the ordinary
course, the business in which it is presently engaged. The Borrower will not,
without the prior written consent of the Bank, directly or indirectly enter into
any other lines of business, businesses or ventures.
3.6. Reporting Requirements. The Borrower will furnish to the Bank:
(i) Within 90 days after the end of each fiscal year of the
Borrower, a copy of the annual audit report for such fiscal year for
the Borrower, including therein consolidated and consolidating balance
sheets of the Borrower and Subsidiaries as at the end of such fiscal
year and related consolidated and consolidating statements of income,
stockholders' equity and cash flow for the fiscal year then ended. The
annual consolidated financial statements shall be certified by Coopers
& Lybrand or other independent public accountants selected by the
Borrower and reasonably acceptable to the Bank, such certification to
be in such form as is generally recognized as "unqualified" (provided,
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<PAGE> 10
however, that the Borrower's financial statements as at December 31,
1993 and for the fiscal year then ended may be subject to a "going
concern" qualification).
(ii) Within 30 days after the end of each month, consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries and
related consolidated and consolidating statements of income and
stockholders' equity and cash flow, unaudited but prepared in
accordance with generally accepted accounting principles consistently
applied (except that such monthly statements need not contain
footnotes) and certified as accurate (subject to normal year-end audit
adjustments, which shall not be material) by the chief financial
officer of the Borrower, such balance sheets to be as at the end of
such month and such statements of income and stockholders' equity and
cash flow to be for such month and for the year to date, in each case
together with a comparison to budget.
(iii) At the time of delivery of each annual and monthly statement
of the Borrower, a certificate executed by the chief financial officer
of the Borrower stating that he or she has reviewed this letter
agreement and the other Loan Documents and has no knowledge of any
default by the Borrower in the performance or observance of any of the
provisions of this letter agreement or of any of the other Loan
Documents or, if he or she has such knowledge, specifying each such
default and the nature thereof. Each financial statement given as at
the end of any fiscal quarter of the Borrower will also set forth the
calculations necessary to evidence compliance with Sections 3.7-3.9.
(iv) Monthly, within 15 days after the end of each month, (A) an
aging report in form satisfactory to the Bank covering all Receivables
of the Borrower outstanding as at the end of such month, and (B) a
certificate of the chief financial officer of the Borrower setting
forth the Borrowing Base as at the end of such month, all in form
reasonably satisfactory to the Bank.
(v) Promptly after receipt, a copy of all audits or reports
submitted to the Borrower by independent public accountants in
connection with any annual, special or interim audits of the books of
the Borrower and any letter of comments directed by such accountants to
the management of the Borrower.
(vi) As soon as possible and in any event within five days after
the occurrence of any Event of Default or any event which, with the
giving of notice or passage of time or both, would constitute an Event
of Default, the statement of the Borrower setting forth details of each
such Event of Default or event and the action which the Borrower
proposes to take with respect thereto.
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<PAGE> 11
(vii) Promptly after the commencement thereof, notice of all
actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, to which the Borrower or any Subsidiary of the
Borrower is a party.
(viii) Promptly upon filing any registration statement or listing
application (or any supplement or amendment to any registration
statement or listing application) with the Securities and Exchange
Commission ("SEC") or any successor agency or with any stock exchange
or with the National Association of Securities Dealers quotations
system, a copy of same.
(ix) If the Borrower becomes a publicly-traded company, a copy of
each periodic or current report filed with the SEC or any successor
agency and each annual report, proxy statement and other communication
sent to shareholders or other securityholders generally, such copy to
be provided to the Bank promptly upon such filing with the SEC or such
communication with shareholders or securityholders, as the case may be.
(x) Promptly upon applying for, or being granted, a federal or
state registration for any copyright, trademark or patent or purchasing
any registered copyright, trademark or patent, written notice to the
Bank describing same, together with all such documents as may be
required to give the Bank a fully perfected first priority security
interest in each such copyright, trademark or patent.
(xi) Promptly after the Borrower has knowledge thereof, written
notice of any development or circumstance which may reasonably be
expected to have a material adverse effect on the Borrower or its
business, properties, assets, Subsidiaries or condition, financial or
otherwise.
(xii) Promptly upon request, such other information respecting the
financial condition, operations, Receivables, inventory, machinery or
equipment of the Borrower or any Subsidiary as the Bank may from time
to time reasonably request.
3.7. Debt to Worth. The Borrower will maintain as at the end of each
fiscal quarter (commencing with its results as at June 30, 1994) on a
consolidated basis a Leverage Ratio of not more than the following: not more
than 2.5 to 1 as at each of June 30, 1994 and September 30, 1994; and not more
than 1.25 to 1 as at December 31, 1994 and as at the end of each fiscal quarter
thereafter. As used herein, "Leverage Ratio" means, as at any date when same is
to be determined, the ratio of (x) the outstanding Senior Liabilities of the
Borrower and/or its Subsidiaries to (y) the Borrower's consolidated Capital
Base.
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<PAGE> 12
3.8. Net Worth. The Borrower will maintain as at the end of each fiscal
quarter (commencing with its results as at June 30, 1994) a consolidated Capital
Base of not less than the then effective Capital Base Requirement. The Capital
Base Requirement is deemed to have been $900,000 as at March 31, 1994; and as at
the last day of each fiscal quarter thereafter (beginning with June 30, 1994)
the Capital Base Requirement will be deemed to become an amount equal to the sum
of: (i) the Capital Base Requirement in effect on the last day of the
immediately preceding fiscal quarter, plus (ii) 75% of the net proceeds of any
equity securities sold by the Borrower during the fiscal quarter then ended and
75% of the proceeds of any Subordinated Debt issued by the Borrower and/or its
Subsidiaries during such fiscal quarter (nothing contained herein being deemed
to approve the issuance of any such Subordinated Debt), plus (iii) 75% of the
consolidated Net Income of the Borrower and Subsidiaries during said fiscal
quarter then ended (but without giving effect to any Net Income which is less
than zero for any fiscal quarter).
3.9. Profitability. The Borrower will achieve quarterly Net Income of
at least $100,000 for each fiscal quarter, commencing with its results for the
fiscal quarter ended June 30, 1994. The Borrower will achieve annual Net Income
of at least $500,000 for its fiscal year ending December 31, 1994 and for each
fiscal year thereafter.
3.10. Books and Records. The Borrower will maintain (and cause each of
its Subsidiaries to maintain) complete and accurate books, records and accounts
which will at all times accurately and fairly reflect all of its transactions in
accordance with generally accepted accounting principles consistently applied.
The Borrower will, at any reasonable time and from time to time upon reasonable
notice and during normal business hours (and at any time and without any
necessity for notice following the occurrence of an Event of Default), permit
the Bank, and any agents or representatives thereof, to examine and make copies
of and take abstracts from the records and books of account of, and visit the
properties of the Borrower and any of its Subsidiaries, and to discuss its
affairs, finances and accounts with its managers, officers or directors and
independent accountants, all of whom are hereby authorized and directed to
cooperate with the Bank in carrying out the intent of this Section 3.10. Each
financial statement of the Borrower hereafter delivered pursuant to this letter
agreement will be complete and accurate in all material respects and will fairly
present the financial condition of the Borrower as at the date thereof and for
the periods covered thereby.
3.11. Subordination Agreements. Prior to the Bank making the first
Revolving Loan, the Borrower will obtain, and will thereafter maintain in full
force and effect, a subordination agreement from each holder of Subordinated
Debt, such agreements to be in form and substance satisfactory to the Bank.
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<PAGE> 13
3.12. Deleted prior to execution.
IV. NEGATIVE COVENANTS.
Without limitation of any covenants and agreements contained in the
Security Agreement or elsewhere, the Borrower agrees that so long as the
financing arrangements contemplated hereby are in effect or any Revolving Loan
or any of the other Obligations shall be outstanding or any letter of credit
issued hereunder shall be outstanding:
4.1. Indebtedness. The Borrower will not create, incur, assume or
suffer to exist any Indebtedness (nor allow any of its Subsidiaries to create,
incur, assume or suffer to exist any Indebtedness), except for:
(i) Indebtedness owed to the Bank, including, without
limitation, the Indebtedness represented by the Revolving Note and any
Indebtedness in respect of letters of credit issued by the Bank;
(ii) Indebtedness of the Borrower or any Subsidiary for taxes,
assessments and governmental charges or levies not yet due and payable;
(iii) unsecured current liabilities of the Borrower or any
Subsidiary (other than for money borrowed or the deferred purchase
price of property) incurred upon customary terms in the ordinary course
of business;
(iv) purchase money Indebtedness (including, without
limitation, Indebtedness in respect of capitalized equipment leases)
owed to equipment vendors and/or lessors for equipment purchased or
leased by the Borrower for use in the Borrower's business, provided
that the total of Indebtedness permitted under this clause (iv) plus
presently-existing equipment financing permitted under clause (v) of
this Section 4.1 will not exceed $250,000 in the aggregate outstanding
at any one time;
(v) other Indebtedness existing at the date hereof, but only
to the extent set forth on item 4.1 of the attached Disclosure
Schedule; and
(vi) any guaranties or other contingent liabilities expressly
permitted pursuant to Section 4.3.
4.2. Liens. The Borrower will not create, incur, assume or suffer to
exist (nor allow any of its Subsidiaries to create, incur, assume or suffer to
exist) any mortgage, deed of trust,
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<PAGE> 14
pledge, lien, security interest, or other charge or encumbrance (including the
lien or retained security title of a conditional vendor) of any nature
(collectively, "Liens"), upon or with respect to any of its property or assets,
now owned or hereafter acquired, except that the foregoing restrictions shall
not apply to:
(i) Liens for taxes, assessments or governmental charges or
levies on property of the Borrower or any of its Subsidiaries if the
same shall not at the time be delinquent or thereafter can be paid
without interest or penalty;
(ii) Liens imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar Liens arising in the ordinary
course of business for sums not yet due or which are being contested in
good faith and by appropriate proceedings which serve as a matter of
law to stay the enforcement thereof and as to which adequate reserves
have been made;
(iii) pledges or deposits under workmen's compensation laws,
unemployment insurance, social security, retirement benefits or similar
legislation;
(iv) Liens in favor of the Bank;
(v) Liens in favor of equipment vendors and/or lessors
securing purchase money Indebtedness to the extent permitted by clause
(iv) of Section 4.1; provided that no such Lien will extend to any
property of the Borrower other than the specific items of equipment
financed; or
(vi) other Liens existing at the date hereof, but only to the
extent and with the relative priorities set forth on item 4.2 of the
attached Disclosure Schedule.
Nothing contained in this Section 4.2 will in any event be deemed to prohibit
non-capitalized operating leases of equipment used in the Borrower's business.
4.3. Guaranties. The Borrower will not, without the prior written
consent of the Bank, assume, guarantee, endorse or otherwise become directly or
contingently liable (including, without limitation, liable by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in any debtor or otherwise to assure any creditor
against loss) in connection with any indebtedness of any other Person (nor will
it permit any Subsidiary to do so), except (i) guaranties by endorsement for
deposit or collection in the ordinary course of business and (ii) guaranties
existing at the date hereof and described on item 4.3 of the attached Disclosure
Schedule.
4.4. Dividends. The Borrower will not, without the prior written
consent of the Bank, make any distributions to its
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<PAGE> 15
shareholders, pay any dividends (other than dividends payable solely in capital
stock of the Borrower) or redeem, purchase or otherwise acquire, directly or
indirectly any of its capital stock; provided, however, that during fiscal 1994
the Borrower may expend up to $250,000 to redeem shares of its capital stock in
transactions incidental to the conversion of Subordinated Debt into equity.
4.5. Loans and Advances. The Borrower will not make (and will not permit
any Subsidiary to make) any loans or advances to any Person, including, without
limitation, the Borrower's directors, officers and employees, except advances to
such directors, officers or employees with respect to expenses incurred by them
in the ordinary course of their duties and advances against salary, all of which
advances will not exceed, in the aggregate, $100,000 outstanding at any one
time.
4.6. Investments. The Borrower will not, without the Bank's prior
written consent, invest in, hold or purchase any stock or securities of any
Person (nor will the Borrower permit any of its Subsidiaries to invest in,
purchase or hold any such stock or securities) except (i) readily marketable
direct obligations of, or obligations guarantied by, the United States of
America or any agency thereof, (ii) other investment grade debt securities,
(iii) mutual funds, the assets of which are primarily invested in items of the
kind described in the foregoing clauses (i) and (ii) of this Section 4.6, (iv)
deposits with or certificates of deposit issued by the Bank and any other
obligations of the Bank or the Bank's parent, (v) deposits in any other bank
organized in the United States having capital in excess of $100,000,000, and
(vi) investments in Subsidiaries to the extent, if any, from time to time
expressly permitted by the Bank.
4.7. Subsidiaries; Acquisitions. The Borrower will not, without the
prior written consent of the Bank, form or acquire any Subsidiary or make any
other acquisition of the stock of any other Person or of all or substantially
all of the assets of any other Person. The Borrower will not become a partner in
any partnership.
4.8. Merger. The Borrower will not, without the prior written consent
of the Bank, merge or consolidate with any Person, or sell, lease, transfer or
otherwise dispose of any material portion of its assets (whether in one or more
transactions), other than sale of inventory in the ordinary course.
4.9. Affiliate Transactions. The Borrower will not, without prior
written consent of the Bank, enter into any transaction, including, without
limitation, the purchase, sale or exchange of any property or the rendering of
any service, with any affiliate of the Borrower, except in the ordinary course
of and pursuant to the reasonable requirements of the Borrower's business and
upon fair and reasonable terms no less favorable to the Borrower than would be
obtained in a comparable arms'-length
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<PAGE> 16
transaction with any Person not an affiliate; provided that nothing in this
Section 4.9 shall be deemed to prohibit the payment of salary or other similar
payments to any officer or director of the Borrower at a level consistent with
the salary and other payments being paid at the date of this letter agreement
and heretofore disclosed in writing to the Bank, nor to prevent the hiring of
additional officers at a salary level consistent with industry practice, nor to
prevent reasonable periodic increases in salary. For the purposes hereof,
"affiliate" means any Person which, directly or indirectly, controls or is
controlled by or is under common control with the Borrower; any officer or
director or former officer or director of the Borrower; any Person owning of
record or beneficially, directly or indirectly, 5% or more of any class of
capital stock of the Borrower or 5% or more of any class of capital stock or
other equity interest having voting power (under ordinary circumstances) of any
of the other Persons described above; and any member of the immediate family of
any of the foregoing. "Control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of any
Person, whether through ownership of voting equity, by contract or otherwise.
4.10. Change of Address, etc. The Borrower will not change its name or
legal structure, nor will the Borrower move its chief executive office or
principal place of business from the address described in the first sentence of
Section 2.1(j) above, nor will the Borrower remove any books or records from
such address, nor will the Borrower keep any Collateral (other than items of
inventory and equipment with an aggregate value not in excess of $100,000 which
may be located off-site in the possession of salesmen and/or customers, such
items being used for demonstration, evaluation and testing purposes) at any
location other than the Premises without, in each instance, giving the Bank at
least 30 days' prior written notice and providing all such financing statements,
certificates and other documentation as the Bank may request in order to
maintain the perfection and priority of the security interests granted or
intended to be granted pursuant to the Security Agreement. The Borrower will not
change its fiscal year or methods of financial reporting (except that as of
January 1, 1994 the Borrower is no longer capitalizing certain intangibles of a
type which it had previously capitalized) unless, in each instance, prior
written notice of such change is given to the Bank and prior to such change the
Borrower enters into amendments to this letter agreement in form and substance
satisfactory to the Bank in order to preserve unimpaired the rights of the Bank
and the obligations of the Borrower hereunder.
4.11. Hazardous Waste. Except as provided below, the Borrower will not
dispose of or suffer or permit to exist any hazardous material or oil on any
site or vessel owned, occupied or operated by the Borrower or any Subsidiary of
the Borrower, nor shall the Borrower store (or permit any Subsidiary to store)
on any site or vessel owned, occupied or operated by the Borrower or any such
Subsidiary, or transport or arrange the transport of, any hazardous material or
oil (the terms "hazardous material", "oil", "site" and "vessel", respectively,
being used herein with
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<PAGE> 17
the meanings given those terms in Mass. Gen. Laws, Ch. 21E or any comparable
terms in any comparable statute in effect in any other relevant jurisdiction).
The Borrower shall provide the Bank with written notice of (i) the intended
storage or transport of any hazardous material or oil by the Borrower or any
Subsidiary of the Borrower, (ii) any potential or known release or threat of
release of any hazardous material or oil at or from any site or vessel owned,
occupied or operated by the Borrower or any Subsidiary of the Borrower, and
(iii) any incurrence of any expense or loss by any government or governmental
authority in connection with the assessment, containment or removal of any
hazardous material or oil for which expense or loss the Borrower or any
Subsidiary of the Borrower may be liable. Notwithstanding the foregoing, the
Borrower and its subsidiaries may use, store and transport, and need not notify
the Bank of the use, storage or transportation of, (x) oil in reasonable
quantities, as fuel for heating of their respective facilities or for vehicles
or machinery used in the ordinary course of their respective businesses and (y)
hazardous materials that are solvents, cleaning agents or other materials used
in the ordinary course of the respective business operations of the Borrower and
its Subsidiaries, in reasonable quantities, as long as in any case the Borrower
or the Subsidiary concerned (as the case may be) has obtained and maintains in
effect any necessary governmental permits, licenses and approvals, complies with
all requirements of applicable federal, state and local law relating to such
use, storage or transportation, follows the protective and safety procedures
that a prudent business person conducting a business the same as or similar to
that of the Borrower or such Subsidiary (as the case may be) would follow, and
disposes of such materials (not consumed in the ordinary course) only through
licensed providers of hazardous waste removal services.
4.12. No Margin Stock. No proceeds of any Revolving Loan shall be used
directly or indirectly to purchase or carry any margin security.
4.13. Subordinated Debt. The Borrower will not directly or indirectly
make any optional or voluntary prepayment or purchase of Subordinated Debt nor
modify, alter or add any provisions with respect to any Subordinated Debt.
Further, the Borrower will not make any payment in respect of Subordinated Debt
in violation of the subordination agreement relating thereto. In any event, the
Borrower will not make any payment on account of Subordinated Debt if any Event
of Default then exists or would result from such payment. Notwithstanding the
foregoing, nothing contained in this Section will be deemed to prevent the
Borrower from converting Subordinated Debt into equity.
V. DEFAULT AND REMEDIES
5.1. Events of Default. The occurrence of any one of the following
events shall constitute an Event of Default hereunder:
(a) The Borrower shall fail to make any payment of principal of or
interest on the Revolving Note on or before the
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date when due; or the Borrower shall fail to pay when due any amount owed to the
Bank in respect of any letter of credit now or hereafter issued by the Bank; or
(b) Any representation or warranty of the Borrower contained herein
shall at any time prove to have been incorrect in any material respect when made
or any representation or warranty made by the Borrower in writing in connection
with the execution and delivery of this letter agreement or in connection with
any Revolving Loan or letter of credit shall at any time prove to have been
incorrect in any material respect when made; or
(c) The Borrower shall default in the performance or observance of any
agreement or obligation under any of Sections 3.1, 3.3, 3.6, 3.7, 3.8 or 3.9 or
Article IV; or
(d) The Borrower shall default in the performance of any other term,
covenant or agreement contained in this letter agreement and such default shall
continue unremedied for 30 days after notice thereof shall have been given to
the Borrower; or
(e) Any default on the part of the Borrower or any Subsidiary of the
Borrower shall exist, and shall remain unwaived or uncured beyond the expiration
of any applicable notice and/or grace period, under any other contract or
agreement now existing or hereafter entered into with or for the benefit of the
Bank (or any affiliate of the Bank); or
(f) Any default shall exist and remain unwaived or uncured with respect
to any Indebtedness of the Borrower or any Subsidiary of the Borrower in excess
of $100,000 in aggregate principal amount or with respect to any instrument
evidencing, guaranteeing, securing or otherwise relating to any such
Indebtedness, or any such Indebtedness shall not have been paid when due,
whether by acceleration or otherwise, or shall have been declared to be due and
payable prior to its stated maturity, or any event or circumstance shall occur
which permits, or with the lapse of time or giving of notice or both would
permit, the acceleration of the maturity of any such Indebtedness by the holder
of holders thereof; or
(g) The Borrower shall be dissolved, or the Borrower or any Subsidiary
of the Borrower shall become insolvent or bankrupt or shall cease paying its
debts as they mature or shall make an assignment for the benefit of creditors,
or a trustee, receiver or liquidator shall be appointed for the Borrower or any
Subsidiary of the Borrower or for a substantial part of the property of the
Borrower or any such Subsidiary, or bankruptcy, reorganization, arrangement,
insolvency or similar proceedings shall be instituted by or against the Borrower
or any such Subsidiary under the laws of any jurisdiction (except for an
involuntary proceeding filed against the Borrower or any Subsidiary of the
Borrower which is dismissed within 60 days following the institution thereof);
or
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<PAGE> 19
(h) Any attachment, execution or similar process shall be issued or
levied against any of the property of the Borrower or any Subsidiary and such
attachment, execution or similar process shall not be paid, stayed, released,
vacated or fully bonded within 10 days after its issue or levy; or
(i) Any final uninsured judgment in excess of $50,000 shall be entered
against the Borrower or any Subsidiary of the Borrower by any court of competent
jurisdiction; or
(j) The Borrower or any Subsidiary of the Borrower shall fail to meet
its minimum funding requirements under ERISA with respect to any employee
benefit plan (or other class of benefit which the PBGC has elected to insure) or
any such plan shall be the subject of termination proceedings (whether voluntary
or involuntary) and there shall result from such termination proceedings a
liability of the Borrower or any Subsidiary of the Borrower to the PBGC which in
the reasonable opinion of the Bank may have a material adverse effect upon the
financial condition of the Borrower or any such Subsidiary; or
(k) The Security Agreement or any other Loan Document shall for any
reason (other than due to payment in full of all amounts secured or evidenced
thereby or due to discharge in writing by the Bank) not remain in full force and
effect; or
(1) The security interests and liens of the Bank in and on any of the
Collateral shall for any reason (other than due to payment in full of all
amounts secured thereby or due to written release by the Bank) not be fully
perfected liens and security interests, subject in priority only to the matters
set forth in Section 4.2 above; or
(m) At any time, 50% or more of the outstanding shares of any class of
equity securities of the Borrower shall be owned by any Person or by any "group"
(as defined in the Securities Exchange Act of 1934, as amended, and the
regulations thereunder), other than by a Person who is a stockholder of the
Borrower at the date hereof or a group consisting solely of such Persons.
5.2. Rights and Remedies on Default. Upon the occurrence of any Event
of Default, in addition to any other rights and remedies available to the Bank
hereunder or otherwise, the Bank may exercise any one or more of the following
rights and remedies (all of which shall be cumulative):
(a) Declare the entire unpaid principal amount of the Revolving Note
then outstanding, all interest accrued and unpaid thereon and all other amounts
payable under this letter agreement, and all other Indebtedness of the Borrower
to the Bank, to be forthwith due and payable, whereupon the same shall become
forthwith due and payable, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived by the Borrower.
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<PAGE> 20
(b) Terminate the revolving financing arrangements provided for by this
letter agreement.
(c) Exercise all rights and remedies hereunder, under the Revolving
Note, under the Security Agreement, under the Intellectual Property Assignments
and under each and any other agreement with the Bank; and exercise all other
rights and remedies which the Bank may have under applicable law.
5.3. Set-off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, the Bank is hereby authorized at any time or
from time to time, without presentment, demand, protest or other notice of any
kind to the Borrower or to any other Person, all of which are hereby expressly
waived, to set off and to appropriate and apply any and all deposits and any
other Indebtedness at any time held or owing by the Bank or any affiliate
thereof to or for the credit or the account of the Borrower against and on
account of the obligations and liabilities of the Borrower to the Bank under
this letter agreement or otherwise, irrespective of whether or not the Bank
shall have made any demand hereunder and although said obligations, liabilities
or claims, or any of them, may then be contingent or unmatured and without
regard for the availability or adequacy of other collateral. As further security
for the obligations, the Borrower also grants to the Bank a security interest
with respect to all its deposits and all securities or other property in the
possession of the Bank or any affiliate of the Bank from time to time, and, upon
the occurrence of any Event of Default, the Bank may exercise all rights and
remedies of a secured party under the Uniform Commercial Code.
5.4. Letters of Credit. Without limitation of any other right or remedy
of the Bank, (i) if an Event of Default shall have occurred and the Bank shall
have accelerated the Revolving Loans or (ii) if this letter agreement and/or the
revolving financing arrangements described herein shall have expired or shall
have been earlier terminated by either the Bank or the Borrower for any reason,
the Borrower will forthwith deposit with, the Bank in cash a sum equal to the
total of all then undrawn amounts of all outstanding letters of credit issued by
the Bank for the account of the Borrower.
VI. MISCELLANEOUS
6.1. Costs and Expenses. The Borrower agrees to pay on demand all
reasonable costs and expenses (including, without limitation, reasonable legal
fees) of the Bank in connection with the preparation, execution and delivery of
this letter agreement, the Security Agreement, the Revolving Note and all other
instruments and documents to be delivered in connection with Any Revolving Loan
or any letter of credit issued hereunder and any amendments or modifications of
any of the foregoing, as well as the reasonable costs and expenses (including,
without limitation, the reasonable fees and expenses of legal counsel) incurred
by the Bank in connection with preserving, enforcing or exercising,
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<PAGE> 21
upon default, any rights or remedies under this letter agreement, the Security
Agreement, the Revolving Note and all other instruments and documents delivered
or to be delivered hereunder or in connection herewith, all whether or not legal
action is instituted. In addition, the Borrower shall be obligated to pay any
and all stamp and other taxes payable or determined to be payable in connection
with the execution and delivery of this letter agreement, the Security
Agreement, the Revolving Note and all other instruments and documents to be
delivered in connection with any Obligation. Any fees, expenses or other charges
which the Bank is entitled to receive from the Borrower under this Section shall
bear interest from the date of any demand therefor until the date when paid at a
rate per annum equal to the sum of (i) two (2%) percent plus (ii) the per annum
rate otherwise payable under the Revolving Note (but in no event in excess of
the maximum rate permitted by then applicable law).
6.2. Capital Adequacy. If the Bank shall have determined that the
adoption or phase-in after the date hereof of any applicable law, rule or
regulation regarding capital requirements for banks or bank holding companies,
or any change therein after the date hereof, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank with any request or directive of such entity regarding
capital adequacy (whether or not having the force of law) has or would have the
effect of reducing the return on the Bank's capital with respect to the
Revolving Loans, the within-described revolving loan facility and/or letters of
credit issued for the account of the Borrower to a level below that which the
Bank could have achieved (taking into consideration the Bank's policies with
respect to capital adequacy immediately before such adoption, phase-in, change
or compliance and assuming that the Bank's capital was then fully utilized) but
for such adoption, phase-in, change or compliance by any amount deemed by the
Bank to be material: (i) the Bank shall promptly after its determination of such
occurrence give notice thereof to the Borrower; and (ii) the Borrower shall pay
forthwith to the Bank as an additional fee such amount as the Bank certifies to
be the amount that will compensate it for such reduction with respect to the
Revolving Loans, the within-described revolving loan facility and/or such
letters of credit.
A certificate of the Bank claiming compensation under this Section
shall be conclusive in the absence of manifest error. Such certificate shall set
forth the nature of the occurrence giving rise to such compensation, the
additional amount or amounts to be paid to it hereunder and the method by which
such amounts were determined. In determining such amounts, the Bank may use any
reasonable averaging and attribution methods. No failure on the part of the Bank
to demand compensation on any one occasion shall constitute a waiver of its
right to demand such compensation on any other occasion and no failure on the
part of the Bank to deliver any certificate in a timely manner shall in
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<PAGE> 22
any way reduce any obligation of the Borrower to the Bank under this Section.
6.3. Facility Fees. With respect to the Revolving Loans, the Borrower
is paying to the Bank at the date of this letter agreement, a non-refundable
facility fee of $10,000. The fee described in this Section is in addition to any
balances and fees required by the Bank or any of its affiliates in connection
with any other services made available to the Borrower.
6.4. Other Agreements. The provisions of this letter agreement are not
in derogation or limitation of any obligations, liabilities or duties of the
Borrower under any of the other Loan Documents or any other agreement with or
for the benefit of the Bank. No inconsistency in default provisions between this
letter agreement and any of the other Loan Documents or any such other agreement
will be deemed to create any additional grace period or otherwise derogate from
the express terms of each such default provision. No covenant, agreement or
obligation of the Borrower contained herein, nor any right or remedy of the
Bank contained herein, shall in any respect be limited by or be deemed in
limitation of any inconsistent or additional provisions contained in any of the
other Loan Documents or any such other agreement.
6.5. Governing Law. This letter agreement and the Revolving Note shall
be governed by, and construed and enforced in accordance with, the laws of The
Commonwealth of Massachusetts.
6.6. Addresses for Notices, etc. All notices, requests, demands and
other communications provided for hereunder shall be in writing and shall be
mailed or delivered to the applicable party at the address indicated below:
If to the Borrower:
Voicetek Corporation
19 Alpha Road
Chelmsford, MA 01824
Attention: Sheldon Dinkes, President
If to the Bank:
Fleet Bank of Massachusetts, N.A.
High Technology Group
75 State Street
Boston, MA 02109
Attention: Catherine M. Bruton, Vice President
or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the other party complying as to delivery with
the terms of this Section. All such notices, requests, demands and other
communications shall be deemed delivered on the earlier of (i) the date received
or (ii) the date of delivery, refusal or non-delivery indicated on the return
receipt if deposited in the United States mails,
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<PAGE> 23
sent postage prepaid, certified or registered mail, return receipt requested,
addressed as aforesaid.
6.7. Binding Effect; Assignment; Termination. This letter agreement shall
be binding upon the Borrower, its successors and assigns and shall inure to the
benefit of the Borrower and the Bank and their respective permitted successors
and assigns. The Borrower may not assign this letter agreement or any rights
hereunder without the express written consent of the Bank. The Bank may, in
accordance with applicable law, from time to time assign or grant participations
in this letter agreement, the Revolving Loans, the Revolving Note and/or the
letters of credit issued hereunder. The Borrower may terminate this letter
agreement and the financing arrangements made herein by giving written notice of
such termination to the Bank; provided that no such termination will release or
waive any of the Bank's rights or remedies or any of the Borrower's obligations
under this letter agreement or any of the other Loan Documents unless and until
the Borrower has paid in full the Revolving Loans and all interest thereon and
all fees and charges payable in connection therewith and all letters of credit
issued hereunder have been terminated.
6.8. Consent to Jurisdiction. The Borrower irrevocably submits to the
non-exclusive jurisdiction of any Massachusetts court or any federal court
sitting within The Commonwealth of Massachusetts over any suit, action or
proceeding arising out of or relating to this letter agreement and/or the
Revolving Note. The Borrower irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of venue
of any such suit, action or proceeding brought in such a court and any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum. The Borrower agrees that final judgment in any such suit, action or
proceeding brought in such a court shall be enforced in any court of proper
jurisdiction by a suit upon such judgment, provided that service of process in
such action, suit or proceeding shall have been effected upon the Borrower in
one of the manners specified in the following paragraph of this Section 6.8 or
as otherwise permitted by law.
The Borrower hereby consents to process being served in any suit, action
or proceeding of the nature referred to in the preceding paragraph of this
Section 6.8 either (i) by mailing a copy thereof by registered or certified
mail, postage prepaid, return receipt requested, to it at its address set forth
in Section 6.6 or (ii) by serving a copy thereof upon it at its address set
forth in Section 6.6.
6.9. Severability. In the event that any provision of this letter
agreement or the application thereof to any Person, property or circumstances
shall be held to any extent to be invalid or unenforceable, the remainder of
this letter agreement,
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<PAGE> 24
and the application of such provision to Persons, properties or circumstances
other than those as to which it has been held invalid and unenforceable, shall
not be affected thereby, and each provision of this letter agreement shall be
valid and enforced to the fullest extent permitted by law.
VII. DEFINED TERMS
7.1. Definitions. In addition to terms defined elsewhere in this letter
agreement, as used in this letter agreement, the following terms have the
following respective meanings:
"Aggregate Bank Liabilities" - At any time, the sum of (i) the
principal amount of all Revolving Loans then outstanding, plus (ii) all
then undrawn amounts of letters of credit issued by the Bank for the
account of the Borrower, plus (iii) all amounts then drawn on any such
letter of credit which at said date shall not have been reimbursed to
the Bank by the Borrower.
"Borrowing Base" - At any time, the sum of (1) the product of
(x) the then applicable Receivables Advance Percentage times (y) the
aggregate principal amount of the Qualified Receivables of the Borrower
then outstanding, plus (2) 65% of the aggregate principal amount of the
Other Acceptable Foreign Receivables then outstanding; provided that
the amount contributed to Borrowing Base pursuant to this clause (2)
shall never exceed 10% of the then total Borrowing Base.
"Business Day" - Any day which is not a Saturday, nor a
Sunday nor a public holiday under the laws of the United States of
America or The Commonwealth of Massachusetts applicable to a national
bank.
"Capital Base" - At any time, the sum of (i) the consolidated
Tangible Net Worth of the Borrower and Subsidiaries then existing plus
(ii) the principal amount of Subordinated Debt of the Borrower then
outstanding (nothing contained herein being deemed to authorize the
incurrence of any additional Subordinated Debt).
"Collateral" - All property now or hereafter owned by the
Borrower or in which the Borrower now or hereafter has any interest
which is described as "Collateral" in the Security Agreement or in
Section 7.2(b) below.
"ERISA" - The Employee Retirement Income Security Act of
1974, as amended.
"Expiration Date" - August 1, 1995, unless extended by the
Bank, which extension may be given or withheld by the Bank in its sole
discretion.
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<PAGE> 25
"Indebtedness" - All obligations of a Person, whether current or
long-term, senior or subordinated, which in accordance with generally accepted
accounting principles would be included as liabilities upon such Person's
balance sheet at the date as of which Indebtedness is to be determined, and
shall also include guaranties, endorsements (other than for collection in the
ordinary course of business) or other arrangements whereby responsibility is
assumed for the obligations of others, whether by agreement to purchase or
otherwise acquire the obligations of others, including any agreement, contingent
or otherwise, to furnish funds through the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
"Liabilities" - All Indebtedness of a Person which would be properly
includable in liabilities as shown on a balance sheet of such Person prepared in
accordance with generally accepted accounting principles.
"Loan Documents" - Each of this letter agreement, the Revolving Note,
the Security Agreement, the Intellectual Property Assignments, and each other
instrument, document or agreement evidencing, securing, guaranteeing or relating
in any way to any of the Revolving Loans or any of the letters of credit issued
hereunder, all whether now existing or hereafter arising or entered into.
"Maximum Revolving Amount" - At any date as of which same is to be
determined, the amount by which (x) $1,000,000 exceeds (y) the sum of (i) all
then undrawn amounts of letters of credit issued by the Bank for the account of
the Borrower plus (ii) all amounts then drawn on any such letter of credit which
at said date shall not have been reimbursed to the Bank by the Borrower.
"Net Income" (or "Net Loss") - The book net income (or book net loss,
as the case may be) of a Person for any period, after all taxes actually paid or
accrued and all expenses and other charges determined in accordance with
generally accepted accounting principles consistently applied.
"Obligation" - As defined in the Security Agreement.
"Other Acceptable Foreign Receivables" - Receivables owed to the
Borrower by account debtors not located in the United States which do not
constitute Qualified Receivables; provided that each such Other Acceptable
Foreign Receivable meets all of the following criteria: (a) the relevant account
debtor has been specifically approved for this purpose in writing by the
Bank, which approval may be given, withheld or revoked by the Bank in its
discretion; (b) such Receivable shall arise out of a bona fide sale in the
ordinary course of the Borrower's business made to a customer of the Borrower
which is not a Subsidiary of the
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<PAGE> 26
Borrower or otherwise controlled by the Borrower; (c) such Receivable shall
remain unpaid no more than 60 days after the date of invoice of the relevant
sale; and (d) such Receivable satisfies all of the requirements to be a
"Qualified Receivable" set forth in the last sentence of the definition of
"Qualified Receivable" below (other than clause (ix) of such sentence).
"PBGC" - The Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" - An individual, corporation, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or political
subdivision thereof.
"Principal Office" - The principal place of business of the Bank, now
located at 75 State Street, Boston, MA 02109.
"Qualified Receivables" - Only those Receivables of the Borrower which
arise out of bona fide sales made to customers of the Borrower (which customers
are located in the United States and are not Subsidiaries of or otherwise
controlled by the Borrower) in the ordinary course of the Borrower's business
and which remain unpaid no more than 90 days past the respective dates of
invoice of such sales, the payment of which is not in dispute. (Notwithstanding
the foregoing, any Receivable owed by a customer of the Borrower which is not
located in the United States will also be deemed to be a Qualified Receivable if
both of the following conditions are satisfied: (i) such Receivable meets all of
the requirements of this definition other than the location of such customer and
(ii) payment of such Receivable is secured by a letter of credit or credit
insurance with terms satisfactory to the Bank and issued by a bank or other
credit enhancer satisfactory to the Bank.) Unless the Bank in its sole
discretion otherwise determines with respect to any Receivable, a Receivable
which would otherwise be a Qualified Receivable shall be deemed not to be a
Qualified Receivable (i) if the Bank does not have a fully perfected first
priority security interest in such Receivable; (ii) if such Receivable is not
free and clear of all adverse interests in favor of any Person other than the
Bank; (iii) if such Receivable is subject to any deduction, off-set, contra
account, counterclaim or condition; (iv) if a field examination made by the Bank
fails to confirm that such Receivable exists and satisfies all of the criteria
set forth herein to be a Qualified Receivable; (v) if such Receivable
is not invoiced within such period of time as is consistent with the Borrower's
normal practices at the date hereof; (vi) if the customer or account debtor has
disputed liability or made any claim with respect to the Receivable or the
merchandise covered thereby or with respect to any other Receivable due from
said customer to the Borrower; (vii) if the customer or account debtor has filed
a petition
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<PAGE> 27
for bankruptcy or any other application for relief under the Bankruptcy Code or
has effected an assignment for the benefit of creditors, or if any petition or
any other application for relief under the Bankruptcy Code has been filed
against said customer or account debtor, or if the customer or account debtor
has suspended business, become insolvent, ceased to pay its debts as they become
due, or had or suffered a receiver or trustee to be appointed for any of its
assets or affairs; (viii) if the customer or account debtor has failed to pay
other Receivables so that an aggregate of 25% of the total Receivables owing to
the Borrower by such customer or account debtor has been outstanding for more
than 90 days past their respective due dates; (ix) if such Receivable is owed by
the United States government or any agency or department thereof (unless
assigned to the Bank under the Federal Assignment of Claims Act); or (x) if the
Bank believes, in its judgment, that collection of such Receivable is insecure
or that it may not be paid by reason of financial inability to pay or otherwise,
or that such Receivable is not for any reason suitable for use as a basis for
borrowing hereunder.
"Receivables" - All of the Borrower's present and future accounts,
accounts receivable and notes, drafts, acceptances and other instruments
representing or evidencing a right to payment for goods sold or for services
rendered.
"Receivables Advance Percentage" - 65%; provided that if at any time
during its fiscal year ending December 31, 1994 the Borrower achieves
year-to-date cumulative Net Income of more than $500,000 (as evidenced to the
Bank by monthly financial statements delivered pursuant to Section 3.6 above),
the Receivables Advance Percentage will automatically be deemed increased to
75%, effective upon the receipt by the Bank of the financial statements
evidencing such year-to-date cumulative Net Income.
"Senior Liabilities" - All Liabilities of the Borrower and/or any
Subsidiary of the Borrower which do not constitute Subordinated Debt.
"Subordinated Debt" - Any Indebtedness of the Borrower which is
expressly subordinated, pursuant to a subordination agreement in form and
substance satisfactory to the Bank, to all Indebtedness now or hereafter owed by
the Borrower to the Bank.
"Subsidiary" - Any corporation or other entity of which the Borrower
and/or any of its Subsidiaries, directly or indirectly, owns, or has the right
to control or direct the voting of, fifty (.50%) percent or more of the
outstanding capital stock or other ownership interest having general voting
power (under ordinary circumstances).
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<PAGE> 28
"Tangible Net Worth" - An amount equal to the total assets of
any Person (excluding (i) the total intangible assets of such Person
and (ii) any assets representing amounts due from any officer or
employee of such Person or from any Subsidiary of such Person) minus
the total liabilities of such Person. Total intangible assets shall be
deemed to include, but shall not be limited to, the excess of cost over
book value of acquired businesses accounted for by the purchase method,
formulae, trademarks, trade names, patents, patent rights and deferred
expenses (including, but not limited to, unamortized debt discount and
expense, organizational expense, capitalized software costs and
experimental and development expenses).
Any defined term used in the plural preceded by the definite article
shall be taken to encompass all members of the relevant class. Any defined term
used in the singular preceded by "any" shall be taken to indicate any number of
the members of the relevant class.
7.2. Security Agreement. (a) The Borrower acknowledges and agrees that
the "Obligations" described in and secured by the Security Agreement, include,
without limitation, all of the obligations of the Borrower under the Revolving
Note and/or this letter agreement and/or with respect to any letter of credit
which may be issued by the Bank for the account of the Borrower.
(b) The Security Agreement is hereby modified to provide as follows:
(i) That the "Collateral" subject thereto includes, without
limitation and in addition to the collateral described therein, all
of the Borrower's files, books and records (including, without
limitation, all electronically recorded data) all whether owned or
existing or hereafter acquired, created or arising. The Borrower
hereby grants to the Bank a security interest in all such
Collateral in order to secure the full and prompt payment and
performance of all of the obligations.
(ii) That, upon the occurrence of any Event of Default (as
defined in Section 5.1 of this letter agreement), the Bank may, at
any time, notify account debtors that the Collateral has been
assigned to the Bank and that payments by such account debtors
shall be made directly to the Bank. At any time after the
occurrence of an Event of Default, the Bank may collect the
Borrower's Receivables, or any of same, directly from account
debtors and may charge the collection costs and expenses to the
Borrower.
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<PAGE> 29
This letter agreement is executed, as an instrument under seal, as of
the day and year first above written.
Very truly yours,
VOICETEK CORPORATION
By /s/ Sheldon Dinkes
-------------------
Its President
Accepted and agreed:
FLEET BANK OF MASSACHUSETTS, N.A.
By /s/ Catherine Bruton
--------------------------
Its VP
-29-
<PAGE> 30
DISCLOSURE SCHEDULE
Item 2.1(a) Jurisdictions in which Borrower is qualified
Item 2.1(b) Stock ownership
Item 2.1(e) Litigation
Item 2.1(f) Existing contractual violations, etc.
Item 2.1(j) Location of Collateral; record owners of Premises
Item 2.1(k) Intellectual Property
Item 4.1 Existing Indebtedness
Item 4.2 Existing Liens
Item 4.3 Existing Guaranties
<PAGE> 31
Disclosure Schedule
Item 2. l(a): Jurisdictions in which Borrower is qualified
California
New York
Pennsylvania
Item 2. 1 (b): Stock Ownership
(see list attached as Exhibit 2.1(b))
Item 2. 1 (e): Litigation
Pentagram Software Corporation commenced an action against the
Company in Norfolk Superior Court, Massachusetts, Civil Action
No. 92-00873 on April 16, 1992. The claim arose out of a Product
Development Agreement effective January 29, 1990 between the
Company and Pentagram under which Pentagram was to act as a
subcontractor to the Company for certain work to be provided by
the Company under the GTE Mobile Communications contract
discussed in the next paragraph. The action sought damages for
breach of contract and quantum meruit recovery for additional
services allegedly provided in the total amount of $230,000, as
well as multiple damages and attorneys fees under M.G.L. c. 93A.
In March of 1994, the parties agreed to dismiss the action and
executed a settlement agreement, pursuant to which the Company
agreed to pay a total of $115,000.00 in settlement of the matter,
payable in installments as follows: (i) $40,000 was paid upon the
execution of the Agreement for Judgment; (ii) $25,000.00 was paid
on or before April 15, 1994; and (iii) one payment of $25,000.00
was paid on or before July 15, and (iv) one additional payment
will be made on or before October 15, 1994. From and after March
7, 1994, interest will accrue on the outstanding balance at a
rate of 4% per annum.
Item 2. 1 (j): Location of Collateral
19 Alpha Road
Chelmsford, Massachusetts 01824
Record Owner: Teachers Realty Corporation
<PAGE> 32
Item 2. 1(k): Intellectual Property
(see list attached as Exhibit 2. 1 (k))
Item 4. 1: Existing Indebtedness
None other than Subordinated Debt.
Item 4.2: Existing Liens
None.
Item 4.3: Existing Guaranties
None.
<PAGE> 33
RECAPITALIZATION PROPOSAL
<TABLE>
<CAPTION>
Pre Note Share Adjustment
Conversion Common STK Common Stock Assuming
Outstanding on as if Ownership % Equivalents Reallocation of
Common Stk Notes, Interest converted After Based or New Existing Comm
Equival. Ownership % & Stk Divdends basis Conversion Ownership % Stk Equival.
----------- ------------ --------------- ------------ ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Coming 150,058 1.78% $ 96,040.53 444,977 2.006% 169,541 19,483
EG & G 4,244,280 50.23% $2,189,113.79 10,966,570 49.447% 4,178,381 -65,899
Kearsarge 748,195 8.85% $ 375,726.54 1,901,969 8.576% 724,670 -23,525
LPP Partners 131,028 1.55% 131,028 0.591% 49,923 -81,105
Geneva Partners $ 341,111.04 1,047,477 4.723% 399,100 399,100
MTDC 255,209 3.02% $ 263,742.75 1,065,105 4.802% 405,816 150,607
Nynex 257,143 3.04% 257,143 1.159% 97,974 -159,169
Pioneer 599,409 7.09% $ 178,678,28 1,148,091 5.177% 437,435 -161,974
Providence Ptrs 113,027 1.34% 113,027 0.510% 43,064 -69,963
Sherman Wolf 482,042 5.70% $ 241,217.81 1,222,769 5.513% 465,888 -16,154
Wood Investment 23,207 0.27% $ 25,000.00 99,977 0.451% 38,092 14,885
Common Stk 10,155 0.12% 10,155 0.046% 3,869 -6,286
Employee Pool 1,436,552 17.00% 3,770,000 16.999% 1,436,552 0
Total 8,450,205 99.99% $3,710,630.74 22,178,288 100.000% 8,450,305
</TABLE>
<PAGE> 34
Exhibit 2.1 (k)
EXHIBIT A
PATENTS
<TABLE>
<CAPTION>
Patent Description Registration No. Issue Date
------------------ ---------------- ----------
<S> <C> <C>
Method of and Apparatus 4,573,140 3-30-83
for Voice Communication
Storage and Forwarding
with Simultaneous Access
to Multiple Users
Voice Switched Gain 4,980,908 5-30-89
Control for Voice
Communication Equipment
Connected to Telephone
Lines
Apparatus for Controlling 4,663,777 12-17-84
Digital Voice Recording and
Playback Over Telephone
Lines and Adapted for Use
with Standard Host
Computers
</TABLE>
TRADEMARKS
<TABLE>
<CAPTION>
Marks with Federal Registration
<S> <C> <C> <C>
Marks Registration No. Date Use
VTK No. 1,402,968 12-9-85 10-1-84
VOICETEK No. 1,428,182 12-6-85 11-1-81
</TABLE>
Marks with Pending Applications
Marks Control/Serial No. Use
None
<PAGE> 1
EXHIBIT 10.10
THIRD LOAN MODIFICATION AGREEMENT
This Third Loan Modification Agreement ("this Agreement") is made as
of September 26, 1996 between Voicetek Corporation, a Massachusetts corporation
(the "Borrower") and Fleet National Bank (successor by merger to Fleet Bank of
Massachusetts, N.A.) (the "Bank"). For good and valuable consideration, receipt
and sufficiency of which are hereby acknowledged, the Borrower and the Bank act
and agree as follows:
I. Reference is made to: (i) that certain letter agreement dated
September 21, 1994 between the Borrower and Fleet Bank of Massachusetts, N.A.,
as amended by Loan Extension Agreement dated as of September 1, 1995 and by
Second Loan Modification Agreement dated as of September 20, 1995 and as
affected by certain allonges heretofore executed by the Borrower (as so amended
and affected, the "Letter Agreement"), the Bank having succeeded to the rights
of Fleet Bank of Massachusetts, N.A. thereunder; (ii) that certain $3,000,000
face principal amount promissory note dated September 20, 1995 made by the
Borrower and payable to the order of Fleet Bank of Massachusetts, N.A., as
affected by certain allonges heretofore executed by the Borrower (as so
affected, the "1995 Revolving Note"); (iii) that certain Inventory, Accounts
Receivable and Intangibles Security Agreement dated September 21, 1994 (the "IAR
Security Agreement") given by the Borrower to Fleet Bank of Massachusetts, N.A.,
the Bank having succeeded to the rights of Fleet Bank of Massachusetts, N.A.
thereunder; (iv) that certain Supplementary Security Agreement - Security
Interest in Goods and Chattels dated September 21, 1994 (the "Supplementary
Security Agreement") given by the Borrower to Fleet Bank of Massachusetts, N.A.,
the Bank having succeeded to the rights of Fleet Bank of Massachusetts, N.A.
thereunder; (v) the Subordination Agreement dated September 21, 1994 (the
"Subordination Agreement") given to Fleet Bank of Massachusetts, N.A. by
Massachusetts Technology Development Corp. ("MTDC"), the Bank having succeeded
to the rights of Fleet Bank of Massachusetts, N.A. thereunder; (vi) that certain
Assignment of Trademarks as Security (the "Trademark Assignment") from the
Borrower to Fleet Bank of Massachusetts, N.A., the Bank having succeeded to the
rights of Fleet Bank of Massachusetts, N.A. thereunder; (vii) that certain
Assignment of Patents as Security (the "Patent Assignment") from the Borrower to
Fleet Bank of Massachusetts, N.A., the Bank having succeeded to the rights of
Fleet Bank of Massachusetts, N.A. thereunder, (viii) that certain $5,000,000
face principal amount promissory note of even date herewith (the "1996
Revolving Note") made by the Borrower and payable to the order of the Bank, and
(ix) that certain $1,000,000 face principal amount promissory note of even date
herewith (the "Term Note") made by the Borrower and payable to the order of the
Bank. The aforesaid Second Loan Modification Agreement dated as of September 20,
1995 is hereinafter referred to as the "1995 Modification". The Letter
Agreement, the IAR Security Agreement, the Supplementary Security Agreement, the
Subordination Agreement, the Trademark Assignment, the Patent Assignment, the
1996 Revolving Note and the Term Note are hereinafter collectively referred to
as the "Financing Documents".
2. The Letter Agreement is hereby amended, effective as of the
date hereof;
a. By providing that all references therein to the "Bank" will be
deemed to refer to Fleet National Bank.
<PAGE> 2
b. By deleting in its entirety clause (i) of Section 1.1 of the Letter
Agreement and by substituting in its stead the following:
"(i) that certain $5,000,000 face principal amount promissory
note (the 'Revolving Note') dated September 26, 1996 made by
the Borrower and payable to the order of the Bank,"
As a result, all references in the Letter Agreement to a "Revolving Note" will
be deemed to refer to the 1996 Revolving Note.
c. By deleting the period at the end of Section 1.1 of the Letter
Agreement and by substituting in its stead the following:
", and (iv) that certain $1,000,000 face principal amount
promissory note (the 'Term Note') dated September 26, 1996
made by the Borrower pursuant to Section 1.4 below and payable
to the order of the Bank."
d. By deleting from the first sentence of Section 1.2 of the Letter
Agreement the words "Aggregate Bank Liabilities" and by substituting in their
stead the following:
"Aggregate Revolving Bank Liabilities"
e. By deleting in their entireties the last four sentences of Section
1.2 of the Letter Agreement.
f. By deleting from the second sentence of Section 1.3 of the Letter
Agreement, in both places where same appear, the words "Aggregate Bank
Liabilities" and by substituting in their stead (in each such place) the
following:
"Aggregate Revolving Bank Liabilities"
g. By renumbering Section 1.4 of the Letter Agreement. at ("Advances
and Payments") so that it will be known as "Section 1.6".
h. By renumbering Section 1.5 of the Letter Agreement ("Letters of
Credit") so that it will be known as "Section 1.7".
i. By renumbering Section 1.6 of the Letter Agreement ("Conditions to
Advance") so that it will be known as "Section 1.8".
j. By inserting into the Letter Agreement, immediately after Section
1.3 thereof, the following:
" 1.4. Term Loans; Term Note. In addition to the foregoing, the Bank
may make one or more loans (the 'Term Loans') to the Borrower, in an
- 2 -
<PAGE> 3
aggregate principal amount up to $1,000,000, in order to finance Qualifying
Equipment. A Term Loan shall be made, no more than once per calendar quarter (or
more frequently for any Term Loan in excess of $25,000), in such amount as may
be requested by the Borrower; provided that (i) no Term Loan will be made after
September 26, 1997; (ii) the aggregate original principal amounts of all Term
Loans will not exceed $1,000,000; (iii) no Term Loan will be in an amount in
excess of 80% (70% for First Half Qualifying Equipment) of the invoiced actual
costs of the tangible property constituting the items of Qualifying Equipment
with respect to which such Term Loan is made (excluding taxes, duties,
installation charges, software, shipping and other 'soft' costs); and (iv) the
Qualifying Equipment with respect to which each Term Loan is made will be
limited to those items of Qualifying Equipment acquired by the Borrower after
June 30, 1996 (except for First Half Qualifying Equipment, which may have been
acquired at any time during the period January 1, 1996 through and including
June 30, 1996) and which were not previously financed by any other Term Loan.
Prior to the making of each Term Loan, and as a precondition thereto, the
Borrower will provide the Bank with: (i) invoices supporting the costs and
purchase dates of the relevant items of Qualifying Equipment (including, without
limitation, First Half Qualifying Equipment); (ii) such evidence as the Bank may
require showing that such Qualifying Equipment (including, without limitation
First Half Qualifying Equipment) has been installed at the Borrower's
Chelmsford, MA, Premises, has become fully operational, has been paid for by the
Borrower and is owned by the Borrower free of all liens and interests of any
other Person (other than the security interest of the Bank pursuant to the
Security Agreement); (iii) evidence satisfactory to the Bank that the Qualifying
Equipment (including, without limitation, First Half Qualifying Equipment) is
fully insured against casualty loss, with insurance naming the Bank as secured
party and first loss payee, (iv) the duly executed Term Note and such clerk's
certificates and opinions of counsel as the Bank may require in connection
therewith, and (v) all such Uniform Commercial Code financing statements and
other documentation as may be necessary or desirable in order to give the Bank a
fully perfected first priority security interest in all of the Qualifying
Equipment (including, without limitation, First Half Qualifying Equipment). The
Term Loans will be evidenced by the Term Note, substantially in the form of Item
1.4 attached to this letter agreement. Interest on each Term Loan shall be
payable at the times and at the rate provided for in the Term Note. Overdue
principal of any Term Loan and, to the extent permitted by law, overdue interest
shall bear interest at a fluctuating rate per annum which at all times shall be
equal to the sum of (1) two percent (2%) per annum plus (ii) the per annum rate
otherwise payable under the Term Note (but in no event in excess of the maximum
rate from time to time permitted by then applicable law), compounded monthly and
payable on demand. The Borrower hereby irrevocably authorizes the Bank to make
or cause to be made, on a schedule attached to
-3-
<PAGE> 4
the Term Note or on the books of the Bank, at or following the time of making
each Term Loan and of receiving any payment of principal, an appropriate
notation reflecting such transaction and the then aggregate unpaid principal
balance of the Term Loans. The amount so noted shall constitute presumptive
evidence as to the amount owed by the Borrower with respect to principal of the
Term Loans. Failure of the Bank to make any such notation shall not, however,
affect any obligation of the Borrower or any right of the Bank hereunder or
under the Term Note.
1.5 Principal Repayment of Term Loans. The Term Loans made at any time through
and including September 30, 1996 are hereinafter referred to as the 'Tranche A
Term Loans'. Principal of the Tranche A Term Loans shall be repaid by the
Borrower to the Bank in 36 equal consecutive monthly installments (each in an
amount equal to 1/36th of the aggregate principal amount of the Tranche A Term
Loans outstanding at the close of business on September 30, 1996), such
installments to commence October 1, 1996 and to continue thereafter through and
including September 1, 1999. The Term Loans made at any time during the period
beginning on October 1, 1996 and continuing through and including December 31,
1996 are hereinafter referred to as the 'Tranche B Term Loans'. Principal of the
Tranche B Term Loans shall be repaid by the Borrower to the Bank in 36 equal
consecutive monthly installments (each in an amount equal to 1/36th of the
aggregate principal amount of the Tranche B Term Loans outstanding at the close
of business on December 31, 1996), such installments to commence January 1, 1997
and to continue thereafter through and including December 1, 1999. The Term
Loans made at any time during the period beginning on January 1, 1997 and
continuing through and including March 31, 1997 are hereinafter referred to as
the 'Tranche C Term Loans'. Principal of the Tranche C Term Loans shall be
repaid by the Borrower to the Bank in 36 equal consecutive monthly installments
(each in an amount equal to 1/36th of the aggregate principal amount of the
Tranche C Term Loans outstanding at the close of business on March 31, 1997),
such installments to commence April 1, 1997 and to continue thereafter through
and including March 1, 2000. The Term Loans made at any time during the period
beginning on April 1, 1997 and continuing through and including June 30, 1997
are hereinafter referred to as the 'Tranche D Term Loans'. Principal of the
Tranche D Term Loans shall be repaid by the Borrower to the Bank in 36 equal
consecutive monthly installments (each in an amount equal to 1/36th of the
aggregate principal amount of the Tranche D Term Loans outstanding at the close
of business on June 30, 1997), such installments to commence July 1, 1997 and to
continue thereafter through and including June 1, 2000. The Term Loans made at
any time on or after July 1, 1997 and are hereinafter referred to as the
'Tranche E Term Loans'. Principal of the Tranche E Term Loans shall be repaid by
the Borrower to the Bank in 36 equal consecutive monthly installments (each in
an amount equal to 1/36th of the aggregate principal amount of the Tranche E
Term
-4-
<PAGE> 5
Loans outstanding at the close of business on September 30,
1997), such installments to commence October 1, 1997 and to
continue thereafter through and including September 1, 2000.
The Borrower may prepay, at any time or from time to time,
without premium or penalty, the whole or any portion of the
Term Loans; provided that each such principal prepayment
shall be accompanied by payment of all interest under the Term
Note accrued but unpaid to the date of payment. Any partial
prepayment of principal of the Term Loans will be applied to
installments of principal of the Term Loans thereafter coming
due, in inverse order of normal maturity. Amounts paid or
prepaid on the Term Loans will not be available for
reborrowing."
k. By deleting from the first sentence of Section 1.6 of the Letter
Agreement (formerly known as "Section 1.4") the word "Revolving".
l. By adding to the first paragraph of Section 1.6 of the Letter
Agreement (formerly known as "Section 1.4"), at the end of such paragraph, the
following:
"The proceeds of each Term Loan will be used by the Borrower
solely to pay or reimburse costs of Qualifying Equipment
(including, without limitation, First Half Qualifying
Equipment)."
m. By deleting from Section 1.6 of the Letter Agreement (formerly known
as "Section 1.4"), in each of the four places in said Section where same appear,
the words "the Revolving Note" and by substituting in their stead, in each such
place, the following:
"any Note"
n. By adding to Section 1.6 of the Letter Agreement (formerly known as
"Section "1.4"), at the end of such Section, the following:
"All payments of interest, principal and any other sum payable
hereunder and/or under any Note and/or with respect to any
letter of credit shall be made to the Bank, in immediately
available funds, at its offices at 75 State Street, Boston, MA
02109 or to such other address as the Bank may from time to
time direct. All payments received by the Bank after 2:00 p.m.
on any day shall be deemed received as of the next succeeding
Business Day. All monies received by the Bank shall be applied
first to fees, charges, costs and expenses payable to the Bank
under this letter agreement, any Note and/or any of the other
Loan Documents and/or with respect to any letter of credit,
next to interest then accrued on account of any Loans or
letter of credit reimbursement obligations and only thereafter
to principal of the Loans and letter of credit reimbursement
obligations, being applied against the Loans and/or such
obligations in such order as the Borrower may designate (and,
failing such designation, being applied first against the
letter of credit reimbursement obligations, next against the
Revolving Loans and
-5-
<PAGE> 6
thereafter against installments of the Term Loans in inverse order
of normal maturity). All interest and fees payable hereunder and/or
under any Note shall be calculated on the basis of a 360-day year
for the actual number of days elapsed."
o. By deleting from the first sentence of Section 1.7 of the Letter
Agreement (formerly known as "Section 1.5") the amount "$3,000,000" (such amount
having been inserted by the 1995 Modification) and by substituting in its stead
the following:
"$5,000,000"
p. By deleting from the second grammatical paragraph of Section 1.8 of
the Letter Agreement (formerly known as "Section 1.6") the words "Revolving
Loan", in each of the five places in said paragraph where such words appear, and
by substituting in their stead, in each such place, the following:
"Loan"
q. By deleting from the first sentence of the last paragraph of Section
1.8 of the Letter Agreement (formerly known as "Section 1.6"), in both places
where same appear, the words "Revolving Loan" and by substituting in their
stead, in each such place, the following:
"Loan"
r. By deleting from the first sentence of the last paragraph of Section
1.8 of the Letter Agreement (formerly known as "Section 1.6"), the number
"Section 1.6" and by substituting in its stead the following:
"Section 1.8"
s. By inserting into the introduction to Section 2.1 of the Letter
Agreement, immediately after the words "Revolving Loans" the following:
"and Term Loans"
t. By inserting into the introduction to Article III of the Letter
Agreement, immediately after the words "any Revolving Loan", the following:
"or any Term Loan"
u. By adding to clause (ii) of Section 3.6 of the Letter Agreement, at
the end of such clause, the following:
"Notwithstanding the foregoing, from and after the date on which the
Borrower consummates an initial public offering generating not less
than $15,000,000 in net cash proceeds to the Borrower, in lieu
-6-
<PAGE> 7
of the above-described monthly financial statements the Borrower shall
provide quarterly financial statements. Such quarterly financial
statements shall be delivered to the Bank within 45 days after the end
of each fiscal quarter of the Borrower and shall include consolidated
and consolidating balance sheets of the Borrower and its Subsidiaries
and related consolidated and consolidating statements of income and
stockholders' equity and cash flow, unaudited but prepared in
accordance with generally accepted accounting principles consistently
applied (except that such quarterly statements need not contain
footnotes) and certified as accurate (subject to normal year-end audit
adjustments, which shall not be material) by the chief financial
officer of the Borrower, such balance sheets to be as at the end of
such fiscal quarter and such statements of income and stockholders'
equity and cash flow to be for such fiscal quarter and for the year to
date, in each case together with a comparison to budget."
v. By deleting from clause (iii) of Section 3.6 of the Letter Agreement
the words "annual and monthly" and by substituting in their stead the following:
"annual, quarterly or monthly"
w. By deleting in its entirety clause (iv) of Section 3.6 of the Letter
Agreement and by substituting in its stead the following:
"(iv) Monthly, within 10 days after the end of each month (and more
frequently if required by the Bank), (A) an aging report in form
satisfactory to the Bank covering all Receivables of the Borrower
outstanding as at the end of such month (or as at such other date as is
requested by the Bank), and (B) a certificate of the chief financial
officer of the Borrower setting forth the Borrowing Base as at the end
of such month (or as of such other date as is requested by the Bank),
all in form reasonably satisfactory to the Bank. Notwithstanding the
foregoing, the Borrower need not provide such an aging report and
Borrowing Base certificate as at the end of any month if no Revolving
Loans or letters of credit are outstanding at such month-end; provided
that if the Borrower omits delivery of such aging report and Borrowing
Base certificate for any month-end in reliance on the preceding
provisions of this sentence, then the Borrower will provide a current
aging report and Borrowing Base certificate in connection with any
subsequent Revolving Loan or letter of credit issuance or at any time
at the Bank's request."
x. By deleting in their entireties Section 3.7 through 3.9 of the
Letter Agreement and by substituting in their stead the following:
-7-
<PAGE> 8
"3.7 Debt to Worth. The Borrower will maintain as at the end of each
fiscal quarter (commencing with September 30, 1996) on a
consolidated basis a Leverage Ratio of not more than the following:
not more than 1.35 to 1 as at September 30, 1996; and not more than
1.25 to 1 as at December 31, 1996 and as at the end of each fiscal
quarter thereafter. As used herein, 'Leverage Ratio' means, as at
any date when same is to be determined, the ratio of (x) all
outstanding Liabilities of the Borrower and/or its Subsidiaries to
(y) the Borrower's consolidated Capital Base.
3.8 Capital Base. The Borrower will maintain as at the end of each
fiscal quarter (commencing with September 30, 1996) a consolidated
Capital Base of not less than the then-effective Capital Base
Requirement. The Capital Base Requirement is deemed to have been
$3,000,000 as at June 30, 1996; and as at the last day of each
fiscal quarter thereafter (beginning with September 30, 1996) the
Capital Base Requirement will be deemed to become an amount equal
to the sum of: (i) that Capital Base Requirement which had been in
effect on the last day of the immediately preceding fiscal quarter,
plus (ii) 75% of the net proceeds of any equity securities sold by
the Borrower during the fiscal quarter then ended and 75% of the
proceeds of any Subordinated Debt issued by the Borrower and/or its
Subsidiaries during such fiscal quarter then ended (nothing
contained herein being deemed to approve the issuance of any
additional Subordinated Debt), plus (iii) 75% of the consolidated
Net Income of the Borrower and Subsidiaries during said fiscal
quarter then ended (but without giving effect to any Net Income
which is less than zero for any fiscal quarter).
3.9 Profitability. The Borrower will achieve quarterly consolidated
Net Income of at least the following: at least $200,000 for its
fiscal quarter ending September 30, 1996, at least $500,000 for its
fiscal quarter ending December 31, 1996, and at least $150,000 for
its fiscal quarter ending March 31, 1997 and for each subsequent
fiscal quarter. Without limitation of the foregoing, the Borrower
will achieve annual consolidated Net Income of at least $500,000
for its fiscal year ending December 31, 1996 and for each fiscal year
thereafter."
y. By inserting into the introduction to Article IV of the Letter
Agreement, immediately after the words "any Revolving Loan", the following:
"or any Term Loan"
z. By deleting from clause (i) of Section 4.1 of the Letter Agreement
the words "the Revolving Note" and by substituting in their stead the following:
-8-
<PAGE> 9
"the Notes"
aa. By deleting from Section 4.12 of the Letter Agreement the words
"Revolving Loan" and by substituting in their stead the following:
"Loan"
bb. By inserting into clause (a) of Section 5.1 of the Letter
Agreement, immediately after the words "Revolving Note", the following:
"or the Term Note"
cc. By deleting from clause (b) of Section 5.1 of the Letter Agreement
the word "Revolving".
dd. By inserting into clause (a) of Section 5.2 of the Letter
Agreement, immediately after the words "Revolving Note", the following:
"and the Term Note"
ee. By inserting into clause (b) of Section 5.2 of the Letter
Agreement, immediately after the words "revolving financing arrangements", the
following:
"and term loan facility"
ff. By inserting into clause (c) of Section 5.2 of the Letter
Agreement, immediately after the words "Revolving Note", the following:
", under the Term Note"
gg. By inserting into the first sentence of Section 6.1 of the Letter
Agreement, immediately after the words "the Revolving Note", in both places.
where same appear, the following:
", the Term Note"
hh. By deleting from the first sentence of Section 6.1 of the Letter
Agreement the words "Revolving Loan" and by substituting in their stead the
following:
"Loan"
ii. By inserting into the second sentence of Section 6.1 of the Letter
Agreement, immediately after the words "the Revolving Note", the following:
"the Term Note"
-9-
<PAGE> 10
jj. By deleting from the first paragraph of Section 6.2 of the Letter
Agreement, in both places where same appear, the words "the within-described
revolving loan facility" and by substituting in their stead the following:
"any Term Loans, the within-described revolving loan facility
and/or the within-described term loan facility"
kk. By deleting in its entirety Section 6.3 of the Letter Agreement
and by substituting in its stead the following:
"6.3. Facility Fees. With respect to the within arrangements for
Revolving Loans, the Borrower will pay to the Bank, on September
26, 1996 and thereafter on the first day of each calendar quarter
(commencing on October 1, 1996) as long as the within-described
revolving loan arrangements are in effect a non-refundable
quarterly facility fee payable in advance in the amount of $9,375
per quarter (appropriately pro-rated for any partial calendar
quarter). In addition, if the within-described revolving
financing arrangements are terminated by the Borrower for any
reason or by the Bank as the result of the Borrower's default,
the Borrower shall forthwith upon such termination pay to the
Bank a sum equal to all of the fees which would have become due
pursuant to the immediately preceding sentence from the date of
such termination through the Expiration Date. Fees described in
this Section are in addition to any balances and fees required by
the Bank or any of its affiliates in connection with any other
services now or hereafter made available to the Borrower."
ll. By deleting from Section 6.6 of the Letter Agreement the words
"Fleet Bank of Massachusetts, N.A." and by substituting in their stead the
following:
"Fleet National Bank"
mm. By inserting into the fourth sentence of Section 6.7 of the Letter
Agreement, immediately after the words "termination to the Bank", the following:
"together with the payment required by the second sentence of
Section 6.3 above"
nn. By deleting from the first sentence of Section 6.8 of the Letter
Agreement the words "the Revolving Note" and by substituting in their stead the
following:
"any of the Notes"
-10-
<PAGE> 11
oo. By modifying the defined term "Aggregate Bank Liabilities"
appearing in Section 7.1 of the Letter Agreement so that it will read "Aggregate
Revolving Bank Liabilities".
pp. By deleting from the definition of "Expiration Date" appearing in
Section 7.1 of the Letter Agreement the date "August 1, 1996" (such date having
been inserted by the 1995 Modification and having been extended through October
1, 1996 by the aforesaid allonges) and by substituting in its stead the
following:
"September 1, 1997"
As a result, from and after the date hereof, for the purposes of the Letter
Agreement and the other Financing Documents, the "Expiration Date" will be
deemed to be September 1, 1997.
qq. By inserting into Section 7.1 of the Letter Agreement, immediately
after the definition of "Expiration Date", the following:
"'First Half Qualifying Equipment' - Items of computer-related
equipment shown on an Equipment List approved in writing for this
purpose by the Bank, which items meet all of the criteria set
forth below in the first sentence of the definition of
'Qualifying Equipment' except that such items were acquired on
or after January 1, 1996 and prior to July 1, 1996."
rr. By inserting into Section 7.1 of the Letter Agreement, immediately
after the definition of "Liabilities", the following:
"'Loan' - Any Revolving Loan or any Term Loan."
ss. By inserting into the definition of "Loan Documents" appearing in
Section 7.1 of the Letter Agreement, immediately after the words "Revolving
Note", the following:
"the Term Note,"
tt. By deleting from the definition of "Maximum Revolving Amount"
appearing in Section 7.1 of the Letter Agreement the amount "$3,000,000" (said
amount having been inserted by the 1995 Modification) and by inserting in its
stead the following:
"$5,000,000"
uu. By inserting into Section 7.1 of the Letter Agreement, immediately
after the definition of "Net Income", the following:
"'Notes' - Collectively, the Revolving Note and the Term Note."
vv. By inserting into the definition of "Principal Office" appearing in
Section 7.1 of the Letter Agreement, immediately after the words "of the Bank",
the following:
-11-
<PAGE> 12
"in Boston, MA"
ww. By inserting into Section 7.1 of the Letter Agreement, immediately
after the definition of "Qualified Receivables", the following:
" 'Qualifying Equipment' - Computer-related equipment
(excluding pre-packaged software) purchased by the Borrower
after June 30, 1996 for use in the Borrower's business which
meets all of the following criteria: (i) such equipment
consists of one of the items shown on an equipment list
heretofore delivered by the Borrower to the Bank or has
otherwise been approved by the Bank for use in supporting a
Term Loan, (ii) each item of such equipment has been delivered
to or installed at the Premises and has become fully
operational and (iii) the Borrower has paid in full for each
item of such equipment and holds title to same, free of all
interests and claims of any other Person (other than the
security interest of the Bank). In addition, and without
limitation of the foregoing, 'Qualifying Equipment' will be
deemed to include First Half Qualifying Equipment."
xx. By adding to paragraph (a) of Section 7.2 of the Letter Agreement,
immediately after the words "Revolving Note", the following:
"the Term Note"
yy. By adding to the Letter Agreement, as an exhibit thereto, Item 1.4
in the form attached to this Agreement.
3. Each of the IAR Security Agreement, the Supplementary Security
Agreement, the Subordination Agreement, the Trademark Assignment and the Patent
Assignment is hereby modified by providing that all references therein to the
"Bank" or to "Fleet Bank of Massachusetts, N.A." will be deemed to refer to
Fleet National Bank.
4. Wherever in any Financing Document, or in any certificate or opinion
to be delivered in connection therewith, reference is made to a "letter
agreement" or to the "Letter Agreement", from and after the date hereof same
will be deemed to refer to the Letter Agreement, as hereby amended.
5. Simultaneously with the execution and delivery of this Agreement,
the Borrower is executing and delivering to the Bank the 1996 Revolving Note, in
substitution for the 1995 Revolving Note. The 1996 Revolving Note is a
$5,000,000 promissory note of the Borrower, substantially in the form attached
hereto as Exhibit 1. Wherever in any of the Financing Documents or in any
certificate or opinion to be delivered in connection therewith, reference is
made to a "Revolving Note", from and after the date hereof same will be deemed
to refer to the 1996 Revolving Note.
-12-
<PAGE> 13
6. In order to induce the Bank to enter into this Agreement, the
Borrower further represents and warrants as follows:
a. The execution, delivery and performance of this Agreement, the 1996
Revolving Note and the Term Note have been duly authorized by the Borrower by
all necessary corporate and other action, will not require the consent of any
third party and will not conflict with, violate the provisions of, or cause a
default or constitute an event which, with the passage of time or the giving of
notice or both, could cause a default on the part of the Borrower under its
charter documents or by-laws or under any contract, agreement, law, rule, order,
ordinance, franchise, instrument or other document, or result in the imposition
of any lien or encumbrance (except in favor of the Bank) on any property or
assets of the Borrower.
b. The Borrower has duly executed and delivered each of this Agreement,
the 1996 Revolving Note and the Term Note.
c. Each of this Agreement, the 1996 Revolving Note and the Term Note is
the legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its respective terms.
d. The statements, representations and warranties made in the Letter
Agreement, in the IAR Security Agreement and/or in the Supplementary Security
Agreement continue to be correct as of the date hereof; except as amended,
updated and/or supplemented by the attached Supplemental Disclosure Schedule.
e. The covenants and agreements of the Borrower contained in the Letter
Agreement, in the IAR Security Agreement and/or in the Supplementary Security
Agreement have been complied with on and as of the date hereof.
f. No event which constitutes or which, with notice or lapse of time,
or both, could constitute, an Event of Default (as defined in the Letter
Agreement) has occurred and is continuing.
g. No material adverse change has occurred in the financial condition
of the Borrower from that disclosed in the annual consolidated financial
statements of the Borrower dated December 31, 1995, heretofore furnished to the
Bank.
7. Except as expressly affected hereby, the Letter Agreement and each
of the other Financing Documents remains in full force and effect as heretofore.
8. Nothing contained herein will be deemed to constitute a waiver or a
release of any provision of any of the Financing Documents. Nothing contained
herein will in any event be deemed to constitute an agreement to give a waiver
or release or to agree to any amendment or modification of any provision of any
of the Financing Documents on any other or future occasion.
-13-
<PAGE> 14
9. By its signature below, MTDC agrees: (i) that all references in the
Subordination Agreement to the "Bank" will be deemed to refer to Fleet National
Bank, (ii) that the number "$3,000,000" set forth in Section 1 of the
Subordination Agreement (as amended by the 1995 Modification) is hereby amended
to read "$6,000,000", (iii) that, as amended hereby, the Subordination Agreement
remains in full force and effect and runs to the benefit of Fleet National Bank,
and (iv) that the term "Senior Debt", as used in the Subordination Agreement,
includes the Letter Agreement (as amended hereby), all Loans (as defined in the
Letter Agreement, as so amended), the 1996 Revolving Note and the Term Note.
Executed, as an instrument under seal, as of the day and year first
above written.
VOICETEK CORPORATION
By: /s/ Roger Tuttle
-----------------------------
Name: Roger Tuttle
Title: Chief Financial Officer
Accepted and agreed:
FLEET NATIONAL BANK
By: /s/ Catherine Bruton
------------------------
Name: Catherine Bruton
----------------
Title: VP
----------------
Accepted and agreed as
Subordinated Lender:
MASSACHUSETTS TECHNOLOGY
DEVELOPMENT CORP.
By: /s/ Robert J. Creeden
--------------------------
Name: Robert J. Creeden
------------------
Title: Vice President
------------------
-14-
<PAGE> 15
EXHIBIT 1.4
PROMISSORY NOTE
$1,000,000.00 Boston, Massachusetts
September 26, 1996
FOR VALUE RECEIVED, the undersigned Voicetek Corporation, a
Massachusetts corporation (the "Borrower") hereby promises to pay to the order
of FLEET NATIONAL BANK (the "Bank") the principal amount of One Million and
00/100 ($ 1,000,000.00) Dollars or such portion thereof as maybe advanced by the
Bank pursuant to Section 1.4 of the below described Letter Agreement and remains
outstanding from time to time thereunder ("Principal"), with interest, at the
rate hereinafter set forth, on the daily balance of all unpaid Principal, from
the date hereof until payment in full of all Principal and interest hereunder.
As used herein, "Letter Agreement" means that certain letter agreement dated
September 21, 1994, as amended, between the Borrower and Fleet Bank of
Massachusetts, N.A., the Bank having succeeded to the rights of Fleet Bank of
Massachusetts, N.A. thereunder.
Interest on all unpaid Principal shall be due and payable monthly in
arrears, on the first day of each month commencing on the first such date after
the advance of any Principal and continuing on the first day of each month
thereafter and on the date of payment of this note in full, at a fluctuating
rate per annum (computed on the basis of a year of three hundred sixty (360)
days for the actual number of days elapsed) which shall at all times be equal to
the sum of (i) one (1.0%) percent per annum plus (ii) the Prime Rate, as in
effect from time to time (but in no event in excess of the maximum rate
permitted by then applicable law). A change in the aforesaid rate of interest
will become effective on the same day on which any change in the Prime Rate is
effective. Overdue principal shall bear interest at a fluctuating rate per annum
which at all times shall be equal to the sum of (i) two (2%) percent per annum
plus (ii) the per annum rate otherwise payable under this note (but in no event
in excess of the maximum rate permitted by then applicable law), compounded
monthly and payable on demand. As used herein, "Prime Rate" means that rate of
interest per annum announced by the Bank from time to time as its prime rate, it
being understood that such rate is merely a reference rate, not necessarily the
lowest, which serves as the basis upon which effective rates of interest are
calculated for obligations making reference thereto. If the entire amount of any
required Principal and/or interest is not paid within ten (10) days after the
same is due, the Borrower shall pay to the Bank a late fee equal to five percent
(5%) of the required payment, provided that such late fee shall be reduced to
three percent (3%) of any required Principal and interest that is not paid
within fifteen (15) days of the date it is due if this note is secured by a
mortgage on an owner-occupied residence of 1-4 units.
All advances of Principal made at any time on or prior to September 30,
1996 are hereinafter referred to as the "Tranche A Term Loans". Principal of the
Tranche A Term Loans shall be repaid by the Borrower to the Bank in 36 equal
consecutive monthly installments (each in an amount, equal to 1/36th of the
aggregate principal amount of Tranche A Term Loans outstanding at the close of
business on September 30, 1996), such installments to commence October 1, 1996
and to continue thereafter on the first day of each month through and including
September 1, 1999, on which date all then remaining Principal of the
<PAGE> 16
Tranche A Term Loans and all interest accrued but unpaid thereon will be due and
payable in full.
All advances of Principal made at any time on or after October 1, 1996
and prior to January 1, 1997 are hereinafter referred to as the "Tranche B Term
Loans". Principal of the Tranche B Term Loans shall be repaid by the Borrower to
the Bank in 36 equal consecutive monthly installments (each in an amount equal
to 1/36th of the aggregate principal amount of Tranche B Term Loans outstanding
at the close of business on December 31, 1996), such installments to commence
January 1, 1997 and to continue thereafter on the first day of each month
through and including December 1, 1999, on which date all then remaining
Principal of the Tranche B Term Loans and all interest accrued but unpaid
thereon will be due and payable in full.
All advances of Principal made at any time on or after January 1, 1997
and prior to April 1, 1997 are hereinafter referred to as the "Tranche C Term
Loans". Principal of the Tranche C Term Loans shall be repaid by the Borrower to
the Bank in 36 equal consecutive monthly installments (each in an amount equal
to 1/36th of the aggregate principal amount of Tranche C Term Loans outstanding
at the close of business on March 31, 1997), such installments to commence April
1, 1997 and to continue thereafter on the first day of each month through and
including March 1, 2000, on which date all then remaining Principal of the
Tranche C Term Loans and all interest accrued but unpaid thereon will be due and
payable in full.
All advances of Principal made at any time on or after April 1, 1997
and prior to July 1, 1997 are hereinafter referred to as the "Tranche D Term
Loans". Principal of the Tranche D Term Loans shall be repaid by the Borrower to
the Bank in 36 equal consecutive monthly installments (each in an amount equal
to 1/36th of the aggregate principal amount of Tranche D Term Loans outstanding
at the close of business on June 30, 1997), such installments to commence July
1, 1997 and to continue thereafter on the first day of each month through and
including June 1, 2000, on which date all then remaining Principal of the
Tranche D Term Loans and all interest accrued but unpaid thereon will be due and
payable in full.
All advances of Principal made at any time on or after July 1, 1997
are hereinafter referred to as the "Tranche E Term Loans". Principal of
the Tranche E Term Loans shall be repaid by the Borrower to the Bank in 36 equal
consecutive monthly installments (each in an amount equal to 1/36th of the
aggregate principal amount of Tranche E Term Loans outstanding at the close of
business on September 30, 1997), such installments to commence October 1, 1997
and to continue thereafter on the first day of each month through and including
September 1, 2000, on which date all then remaining Principal of the Tranche E
Term Loans and all interest accrued but unpaid thereon will be due and payable
in full.
The Borrower may at any time and from time to time, without premium or
penalty, prepay all or any portion of the Principal; provided that each such
Principal prepayment shall be accompanied by payment of all interest on this
note accrued but unpaid to the date of
-2-
<PAGE> 17
payment. Any partial prepayment of Principal will be applied against Principal
installments in inverse order of normal maturity.
Payments of both Principal and interest shall be made, in immediately
available funds, at the office of the Bank located at 75 State Street, Boston,
Massachusetts 02109, or at such other address as the Bank may from time to time
designate.
The undersigned Borrower irrevocably authorizes the Bank to make or
cause to be made, on a schedule attached to this note or on the books of the
Bank, at or following the time of making any Term Loan (as defined in the Letter
Agreement) and of receiving any payment of Principal, an appropriate notation
reflecting such transaction and the then unpaid balance of Principal. Failure of
the Bank to make any such notation shall not, however, affect any obligation of
the Borrower hereunder or under the Letter Agreement. The unpaid Principal
amount of this note, as recorded by the Bank from time to time on such schedule
or on such books, shall constitute presumptive evidence of the aggregate
outstanding principal amount of the Term Loans.
The Borrower hereby (a) waives notice of and consents to any and all
advances, settlements, compromises, favors and indulgences (including, without
limitation, any extension or postponement of the time for payment), any and all
receipts, substitutions, additions, exchanges and releases of collateral, and
any and all additions, substitutions and releases of any person primarily or
secondarily liable, (b) waives presentment, demand, notice, protest and all
other demands and notices generally in connection with the delivery,
acceptance, performance, default or enforcement of or under this note, and (c)
agrees to pay all costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred or paid by the Bank in enforcing this note and any
collateral or security therefor, all whether or not litigation is commenced.
This note is the Term Note referred to in, and is entitled to the
benefits of, the Letter Agreement. This note is secured by the Security
Agreement (as defined in the Letter Agreement). This note is subject to
prepayment as set forth in the Letter Agreement. The maturity of this note may
be accelerated upon the occurrence of an Event of Default, as provided in the
Letter Agreement.
Executed, as an instrument under seal, as of the day and year first
above written.
CORPORATE SEAL VOICETEK CORPORATION
ATTEST:
By:
-----------------------
- -------------------------
Clerk Name:
Title:
-3-
<PAGE> 18
EXHIBIT 1
PROMISSORY NOTE
$5,000,000.00 Boston, Massachusetts
September 26, 1996
FOR VALUE RECEIVED, the undersigned Voicetek Corporation, a
Massachusetts corporation (the "Borrower) hereby promises to pay to the order of
FLEET NATIONAL BANK (the "Bank") the principal amount of Five Million and 00/100
($5,000,000.00) Dollars or such portion thereof as has been advanced by the Bank
and/or its corporate predecessor or may hereafter be advanced by the Bank
pursuant to Section 1.2 of that certain letter agreement between the Borrower
and Fleet Bank of Massachusetts, N.A. dated September 21, 1994, as amended (as
so amended, the "Letter Agreement") (the Bank having succeeded to the rights of
Fleet Bank of Massachusetts, N.A. thereunder) and remains outstanding from time
to time hereunder ("Principal"), with interest, at the rate hereinafter set
forth, on the daily balance of all unpaid Principal, from the date hereof until
payment in full of all Principal and interest hereunder.
Interest on all unpaid Principal shall be due and payable monthly in
arrears, on the first day of each month, commencing on the first such date after
the advance of any Principal and continuing on the first day of each month
thereafter and on the date of payment of this note in full, at a fluctuating
rate per annum (computed on the basis of a year of three hundred sixty (360)
days for the actual number of days elapsed) which shall at all times be equal to
the sum of (i) three-quarters of one percent (0.75%) per annum plus (ii) the
Prime Rate, as in effect from time to time (but in no event in excess of the
maximum rate permitted by then applicable law). A change in the aforesaid rate
of interest shall become effective on the same day on which any change in the
Prime Rate is effective. Overdue Principal and, to the extent permitted by law,
overdue interest from and after the date on which same becomes past due shall
bear interest at a fluctuating rate per annum which at all times shall be equal
to the sum of (i) two (2%) percent per annum plus (ii) the per annum rate
otherwise payable under this note (but in no event in excess of the maximum rate
permitted by then applicable law), compounded monthly and payable on demand. As
used herein, "Prime Rate" means that rate of interest per annum announced by
the Bank from time to time as its prime rate, it being understood that such rate
is merely a reference rate, not necessarily the lowest, which serves as the
basis upon which effective rates of interest are calculated for obligations
making reference thereto. If the entire amount of any required Principal and/or
interest is not paid within ten (10) days after the same is due, the Borrower
shall pay to the Bank a late fee equal to five percent (5%) of the required
payment, provided that such late fee shall be reduced to three percent (3%) of
any required Principal and interest that is not paid within fifteen (15) days of
the date it is due if this note is secured by a mortgage on an owner-occupied
residence of 1-4 units.
All outstanding Principal and all interest accrued thereon shall be due
and payable in full on the first to occur of: (i) an acceleration under Section
5.2 of the Letter Agreement or (ii) September 1, 1997. The Borrower may at any
time and from time to time prepay all or any portion of said
<PAGE> 19
Principal, without premium or penalty. Under certain circumstances set forth in
the Letter Agreement, prepayments of Principal may be required.
Payments of both Principal and interest shall be made, in immediately
available funds, at the office of the Bank located at 75 State Street, Boston,
Massachusetts 02109, or at such other address as the Bank may from time to time
designate.
The undersigned Borrower irrevocably authorizes the Bank to make or
cause to be made, on a schedule attached to this note or on the books of the
Bank, at or following the time of making any Revolving Loan (as defined in the
Letter Agreement) and of receiving any payment of Principal, an appropriate
notation reflecting such transaction and the then aggregate unpaid balance of
Principal. Failure of the Bank to make any such notation shall not, however,
affect any obligation of the Borrower hereunder or under the Letter Agreement.
The unpaid Principal balance of this note, as recorded by the Bank from time to
time on such schedule or on such books, shall constitute presumptive evidence of
the aggregate unpaid principal amount of the Revolving Loans.
The Borrower hereby (a) waives notice of and consents to any and all
advances, settlements, compromises, favors and indulgences (including, without
limitation, any extension or postponement of the time for payment), any and all
receipts, substitutions, additions, exchanges and releases of collateral, and
any and all additions, substitutions and releases of any person primarily or
secondarily liable, (b) waives presentment, demand, notice, protest and all
other demands and notices generally in connection with the delivery, acceptance,
performance, default or enforcement of or under this note, and (c) agrees to pay
all costs and expenses, including, without limitation, reasonable attorneys'
fees, incurred or paid by the Bank in enforcing this note and any collateral or
security therefor, all whether or not litigation is commenced.
This note is the Revolving Note referred to in the Letter Agreement.
This note is secured by, and is entitled to the benefits of, the Security
Agreement (as defined in the Letter Agreement). This note is subject to
prepayment as set forth in the Letter Agreement. The maturity of this note may
be accelerated upon the occurrence of an Event of Default, as provided in the
Letter Agreement.
Executed, as an instrument under seal, as of the day and year first
above written.
CORPORATE SEAL VOICETEK CORPORATION
ATTEST:
By:___________________
_____________________
Clerk Name:
Title:
-2-
<PAGE> 20
SUPPLEMENTAL DISCLOSURE SCHEDULE
None.
<PAGE> 1
EXHIBIT 10.11
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated and entered into as of the 13th day of January,
1997, by and between Voicetek Corporation , a Massachusetts corporation (the
"Company"), and Sheldon Dinkes, an individual residing at 85 East India Row,
Apt. 21F, Boston, MA 02110 (the "Executive").
WHEREAS, the Company desires to engage the full-time services of the
Executive;
WHEREAS, the Executive desires to be so employed by the Company; and
WHEREAS, the Company desires to be assured that the unique and expert
services of the Executive will be available solely to the Company on such
full-time basis, and that the Executive is willing and able to render such
services on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of such employment and the mutual
covenants and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
Section 1. Employment. The Company hereby employs the Executive as
its President and Chief Executive Officer, and the Executive hereby accepts such
employment under and subject to the terms and conditions hereinafter set forth.
The Executive further agrees to serve as a member of the Board of Directors (the
"Board") of the Company if elected or appointed to such office in accordance
with the Company's By-Laws.
Section 2. Term. Unless sooner terminated as provided in Section 7,
the term of employment under this Agreement shall begin on the date hereof and
shall conclude on
<PAGE> 2
January 12, 2000 (the "Term").
Section 3. Duties. The Executive shall serve as President and Chief
Executive Officer, and he shall perform additional duties as the Board of
Directors of the Corporation may assign to him from time to time. The Executive
hereby agrees to devote his full business time and best efforts to the faithful
performance of such duties and to the promotion and forwarding of the business
and affairs of the Company for the Term.
Section 4. Salary Compensation. In consideration of the services
rendered by the Executive under this Agreement, the Company shall pay the
Executive a base salary (the "Base Salary") at the rate of Two Hundred Thousand
Dollars ($200,000) per calendar year. The Base Salary shall be paid in such
installments and at such times as the Company pays its regularly salaried key
executive employees, and the Board may change the Base Salary from time to time
in its sole discretion; provided, however, that in no event shall the Base
Salary for any calendar year be less than the Base Salary in effect for the
immediately prior calendar year.
Section 5. Bonus Compensation. The Executive shall be entitled to
receive such incentive or performance bonuses as the Board may determine from
time to time.
Section 6. Fringe Benefits. As a key executive employee of the
Company, the Executive shall be eligible to participate in all employee fringe
benefit programs as are made available from time to time to the Company's key
executive employees.
Section 6. Benefits. In addition to the compensation detailed in
Section 4 and 5 of this Agreement, the Executive shall be entitled to the
following additional benefits:
-2-
<PAGE> 3
Section 6.01. Paid Vacation. The Executive shall be entitled to four
(4) weeks paid vacation per calendar year, such vacation to extend for such
periods and shall be taken at such intervals as shall be appropriate and
consistent with the proper performance of the Executive's duties hereunder and
consistent with the Company's vacation policy.
Section 6.02. Insurance Coverage. During the Term, the Company shall
provide the Executive with group health, dental and life insurance protection to
the same extent that it makes such protection available to its other key
executive employees.
Section 6.03. Reimbursement of Expenses. The Company shall reimburse
the Executive for all reasonable expenses actually incurred by the Executive in
connection with the business affairs of the Company and the performance of his
duties hereunder. The Executive shall comply with such reasonable limitations
and reporting requirements with respect to such expenses as the Board may
establish from time to time.
Section 6.04. Disability and Other Benefits. If the Executive suffers
any illness, disability or incapacity which prevents the Executive from
performing the Executive's duties hereunder, and such illness, disability or
incapacity shall be deemed by a duly licensed physician (who may be the
Executive's personal physician) to be permanent; or, if the Executive is unable
to render full-time services to the Company of the character required hereunder
for a period of six (6) consecutive months by reason of illness, disability or
incapacity, and the Board has determined that the Executive has been permanently
disabled; then, and in either of such events, the Executive shall render such
advisory and consulting services to the Company as may be reasonably requested
of the Executive by the Board and officers of the Company but only to the
-3-
<PAGE> 4
extent that the Executive is able to perform such services. In such event, the
Executive shall be paid the amount of Two Hundred Thousand Dollars ($200,000)
annually, payable in equal installments in conformity with the Company's normal
payroll period. Such disability compensation shall commence upon the first day
of the first month following the determination that the Executive's illness,
disability or incapacity is permanent, and shall be paid for the balance of the
Term even if the Executive's Employee's illness, disability or incapacity
prevents the rendering by the Executive of any services to the Company and
continues for the entire remaining Term. During such periods of disability, the
Company reserves the right to, at its own expense, have a licensed physician
examine the person of the Executive when and as often as it may reasonably
require to determine if the Executive is permanently disabled. The Executive's
disability compensation hereunder shall be reduced by the amount of any
disability insurance proceeds paid to or for the benefit of the Executive under
any policy, the premiums for which have been paid by the Company. The Executive
will also be provided with those other benefits generally equivalent to those
made available to key executive employees performing similar functions for
similarly situated companies.
Section 7. Termination. This Agreement shall be terminated at the end
of the Term, or earlier as follows:
Section 7.01. Death. This Agreement shall terminate upon the death of
the Executive, except that the compensation provided in Section 4 shall continue
through the end of the month in which the Executive's death occurs.
-4-
<PAGE> 5
Section 7.02. Permanent Disability. In the event of any physical or
mental disability of the Executive rendering the Executive unable to perform his
or her duties hereunder for a period of at least one hundred twenty (120)
consecutive days and the further determination that the disability is permanent
with regard to the Executive's ability to return to work in his or full
capacity, this Agreement shall terminate automatically. Any determination of
disability shall be made by the Board in consultation with a qualified physician
or physicians selected by the Board and reasonably acceptable to the Executive.
Section 7.03. By The Company For Cause. The employment of the
Executive may be terminated by the Company for Cause (as defined below) at any
time effective upon written notice to the Executive. The Company shall provide
the Executive with at least ten (10) business days' prior written notice of a
Board meeting at which a termination for Cause will be considered and the
Executive will have an opportunity to attend and participate in that meeting.
For purposes hereof, the term "Cause" shall mean that the Board has determined
that any one or more of the following has occurred:
(a) The Executive shall have been convicted of, or shall
have pleaded guilty or nolo contendere to, any felony or a
crime involving moral turpitude;
(b) The Executive shall have repeatedly failed or refused to
perform his duties hereunder and such failure or refusal
shall have continued for a period of ten (10) days following
written notice from the Board, it being understood that the
Company's failure to achieve its business plan or
projections shall not itself be considered a failure or
refusal to perform duties;
(c) the Executive shall have intentionally committed any
fraud, embezzlement, misappropriation of funds, breach of
fiduciary duty or other act of dishonesty against the
Company which has a material adverse effect on the Company;
or
-5-
<PAGE> 6
(d) the Executive shall have (i) failed to perform his
duties hereunder in a manner that is reasonably satisfactory
to the Board, (ii) refused to carry out the duties assigned
to him by the Board, or (iii) breached any one or more of
the material provisions of this Agreement, which failure,
refusal or breach shall have continued for a period of at
least ten (10) days after notice from the Company describing
such failure, refusal or breach in reasonable detail.
Section 7.04. By the Company Without Cause. The Company may terminate
the Executive's employment at any time without Cause effective upon written
notice to the Executive.
Section 7.05. Termination Without Cause Following Change of Control.
In the event the Company undergoes a Change of Control, termination of the
Executive's employment for any reason within sixty days after such Change of
Control shall be deemed to be a termination without Cause. In addition, each of
the following events at any time subsequent to such Change of Control shall be
deemed to be a termination without Cause: (i) any reduction in the compensation
payable to the Executive set forth in Section 4 herein; (ii) any change in the
location of the place of work of the Executive to a location more than thirty
miles from downtown Boston; and (iii) any violation by the Company of any
provision of this Agreement.
For purposes hereof a "Change of Control" shall mean the happening of
any of the following events: (i) an acquisition by any person or group of
persons of 50% or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of the
Company; (ii) the approval by the Directors or Shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all
substantially all of the assets of the Company which would result in the voting
securities of the
- 6 -
<PAGE> 7
Company immediately prior to such transaction continuing to represent less than
50% of the combined voting power of the securities entitled to vote generally in
the election of directors of the Company or such other entity outstanding
immediately after such transaction, or (iii) the members of the Board of
Directors of the Company (or their respective successors designated by the
stockholders which designated current members of the Board of Directors) on the
date hereof shall not constitute a majority of the Board of Directors of the
Company.
Section 7.06. By the Executive Voluntarily. The Executive may
terminate this Agreement at any time effective upon at least fifteen (15)
business days' prior written notice to the Company.
Section 8. Termination Payments and Benefits.
Section 8.01. Voluntary Termination, Termination For Cause. Upon any
termination of this Agreement: (1) voluntarily by the Executive or (2) by the
Company for Cause as provided in Section 7.04, all payments, salary and other
benefits hereunder shall cease at the effective date of termination except as
specifically provided in this Section 8.02.
Section 8.02. Termination without Cause, Company Election Not To
Renew, Death, Disability In the event that this Agreement is terminated by the
Company without Cause, or because of the death or permanent disability of the
Executive, the Executive shall receive as a termination settlement an amount
equal to twelve (12) month's salary as is in effect at the effective date of
termination (the "Termination Payment"). The Termination Payment shall be paid
in twelve (12) monthly installments on the first business day of each month
following the effective date of termination. If twelve (12) months following the
termination, the Executive has
-7-
<PAGE> 8
not obtained employment with similar salary, benefits and responsibilities as
described herein, the Executive shall receive as an additional termination
settlement an amount equal to six (6) month's salary (the "Additional
Termination Payment"); provided, however, such Additional Termination Payment
shall be mitigated by the amount of salary the Executive shall receive during
such additional six (6) month period. The Termination Payment shall be reduced
by any statutorily-mandated severance, change of control, plant closing, or
similar payment to the Executive by the Company or its stockholders. In addition
to the Termination Payment, the Executive shall continue to receive the
insurance benefits included as part of the fringe benefits referenced in Section
6 for a period of twelve (12) months following the effective date of termination
and any death and disability benefits hereunder for a period of (eighteen) 18
months following the effective date of termination.
Section 8.03. Acceleration of Options. In the event the Executive's
employment terminates for any reason, other than for Cause or voluntarily by the
Executive, any and all options to purchase Common Stock held by the Executive
shall immediately vest and become fully exercisable. In addition, in the event
the Company undergoes a Change of Control, all options of the Executive to
purchase Common Stock of the Company which, by the terms of the grant of such
options otherwise would become exercisable within one year following the date of
the Change of Control, shall become exercisable upon the Change of Control, and
all other options shall become exercisable one year earlier than provided for in
the grant of such options.
Section 8.04. Health and Life Insurance. In the event the Executive's
employment terminates for any reason, other than for Cause, the Company shall
continue to provide the
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<PAGE> 9
Executive the benefits set forth in Section 6.02 hereof for a period of six (6)
months following the date of such termination.
Section 8.05. Outplacement Assistance. In the event the Executive's
employment terminates for any reason , other than for Cause, the Company shall
provide outplacement assistance to the Executive as is then reasonable and
customary for similarly situated businesses up to a $15,000 maximum expenditure
by the Company.
Section 8.06. Public Statement of Termination. In the event the
Executive's employment terminates for any reason, the Company and the Executive
shall agree upon a public statement pertaining to the Executive's termination of
employment, and the terms of said statement shall not be subject to subsequent
modification by either party unless required by law; provided, however, that in
the event the Company and the Executive are unable in good faith to agree on
such a statement, the Company may make public statements as are necessary to
comply with the law.
Section 8.07. No Other Benefits. Except as specifically provided in
this section 8, the Executive shall not be entitled to any compensation,
severance or other benefits from the Company upon the termination of this
Agreement for any reason whatsoever.
Section 9. Merger Clause. The Company shall not consolidate, merge or
transfer all or a substantial portion of its assets without requiring the
transferee to assume this Agreement and the obligations hereunder.
Section 10. Severable Provisions. The provisions of this Agreement
are severable and the invalidity of any one or more provisions shall not affect
the validity of any other provision.
-9-
<PAGE> 10
In the event that a court of competent jurisdiction shall determine that any
provision of this Agreement or the application thereof is unenforceable in whole
or in part because of the duration or scope thereof, the parties hereto agree
that said court in making such determination shall have the power to reduce the
duration and scope of such provision to the extent necessary to make it
enforceable, and that the Agreement in its reduced form shall be valid and
enforceable to the full extent permitted by law.
Section 11. Notices. All notices hereunder, to be effective, shall be
in writing and shall be delivered by hand or mailed by certified mail, postage
and fees prepaid, as follows:
If to the Company: Voicetek Corporation
19 Alpha Road
Chelmsford, MA 01824-4175
Attn: President
Copy to: Anthony J. Medaglia, Jr., Esq.
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
101 Federal Street
Boston, MA 02110
If to the Executive: Sheldon Dinkes
85 East India Row, Apt. 21F
Boston, MA 02110
or to such other address as a party may notify the other pursuant to a notice
given in accordance with this Section 11.
Section 12. Miscellaneous.
Section 12.01. Modification. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior
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<PAGE> 11
understandings and agreements, whether written or oral. This Agreement may not
be amended or revised except by a writing signed by the parties.
Section 12.02. Assignment and Transfer. This Agreement shall not be
terminated by the merger or consolidation of the Company with any corporate or
other entity or by the transfer of all or substantially all of the assets of the
Company to any other person, corporation, firm or entity. The provisions of this
Agreement shall be binding on and shall inure to the benefit of any such
successor in interest to the Company. Neither this Agreement nor any of the
rights, duties or obligations of the Executive shall be assignable by the
Executive, nor shall any of the payments required or permitted to be made to the
Executive by this Agreement be encumbered, transferred or in any way
anticipated.
Section 12.03. Captions. Captions herein have been inserted solely
for convenience of reference and in no way define, limit or describe the scope
or substance of any provision of this Agreement.
Section 12.04. Governing Law. This Agreement shall be construed under
and enforced in accordance with the laws of The Commonwealth of Massachusetts.
[The Rest of This Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a sealed instrument as of the day and year first above written.
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<PAGE> 12
VOICETEK
By:_____________________________________
Vice President
EXECUTIVE
By:_____________________________________
Name:
- 12 -
<PAGE> 1
EXHIBIT 10.12
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated and entered into as of the 13th day of January,
1997, by and between Voicetek Corporation, a Massachusetts corporation (the
"Company"), and Roger Tuttle, an individual residing at 73 Cambridge Road,
Bedford, NH 03110 (the "Executive").
WHEREAS, the Company desires to engage the full-time services of the
Executive;
WHEREAS, the Executive desires to be so employed by the Company; and
WHEREAS, the Company desires to be assured that the unique and expert
services of the Executive will be available solely to the Company on such
full-time basis, and that the Executive is willing and able to render such
services on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of such employment and the mutual
covenants and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
Section 1. Employment. The Company hereby employs the Executive as
its Vice President of Finance and Chief Financial Officer, and the Executive
hereby accepts such employment under and subject to the terms and conditions
hereinafter set forth. The Executive further agrees to serve as a member of the
Board of Directors (the "Board") of the Company if elected or appointed to such
office in accordance with the Company's By-Laws.
Section 2. Term. Unless sooner terminated as provided in Section 7,
the term of employment under this Agreement shall begin on the date hereof and
shall conclude on
<PAGE> 2
January 12, 2000 (the "Term").
Section 3. Duties. The Executive shall serve as Vice President of
Finance and Chief Financial Officer, and he shall perform additional duties as
the Board of Directors or the President of the Corporation may assign to him
from time to time. The Executive hereby agrees to devote his full business time
and best efforts to the faithful performance of such duties and to the promotion
and forwarding of the business and affairs of the Company for the Term.
Section 4. Salary Compensation. In consideration of the services
rendered by the Executive under this Agreement, the Company shall pay the
Executive a base salary (the "Base Salary") at the rate of One Hundred Twenty
Thousand Dollars ($120,000) per calendar year. The Base Salary shall be paid in
such installments and at such times as the Company pays its regularly salaried
key executive employees, and the Board may change the Base Salary from time to
time in its sole discretion; provided, however, that in no event shall the Base
Salary for any calendar year be less than the Base Salary in effect for the
immediately prior calendar year.
Section 5. Bonus Compensation. The Executive shall be entitled to
receive such incentive or performance bonuses as the Board may determine from
time to time.
Section 6. Fringe Benefits. As a key executive employee of the
Company, the Executive shall be eligible to participate in all employee fringe
benefit programs as are made available from time to time to the Company's key
executive employees.
Section 6. Benefits. In addition to the compensation detailed in
Section 4 and 5 of this Agreement, the Executive shall be entitled to the
following additional benefits:
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<PAGE> 3
Section 6.01. Paid Vacation. The Executive shall be entitled to
fifteen (15) business days paid vacation per calendar year. The Executive shall
be entitled to an additional vacation day for each full year during which the
Executive has been in the full time employment of the Company, with an
additional vacation day per year granted upon each subsequent anniversary of the
commencement of the Executive's full time employment with the Company, which
occurred on October 3, 1994; provided that the number of paid vacation days to
which the Executive shall be entitled in a calendar year shall not exceed twenty
(20) business days. Such vacation shall extend for such periods and shall be
taken at such intervals as shall be appropriate and consistent with the proper
performance of the Executive's duties hereunder and consistent with the
Company's vacation policy.
Section 6.02. Insurance Coverage. During the Term, the Company shall
provide the Executive with group health, dental and life insurance protection to
the same extent that it makes such protection available to its other key
executive employees.
Section 6.03. Reimbursement of Expenses. The Company shall reimburse
the Executive for all reasonable expenses actually incurred by the Executive in
connection with the business affairs of the Company and the performance of his
duties hereunder. The Executive shall comply with such reasonable limitations
and reporting requirements with respect to such expenses as the Board may
establish from time to time.
Section 6.04. Disability and Other Benefits. If the Executive suffers
any illness, disability or incapacity which prevents the Executive from
performing the Executive's duties hereunder, and such illness, disability or
incapacity shall be deemed by a duly licensed physician
- 3 -
<PAGE> 4
(who may be the Executive's personal physician) to be permanent; or, if the
Executive is unable to render full-time services to the Company of the character
required hereunder for a period of six (6) consecutive months by reason of
illness, disability or incapacity, and the Board has determined that the
Executive has been permanently disabled; then, and in either of such events, the
Executive shall render such advisory and consulting services to the Company as
may be reasonably requested of the Executive by the Board and officers of the
Company but only to the extent that the Executive is able to perform such
services. In such event, the Executive shall be paid the amount of One Hundred
Twenty Thousand Dollars ($120,000) annually, payable in equal installments in
conformity with the Company's normal payroll period. Such disability
compensation shall commence upon the first day of the first month following the
determination that the Executive's illness, disability or incapacity is
permanent, and shall be paid for the balance of the Term even if the Executive's
Employee's illness, disability or incapacity prevents the rendering by the
Executive of any services to the Company and continues for the entire remaining
Term. During such periods of disability, the Company reserves the right to, at
its own expense, have a licensed physician examine the person of the Executive
when and as often as it may reasonably require to determine if the Executive is
permanently disabled. The Executive's disability compensation hereunder shall be
reduced by the amount of any disability insurance proceeds paid to or for the
benefit of the Executive under any policy, the premiums for which have been paid
by the Company. The Executive will also be provided with those other benefits
generally equivalent to those made available to key executive employees
performing similar functions for similarly situated companies.
- 4 -
<PAGE> 5
Section 7. Termination. This Agreement shall be terminated at the end
of the Term, or earlier as follows:
Section 7.01. Death. This Agreement shall terminate upon the death of
the Executive, except that the compensation provided in Section 4 shall continue
through the end of the month in which the Executive's death occurs.
Section 7.02. Permanent Disability. In the event of any physical or
mental disability of the Executive rendering the Executive unable to perform his
or her duties hereunder for a period of at least one hundred twenty (120)
consecutive days and the further determination that the disability is permanent
with regard to the Executive's ability to return to work in his or full
capacity, this Agreement shall terminate automatically. Any determination of
disability shall be made by the Board in consultation with a qualified physician
or physicians selected by the Board and reasonably acceptable to the Executive.
Section 7.03. By The Company For Cause. The employment of the
Executive may be terminated by the Company for Cause (as defined below) at any
time effective upon written notice to the Executive. The Company shall provide
the Executive with at least ten (10) business days' prior written notice of a
Board meeting at which a termination for Cause will be considered and the
Executive will have an opportunity to attend and participate in that meeting.
For purposes hereof, the term "Cause" shall mean that the Board has determined
that any one or more of the following has occurred:
(a) The Executive shall have been convicted of, or shall
have pleaded guilty or nolo contendere to, any felony or a
crime involving moral turpitude;
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<PAGE> 6
(b) The Executive shall have repeatedly failed or refused to
perform his duties hereunder and such failure or refusal
shall have continued for a period of ten (10) days following
written notice from the Board, it being understood that the
Company's failure to achieve its business plan or
projections shall not itself be considered a failure or
refusal to perform duties;
(c) the Executive shall have intentionally committed any
fraud, embezzlement, misappropriation of funds, breach of
fiduciary duty or other act of dishonesty against the
Company which has a material adverse effect on the Company;
or
(d) the Executive shall have (i) failed to perform his
duties hereunder in a manner that is reasonably satisfactory
to the Board, (ii) refused to carry out the duties assigned
to him by the Board, or (iii) breached any one or more of
the material provisions of this Agreement, which failure,
refusal or breach shall have continued for a period of at
least ten (10) days after notice from the Company describing
such failure, refusal or breach in reasonable detail.
Section 7.04. By the Company Without Cause. The Company may terminate
the Executive's employment at any time without Cause effective upon written
notice to the Executive.
Section 7.05. Termination Without Cause Following Change of Control.
In the event the Company undergoes a Change of Control, termination of the
Executive's employment for any reason within sixty days after such Change of
Control shall be deemed to be a termination without Cause. In addition, each of
the following events at any time subsequent to such Change of Control shall be
deemed to be a termination without Cause: (i) any reduction in the compensation
payable to the Executive set forth in Section 4 herein; (ii) any change in the
location of the place of work of the Executive to a location more than thirty
miles from downtown Boston; and (iii) any violation by the Company of any
provision of this Agreement.
- 6 -
<PAGE> 7
For purposes hereof a "Change of Control" shall mean the happening of
any of the following events: (i) an acquisition by any person or group of
persons of 50% or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of the
Company; (ii) the approval by the Directors or Shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all
substantially all of the assets of the Company which would result in the voting
securities of the Company immediately prior to such transaction continuing to
represent less than 50% of the combined voting power of the securities entitled
to vote generally in the election of directors of the Company or such other
entity outstanding immediately after such transaction, or (iii) the members of
the Board of Directors of the Company (or their respective successors designated
by the stockholders which designated current members of the Board of Directors)
on the date hereof shall not constitute a majority of the Board of Directors of
the Company.
Section 7.06. By the Executive Voluntarily. The Executive may
terminate this Agreement at any time effective upon at least fifteen (15)
business days' prior written notice to the Company.
Section 8. Termination Payments and Benefits.
Section 8.01. Voluntary Termination, Termination For Cause. Upon any
termination of this Agreement: (1) voluntarily by the Executive or (2) by the
Company for Cause as provided in Section 7.04, all payments, salary and other
benefits hereunder shall cease at the effective date of termination except as
specifically provided in this Section 8.02.
- 7 -
<PAGE> 8
Section 8.02. Termination without Cause, Company Election Not To
Renew, Death, Disability In the event that this Agreement is terminated by the
Company without Cause, or because of the death or permanent disability of the
Executive, the Executive shall receive as a termination settlement an amount
equal to six (6) month's salary as is in effect at the effective date of
termination (the "Termination Payment"). The Termination Payment shall be paid
in six (6) monthly installments on the first business day of each month
following the effective date of termination. If six (6) months following the
termination, the Executive has not obtained employment with similar salary,
benefits and responsibilities as described herein, the Executive shall receive
as an additional termination settlement an amount equal to six (6) month's
salary (the "Additional Termination Payment"); provided, however, such
Additional Termination Payment shall be mitigated by the amount of salary the
Executive shall receive during such additional six (6) month period. The
Termination Payment shall be reduced by any statutorily-mandated severance,
change of control, plant closing, or similar payment to the Executive by the
Company or its stockholders. In addition to the Termination Payment, the
Executive shall continue to receive the insurance benefits included as part of
the fringe benefits referenced in Section 6 for a period of six (6) months
following the effective date of termination and any death and disability
benefits hereunder for a period of (eighteen) 18 months following the effective
date of termination.
Section 8.03. Acceleration of Options. In the event the Executive's
employment terminates for any reason, other than for Cause or voluntarily by the
Executive, any and all options to purchase Common Stock held by the Executive
shall immediately vest and become
- 8 -
<PAGE> 9
fully exercisable. In addition, in the event the Company undergoes a Change of
Control, all options of the Executive to purchase Common Stock of the Company
which, by the terms of the grant of such options otherwise would become
exercisable within one year following the date of the Change of Control, shall
become exercisable upon the Change of Control, and all other options shall
become exercisable one year earlier than provided for in the grant of such
options.
Section 8.04. Health and Life Insurance. In the event the Executive's
employment terminates for any reason, other than for Cause, the Company shall
continue to provide the Executive the benefits set forth in Section 6.02 hereof
for a period of six (6) months following the date of such termination.
Section 8.05. Outplacement Assistance. In the event the Executive's
employment terminates for any reason , other than for Cause, the Company shall
provide outplacement assistance to the Executive as is then reasonable and
customary for similarly situated businesses up to a $15,000 maximum expenditure
by the Company.
Section 8.06. Public Statement of Termination. In the event the
Executive's employment terminates for any reason, the Company and the Executive
shall agree upon a public statement pertaining to the Executive's termination of
employment, and the terms of said statement shall not be subject to subsequent
modification by either party unless required by law; provided, however, that in
the event the Company and the Executive are unable in good faith to agree on
such a statement, the Company may make public statements as are necessary to
comply with the law.
- 9 -
<PAGE> 10
Section 8.07. No Other Benefits. Except as specifically provided in
this section 8, the Executive shall not be entitled to any compensation,
severance or other benefits from the Company upon the termination of this
Agreement for any reason whatsoever.
Section 9. Merger Clause. The Company shall not consolidate, merge or
transfer all or a substantial portion of its assets without requiring the
transferee to assume this Agreement and the obligations hereunder.
Section 10. Severable Provisions. The provisions of this Agreement
are severable and the invalidity of any one or more provisions shall not affect
the validity of any other provision. In the event that a court of competent
jurisdiction shall determine that any provision of this Agreement or the
application thereof is unenforceable in whole or in part because of the duration
or scope thereof, the parties hereto agree that said court in making such
determination shall have the power to reduce the duration and scope of such
provision to the extent necessary to make it enforceable, and that the Agreement
in its reduced form shall be valid and enforceable to the full extent permitted
by law.
Section 11. Notices. All notices hereunder, to be effective, shall be
in writing and shall be delivered by hand or mailed by certified mail, postage
and fees prepaid, as follows:
If to the Company: Voicetek Corporation
19 Alpha Road
Chelmsford, MA 01824-4175
Attn: President
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<PAGE> 11
Copy to: Anthony J. Medaglia, Jr., Esq.
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
101 Federal Street
Boston, MA 02110
If to the Executive: Roger Tuttle
73 Cambridge Road
Bedford, NH 03110
or to such other address as a party may notify the other pursuant to a notice
given in accordance with this Section 11.
Section 12. Miscellaneous.
Section 12.01. Modification. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
This Agreement may not be amended or revised except by a writing signed by the
parties.
Section 12.02. Assignment and Transfer. This Agreement shall not be
terminated by the merger or consolidation of the Company with any corporate or
other entity or by the transfer of all or substantially all of the assets of the
Company to any other person, corporation, firm or entity. The provisions of this
Agreement shall be binding on and shall inure to the benefit of any such
successor in interest to the Company. Neither this Agreement nor any of the
rights, duties or obligations of the Executive shall be assignable by the
Executive, nor shall any of the payments required or permitted to be made to the
Executive by this Agreement be encumbered, transferred or in any way
anticipated.
- 11 -
<PAGE> 12
Section 12.03. Captions. Captions herein have been inserted solely
for convenience of reference and in no way define, limit or describe the scope
or substance of any provision of this Agreement.
Section 12.04. Governing Law. This Agreement shall be construed under
and enforced in accordance with the laws of The Commonwealth of Massachusetts.
[The Rest of This Page Intentionally Left Blank]
- 12 -
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a sealed instrument as of the day and year first above written.
VOICETEK
By:_____________________________________
President
EXECUTIVE
By:_____________________________________
Name
- 13 -
<PAGE> 1
EXHIBIT 10.14
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated and entered into as of the 13th day of January,
1997, by and between Voicetek Corporation , a Massachusetts corporation (the
"Company"), and Scott Ganson, an individual residing at 229 Beacon Street, Apt.
4, Boston, MA 02116 (the "Executive").
WHEREAS, the Company desires to engage the full-time services of the
Executive;
WHEREAS, the Executive desires to be so employed by the Company; and
WHEREAS, the Company desires to be assured that the unique and expert
services of the Executive will be available solely to the Company on such
full-time basis, and that the Executive is willing and able to render such
services on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of such employment and the mutual
covenants and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
Section 1. Employment. The Company hereby employs the Executive as
its Vice President of Sales and Customer Service, and the Executive hereby
accepts such employment under and subject to the terms and conditions
hereinafter set forth. The Executive further agrees to serve as a member of the
Board of Directors (the "Board") of the Company if elected or appointed to such
office in accordance with the Company's By-Laws.
<PAGE> 2
Section 2. Term. Unless sooner terminated as provided in Section 7,
the term of employment under this Agreement shall begin on the date hereof and
shall conclude on January 12, 2000 (the "Term").
Section 3. Duties. The Executive shall serve as Vice President of
Sales and Customer Service, and he shall perform additional duties as the Board
of Directors or the President of the Corporation may assign to him from time to
time. The Executive hereby agrees to devote his full business time and best
efforts to the faithful performance of such duties and to the promotion and
forwarding of the business and affairs of the Company for the Term.
Section 4. Salary Compensation. In consideration of the services
rendered by the Executive under this Agreement, the Company shall pay the
Executive a base salary (the "Base Salary") at the rate of One Hundred Sixty-One
Thousand Five Hundred Dollars ($161,500) per calendar year. The Base Salary
shall be paid in such installments and at such times as the Company pays its
regularly salaried key executive employees, and the Board may change the Base
Salary from time to time in its sole discretion; provided, however, that in no
event shall the Base Salary for any calendar year be less than the Base Salary
in effect for the immediately prior calendar year. Section 5. Bonus
Compensation. The Executive shall be entitled to receive such incentive or
performance bonuses as the Board may determine from time to time.
Section 5. Bonus Compensation. The Executive shall be entitled to
receive such incentive or performance bonuses as the Board may determine from
time to time.
Section 6. Fringe Benefits. As a key executive employee of the
Company, the Executive shall be eligible to participate in all employee fringe
benefit programs as are made available from time to time to the Company's key
executive employees.
- 2 -
<PAGE> 3
Section 6. Benefits. In addition to the compensation detailed in
Section 4 and 5 of this Agreement, the Executive shall be entitled to the
following additional benefits:
Section 6.01. Paid Vacation. The Executive shall be entitled to
fifteen (15) business days paid vacation per calendar year. Furthermore, the
Executive shall be entitled to an additional vacation day for each full year
during which the Executive has been in the full time employment of the Company,
with an additional vacation day per year granted upon each subsequent
anniversary of the commencement of the Executive's full time employment with the
Company, which occurred on May 10, 1993; provided that the number of paid
vacation days to which the Executive shall be entitled in a calendar year shall
not exceed twenty (20) business days. Such vacation shall extend for such
periods and shall be taken at such intervals as shall be appropriate and
consistent with the proper performance of the Executive's duties hereunder and
consistent with the Company's vacation policy.
Section 6.02. Insurance Coverage. During the Term, the Company shall
provide the Executive with group health, dental and life insurance protection to
the same extent that it makes such protection available to its other key
executive employees.
Section 6.03. Reimbursement of Expenses. The Company shall reimburse
the Executive for all reasonable expenses actually incurred by the Executive in
connection with the business affairs of the Company and the performance of his
duties hereunder. The Executive shall comply with such reasonable limitations
nd reporting requirements with respect to such expenses as the Board may
establish from time to time.
- 3 -
<PAGE> 4
Section 6.04. Disability and Other Benefits. If the Executive suffers
any illness, disability or incapacity which prevents the Executive from
performing the Executive's duties hereunder, and such illness, disability or
incapacity shall be deemed by a duly licensed physician (who may be the
Executive's personal physician) to be permanent; or, if the Executive is unable
to render full-time services to the Company of the character required hereunder
for a period of six (6) consecutive months by reason of illness, disability or
incapacity, and the Board has determined that the Executive has been permanently
disabled; then, and in either of such events, the Executive shall render such
advisory and consulting services to the Company as may be reasonably requested
of the Executive by the Board and officers of the Company but only to the extent
that the Executive is able to perform such services. In such event, the
Executive shall be paid the amount of One Hundred Sixty-One Thousand Five
Hundred Dollars ($161,500) annually, payable in equal installments in conformity
with the Company's normal payroll period. Such disability compensation shall
commence upon the first day of the first month following the determination that
the Executive's illness, disability or incapacity is permanent, and shall be
paid for the balance of the Term even if the Executive's Employee's illness,
disability or incapacity prevents the rendering by the Executive of any services
to the Company and continues for the entire remaining Term. During such periods
of disability, the Company reserves the right to, at its own expense, have a
licensed physician examine the person of the Executive when and as often as it
may reasonably require to determine if the Executive is permanently disabled.
The Executive's disability compensation hereunder shall be reduced by the amount
of any disability insurance proceeds paid to or for the benefit of the Executive
under any policy, the premiums for
- 4 -
<PAGE> 5
which have been paid by the Company. The Executive will also be provided with
those other benefits generally equivalent to those made available to key
executive employees performing similar functions for similarly situated
companies.
Section 7. Termination. This Agreement shall be terminated at the end
of the Term, or earlier as follows:
Section 7.01. Death. This Agreement shall terminate upon the death of
the Executive, except that the compensation provided in Section 4 shall continue
through the end of the month in which the Executive's death occurs.
Section 7.02. Permanent Disability. In the event of any physical or
mental disability of the Executive rendering the Executive unable to perform his
or her duties hereunder for a period of at least one hundred twenty (120)
consecutive days and the further determination that the disability is permanent
with regard to the Executive's ability to return to work in his or full
capacity, this Agreement shall terminate automatically. Any determination of
disability shall be made by the Board in consultation with a qualified physician
or physicians selected by the Board and reasonably acceptable to the Executive.
Section 7.03. By The Company For Cause. The employment of the
Executive may be terminated by the Company for Cause (as defined below) at any
time effective upon written notice to the Executive. The Company shall provide
the Executive with at least ten (10) business days' prior written notice of a
Board meeting at which a termination for Cause will be considered and the
Executive will have an opportunity to attend and participate in that meeting.
For
- 5 -
<PAGE> 6
purposes hereof, the term "Cause" shall mean that the Board has determined that
any one or more of the following has occurred:
(a) The Executive shall have been convicted of, or shall
have pleaded guilty or nolo contendere to, any felony or a
crime involving moral turpitude;
(b) The Executive shall have repeatedly failed or refused to
perform his duties hereunder and such failure or refusal
shall have continued for a period of ten (10) days following
written notice from the Board, it being understood that the
Company's failure to achieve its business plan or
projections shall not itself be considered a failure or
refusal to perform duties;
(c) the Executive shall have intentionally committed any
fraud, embezzlement, misappropriation of funds, breach of
fiduciary duty or other act of dishonesty against the
Company which has a material adverse effect on the Company;
or
(d) the Executive shall have (i) failed to perform his
duties hereunder in a manner that is reasonably satisfactory
to the Board, (ii) refused to carry out the duties assigned
to him by the Board, or (iii) breached any one or more of
the material provisions of this Agreement, which failure,
refusal or breach shall have continued for a period of at
least ten (10) days after notice from the Company describing
such failure, refusal or breach in reasonable detail.
Section 7.04. By the Company Without Cause. The Company may terminate
the Executive's employment at any time without Cause effective upon written
notice to the Executive.
Section 7.05. Termination Without Cause Following Change of Control.
In the event the Company undergoes a Change of Control, each of the following
events at any time subsequent to such Change of Control shall be deemed to be a
termination without Cause: (i) any reduction in the compensation payable to the
Executive set forth in Section 4 herein; (ii) any change in the location of the
place of work of the Executive to a location more than
- 6 -
<PAGE> 7
thirty miles from downtown Boston; and (iii) any violation by the Company of any
provision of this Agreement.
For purposes hereof a "Change of Control" shall mean the happening of
any of the following events: (i) an acquisition by any person or group of
persons of 50% or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of the
Company; (ii) the approval by the Directors or Shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all
substantially all of the assets of the Company which would result in the voting
securities of the Company immediately prior to such transaction continuing to
represent less than 50% of the combined voting power of the securities entitled
to vote generally in the election of directors of the Company or such other
entity outstanding immediately after such transaction, or (iii) the members of
the Board of Directors of the Company (or their respective successors designated
by the stockholders which designated current members of the Board of Directors)
on the date hereof shall not constitute a majority of the Board of Directors of
the Company.
Section 7.06. By the Executive Voluntarily. The Executive may
terminate this Agreement at any time effective upon at least fifteen (15)
business days' prior written notice to the Company.
Section 8. Termination Payments and Benefits.
Section 8.01. Voluntary Termination, Termination For Cause. Upon any
termination of this Agreement: (1) voluntarily by the Executive or (2) by the
Company for Cause as provided
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<PAGE> 8
in Section 7.04, all payments, salary and other benefits hereunder shall cease
at the effective date of termination except as specifically provided in this
Section 8.02.
Section 8.02. Termination without Cause, Company Election Not To
Renew, Death, Disability. In the event that this Agreement is terminated by the
Company without Cause, or because of the death or permanent disability of the
Executive, the Executive shall receive as a termination settlement an amount
equal to six (6) month's salary as is in effect at the effective date of
termination (the "Termination Payment"). The Termination Payment shall be paid
in six (6) monthly installments on the first business day of each month
following the effective date of termination. If six (6) months following the
termination, the Executive has not obtained employment with similar salary,
benefits and responsibilities as described herein, the Executive shall receive
as an additional termination settlement an amount equal to six (6) month's
salary (the "Additional Termination Payment"); provided, however, such
Additional Termination Payment shall be mitigated by the amount of salary the
Executive shall receive during such additional six (6) month period. The
Termination Payment shall be reduced by any statutorily-mandated severance,
change of control, plant closing, or similar payment to the Executive by the
Company or its stockholders. In addition to the Termination Payment, the
Executive shall continue to receive the insurance benefits included as part of
the fringe benefits referenced in Section 6 for a period of six (6) months
following the effective date of termination and any death and disability
benefits hereunder for a period of (eighteen) 18 months following the effective
date of termination.
- 8 -
<PAGE> 9
Section 8.03. Acceleration of Options. In the event the Executive's
employment terminates for any reason, other than for Cause or voluntarily by the
Executive, any and all options to purchase Common Stock held by the Executive
shall immediately vest and become fully exercisable. In addition, in the event
the Company undergoes a Change of Control, all options of the Executive to
purchase Common Stock of the Company which, by the terms of the grant of such
options otherwise would become exercisable within one year following the date of
the Change of Control, shall become exercisable upon the Change of Control, and
all other options shall become exercisable one year earlier than provided for in
the grant of such options.
Section 8.04. Health and Life Insurance. In the event the Executive's
employment terminates for any reason, other than for Cause, the Company shall
continue to provide the Executive the benefits set forth in Section 6.02 hereof
for a period of six (6) months following the date of such termination.
Section 8.05. Outplacement Assistance. In the event the Executive's
employment terminates for any reason, other than for Cause, the Company shall
provide outplacement assistance to the Executive as is then reasonable and
customary for similarly situated businesses up to a $15,000 maximum expenditure
by the Company.
Section 8.06. Public Statement of Termination. In the event the
Executive's employment terminates for any reason, the Company and the Executive
shall agree upon a public statement pertaining to the Executive's termination of
employment, and the terms of said statement shall not be subject to subsequent
modification by either party unless required by law; provided, however, that in
the event the Company and the Executive are unable in good faith to
- 9 -
<PAGE> 10
agree on such a statement, the Company may make public statements as are
necessary to comply with the law.
Section 8.07. No Other Benefits. Except as specifically provided in
this section 8, the Executive shall not be entitled to any compensation,
severance or other benefits from the Company upon the termination of this
Agreement for any reason whatsoever.
Section 9. Merger Clause. The Company shall not consolidate, merge or
transfer all or a substantial portion of its assets without requiring the
transferee to assume this Agreement and the obligations hereunder.
Section 10. Severable Provisions. The provisions of this Agreement
are severable and the invalidity of any one or more provisions shall not affect
the validity of any other provision. In the event that a court of competent
jurisdiction shall determine that any provision of this Agreement or the
application thereof is unenforceable in whole or in part because of the duration
or scope thereof, the parties hereto agree that said court in making such
determination shall have the power to reduce the duration and scope of such
provision to the extent necessary to make it enforceable, and that the Agreement
in its reduced form shall be valid and enforceable to the full extent permitted
by law.
Section 11. Notices. All notices hereunder, to be effective, shall be
in writing and shall be delivered by hand or mailed by certified mail, postage
and fees prepaid, as follows:
If to the Company: Voicetek Corporation
19 Alpha Road
Chelmsford, MA 01824-4175
Attn: President
- 10 -
<PAGE> 11
Copy to: Anthony J. Medaglia, Jr., Esq.
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
101 Federal Street
Boston, MA 02110
If to the Executive: Scott Ganson
229 Beacon Street, Apt. 4
Boston, MA 02116
or to such other address as a party may notify the other pursuant to a notice
given in accordance with this Section 11.
Section 12. Miscellaneous.
Section 12.01. Modification. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
This Agreement may not be amended or revised except by a writing signed by the
parties.
Section 12.02. Assignment and Transfer. This Agreement shall not be
terminated by the merger or consolidation of the Company with any corporate or
other entity or by the transfer of all or substantially all of the assets of the
Company to any other person, corporation, firm or entity. The provisions of this
Agreement shall be binding on and shall inure to the benefit of any such
successor in interest to the Company. Neither this Agreement nor any of the
rights, duties or obligations of the Executive shall be assignable by the
Executive, nor shall any of the payments required or permitted to be made to the
Executive by this Agreement be encumbered, transferred or in any way
anticipated.
- 11 -
<PAGE> 12
Section 12.03. Captions. Captions herein have been inserted solely
for convenience of reference and in no way define, limit or describe the scope
or substance of any provision of this Agreement.
Section 12.04. Governing Law. This Agreement shall be construed under
and enforced in accordance with the laws of The Commonwealth of Massachusetts.
[The Rest of This Page Intentionally Left Blank]
- 12 -
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a sealed instrument as of the day and year first above written.
VOICETEK
By:_____________________________________
President
EXECUTIVE
By:_____________________________________
Name:
- 13 -
<PAGE> 14
EXHIBIT 10.13
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated and entered into as of the 13th day of January,
1997, by and between Voicetek Corporation , a Massachusetts corporation (the
"Company"), and Paul Gagne, an individual residing at 162 Duck Pond Road,
Groton, MA 01450 (the "Executive").
WHEREAS, the Company desires to engage the full-time services of the
Executive;
WHEREAS, the Executive desires to be so employed by the Company; and
WHEREAS, the Company desires to be assured that the unique and expert
services of the Executive will be available solely to the Company on such
full-time basis, and that the Executive is willing and able to render such
services on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of such employment and the mutual
covenants and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
Section 1. Employment. The Company hereby employs the Executive as
its Executive Vice President of Engineering, and the Executive hereby accepts
such employment under and subject to the terms and conditions hereinafter set
forth. The Executive further agrees to serve as a member of the Board of
Directors (the "Board") of the Company if elected or appointed to such office in
accordance with the Company's By-Laws.
Section 2. Term. Unless sooner terminated as provided in Section 7,
the term of employment under this Agreement shall begin on the date hereof and
shall conclude on
<PAGE> 15
January 12, 2000 (the "Term").
Section 3. Duties. The Executive shall serve as Executive Vice
President of Engineering, and he shall perform additional duties as the Board of
Directors or the President of the Corporation may assign to him from time to
time. The Executive hereby agrees to devote his full business time and best
efforts to the faithful performance of such duties and to the promotion and
forwarding of the business and affairs of the Company for the Term.
Section 4. Salary Compensation. In consideration of the services
rendered by the Executive under this Agreement, the Company shall pay the
Executive a base salary (the "Base Salary") at the rate of One Hundred Seventy
Thousand Dollars ($170,000) per calendar year. The Base Salary shall be paid in
such installments and at such times as the Company pays its regularly salaried
key executive employees, and the Board may change the Base Salary from time to
time in its sole discretion; provided, however, that in no event shall the Base
Salary for any calendar year be less than the Base Salary in effect for the
immediately prior calendar year.
Section 5. Bonus Compensation. The Executive shall be entitled to
receive such incentive or performance bonuses as the Board may determine from
time to time.
Section 6. Fringe Benefits. As a key executive employee of the
Company, the Executive shall be eligible to participate in all employee fringe
benefit programs as are made available from time to time to the Company's key
executive employees.
Section 6. Benefits. In addition to the compensation detailed in
Section 4 and 5 of this Agreement, the Executive shall be entitled to the
following additional benefits:
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<PAGE> 16
Section 6.01. Paid Vacation. The Executive shall be entitled to four
(4) weeks paid vacation per calendar year, such vacation to extend for such
periods and shall be taken at such intervals as shall be appropriate and
consistent with the proper performance of the Executive's duties hereunder and
consistent with the Company's vacation policy.
Section 6.02. Insurance Coverage. During the Term, the Company shall
provide the Executive with group health, dental and life insurance protection to
the same extent that it makes such protection available to its other key
executive employees.
Section 6.03. Reimbursement of Expenses. The Company shall reimburse
the Executive for all reasonable expenses actually incurred by the Executive in
connection with the business affairs of the Company and the performance of his
duties hereunder. The Executive shall comply with such reasonable limitations
and reporting requirements with respect to such expenses as the Board may
establish from time to time.
Section 6.04. Disability and Other Benefits. If the Executive suffers
any illness, disability or incapacity which prevents the Executive from
performing the Executive's duties hereunder, and such illness, disability or
incapacity shall be deemed by a duly licensed physician (who may be the
Executive's personal physician) to be permanent; or, if the Executive is unable
to render full-time services to the Company of the character required hereunder
for a period of six (6) consecutive months by reason of illness, disability or
incapacity, and the Board has determined that the Executive has been permanently
disabled; then, and in either of such events, the Executive shall render such
advisory and consulting services to the Company as may be reasonably requested
of the Executive by the Board and officers of the Company but only to the
- 3 -
<PAGE> 17
extent that the Executive is able to perform such services. In such event, the
Executive shall be paid the amount of One Hundred Seventy Thousand Dollars
($170,000) annually, payable in equal installments in conformity with the
Company's normal payroll period. Such disability compensation shall commence
upon the first day of the first month following the determination that the
Executive's illness, disability or incapacity is permanent, and shall be paid
for the balance of the Term even if the Executive's Employee's illness,
disability or incapacity prevents the rendering by the Executive of any services
to the Company and continues for the entire remaining Term. During such periods
of disability, the Company reserves the right to, at its own expense, have a
licensed physician examine the person of the Executive when and as often as it
may reasonably require to determine if the Executive is permanently disabled.
The Executive's disability compensation hereunder shall be reduced by the amount
of any disability insurance proceeds paid to or for the benefit of the Executive
under any policy, the premiums for which have been paid by the Company. The
Executive will also be provided with those other benefits generally equivalent
to those made available to key executive employees performing similar functions
for similarly situated companies.
Section 7. Termination. This Agreement shall be terminated at the end
of the Term, or earlier as follows:
Section 7.01. Death. This Agreement shall terminate upon the death of
the Executive, except that the compensation provided in Section 4 shall continue
through the end of the month in which the Executive's death occurs.
- 4 -
<PAGE> 18
Section 7.02. Permanent Disability. In the event of any physical or
mental disability of the Executive rendering the Executive unable to perform his
or her duties hereunder for a period of at least one hundred twenty (120)
consecutive days and the further determination that the disability is permanent
with regard to the Executive's ability to return to work in his or full
capacity, this Agreement shall terminate automatically. Any determination of
disability shall be made by the Board in consultation with a qualified physician
or physicians selected by the Board and reasonably acceptable to the Executive.
Section 7.03. By The Company For Cause. The employment of the
Executive may be terminated by the Company for Cause (as defined below) at any
time effective upon written notice to the Executive. The Company shall provide
the Executive with at least ten (10) business days' prior written notice of a
Board meeting at which a termination for Cause will be considered and the
Executive will have an opportunity to attend and participate in that meeting.
For purposes hereof, the term "Cause" shall mean that the Board has determined
that any one or more of the following has occurred:
(a) The Executive shall have been convicted of, or shall
have pleaded guilty or nolo contendere to, any felony or a
crime involving moral turpitude;
(b) The Executive shall have repeatedly failed or refused to
perform his duties hereunder and such failure or refusal
shall have continued for a period of ten (10) days following
written notice from the Board, it being understood that the
Company's failure to achieve its business plan or
projections shall not itself be considered a failure or
refusal to perform duties;
(c) the Executive shall have intentionally committed any
fraud, embezzlement, misappropriation of funds, breach of
fiduciary duty or other act of dishonesty against the
Company which has a material adverse effect on the Company;
or
- 5 -
<PAGE> 19
(d) the Executive shall have (i) failed to perform his
duties hereunder in a manner that is reasonably satisfactory
to the Board, (ii) refused to carry out the duties assigned
to him by the Board, or (iii) breached any one or more of
the material provisions of this Agreement, which failure,
refusal or breach shall have continued for a period of at
least ten (10) days after notice from the Company describing
such failure, refusal or breach in reasonable detail.
Section 7.04. By the Company Without Cause. The Company may terminate
the Executive's employment at any time without Cause effective upon written
notice to the Executive.
Section 7.05. Termination Without Cause Following Change of Control.
In the event the Company undergoes a Change of Control, each of the following
events at any time subsequent to such Change of Control shall be deemed to be a
termination without Cause: (i) any reduction in the compensation payable to the
Executive set forth in Section 4 herein; (ii) any change in the location of the
place of work of the Executive to a location more than thirty miles from
downtown Boston; and (iii) any violation by the Company of any provision of this
Agreement.
For purposes hereof a "Change of Control" shall mean the happening of
any of the following events: (i) an acquisition by any person or group of
persons of 50% or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of the
Company; (ii) the approval by the Directors or Shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all
substantially all of the assets of the Company which would result in the voting
securities of the Company immediately prior to such transaction continuing to
represent less than 50% of the
- 6 -
<PAGE> 20
combined voting power of the securities entitled to vote generally in the
election of directors of the Company or such other entity outstanding
immediately after such transaction, or (iii) the members of the Board of
Directors of the Company (or their respective successors designated by the
stockholders which designated current members of the Board of Directors) on the
date hereof shall not constitute a majority of the Board of Directors of the
Company.
Section 7.06. By the Executive Voluntarily. The Executive may
terminate this Agreement at any time effective upon at least fifteen (15)
business days' prior written notice to the Company.
Section 8. Termination Payments and Benefits.
Section 8.01. Voluntary Termination, Termination For Cause. Upon any
termination of this Agreement: (1) voluntarily by the Executive or (2) by the
Company for Cause as provided in Section 7.04, all payments, salary and other
benefits hereunder shall cease at the effective date of termination except as
specifically provided in this Section 8.02.
Section 8.02. Termination without Cause, Company Election Not To
Renew, Death, Disability In the event that this Agreement is terminated by the
Company without Cause, or because of the death or permanent disability of the
Executive, the Executive shall receive as a termination settlement an amount
equal to six (6) month's salary as is in effect at the effective date of
termination (the "Termination Payment"). The Termination Payment shall be paid
in six (6) monthly installments on the first business day of each month
following the effective date of termination. If six (6) months following the
termination, the Executive has not obtained employment with similar salary,
benefits and responsibilities as described herein, the Executive
- 7 -
<PAGE> 21
shall receive as an additional termination settlement an amount equal to six (6)
month's salary (the "Additional Termination Payment"); provided, however, such
Additional Termination Payment shall be mitigated by the amount of salary the
Executive shall receive during such additional six (6) month period. The
Termination Payment shall be reduced by any statutorily-mandated severance,
change of control, plant closing, or similar payment to the Executive by the
Company or its stockholders. In addition to the Termination Payment, the
Executive shall continue to receive the insurance benefits included as part of
the fringe benefits referenced in Section 6 for a period of six (6) months
following the effective date of termination and any death and disability
benefits hereunder for a period of (eighteen) 18 months following the effective
date of termination.
Section 8.03. Acceleration of Options. In the event the Executive's
employment terminates for any reason, other than for Cause or voluntarily by the
Executive, any and all options to purchase Common Stock held by the Executive
shall immediately vest and become fully exercisable. In addition, in the event
the Company undergoes a Change of Control, all options of the Executive to
purchase Common Stock of the Company which, by the terms of the grant of such
options otherwise would become exercisable within one year following the date of
the Change of Control, shall become exercisable upon the Change of Control, and
all other options shall become exercisable one year earlier than provided for in
the grant of such options.
Section 8.04. Health and Life Insurance. In the event the Executive's
employment terminates for any reason, other than for Cause, the Company shall
continue to provide the
- 8 -
<PAGE> 22
Executive the benefits set forth in Section 6.02 hereof for a period of six (6)
months following the date of such termination.
Section 8.05. Outplacement Assistance. In the event the Executive's
employment terminates for any reason , other than for Cause, the Company shall
provide outplacement assistance to the Executive as is then reasonable and
customary for similarly situated businesses up to a $15,000 maximum expenditure
by the Company.
Section 8.06. Public Statement of Termination. In the event the
Executive's employment terminates for any reason, the Company and the Executive
shall agree upon a public statement pertaining to the Executive's termination of
employment, and the terms of said statement shall not be subject to subsequent
modification by either party unless required by law; provided, however, that in
the event the Company and the Executive are unable in good faith to agree on
such a statement, the Company may make public statements as are necessary to
comply with the law.
Section 8.07. No Other Benefits. Except as specifically provided in
this section 8, the Executive shall not be entitled to any compensation,
severance or other benefits from the Company upon the termination of this
Agreement for any reason whatsoever.
Section 9. Merger Clause. The Company shall not consolidate, merge or
transfer all or a substantial portion of its assets without requiring the
transferee to assume this Agreement and the obligations hereunder.
Section 10. Severable Provisions. The provisions of this Agreement
are severable and the invalidity of any one or more provisions shall not affect
the validity of any other provision.
- 9 -
<PAGE> 23
In the event that a court of competent jurisdiction shall determine that any
provision of this Agreement or the application thereof is unenforceable in whole
or in part because of the duration or scope thereof, the parties hereto agree
that said court in making such determination shall have the power to reduce the
duration and scope of such provision to the extent necessary to make it
enforceable, and that the Agreement in its reduced form shall be valid and
enforceable to the full extent permitted by law.
Section 11. Notices. All notices hereunder, to be effective, shall be
in writing and shall be delivered by hand or mailed by certified mail, postage
and fees prepaid, as follows:
If to the Company: Voicetek Corporation
19 Alpha Road
Chelmsford, MA 01824-4175
Attn: President
Copy to: Anthony J. Medaglia, Jr., Esq.
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
101 Federal Street
Boston, MA 02110
If to the Executive: Paul Gagne
162 Duck Pond Road
Groton, MA 01450
or to such other address as a party may notify the other pursuant to a notice
given in accordance with this Section 11.
- 10 -
<PAGE> 24
Section 12. Miscellaneous.
Section 12.01. Modification. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
This Agreement may not be amended or revised except by a writing signed by the
parties.
Section 12.02. Assignment and Transfer. This Agreement shall not be
terminated by the merger or consolidation of the Company with any corporate or
other entity or by the transfer of all or substantially all of the assets of the
Company to any other person, corporation, firm or entity. The provisions of this
Agreement shall be binding on and shall inure to the benefit of any such
successor in interest to the Company. Neither this Agreement nor any of the
rights, duties or obligations of the Executive shall be assignable by the
Executive, nor shall any of the payments required or permitted to be made to the
Executive by this Agreement be encumbered, transferred or in any way
anticipated.
Section 12.03. Captions. Captions herein have been inserted solely
for convenience of reference and in no way define, limit or describe the scope
or substance of any provision of this Agreement.
Section 12.04. Governing Law. This Agreement shall be construed under
and enforced in accordance with the laws of The Commonwealth of Massachusetts.
[The Rest of This Page Intentionally Left Blank]
- 11 -
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a sealed instrument as of the day and year first above written.
VOICETEK
By:_____________________________________
President
EXECUTIVE
By:_____________________________________
Name:
- 12 -
<PAGE> 1
EXHIBIT 10.14
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated and entered into as of the 13th day of January,
1997, by and between Voicetek Corporation , a Massachusetts corporation (the
"Company"), and Scott Ganson, an individual residing at 229 Beacon Street, Apt.
4, Boston, MA 02116 (the "Executive").
WHEREAS, the Company desires to engage the full-time services of the
Executive;
WHEREAS, the Executive desires to be so employed by the Company; and
WHEREAS, the Company desires to be assured that the unique and expert
services of the Executive will be available solely to the Company on such
full-time basis, and that the Executive is willing and able to render such
services on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of such employment and the mutual
covenants and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
Section 1. Employment. The Company hereby employs the Executive as
its Vice President of Sales and Customer Service, and the Executive hereby
accepts such employment under and subject to the terms and conditions
hereinafter set forth. The Executive further agrees to serve as a member of the
Board of Directors (the "Board") of the Company if elected or appointed to such
office in accordance with the Company's By-Laws.
<PAGE> 2
Section 2. Term. Unless sooner terminated as provided in Section 7,
the term of employment under this Agreement shall begin on the date hereof and
shall conclude on January 12, 2000 (the "Term").
Section 3. Duties. The Executive shall serve as Vice President of
Sales and Customer Service, and he shall perform additional duties as the Board
of Directors or the President of the Corporation may assign to him from time to
time. The Executive hereby agrees to devote his full business time and best
efforts to the faithful performance of such duties and to the promotion and
forwarding of the business and affairs of the Company for the Term.
Section 4. Salary Compensation. In consideration of the services
rendered by the Executive under this Agreement, the Company shall pay the
Executive a base salary (the "Base Salary") at the rate of One Hundred Sixty-One
Thousand Five Hundred Dollars ($161,500) per calendar year. The Base Salary
shall be paid in such installments and at such times as the Company pays its
regularly salaried key executive employees, and the Board may change the Base
Salary from time to time in its sole discretion; provided, however, that in no
event shall the Base Salary for any calendar year be less than the Base Salary
in effect for the immediately prior calendar year. Section 5. Bonus
Compensation. The Executive shall be entitled to receive such incentive or
performance bonuses as the Board may determine from time to time.
Section 5. Bonus Compensation. The Executive shall be entitled to
receive such incentive or performance bonuses as the Board may determine from
time to time.
Section 6. Fringe Benefits. As a key executive employee of the
Company, the Executive shall be eligible to participate in all employee fringe
benefit programs as are made available from time to time to the Company's key
executive employees.
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Section 6. Benefits. In addition to the compensation detailed in
Section 4 and 5 of this Agreement, the Executive shall be entitled to the
following additional benefits:
Section 6.01. Paid Vacation. The Executive shall be entitled to
fifteen (15) business days paid vacation per calendar year. Furthermore, the
Executive shall be entitled to an additional vacation day for each full year
during which the Executive has been in the full time employment of the Company,
with an additional vacation day per year granted upon each subsequent
anniversary of the commencement of the Executive's full time employment with the
Company, which occurred on May 10, 1993; provided that the number of paid
vacation days to which the Executive shall be entitled in a calendar year shall
not exceed twenty (20) business days. Such vacation shall extend for such
periods and shall be taken at such intervals as shall be appropriate and
consistent with the proper performance of the Executive's duties hereunder and
consistent with the Company's vacation policy.
Section 6.02. Insurance Coverage. During the Term, the Company shall
provide the Executive with group health, dental and life insurance protection to
the same extent that it makes such protection available to its other key
executive employees.
Section 6.03. Reimbursement of Expenses. The Company shall reimburse
the Executive for all reasonable expenses actually incurred by the Executive in
connection with the business affairs of the Company and the performance of his
duties hereunder. The Executive shall comply with such reasonable limitations
nd reporting requirements with respect to such expenses as the Board may
establish from time to time.
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Section 6.04. Disability and Other Benefits. If the Executive suffers
any illness, disability or incapacity which prevents the Executive from
performing the Executive's duties hereunder, and such illness, disability or
incapacity shall be deemed by a duly licensed physician (who may be the
Executive's personal physician) to be permanent; or, if the Executive is unable
to render full-time services to the Company of the character required hereunder
for a period of six (6) consecutive months by reason of illness, disability or
incapacity, and the Board has determined that the Executive has been permanently
disabled; then, and in either of such events, the Executive shall render such
advisory and consulting services to the Company as may be reasonably requested
of the Executive by the Board and officers of the Company but only to the extent
that the Executive is able to perform such services. In such event, the
Executive shall be paid the amount of One Hundred Sixty-One Thousand Five
Hundred Dollars ($161,500) annually, payable in equal installments in conformity
with the Company's normal payroll period. Such disability compensation shall
commence upon the first day of the first month following the determination that
the Executive's illness, disability or incapacity is permanent, and shall be
paid for the balance of the Term even if the Executive's Employee's illness,
disability or incapacity prevents the rendering by the Executive of any services
to the Company and continues for the entire remaining Term. During such periods
of disability, the Company reserves the right to, at its own expense, have a
licensed physician examine the person of the Executive when and as often as it
may reasonably require to determine if the Executive is permanently disabled.
The Executive's disability compensation hereunder shall be reduced by the amount
of any disability insurance proceeds paid to or for the benefit of the Executive
under any policy, the premiums for
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which have been paid by the Company. The Executive will also be provided with
those other benefits generally equivalent to those made available to key
executive employees performing similar functions for similarly situated
companies.
Section 7. Termination. This Agreement shall be terminated at the end
of the Term, or earlier as follows:
Section 7.01. Death. This Agreement shall terminate upon the death of
the Executive, except that the compensation provided in Section 4 shall continue
through the end of the month in which the Executive's death occurs.
Section 7.02. Permanent Disability. In the event of any physical or
mental disability of the Executive rendering the Executive unable to perform his
or her duties hereunder for a period of at least one hundred twenty (120)
consecutive days and the further determination that the disability is permanent
with regard to the Executive's ability to return to work in his or full
capacity, this Agreement shall terminate automatically. Any determination of
disability shall be made by the Board in consultation with a qualified physician
or physicians selected by the Board and reasonably acceptable to the Executive.
Section 7.03. By The Company For Cause. The employment of the
Executive may be terminated by the Company for Cause (as defined below) at any
time effective upon written notice to the Executive. The Company shall provide
the Executive with at least ten (10) business days' prior written notice of a
Board meeting at which a termination for Cause will be considered and the
Executive will have an opportunity to attend and participate in that meeting.
For
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<PAGE> 6
purposes hereof, the term "Cause" shall mean that the Board has determined that
any one or more of the following has occurred:
(a) The Executive shall have been convicted of, or shall
have pleaded guilty or nolo contendere to, any felony or a
crime involving moral turpitude;
(b) The Executive shall have repeatedly failed or refused to
perform his duties hereunder and such failure or refusal
shall have continued for a period of ten (10) days following
written notice from the Board, it being understood that the
Company's failure to achieve its business plan or
projections shall not itself be considered a failure or
refusal to perform duties;
(c) the Executive shall have intentionally committed any
fraud, embezzlement, misappropriation of funds, breach of
fiduciary duty or other act of dishonesty against the
Company which has a material adverse effect on the Company;
or
(d) the Executive shall have (i) failed to perform his
duties hereunder in a manner that is reasonably satisfactory
to the Board, (ii) refused to carry out the duties assigned
to him by the Board, or (iii) breached any one or more of
the material provisions of this Agreement, which failure,
refusal or breach shall have continued for a period of at
least ten (10) days after notice from the Company describing
such failure, refusal or breach in reasonable detail.
Section 7.04. By the Company Without Cause. The Company may terminate
the Executive's employment at any time without Cause effective upon written
notice to the Executive.
Section 7.05. Termination Without Cause Following Change of Control.
In the event the Company undergoes a Change of Control, each of the following
events at any time subsequent to such Change of Control shall be deemed to be a
termination without Cause: (i) any reduction in the compensation payable to the
Executive set forth in Section 4 herein; (ii) any change in the location of the
place of work of the Executive to a location more than
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<PAGE> 7
thirty miles from downtown Boston; and (iii) any violation by the Company of any
provision of this Agreement.
For purposes hereof a "Change of Control" shall mean the happening of
any of the following events: (i) an acquisition by any person or group of
persons of 50% or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of the
Company; (ii) the approval by the Directors or Shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all
substantially all of the assets of the Company which would result in the voting
securities of the Company immediately prior to such transaction continuing to
represent less than 50% of the combined voting power of the securities entitled
to vote generally in the election of directors of the Company or such other
entity outstanding immediately after such transaction, or (iii) the members of
the Board of Directors of the Company (or their respective successors designated
by the stockholders which designated current members of the Board of Directors)
on the date hereof shall not constitute a majority of the Board of Directors of
the Company.
Section 7.06. By the Executive Voluntarily. The Executive may
terminate this Agreement at any time effective upon at least fifteen (15)
business days' prior written notice to the Company.
Section 8. Termination Payments and Benefits.
Section 8.01. Voluntary Termination, Termination For Cause. Upon any
termination of this Agreement: (1) voluntarily by the Executive or (2) by the
Company for Cause as provided
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<PAGE> 8
in Section 7.04, all payments, salary and other benefits hereunder shall cease
at the effective date of termination except as specifically provided in this
Section 8.02.
Section 8.02. Termination without Cause, Company Election Not To
Renew, Death, Disability. In the event that this Agreement is terminated by the
Company without Cause, or because of the death or permanent disability of the
Executive, the Executive shall receive as a termination settlement an amount
equal to six (6) month's salary as is in effect at the effective date of
termination (the "Termination Payment"). The Termination Payment shall be paid
in six (6) monthly installments on the first business day of each month
following the effective date of termination. If six (6) months following the
termination, the Executive has not obtained employment with similar salary,
benefits and responsibilities as described herein, the Executive shall receive
as an additional termination settlement an amount equal to six (6) month's
salary (the "Additional Termination Payment"); provided, however, such
Additional Termination Payment shall be mitigated by the amount of salary the
Executive shall receive during such additional six (6) month period. The
Termination Payment shall be reduced by any statutorily-mandated severance,
change of control, plant closing, or similar payment to the Executive by the
Company or its stockholders. In addition to the Termination Payment, the
Executive shall continue to receive the insurance benefits included as part of
the fringe benefits referenced in Section 6 for a period of six (6) months
following the effective date of termination and any death and disability
benefits hereunder for a period of (eighteen) 18 months following the effective
date of termination.
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<PAGE> 9
Section 8.03. Acceleration of Options. In the event the Executive's
employment terminates for any reason, other than for Cause or voluntarily by the
Executive, any and all options to purchase Common Stock held by the Executive
shall immediately vest and become fully exercisable. In addition, in the event
the Company undergoes a Change of Control, all options of the Executive to
purchase Common Stock of the Company which, by the terms of the grant of such
options otherwise would become exercisable within one year following the date of
the Change of Control, shall become exercisable upon the Change of Control, and
all other options shall become exercisable one year earlier than provided for in
the grant of such options.
Section 8.04. Health and Life Insurance. In the event the Executive's
employment terminates for any reason, other than for Cause, the Company shall
continue to provide the Executive the benefits set forth in Section 6.02 hereof
for a period of six (6) months following the date of such termination.
Section 8.05. Outplacement Assistance. In the event the Executive's
employment terminates for any reason, other than for Cause, the Company shall
provide outplacement assistance to the Executive as is then reasonable and
customary for similarly situated businesses up to a $15,000 maximum expenditure
by the Company.
Section 8.06. Public Statement of Termination. In the event the
Executive's employment terminates for any reason, the Company and the Executive
shall agree upon a public statement pertaining to the Executive's termination of
employment, and the terms of said statement shall not be subject to subsequent
modification by either party unless required by law; provided, however, that in
the event the Company and the Executive are unable in good faith to
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<PAGE> 10
agree on such a statement, the Company may make public statements as are
necessary to comply with the law.
Section 8.07. No Other Benefits. Except as specifically provided in
this section 8, the Executive shall not be entitled to any compensation,
severance or other benefits from the Company upon the termination of this
Agreement for any reason whatsoever.
Section 9. Merger Clause. The Company shall not consolidate, merge or
transfer all or a substantial portion of its assets without requiring the
transferee to assume this Agreement and the obligations hereunder.
Section 10. Severable Provisions. The provisions of this Agreement
are severable and the invalidity of any one or more provisions shall not affect
the validity of any other provision. In the event that a court of competent
jurisdiction shall determine that any provision of this Agreement or the
application thereof is unenforceable in whole or in part because of the duration
or scope thereof, the parties hereto agree that said court in making such
determination shall have the power to reduce the duration and scope of such
provision to the extent necessary to make it enforceable, and that the Agreement
in its reduced form shall be valid and enforceable to the full extent permitted
by law.
Section 11. Notices. All notices hereunder, to be effective, shall be
in writing and shall be delivered by hand or mailed by certified mail, postage
and fees prepaid, as follows:
If to the Company: Voicetek Corporation
19 Alpha Road
Chelmsford, MA 01824-4175
Attn: President
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<PAGE> 11
Copy to: Anthony J. Medaglia, Jr., Esq.
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
101 Federal Street
Boston, MA 02110
If to the Executive: Scott Ganson
229 Beacon Street, Apt. 4
Boston, MA 02116
or to such other address as a party may notify the other pursuant to a notice
given in accordance with this Section 11.
Section 12. Miscellaneous.
Section 12.01. Modification. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
This Agreement may not be amended or revised except by a writing signed by the
parties.
Section 12.02. Assignment and Transfer. This Agreement shall not be
terminated by the merger or consolidation of the Company with any corporate or
other entity or by the transfer of all or substantially all of the assets of the
Company to any other person, corporation, firm or entity. The provisions of this
Agreement shall be binding on and shall inure to the benefit of any such
successor in interest to the Company. Neither this Agreement nor any of the
rights, duties or obligations of the Executive shall be assignable by the
Executive, nor shall any of the payments required or permitted to be made to the
Executive by this Agreement be encumbered, transferred or in any way
anticipated.
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<PAGE> 12
Section 12.03. Captions. Captions herein have been inserted solely
for convenience of reference and in no way define, limit or describe the scope
or substance of any provision of this Agreement.
Section 12.04. Governing Law. This Agreement shall be construed under
and enforced in accordance with the laws of The Commonwealth of Massachusetts.
[The Rest of This Page Intentionally Left Blank]
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a sealed instrument as of the day and year first above written.
VOICETEK
By:_____________________________________
President
EXECUTIVE
By:_____________________________________
Name:
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<PAGE> 1
EXHIBIT 10.15
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated and entered into as of the 13th day of January,
1997, by and between Voicetek Corporation , a Massachusetts corporation (the
"Company"), and Daniel Poranski, an individual residing at 137 Linebrook Road,
Ipswich, MA 01938 (the "Executive").
WHEREAS, the Company desires to engage the full-time services of the
Executive;
WHEREAS, the Executive desires to be so employed by the Company; and
WHEREAS, the Company desires to be assured that the unique and expert
services of the Executive will be available solely to the Company on such
full-time basis, and that the Executive is willing and able to render such
services on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of such employment and the mutual
covenants and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
Section 1. Employment. The Company hereby employs the Executive as
its Vice President of Marketing, and the Executive hereby accepts such
employment under and subject to the terms and conditions hereinafter set forth.
The Executive further agrees to serve as a member of the Board of Directors (the
"Board") of the Company if elected or appointed to such office in accordance
with the Company's By-Laws.
Section 2. Term. Unless sooner terminated as provided in Section 7,
the term of employment under this Agreement shall begin on the date hereof and
shall conclude on
<PAGE> 2
January 12, 2000 (the "Term").
Section 3. Duties. The Executive shall serve as Vice President of
Marketing, and he shall perform additional duties as the Board of Directors or
the President of the Corporation may assign to him from time
to time. The Executive hereby agrees to devote his full business time and best
efforts to the faithful performance of such duties and to the promotion and
forwarding of the business and affairs of the Company for the Term.
Section 4. Salary Compensation. In consideration of the services
rendered by the Executive under this Agreement, the Company shall pay the
Executive a base salary (the "Base Salary") at the rate of One Hundred
Thirty-Two Thousand Dollars ($132,000) per calendar year. The Base Salary shall
be paid in such installments and at such times as the Company pays its regularly
salaried key executive employees, and the Board may change the Base Salary from
time to time in its sole discretion; provided, however, that in no event shall
the Base Salary for any calendar year be less than the Base Salary in effect for
the immediately prior calendar year.
Section 5. Bonus Compensation. The Executive shall be entitled to
receive such incentive or performance bonuses as the Board may determine from
time to time.
Section 6. Fringe Benefits. As a key executive employee of the
Company, the Executive shall be eligible to participate in all employee fringe
benefit programs as are made available from time to time to the Company's key
executive employees.
Section 6. Benefits. In addition to the compensation detailed in
Section 4 and 5 of this Agreement, the Executive shall be entitled to the
following additional benefits:
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Section 6.01. Paid Vacation. The Executive shall be entitled to
fifteen (15) business days paid vacation per calendar year. The Executive shall
be entitled to an additional vacation day for each full year during which the
Executive has been in the full time employment of the Company, with an
additional vacation day per year granted upon each subsequent anniversary of the
commencement of the Executive's full time employment with the Company, which
occurred on April 1, 1996; provided that the number of paid vacation days to
which the Executive shall be entitled in a calendar year shall not exceed twenty
(20) business days. Such vacation shall extend for such periods and shall be
taken at such intervals as shall be appropriate and consistent with the proper
performance of the Executive's duties hereunder and consistent with the
Company's vacation policy.
Section 6.02. Insurance Coverage. During the Term, the Company shall
provide the Executive with group health, dental and life insurance protection to
the same extent that it makes such protection available to its other key
executive employees.
Section 6.03. Reimbursement of Expenses. The Company shall reimburse
the Executive for all reasonable expenses actually incurred by the Executive in
connection with the business affairs of the Company and the performance of his
duties hereunder. The Executive shall comply with such reasonable limitations
and reporting requirements with respect to such expenses as the Board may
establish from time to time.
Section 6.04. Disability and Other Benefits. If the Executive suffers
any illness, disability or incapacity which prevents the Executive from
performing the Executive's duties hereunder, and such illness, disability or
incapacity shall be deemed by a duly licensed physician
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<PAGE> 4
(who may be the Executive's personal physician) to be permanent; or, if the
Executive is unable to render full-time services to the Company of the character
required hereunder for a period of six (6) consecutive months by reason of
illness, disability or incapacity, and the Board has determined that the
Executive has been permanently disabled; then, and in either of such events, the
Executive shall render such advisory and consulting services to the Company as
may be reasonably requested of the Executive by the Board and officers of the
Company but only to the extent that the Executive is able to perform such
services. In such event, the Executive shall be paid the amount of One Hundred
Thirty-Two Thousand Dollars ($132,000) annually, payable in equal installments
in conformity with the Company's normal payroll period. Such disability
compensation shall commence upon the first day of the first month following the
determination that the Executive's illness, disability or incapacity is
permanent, and shall be paid for the balance of the Term even if the Executive's
Employee's illness, disability or incapacity prevents the rendering by the
Executive of any services to the Company and continues for the entire remaining
Term. During such periods of disability, the Company reserves the right to, at
its own expense, have a licensed physician examine the person of the Executive
when and as often as it may reasonably require to determine if the Executive is
permanently disabled. The Executive's disability compensation hereunder shall be
reduced by the amount of any disability insurance proceeds paid to or for the
benefit of the Executive under any policy, the premiums for which have been paid
by the Company. The Executive will also be provided with those other benefits
generally equivalent to those made available to key executive employees
performing similar functions for similarly situated companies.
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Section 7. Termination. This Agreement shall be terminated at the end
of the Term, or earlier as follows:
Section 7.01. Death. This Agreement shall terminate upon the death of
the Executive, except that the compensation provided in Section 4 shall continue
through the end of the month in which the Executive's death occurs.
Section 7.02. Permanent Disability. In the event of any physical or
mental disability of the Executive rendering the Executive unable to perform his
or her duties hereunder for a period of at least one hundred twenty (120)
consecutive days and the further determination that the disability is permanent
with regard to the Executive's ability to return to work in his or full
capacity, this Agreement shall terminate automatically. Any determination of
disability shall be made by the Board in consultation with a qualified physician
or physicians selected by the Board and reasonably acceptable to the Executive.
Section 7.03. By The Company For Cause. The employment of the
Executive may be terminated by the Company for Cause (as defined below) at any
time effective upon written notice to the Executive. The Company shall provide
the Executive with at least ten (10) business days' prior written notice of a
Board meeting at which a termination for Cause will be considered and the
Executive will have an opportunity to attend and participate in that meeting.
For purposes hereof, the term "Cause" shall mean that the Board has determined
that any one or more of the following has occurred:
(a) The Executive shall have been convicted of, or shall
have pleaded guilty or nolo contendere to, any felony or a
crime involving moral turpitude;
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<PAGE> 6
(b) The Executive shall have repeatedly failed or refused to
perform his duties hereunder and such failure or refusal
shall have continued for a period of ten (10) days following
written notice from the Board, it being understood that the
Company's failure to achieve its business plan or
projections shall not itself be considered a failure or
refusal to perform duties;
(c) the Executive shall have intentionally committed any
fraud, embezzlement, misappropriation of funds, breach of
fiduciary duty or other act of dishonesty against the
Company which has a material adverse effect on the Company;
or
(d) the Executive shall have (i) failed to perform his
duties hereunder in a manner that is reasonably satisfactory
to the Board, (ii) refused to carry out the duties assigned
to him by the Board, or (iii) breached any one or more of
the material provisions of this Agreement, which failure,
refusal or breach shall have continued for a period of at
least ten (10) days after notice from the Company describing
such failure, refusal or breach in reasonable detail.
Section 7.04. By the Company Without Cause. The Company may terminate
the Executive's employment at any time without Cause effective upon written
notice to the Executive.
Section 7.05. Termination Without Cause Following Change of Control.
IN THE EVENT THE COMPANY UNDERGOES A CHANGE OF CONTROL, EACH OF THE FOLLOWING
EVENTS AT ANY TIME SUBSEQUENT TO SUCH CHANGE OF CONTROL SHALL BE DEEMED TO BE A
TERMINATION WITHOUT CAUSE: (i) ANY REDUCTION IN THE COMPENSATION PAYABLE TO THE
EXECUTIVE SET FORTH IN SECTION 4 HEREIN; (ii) ANY CHANGE IN THE LOCATION OF THE
PLACE OF WORK OF THE EXECUTIVE TO A LOCATION MORE THAN THIRTY MILES FROM
DOWNTOWN BOSTON; AND (iii) ANY VIOLATION BY THE COMPANY OF ANY PROVISION OF THIS
AGREEMENT.
For purposes hereof a "Change of Control" shall mean the happening of
any of the following events: (i) an acquisition by any person or group of
persons of 50% or more of the
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<PAGE> 7
combined voting power of the then outstanding securities entitled to vote
generally in the election of directors of the Company; (ii) the approval by the
Directors or Shareholders of the Company of a reorganization, merger or
consolidation or sale or other disposition of all substantially all of the
assets of the Company which would result in the voting securities of the Company
immediately prior to such transaction continuing to represent less than 50% of
the combined voting power of the securities entitled to vote generally in the
election of directors of the Company or such other entity outstanding
immediately after such transaction, or (iii) the members of the Board of
Directors of the Company (or their respective successors designated by the
stockholders which designated current members of the Board of Directors) on the
date hereof shall not constitute a majority of the Board of Directors of the
Company.
Section 7.06. By the Executive Voluntarily. The Executive may
terminate this Agreement at any time effective upon at least fifteen (15)
business days' prior written notice to the Company.
Section 8. Termination Payments and Benefits.
Section 8.01. Voluntary Termination, Termination For Cause. Upon any
termination of this Agreement: (1) voluntarily by the Executive or (2) by the
Company for Cause as provided in Section 7.04, all payments, salary and other
benefits hereunder shall cease at the effective date of termination except as
specifically provided in this Section 8.02.
Section 8.02. Termination without Cause, Company Election Not To
Renew, Death, Disability In the event that this Agreement is terminated by the
Company without Cause, or because of the death or permanent disability of the
Executive, the Executive shall receive as a
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<PAGE> 8
termination settlement an amount equal to six (6) month's salary as is in effect
at the effective date of termination (the "Termination Payment"). The
Termination Payment shall be paid in six (6) monthly installments on the first
business day of each month following the effective date of termination. If six
(6) months following the termination, the Executive has not obtained employment
with similar salary, benefits and responsibilities as described herein, the
Executive shall receive as an additional termination settlement an amount equal
to six (6) month's salary (the "Additional Termination Payment"); provided,
however, such Additional Termination Payment shall be mitigated by the amount of
salary the Executive shall receive during such additional six (6) month period.
The Termination Payment shall be reduced by any statutorily-mandated severance,
change of control, plant closing, or similar payment to the Executive by the
Company or its stockholders. In addition to the Termination Payment, the
Executive shall continue to receive the insurance benefits included as part of
the fringe benefits referenced in Section 6 for a period of six (6) months
following the effective date of termination and any death and disability
benefits hereunder for a period of (eighteen) 18 months following the effective
date of termination.
Section 8.03. Acceleration of Options. In the event the Executive's
employment terminates for any reason, other than for Cause or voluntarily by the
Executive, any and all options to purchase Common Stock held by the Executive
shall immediately vest and become fully exercisable. In addition, in the event
the Company undergoes a Change of Control, all options of the Executive to
purchase Common Stock of the Company which, by the terms of the grant of such
options otherwise would become exercisable within one year following the date of
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<PAGE> 9
the Change of Control, shall become exercisable upon the Change of Control, and
all other options shall become exercisable one year earlier than provided for in
the grant of such options.
Section 8.04. Health and Life Insurance. In the event the Executive's
employment terminates for any reason, other than for Cause, the Company shall
continue to provide the Executive the benefits set forth in Section 6.02 hereof
for a period of six (6) months following the date of such termination.
Section 8.05. Outplacement Assistance. In the event the Executive's
employment terminates for any reason , other than for Cause, the Company shall
provide outplacement assistance to the Executive as is then reasonable and
customary for similarly situated businesses up to a $15,000 maximum expenditure
by the Company.
Section 8.06. Public Statement of Termination. In the event the
Executive's employment terminates for any reason, the Company and the Executive
shall agree upon a public statement pertaining to the Executive's termination of
employment, and the terms of said statement shall not be subject to subsequent
modification by either party unless required by law; provided, however, that in
the event the Company and the Executive are unable in good faith to agree on
such a statement, the Company may make public statements as are necessary to
comply with the law.
Section 8.07. No Other Benefits. Except as specifically provided in
this section 8, the Executive shall not be entitled to any compensation,
severance or other benefits from the Company upon the termination of this
Agreement for any reason whatsoever.
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Section 9. Merger Clause. The Company shall not consolidate, merge or
transfer all or a substantial portion of its assets without requiring the
transferee to assume this Agreement and the obligations hereunder.
Section 10. Severable Provisions. The provisions of this Agreement
are severable and the invalidity of any one or more provisions shall not affect
the validity of any other provision. In the event that a court of competent
jurisdiction shall determine that any provision of this Agreement or the
application thereof is unenforceable in whole or in part because of the duration
or scope thereof, the parties hereto agree that said court in making such
determination shall have the power to reduce the duration and scope of such
provision to the extent necessary to make it enforceable, and that the Agreement
in its reduced form shall be valid and enforceable to the full extent permitted
by law.
Section 11. Notices. All notices hereunder, to be effective, shall be
in writing and shall be delivered by hand or mailed by certified mail, postage
and fees prepaid, as follows:
If to the Company: Voicetek Corporation
19 Alpha Road
Chelmsford, MA 01824-4175
Attn: President
Copy to: Anthony J. Medaglia, Jr., Esq.
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
101 Federal Street
Boston, MA 02110
If to the Executive: Daniel Poranski
137 Linebrook Road
Ipswich, MA 01938
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<PAGE> 11
or to such other address as a party may notify the other pursuant to a notice
given in accordance with this Section 11.
Section 12. Miscellaneous.
Section 12.01. Modification. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
This Agreement may not be amended or revised except by a writing signed by the
parties.
Section 12.02. Assignment and Transfer. This Agreement shall not be
terminated by the merger or consolidation of the Company with any corporate or
other entity or by the transfer of all or substantially all of the assets of the
Company to any other person, corporation, firm or entity. The provisions of this
Agreement shall be binding on and shall inure to the benefit of any such
successor in interest to the Company. Neither this Agreement nor any of the
rights, duties or obligations of the Executive shall be assignable by the
Executive, nor shall any of the payments required or permitted to be made to the
Executive by this Agreement be encumbered, transferred or in any way
anticipated.
Section 12.03. Captions. Captions herein have been inserted solely
for convenience of reference and in no way define, limit or describe the scope
or substance of any provision of this Agreement.
Section 12.04. Governing Law. This Agreement shall be construed under
and enforced in accordance with the laws of The Commonwealth of Massachusetts.
[The Rest of This Page Intentionally Left Blank]
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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a sealed instrument as of the day and year first above written.
VOICETEK
By:_____________________________________
President
EXECUTIVE
By:_____________________________________
Name:
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<PAGE> 1
EXHIBIT 10.16
VOICETEK CORPORATION
1992 Equity Incentive Plan
--------------------------
Section 1. Purpose
-------
The purpose of the Voicetek Corporation 1992 Equity Incentive Plan (the
"Plan") is to attract and retain key employees and consultants to provide an
incentive for them to assist the Company to achieve long-range performance goals
and to enable them to participate in the long-term growth of the Company.
Section 2. Definitions
-----------
"Affiliate" means any business entity in which the Company owns directly or
indirectly 50% or more of the total combined voting power or has a significant
financial interest as determined by the Committee.
"Award" means any Option, Stock Appreciation Right, Performance Share or
Restricted Stock awarded under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means a committee of not less than three members of the Board
appointed by the Board to administer the Plan, provided that if and when the
Company is subject to Rule 16b-3 under the Securities Exchange Act of 1934,
or any successor provision ("Rule 16b-3"), each member of the Committee shall
be a "disinterested person" within the meaning of Rule 16b-3.
"Common Stock" or "Stock" means the Common Stock, $.01 par value per share,
of the Company.
"Company" means Voicetek Corporation.
"Designated Beneficiary" means the beneficiary designated by a Participant,
in a manner determined by the Committee, to receive amounts due or exercise
rights of the Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.
<PAGE> 2
"Incentive Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 6 which is intended to meet the
requirements of Section 422 of the Code or any successor provision.
"Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is not intended to be an
Incentive Stock Option.
"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.
"Participant" means a person selected by the Committee to receive an Award
under the Plan.
"Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.
"Performance Shares" mean shares of Common Stock which may be earned by the
achievement of performance goals awarded to a Participant under Section 8.
"Reporting Person" means a person subject to Section 16 of the Securities
Exchange Act of 1934 or any successor provision.
"Restricted Period" means the period of time selected by the Committee
during which an award of Restricted Stock may be forfeited to the Company.
"Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.
"Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the exercise price awarded to a Participant
under Section 7.
Section 3. Administration
--------------
The Plan shall be administered by the Committee. The Committee shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Committee's
decisions shall be final and binding. To the extent permitted by applicable law,
the Committee may delegate to one or more executive officers of the Company the
power to make Awards to Participants who are not Reporting Persons and all
determinations under the Plan with respect thereto, provided that the Committee
shall fix the maximum amount of such Awards for the group and a maximum for any
one Participant.
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<PAGE> 3
Section 4. Eligibility
-----------
All employees (including part-time employees), and in the case of Awards
other than Incentive Stock Options, consultants of the Company or any Affiliate
capable of contributing significantly to the successful performance of the
Company, other than a person who has irrevocably elected not to be eligible, are
eligible to be Participants in the Plan.
Section 5. Stock Available for Awards
--------------------------
(a) Subject to adjustment under subsection (b) below, Awards may be made
under the Plan for up to 1,436,552 shares of Common Stock. If any Award in
respect of shares of Common Stock expires or is terminated unexercised or is
forfeited for any reason or settled in a manner that results in fewer shares
outstanding than were initially awarded, the shares subject to such Award or so
surrendered, as the case may be, to the extent of such expiration, termination,
forfeiture or decrease, shall again be available for award under the Plan,
subject, however, in the case of Incentive Stock Options, to any limitation
required under the Code. Common Stock issued through the assumption or
substitution of outstanding grants from an acquired company shall not reduce the
shares available for Awards under the Plan. Shares issued under the Plan may
consist in whole or in part of authorized but unissued shares or treasury
shares.
(b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment is required in
order to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee, subject, in the case of Incentive
Stock Options, to any limitation required under the Code, shall equitably adjust
any or all of (i) the number and kind of shares in respect of which Awards may
be made under the Plan, (ii) the number and kind of shares subject to
outstanding Awards, and (iii) the award, exercise or conversion price with
respect to any of the foregoing, and if considered appropriate, the Committee
may make provision for a cash payment with respect to an outstanding Award,
provided that the number of shares subject to any Award shall always be a whole
number.
Section 6. Stock Options
-------------
(a) General.
-------
(i) Subject to the provisions of the Plan, the Committee may award
Incentive Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the
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<PAGE> 4
exercise of the Option. The terms and conditions of Incentive Stock Options
shall be subject to and comply with Section 422 of the Code, or any successor
provision, and any regulations thereunder. See subsection (b) below.
(ii) The Committee shall establish the option price at the time each
Option is awarded. In the case of Incentive Stock Options, such price shall not
be less than 100% of the Fair Market Value of the Common Stock on the date of
award. In the case of Nonstatutory Stock Options granted at a time when the
Company is subject to Rule 16b-3, such price shall not be less than 50% of the
Fair Market Value of the Common Stock on the date of the award.
(iii) Each Option shall be exercisable at such times and subject to
such terms and conditions as the Committee may specify in the applicable Award
or thereafter. The Committee may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable,
(iv) No shares shall be delivered pursuant to any exercise of an
Option until payment in full of the option price therefor is received by the
Company. Such payment may be made in whole or in part in cash or, to the extent
permitted by the Committee at or after the award of the Option, by delivery of a
note or shares of Common Stock owned by the optionee, including Restricted
Stock, valued at their Fair Market Value on the date of delivery, or such other
lawful consideration as the Committee may determine.
(b) Incentive Stock Options
-----------------------
Options granted under the Plan which are intended to be Incentive
Stock, Options shall be subject to the following additional terms and
conditions:
(i) All Incentive Stock Options granted under the Plan shall, at
the time of grant, be specifically designated as such in the option agreement
covering such Incentive Stock Options. The Option exercise period shall not
exceed ten years from the date of grant.
(ii) If any employee to whom an Incentive Stock Option is to be
granted under the Plan is, at the time of the grant of such option, the owner of
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company (after taking into account the attribution of stock
ownership rules of Section 424(d) of the Code), then the following special
provisions shall be applicable to the Incentive Stock Option granted to such
individual:
(x) The purchase price per share of the Common Stock subject to
such Incentive Stock Option shall not be less than 110% of the Fair
Market Value of one share of Common Stock at the time of grant; and
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<PAGE> 5
(y) The option exercise period shall not exceed five years from
the date of grant.
(iii) For so long as the Code shall so provide, options granted to
any employee under the Plan (and any other incentive stock option plans of the
Company) which are intended to constitute Incentive Stock Options shall not
constitute Incentive Stock Options to the extent that such options, in the
aggregate, become exercisable for the first time in any one calendar year for
shares of Common Stock with an aggregate Fair Market Value (determined as of the
respective date or dates of grant) of more than $100,000.
(iv) No Incentive Stock Option may be exercised unless, at the time
of such exercise, the Participant is, and has been continuously since the date
of grant of his or her option, employed by the Company, except that:
(x) an Incentive Stock Option may be exercised within the
period of three months after the date the Participant ceases to be an
employee of the Company (or within such lesser period as may be
specified in the applicable option agreement), PROVIDED, that the
agreement with respect to such Option may designate a longer exercise
period and that the exercise after such three-month period shall be
treated as the exercise of a Nonstatutory Stock Option under the Plan;
(y) if the Participant dies while in the employ of the Company,
or within three months after the Participant ceases to be such an
employee, the Incentive Stock Option may be exercised by the
Participant's Designated Beneficiary within the period of one year
after the date of death (or within such lesser period as may be
specified in the applicable Option agreement); and
(z) if the Participant becomes disabled (within the meaning of
Section 22(e)(3) of the Code or any successor provision thereto) while
in the employ of the Company, the Incentive Stock Option may be
exercised within the period of one year after the date the Participant
ceases to be such an employee because of such disability (or within
such lesser period as may be specified in the applicable option
agreement).
For all purposes of the Plan and any Option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
5
<PAGE> 6
Section 7. Stock Appreciation Rights
-------------------------
(a) Subject to the provisions of the Plan, the Committee may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised. SARs granted in
tandem with Options shall have an exercise price of not less than the exercise
price of the related Option. SARs granted at a time when the Company is subject
to Rule 16b-3 shall have an exercise price of not less than 50% of the Fair
Market Value of the Common Stock on the date of award, or in the case of SARs
granted in tandem with Options, the exercise price of the SAR shall not be less
than the exercise price of the related Option.
(b) An SAR related to an Option which can only be exercised during limited
periods following a change in control of the Company may entitle the Participant
to receive an amount based upon the highest price paid or offered for Common
Stock in any transaction relating to the change in control or paid during the
thirty-day period immediately preceding the occurrence of the change in control
in any transaction reported in any stock market in which the Common Stock is
usually traded.
Section 8. Performance Shares
------------------
(a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other. The payment value of Performance Shares shall
be equal to the Fair Market Value of the Common Stock on the date the
Performance Shares are earned or, in the discretion of the Committee, on the
date the Committee determines that the Performance Shares have been earned.
(b) The Committee shall establish performance goals for each Cycle, for
the purpose of determining the extent to which Performance Shares awarded for
such Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. During any Cycle, the
Committee may adjust the performance goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the Company, changes
in applicable tax laws or accounting principles, or such other factors as the
Committee may determine.
(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have been
earned on the basis of performance in relation to the established performance
goals. The payment values of earned Performance Shares shall be distributed to
the Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Committee shall
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<PAGE> 7
determine, at or after the time of award, whether payment values will be settled
in whole or in part in cash or other property, including Common Stock or Awards.
Section 9. Restricted Stock
----------------
(a) Subject to the provisions of the Plan, the Committee may award shares
of Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock shall be issued for no cash consideration or such minimum consideration as
may be required by applicable law.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such certificates
to the Participant or if the Participant has died, to the Participant's
Designated Beneficiary.
Section 10. General Provisions Applicable to Awards
---------------------------------------
(a) APPLICABILITY OF RULE 16b-3. Those provision of the Plan which make an
express reference to Rule 16b-3 shall apply to the Company only at such time as
the Company's Common Stock is registered under the Securities Exchange Act of
1934, or any successor provision, and then only to Reporting Persons.
(b) REPORTING PERSON LIMITATIONS. Notwithstanding any other provision of
the Plan, to the extent required to qualify for the exemption provided by Rule
16b-3 under the Securities Exchange Act of 1934, and any successor provision,
(i) any Common Stock or other equity security offered under the Plan to a
Reporting Person may not be sold for at least six months after acquisition, or,
in the case of an Option or SAR, at least six months elapse between the date of
grant of the Option or the SAR and the date of disposition of the Option or SAR
or the Common Stock acquired under the Option, except in case of death or
disability and (ii) any Option, SAR or other similar right related to an equity
security issued under the Plan to a Reporting Person shall not be transferrable
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act ("ERISA"), or the rules thereunder,
shall not be exercisable for at least six months except in the case of death or
disability and shall be exercisable during the Participant's lifetime only by
the Participant or the Participant's guardian or legal representative.
7
<PAGE> 8
(c) DOCUMENTATION. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and regulatory
laws and accounting principles.
(d) COMMITTEE DISCRETION. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms of each type of
Award need not be identical, and the Committee need not treat Participants
uniformly. Except as otherwise provided by the Plan or a particular Award, any
determination with respect to an Award may be made by the Committee at the time
of award or at any time thereafter.
(e) SETTLEMENT. The Committee shall determine whether Awards are settled
in whole or in part in cash, Common Stock, other securities of the Company,
Awards or other property. The Committee may permit a Participant to defer all or
any portion of a payment under the Plan, including the crediting of interest on
deferred amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.
(f) DIVIDENDS AND CASH AWARDS. In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.
(g) TERMINATION OF EMPLOYMENT. The Committee shall determine the effect on
an Award of the disability, death, retirement or other termination of employment
of a Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
receive payment of an Award or exercise rights thereunder.
(h) CHANGE IN CONTROL. In order to preserve a Participant's rights under
an Award in the event of a change in control of the Company, the Committee in
its discretion may, at the time an Award is made or at any time thereafter, take
one or more of the following actions: (i) provide for the acceleration of any
time period relating to the exercise or realization of the Award, (ii) provide
for the purchase of the Award upon the Participant's request for an amount of
cash or other property that could have been received upon the exercise or
realization of the Award had the Award been currently exercisable or payable,
(iii) adjust the terms of the Award in a manner determined by the Committee to
reflect the change in control, (iv) cause the Award to be assumed, or new rights
substituted therefor, by another entity, or (v) make such other provision as the
Committee may consider equitable and in the best interests of the Company.
(i) WITHHOLDING. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Awards under the Plan no later than the date of
the event creating the tax liability. In the Committee's discretion, such tax
obligations may be paid in whole or in part in shares of
8
<PAGE> 9
Common Stock, including shares retained from the Award creating the tax
obligation, valued at their Fair Market Value on the date of delivery. The
Company and its Affiliates may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to the Participant.
(j) FOREIGN NATIONALS. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and conditions
different from those specified in the Plan as the Committee considers necessary
or advisable to achieve the purposes of the Plan or comply with applicable laws.
(k) AMENDMENT OF AWARD. The Committee may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or realization and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.
Section 11. Miscellaneous
-------------
(a) NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to continued employment. The Company expressly reserves
the right at any time to dismiss a Participant free from any liability or claim
under the Plan, except as expressly provided in the applicable Award.
(b) NO RIGHTS AS SHAREHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
shareholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.
(c) EFFECTIVE DATE. Subject to the approval of the shareholders of the
Company, the Plan shall be effective on May 21, 1992. Prior to such approval,
Awards may be made under the Plan expressly subject to such approval.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no amendment shall be made
without shareholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement, including any requirement for
exemptive relief under Section 16(b) of the Securities Exchange Act of 1934, or
any successor provision. Prior to any such approval, Awards may be made under
the Plan expressly subject to such approval.
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(e) GOVERNING LAW. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts.
10
<PAGE> 1
EXHIBIT 10.17
VOICETEK CORPORATION
1996 STOCK OPTION PLAN
1. Purpose of the Plan.
This stock option plan (the "Plan") is intended to provide incentives:
(a) to the officers and other employees of Voicetek Corporation (the "Company")
and any present or future subsidiaries of the Company by providing them with
opportunities to purchase stock in the Company pursuant to options granted
hereunder which qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") ("ISO" or "ISOs"); and
(b) to officers, employees, consultants and directors of the Company and any
present or future subsidiaries by providing them with opportunities to purchase
stock in the Company pursuant to options granted hereunder which do not qualify
as ISOs ("Non-Qualified Option" or "Non-Qualified Options"). As used herein, the
terms "parent" and "subsidiary" mean "parent corporation" and "subsidiary
corporation," respectively, as those terms are defined in Section 424 of the
Code and the Treasury Regulations promulgated thereunder (the "Regulations").
2. Stock Subject to the Plan.
(a) The initial maximum number of shares of common stock, par value $.01
per share, of the Company ("Common Stock") available for stock options granted
under the Plan through the end of the Company's fiscal year ending December 31,
1996 shall be 500,000 shares of Common Stock. In addition, effective January 1,
1997 and each January 1 thereafter during the term of this Plan, the number of
shares of Common Stock available for grants of stock options under this Plan
shall be increased such that the total number of shares of Common Stock subject
to options under the Plan and all other stock option plans of the Company
(excluding the Company's 1996 Stock Option Plan for Non-Employee Directors and
Clerk) shall equal fifteen percent of the sum of (i) total number of issued and
outstanding shares of Common Stock (including shares held in treasury) and (ii)
shares of Common Stock reserved for issuance upon exercise of outstanding
options to purchase the Company's Common Stock (excluding those subject to the
Company's 1996 Stock Option Plan for Clerk and Non-Employee Directors), each
calculated as of the close of business on December 31 of the preceding year.
[Notwithstanding the foregoing, the maximum cumulative number of shares of
Common Stock available for grants of stock options under the Plan shall be
__________.] The maximum number of shares of Common Stock available for grants
shall be subject to adjustment in accordance with Section 11 thereof. Shares
issued under the Plan may be authorized but unissued shares of Common Stock or
shares of Common Stock held in treasury.
(b) To the extent that any stock option shall lapse, terminate, expire
or otherwise be cancelled without the issuance of shares of Common Stock, the
shares of Common Stock covered by such option(s) shall again be available for
the granting of stock options.
<PAGE> 2
(c) Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall be
determined by the Committee (as defined in Section 3 below).
3. Administration of the Plan.
(a) The Plan shall be administered by a committee (the "Committee")
consisting of two or more members of the Company's Board of Directors, each of
whom is a disinterested person as defined from time to time in Rule 16b-3
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"). The
Board of Directors may from time to time appoint a member or members of the
Committee in substitution for or in addition to the member or members then in
office and may fill vacancies on the Committee however caused. The Committee
shall choose one of its members as Chairman and shall hold meetings at such
times and places as it shall deem advisable. A majority of the members of the
Committee shall constitute a quorum and any action may be taken by a majority of
those present and voting at any meeting. Any action may also be taken without
the necessity of a meeting by a written instrument signed by a majority of the
Committee. The decision of the Committee as to all questions of interpretation
and application of the Plan shall be final, binding and conclusive on all
persons. The Committee shall have the authority to adopt, amend and rescind such
rules and regulations as, in its opinion, may be advisable in the administration
of the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any option agreement granted
hereunder in the manner and to the extent it shall deem expedient to carry the
Plan into effect and shall be the sole and final judge of such expediency. No
Committee member shall be liable for any action or determination made in good
faith. Prior to the date of the registration of an equity security of the
Company under Section 12 of the Exchange Act, the Plan may be administered by
the Board of Directors and in such event all references in this Plan to the
Committee shall be deemed to mean the Board of Directors.
(b) Subject to the terms of the Plan, the Committee shall have the
authority to (i) determine the employees of the Company and its subsidiaries
(from among the class of employees eligible under Section 4 to receive ISOs) to
whom ISOs may be granted, and to determine (from the class of individuals
eligible under Section 4 to receive Non-Qualified Options) to whom Non-Qualified
Options may be granted; (ii) determine the time or times at which options may be
granted; (iii) determine the option price of shares subject to each option which
price shall not be less than the minimum price specified in Section 6; (iv)
determine whether each option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to Section 9) the time or times when each option shall
become exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to options and the nature of such restrictions; and (vii) determine the
size of any Options under the Plan, taking into account the position or office
of the optionee with the Company, the job performance of the optionee
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and such other factors as the Committee may deem relevant in the good faith
exercise of its independent business judgment.
4. Eligibility.
Options designated as ISOs may be granted only to officers and other
employees of the Company or any subsidiary. Non-Qualified Options may be granted
to any officer, employee, consultant or director of the Company or of any of its
subsidiaries.
In determining the eligibility of an individual to be granted an option,
as well as in determining the number of shares to be optioned to any individual,
the Committee shall take into account the position and responsibilities of the
individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Committee may deem relevant.
No option designated as an ISO shall be granted to any employee of the
Company or any subsidiary if such employee owns, immediately prior to the grant
of an option, stock representing more than 10% of the voting power or more than
10% of the value of all classes of stock of the Company or a parent or a
subsidiary, unless the purchase price for the stock under such option shall be
at least 110% of its fair market value at the time such option is granted and
the option, by its terms, shall not be exercisable more than five years from the
date it is granted. In determining the stock ownership under this paragraph, the
provisions of Section 424(d) of the Code shall be controlling. In determining
the fair market value under this paragraph, the provisions of Section 6 hereof
shall apply.
5. Option Agreement.
Each option shall be evidenced by an option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such option
is granted, which Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Agreement may contain such other terms, provisions
and conditions which are not inconsistent with the Plan as may be determined by
the Committee, provided that options designated as ISOs shall meet all of the
conditions for ISOs as defined in Section 422 of the Code. The date of grant of
an option shall be as determined by the Committee. More than one option may be
granted to an individual.
6. Option Price.
The option price or prices of shares of the Company's Common Stock for
options designated as Non-Qualified Options shall be as determined by the
Committee, but in no event shall the option price be less than the minimum legal
consideration required therefor under the laws of the State of Delaware or the
laws of any jurisdiction in which the Company
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or its successors in interest may be organized. The option price or prices of
shares of the Company's Common Stock for ISOs shall be the fair market value of
such Common Stock at the time the option is granted as determined by the
Committee in accordance with the Regulations promulgated under Section 422 of
the Code. If such shares are then listed on any national securities exchange,
the fair market value shall be the mean between the high and low sales prices,
if any, on such exchange on the business day immediately preceding the date of
the grant of the option or, if none, shall be determined by taking a weighted
average of the means between the highest and lowest sales prices on the nearest
date before and the nearest date after the date of grant in accordance with
Treasury Regulations Section 25.2512-2. If the shares are not then listed on any
such exchange, the fair market value of such shares shall be the mean between
the high and low sales prices, if any, as reported in the National Association
of Securities Dealers Automated Quotation System National Market System
("NASDAQ/NMS") for the business day immediately preceding the date of the grant
of the option, or, if none, shall be determined by taking a weighted average of
the means between the highest and lowest sales on the nearest date before and
the nearest date after the date of grant in accordance with Treasury Regulations
Section 25.2512-2. If the shares are not then either listed on any such exchange
or quoted in NASDAQ/NMS, the fair market value shall be the mean between the
average of the "Bid" and the average of the "Ask" prices, if any, as reported in
the National Daily Quotation Service for the business day immediately preceding
the date of the grant of the option, or, if none, shall be determined by taking
a weighted average of the means between the highest and lowest sales prices on
the nearest date before and the nearest date after the date of grant in
accordance with Treasury Regulations Section 25.2512-2. If the fair market value
cannot be determined under the preceding three sentences, it shall be determined
in good faith by the Committee.
7. Manner of Payment; Manner of Exercise.
(a) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such options, (ii) shares of
Common Stock of the Company owned by the optionee having a fair market value
equal in amount to the exercise price of the options being exercised, or (iii)
any combination of (i) and (ii), provided, however, that payment of the exercise
price by delivery of shares of Common Stock of the Company owned by such
optionee may be made only under such circumstances and on such terms as may from
time to time be established by the Committee. The fair market value of any
shares of the Company's Common Stock which may be delivered upon exercise of an
option shall be determined by the Committee in accordance with Section 6 hereof.
With the consent of the Committee, payment may also be made by delivery of a
properly executed exercise notice to the Company, together with a copy of
irrevocable instruments to a broker to deliver promptly to the Company the
amount of sale or loan proceeds to pay the exercise price. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
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(b) To the extent that the right to purchase shares under an option has
accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, after ten business days from the
date of receipt of the notice by the Company, as shall be designated in such
notice, or at such time, place and manner as may be agreed upon by the Company
and the person or persons exercising the option.
8. Exercise of Options.
Subject to the provisions of paragraphs 9 through 11, each option
granted under the Plan shall be exercisable as follows:
(a) Vesting. The option shall either be fully exercisable on the date of
grant or shall become exercisable thereafter in such installments as the
Committee may specify.
(b) Full Vesting of Installments. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the
option, unless otherwise specified by the Committee.
(c) Partial Exercise. Each option or installment may be exercised at any
time or from time to time, in whole or in part, for up to the total number of
shares with respect to which it is then exercisable.
(d) Acceleration of Vesting. The Committee shall have the right to
accelerate the date of exercise of any installment or any option; provided that
the Committee shall not, without the consent of an optionee, accelerate the
exercise date of any installment of any option granted to any employee as an ISO
if such acceleration would violate the annual vesting limitation contained in
Section 422(d) of the Code.
9. Term of Options; Exercisability.
(a) Term. Each option shall expire not more than ten (10) years from the
date of the granting thereof, but shall be subject to earlier termination as may
be provided in the Agreement.
(b) Exercisability. Except as otherwise provided in the Agreement, an
option granted to an employee optionee who ceases to be an employee of the
Company or one of its subsidiaries shall be exercisable only to the extent that
the right to purchase shares under
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such option has accrued and is in effect on the date such optionee ceases to be
an employee of the Company or one of its subsidiaries.
10. Options Not Transferable.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution, or (solely with respect to
Non-Qualified Options) pursuant to a qualified domestic relations order, as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder, and any such option shall be exercisable during the
lifetime of such optionee only by him. Any option granted under the Plan shall
be null and void and without effect upon the bankruptcy of the optionee to whom
the option is granted, or upon any attempted assignment or transfer, except as
herein provided, including without limitation any purported assignment, whether
voluntary or by operation of law, pledge, hypothecation or other disposition,
attachment, divorce, except as provided above with respect to Non-Qualified
Options, trustee process or similar process, whether legal or equitable, upon
such option.
11. Adjustments. Upon the occurrence of any of the following events, an
optionee's rights with respect to options granted to him or her hereunder shall
be adjusted as hereinafter provided, unless otherwise specifically provided in
the written agreement between the optionee and the Company relating to such
option:
(a) Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
(b) Consolidations or Mergers. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Committee or the board
of directors of any entity assuming the obligations of the Company hereunder
(the "Successor Board"), shall, as to outstanding options, either (i) make
appropriate provision for the continuation of such options by substituting on an
equitable basis for the shares then subject to such options the consideration
payable with respect to the outstanding shares of Common Stock in connection
with the Acquisition; or (ii) upon written notice to the optionees, provide that
all options must be exercised, to the extent then exercisable, within a
specified number of days of the date of such notice, at the end of which period
the options shall terminate; or (iii) terminate all options in exchange for a
cash payment equal to the excess of the fair market value of the shares subject
to such options (to the extent then exercisable) over the exercise price
thereof.
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(c) Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph (b) above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an option shall be entitled to receive
for the purchase price paid upon such exercise the securities he would have
received if he had exercised his option prior to such recapitalization or
reorganization.
(d) Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraphs (a), (b) or (c) with respect to ISOs shall be
made only after the Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424 of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments.
(e) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, each option will terminate immediately prior to
the consummation of such proposed action or at such other time and subject to
such other conditions as shall be determined by the Committee.
(f) Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
(g) Fractional Shares. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.
(h) Adjustments. Upon the happening of any of the events described in
subparagraphs (a), (b) or (c) above, the class and aggregate number of shares
set forth in Section 2 hereof that are subject to options which previously have
been or subsequently may be granted under the Plan shall also be appropriately
adjusted to reflect the events described in such subparagraphs. The Committee or
the Successor Board shall determine the specific adjustments to be made under
this paragraph 11 and, subject to Section 3, its determination shall be
conclusive.
If any person or entity owning restricted Common Stock obtained by
exercise of an option made hereunder receives shares or securities or cash in
connection with a corporate transaction described in subparagraphs (a), (b) or
(c) above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which
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such shares or securities or cash were issued, unless otherwise determined by
the Committee or the Successor Board.
12. No Special Employment Rights.
Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the continuation
of his employment by the Company (or any subsidiary) or interfere in any way
with the right of the Company (or any subsidiary), subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the option holder from
the rate in existence at the time of the grant of an option. Whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Committee at the
time.
13. Withholding.
The Company's obligation to deliver shares upon the exercise of any
option granted under the Plan shall be subject to the option holder's
satisfaction of all applicable Federal, state and local income, excise and
employment tax withholding requirements. The Company and employee may agree to
withhold shares of Common Stock purchased upon exercise of an option to satisfy
the above-mentioned withholding requirements. With the approval of the
Committee, which it shall have sole discretion to grant, and on such terms and
conditions as the Committee may impose, the option holder may satisfy the
foregoing condition by electing to have the Company withhold from delivery
shares having a value equal to the amount of tax to be withheld. The Committee
shall also have the right to require that shares be withheld from delivery to
satisfy such condition.
14. Restrictions on Issue of Shares.
(a) Notwithstanding the provisions of Section 7, the Company may delay
the issuance of shares covered by the exercise of an option and the delivery of
a certificate for such shares until one of the following conditions shall be
satisfied:
(i) The shares with respect to which such option has been
exercised are at the time of the issue of such shares effectively registered or
qualified under applicable Federal and state securities acts now in force or as
hereafter amended; or
(ii) Counsel for the Company shall have given an opinion,
which opinion shall not be unreasonably conditioned or withheld, that such
shares are exempt from registration and qualification under applicable Federal
and state securities acts now in force or as hereafter amended.
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(b) It is intended that all exercises of options shall be effective, and
the Company shall use its best efforts to bring about compliance with the above
conditions within a reasonable time, except that the Company shall be under no
obligation to qualify shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any option may be
exercised, except as otherwise agreed to by the Company in writing.
15. Purchase for Investment; Rights of Holder on Subsequent
Registration.
Unless the shares to be issued upon exercise of an option granted under
the Plan have been effectively registered under the Securities Act of 1933, as
now in force or hereafter amended, the Company shall be under no obligation to
issue any shares covered by any option unless the person who exercises such
option, in whole or in part, shall give a written representation and undertaking
to the Company which is satisfactory in form and scope to counsel for the
Company and upon which, in the opinion of such counsel, the Company may
reasonably rely, that he or she is acquiring the shares issued pursuant to such
exercise of the option for his or her own account as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law, and that if shares are
issued without such registration, a legend to this effect may be endorsed upon
the securities so issued. In the event that the Company shall, nevertheless,
deem it necessary or desirable to register under the Securities Act of 1933 or
other applicable statutes any shares with respect to which an option shall have
been exercised, or to qualify any such shares for exemption from the Securities
Act of 1933 or other applicable statutes, then the Company may take such action
and may require from each optionee such information in writing for use in any
registration statement, supplementary registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors and controlling persons from such holder against all losses, claims,
damages and liabilities arising from such use of the information so furnished
and caused by any untrue statement of any material fact therein or caused by the
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made.
16. Loans.
The Company may make loans to optionees to permit them to exercise
options. If loans are made, the requirements of all applicable Federal and state
laws and regulations regarding such loans must be met.
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17. Modification of Outstanding Options.
The Committee may authorize the amendment of any outstanding option with
the consent of the optionee when and subject to such conditions as are deemed to
be in the best interests of the Company and in accordance with the purposes of
this Plan.
18. Approval of Shareholders.
The Plan shall be subject to approval by the vote of shareholders
holding at least a majority of the voting stock of the Company voting in person
or by proxy at a duly held shareholders' meeting, or by written consent of
shareholders holding at least a majority of the voting stock of the Company,
within twelve (12) months after the adoption of the Plan by the Board of
Directors and shall take effect as of the date of adoption by the Board of
Directors upon such approval. The Committee may grant options under the Plan
prior to such approval, but any such option shall become effective as of the
date of grant only upon such approval and, accordingly, no such option may be
exercisable prior to such approval.
19. Termination and Amendment.
Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the Board
of Directors of the Company. The Board of Directors may at any time terminate
the Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that except as provided in this Section 19, the Board of
Directors may not, without the approval of the shareholders of the Company
obtained in the manner stated in Section 18, increase the maximum number of
shares for which options may be granted or change the designation of the class
of persons eligible to receive options under the Plan, or make any other change
in the Plan which requires shareholder approval under applicable law or
regulations, including any approval requirement which is a prerequisite for
exemptive relief under Section 16 of the Exchange Act. The Committee may grant
options to persons subject to Section 16(b) of the Exchange Act after an
amendment to the Plan by the Board of Directors requiring shareholder approval
under Section 19, but any such option shall become effective as of the date of
grant only upon such approval and, accordingly, no such option may be
exercisable prior to such approval. The Committee may terminate, amend or modify
any outstanding option without the consent of the option holder, provided,
however, that, except as provided in Section 11, without the consent of the
optionee, the Committee shall not change the number of shares subject to an
option, nor the exercise price thereof, nor extend the term of such option.
20. Compliance with Rule 16b-3.
It is intended that the provisions of the Plan and any option granted
hereunder to a person subject to the reporting requirements of Section 16(a) of
the Exchange Act shall
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comply in all respects with the terms and conditions of Rule 16b-3 under the
Exchange Act, or any successor provisions, to the extent the Company has any
equity security registered pursuant to Section 12 of the Exchange Act. Any
agreement granting options shall contain such provisions as are necessary or
appropriate to assure such compliance. To the extent that any provision hereof
is found not to be in compliance with such Rule, such provision shall be deemed
to be modified so as to be in compliance with such Rule, or if such modification
is not possible, shall be deemed to be null and void, as it relates to a
recipient subject to Section 16(a) of the Exchange Act.
21. Reservation of Stock.
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
22. Limitation of Rights in the Option Shares.
An optionee shall not be deemed for any purpose to be a shareholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.
23. Notices.
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on the
records of the Company.
Approved by the Directors:______________
Approved by the Stockholders:_______________
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EXHIBIT 10.18
VOICETEK CORPORATION
1996 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS AND CLERK
1. PURPOSE
The purpose of this Voicetek Corporation 1996 Stock Option Plan for
Non-Employee Directors (the "Plan") is to attract and retain the services of
experienced and knowledgeable independent directors who are not employees
(sometimes referred to herein collectively as "Participants") of Voicetek
Corporation ("Voicetek") for the benefit of Voicetek and its stockholders and to
provide additional incentive for such Participants to continue to work in the
best interests of Voicetek and its stockholders through continuing ownership of
its common stock.
2. SHARES SUBJECT TO THE PLAN
The total number of shares of common stock, par value $.01 per share
("Shares"), of Voicetek for which options may be granted under the Plan shall
not exceed 90,000 in the aggregate, subject to adjustment in accordance with
Section 9 hereof.
3. ELIGIBILITY; GRANT OF OPTION
Each of John Blaeser, Christopher Lynch, Alan Voulgaris and Sherman Wolf,
who are the four current directors of Voicetek who are not otherwise employees
of Voicetek or any subsidiary, and upon their election to the Board of Directors
of Voicetek (the "Board"), all new non-employee directors duly elected in the
five year period commencing on the date of the adoption of the Plan, shall be
granted an option to acquire twelve thousand (12,000) Shares under the Plan. In
addition, Anthony J. Medaglia, Jr., the Clerk of the Corporation, shall be
granted an option to acquire ten thousand (10,000) Shares under the Plan. The
date of grant for such options
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granted to the Clerk and four current non-employee directors named above shall
be the date of adoption of the Plan by the Board, but such options shall become
effective as of such date of grant only upon shareholder approval of this Plan
in accordance with Section 13 hereof. The options shall be non-qualified options
not intended to meet the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). The date of grant for each subsequently
elected non-employee director shall be the date of election.
4. OPTION AGREEMENT
Each option granted under the Plan shall be evidenced by an option
agreement (the "Agreement") duly executed on behalf of Voicetek and by the Clerk
or the director to whom such option is granted, which Agreements shall (i)
comply with and be subject to the terms and conditions of the Plan and (ii)
provide that the optionee agrees to continue to serve as the Clerk or a director
of Voicetek, as the case may be, during the term for which he was elected.
5. OPTION EXERCISE PRICE
Subject to the provisions of Section 9 hereof, the option exercise price
for the options granted to the Clerk and four current non-employee directors
named above under the Plan shall be $5.00. Subject to the provisions of Section
9 hereof, the option exercise price for options granted to any subsequently
elected clerk or non-employee director under the Plan shall be the fair market
value of the Shares of the common stock of Voicetek covered by the option on the
date of grant of the option. For the purposes of this Section 5 and of Section
6(b) herein, the fair market value of the common stock of Voicetek shall be the
mean between the high and low sales prices of the common stock of Voicetek on
the NASDAQ National Market System as reported in the Wall Street Journal on the
date of grant for the immediately preceding business day; provided
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that if the common stock of Voicetek is not listed on or actually trading on the
NASDAQ National Market System, fair market value shall be determined in good
faith by the Board.
6. TIME AND MANNER OF EXERCISE OF OPTION
(a) Options granted under the Plan shall, subject to the provisions of
Section 7, become exercisable in equal increments on the first, second and third
anniversaries of the date at the grant of such options; provided, however, that
no option granted under the Plan may be exercised prior to approval of the Plan
by the stockholders of Voicetek.
(b) To the extent that the right to exercise an option has accrued and is
in effect, the option may be exercised in full at one time or in part from time
to time by giving written notice to Voicetek, signed by the person or persons
exercising the option, stating the number of Shares with respect to which the
option is being exercised, accompanied by payment in full for such Shares, which
payment may be in cash or in whole or in part in Shares of the common stock of
Voicetek already owned for a period of at least six months by the person or
persons exercising the option, valued at fair market value, as determined under
Section 5 hereof, on the date of exercise; provided, however, that there shall
be no such exercise at any one time as to fewer than one hundred (100) Shares
or all of the remaining Shares then purchasable by the person or persons
exercising the option, if fewer than one hundred (100) Shares. Upon such
exercise, delivery of a certificate for paid-up non-assessable Shares shall be
made at the principal Massachusetts office of Voicetek to the person or persons
exercising the option at such time, during ordinary business hours, not more
than thirty (30) days from the date of receipt of the notice by Voicetek, as
shall be designated in such notice, or at such time, place and manner as may be
agreed upon by Voicetek and the person or persons exercising the option.
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7. TERM OF OPTIONS
(a) Each option shall expire ten (10) years from the date of the granting
thereof, but shall be subject to earlier termination as herein provided.
(b) In the event of the death of an optionee, the option granted to such
optionee may be exercised, to the extent the optionee was entitled to do so on
the date of such optionee's death, by the estate of such optionee or by any
person or persons who acquired the right to exercise such option by bequest or
inheritance or otherwise by reason of the death of such optionee. Such option
may be exercised at any time within one (1) year after the date of death of such
optionee, at which time the option shall terminate, or prior to the date on
which the option otherwise expires by its terms, whichever is earlier.
(c) In the event that an optionee ceases to be the Clerk or a director of
Voicetek, as the case may be, the option granted to such optionee may be
exercised by him, but only to the extent that under Section 6 hereof the right
to exercise the option has accrued and is in effect on the date that the
optionee ceases to be the Clerk or a director, as the case may be. Such option
may be exercised at any time within seven (7) business days after the date such
optionee ceases to be a director of Voicetek, as the case may be, at which time
the option shall terminate, but in any event prior to the date on which the
option expires by its terms, whichever is earlier, unless termination as a
director (a) was by Voicetek for cause, in which case the option shall terminate
immediately at the time the optionee ceases to be a director of Voicetek, (b)
was because the optionee has become disabled (within the meaning of Section
22(e)(3) of the Code), or (c) was by reason of the death of the optionee. In the
case of death, see Section 7(b) above. In the case of disability, the option may
be exercised, to the extent exercisable under Section 6 hereof when
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the optionee ceased to be a director, at any time within one (1) year after the
date of termination of the optionee's directorship with Voicetek, at which time
the option shall terminate, but in any event prior to the date on which the
option otherwise expires by its terms, whichever is earlier.
8. OPTIONS NOT TRANSFERABLE
The right of any optionee to exercise an option granted to him under the
Plan shall not be assignable or transferable by such optionee otherwise than by
will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder. Any option granted
under the Plan shall be exercisable during the lifetime of such optionee only by
him. Any option granted under the Plan shall be null and void and without effect
upon the bankruptcy of the optionee, or upon any attempted assignment or
transfer, except as herein provided, including without limitation any purported
assignment, whether voluntary or by operation of law, pledge, hypothecation or
other disposition, attachment, trustee process or similar process, whether legal
or equitable, upon such option.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the outstanding Shares of the common stock of Voicetek
are changed into or exchanged for a different number or kind of shares or other
securities of Voicetek or of another corporation by reason of any
reorganization, merger, consolidation, recapitalization, reclassification, stock
split-up, combination of shares or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which outstanding options, or portions thereof then unexercised, shall be
exercisable, to the end that the proportionate interest of the optionee shall be
maintained as before the occurrence of such event,
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and such adjustment in outstanding options shall be made without change in the
total price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share.
10. RESTRICTIONS ON ISSUE OF SHARES
Notwithstanding the provisions of Section 6 hereof, Voicetek may delay
the issuance of Shares covered by the exercise of any option and the delivery of
a certificate for such Shares until one of the following conditions shall be
satisfied:
(i) the Shares with respect to which an option has been exercised
are at the time of the issue of such Shares effectively registered under
applicable Federal and state securities acts now in force or hereafter amended;
or
(ii) counsel for Voicetek shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such Shares are
exempt from registration under applicable Federal and state securities acts now
in force or hereafter amended.
It is intended that all exercises of options shall be effective.
Accordingly, Voicetek shall use its best efforts to bring about compliance with
the above conditions within a reasonable time, except that Voicetek shall be
under no obligation to cause a registration statement or a post-effective
amendment to any registration statement to be prepared at its expense solely for
the purpose of covering the issue of Shares in respect of which any option may
be exercised, except as otherwise agreed to by Voicetek in writing.
6
<PAGE> 7
11. RIGHTS OF HOLDER ON PURCHASE FOR INVESTMENT; SUBSEQUENT REGISTRATION
Unless the Shares to be issued upon exercise of an option granted under the
Plan have been effectively registered under the Securities Act of 1933, as now
in force or hereafter amended, Voicetek shall be under no obligation to issue
any Shares covered by any option unless the person who exercises such option, in
whole or in part, shall give a written representation and undertaking to
Voicetek which is satisfactory in form and scope to counsel to Voicetek and upon
which, in the opinion of such counsel, Voicetek may reasonably rely, that he is
acquiring the Shares issued to him pursuant to such exercise of the option for
his own account as an investment and not with a view to, or for sale in
connection with, the distribution of any such Shares, and that he will make no
transfer of the same except in compliance with any rules and regulations in
force at the time of such transfer under the Securities Act of 1933, or any
other applicable law, and that if Shares are issued without such registration a
legend to this effect may be endorsed upon the securities so issued. In the
event that Voicetek shall, nevertheless, deem it necessary or desirable to
register under the Securities Act of 1933 or other applicable statutes any
Shares with respect to which an option shall have been exercised, or to qualify
any such Shares for exemption from the Securities Act of 1933 or other
applicable statutes, then Voicetek shall take such action at its own expense and
may require from each optionee such information in writing for use in any
registration statement, prospectus, preliminary prospectus or offering circular
as is reasonably necessary for such purpose and may require reasonable indemnity
to Voicetek and its officers and directors from such holder against all losses,
claims, damages and liabilities arising from such use of the information so
furnished and caused by any untrue statement of any material fact
7
<PAGE> 8
therein or caused by the omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made.
12. LOANS PROHIBITED
Voicetek shall not, directly or indirectly, lend money to an optionee or to
any person or persons entitled to exercise an option by reason of the death of
an optionee for the purpose of assisting him or them in the acquisition of
Shares covered by an option granted under the Plan.
13. APPROVAL OF STOCKHOLDERS
The Plan shall be subject to approval by the affirmative vote of the holders
of a majority of the securities of Voicetek present or represented and entitled
to vote at a duly held stockholders' meeting, or by written consent of all of
the stockholders, and shall take effect immediately as of its date of adoption
upon such approval.
14. EXPENSES OF THE PLAN
All costs and expenses of the adoption and administration of the Plan shall
be borne by Voicetek, and none of such expenses shall be charged to any
optionee.
15. TERMINATION AND AMENDMENT OF PLAN
Unless sooner terminated as herein provided, the Plan shall terminate ten
(10) years from the date upon which the Plan was duly approved by the
stockholders. The Board may at any time terminate the Plan or make such
modification or amendment thereof as it deems advisable; provided, however,
that, except as provided in Section 9 hereof, no modification or amendment to
the provisions of the Plan may be made more than once every six (6) months other
than to comport with changes in the Code, the Employee Retirement Income
Security Act, or the rules
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thereunder, if the effect of such amendment or modification would be to change
(i) the requirements for eligibility under the Plan, (ii) the timing of the
grants of options to be granted under the Plan or the exercise price or vesting
schedule thereof, or (iii) the number of Shares subject to options to be granted
under the Plan either in the aggregate or to the Clerk or one director. Any
amendment to the provisions of the Plan which (i) materially increases the
number of Shares which may be subject to options granted under the Plan, (ii)
materially increases the benefits accruing to Participants under the Plan, or
(iii) materially modifies the requirement for eligibility to participate in the
Plan, shall be subject to approval by the stockholders of Voicetek obtained in
the manner stated in Section 13 hereof. Termination or any modification or
amendment of the Plan shall not, without the consent of an optionee, affect his
rights under an option previously granted to him.
16. LIMITATION OF RIGHTS IN THE OPTION SHARES
An optionee shall not be deemed for any purpose to be a stockholder of
Voicetek with respect to any of the options except to the extent that the option
shall have been exercised with respect thereto and, in addition, a certificate
shall have been issued theretofore and delivered to the optionee.
17. NOTICES
Any communication or notice required or permitted to be given under the Plan
shall be in writing, and mailed by registered or certified mail or delivered by
hand, if to Voicetek, to its principal place of business, Attention: President,
and, if to an optionee, to the address as appearing on the records of Voicetek.
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18. COMPLIANCE WITH RULE 16b-3.
It is the intention of Voicetek that the Plan comply in all respects with
Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of
1934 (the "Act") and that Participants remain disinterested persons for purposes
of administering other employee benefit plans of Voicetek and having
transactions under such other plans be exempt from Section 16(b) of the Act.
Therefore, if any Plan provision is found not to be in compliance with Rule
16b-3 or if any Plan provisions would disqualify Participants from remaining
disinterested persons, that provisions shall be deemed null and void, and in all
events the Plan shall be construed in favor of its meeting the requirements of
Rule 16b-3.
APPROVED BY THE BOARD OF DIRECTORS: AUGUST 1, 1996
APPROVED BY THE STOCKHOLDERS: ________________________________________
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EXHIBIT 10.19
VOICETEK CORPORATION
1997 Employee Stock Purchase Plan
1. Purpose
It is the purpose of this 1997 Employee Stock Purchase Plan to provide a
means whereby eligible employees may purchase Common Stock of Voicetek
Corporation (the "Company") and any subsidiaries as defined below through
after-tax payroll deductions. It is intended to provide a further incentive for
employees to promote the best interests of the Company and to encourage stock
ownership by employees in order that they may participate in the Company's
economic growth.
It is the intention of the Company that the Plan qualify as an "employee
stock purchase plan" within the meaning of Section 423 of the Internal Revenue
Code and the provisions of this Plan shall be construed in a manner consistent
with the Code and Treasury Regulations promulgated thereunder.
2. Definitions
The following words or terms, when used herein, shall have the following
respective meanings:
(a) "Plan" shall mean the 1996 Employee Stock Purchase Plan.
(b) "Company" shall mean Voicetek Corporation, a Massachusetts
corporation.
(c) "Account" shall mean the Employee Stock Purchase Account
established for a Participant under Section 7 hereunder.
(d) "Basic Compensation" shall mean the regular rate of salary or
wages in effect immediately prior to a Purchase Period, before any
deductions or withholdings, and
<PAGE> 2
including overtime, bonuses and sales commissions, but excluding
amounts paid in reimbursement for expenses.
(e) "Board of Directors" shall mean the Board of Directors of Voicetek
Corporation.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(g) "Committee" shall mean the Compensation Committee appointed by the
Board of Directors.
(h) "Common Stock" shall mean shares of the Company's common stock,
$.01 par value per share.
(i) "Effective Date" shall mean the date of the closing of the
Company's first public offering of Common Stock made pursuant to
an effective Registration Statement filed with the Securities and
Exchange Commission.
(j) "Eligible Employees" shall mean all persons employed by the
Company or one of its Subsidiaries, but excluding:
(1) Persons who have been employed by the Company or its
Subsidiaries for less than six months on the first day of the
Purchase Period;
(2) Persons whose customary employment is less than twenty hours
per week or five months or less per year; and
(3) Persons who are deemed for purposes of Section 423(b)(3) of
the Code to own stock possessing 5% or more of the total
combined voting power or value of all classes of stock of the
Company or a subsidiary.
For purposes of the Plan, employment will be treated as continuing
intact while a Participant is on military leave, sick leave, or other bona fide
leave of absence, for up to 90 days
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or so long as the Participant's right to re-employment is guaranteed either by
statute or by contract, if longer than 90 days.
(k) "Exercise Date" shall mean the last day of a Purchase Period;
provided, however, that if such date is not a business day,
"Exercise Date" shall mean the immediately preceding business day.
(l) "Participant" shall mean an Eligible Employee who elects to
participate in the Plan under Section 6 hereunder.
(m) Except as provided below, there shall be two "Purchase Periods" in
each full calendar year during which the Plan is in effect, one
commencing on January 1 of each calendar year and continuing
through June 30 of such calendar year, and the second commencing
on July 1 of each calendar year and continuing through December 31
of such calendar year. The first Purchase Period after the
Effective Date of the Plan shall commence on July 1, 1997. The
last Purchase Period shall commence on January 1, 2007 and end on
June 30, 2007.
(n) "Purchase Price" shall mean the lower of (i) 85% of the fair
market value of a share of Common Stock for the first business day
of the relevant Purchase Period, or (ii) 85% of such value on the
relevant Exercise Date. If the shares of Common Stock are listed
on any national securities exchange, or traded on the National
Association of Securities Dealers Automated Quotation System
("Nasdaq") National Market System, the fair market value per share
of Common Stock on a particular day shall be the closing price, if
any, on the largest such exchange, or if not traded on an
exchange, the Nasdaq National Market System, on such day, and,
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<PAGE> 4
if there are no sales of the shares of Common Stock on such
particular day, the fair market value of a share of Common Stock
shall be determined by taking a weighted average of the means
between the highest and lowest sales on the nearest date before
and the nearest date after the particular day in accordance with
Treasury Regulations Section 25.2512-2. If the shares of Common
Stock are not then listed on any such exchange or the Nasdaq
National Market System, the fair market value per share of Common
Stock on a particular day shall be the mean between the closing
"Bid" and the closing "Asked" prices, if any, as reported in the
National Daily Quotation Service for such day. If the fair market
value cannot be determined under the preceding sentences, it shall
be determined in good faith by the Board of Directors.
(o) "Subsidiary" shall mean any present or future corporation which
(i) would be a "subsidiary corporation" of the Company as that
term is defined in Section 424(f) of the Code and (ii) is
designated as a participant in the Plan by the Board.
3. Grant of Option to Purchase Shares.
Each Eligible Employee shall be granted an option effective on the first
business day of each Purchase Period to purchase shares of Common Stock. The
term of the option shall be the length of the Purchase Period. The number of
shares subject to each option shall be the quotient of the aggregate payroll
deductions in the Purchase Period authorized by each Participant in accordance
with Section 6 divided by the Purchase Price, but in no event greater than 2,000
shares per option, or such other number as determined from time to time by the
Board of Directors or the Committee (the "Share Limitation"). Notwithstanding
the foregoing, no
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<PAGE> 5
employee shall be granted an option which permits his right to purchase shares
under the Plan to accrue at a rate which exceeds in any one calendar year
$25,000 of the fair market value of the Common Stock as of the date the option
to purchase is granted.
4. Shares.
There shall be 250,000 shares of Common Stock reserved for issuance to
and purchase by Participants under the Plan, subject to adjustment as herein
provided. The shares of Common Stock subject to the Plan shall be either shares
of authorized but unissued Common Stock or shares of Common Stock reacquired by
the Company and held as treasury shares. Shares of Common Stock not purchased
under an option terminated pursuant to the provisions of the Plan may again be
subject to options granted under the Plan.
The aggregate number of shares of Common Stock which may be purchased
pursuant to options granted hereunder, the number of shares of Common Stock
covered by each outstanding option, and the purchase price for each such option
shall be appropriately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock resulting from a stock split or other
subdivision or consolidation of shares of Common Stock or for other capital
adjustments or payments of stock dividends or distributions or other increases
or decreases in the outstanding shares of Common Stock effected without receipt
of consideration by the Company.
5. Administration.
The Plan shall be administered by the Board of Directors or the
Compensation Committee appointed from time to time by the Board of Directors.
The Board of Directors or the Committee, if one has been appointed, is vested
with full authority to make, administer and interpret such equitable rules and
regulations regarding the Plan as it may deem advisable. The
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<PAGE> 6
Board of Directors', or the Committee's, if one has been appointed,
determinations as to the interpretation and operation of the Plan shall be final
and conclusive. No member of the Board of Directors or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted under the Plan.
6. Election to Participate.
An Eligible Employee may elect to become a Participant in the Plan for a
Purchase Period by completing a "Stock Purchase Agreement" form prior to the
first day of the Purchase Period for which the election is made. Such Stock
Purchase Agreement shall be in such form as shall be determined by the Board of
Directors or the Committee. The election to participate shall be effective for
the Purchase Period for which it is made. There is no limit on the number of
Purchase Periods for which an Eligible Employee may elect to become a
Participant in the Plan. In the Stock Purchase Agreement, the Eligible Employee
shall authorize regular payroll deductions of any full percentage of his Basic
Compensation, but in no event less than one percent (1%) nor more than ten
percent (10%) of his Basic Compensation, not to exceed $25,000 per year. An
Eligible Employee may not change his authorization except as otherwise provided
in Section 9. Options granted to Eligible Employees who have failed to execute a
Stock Purchase Agreement within the time periods prescribed by the Plan will
automatically lapse.
7. Employee Stock Purchase Account.
An Employee Stock Purchase Account will be established for each
Participant in the Plan for bookkeeping purposes, and payroll deductions made
under Section 6 will be credited to such Accounts. However, prior to the
purchase of shares in accordance with Section 8 or withdrawal from or
termination of the Plan in accordance with the provisions hereof, the Company
may use
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<PAGE> 7
for any valid corporate purpose all amounts deducted from a Participant's wages
under the Plan and credited for bookkeeping purposes to his Account.
The Company shall be under no obligation to pay interest on funds
credited to a Participant's Account, whether upon purchase of shares in
accordance with Section 8 or upon distribution in the event of withdrawal from
or termination of the Plan as herein provided.
8. Purchase of Shares.
Each Eligible Employee who is a Participant in the Plan automatically
and without any act on his part will be deemed to have exercised his option on
each Exercise Date to the extent that the balance then in his Account under the
Plan is sufficient to purchase at the Purchase Price whole shares of the Common
Stock subject to his option, subject to the Share Limitations and the Section
423(b)(8) limitation described in Section 3. Any balance remaining in the
Participant's Account shall be refunded to him in cash without interest.
9. Withdrawal.
A Participant who has elected to authorize payroll deductions for the
purchase of shares of Common Stock may cancel his election by written notice of
cancellation ("Cancellation") delivered to the office or person designated by
the Company to receive Stock Purchase Agreements, but any such notice of
Cancellation must be so delivered not later than ten (10) days before the
relevant Exercise Date.
A Participant will receive in cash, as soon as practicable after
delivery of the notice of Cancellation, the amount credited to his Account. Any
Participant who so withdraws from the Plan may again become a Participant at the
start of the next Purchase Period in accordance with Section 6.
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<PAGE> 8
Upon dissolution or liquidation of the Company every option outstanding
hereunder shall terminate, in which event each Participant shall be refunded the
amount of cash then in his Account. If the Company shall at any time merge into
or consolidate with another corporation, the holder of each option then
outstanding will thereafter be entitled to receive at the next Exercise Date,
upon exercise of such option and for each share as to which such option was
exercised, the securities or property which a holder of one share of the Common
Stock was entitled upon and at such time of such merger or consolidation. In
accordance with this paragraph and this Plan, the Board of Directors or
Compensation Committee, if any, shall determine the kind or amount of such
securities or property which such holder of an option shall be entitled to
receive. A sale of all or substantially all of the assets of the Company shall
be deemed a merger or consolidation for the foregoing purposes.
10. Issuance of Stock Certificates.
The shares of Common Stock purchased by a Participant shall, for all
purposes, be deemed to have been issued and sold at the close of business on the
Exercise Date. Prior to that date none of the rights or privileges of a
shareholder of the Company, including the right to vote or receive dividends,
shall exist with respect to such shares.
Within a reasonable time after the Exercise Date, the Company shall
notify the transfer agent and registrar of the Common Stock of the Participant's
ownership of the number of shares of Common Stock purchased by a Participant for
the Purchase Period, which shall be registered either in the Participant's name
or jointly in the names of the Participant and his spouse with right of
survivorship as the Participant shall designate in his Stock Purchase Agreement.
Such
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<PAGE> 9
designation may be changed at any time by filing notice thereof with the party
designated by the Company to receive such notices.
11. Termination of Employment.
(a) Upon a Participant's termination of employment for any reason,
other than death, no payroll deduction may be made from any
compensation due him and the entire balance credited to his
Account shall be automatically refunded, and his rights under the
Plan shall terminate.
(b) Upon the death of a Participant, no payroll deduction shall be
made from any compensation due him at time of death, the entire
balance in the deceased Participant's Account shall be paid in
cash to the Participant's designated beneficiary, if any, under a
group insurance plan of the Company covering such employee, or
otherwise to his estate, and his rights under the Plan shall
terminate.
12. Rights Not Transferable.
The right to purchase shares of Common Stock under this Plan is
exercisable only by the Participant during his lifetime and is not transferable
by him. If a Participant attempts to transfer his right to purchase shares under
the Plan, he shall be deemed to have requested withdrawal from the Plan and the
provisions of Section 9 hereof shall apply with respect to such Participant.
13. No Guarantee of Continued Employment.
Granting of an option under this Plan shall imply no right of continued
employment with the Company for any Eligible Employee.
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<PAGE> 10
14. Notice.
Any notice which an Eligible Employee or Participant files pursuant to
this Plan shall be in writing and shall be delivered personally or by mail
addressed to Voicetek Corporation, 19 Alpha Road, Chelmsford, MA 01824, Attn:
Sheldon L. Dinkes. Any notice to a Participant or an Eligible Employee shall be
conspicuously posted in the Company's principal office or shall be mailed
addressed to the Participant or Eligible Employee at the address designated in
the Stock Purchase Agreement or in a subsequent writing.
15. Application of Funds.
All funds deducted from a Participant's wages in payment for shares
purchased or to be purchased under this Plan may be used for any valid corporate
purpose provided that the Participant's Account shall be credited with the
amount of all payroll deductions as provided in Section 7.
16. Government Approvals or Consents.
This Plan and any offering and sales to Eligible Employees under it are
subject to any governmental approvals or consents that may be or become
applicable in connection therewith. Subject to the provisions of Section 17, the
Board of Directors of the Company may make such changes in the Plan and include
such terms in any offering under this Plan as may be necessary or desirable, in
the opinion of counsel, to comply with the rules or regulations of any
governmental authority, or to be eligible for tax benefits under the Code or the
laws of any state.
17. Amendment of the Plan.
The Board of Directors may, without the consent of the Participants,
amend the Plan at any time, provided that no such action shall adversely affect
options theretofore granted hereunder,
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<PAGE> 11
and provided that no such action by the Board of Directors without approval of
the Company's shareholders may (a) increase the total number of shares of Common
Stock which may be purchased by all Participants, (b) change the class of
employees eligible to receive options under the Plan, or (c) make any changes to
the Plan which require shareholder approval under applicable law or regulations,
including Section 423 of the Code and the regulations promulgated thereunder.
For purposes of this Section 17, termination of the Plan by the Board of
Directors pursuant to Section 18 shall not be deemed to be an action which
adversely affects options theretofore granted hereunder.
18. Term of the Plan.
The Plan shall become effective on the Effective Date, provided that it
is approved within twelve months after adoption by the Board of Directors by the
affirmative vote of holders of a majority of the stock of the Company present or
represented and entitled to vote at a duly held shareholders' meeting. The Plan
shall continue in effect through June 30, 2007, provided, however, that the
Board of Directors shall have the right to terminate the Plan at any time, but
such termination shall not affect options then outstanding under the Plan. It
will terminate in any case when all or substantially all of the unissued shares
of stock reserved for the purposes of the Plan have been purchased. If at any
time shares of stock reserved for the purposes of the Plan remain available for
purchase but not in sufficient number to satisfy all then unfilled purchase
requirements, the available shares shall be apportioned among Participants in
proportion to the amount of payroll deductions accumulated on behalf of each
Participant that would otherwise be used to purchase stock and the Plan shall
terminate. Upon such termination or any other
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<PAGE> 12
termination of the Plan, all payroll deductions not used to purchase stock will
be refunded, without interest.
19. Notice to Company of Disqualifying Disposition; Legend.
By electing to participate in the Plan, each Participant agrees to
notify the Company in writing immediately after the Participant transfers Common
Stock acquired under the Plan, if such transfer occurs within two years after
the first business day of the Purchase Period in which such Common Stock was
acquired. Each Participant further agrees to provide any information about such
a transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as "disqualifying dispositions" under Sections 421 and 424 of the
Code, which have certain tax consequences to Participants and to the Company and
its participating Subsidiaries. The Participant further agrees that all stock
certificates for Common Stock purchased under the Plan by the Participant shall
be held in his name or jointly with his spouse, as the case may be, and not in
the name of a broker, nominee or other person or entity for such two-year
period, and agrees that such stock certificates shall bear a legend reflecting
that such Common Stock was obtained upon the purchase of Common Stock under the
Plan. The Participant acknowledges that the Company may send a Form W-2, or
substitute therefor, as appropriate, to the Participant with respect to any
income recognized by the Participant upon a disqualifying disposition of Common
Stock.
20. Withholding of Additional Income Taxes.
By electing to participate in the Plan, each Participant acknowledges
that the Company and its participating Subsidiaries are required to withhold
taxes with respect to the amounts deducted
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from the Participant's compensation and accumulated for the benefit of the
Participant under the Plan and each Participant agrees that the Company and its
participating Subsidiaries may deduct additional amounts from the Participant's
compensation, when amounts are added to the Participant's account, used to
purchase Common Stock or refunded, in order to satisfy such withholding
obligations. Each Participant further acknowledges that when Common Stock is
purchased under the Plan, the Company and its participating Subsidiaries may be
required to withhold taxes with respect to all or a portion of the difference
between the fair market value of the Common Stock purchased and its purchase
price, and each Participant agrees that such taxes may be withheld from
compensation otherwise payable to such Participant. It is intended that tax
withholding will be accomplished in such a manner that the full amount of
payroll deductions elected by the Participant under Section 6 will be used to
purchase Common Stock. However, if amounts sufficient to satisfy applicable tax
withholding obligations have not been withheld from compensation otherwise
payable to any Participant, then, notwithstanding any other provision of the
Plan, the Company may withhold such taxes from the Participant's accumulated
payroll deductions and apply the net amount to the purchase of Common Stock,
unless the Participant pays to the Company, prior to the exercise date, an
amount sufficient to satisfy such withholding obligations. Each Participant
further acknowledges that the Company and its participating Subsidiaries may be
required to withhold taxes in connection with the disposition of stock acquired
under the Plan and agrees that the Company or any participating subsidiary may
take whatever action it considers appropriate to satisfy such withholding
requirements, including deducting from compensation otherwise payable to such
Participant an amount sufficient to satisfy such withholding requirements or
conditioning any disposition of Common Stock by the
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<PAGE> 14
Participant upon the payment to the Company or such subsidiary of an amount
sufficient to satisfy such withholding requirements.
21. General.
Whenever the context of this Plan permits, the masculine gender shall
include the feminine and neuter genders.
Adopted by the Board of Directors __________________.
Approved by the Stockholders ___________________.
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EXHIBIT 10.20
REGISTRATION AND FIRST REFUSAL RIGHTS AGREEMENT
This Registration and First Refusal Rights Agreement (the "Agreement")
dated as of December 22, 1992 is entered into by and among Voicetek Corporation,
a Massachusetts corporation (the "Company"), and the holders of shares of the
Company's Senior Preferred Stock, $.01 par value per share (the "Senior
Preferred Shares"), Junior Preferred Stock -- Series 1, $.01 par value per share
(the "Series 1 Junior Preferred Shares"), and Junior Preferred Stock -- Series
2, $.01 par value per share (the "Series 2 Junior Preferred Shares")
(collectively, the Senior Preferred Shares, the Series 1 Junior Preferred Shares
and the Series 2 Junior Preferred Shares are referred to as the "Preferred
Shares"), listed on the signature pages hereto.
WITNESSETH:
WHEREAS, the Company and the purchasers of the Company's Senior
Preferred Shares (the "Senior Preferred Shareholders") are parties to a certain
Senior Preferred Stock Purchase Agreement with the Company dated as of December
22, 1992 (the "Senior Purchase Agreement");
WHEREAS, the Company and the purchasers of the Company's Series 1
Junior Preferred Shares and the Company's Series 2 Junior Preferred Shares
(collectively the "Junior Preferred Shareholders") are parties to a certain
Junior Preferred Stock Purchase Agreement with the Company dated as of December
22, 1992 (the "Junior Purchase Agreement");
WHEREAS, each of the parties hereto desires to set forth in a single
agreement all of the registration and first refusal rights of the Senior
Preferred Shareholders and Junior Preferred Shareholders (collectively, the
"Preferred Shareholders") with respect to all of the Preferred Shares acquired
by the Preferred Shareholders pursuant to the Senior Purchase Agreement and the
Junior Purchase Agreement (collectively, the "Purchase Agreements").
NOW THEREFORE, in consideration of the execution of the Senior Purchase
Agreement and the Junior Purchase Agreement, the mutual promises, covenants and
conditions hereinafter set forth and other good and valuable consideration, the
parties hereto agree as follows:
1. Certain Definitions. Any capitalized terms not defined herein shall
have the meaning assigned to them in the Purchase Agreements. As used in this
Agreement, the following terms shall have the following respective meanings:
"Commission" shall mean the securities and Exchange
commission, or any other federal agency at the time administering the
Securities Act.
<PAGE> 2
"Conversion Shares" shall mean shares of Common Stock issued
upon conversion of any of the Preferred Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Restricted Securities" shall mean the Preferred Shares and
the Conversion Shares, but excluding in each case securities that have
been (a) registered under the Securities Act pursuant to an effective
registration statement filed thereunder and disposed of in accordance
with such registration statement or (b) publicly sold pursuant to Rule
144 under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
2. Restrictive Legend. Each certificate representing Preferred Shares
or Restricted Securities shall, except as otherwise provided in this Section 2
or in Section 3, be stamped or otherwise imprinted with a legend substantially
in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE MORTGAGED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933 AND APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY OF AN
EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF
1933 AND APPLICABLE STATE SECURITIES LAWS."
3. Notice of Proposed Transfer. Prior to any proposed transfer of any Restricted
Securities (other than under the circumstances described in sections 4, 5 or 6),
the holder thereof shall give written notice to the Company of its intention to
effect such transfer. Each such notice shall describe the manner of the proposed
transfer and, if requested by the Company, shall be accompanied by an opinion of
counsel satisfactory to the Company to the effect that the proposed transfer may
be effected without registration under the Securities Act, whereupon the holder
of such Restricted Securities shall be entitled to transfer such Restricted
Securities in accordance with the terms of its notice; provided, however, that
no such opinion of counsel shall be required for a transfer (a) by a partnership
to one or more of its partners or
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<PAGE> 3
to another partnership with which such transferring partnership has a general
partner in common, (b) by a corporation to one or more of its officers or
employees or to another corporation that controls, is controlled by, or is under
common control with such transferring corporation, (c) by an individual to (i)
any member of his family or to any trust for the benefit of such family member
or the holder, in each case by way of gift or (ii) by will or the laws of
descent and distribution or (d) to any other individual or entity (other than
the Company) that is a party to this Agreement at the time of such transfer.
Each certificate for Restricted Securities transferred as above provided shall
bear the legend set forth in Section 2 unless (i) such transfer is in accordance
with the provisions of Rule 144 under the Securities Act (or any other rule
permitting public sale without registration under the Securities Act) or (ii)
the opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the Securities Act. The restrictions provided for in this
Section 3 shall not apply to securities which are not required to bear the
legend prescribed by Section 2 in accordance with the provisions of that
Section.
4. Required Registrations.
(a) At any time on up to three occasions after the earlier of (i) six
months after any registration statement covering a public offering of equity
securities of the Company under the Securities Act shall have become effective
and (ii) December 31, 1993, the holders of Restricted Securities constituting at
least forty percent (40%) of the total shares of Restricted Securities then
outstanding may request the Company to register under the Securities Act all or
any portion of the Restricted Securities held by such requesting holder or
holders for sale in the manner specified in such notice, provided that the
Restricted Securities for which registration has been requested shall constitute
at least ten percent (10%) of the total Restricted Securities originally issued
if such holder or holders shall request the registration of less than all of the
Restricted Securities then held by such holder or holders (or any lesser
percentage if the reasonably anticipated aggregate price to the public of such
public offering would exceed $2,000,000). The only securities which the Company
shall be required to register pursuant this Agreement shall be shares of Common
Stock. In any underwritten public offering contemplated by this Agreement, the
holders of Preferred Shares shall be entitled to sell such Preferred Shares to
the underwriters for conversion and sale (in such public offering) of the shares
of Common Stock issued upon conversion or exercise thereof and such Preferred
Shares so sold shall be deemed to have been "registered" for purposes of this
Agreement. Notwithstanding anything to the contrary contained herein, no request
may be made under this Section 4 within 120 days after the effective date of a
registration statement filed by the Company covering a firm commitment
underwritten public offering in which the holders of Restricted Securities shall
have been entitled to join pursuant to Sections 5 or 6 and in which there shall
have been effectively registered all Restricted Securities as to which
registration shall have been requested by the holders thereof. If the Company
determines to include shares to be sold by it in any registration request
pursuant to this Section 4, such registration shall not decrease the number of
"demand" registrations available under this Section 4 if the holders of
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<PAGE> 4
Restricted Securities are unable to include in any such registration statement
all of the Restricted Securities requested for inclusion in such registration
statement.
(b) Following receipt of any notice under this Section 4, the Company
shall immediately notify all holders of Restricted securities from whom notice
has not been received and shall use its best efforts to register under the
Securities Act, for public sale in accordance with the method of disposition
specified in such notice from requesting holders, the number of Restricted
securities specified in such notice (and in all notices received by the Company
from other holders within thirty days after the giving of such notice by the
Company). If such method of disposition shall be an underwritten public offering
of Common Stock, the number of Restricted Securities to be included in such an
underwriting may be reduced (pro rata among the requesting holders based upon
the number of Restricted Securities owned by such holders) if and to the extent
that the lead managing underwriter shall be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold therein,
provided, however, that such number of Restricted Securities shall not be
reduced if any shares are to be included in such underwriting for the account of
any person other than the Company or requesting holders of Restricted
Securities, and provided, further, however, that in no event may less than
fifteen percent (15%) of the total number of shares of Common Stock to be
included in such underwriting be made available for Restricted Securities. If
such method of disposition shall be an underwritten public offering, the holders
of a majority of the Restricted Securities to be sold in such offering under
this Section 4 may designate the managing underwriter or underwriters of such
offering, subject to the approval of the Company, which approval shall not be
unreasonably withheld or delayed. The Company shall be obligated to register
Restricted Securities pursuant to this Section 4 on three occasions only,
provided, however, that such obligations shall be deemed satisfied on a
particular occasion only when a registration statement covering all Restricted
Securities specified in notices received as aforesaid, for sale in accordance
with the method of disposition specified by the requesting holders, shall have
become effective and, if such method of disposition is a firm commitment
underwritten public offering, all such shares shall have been sold pursuant
thereto.
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the lead managing underwriter (if such method of disposition
shall be an underwritten public offering), such inclusion would adversely affect
the marketing of the Restricted Securities to be sold. Except for registration
statements on Form S-4, S-8 or any successor thereto, and unless the Company has
previously given the notice referred to in Section 5, the Company will not file
with the Commission any other registration statement with respect to Common
Stock, whether for its own account or that of other stockholders, from the date
of receipt of a notice from requesting holders pursuant to this Section 4 until
the completion of the period of distribution of the registration contemplated
thereby.
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<PAGE> 5
5. Incidental Registration. If the Company at any time (other than
pursuant to Section 4) proposes to register any of its securities under the
Securities Act for sale to the public, whether for its own account or for the
account of other security holders or both (except with respect to registration
statements on Forms S-4 and S-8 or another form not available for registering
the Restricted Securities for sale to the public), then each such time it will
give written notice to all holders of outstanding Restricted Securities of its
intention so to do. Upon the written request of any such holder, received by the
Company within thirty days after the giving of any such notice by the Company,
to register any of its Restricted Securities (which request shall state the
intended method of disposition thereof), the Company will use its best efforts
to cause the Restricted securities as to which registration shall have been so
requested to be included in the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent requisite to
permit the sale or other disposition by the holder (in accordance with its
written request) of such Restricted Securities so registered. In the event that
any registration pursuant to this Section 5 shall be, in whole or in part, an
underwritten public offering of Common Stock, the number of Restricted
Securities to be included in such an underwriting may be reduced (pro rata among
the requesting holders based upon the proportion which the number of Restricted
Securities held by each holder bears to the total number of Restricted
Securities outstanding) if and to the extent that the managing underwriter shall
be of the opinion that such inclusion would adversely affect the marketing of
the securities to be sold by the Company therein, provided, however, that such
number of Restricted Securities shall not be reduced if any securities are to be
included in such underwriting for the account of any person other than the
Company or requesting holders of Restricted securities, and provided, further,
however, that in no event may less than fifteen percent (15%) of the total
number of shares to be included in such underwriting be made available for
Restricted Securities. Notwithstanding the foregoing provisions, the Company may
withdraw any registration statement referred to in this Section 5 without
thereby incurring any liability, other than for the payment of the Registration
Expenses referred to in Section 8.
6. Registration on Form S-3. If at any time (i) a holder or holders of
Restricted Securities request that the Company file a registration statement on
Form S-3 or any successor thereto for a public offering of all or any portion of
the Restricted Securities held by such requesting holder or holders, the
reasonably anticipated aggregate price to the public of which would exceed
$500,000, and (ii) the Company is a registrant entitled to use Form S-3 or any
successor thereto to register such shares, then the Company shall use its best
efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of Restricted Securities specified in such notice.
Whenever the Company is required by this Section 6 to use its best efforts to
effect the registration of Restricted Securities, each of the procedures and
requirements of Section 4 (including the requirement that the Company notify all
holders of Restricted Securities from whom notice has not been received and
provide them with the opportunity to participate in the offering shall apply to
such registration, provided, however, that there shall be no limitation on the
number of registrations on Form S-3 which may be requested and obtained under
this Section 6 (except that the Company shall not be required to
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<PAGE> 6
file more than two such registrations in any one calendar year), and provided,
further, however, that the requirements contained in the first sentence of
Section 4(a) shall not apply to any registration on Form S-3 which may be
requested and obtained under this Section 6.
7. Registration Procedures. If and whenever the Company is required by
the provisions of Section 4, 5 or 6 to use its best effort's to effect the
registration of any Restricted Securities under the Securities Act, the Company
will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 4,
shall be on Form S-1 or other form of general applicability satisfactory to the
lead managing underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the disposition of all Restricted securities
covered by such registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Restricted Securities and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Restricted Securities covered by such registration statement;
(d) use its best efforts to register or qualify the Restricted
Securities covered by such registration statement under the securities or "blue
sky" laws of such jurisdictions as the sellers of Restricted Securities or, in
the case of an underwritten public offering, the managing underwriter reasonably
shall request, provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is bus not so qualified or to consent
to general service of process in any such jurisdiction;
(e) use its best efforts to list or include the Restricted Securities
covered by such registration statement with any securities exchange or
over-the-counter market system on which Common Stock is then listed or traded,
including the National Association of Securities Dealers Automated Quotation
(NASDAQ) system;
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<PAGE> 7
(f) immediately notify each seller of Restricted Securities and each
underwriter under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading in the light of the circumstances under which they were
made;
(g) if the offering is underwritten and at the request of any seller of
Restricted Securities, use its best efforts to furnish on the date that
Restricted Securities is delivered to the underwriters for sale pursuant to such
registration: (i) an opinion dated such date of counsel representing the Company
for the purposes of such registration, addressed to the underwriters and to such
seller, stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act, (B) the registration statement, the related prospectus and each amendment
or supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements contained therein) and (C) to such other
effects as reasonably may be requested by counsel for the underwriters or by
such seller or its counsel and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five business days prior to the date of such
letter), with respect to such registration as such underwriters reasonably may
request as contemplated by Statement on Auditing Standards No. 49 of the
Auditing Standards Board or any successor statement; and
(h) make available for inspection by each seller of Restricted
Securities, any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent retained by
such seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
registration statement.
For purposes of Sections 4(c), 7(a) and 7(b), the period of
distribution of Restricted Securities in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of Restricted securities in any other registration shall be deemed to
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<PAGE> 8
extend until the earlier of the sale of all Restricted Securities covered
thereby and ninety days after the effective date of the registration statement.
In connection with each registration hereunder, the sellers of
Restricted Securities will furnish to the Company in writing such information
with respect to themselves and the proposed distribution by them as reasonably
shall be necessary in order to assure compliance with federal and applicable
state securities laws.
In connection with each registration pursuant to Section 4, 5 or 6
covering an underwritten public offering, the Company and each seller agree to
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
8. Expenses. All expenses incurred by the Company in complying with
Sections 4, 5 and 6, including, without limitation, all registration and filing
fees, fees and disbursements of counsel and independent public accountants for
the Company, fees and expenses (including counsel fees) incurred in connection
with complying with state securities or "blue sky" laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
and registrars, listing or any other fees of exchanges or over-the-counter
market systems, costs of insurance, printing costs and expenses in connection
with the preparation of the registration statement and prospectus, and fees and
disbursements of one counsel for the sellers of Restricted Securities, but
excluding any Selling Expenses, are called "Registration Expenses". All
underwriting discounts and selling commissions applicable to the sale of
Restricted Securities are called "Selling Expenses".
The Company will pay all Registration Expenses in connection with each
registration statement under Section 4, 5 or 6. All Selling Expenses in
connection with each registration statement under Section 4, 5 or 6 shall be
borne by the participating sellers in proportion to the number of shares sold by
each, or by such participating sellers other than the Company (except to the
extent the Company shall be a seller) as they may agree. The Company shall pay
all expenses of the holders of Restricted securities in connection with any
registration of Restricted securities initiated pursuant to Sections 4, 5 or 6
hereof which is withdrawn, delayed or abandoned at the request of the Company.
9. Indemnification and Contribution. (a) In the event of a registration
of any of the Restricted Securities under the Securities Act pursuant to
Sections 4, 5 or 6, the Company will and hereby does indemnify and hold harmless
each seller of such Restricted Securities thereunder, each underwriter of such
Restricted Securities thereunder and each other person, if any, who controls
such seller or-underwriter within the meaning of the Securities Act or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such
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<PAGE> 9
seller, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Restricted Securities was registered
under the Securities Act pursuant to Section 4, 5 or 6, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each such seller, each
such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
the Company will not be liable in any such case if and to the extent that any'
such loss, claim, damage or liability arises out of or is based solely upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by any such seller, any such
underwriter or any such controlling person (or its or their authorized officers,
employees, directors or agents) in writing specifically for use in such
registration statement or prospectus and provided further that such indemnity
with respect to any registration statement shall not inure to the benefit of any
party from whom the person asserting any such loss, claim, damage or liability
purchased the Restricted Securities which is the subject thereof if such person
did not receive a copy of the registration statement (or the registration
statement as supplemented) at or prior to the confirmation of the sale of such
Restricted Securities to such person in any case where such delivery is required
by the Securities Act and the untrue statement or omission of a material fact
contained in such registration statement was corrected in the registration
statement (or the registration statement as supplemented).
(b) In the event of a registration of any of the Restricted Securities
under the Securities Act pursuant to Sections 4, 5 or 6, each seller of such
Restricted Securities thereunder, severally and not jointly, will indemnify and
hold harmless the Company, each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
the company or such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based solely upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which such
Restricted Securities was registered under the Securities Act pursuant to
Sections 4, 5 or 6, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
solely upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or
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<PAGE> 10
action, provided, however, that seller will be liable hereunder-in any such case
if and only to the extent that any such loss, claim, damage or liability arises
out of or is based solely upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
information pertaining to such seller, as furnished in writing to the Company by
such seller (or its authorized officers, directors, employees or agents)
specifically for use in such registration statement or prospectus, (ii) such
indemnity with respect to any registration statement shall not inure to the
benefit of any party from whom the person asserting any such loss, claim, damage
or liability purchased the Restricted Securities which is the subject thereof if
such person did not receive a copy of the registration statement (or the
registration statement as supplemented) at or prior to the confirmation of the
sale of such Restricted Securities to such person in any case where such
delivery is required by the Securities Act and the untrue statement or omission
of a material fact contained in such registration statement was corrected in the
registration statement (or the registration statement as supplemented), and
(iii) the liability of each seller hereunder shall be limited to the proportion
of any such loss, claim, damage, liability or expense which is equal to the
proportion that the public offering price of the shares sold by such seller'
under such registration statement bears to the total public offering price of
all securities sold thereunder, but not in any event to exceed the proceeds
received by such seller from the sale of Restricted Securities covered by such
registration statement. Not in limitation of the foregoing, it is hereby
understood And agreed that the indemnification obligations of any seller
hereunder pursuant to any underwriting agreement entered into in connection
herewith shall be limited to the obligations contained in this subparagraph (b).
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 9 and shall only relieve it
from any liability which it may have to such indemnified party under this
Section 9 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish to assume and undertake the defense thereof with counsel satisfactory
to such indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 9 for any legal expenses subsequently incurred by such
indemnified party-in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, provided,
however, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party
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<PAGE> 11
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Restricted Securities exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 9 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 9 provides for
indemnification in such case or (ii) contribution under the Securities Act may
be required on the part of any such selling holder or any such controlling
person in circumstances for which indemnification is provided under this Section
9, then, and in each such case, the Company and such holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such holder
is responsible for the portion represented by the percentage that the public
offering price of its Restricted Securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the public offering price of all
such Restricted Securities offered by it pursuant to such registration
statement; and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
10. Changes in Common Stock or Preferred Stock. If, and as often as,
there is any such change in the Common Stock, the Senior Preferred Shares or the
Junior Preferred Shares by way of a stock split, stock dividend, combination or
reclassification, or through a merger, consolidation, reorganization or
,recapitalization, or by any other means, appropriate adjustment shall be made
in the provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock, the Senior Preferred Shares or the
Junior Preferred Shares as so changed.
11. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, at all
times after ninety days after any registration statement covering a public
offering of securities of the Company under the Securities Act shall have become
effective, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
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<PAGE> 12
(b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act; and
(c) furnish to each holder of Restricted Securities forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Restricted Securities without
registration.
12. Right of First Refusal.
12.1. General. Subject to the provisions of Section 12.5, the Company
shall not issue, sell or exchange, agree or obligate itself to issue, sell or
exchange, or reserve or set aside for issuance, sale or exchange (a) any shares
of Common Stock, (b) any other equity securities of the Company, including
Preferred Shares, (c) any debt securities of the Company (other than a bank line
of credit with no equity feature), including any debt securities that by its
terms are convertible into or exchangeable for any equity securities of the
Company, (d) any securities of the Company that are a combination of debt and
equity, or (e) any options, warrants or other rights to subscribe for, purchase
or otherwise acquire any such equity or debt securities of the Company, unless
in each case the Company shall have first offered to sell such securities (the
"Offered Securities") to the Preferred Shareholders as set forth in this Section
12.1 or the provisions of this Section 12 shall have terminated pursuant to
Section 12.6. The Company shall offer to sell to each Preferred Shareholder (a)
that portion of the Offered Securities as the number of shares of Common Stock
then held by such Preferred Shareholder plus the number of shares obtainable by
such Preferred Shareholder upon the conversion of any Preferred Shares then held
by such Shareholder bears to the total number of shares of Common Stock then
outstanding or then issuable upon the conversion of then outstanding Preferred
Shares or then issuable upon the conversion and/or payment of any then
outstanding debt securities (such portion being herein referred to as such
Preferred Shareholder's "Basic Amount") and (b) subject to the provisions set
forth in Section 12.2, such additional portion of the Offered Securities as such
Preferred Shareholder shall indicate it will purchase should the other Preferred
Shareholders subscribe for less than their Basic Amounts (the "Undersubscription
Amount"), at a price and on such other terms as shall have been specified by the
Company in writing delivered to such Preferred Shareholder (the "Offer"), which
offer by its terms shall remain open and irrevocable for a period of twenty days
from receipt of the offer.
12.2. Notice of Acceptance. Notice of each Preferred Shareholder's
intention to accept, in whole or in part, any Offer made pursuant to Section
12.1 shall be evidenced by a writing signed by such Preferred Shareholder and
delivered to the Company prior to the end of the twenty-day period of such
offer, setting forth such of the Preferred Shareholder's Basic
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<PAGE> 13
Amount as such Preferred Shareholder elects purchase and, if such Preferred
Shareholder shall elect to purchase all of its Basic Amount, such
Undersubscription Amount as such Preferred Shareholder shall elect to purchase
(the "Notice of Acceptance"). If the Basic Amounts subscribed for by all
Preferred Shareholders are less than the total number of Offered Securities,
then each Preferred Shareholder who has set forth an Undersubscription Amount in
its Notice of Acceptance shall be entitled to purchase, in addition to the Basic
Amount subscribed for, the Undersubscription Amount it has subscribed for;
provided, however, that should the Undersubscription Amounts subscribed for by
all of the Preferred Shareholders exceed the difference between the number of
Offered Securities and the Basic Amounts subscribed for by all of the Preferred
Shareholders (the "Available Undersubscription Amount"), each Preferred
Shareholder that has subscribed for any Undersubscription Amount shall be
entitled to purchase only that portion of the Available Undersubscription Amount
as the Basic Amount of such Preferred Shareholder bears to the initial Basic
Amounts of all Preferred Shareholders that subscribe for Undersubscription
Amounts, subject to rounding by the Board to the extent it reasonably deems
necessary.
12.3. Conditions to Acceptances and Purchases.
12.3.1. Permitted Sales of Refused Securities. In the event
that Notices of Acceptances are not given by the Preferred Shareholders in
respect of all the offered Securities, the Company shall have sixty days from
the expiration of the period set forth in Section 12.1 to sell all or any part
of such Offered Securities as to which Notices of Acceptance have not been given
by the Preferred Shareholders (the "Refused Securities") to the person or
persons specified in the Offer, but only for cash and otherwise in all respects
upon terms and conditions, including unit price and interest rates, that are not
materially more favorable to such other person or persons or less favorable to
the Company than those set forth in the Offer.
12.3.2. Reduction in Amount of Offered Securities. In the
event the Company shall propose to sell less than all the Refused Securities
(any such sale to be in the manner and on the terms specified in Section 12.3.1
above), then prior to the closing described in Section 12.3.3, each Preferred
Shareholder may, at its sole option and in its sole discretion, by written
notice to the Company reduce the number of shares (or other units of the Offered
Securities) specified in its Notice of Acceptance to an amount that shall be not
less than the amount of the offered Securities which the Preferred Shareholder
elected to purchase pursuant to Section 12.2 multiplied by a fraction, (a) the
numerator of which shall be the number of all Offered Securities which the
Company actually proposes to sell and (b) the denominator of which shall be the
total number of Offered Securities. In the event that any Preferred Shareholder
so elects to reduce the number or amount of Offered Securities specified in its
respective Notices of Acceptance, the Company may not sell or otherwise dispose
of more than the reduced amount for the Offered Securities until such securities
have again been offered to the Preferred Shareholder in accordance with Section
12.1.
- 13 -
<PAGE> 14
12.3.3. Closing. Upon the closing, which shall include full
payment to the Company, of the sale to such other Person or Persons of all or
less than all the Refused Securities (or if all such Refused Securities are to
be purchased by Shareholders, upon a closing at a time and place agreed upon by
the Company and the Preferred Shareholders who have delivered Notices of
Acceptance), the Preferred Shareholders shall purchase from the Company, and the
Company shall sell to the Preferred Shareholders, the number of offered
Securities specified in their respective Notices of Acceptance, as reduced
pursuant to Section 12.3.2 if the Preferred Shareholders have so elected, upon
the terms and conditions specified in the Offer. The purchase by the Preferred
Shareholders of any offered Securities is subject in all cases to the
preparation, execution and delivery by the Company and the Preferred
Shareholders of a purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to the Preferred Shareholders and
their respective counsel.
12.4. Further Sale. In each case, any offered Securities not purchased
by the Preferred Shareholders or other Person or Persons in accordance with
Section 12.3 may not be sold or otherwise disposed of until they are again
offered to the Preferred Shareholders under the procedures specified in Sections
12.1, 12.2 and 12.3.
12.5. Exceptions. Notwithstanding anything to the contrary herein, the
rights of the Preferred Shareholders under this Section 12 shall not apply to:
(a) Common Stock issued as a stock dividend to holders of
Common Stock or upon any subdivision or combination of shares of Common Stock;
(b) Senior Preferred Shares issued as a dividend to holders of
Senior Preferred Shares, or upon any subdivision or combination of Senior
Preferred Shares;
(c) Series 1 Junior Preferred Shares issued as a dividend to
holders of Series 1 Junior Preferred Shares, or upon any subdivision or
combination of Series I Junior Preferred Shares; (d) Series 2 Junior Preferred
Shares issued as a dividend to holders of Series 2 Junior Preferred Stock, or
upon any subdivision or combination of Series 2 Junior Preferred Shares; (e)
Common Stock issued on conversion of any Preferred Shares;
(d) Series 2 Junior Preferred Shares issued as a dividend to
holders of Series 2 Junior Preferred Stock, or upon any subdivision or
combination of Series 2 Junior Preferred Shares;
(e) Common Stock issued on conversion of any Preferred Shares;
(f) Demand Promissory Notes, substantially in the form of
Exhibit D to the Purchase Agreements, representing in the aggregate not more
than $600,000 of indebtedness to existing stockholders of the Company (the
"Demand Promissory Notes");
(g) Senior Preferred Stock issued upon conversion and/or
payment of the Demand Promissory Notes;
- 14 -
<PAGE> 15
(h) shares of Common Stock issuable as of the date hereof
under the Company's stock option plans; or
(i) securities issued solely in consideration for the
acquisition (whether by merger or otherwise) by the Company of all or
substantially all of the capital stock or assets for any other entity, or
securities issued solely in consideration for the grant by or to the Company of
marketing rights, distribution rights, license rights or similar rights granted
by or to the Company in consideration of the exchange of proprietary technology,
whether of the Company or any other entity.
12.6. Termination of Right of First Refusal. The covenants contained in
this Section 12 shall terminate upon the earlier of:
(a) a closing of an underwritten public offering of Common
Stock on a "firm commitment" basis pursuant to a registration statement on Form
S-1 (or its then equivalent) filed under the Securities Act with the Commission,
provided that (i) the aggregate gross proceeds received by the Company from such
offering exceed $5,000,000 and (ii) such Common Stock is offered at a price per
share not-less than $.64, and
(b) the first date on which no Senior Preferred Shares and
Junior Preferred Shares are outstanding.
13. Representations and Warranties of the Company. The Company
represents and warrants to the Preferred Shareholders as follows:
(a) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other agency of
government, the Articles of Organization or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or any of
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
- 15 -
<PAGE> 16
14. Miscellaneous.
(a) All covenants and agreements contained in this Agreement
by or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto (including
transferees of any Restricted Securities), whether so expressed or not,
provided, however, that registration rights conferred herein on the holders of
Restricted Securities shall only inure to the benefit of a transferee of
Restricted Securities if (i) there is transferred to such transferee Restricted
Securities composed of, convertible into or exercisable for at least 392,950
shares of Common Stock or (ii) such transferee satisfies the description set
forth in the proviso to the second sentence of Section 3.
(b) All notices, requests, demands and other communications
hereunder shall be in writing (including telegraphic communication) and shall be
mailed, telegraphed or delivered to each applicable party at the address set
forth in the Purchase Agreements or at such other address as to which such party
may inform the other parties in writing in compliance with the terms of this
Section.
If to any subsequent holder of Common Stock or Preferred Shares: at
such holder's address for notice as set forth in the register maintained by the
Company, or at such other address as shall be designated by such person in a
written notice to the other parties complying as to delivery with the terms of
this Section.
All such notices, requests, demands and other communications shall,
when mailed (which mailing must be accomplished by first class mail, postage
prepaid; electronic facsimile transmission; express overnight courier service;
or registered mail, return receipt requested) or telegraphed, by effective upon
the earlier of actual receipt and the third business day after deposited in the
mails or delivered to the telegraph company, respectively, addressed as
aforesaid, unless otherwise provided herein. Any notice delivered in person
shall be deemed to have been given on the date of personal delivery.
(c) For any action to be taken hereunder by the holders of, or for any
right contingent upon, a specified percentage or proportion of one or more
classes or series of the Company's securities, such percentage or proportion
shall be determined as if all Preferred Shares had been converted into Common
Stock pursuant to the Company's Articles of Organization.
(d) This Agreement shall be governed by the laws of The Commonwealth of
Massachusetts.
(e) This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company and the holders
of at least two-thirds of the outstanding Restricted Securities. The parties
hereto acknowledge that the Company has issued and/or may in the future issue
the Demand Promissory Notes, and that the holders of
- 16 -
<PAGE> 17
such Demand Promissory Notes may be entitled to acquire additional Senior
Preferred Shares pursuant to the terms of the Demand Promissory Notes. The
parties hereto acknowledge that, at such time as any holder of Demand Promissory
Notes acquires additional Senior Preferred Shares, this Agreement shall be
amended to reflect the addition of such holder as a party hereto and that no
further consent or approval of any party to this Agreement will be required in
order to effect such amendment.
(f) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Additional persons or entities who purchase
Restricted Securities shall, as a condition to the purchase of Restricted
Securities, become parties to this Agreement and shall become holders of
"Restricted Securities" hereunder, subject to the limitation set forth in
Section 14(a), upon execution by such persons or entities of a counterpart of
this Agreement.
(g) If requested in writing by the underwriters for the initial
underwritten public offering of securities of the Company, each holder of
Restricted Securities shall agree not to sell publicly any Restricted Securities
or any other shares of Common stock (other than Restricted Securities or other
shares of Common Stock being registered in such offering), without the consent
of such underwriters, for a period of not more than ninety days following the
effective date of the registration statement relating to such offering;
provided, however, that all persons entitled to registration rights with respect
to shares of Common Stock whether or not they are parties to this Agreement, all
other persons selling shares of Common Stock in such offering and all executive
officers and directors of the Company shall also have agreed not to sell
publicly their Common Stock under the circumstances and pursuant to the terms
set forth in this Section 14(g).
(h) Notwithstanding the provisions of Section 7(a), the Company's
obligation to file a registration statement, or cause such registration
statement to become and remain effective, shall be suspended for a period not to
exceed ninety days in,any twenty-four-month period if there exists at the time
material non-public information relating to the Company which, in the reasonable
opinion of the Company, should not be disclosed.
(i) The Company shall not grant any registration rights in conflict
with or more favorable than any of those contained herein, and the Company shall
not grant any registration rights to any person investing less than $100,000 in
cash in the Company so long as any of the registration rights under this
Agreement remains in effect.
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
- 17 -
<PAGE> 18
(k) The Company recognizes that the rights of the holders of Restricted
Securities under this Agreement are unique and, accordingly, such holders shall,
in addition to such other remedies as may be available to them at law or in
equity, have the right to enforce their rights hereunder by actions for
injunctive relief and specific performance to the extent permitted by law. This
Agreement is not intended to limit or abridge any rights of such holders which
may exist apart from this Agreement.
(l) The obligations of the Company to register Shares of Restricted
Stock under Section 4, 5 or 6 shall terminate on December 22, 2002.
- 18 -
<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of December 22, 1992.
VOICETEK CORPORATION
By: _________________________________
Title:
PREFERRED SHAREHOLDERS:
CORNING PARTNERS II
By: __________________________________
Name:
Title:
- 19 -
<PAGE> 20
(i) The Company shall not grant any registration rights in conflict
with or more favorable than any of those contained herein, and the Company
shall not grant any registration rights to any person investing less than
$100,000 in cash in the Company so long as any of the registration rights under
this Agreement remains in effect.
(j) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
(k) The Company recognizes that the rights of the holders of Restricted
Securities under this Agreement are unique and, accordingly, such holders shall,
in addition to such other remedies as may be available to them at law or in
equity, have the right to enforce their rights hereunder by actions for
injunctive relief and specific performance to the extent permitted by law. This
Agreement is not intended to limit or abridge any rights of such holders which
may exist apart from this Agreement.
(l) The obligations of the Company to register Shares of Restricted
Stock under Section 4, 5 or 6 shall terminate on December 22, 2002.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of December 22, 1992.
VOICETEK CORPORATION
By: /s/
-----------------------------
Title:
PREFERRED SHAREHOLDERS:
CORNING PARTNERS II
By: /s/
-----------------------------
Name:
Title:
- 20 -
<PAGE> 21
EG&G VENTURE PARTNERS
By: EG&G VENTURE MANAGEMENT, G.P.
By: /s/
-----------------------------
KEARSARGE CAPITAL FUND, L.P.
By: /s/
-----------------------------
Name:
Title:
LPP PARTNERS
By: /s/
-----------------------------
Name:
Title:
MASSACHUSETTS TECHNOLOGY
DEVELOPMENT CORPORATION
By: /s/
-----------------------------
Name:
Title:
/s/ Sherman M. Wolf
-----------------------------
Sherman M. Wolf
NYNEX DEVELOPMENT COMPANY
By: /s/
-----------------------------
Name:
Title:
- 21 -
<PAGE> 22
EG&G VENTURE PARTNERS
By:
-------------------------------
Name:
Title:
KEARSARGE CAPITAL FUND, L.P.
By:
-------------------------------
Name:
Title:
LPP PARTNERS
By:
-------------------------------
Name:
Title:
MASSACHUSETTS TECHNOLOGY
DEVELOPMENT CORPORATION
By:
-------------------------------
Name:
Title:
---------------------------------
Sherman M. Wolf
NYNEX DEVELOPMENT COMPANY
By:
-------------------------------
Name:
Title:
- 22 -
<PAGE> 23
EG&G VENTURE PARTNERS
By:
-------------------------------
Name:
Title:
KEARSARGE CAPITAL FUND, L.P.
By:
-------------------------------
Name:
Title:
LPP PARTNERS
By:
-------------------------------
Name: Christopher W. Lynch
Title: General Partner
MASSACHUSETTS TECHNOLOGY
DEVELOPMENT CORPORATION
By:
-------------------------------
Name:
Title:
----------------------------------
Sherman M. Wolf
NYNEX DEVELOPMENT COMPANY
By:
-------------------------------
Name:
Title:
- 23 -
<PAGE> 24
EG&G VENTURE PARTNERS
By:
-------------------------------
Name:
Title:
KEARSARGE CAPITAL FUND, L.P.
By:
-------------------------------
Name:
Title:
LPP PARTNERS
By:
-------------------------------
Name:
Title:
MASSACHUSETTS TECHNOLOGY
DEVELOPMENT CORPORATION
By:
-------------------------------
Name: Michael E. A. O'Malley
Title: Vice President
---------------------------------
Sherman M. Wolf
NYNEX DEVELOPMENT COMPANY
By:
-------------------------------
Name:
Title:
- 24 -
<PAGE> 25
EG&G VENTURE PARTNERS
By:
-------------------------------
Name:
Title:
KEARSARGE CAPITAL FUND, L.P.
By:
-------------------------------
Name:
Title:
LPP PARTNERS
By:
-------------------------------
Name:
Title:
MASSACHUSETTS TECHNOLOGY
DEVELOPMENT CORPORATION
By:
-------------------------------
Name:
Title:
---------------------------------
Sherman M. Wolf
NYNEX DEVELOPMENT COMPANY
By:
-------------------------------
Name:
Title:
- 25 -
<PAGE> 26
EG&G VENTURE PARTNERS
By:
-------------------------------
Name:
Title:
KEARSARGE CAPITAL FUND, L.P.
By:
-------------------------------
Name:
Title:
LPP PARTNERS
By:
-------------------------------
Name: Christopher W. Lynch
Title: General Partner
MASSACHUSETTS TECHNOLOGY
DEVELOPMENT CORPORATION
By:
-------------------------------
Name:
Title:
----------------------------------
Sherman M. Wolf
NYNEX DEVELOPMENT COMPANY
By:
-------------------------------
Name: R. A. Jelmen
Title: Vice President
- 26 -
<PAGE> 27
PIONEER VENTURES LIMITED
PARTNERSHIP
By: Christopher W. Lynch
-------------------------------
Name: Christopher W. Lynch
Title: Vice President
PROVIDENCE PARTNERSHIP II
By: /s/
-------------------------------
Name:
Title:
WOOD INVESTMENT
By: /s/
-------------------------------
Name:
Title:
- 27 -
<PAGE> 1
EXHIBIT 11.1
VOICETEK CORPORATION
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------------- ----------
Primary Fully Diluted
---------- --------------
<S> <C> <C> <C>
For the year ended December 31, 1996:
Net income available to common stockholders.......................... $2,967,000 $4,063,000(2) $4,063,000(2)
========== ========== ==========
Weighted average common stock outstanding during the period.......... 401,000 401,000 401,000
Weighted average cheap stock outstanding during the period(1)........ 59,000 59,000 59,000
Assumed conversion of Preferred Stock................................ -- 4,577,000 4,577,000
Assumed exercise of common stock options, less purchase of
common stock under treasury stock method........................... 643,000 653,000 643,000
---------- ---------- ----------
Weighted average shares outstanding.................................. 1,103,000 5,690,000 5,680,000
========== ========== ==========
Net income per share................................................. $ 2.69 $ 0.71 $ 0 .72
========== ========== ==========
For the year ended December 31, 1995:
Net income available to common stockholders.......................... $1,396,000 $2,392,000(2)
========== ==========
Weighted average common stock outstanding during the period.......... 252,000 252,000
Weighted average cheap stock outstanding during the period(1)........ 59,000 59,000
Assumed conversion of Preferred Stock................................ 4,577,000
Assumed exercise of common stock options, less purchase of common
stock under the treasury stock method.............................. 785,000 1,030,000
---------- ----------
Weighted average shares outstanding.................................. 1,096,000 5,918,000
========== ==========
Net income per share................................................. $ 1.27 $ 0.40
========== ==========
For the year ended December 31, 1994:
Net income available to common stockholders.......................... $ 444,000 $ 854,000(2)
========== ==========
Weighted average common stock outstanding during the period.......... 149,000 149,000
Weighted average cheap stock outstanding during the period(1)........ 59,000 59,000
Assumed conversion of preferred stock................................ 4,577,000
Assumed exercise of common stock options, less purchase of common
stock under the treasury stock method.............................. 143,000 642,000
---------- ----------
Weighted average shares outstanding.................................. 351,000 5,427,000
========== ==========
Net income per share................................................. $ 1.26 $ 0.16
========== ==========
</TABLE>
- ----------
(1) In accordance with the Securities and Exchange Commission Staff Accounting
Bulletin No. 83, issuances of Common Stock and Common Stock equivalents
within one year prior to the initial filing date of the registration
statement, at share prices less than the assumed initial public offering
price of $11.00 per share (cheap stock), are considered to have been made
in anticipation of the contemplated public offering for which this
registration statement was prepared. Accordingly, these equity issuances
are treated as if issued and outstanding, using the treasury stock method,
for all periods presented.
(2) Adjusted to add back accretion of the Preferred Stock to redemption value
as the Preferred Stock is assumed to be converted for the Pro Forma and
Fully Diluted calculations.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement on Form S-1
of our report dated February 3, 1997, except as to the information presented in
Note 11, for which the date is February 12, 1997, on our audits of the
financial statements of Voicetek Corporation. We also consent to the references
to our firm under the captions "Experts" and "Selected Financial Data."
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 7,970
<ALLOWANCES> 70
<INVENTORY> 1,188
<CURRENT-ASSETS> 12,204
<PP&E> 5,191
<DEPRECIATION> 3,291
<TOTAL-ASSETS> 16,015
<CURRENT-LIABILITIES> 7,608
<BONDS> 0
11,297
0
<COMMON> 5
<OTHER-SE> (3,131)
<TOTAL-LIABILITY-AND-EQUITY> 16,015
<SALES> 16,239
<TOTAL-REVENUES> 22,101
<CGS> 5,183
<TOTAL-COSTS> 8,344
<OTHER-EXPENSES> 12,835
<LOSS-PROVISION> 39
<INTEREST-EXPENSE> 229
<INCOME-PRETAX> 704
<INCOME-TAX> (3,359)
<INCOME-CONTINUING> 4,063
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,063
<EPS-PRIMARY> $2.69
<EPS-DILUTED> $0.71
</TABLE>
