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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996)
For the fiscal year ended December 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________ to __________
Commission file number 0-15578
DAVOX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 02-0364368
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6 Technology Park Drive
Westford, Massachusetts 01886
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 952-0200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 Par Value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
Aggregate market value, as of February 29, 2000 of Common Stock held by non-
affiliates of the registrant: $363,205,514 based on the last reported sale price
on the National Market System as reported by Nasdaq on that date.
Number of shares of Common Stock outstanding at February 29, 2000: 13,452,946
DOCUMENTS INCORPORATED BY REFERENCE
The registrant intends to file a definitive Proxy Statement pursuant to
Regulation 14A within 120 days of the end of the fiscal year ended December 31,
1999. Portions of such Proxy Statement are incorporated by reference in Part
III.
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CAUTIONARY STATEMENTS
The Private Securities Litigation Reform Act of 1995 contains certain safe
harbors regarding forward-looking statements. Statements set forth herein may
contain "forward-looking" information that involves risks and uncertainties.
Actual future financial or operating results may differ materially from such
forward-looking statements. Statements indicating that the Company "expects,"
"estimates," "believes," "is planning," or "plans to" are forward looking, as
are other statements concerning future financial or operating results, product
offerings or other events that have not yet occurred. There are several
important factors that could cause actual results or events to differ materially
from those anticipated by the forward-looking statements. Such factors are
described throughout this filing, however the Company goes into greater detail
under Management's Discussion and Analysis of Financial Condition and Results of
Operations--Certain Factors That May Affect Future Results. Although the Company
has sought to identify the most significant risks to its business, the Company
cannot predict whether, or to what extent, any of such risks may be realized nor
can there be any assurance that the Company has identified all possible issues
that the Company may face.
ITEM 1. BUSINESS
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GENERAL
Davox Corporation ("Davox" or the "Company") and its subsidiaries develop,
market, support and service software solutions for the contact center
marketplace. Davox was founded in 1981 on a simple principal: provide solutions
that will enable call centers to optimize agent productivity and effectively
manage calling campaigns in order to provide superior customer service and
satisfaction. Since then, Davox has become a recognized leader in the customer
interaction management marketplace. Through its direct sales force and third-
party distribution channels, Davox provides a full range of customer interaction
management solutions to businesses involved in mission-critical customer contact
activities within such industries as financial services, media and
entertainment, retail, healthcare, telecommunications, transportation, utilities
and service bureaus. Davox(R) products and services are used by more than 1,000
organizations worldwide.
Davox was incorporated in Massachusetts in 1981 and reorganized in Delaware in
1982. The Company's common stock is listed on the NASDAQ National Market under
the symbol "DAVX". The Company is headquartered in Westford, Massachusetts.
The mailing address for the Company's headquarters is 6 Technology Park Drive,
Westford, Massachusetts, 01886 and its telephone number is (978)952-0200. Davox
can also be contacted through its web site at www.davox.com.
OVERVIEW
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Over the past few years, call centers have transformed into contact centers that
are designed to handle a wide range of customer interactions across a variety of
media including telephony, e-mail and web-enabled communications. These diverse
communications are unified by a common goal: establishing direct links between
contact center agents and customer information
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that deliver tangible improvements in sales and satisfaction.
In pursuit of this goal, Davox acquired AnswerSoft, Inc. in May 1998. As a
developer of inbound call routing, reporting and agent desktop automation
software specifically designed for the needs of the inbound-oriented contact
center, AnswerSoft's capabilities complemented Davox's leadership in outbound
and blended call center systems. After the acquisition, Davox integrated and
modularized AnswerSoft's technology into its product offerings, thereby
transforming the company into a full-service solution provider for contact
centers.
Subsequent to this integration effort, Davox introduced its Ensemble customer
interaction management suite in December 1999. Ensemble is a modular,
integrated solution that enables companies to optimize the value of their
customer interactions across a broad range of media. The system integrates
inbound call routing, outbound call management, seamless call blending, web
capabilities, desktop automation and comprehensive reporting capabilities. The
product's modular design makes these capabilities fully scalable, thereby
providing a framework for the continued growth and evolution of our customers'
technology investments.
Ensemble continues Davox's 20-year tradition of industry leadership. Designed to
address the strategic needs of world-class organizations, Ensemble(TM) reflects
Davox's long-standing commitment to provide solutions that are rapidly deployed,
highly automated and capable of delivering a rapid return on our customers'
technology investments.
The introduction of Ensemble supports the Company's efforts to achieve two key
strategic objectives: (i) to increase its market share in the customer contact
industry and (ii) to establish Ensemble as the standard for customer interaction
management.
As customer interaction management functions become increasingly critical to the
success of an enterprise, customer contact solutions must demonstrate a proven
ability to assist organizations in achieving their strategic goals. Ensemble(TM)
provides the opportunity to deliver key benefits to service-oriented customer
contact centers:
. ENHANCED REVENUES - The consolidation of mission-critical customer
interaction management functions enables senior managers to track complete
customer contact performance and identify potential cross-selling
opportunities.
. REDUCED OPERATING COSTS - Organizations can consolidate redundant or parallel
systems and agent pools by integrating both inbound and outbound customer
communications.
. INCREASED PRODUCTIVITY - Agents can perform a greater number of automated
tasks and reach more customers through multiple channels.
. IMPROVED CUSTOMER SERVICE - Customer loyalty is enhanced because customers
can communicate via the method that best suits their needs.
The Company believes that its Ensemble(TM) customer contact suite addresses the
needs of today's customer contact centers and is an optimal solution for
organizations looking to deliver world class service to their customers while
increasing revenues, agent productivity and gaining competitive advantage by
reducing operating costs.
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PRINCIPAL PRODUCTS AND APPLICATIONS
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Davox's product strategy is focused on its three major product lines:
Ensemble(TM), Unison(R) and LYRICall(TM).
ENSEMBLE
Released in North America in December 1999, Ensemble is a modular, integrated
solution that combines inbound, outbound, and blended call management with
powerful desktop automation tools, web capabilities and sophisticated real-time
and historical reporting. Since its release in December, Ensemble has been
recognized with two industry awards: Call Center News' Hot Picks 2000 and 1999
Product of the Year by Call Center CRM Solutions magazine
Ensemble is comprised of the following modules that can be deployed as either
stand-alone applications or as part of a set of integrated capabilities tailored
to meet specific technological and operational requirements:
. ENSEMBLE INBOUND - Supports inbound call processing requirements, such as
routing calls to specific agents or Automatic Call Distributor (ACD) queues,
converts telephony-based information into automated screen pops at the agent
workstation; and facilitates voice/data transfers.
. ENSEMBLE OUTBOUND - Provides powerful predictive and preview dialing,
campaign and call list management, scheduled recalls, automated messaging,
real-time filtering, system alerts and voice/data transfers.
. ENSEMBLE BLEND - Utilizes computer telephony integration (CTI) and non-CTI
integration to provide a seamless, blended environment that can be used to
monitor ACD queues that reflect service thresholds.
. ENSEMBLE DESKTOP - Provides a link between front-line agents and back-office
customer information systems. Based on Davox's browser-based scripting and
agent application software, LYRICall(TM), Ensemble Desktop provides contact
center agents with the tools necessary to execute more successful customer
contacts.
. ENSEMBLE REPORTING - Provides real-time and historical reporting capabilities
that allows managers to effectively manage their contact center operations.
Key functional highlights of the Ensemble(TM) platform include:
. ENTERPRISE-WIDE VOICE/DATA TRANSFER - With Ensemble(TM), data gathered during
a particular contact moves with the call during transfers. The accumulated
information is automatically forwarded from one contact center agent to the
next. This capability reduces call handling times, and increases "first call"
resolution rates without compromising customer satisfaction.
. INTEGRATED MANAGEMENT CONSOLE - An integrated console enables supervisors to
manage both telephony (inbound, outbound, and blend) and email/web based
interactions through a single workstation. The console includes a number of
features that help improve operational effectiveness, such as an Alerts
feature, which notifies the supervisor when defined productivity benchmarks
run the risk of being compromised.
. SINGULAR CTI LINK - Ensemble(TM) transfers screen pop information from
various sources to the contact center agent desktop via a consolidated CTI
link. This feature leverages investments in existing resources by allowing
Davox customers to channel all CTI-related activities through a single
source, without relying on multiple vendors.
. LIFE CYCLE CALL TRACKING - Ensemble's call tracking features gather
transaction information that can be used to identify and address the contact
center's customer
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activity trends. These records include specialized forms of information, such
as call segment length and enterprise-wide call movement patterns, that can
be used to fine-tune operations and enhance customer satisfaction.
Ensemble is scheduled to be available for international shipments in the second
quarter of 2000. Pricing for Ensemble starts at approximately $1,500 per agent.
The Company plans to increase and enhance the capabilities of the Ensemble
solution during 2000. The next major release of the product, version 2.0, is
scheduled for distribution during the second quarter of 2000. It is expected
that this release will incorporate a new module called Ensemble Online that will
integrate electronic mail contact management with telephone contact management.
In November 1999, Davox entered into a technology licensing agreement with Kana
Communications, a leading provider of online customer communications solutions
based in Palo Alto, California. Under the terms of the agreement, Davox will
incorporate e-business technologies from Kana for e-mail response into version
2.0 of its Ensemble customer contact suite.
The Company believes that this new online functionality will address one of the
fastest-growing requirements in customer interaction management: the need to
provide e-mail communications that are linked with telephony-based functions.
Ensemble's automated e-mail response capability is expected to enable companies
to begin the implementation of a convergent solution that accommodates both
telephony- and Internet-based interactivity.
UNISON(R)
Introduced in 1993, the Unison(R) call management system is designed to automate
the full range of outbound and blended calling activities within the customer
contact center. It integrates with existing voice and data systems, manages
outbound and call-blending applications and provides high-productivity tools to
increase the number of calls handled and the quality of each customer contact.
Unison technology is used primarily in customer contact centers with outbound
and blended calling requirements, such as credit/collections, telemarketing,
fundraising, and customer service. Unison is an award-winning, time-tested call
management solution that is used by companies throughout the world to meet their
mission-critical customer contact needs.
One of the key differentiating features of the Unison system is its Rules
Based(TM) Management technology. This technology enables customer contact
centers to define the parameters of calling campaigns based on specific business
objectives. The Unison system automatically implements the strategies, measures
calling effectiveness, and enables customer contact center managers to make
adjustments to calling campaigns in real-time without disrupting operations.
Unison is a fully scaleable architecture that lets contact centers modify and
extend the system without compromising system performance.
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Unison is designed to provide key outbound call management functionality,
including predictive and preview dialing, campaign and call list management,
scheduled recalls, automated messaging, real-time filtering, system alerts, and
voice/data transfers. The Unison system also provides a graphical management
console that monitors critical functions and displays information about calling
campaigns.
The Company believes that sales of Unison will remain strong as organizations
continue to seek effective solutions for outbound-based calling campaigns. As
such, the Company plans to commit resources to enhancing the product as dictated
by the marketplace.
Unison system pricing starts at approximately $100,000.
LYRICALL(TM)
Released in 1998, the Company's LYRICall software is designed to provide a link
between front-line contact center agents and back-office customer information
systems.
Utilizing Internet standard technologies, LYRICall provides customer contact
center agents with the ability to access customer specific data that empower
them to execute more successful customer contacts. Designers can quickly create
and deploy intuitive screen and script pages that help reduce implementation
costs, maximize agent productivity and increase customer satisfaction.
LYRICall features wizard and template functions that guide designers through the
creation of customer contact scripts and applications. Designers can create
applications using browser, Java, and HTML technologies without requiring
programming skills. Designers can write an application once and then deploy it
across a range of industry-standard devices and operating systems, including
desktop appliances and network computers. This significantly reduces
development costs and deployment times. LYRICall also requires no additional
client software to be installed on agent workstations, making the LYRICall
solution a true web-enabled interface.
LYRICall has been recognized with a variety of industry awards such as Best of
Show at CT Expo and 1999 Product of the Year from CTI Magazine.
The Company believes that there will continue to be significant growth
opportunities for LYRICall in all major geographies during 2000 and beyond. As
such, the Company is committed to providing the resources required to continue
to enhance the functionality and capabilities of this innovative product.
Pricing for LYRICall starts at $700 per agent.
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MARKETS AND DISTRIBUTION CHANNELS
Davox products and services are sold worldwide through multiple distribution
channels, including a direct sales force, distributors and resellers.
NORTH AMERICAN OPERATIONS
In North America, Davox sells its products primarily through a direct sales
force. Sales activities are organized and managed in three regions, each
consisting of territory representatives and solution consultants. Offices are
located throughout the United States and Canada.
Davox territory sales representatives and solution consultants take a solutions-
driven approach in working with prospective customers. Customer business goals
and integration requirements are clearly identified and defined before the sale
ensuring customer expectations are properly met on a timely basis. This
consultative selling approach, combined with Davox's own Enterprise Solutions
resources for application development and integration, ensure that the right
solution is quickly deployed to meet customer requirements.
In addition to direct sales in North America, Davox uses authorized resellers to
provide additional market coverage and revenue contribution. These resellers
include Siemens Information & Communication Networks, Inc. and Lucent
Technologies, Inc. The Company plans to expand its authorized reseller program
during 2000.
INTERNATIONAL OPERATIONS
During 1999, the Company expanded its sales presence in key geographic areas of
the world, establishing subsidiaries in Germany and Singapore. In addition, the
Company has a direct sales presence in the United Kingdom (London) and Latin
America (Mexico City). The Company plans to continue to expand its direct sales
presence in the international marketplace.
In addition to its direct sales presence in the international marketplace, Davox
licenses its products through indirect channels, utilizing distributors and
resellers. These indirect channel partners have the ability to not only resell
product licenses, but also have substantial skills in systems consulting and
integration to meet customer requirements. Currently, the Company's
international distributors include Wittel Comunicacoes LTDA (Brazil), GMA
Consulting S.A. (Argentina), OLTP Voice Systems, C.A. (Venezuela), Universal
Electronics & Computers, Inc. (Taiwan), IVRS International Ltd. (Hong Kong),
Marubeni Information Systems (Japan), Lake Corporation (Australia), Affinity
Communications (f.k.a. Data DPS(s) PTE LTD.), (Singapore), DataMetrix AB
(Scandinavia), Advanced Voice Applications BV (Netherlands), Teledynamics BV
(Belgium, the Netherlands and Luxembourg), DataPoint Corporation (Europe),
Sinclair Voicenet Limited (Scotland), and Multi-Connect (pty.) Ltd. (South
Africa).
In connection with sales outside the United States, some Davox products are
subject to regulation by foreign governments, which requires the Company to
follow certain telecommunications and safety certification procedures for some
countries. Failure to obtain necessary local country approvals or
certifications will restrict Davox's ability to sell into some countries. In
addition, other factors including, but not limited to currency rate fluctuation,
import/export restrictions, political instabilities and other unknown or
unforeseen eventualities, may affect international sales.
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International product revenue was approximately $10.8 million, $9.7 million and
$14.7 million, or approximately 20%, 18% and 25% of product revenue in 1999,
1998, and 1997, respectively.
In 1999, the Company derived 80% of its product revenue from North America; 16%
from Europe, the Middle East, and Africa; 3% from Asia Pacific; and 1% from
Latin America.
SUPPORT SERVICES
The Company offers a full line of warranty, service and support options in all
of its geographic markets. Central to the Company's maintenance service
offerings is the Worldwide Support Center located at Davox headquarters in
Westford, Massachusetts. The Company also operates satellite support offices in
Slough, United Kingdom, and Mexico City. From these locations, Davox support
professionals accept and manage telephone, web and email requests from customers
for information and remedial support. Using state-of-the-art case management
and diagnostic tools, the support centers provide end-to-end problem resolution.
Davox's contract coverage includes access to Davox's support web site for case
logging, interactive problem resolution, periodic maintenance updates and 24
hour x 365 day priority phone support, problem escalation and on-site hardware
maintenance requests.
The Company offers a tiered support program for its distributor channel.
Included in the program are periodic maintenance updates to distributors'
enrolled end-user base, access to Davox's distributor web site, escalated
support for distributor personnel, recommended training curriculums and a spare
parts repair/exchange program.
Davox seeks out and contracts hardware support with independent third party
service providers who are recognized for quality support and customer care
practices. Currently, these services are provided by Grumman Systems Support
Corporation ("GSSC"), a wholly owned subsidiary of Northrop Grumman Corporation
in the United States and Canada.
In addition, GSSC provides network design and systems integration services
allowing Davox to focus its expertise on customizing advanced contact center
solutions for its customers. Similar services are provided in the United Kingdom
by G&A Business Solutions, Ltd., and in Mexico by TECOcibernetica. The Company
believes that it has adequate resources internally and externally in order to
provide services to its customers and partners in the event services from these
organizations should cease in any manner, however loss of any one of these
relationships could materially adversely affect the ability for Davox to provide
support to its customers and partners in the geographic region covered by such
organization.
In early 1994, Davox discontinued its Computerized Automated Dialing System
(CAS(R)) and Communications Resource Server(R)/controller workstation (CRS(R))
products from its product line. Each of these products has now matured to the
end of its "useful life." Accordingly, Davox notified its CAS and CRS customers
in writing that the Company will no longer offer maintenance and support
services for these products after December 31, 1999.
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Davox's Educational Services offers a variety of courses designed to provide
customer contact centers with the skills and knowledge needed to enhance
productivity and raise the level of service they deliver to their customers.
Davox training facilities are located in Acton, Massachusetts; Richardson,
Texas; and Slough, United Kingdom. The Company also offers customized courses
at customer locations.
The Company's Professional Services group was established in 1997 and
reorganized in January 2000 as an Enterprise Solutions Services group. This
organization was established to expand the consulting and integration services
Davox offers to its customers. Drawing on the wealth of experience within
Davox, the organization offers consulting expertise on agent desktop automation,
database integration, call flow automation, project management and other
services to help customer contact centers enhance the productivity and value of
their Davox systems. These services focus on both the traditional customer
contact center as well as the emerging e-business markets.
Service revenue accounted for $38.6 million, or 42% of the Company's total
revenue in 1999. This is an increase of $3.5 million from $35.1 million or 39%
of the Company's total revenue in 1998. The Company's service revenue for 1998
increased $9.8 million from $25.3 million or 30% of the Company's total revenue
in 1997.
OPERATIONS
While the majority of the Company's hardware needs are met by readily available
off-the-shelf technology, a small portion remains proprietary. Third-party
contractors manufacture these proprietary hardware components and the Company
believes there are many qualified vendors for these services. The Company's
production process consists primarily of product staging, quality assurance,
final test and systems integration which occurs at its Westford facility.
The Company attempts to maintain multiple sources of supply for key items and
believes it has adequate sources of supply for its expected needs. While any of
these sources could be replaced if necessary, the Company might face significant
delays in establishing replacement sources or in modifying its products to
incorporate replacement components or software code. There can be no assurance
that the Company will not suffer delays resulting from non-performance by its
vendors or cost increases due to a variety of factors, including component
shortages or changes in laws or tariffs applicable to items imported by the
Company.
STRATEGIC PARTNERSHIPS
A complete customer relationship management system is extremely complex and
always entails integration with existing telecommunications systems, databases
and front office applications to fully meet customer requirements. Currently,
no vendor provides all the requisite elements for a fully integrated customer
relationship management system.
To meet this challenge and to increase its market opportunity, Davox has
undertaken strategic partnerships with various complementary technology and
platform vendors. These partners include Sun Microsystems, Kana Communications,
Siebel Systems, IEX Corporation, CenterForce Technologies, Witness Systems and
Microsoft.
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Additionally in 1999, Davox and Kana Communications entered into a global
reseller and technology licensing agreement, whereby Davox secured rights to
resell Kana's industry-leading online customer communications products. In
addition, Davox expects to integrate selected Kana technology into the next
major release of its Ensemble customer contact suite scheduled for release in
the second quarter of 2000.
COMPETITION
Davox currently competes in two distinct markets: customer interaction
management and outbound call management.
In the customer interaction management market, Davox offers its Ensemble product
suite which includes inbound, outbound, and blended call management as well as
online customer contact functionality that is essential in implementing an
overall customer relationship management system.
According to industry market analysts Datamonitor, the customer interaction
management market segment is expected to grow to more than $3 billion worldwide
by 2003 and is considered the second fastest software growth segment (28% CAGR,
1998 to 2003).
In this market, the Company currently competes with, among others, Genesys
Telecommunications (being acquired by Alcatel), Cisco System's Intelligent
Contact Management product line (comprised of recent acquisitions of Geotel and
Webline), Aspect Communications and Quintus Corporation.
In the outbound call management marketplace, Davox offers its Unison system.
Unison is an industry leading outbound solution for managing outbound and
blended calling campaigns primarily within telemarketing and collections
organizations.
According to industry market analysts Datamonitor, this market is projected to
grow to $730 million worldwide by 2003 (13% CAGR, 1998-2003). Much of this
growth opportunity exists in markets outside of North America.
In this market, the Company currently competes with, among others, eShare
(formerly Melita), EIS International and Lucent Technologies' call center
solutions unit, which includes the recent acquisition of Mosaix.
The Company believes that it has a number of advantages over its competitors in
the areas of product functionality, integration, deployment time and customer
service.
Certain of the Company's current and potential competitors are larger companies
that have greater financial, technical and marketing resources. It is possible
that competitors could produce products that perform the same or similar
functions as those performed by the Company's products. In addition, current and
potential competitors have established and may in the future establish
cooperative relationships among themselves or with third parties to increase the
ability of their products to address the needs of the Company's current or
prospective customers. Accordingly, it is likely that new competitors or
alliances among such competitors will emerge and may rapidly acquire significant
market share, which would have a material adverse effect on the Company's
business, financial condition and results of operations. In order to be
successful in the future, the Company must respond promptly and effectively to
the challenges of technological change, changing customer requirements and
competitive pressures.
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Increased competition could make it more difficult for the Company to maintain
its market presence.
SIGNIFICANT CUSTOMERS
Davox has more than 1,000 customers that are located worldwide and represent a
cross section of industries. For the year ended December 31, 1999, AT&T was the
Company's largest single customer, accounting for approximately 12% of total
revenue. In 1998, Lucent Technologies, Inc., a distributor of Davox products,
was the Company's single largest customer, accounting for approximately 13% of
total revenue. In 1997, Datapoint Corporation, a distributor of Davox products,
was the largest single customer, accounting for approximately 10% of total
revenue. Total revenue from the Company's top three customers amounted to
approximately 24%, 24% and 18% of total revenue in 1999, 1998 and 1997,
respectively. The Company believes that its dependence on any end user customer
or reseller is not likely to increase significantly as its products continue to
be accepted by both existing customers and new accounts in major industries
worldwide.
MARKETING AND PROMOTION
During 1999, Davox increased its investment in worldwide marketing and promotion
to increase awareness and demand for its products. Marketing activities include
targeted print advertising, web-based marketing, seminars, trade shows and
press/analyst relations. Davox also established joint marketing relationships
with a number of key technology alliance and distribution partners worldwide,
including Kana Communications and IEX Corporation.
Davox maintains a dynamic public web site containing a complete range of product
information, corporate news, customer profiles, investor information and general
company information. The Davox web site can be found at www.davox.com.
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company's product development efforts are aimed at designing and developing
customer contact center software that meets software industry standards and
incorporates technologies and features that the Company believes its customers
require. Most of the Company's products are developed internally by research
and development teams located at the Company's headquarters in Westford,
Massachusetts, and at a satellite development facility located in Richardson,
Texas. The Company also licenses certain technology and intellectual property
rights from third parties. The Company believes that by establishing mutually
beneficial relationships with third party technology companies it can provide
its customers with emerging technologies in the most timely and cost-effective
manner.
The Company also believes that a critical success factor of a new product is
getting it to market quickly. During 1999, Davox undertook a variety of
initiatives to accelerate the delivery of products to the marketplace. A
program management function was added to the Company's product introduction
process. This group is responsible for managing the introduction of new and
enhanced products across various functions at Davox. The Company believes that
the establishment of this key group will help to ensure corporate readiness to
ship and support products at an accelerated pace. The Company's Quality
Assurance Group was also expanded to provide enhanced quality testing across all
products. Finally, the Company has entered into a key technology agreement with
Kana Communications in order to incorporate Internet-related technologies into
its product line.
The Company's continued success depends on, among other factors, maintaining
close working
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relationships with its customers, business partners and resellers
and anticipating and responding to their evolving applications needs. The
Company is committed to the development of new products, the improvement of
existing products, and the continued evaluation of new technologies.
The Company spent $13.3 million on research and development in 1999, compared
with $12.1 million in 1998 and $10.4 million in 1997. This represented
approximately 14%, 14%, and 12%, respectively, of total revenue in each of those
years. The Company expects to incur approximately the same level of development
costs during 2000.
In addition, the Company did not capitalize any of its software development
costs in 1999, 1998 or 1997, as the additional development costs incurred to
bring the Company's products to a commercially acceptable level after
technological feasibility has been established are not significant.
INTELLECTUAL PROPERTY
The Company relies on a combination of patent, copyright, trademark, contract
and trade secret laws to establish and protect its proprietary rights in its
technology. The Company owns and licenses a number of patents relating to
predictive dialing, real-time telecommunication management, client/server
computer telephony software, and user interfaces. Software products are
furnished under software license agreements that grant customers licenses to
use, rather than to own, the products. The license agreements contain provisions
protecting the Company's ownership of the underlying technology. Upon
commencement of employment, employees execute a non-disclosure and invention
agreement under which inventions developed during the course of employment will,
at the election of the Company, be assigned to the Company and which further
prohibits disclosure of confidential Company information. There can be no
assurances that the steps taken by the Company in this regard will be adequate
to prevent misappropriation or infringement of its technology or that Davox's
competitors will not independently develop technologies that are substantially
equivalent or superior to Davox's technology. See also "Item 3-Legal
Proceedings." Effective protection of intellectual property rights may be
limited or unavailable in certain foreign countries.
EMPLOYEES
As of December 31, 1999, the Company had 444 employees worldwide, of whom 28
were engaged in operations; 292 in sales, marketing and customer support; 78 in
research, development and engineering; and 46 in administrative functions. None
of the Company's employees is represented by a collective bargaining agreement,
nor has the Company ever experienced any work stoppage. The Company considers
its relations with its employees to be good.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
From time to time, information provided by the Company, statements made by its
employees or information included in its filings with the Securities and
Exchange Commission (including this Form 10-K) may contain statements which are
not historical facts, so-called "forward-looking statements". Such forward-
looking statements involve risks and uncertainties which may adversely impact
whether or not such forward-looking statements come true. In particular, but
without limitation, statements, implied or actual, in "Item 1. Business",
relating to: (i) the Company's objective to gain market share and make Ensemble
the standard for customer contact management and the fact that Ensemble
addresses the needs of today's customer contact center; (ii) the international
availability of Ensemble being in the second quarter of 2000; (iii)
12
<PAGE>
releasing Ensemble Online in version 2 of Ensemble and its associated beneficial
synergies; (iv) the prediction that Unison sales will remain strong as
organizations continue to seek effective solutions for outbound-based calling
campaigns and that the Company will continue to commit resources to enhancing
Unison; (v) the plan to expand the Company's authorized reseller program; (vi)
the plan to expand the direct sales presence internationally; (vii) the
potential benefits as a result of the growth in the customer interaction
management market segment; (viii) the potential benefits as a result of the
growth in the outbound call management market; (ix) the prediction that the
Company's dependence on any one customer should not increase; (x) the fact that
the Company licenses (and plans to continue licensing) technology from other
parties, may be forward-looking statements. The Company's actual future results
may differ significantly from those stated in any forward-looking statements.
Factors that may cause such differences include, but are not limited to, the
factors discussed below. Each of these factors, and others, are discussed from
time to time in the Company's filings with the Securities and Exchange
Commission.
The Company's future results may be subject to substantial risks and
uncertainties. The Company purchases certain equipment for its products from
third-party suppliers and licenses certain components of its software code from
a number of third-party vendors. While the Company believes that third-party
equipment and software vendors could be replaced if necessary, the Company might
face significant delays in establishing replacement sources or in modifying its
products to incorporate replacement components or software code. There can be
no assurance that the Company will not suffer delays resulting from non-
performance by its vendors or cost increases due to a variety of factors,
including component shortages. The Company uses third party service providers
to fulfill its hardware support obligations with its customers. Additionally,
the Company relies on co-providers to assist its Professional Services
organization. While the Company believes that its currently contracted service
providers and co-providers are adequate at this time, the Company may face
significant delays in establishing replacement providers for such services.
The Company relies on certain intellectual property protections to preserve its
intellectual property rights. Any invalidation of the Company's intellectual
property rights or lengthy and expensive defense of those rights could have a
material adverse affect on the financial position and results of operations of
the Company.
The development of new products, the improvement of existing products and the
continuing evaluation of new technologies is critical to the Company's success.
Successful product development and introduction depends upon a number of
factors, including anticipating and responding to the evolving applications
needs of customers and resellers, timely completion and introduction of new
products, and market acceptance of the Company's products.
The customer interaction management and outbound call management industries are
extremely competitive. Certain current and potential competitors of the Company
are more established, benefit from greater market recognition and have
substantially greater financial, development and marketing resources than the
Company.
Additionally, the Company's quarterly and annual financial and operating results
are affected by a wide variety of factors that could materially adversely affect
revenue and profitability, including: the timing of customer orders; the
Company's ability to introduce new products on a timely basis; introduction of
products and technologies by the Company's competitors; and market acceptance of
the Company's and its competitors' products; effects of litigation
13
<PAGE>
described in Item 3 Legal Proceedings; the ability to hire and retain key
personnel and difficulties of any nature as a result of the impact of the Year
2000 on Davox, its customers, its vendors or its distributors.
International sales are expected to continue to account for a significant
portion of the Company's net sales in future periods. International sales are
subject to certain inherent risks, including, but not limited to those risks
discussed in this section and elsewhere in the Form 10-K, unexpected changes in
regulatory requirements and tariffs, difficulties in staffing and managing
foreign operations, longer payment cycles, problems in collecting accounts
receivable, potentially adverse tax treatment, and the inability to expand
distribution channels. As a result of the foregoing and other factors, the
Company may experience material fluctuations in future financial and operating
results on a quarterly or annual basis, which could materially and adversely
affect its business, financial condition, results of operations and stock price.
ITEM 2. PROPERTIES
- ------------------
The Company's corporate offices are located at a 60,000 square foot, two-story
building in Westford, Massachusetts. The facility is occupied under a lease
that expires in September 2008. The Company also leases a Richardson, Texas
facility of approximately 26,000 square feet, which expires in January 2002. In
addition, the Company leases facilities for district and regional sales and
service offices in seven states as well as in Canada, the United Kingdom,
Mexico, Singapore and Germany. The current aggregate annual rental payments for
all of the Company's facilities are approximately $2.0 million.
In January 2000, the Company signed an amended lease under which it will add a
25,000 square foot addition to its Westford, Massachusetts facility. The
Company expects that the addition will be ready for occupancy by the end of
2000.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
In 1998, a customer of Davox was sued for patent infringement by Manufacturing
Administration and Management Systems, Inc. (MAMS) alleging that the customer's
use of a computer driven automated dialer infringes MAMS's patent. Under Davox's
contract with this customer, Davox is obligated to defend and indemnify such
customer against any such claims. In the third quarter of 1998, Davox sued MAMS
in federal court in the Eastern District of New York in an action entitled
"Davox Corporation v. Manufacturing Administration and Management Systems, Inc."
In the lawsuit, Davox is seeking a declaratory judgment that its products do not
infringe the MAMS patent or, in the alternative, that the MAMS patent is
invalid. Davox believes that MAMS's assertions of patent infringement are
without merit, and Davox will vigorously pursue this action against MAMS. While
the outcome of this litigation cannot be predicted with certainty at this time,
management does not believe that the outcome will have a material adverse effect
on the Company's business, financial condition or results of operations.
14
<PAGE>
The Company is from time to time subject to claims arising in the ordinary
course of business. While the outcome of the claims cannot be predicted with
certainty, management does not expect these matters to have a material adverse
effect on the results of operations and financial condition of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
There were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1999.
Item 4A. Executive Officers of the Registrant
- ----------------------------------------------
The executive officers of the Company, the age of each, and the period during
which each has served in his present office are as follows:
Mr. Alphonse M. Lucchese (64) has served as Chairman and Chief Executive Officer
since July 1994, and also served as President from July 1994 until January of
1998. Mr. Lucchese joined Davox following seven years as President and Chief
Executive Officer at Iris Graphics, a manufacturer of high quality color
printers. Prior to joining Iris, Mr. Lucchese had served as Vice President of
Sales at Xyvision, Inc., a manufacturer of computer-integrated publishing
systems sold to Fortune 500 companies, commercial printers and typesetters and
government agencies. Mr. Lucchese was Vice President of Sales for Davox
Corporation from 1983 until 1984. Earlier, he had spent six years at Raytheon
Data Systems, where he attained the position of Vice President and General
Manager of Northeastern Operations. Following service in the U.S. Army during
the mid-1950s, Mr. Lucchese began his professional career at IBM as a systems
engineer, later moving into the position of marketing representative.
Jeffrey E. Anderholm (43) serves as Senior Vice President of Marketing. He has
overall responsibility for product marketing, product management, and marketing
communications worldwide. Mr. Anderholm, who joined Davox in January 1999 as
Vice President of Marketing, was previously Vice President of Marketing for Art
Technology Group, a Boston-based Internet company delivering applications and
services for personalized content and e-commerce. Prior to joining Art
Technology Group, Mr. Anderholm was Vice President, Electronic Channel
Development at Fidelity Investments. While at Fidelity, he helped lead the
effort to develop online channels, focusing on the Internet. He was responsible
for strategic market planning and the direction of marketing programs across
many functional groups within Fidelity. Prior to Fidelity, Mr. Anderholm served
in a variety of marketing roles of increasing responsibility at Lotus
Development Corporation, where he managed development and execution of worldwide
marketing strategy, positioning and marketing programs for the Lotus 1-2-3 and
Freelance product lines.
Mr. John E. Cambray (44) has served as Vice President, Product Development since
August 1993. Mr. Cambray has been with Davox since 1982 and has held various
software development and engineering management positions during this time.
Prior to joining Davox, Mr. Cambray held various design and management positions
with FASFAX Corporation and Sanders Associates.
15
<PAGE>
Mr. Joseph R. (Rusty) Coleman (44) serves as Senior Vice President of North
American Sales. In this position, Mr. Coleman oversees all direct Davox sales
activities in the United States and Canada, Davox's solutions consulting
services as well as Davox's channel relationships within North America. In
addition, he is responsible for technical sales support and sales
administration. Mr. Coleman joined Davox in 1994 and served as a Regional Vice
President of Sales before being appointed Vice President of North American Sales
in 1998. Mr. Coleman was promoted to Senior Vice President of North American
Sales in January 2000. Prior to joining Davox, Mr. Coleman held management
positions of increasing responsibility at such technology companies as XL
Datacomp, Picture Data, Inc., and TRACS, Inc.
Mr. John J. Connolly (43) is Senior Vice President, Finance, Chief Financial
Officer and Treasurer. He joined the Company in August 1994, and was elected
Treasurer in January 1997. Mr. Connolly joined Davox from Iris Graphics where
he had been Vice President of Finance since 1989. Prior to joining Iris, Mr.
Connolly held finance and accounting positions of increasing responsibilities at
Instrumentation Laboratory, a manufacturer of medical equipment.
Mr. Mark Donovan (45) serves as Senior Vice President, Operations and Customer
Services. Since joining Davox in 1983, Mr. Donovan has held management positions
of increasing responsibility, including Vice President, Customer Service. He
has also held various materials and manufacturing management positions within
the Company. Prior to joining Davox, Mr. Donovan held various management
positions with Applicon, Inc. and Raytheon Corporation.
Mr. James F. Mitchell (53) serves as Chief Technical Consultant. He is a
founder of the Company and has served as Senior Vice President and Chief
Technical Officer since 1983. From September 1993 to August 1994, Mr. Mitchell
managed the domestic sales operations of the Company and from 1981 to 1983, he
was Vice President, Engineering of the Company. Prior to joining Davox in 1981,
Mr. Mitchell served as Manager of Systems Development at Applicon, Inc., a
producer of CAD/CAM products.
Dr. James T. Pepe (55) serves as Senior Vice President of Research and
Development. He is responsible for leading Davox's research and development
efforts, with particular emphasis on the company's evolving suite of customer
contact solutions. Before joining Davox in September 1999, Dr. Pepe served as a
corporate officer and vice president of product development for Gensym
Corporation, a leading supplier of software products and services for
intelligent operations management. He was responsible for overseeing the
integration of intelligent system technologies with state-of-the-art software
technologies in distributed client/server environments. He also managed the
development of leading-edge Internet and intranet technologies, including
product sets with Java-based, intelligent agent capabilities. Prior to Gensym,
Dr. Pepe served as a group manager for the Corporate Information Systems Group
at Digital Equipment Corporation. Previously, Dr. Pepe was vice president of
software development for Prime Computer, Inc. He began his career working at the
Massachusetts Institute of Technology's Draper Lab, developing real-time
executive systems and flight software.
16
<PAGE>
Mr. Douglas W. Smith (57) serves as Senior Vice President of International
Operations. In this position, he is responsible for the Company's international
sales and distribution channels worldwide. Mr. Smith joined the company as Vice
President of Sales and Marketing in September, 1994, following seven years at
Iris Graphics. Prior to joining Iris, Mr. Smith worked for nearly 20 years in
sales, managerial, and executive-level capacities for General Electric
Information Systems, Honeywell Information Systems, Raytheon Data Systems and
Phoenix Data Systems.
Officers are elected by and serve at the discretion of the Board of Directors.
17
<PAGE>
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
- ------ -----------------------------------------------------------------
MATTERS
-------
Davox's Common Stock has been traded on the Nasdaq stock market under the
symbol "DAVX" since its initial public offering on April 28, 1987. Prior to
that date there was no public market for Davox's Common Stock. The following
table sets forth the range of high and low sale prices per share of Common Stock
on the National Market System for each quarter of the years ended December 31,
1999 and 1998 as reported by the National Association of Securities Dealers
Automated Quotation System (NASDAQ). During 1997, the Company effected a three
for two stock split through the issuance of a 50% stock dividend. All share and
per share amounts affected by this split, that are contained in this report on
Form 10-K have been retroactively adjusted for all periods presented.
<TABLE>
<CAPTION>
Fiscal 1999
High Low
-------------------
<S> <C> <C>
First Quarter 10-1/4 5-15/16
Second Quarter 13-1/2 6
Third Quarter 17-1/8 9-3/4
Fourth Quarter 25-1/2 12-3/8
<CAPTION>
Fiscal 1999
High Low
-------------------
<S> <C> <C>
First Quarter 34-7/8 24-1/2
Second Quarter 29-7/8 16-9/16
Third Quarter 22-1/4 9-3/16
Fourth Quarter 9-1/8 5-3/8
</TABLE>
As of February 29, 2000, there were approximately 375 holders of record of
the Company's Common Stock and approximately 4,600 beneficial shareholders of
the Company's Common Stock.
In January 1999, the Board of Directors authorized, effective February 1,
1999, the purchase of up to 3,000,000 shares of the Company's common stock, at
such times when the Company deems such purchases to be an effective use of cash.
Shares that are repurchased may be used for various purposes including the
issuance of shares pursuant to the Company's stock option plans. Under the
stock repurchase program, shares may be repurchased, at management's discretion,
from time to time at prevailing prices in the open market. The repurchase
program of three million shares represented approximately 21% of the Company's
issued and outstanding shares at that time. As of February 29, 2000, the Company
had repurchased 1,326,400 shares under this repurchase program.
18
<PAGE>
The Company has never paid cash dividends on its Common Stock and has no
present intentions to pay cash dividends in the future. The Company intends to
retain any future earnings to finance the growth of the Company.
The Company has not sold any equity securities during the period covered by
this report that were not registered under the Securities Act of 1933, as
amended.
19
<PAGE>
ITEM 6 SELECTED FINANCIAL DATA
- ------ -----------------------
The following table sets forth certain condensed consolidated financial
data with respect to the Company for each of the five years in the period ended
December 31, 1999:
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------------------------------------
1999 1998 (a) 1997 (a) 1996 (a) 1995 (a)
------------- ------------- ------------- ------------- -----------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
Condensed Consolidated Statement
of Operations Data:
Total revenue $92,354 $88,948 $83,554 $57,098 $38,597
Cost of revenue 30,710 30,114 28,029 22,230 17,164
-------------- -------------- -------------- -------------- ------------
Gross profit 61,644 58,834 55,525 34,868 21,433
Research, development and
engineering expenses 13,259 12,086 10,418 6,734 4,901
Selling, general and
administrative 37,077 34,841 29,710 19,704 13,967
expenses
Non-recurring merger costs - - - - 1,926 - - - - - - - - - - - -
-------------- -------------- -------------- -------------- ------------
Income from operations 11,308 9,981 15,397 8,430 2,565
Other income, net 2,815 2,941 2,031 1,217 629
-------------- -------------- -------------- -------------- ------------
Income before provision
for income taxes 14,123 12,922 17,428 9,647 3,194
Provision for income 2,118 4,393 2,507 1,014 559
taxes
-------------- -------------- -------------- -------------- ------------
Net income $12,005 $ 8,529 $14,921 $ 8,633 $ 2,635
============== ============== ============== ============== ============
Earnings per share:
Basic $.89 $.60 $1.15 $.72 $.23
============== ============== ============== ============== ============
Diluted $.85 $.58 $1.05 $.64 $.21
============== ============== ============== ============== ============
Weighted average
shares outstanding:
Basic 13,531 14,130 12,940 11,947 11,280
============== ============== ============== ============== ============
Diluted 14,165 14,822 14,270 13,593 12,846
============== ============== ============== ============== ============
<CAPTION>
December 31,
----------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Condensed Consolidated
Balance Sheet Data:
Working capital $66,085 $62,756 $52,847 $21,129 $11,299
Total assets 99,043 89,423 81,560 44,478 24,115
Long-term obligations - - - - - - - - 297 - - - - 50
Redeemable Preferred Stock - - - - - - - - 13,911 8,480 8,480
Stockholders' equity 72,514 69,327 44,464 16,890 5,445
</TABLE>
(a) Historical financial information has been restated to reflect the
combination of Davox and AnswerSoft in 1998 accounted for as a pooling of
interests and the 3-for-2 stock split effected in the form of a stock dividend
payable to shareholders of record on May 13, 1997.
20
<PAGE>
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------ -----------------------------------------------------------------------
OF OPERATIONS
- -------------
All statements contained herein that are not historical facts, including, but
not limited to, statements regarding anticipated future capital requirements,
the Company's future development plans, the Company's ability to obtain debt,
equity or other financing, and the Company's ability to generate cash from
operations, are based on current expectations. These statements are forward
looking in nature and involve a number of risks and uncertainties, as more fully
described under "Certain Factors That May Affect Future Results." Actual results
may differ materially.
The following table sets forth, for the periods indicated, the percentage of
revenue represented by items as shown in the Company's Consolidated Statements
of Operations. This table should be read in conjunction with the Selected
Financial Data, Consolidated Financial Statements and Notes to Consolidated
Financial Statements contained elsewhere herein.
<TABLE>
<CAPTION>
Percentage of Total Revenue For The
Years Ended December 31,
----------------------------------------------------------------
1999 1998 1997
----------------------------------------------------------------
<S> <C> <C> <C>
Product revenue 58.2% 60.5% 69.8%
Service revenue 41.8 39.5 30.2
----------------------------------------------------------------
Total revenue 100.0 100.0 100.0
Cost of revenue 33.3 33.8 33.5
----------------------------------------------------------------
Gross profit 66.7 66.2 66.5
Research, development
and engineering expenses 14.4 13.6 12.5
Selling, general and
administrative expenses 40.1 39.2 35.6
Non-recurring merger costs ----- 2.2 -----
----------------------------------------------------------------
Income from operations 12.2 11.2 18.4
Other income, net 3.1 3.3 2.4
----------------------------------------------------------------
Income before provision
for income taxes 15.3 14.5 20.8
Provision for income taxes 2.3 4.9 3.0
----------------------------------------------------------------
Net income 13.0% 9.6% 17.8%
====== ===== ======
</TABLE>
Total revenue was approximately $92.4 million, $88.9 million and $83.6
million for the fiscal years ended December 31, 1999, 1998 and 1997,
respectively. Total revenue increased
21
<PAGE>
4.0% for the year ended December 31, 1999 compared to the same period in 1998
and increased 6.5% in fiscal year 1998 compared to fiscal year 1997. Total cost
of revenue as a percentage of total revenue was 33.3% in fiscal year 1999, 33.8%
in fiscal year 1998 and 33.5% in fiscal year 1997.
Product revenue was approximately $53.8 million, $53.8 million and $58.3
million in fiscal years 1999, 1998 and 1997, respectively. Product revenue was
consistent in 1999 and decreased by 7.7% in 1998 as compared to 1997. The
decrease in 1998 was due to lower product sales in the international market,
which was only partially offset by a slight increase in domestic sales.
Cost of product revenue as a percentage of product revenue was 18.2%, 19.5%,
and 20.7% in fiscal years 1999, 1998 and 1997, respectively. The decrease as a
percentage of product revenue in 1999 and 1998 was due to the continued decrease
in the hardware content of the Company's products.
Service revenue was approximately $38.6 million, $35.1 million, and $25.3
million in fiscal years 1999, 1998 and 1997, respectively. Service revenue
increased 9.9% and 39.1% in 1999 and 1998, respectively. The increase in 1999
was due to increased professional services revenue and an increase in
maintenance revenue related to the growth in the installed base of the Company's
products in recent years. The increase in 1998 was due to an increase in
maintenance revenue related to the growth in the installed base of the Company's
products and increased implementation and professional services revenue over
1997.
Cost of service revenue as a percentage of service revenue was 54.2%, 55.8%
and 63.3% in 1999, 1998 and 1997, respectively. These decreases as a percentage
of service revenue were attributable to the growth in service revenue in 1999
and 1998, which exceeded the associated increases in the costs of servicing a
larger installed base of products.
Revenue from the Company's largest single customer in each of 1999, 1998 and
1997 was approximately 12%, 13%, and 10% of total revenue, respectively.
Revenue from the Company's three largest customers amounted to 24%, 24% and 18%
of total revenue in 1999, 1998 and 1997, respectively. The Company intends to
continue to broaden its base of existing and new customers by penetrating new
markets, expanding its direct international sales force and using alternate
channels of distribution, thereby decreasing its dependence on its largest end-
user customers.
Research, development and engineering expenses were approximately $13.3
million, $12.1 million and $10.4 million, representing 14.4%, 13.6% and 12.5% of
total revenue during 1999, 1998 and 1997, respectively. The increase in 1999
was primarily attributable to higher payroll, depreciation and consulting
expenses compared to 1998. The increase in 1998 was due to higher payroll
expenses compared to 1997.
Selling, general and administrative expenses were approximately $37.1
million, $34.8 million and $29.7 million, representing 40.1%, 39.2% and 35.6% of
total revenue during 1999, 1998 and 1997, respectively. The increases in 1999
were mostly attributable to increased bonus and commission expense and increased
payroll and related expenses. The increases in 1998 were primarily attributable
to increased payroll and related expenses, increased travel and related sales
expenses, and increased consulting fees.
22
<PAGE>
For the year ended December 31, 1998, in connection with the merger with
AnswerSoft, Inc., the Company incurred non-recurring merger transaction costs,
primarily professional fees, of $1.3 million. In addition, the Company incurred
non-recurring costs, primarily severance and lease termination costs, of
$597,000 related to the integration of the two businesses.
Other income, derived primarily from investments in commercial paper,
corporate bonds, Eurodollar bonds, and money market instruments decreased 4.3%
in 1999 and increased 44.8% in 1998. The decrease in 1999 was due to lower
average cash balances as the Company repurchased approximately 1.3 million
shares of its common stock at an aggregate cost of $10.2 million during 1999.
The increase in 1998 was due primarily to the significant increase in the
average cash and cash equivalent and marketable securities balances over the
prior fiscal year.
INCOME TAXES
The Company provided for income taxes at estimated annual effective tax rates
of 15.0%, 34.0% and 14.4% for 1999, 1998 and 1997, respectively. These rates
are lower than the combined federal and state statutory tax rates due primarily
to the utilization of net operating loss and tax credit carryforwards and
benefits derived from the Company's foreign sales corporation. The Company's
1999 effective tax rate reflects the utilization of net operating losses
resulting from the Company's acquisition of AnswerSoft, Inc. in 1998.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, the Company's principal sources of liquidity were
its cash and cash equivalent balances of approximately $34.4 million, and its
marketable securities of approximately $30.8 million. As of December 31, 1998,
the Company's principal sources of liquidity were its cash and cash equivalent
balances of approximately $31.8 million, and its marketable securities of
approximately $27.7 million. The overall increase in cash and cash equivalents
and marketable securities was due primarily to favorable operating results and
proceeds from exercises of stock options. In addition, the Company has an
agreement for a working capital line of credit with a bank for up to $2.0
million based on eligible receivables, as defined. There were no outstanding
balances as of December 31, 1999 or 1998 under this line of credit.
The Company's primary investing activities were purchases of property and
equipment, and purchases and sales of marketable securities. Property and
equipment purchases were approximately $3.4 million in 1999 compared to
approximately $3.4 million and $4.6 million in 1998 and 1997, respectively.
Purchases and sales of marketable securities generated a net cash outflow of
approximately $3.1 million in 1999 compared to a net cash outflow of
approximately $3.9 million and $14.0 million in 1998 and 1997, respectively.
Cash used by financing activities in 1999 was $8.8 million and resulted from
the Company's repurchase of approximately 1.3 million shares of its common stock
at an aggregate cost of $10.2 million, partially offset by proceeds generated
from the exercise of stock options and shares purchased by employees under the
Company's employee stock purchase plan. Cash provided by financing activities
in 1998 was approximately $1.9 million, which was generated primarily from
proceeds from exercises of stock options and shares purchased by employees under
the Company's employee stock purchase plan. Cash provided by financing
activities in 1997 was approximately $7.7 million, and was generated primarily
from the issuance of $5.1
23
<PAGE>
million of AnswerSoft preferred stock and from proceeds from the exercise of
stock options and shares purchased by employees under the Company's employee
stock purchase plan.
Working capital as of December 31, 1999 was approximately $66.1 million as
compared to approximately $62.8 million as of December 31, 1998. Total assets
as of December 31, 1999 were approximately $99.0 million compared to
approximately $89.4 million as of December 31, 1998. These increases were
primarily attributable to increases in cash and cash equivalents, marketable
securities and accounts receivable due to the Company's favorable operating
results.
Management believes, based on its current operating plan, that the Company's
existing cash and cash equivalents, marketable securities, cash generated from
operations and amounts available under its working capital line of credit will
be sufficient to meet the Company's cash requirements for the next twelve
months.
IMPACT OF INFLATION
The Company believes that inflation did not have a material effect on the
results of operations in 1999, 1998 and 1997.
NEW ACCOUNTING STANDARDS
In June 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 137, Accounting for Derivative
Financial Instruments and Hedging Activities - Deferral of the Effective Date of
FASB Statement No. 133, which defers the effective date of SFAS No. 133 to all
fiscal quarters of all fiscal years beginning after June 15, 2000. SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities, establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
It requires entities to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The Company does not anticipate the adoption of these Statements
to have a material impact on its financial position or results of operations.
YEAR 2000 READINESS DISCLOSURE - made pursuant to the Year 2000 Information and
Readiness Disclosure Act, Pub. L. No. 105-271 (1998)
The Year 2000 presented potential concerns and issues for the Company as
well as other companies in the information technology industry. In general, Year
2000 readiness issues typically arose in computer software and hardware systems
that use two digit date formats, instead of four digit dates, to represent a
particular year. Users had to test their unique combination of hardware, system
software (including databases, transaction processors, and operating systems)
and application software in order to achieve Year 2000 readiness.
YEAR 2000 COMMITTEE
The Company established a Year 2000 steering committee under the auspices
of the Company's senior technical executive to evaluate, plan and implement
policies and practices, including contingency planning, and to address the
impact of the Year 2000 on the Company
24
<PAGE>
and its products. The Company's Year 2000 readiness preparations fell into three
categories: (1) product readiness, addressing product functionality; (2)
internal readiness, addressing the Year 2000 operability of internal information
technology ("IT") systems and mission critical non-IT systems; and (3) third
party readiness, addressing the preparedness of relevant third parties and the
Year 2000 operability of products furnished for internal use and resale. After
reviewing these areas, the committee reported to the Board of Directors specific
areas of concern and a plan for resolving and further testing of any remaining
Year 2000 issues. The committee also formulated a contingency plan in the event
that the committee reasonably determined that certain Year 2000 issues may not
be resolved by the end of 1999 or if unforeseen problems arose. As of the date
of this filing, the Company has not encountered any material problems. Despite
this fact, the Company and the steering committee remain focused on addressing
any problems that may arise. The Company does not anticipate any material
problems. Should any problems arise, the Company believes it has adequate
resources to address them properly.
PRODUCT READINESS
The Company established Year 2000 date operability standards against which
the most current versions of its software products were tested. The Company
completed testing of its current line of Unison(R) software products and
determined that the most current versions conform to these standards and were
Year 2000 ready. In connection with the acquisition of AnswerSoft, Inc. in May
1998, the Company acquired the Concerto(TM) line of software tool products. The
Company completed testing of the current releases of Concerto(TM) software
products and determined that they were Year 2000 ready, except IIR. All versions
of IIR were not believed to be Year 2000 ready. All customers were notified to
upgrade to SmartRouteO, which was Year 2000 ready. Despite the Company's testing
and despite the pausing of December 31, 1999, there can be no assurance that the
Company's products do not contain undetected errors or defects related to Year
2000 operability that may result in material costs to the Company or that the
Company's products contain all features and functionality considered necessary
by customers, end users and distributors to be Year 2000 ready.
In early 1994, the Company discontinued its Computerized Automated Dialing
System ("CAS") and Communications Resource Server ("CRS") product lines and
introduced the Unison brand line of software products. Support of the CAS and
CRS products were discontinued as of December 31, 1999. The Company did not
test the CAS and CRS product lines and believes that they do not conform to its
test standards and were not Year 2000 ready. The Company notified known users
of these products that support was being discontinued and that users may
experience Year 2000 related operability issues. Users of these discontinued or
"legacy" products were encouraged to migrate to the Unison product line. The
Company's exposure arising from its legacy products is not known. The Company
does expect to incur additional costs associated with migrating users of legacy
products, but does not believe these costs will be material.
While the Company believes that most of its current releases of products
are Year 2000 ready, other factors may result in an application created using
the Company's products not being Year 2000 ready. Some of these factors include
improper programming techniques used by third parties in creating the
application, customization, or non-compliance of hardware, software or firmware
not provided by the Company with which the products operate. The Company does
not believe that it would be liable in such an event. However, due to the
unprecedented nature of the potential litigation related to Year 2000 readiness
as discussed in
25
<PAGE>
the industry and popular press, the most likely worst case scenario is that the
Company would be subject to litigation. It is uncertain whether or to what
extent the Company may be affected by such litigation.
The Company tested only the current versions of its products and did not
test earlier versions of its products. The Company believes some of its
customers may be running product versions which have not been tested and may
experience Year 2000 date related operability issues. The Company identified
these customers and encouraged them to migrate to current versions of the
products. Further, the Company cautioned users of such products to conduct their
own Year 2000 operability testing to determine if continued use of the products
allowed them to meet their own Year 2000 readiness objectives. While many
customers were upgraded to Year 2000 ready versions of products under
maintenance coverage, if eligible, in the normal course the Company expects to
incur some increased expenses associated with the furnishing of upgrades and
modifications. At this time, the Company does not believe that the cost of
potential upgrades or modifications will have a material effect on the Company's
business, financial condition and operating results. To date, the Company has
not experienced any material adverse effects due to the Year 2000 readiness of
the most recent version of its products.
INTERNAL READINESS
The Company conducted a Year 2000 readiness audit of its internal IT
systems (including telecommunication, facilities management, safety and security
systems). The Company did not encounter any material operational issues or
incurring material costs associated with preparing its internal IT and non-IT
systems for the Year 2000, the Company will continue to monitor its systems and
there can be no assurance that the Company will not experience unanticipated
negative consequences or material costs caused by undetected errors or defects
in the technology used in its internal systems, which include third party
hardware, firmware, and software. To date, the Company has not experienced any
material adverse effects on its internal systems due to Year 2000 readiness.
THIRD PARTY READINESS
The Company assessed the Year 2000 readiness of its material third parties,
such as public utilities and key clients and suppliers, who provide external
services to the Company. The Company has certain key relationships with
suppliers which furnish components and software used by the Company in its
products. If these suppliers fail to adequately address the Year 2000 issue for
the products they supply the Company, this could have a material adverse effect
on the Company's operations, reputation, and financial results. Certain of the
Company's products contain third party components and software that is integral
to its operation for which the cost and time to integrate alternative components
or software into these products would be material. To date, the Company has not
experienced any material adverse effects on its business due the Year 2000
readiness of its material third parties.
CONTINGENCY PLANS AND WORST CASE SCENARIO
The Company developed contingency plans to operate in the event that its
products, systems, or business partners were not Year 2000 ready. The Company
did not experience any material adverse effects on its business due to the Year
2000 readiness of its products, systems or business partners.
26
<PAGE>
COSTS, SOURCE OF FUNDS AND ACCOUNTING TREATMENT
The Company expensed all costs related to its Year 2000 compliance program
unless the useful life of the technological asset was extended or increased.
The expenses incurred to date have not had a material impact on the Company's
results of operations or financial condition. The Company funded its Year 2000
expenses through cash flows from operations. The impact of the Year 2000 was and
remains difficult to discern, but it is not considered to be a material risk
when evaluating future growth and performance of the Company.
27
<PAGE>
ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ---------- ----------------------------------------------------------
Derivative Financial Instruments, Other Financial Instruments, and Derivative
Commodity Instruments.
As of December 31, 1999 and 1998, the Company did not participate in any
derivative financial instruments or other financial and commodity instruments
for which fair value disclosure would be required under SFAS No. 107. All of
the Company's investments are short-term, Euro dollar bonds, investment-grade
commercial paper, and money market accounts that are carried on the Company's
books at amortized cost, which approximates fair market value. Accordingly, the
Company has no quantitative information concerning the market risk of
participating in such investments.
PRIMARY MARKET RISK EXPOSURES
The Company's primary market risk exposures are in the areas of interest rate
risk and foreign currency exchange rate risk. The Company's investment
portfolio of cash equivalent and short-term investments is subject to interest
rate fluctuations, but the Company believes this risk is immaterial due to the
short-term nature of these investments.
The Company's exposure to currency exchange rate fluctuations has been and is
expected to continue to be modest due to the fact that the operations of its
international subsidiaries are almost exclusively conducted in their respective
local currencies. International subsidiary operating results are translated
into U.S. dollars and consolidated for reporting purposes. The impact of
currency exchange rate movements on inter-company transactions was immaterial
for the years ended December 31, 1999, 1998 and 1997. Currently the Company
does not engage in foreign currency hedging activities.
28
<PAGE>
ITEM 8 CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- --------------------------------------------------------
Index to Consolidated Financial Statements and Financial Statement Schedule
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants 30
Report of Independent Public Accountants 31
Consolidated Balance Sheets as of December 31,
1999 and 1998 32
Consolidated Statements of Income for the Years
Ended December 31, 1999, 1998 and 1997 33
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1999, 1998
and 1997 34
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1999, 1998 and 1997 35
Notes to Consolidated Financial Statements 36
Report of Independent Public Accountants on Financial
Statement Schedule 56
Schedule II - Valuation and Qualifying Accounts 57
</TABLE>
29
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Davox Corporation:
We have audited the accompanying consolidated balance sheets of Davox
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1999
and 1998 and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of
AnswerSoft, Inc., a company acquired during 1998 in a transaction accounted for
as a pooling of interests, as discussed in Note 2. Such statements are included
in the consolidated financial statements of Davox Corporation and reflect total
revenues of $6,738,000 for the year ended December 31, 1997 of the related
consolidated totals. These statements were audited by other auditors whose
report has been furnished to us. Our opinion expressed herein, insofar as it
relates to amounts included for AnswerSoft, Inc., is based solely upon the
report of the other auditors.
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 and the report of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audit and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Davox Corporation and subsidiaries
as of December 31, 1999 and 1998 and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1999 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 24, 2000
30
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Board of Directors and Stockholders of AnswerSoft, Inc.:
We have audited the consolidated statements of operations, stockholders'
equity and cash flows of AnswerSoft, Inc. for the year ended December 31, 1997
(not presented herein). 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations and cash flows of
AnswerSoft, Inc. for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Dallas, Texas
February 28, 1998
31
<PAGE>
<TABLE>
<CAPTION>
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
December 31,
ASSETS 1999 1998
---------------- ----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $34,433 $31,759
Marketable securities, at amortized cost 30,770 27,711
Accounts receivable, net of reserves of
$1,631 and $1,175 in 1999 and 1998, respectively 20,320 15,959
Prepaid expenses and other current assets 2,280 2,515
Deferred tax assets 4,811 4,887
---------------- ----------------
Total current assets 92,614 82,831
Property and equipment, net 5,050 5,298
Other assets 1,379 1,294
---------------- ----------------
$99,043 $89,423
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,733 $ 4,965
Accrued expenses 11,815 9,461
Customer deposits 3,515 1,892
Deferred revenue 5,466 3,778
---------------- ----------------
Total current liabilities 26,529 20,096
Commitments and contingencies (Note 7)
Stockholders' equity:
Common stock, $.10 par value -
Authorized - 30,000 shares
Issued - 14,556 and 14,349
shares in 1999 and 1998, respectively 1,456 1,435
Additional paid-in capital 74,691 73,555
Accumulated foreign currency translation adjustment (17) 11
Retained earnings (deficit) 6,355 (5,650)
---------------- ----------------
82,485 69,351
Less - Treasury stock, 1,298 and 3 shares, at
cost, in 1999 and 1998, respectively (9,971) (24)
---------------- ----------------
Total stockholders' equity 72,514 69,327
---------------- ----------------
$99,043 $89,423
================ ================
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
32
<PAGE>
<TABLE>
<CAPTION>
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
For the Years Ended December 31,
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
Product revenue $53,757 $53,818 $58,300
Service revenue 38,597 35,130 25,254
-------------- ------------- -------------
Total revenue 92,354 88,948 83,554
-------------- ------------- -------------
Cost of product revenue 9,809 10,510 12,045
Cost of service revenue 20,901 19,604 15,984
-------------- ------------- -------------
Total cost of revenue 30,710 30,114 28,029
-------------- ------------- -------------
Gross profit 61,644 58,834 55,525
-------------- ------------- -------------
Operating expenses:
Research, development and engineering 13,259 12,086 10,418
Selling, general and administrative 37,077 34,841 29,710
Non-recurring merger related transaction costs ----- 1,329 ----
Non-recurring merger related integration costs ----- 597 ----
-------------- ------------- -------------
Total operating expenses 50,336 48,853 40,128
-------------- ------------- -------------
Income from operations 11,308 9,981 15,397
Other income (primarily interest), net 2,815 2,941 2,031
-------------- ------------- -------------
Income before provision for income taxes 14,123 12,922 17,428
Provision for income taxes 2,118 4,393 2,507
-------------- ------------- -------------
Net income $12,005 $ 8,529 $14,921
============== ============= =============
Earnings per share:
Basic $0.89 $0.60 $1.15
============== ============= =============
Diluted $0.85 $0.58 $1.05
============== ============= =============
Weighted average shares outstanding:
Basic 13,531 14,130 12,940
============== ============= =============
Diluted 14,165 14,822 14,270
============== ============= =============
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
33
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Accumulated
Common Stock Foreign Currency Retained
$.10 Additional Translation Earnings/
Shares Par Value Paid In Capital Adjustment (Deficit)
------ --------- --------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 11,162 $1,116 $44,898 $ ---- $(29,100)
Proceeds from exercise of
stock options, including
related tax benefit 848 85 12,694 ---- ----
Proceeds from purchases
under employee stock
purchase plan 12 1 244 ---- ----
Common stock issued for
services rendered 18 2 34 ---- ----
Issuance of note receivable
for preferred stock ---- ---- ---- ---- ----
Translation adjustment ---- ---- ---- 7 ----
Net income ---- ---- ---- ---- 14,921
Comprehensive income for the
year ended December 31, 1997 ---- ---- ---- ---- ----
------ ------ ------ ------ -------
BALANCE, December 31, 1997 12,040 1,204 57,870 7 (14,179)
Proceeds from exercise of stock
options, including related
tax benefit 452 45 1,507 ---- ----
Proceeds from purchase under
employee stock purchase plan 21 2 451 ---- ----
Conversion of preferred stock
into common stock 1,836 184 13,727 ---- ----
Repayment of note receivable ---- ---- ----- ---- ----
Translation adjustment ---- ---- ----- 4 ----
Net income ---- ---- ----- ---- 8,529
Comprehensive income
for the year ended
December 31, 1998 ---- ---- ----- ---- ----
------ ------ ------ ------ -------
BALANCE, December 31, 1998 14,349 1,435 73,555 11 (5,650)
Proceeds from exercise of
stock options, including
related tax benefit 161 16 830 ---- ----
Proceeds from purchases under
employee stock purchase plan 46 5 306 ---- ----
Purchase of treasury stock ---- ---- ----- ---- ----
Translation adjustment ---- ---- ----- (28) ----
Net income ---- ---- ----- ---- 12,005
Comprehensive income for the
year ended December 31, 1999 ---- ---- ----- ---- ----
------ ------ ------- ------ --------
BALANCE, December 31, 1999 14,556 $1,456 $74,691 $ (17) $ 6,355
====== ====== ======= ====== ========
<CAPTION>
Note
Receivable Total
Due From Treasury Stock Stockholders' Comprehensive
Officer Shares Amount Equity Income
------------ --------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 $ ---- 3 $ (24) $ 16,890
Proceeds from exercise of
stock options, including
related tax benefit (58) ---- ---- 12,721
Proceeds from purchases
under employee stock
purchase plan ---- ---- ---- 245
Common stock issued for
services rendered ---- ---- ---- 36
Issuance of note receivable
for preferred stock (356) ---- ---- (356)
Translation adjustment ---- ---- ---- 7 $ 7
Net income ---- ---- ---- 14,921 14,921
-------
Comprehensive income for the
year ended December 31, 1997 ---- ---- ---- ---- $14,928
=======
------- ------ ------ -------
BALANCE, December 31, 1997 (414) 3 (24) 44,464
Proceeds from exercise of stock
options, including related
tax benefit ---- ---- ---- 1,552
Proceeds from purchase under
employee stock purchase plan ---- ---- ---- 453
Conversion of preferred stock
into common stock ---- ---- ---- 13,911
Repayment of note receivable 414 ---- ---- 414
Translation adjustment ---- ---- ---- 4 $ 4
Net income ---- ---- ---- 8,529 8,529
-------
Comprehensive income
for the year ended
December 31, 1998 ---- ---- ---- ---- $ 8,533
=======
------- ------ ------ -------
BALANCE, December 31, 1998 ---- 3 (24) 69,327
Proceeds from exercise of
stock options, including
related tax benefit ---- (11) 100 946
Proceeds from purchases under
employee stock purchase plan ---- (20) 170 481
Purchase of treasury stock ---- 1,326 (10,217) (10,217)
Translation adjustment ---- ---- ---- (28) $ (28)
Net income ---- ---- ---- 12,005 12,005
-------
Comprehensive income for the
year ended December 31, 1999 ---- ---- ---- ---- $11,977
=======
------- ------ ------ -------
BALANCE, December 31, 1999 $ ---- 1,298 $(9,971) $72,514
======= ===== ====== =======
</TABLE>
The accompanying notes are an integral
part of these consolidated financial statements.
34
<PAGE>
<TABLE>
<CAPTION>
DAVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands, Except Per Share Amounts)
For the Years Ended December 31,
1999 1998 1997
--------------- --------------- -------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income $ 12,005 $ 8,529 $ 14,921
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 3,606 3,356 3,677
Changes in current assets and liabilities -
Accounts receivable (4,361) (3,360) (8,235)
Prepaid expenses, other current assets and deferred tax 311 3,040 381
assets
Accounts payable 768 (282) 119
Accrued expenses 2,354 (1,376) 5,156
Customer deposits 1,623 (126) (1,396)
Deferred revenue 1,688 (830) 622
-------- -------- --------
Net cash provided by operating activities 17,994 8,951 15,245
-------- -------- --------
Cash Flows From Investing Activities:
Purchases of property and equipment (3,358) (3,406) (4,602)
(Increase) decrease in other assets (85) (464) 77
Purchases of marketable securities (84,073) (82,400) (39,025)
Sales and maturities of marketable securities 81,014 78,491 25,003
-------- -------- --------
Net cash used in investing activities (6,502) (7,779) (18,547)
-------- -------- --------
Cash Flows From Financing Activities:
Proceeds from exercise of stock options 946 1,552 1,869
Proceeds from employee stock purchase plan 481 453 245
Purchases of treasury stock (10,217) ----- -----
Proceeds from issuance of preferred stock ----- ----- 5,075
Principal borrowings of long-term obligations ----- ----- 475
Principal payments under long-term obligations ----- (475) (5)
Payment of note receivable from officer ----- 414 -----
-------- -------- --------
Net cash (used in) provided by financing activities (8,790) 1,944 7,659
-------- -------- --------
Effect of exchange rate differences on cash (28) 4 7
-------- -------- --------
Net increase in cash and cash equivalents 2,674 3,120 4,364
Cash and cash equivalents, beginning of year $ 31,759 $ 28,639 $ 24,275
-------- -------- --------
Cash and cash equivalents, end of year $ 34,433 $ 31,759 $ 28,639
======== ======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for income taxes $ 1,363 $ 1,487 $ 265
======== ======== ========
Cash paid during the year for interest $------- $ 21 $ 23
======== ======== ========
Supplemental Disclosure of Non-Cash Investing and Financing
Activities:
Conversion of redeemable preferred stock into common stock $------- $ 13,911 $ ------
======== ======== ========
Preferred stock issued in exchange for note receivable due from
officer $------- $------- $ 414
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
35
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Amounts In Thousands, Except Per Share Information)
(1) Operations and Significant Accounting Policies
Davox Corporation (the Company) is a software and systems integration company
that develops, markets, implements, supports and services intelligent management
systems for customer contact centers located throughout the world. These
systems are marketed directly, through joint marketing relationships and
distribution agreements. The Company markets its systems to banks, consumer
finance organizations, retailers, entertainment companies, telemarketing
organizations, telecommunications and transportation companies and utilities.
These consolidated financial statements reflect the application of certain
significant accounting policies as described below and elsewhere in the
accompanying consolidated financial statements.
(a) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
(b) Management Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
(c) Revenue Recognition
The Company generates software revenue from licensing the rights to use its
software products. The Company also generates service revenues from the sale of
product maintenance contracts, installation services and consulting services.
The Company recognizes revenue in accordance with the provisions of the American
Institute of Certified Public Accountants Statement of Position (SOP) No. 97-2
Software Revenue Recognition. Revenue from software license fees are generally
recognized upon delivery, net of estimated returns, provided that there are no
significant post delivery obligations, payment is due within one year and
collection is probable. If acceptance is required beyond the Company's standard
published specifications, software license revenue is recognized upon customer
acceptance. SOP No. 97-2 generally requires revenue earned on software
arrangements involving multiple elements to be allocated to each element based
on the relative fair values of the elements.
36
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(1) Operations and Significant Accounting Policies (continued)
(c) Revenue Recognition (continued)
The fair value of an element must be based on evidence that is specific to the
vendor. If a vendor does not have evidence of the fair value for all the
elements in a multiple-element arrangement, all revenue from the arrangement is
deferred until such evidence exists or until all elements are delivered.
Revenues for consulting services are recognized over the period in which
services are provided, the revenue is fixed and determinable and collection is
probable. Maintenance revenue is deferred at the time of software license
shipment and is recognized ratably over the term of the support period, which is
typically one year.
(d) Warranty Costs
The Company warrants its products for 90 days and defers a portion of its
revenue related to the free-warranty period, in accordance with SOP No. 97-2.
(e) Post-retirement Benefits
The Company has no pension plan or other obligations for post retirement
benefits.
(f) Cash, Cash Equivalents and Marketable Securities
The Company considers all highly liquid investments with original
maturities of three months or less at the time of purchase to be cash
equivalents. Cash equivalents consist mainly of commercial paper.
The Company accounts for investments in accordance with Statement of
Financial Accounting Standard (SFAS) No. 115, Accounting for Certain Investments
in Debt and Equity Securities. Under SFAS No. 115, securities that the Company
has the positive intent and ability to hold to maturity are reported at
amortized cost and are classified as held-to-maturity. The Company's investments
consist of held-to-maturity securities that are investments in Euro dollar bonds
and high-grade commercial paper instruments at December 31, 1999 and 1998. All
of these investments are classified as current as they mature within one year.
37
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(1) Operations and Significant Accounting Policies (continued)
(f) Cash, Cash Equivalents and Marketable Securities (continued)
At December 31, 1999 and 1998, held-to-maturity marketable securities
consisted of the following:
<TABLE>
<CAPTION>
1999 1998
---------------------------------- ---------------------------
Market Amortized Market Amortized
Value Cost Value Cost
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Euro dollar bond $ 4,204 $ 4,212 $11,479 $11,484
(maturity 3-7 months)
Commerical paper obligations 13,825 13,824 12,353 12,352
(maturity 3-6 months)
Corporate bonds 11,023 11,032 2,685 2,675
(maturity 3-7 months)
Medium & Short-term notes 1,702 1,702 1,201 1,200
------- ------- ------- -------
(maturity 5 months)
$30,754 $30,770 $27,718 $27,711
======= ======= ======= =======
</TABLE>
(g) Property and Equipment
The Company provides for depreciation and amortization of property and
equipment using the straight-line method by charges to operations in amounts to
allocate the cost of the property and equipment over their estimated useful
lives. The cost of property and equipment and their useful lives are summarized
as follows:
<TABLE>
<CAPTION>
December 31,
-------------
Estimated
Asset Classification Useful Life 1999 1998
- -------------------- --------------- --------------- -------------
<S> <C> <C> <C>
Office equipment and software 2-3 Years $16,894 $13,789
Rental and demonstration equipment 2-3 Years 316 311
Furniture and fixtures 5 Years 943 698
Leasehold improvements Life of Lease 289 286
------- -------
18,442 15,084
Less-Accumulated depreciation and 13,392 9,786
amortization ------- -------
$ 5,050 $ 5,298
======= =======
</TABLE>
38
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(1) Operations and Significant Accounting Policies (continued)
(h) Research and Development and Software Development Costs
Research and development costs have been charged to operations as incurred.
SFAS No. 86, Accounting for the Costs of Computer Software To Be Leased, Sold,
or Otherwise Marketed, requires the capitalization of certain computer software
development costs incurred after technological feasibility is established. The
Company believes that once technological feasibility of a software product has
been established, the additional development costs incurred to bring the product
to a commercially acceptable level are not significant.
(i) Foreign Currency Translation
The Company considers the functional currency of its foreign subsidiaries
to be the local currency and, accordingly their financial information is
translated into U.S. dollars using exchange rates in effect at period end for
assets and liabilities and average exchange rates during each reporting period
for the results of operations. Adjustments resulting from translation of
foreign subsidiary financial statements are included in stockholders' equity.
(j) Earnings Per Share
Basic earnings per share was determined by dividing net income by the
weighted average shares of common stock outstanding during the year. Diluted
earnings per share reflects the potential dilution of stock options, based on
the treasury stock method.
A reconciliation of basic and diluted weighted averages shares
outstanding is as follows:
<TABLE>
<CAPTION>
For the year ended December 31,
-------------------------------
1999 1998 1997
------------- ------------- ------------
<S> <C> <C> <C>
Basic weighted average shares outstanding 13,531 14,130 12,940
Dilutive stock options 634 692 1,330
------ ------ ------
Diluted weighted average shares outstanding 14,165 14,822 14,270
====== ====== ======
</TABLE>
39
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(1) Operations and Significant Accounting Policies (continued)
(j) Earnings Per Share (continued)
In 1999, 1998 and 1997, 1,657, 1,484 and 55 options to purchase common
shares, respectively, were not included in the diluted weighted average shares
outstanding, as they were antidilutive.
(k) Concentration of Credit Risk
SFAS No. 105, Disclosure of Information About Financial Instruments with
Off-Balance Sheet Risk and Financial Instruments with Concentrations of Credit
Risk, requires disclosure of any significant off-balance sheet and credit risk
concentrations. Financial instruments that potentially expose the Company to
concentrations of credit risk consist primarily of cash and cash equivalents,
short-term investments and trade accounts receivable. The Company places its
temporary cash investments in several financial institutions. The Company has
not experienced significant losses related to receivables from any individual
customers or groups of customers in any specific industry or by geographic area.
Due to these factors, no additional credit risk beyond amounts provided for
collection losses is believed by management to be inherent in the Company's
accounts receivable. The Company had one customer with amounts due to the
Company of approximately 19% and 12% of total accounts receivable as of December
31, 1999 and 1998, respectively.
(l) Derivative Financial Instruments and Fair Value of Financial
Instruments
In June 1999, the Financial Accounting Standards Board (FASB) issued SFAS
No. 137, Accounting for Derivative Financial Instruments and Hedging Activities
- - Deferral of the Effective Date of FASB Statement No. 133, which defers the
effective date of SFAS No. 133 to all fiscal quarters of all fiscal years
beginning after June 15, 2000. SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires entities
to recognize all derivatives as either assets or liabilities in the statement of
financial position and to measure those instruments at fair value. The Company
does not anticipate the adoption of these
40
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(1) Operations and Significant Accounting Policies (continued)
(l) Derivative Financial Instruments and Fair Value of Financial
Instruments (continued)
statements to have a material impact on its financial position or results of
operations. As of December 31, 1999, the Company did not have any derivatives
or other financial instruments as defined by SFAS No. 119, Disclosures About
Derivative Financial Instruments and Fair Value of Financial Instruments.
SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure of an estimate of the fair value of certain financial
instruments. The Company's financial instruments consist of cash equivalents,
marketable securities, accounts receivable and accounts payable. The estimated
fair value of these financial instruments approximates their carrying value at
December 31, 1999 and 1998 due to the short-term nature of these instruments.
(m) Comprehensive Income
SFAS No. 130, Reporting Comprehensive Income, requires disclosure of all
components of comprehensive income on an annual and interim basis. The Company
adopted SFAS No. 130 and has disclosed comprehensive income for all periods
presented in the accompanying consolidated statements of stockholders' equity.
(2) Acquisition of AnswerSoft, Inc.
In May 1998, the Company acquired AnswerSoft, Inc. (AnswerSoft), a
Richardson, Texas, developer of inbound call center software solutions, in
exchange for the issuance of an aggregate of 2,384 shares of Davox common stock,
including shares which were subject to outstanding AnswerSoft, Inc. stock
options and warrants. The acquisition was accounted for as a pooling of
interests under Accounting Principles Board Opinion No. 16. Accordingly, the
historical consolidated financial statements for the periods prior to the merger
have been restated in the accompanying consolidated financial statements to
include the financial position, results of operations and cash flows of
AnswerSoft. In connection with the merger with AnswerSoft, the Company incurred
non-recurring merger transaction costs (primarily professional fees) of $1,329.
In addition, the Company incurred non-recurring costs
41
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(2) Acquisition of AnswerSoft, Inc. (continued)
(primarily severance and lease termination costs) of $597 related to the
integration of the two businesses.
Separate and combined results of Davox and AnswerSoft during the periods
preceding the merger were as follows:
<TABLE>
<CAPTION>
Davox AnswerSoft Combined
-------------- --------------- --------------
Three months ended March 31, 1998 (unaudited):
<S> <C> <C> <C>
Total revenue $23,160 $ 1,260 $24,420
======= ======= =======
Net income (loss) $ 4,433 $(1,173) $ 3,260
======= ======= =======
Year ended December 31, 1997:
Total revenue $76,816 $ 6,738 $83,554
======= ======= =======
Net income (loss) $18,380 $(3,459) $14,921
======= ======= =======
</TABLE>
(3) Line of Credit
The Company has a working capital line of credit with a bank that expires
August 31, 2000, if not renewed, pursuant to which the Company may borrow up to
the lesser of $2,000 or a percentage of accounts receivable, as defined.
Borrowings under the line of credit bear interest at the bank's prime rate (8.5%
at December 31, 1999). There were no borrowings outstanding under the line of
credit at December 31, 1999 and 1998.
42
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(4) Accrued Expenses
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
December 31
-----------
1999 1998
---- ---
<S> <C> <C>
Payroll and payroll related $ 4,654 $3,926
Income taxes 1,654 515
Sales and property taxes 1,419 986
Other 4,088 4,034
------- ------
$11,815 $9,461
======= ======
</TABLE>
(5) 401(k) Plan
The Company maintains the Davox Corporation 401(k) Retirement Plan (the
Plan), which is a deferred contribution plan that covers all full-time employees
over 21 years of age. Employees may join the plan in the next quarterly
enrollment period following their date of hire. The participants may make
pretax deferred contributions to the Plan of up to 15% of the annual
compensation, as defined. Contributions to the Plan by the Company are
discretionary and are determined by the Board of Directors. The Company made
discretionary contributions to the Plan of approximately $777, $315 and $235 for
the years 1999, 1998 and 1997, respectively.
(6) Income Taxes
The Company accounts for income taxes using the liability method in
accordance with SFAS No. 109, Accounting for Income Taxes. Under the liability
method specified by SFAS No. 109, a deferred tax asset or liability is
determined based on the difference between the financial statement and tax bases
of assets and liabilities, as measured by the enacted tax rates assumed to be in
effect when these differences are expected to reverse.
43
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(6) Income Taxes (continued)
The components of the provision for income taxes consist of the following:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1999 1998 1997
---- ----- ----
<S> <C> <C> <C>
Current:
Federal $1,270 $3,199 $ 5,701
State 1,108 994 1,606
------ ------ -------
Total current 2,378 4,193 7,307
------ ------ -------
Deferred:
Federal (230) 153 (4,300)
State (30) 47 (500)
------ ------ -------
Total deferred (260) 200 (4,800)
------ ------ -------
$2,118 $4,393 $ 2,507
====== ====== =======
</TABLE>
The provision for income taxes that is currently payable for the years
ended December 31, 1999, 1998 and 1997 does not reflect approximately $438, $394
and $10,887, respectively, of tax benefits included in additional paid-in
capital related to disqualifying dispositions and the exercise of non-qualified
stock options.
The approximate income tax effect of each type of temporary difference
comprising the deferred tax asset is approximately as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------
1999 1998
--------------------- ---------------------
<S> <C> <C>
Net operating loss carryforwards $ 332 $2,687
Depreciation 1,215 1,029
Inventory reserves 1,699 1,702
Tax credit carryforwards 1,762 1,701
Other temporary differences 2,268 2,517
------ ------
7,276 9,636
Less-valuation allowance 1,267 3,892
------ ------
$6,009 $5,744
====== ======
</TABLE>
44
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(6) Income Taxes (continued)
Approximately $4,811 and $4,887 of the deferred tax assets are classified
as current at December 31, 1999 and 1998, respectively. Approximately $1,198 and
$857 of the deferred tax assets are classified as long-term as of December 31,
1999 and 1998, respectively.
At December 31, 1999, the Company has available net operating loss
carryforwards and tax credit carryforwards of approximately $962 and $1,762,
respectively. The operating loss carryforwards and tax credit carryforwards
begin to expire in the years 2008 and 2000, respectively.
In accordance with SFAS No. 109, the Company records a valuation allowance
against its deferred tax asset to the extent management believes it is more
likely than not that the asset will be realized. As of December 31, 1999, the
Company has provided a full valuation allowance against certain of the Company's
tax credit carryforwards due to the uncertainty of their realizability as a
result of limitations on their utilization in accordance with certain tax laws
and regulations. In 1998, a significan portion of the valuation allowance
related to the utilization of AnswerSoft's net operating loss carryforwards
(NOLs) due to limitations associated with these acquired NOLs. In 1999, the
Company implemented certain tax planning strategies that will result in the
Company being able to utilize substantially all of these acquired NOLs.
Accordingly, the Company reduced its valuation allowance in 1999 related to
these NOLs.
A reconciliation of the federal statutory tax rate to the Company's
effective tax rate is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate 34.0% 34.0% 34.0%
State income taxes, net of federal
income tax benefit 5.1 3.3 5.0
AnswerSoft, Inc. merger expenses not
deductible for tax purposes --- 2.6 ---
Change in valuation
allowance/utilization of net
operating loss and tax credit carryforwards (24.9) (3.8) (25.6)
Foreign sales corporation benefit (1.7) (1.0) (1.0)
Other 2.5 (1.1) 2.0
----- ---- -----
15.0% 34.0% 14.4%
===== ==== =====
</TABLE>
45
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(7) Commitments and Contingencies
(a) Operating Lease Commitments
The Company leases its facilities and sales offices under operating
leases that expire at various dates through September 2008. Pursuant to the
lease agreements, the Company is responsible for maintenance costs and real
estate taxes. Total rental expense for all operating leases for the years ended
December 31, 1999, 1998 and 1997 amounted to approximately $1,720, $1,771 and
$1,306, respectively.
Future minimum lease payments at December 31, 1999 are approximately as
follows:
<TABLE>
<CAPTION>
Year Ending December 31, Amount
-------------------------- -----------
<S> <C>
2000 $ 2,028
2001 2,227
2002 1,737
2003 1,549
2004 1,318
Thereafter 4,307
-------
$13,166
=======
</TABLE>
(b) Employment and Severance Agreements
The Company has entered into employment and severance agreements with
certain officers and key employees whereby the Company may be required to pay
the officers and employees a total of approximately $1,591 upon termination of
employment by the Company under certain circumstances, as defined.
(c) Litigation
The Company is, from time to time, subject to claims arising in the
ordinary course of business. While the outcome of the claims cannot be
predicted with certainty, management does not expect these matters to have a
material adverse effect on the consolidated results of operations and financial
condition of the Company.
46
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(8) Preferred Stock
Prior to the merger, AnswerSoft had two issues of preferred stock
outstanding, Series A Preferred Stock and Series B Preferred Stock or
collectively referred to as Preferred Stock. All shares of outstanding Preferred
Stock were converted to shares of Davox Common Stock upon approval of the merger
between the two companies in 1998.
(9) Stockholders' Equity
(a) Stock Split
During 1997, the Company effected a three-for-two stock split through the
issuance of a 50% stock dividend. All share and per share amounts have been
retroactively adjusted for the stock split.
(b) Note Receivable Due from Officer
During 1997, AnswerSoft granted options to purchase 223 common shares with
an exercise price of $0.26 and 137 Series B preferred shares with an exercise
price of $2.60 to an officer of AnswerSoft as part of his employment with
AnswerSoft. The options were exercised in 1997 in exchange for a promissory
note from the officer. This note was repaid in full by the officer during 1998.
(c) 1986 Stock Plan
The Company's 1986 Stock Plan (the 1986 Plan), administered by the Board of
Directors authorizes the issuance of a maximum of 3,696 shares of common stock
for the exercise of options in connection with awards or direct purchases of
stock. Options granted under the 1986 Plan may be either non statutory stock
options or options intended to constitute incentive stock options under the
Internal Revenue Code. Stock options may be granted to employees, officers,
employee-directors or consultants of the Company and are exercisable in such
installments as the Board of Directors may specify. The options granted
currently vest over a four-year period and expire ten years from the date of
grant. As of December 31, 1999, there were options to purchase 616 shares
outstanding under this plan. The 1986 Plan terminated pursuant to its terms in
September 1996.
47
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(9) Stockholders' Equity (continued)
(d) 1994 Stock Plan
In 1994, AnswerSoft's Board of Directors approved the adoption of an
employee stock option plan (the AnswerSoft Plan), as amended, which authorized
the grant of options to purchase up to 4,200 shares of AnswerSoft's common
stock. The AnswerSoft Plan provided for the granting of options to eligible
employees to purchase AnswerSoft's common stock at an exercise price of not less
than 100% of the fair market value per share on the date of grant as determined
by AnswerSoft's Board of Directors. The AnswerSoft Plan was administered by its
Board of Directors who determined the number of shares for which options will be
granted, the effective dates of the grants, the option price and vesting
schedules. All options under the AnswerSoft Plan have a ten year term and
typically vested over four years from the effective date of the grant. All
outstanding options became immediately and fully vested upon completion of the
merger with Davox. The Company no longer grants options under the AnswerSoft
Plan. As of December 31, 1999, there were eight options outstanding under the
AnswerSoft Plan.
(e) 1996 Stock Plan
The Company's 1996 Stock Plan (the 1996 Plan) administered by the Board of
Directors authorizes the issuance of a maximum of 2,700 shares of common stock
for the exercise of options in connection with awards or direct purchases of
stock. Options granted under the 1996 Plan may be either nonstatutory stock
options or options intended to constitute incentive stock options under the
Internal Revenue Code. Stock options may be granted to employees, officers,
employee-directors or consultants of the Company and are exercisable in such
installments as the Board of Directors may specify. The options currently vest
over a four-year period. As of December 31, 1999, there were options to purchase
2,320 shares of common stock outstanding and 346 shares available for future
grants under the 1996 Plan.
48
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(9) Stockholders' Equity (continued)
(f) Directors Stock Option Plan
The Company's 1988 Non-employee Director Stock Option Plan (the 1988 Plan),
as amended, is administered by the Board of Directors and authorizes the
issuance of a maximum of 600 shares of common stock for the exercise of options.
The 1988 Plan provides for the automatic grant of options to purchase 60 shares
of common stock to each newly elected non-employee director and additional
option grants of 15 shares of common stock per biennial anniversary of election
to the Board of Directors. Options granted under the 1988 Plan vest 25% per
year beginning one year from the date of grant and expire five years from the
date of grant. As of December 31, 1999 there were 105 shares outstanding and
281 shares available for future grants under the 1988 Plan.
49
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(9) Stockholders' Equity (Continued)
(g) Stock Option Plans Summary
The following is a summary of the stock option activity for all plans for the
years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Weighted
Average
Number of Exercise Exercise
Options Price Range Price
------------ ----------- ---------
<S> <C> <C> <C>
Outstanding, December 31, 1996 2,022 $0.08 - $26.33 $ 5.90
Granted 1,389 0.77 - 34.13 19.29
Exercised (865) 0.08 - 26.33 3.62
Canceled (89) 0.77 - 31.00 10.44
----- -------------- ------
Outstanding, December 31, 1997 2,457 0.77 - 34.13 14.11
Granted 1,124 2.01 - 34.12 18.48
Exercised (452) 0.77 - 26.33 2.56
Canceled (593) 0.77 - 34.13 21.72
----- -------------- ------
Outstanding, December 31, 1998 2,536 0.77 - 34.13 16.33
Granted 931 8.50 - 21.75 11.87
Exercised (172) 0.77 - 20.75 2.95
Canceled (246) 0.77 - 34.13 16.23
----- -------------- ------
Outstanding, December 31, 1999 3,049 $0.77 - $34.13 $15.73
===== ============== ======
Exercisable, December 31, 1999 1,410 $0.77 - $34.13 $14.88
===== ============== ======
Exercisable, December 31, 1998 1,124 $0.77 - $34.13 $11.09
===== ============== ======
Exercisable, December 31, 1997 593 $0.77 - $34.13 $ 8.21
===== ============== ======
</TABLE>
The range of exercise prices for options outstanding and options exercisable at
December 31, 1999 are as follows:
<TABLE>
<CAPTION>
OPTIONS
OPTIONS OUTSTANDING EXERCISABLE
REMAINING NUMBER NUMBER WEIGHTED
RANGE OF CONTRACTUAL LIFE OF WEIGHTED AVERAGE OF AVERAGE
EXERCISE PRICES (IN YEARS) OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 0.77 6.87 1 $ 0.77 1 $ 0.77
1.33 - 1.92 4.37 252 1.64 252 1.64
2.00 - 2.33 4.80 164 2.32 164 2.32
3.25 - 4.75 4.44 70 3.49 70 3.49
6.17 - 8.94 8.62 605 8.04 140 7.75
10.75 - 14.63 9.55 466 14.15 4 10.75
16.17 - 21.75 7.50 512 19.01 202 18.73
24.33 - 34.13 7.32 979 26.27 577 26.04
----- -----
3,049 1,410
===== =====
</TABLE>
50
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(9) Stockholders' Equity (Continued)
(h) Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan (the Purchase Plan) under
which a maximum of 150 shares of common stock may be purchased by eligible
employees. Substantially all full-time employees of the Company are eligible to
participate in the Purchase Plan. Shares are purchased through accumulation of
payroll deductions (of not less than 0.5% nor more than 10% of compensation, as
defined) for the number of whole shares, determined by dividing the balance in
the employee's account by the purchase price per share which is equal to 85% of
the fair market value of the common stock, as defined. During 1999, 1998 and
1997, approximately 66, 21 and 12 shares, respectively, were purchased under the
Purchase Plan.
(i) Accounting for Stock-Based Compensation
The Company accounts for its stock-based compensation under Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. In
October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation, which established a fair-value-based method of accounting for
stock-based compensation plans. The Company has adopted the disclosure-only
alternative under SFAS No. 123, which requires the disclosure of the pro forma
effects on earnings and earnings per share as if SFAS No. 123 had been adopted,
as well as certain other information.
The Company has computed the pro forma disclosures required under SFAS No.
123 for all stock options granted (including shares issued under the employee
stock purchase plan) as of December 31, 1999, 1998 and 1997 using the Black-
Scholes option pricing model prescribed by SFAS No. 123.
51
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(9) Stockholders' Equity (Continued)
(i) Accounting for Stock-Based Compensation (continued)
The assumptions used and the weighted average information for the years
ended December 31, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1999 1998 1997
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Risk-free interest rates 4.60%-6.19% 4.18%-5.61% 5.71%-6.83%
Expected dividend yield ----- ----- -----
Expected lives 5.28 years 4.85 years 4.78 years
Expected volatility 68% 69% 66%
Weighted average grant-date fair value of
options granted during the period $ 7.35 $ 11.45 $ 16.00
Weighted-average remaining contractual
life of options outstanding 7.51 years 7.75 years 7.98 years
</TABLE>
The effect of applying SFAS No. 123 would be as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1999 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Net income as reported $12,005 $8,529 $14,921
======= ====== =======
Pro forma net income $ 5,994 $3,674 $11,080
======= ====== =======
Earnings per share as reported:
Basic $ 0.89 $ 0.60 $ 1.15
======= ====== =======
Diluted $ 0.85 $ 0.58 $ 1.05
======= ====== =======
Pro forma earnings per share:
Basic $ 0.44 $ 0.23 $ 0.84
======= ====== =======
Diluted $ 0.42 $ 0.22 $ 0.76
======= ====== =======
</TABLE>
52
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(10) Segment and Geographic Information
The Company adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, in the fiscal year ended December 31, 1998.
SFAS No. 131 establishes standards for reporting information regarding operating
segments in annual financial statements and requires selected information for
those segments to be presented in interim financial reports issued to
stockholders. SFAS No. 131 also establishes standards for related disclosures
about products and services and geographic areas. Operating segments are
identified as components of an enterprise about which separate discrete
financial information is available for evaluation by the chief operating
decision maker, or decision making group, in making decisions how to allocate
resources and assess performance. The Company's chief decision-making group, as
defined under SFAS No. 131, is its executive management team. To date, the
Company has viewed its operations and manages its business as principally one
segment, software sales and associated services. As a result, the financial
information disclosed herein represents all of the material financial
information related to the Company's principal operating segment.
Product revenues from international sources were approximately $10,800,
$9,700 and $14,700 in 1999, 1998 and 1997, respectively. The Company's revenues
from international sources were primarily generated from customers located in
Europe, Canada, Asia/Pacific and Latin America. All of the Company's product
sales for the years ended December 31, 1999, 1998 and 1997 were shipped from its
headquarters located in the United States.
The following table represents the percentage of product revenue by
geographic region from customers for 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
U.S. 80.0% 82.0% 74.9%
Europe 16.4 8.1 17.1
Asia/Pacific 2.7 3.5 2.3
Latin America 0.6 1.5 2.2
Canada 0.3 4.9 3.5
----- ----- -----
Total 100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
53
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(Amounts In Thousands, Except Per Share Information)
(11) Significant Customers
Revenue from the Company's largest single customer was 12%, 13% and 10% of
total revenue in 1999, 1998 and 1997, respectively. Revenue from the Company's
three largest customers amounted to 24%, 24% and 18% of total revenue in 1999,
1998 and 1997, respectively.
54
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Continued)
(12) Quarterly Results of Operations (Unaudited)
The following table presents a condensed summary of quarterly results of
operations for the years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
Year Ended December 31, 1999
----------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenue $20,249 $22,008 $24,046 $26,051
Gross profit 12,778 14,500 16,205 18,161
Net income $ 1,699 $ 2,408 $ 3,476 $ 4,422
======= ======= ======= =======
Earnings per share:
Basic $ 0.12 $ 0.18 $ 0.26 $ 0.33
======= ======= ======= =======
Diluted $ 0.11 $ 0.17 $ 0.25 $ 0.32
======= ======= ======= =======
<CAPTION>
Year Ended December 31, 1998
-----------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenue $24,420 $24,190 $20,939 $19,399
Gross profit 16,502 16,597 13,343 12,393
Net income $ 3,260 $ 2,341 $ 1,883 $ 1,045
======= ======= ======= =======
Earnings per share:
Basic $ 0.25 $ 0.17 $ 0.13 $ 0.07
======= ======= ======= =======
Diluted $ 0.22 $ 0.16 $ 0.13 $ 0.07
======= ======= ======= =======
</TABLE>
55
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To Davox Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Davox Corporation and subsidiaries
included in this Form 10-K and have issued our report thereon dated January 24,
2000. Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and regulations
and is not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and in our opinion, fairly states, in all material
respects, the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 24, 2000
56
<PAGE>
DAVOX CORPORATION AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
<CAPTION>
Balance at Charged to Deductions Balance at
Beginning Costs and from End of
of Year Expenses Reserves Year
------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
ACCOUNTS RECEIVABLE RESERVES:
December 31, 1999 $1,175 $958 $502 $1,631
December 31, 1998 1,134 315 274 1,175
December 31, 1997 711 554 131 1,134
</TABLE>
57
<PAGE>
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------ ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not Applicable.
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------- --------------------------------------------------
Directors
The information concerning directors of the Company required under this item
is incorporated herein by reference to the Company's definitive proxy statement
pursuant to Regulation 14A, to be filed with the Commission not later than 120
days after the close of the Company's 1999 fiscal year ended December 31, 1999
under the heading "Election of Directors."
Executive Officers
See Item 4A.
ITEM 11 EXECUTIVE COMPENSATION
- ------- ----------------------
The information required under this item is incorporated herein by reference
to the Company's definitive proxy statement pursuant to Regulation 14A, to be
filed with the Commission not later than 120 days after the close of the
Company's 1999 fiscal year ended December 31, 1999, under the heading
"Compensation and Other Information Concerning Directors and Officers."
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------- --------------------------------------------------------------
The information required under this item is incorporated herein by reference
to the Company's definitive proxy statement pursuant to Regulation 14A, to be
filed with the Commission not later than 120 days after the close of the
Company's 1999 fiscal year ended December 31, 1999, under the headings
"Principal Holders of Voting Securities" and "Election of Directors."
ITEM 13 CERTAIN RELATIONSHIPS AND TRANSACTIONS
- ------- --------------------------------------
The information required under this item is incorporated herein by reference
to the Company's definitive proxy statement pursuant to Regulation 14A, to be
filed with the Commission within 120 days after the close of the Company's 1999
fiscal year ended December 31, 1999, under the headings "Principal Holders of
Voting Securities" and "Election of Directors."
58
<PAGE>
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
- ------- ---------------------------------------------------------------
(a) Financial Statements and Financial Statement Schedules
1. Financial Statements
The following financial information is incorporated in Item 8 above:
Report of Independent Public Accountants
Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Income for the Years Ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Stockholders' Equity for the Years
Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
2. Financial Statement Schedule
The following financial information is incorporated in Item 8 above:
Report of Independent Public Accountants on Financial Statement
Schedule II - Valuation and Qualifying Accounts.
All other schedules are not submitted because they are not applicable, not
required or because the information is included in the Consolidated
Financial Statements or Notes to Consolidated Financial Statements.
(b) Reports on Form 8-K
The Company did not file any Current Report on Form 8-K during the fourth
quarter of the fiscal year ended December 31, 1999.
59
<PAGE>
(c) List of Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------
3.01(2) Restated Certificate of Incorporation of the Registrant, as
amended.
- -
3.02(2) By-laws of the Registrant, as amended.
4.01(2) Description of Capital Stock contained in the Registrant's
Restated Certificate of Incorporation, as amended, filed as
Exhibit 3.01.
10.02(2) Amended and Restated 1988 Non-Employee Director Stock Option Plan
of the Registrant.
10.03(2) Form of Option Agreement under the Registrant's 1988
Non-Employee Director Stock Option Plan.
10.04(2)(4) Special support services agreement between Registrant and
Datapoint (UK) Ltd., dated August 1, 1997.
10.05(2) 1991 Employee Stock Purchase Plan, as amended.
10.08(5) Third party service provider agreement between the Registrant and
Grumman Systems Support Corporation.
10.09(1) 1996 Stock Plan of the Registrant, as amended by amendment No. 1.
10.10(1) Form of Incentive Stock Option Agreement under the Registrant's
1996 Stock Plan.
10.11(1) Form of Non-Qualified Stock Option Agreement under the
Registrant's 1996 Stock Plan.
10.12 Executive Compensation Plan.
10.13(2) Lease agreement between Registrant and Michelson Farm
Westford Technology Park VI Limited Partnership for Westford
Technology Park Building Six.
60
<PAGE>
(c) List of Exhibits (Continued)
10.14(2)(4) Distribution agreement between Lucent Technologies Inc.
(by and through its Business Communications Systems Division)
and the Registrant, dated May 2, 1997.
10.15(5) OEM Agreement by and between the Registrant and Kana
Communications, Inc. dated as of November 16, 1999.
10.16 First Amendment to Lease by and between the Registrant and
Michaelson Farm - Westford Technology Park Trust VI Limited
Partnership for Westford Technology Park Building Six.
10.17 Severance Agreement for Alphonse M. Lucchese, Chairman and Chief
Executive Officer.
10.18 Severance Agreement for John J. Connolly, Senior Vice President
Finance and Chief Financial Officer.
10.19 Severance Agreement for Joseph R. Coleman, Senior Vice President
North American Sales Operations.
10.20 Severance Agreement for Mark Donovan, Senior Vice President
Operations & Customer Service.
10.21 Severance Agreement for Douglas W. Smith, Senior Vice President
International Operations.
21. Subsidiaries of the Registrant.
24.1 Consent of Arthur Andersen LLP.
24.3 Consent of Ernst & Young LLP.
27. Financial Data Schedule.
(1) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1996.
(2) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1997.
(3) Previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31,
1998.
(4) Confidential treatment granted. Redacted version previously filed.
(5) Confidential treatment has been requested as to omitted portions pursuant
to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as
amended.
61
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized, in the Town of Westford,
Commonwealth of Massachusetts, on the 6th day of March 2000.
Davox Corporation
By: /s/ Alphonse M. Lucchese
----------------------------
Alphonse M. Lucchese
Chief Executive Officer
and Chairman
POWER OF ATTORNEY
Each person whose signature appears below this Annual Report on Form 10-K hereby
constitutes and appoints Alphonse M. Lucchese and Timothy C. Maguire and each of
them, with full power to act without the other, his true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution, for him or
her and in his or her name, place and stead in any and all capacities (until
revoked in writing) to sign all amendments (including post-effective amendments)
to this Annual Report on Form 10-K of Davox Corporation, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes as
he might or could do in person thereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his or her substitute,
may lawfully do or cause to be done by virtue hereof.
62
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, this report has been
signed below by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Alphonse M. Lucchese Chief Executive
- ------------------------ Officer and Chairman
Alphonse M. Lucchese (Principal Executive
Officer) March 6, 2000
/s/ John J. Connolly Senior Vice President of
- -------------------- Finance and Chief
John J. Connolly Financial Officer
(Principal Financial
Officer) March 6, 2000
/s/ Michael D. Kaufman Director March 6, 2000
- ----------------------
Michael D. Kaufman
/s/ R. Scott Asen Director March 6, 2000
- -----------------
R. Scott Asen
</TABLE>
63
<PAGE>
EXHIBIT 10.08
-------------
Third Party Service Provider Agreement
By and Between
Davox Corporation
and
Grumman Systems Support Corporation
<PAGE>
Third Party Service Provider Agreement
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
1.0 APPOINTMENT OF GSSC............................................ 2
2.0 TERM........................................................... 3
3.0 GSSC RESPONSIBILITIES.......................................... 4
4.0 DAVOX/(R)/'s RESPONSIBILITIES.................................. 5
5.0 CHARGES, INVOICES, PAYMENT AND TAXES........................... 7
6.0 GSSC PERFORMANCE EVALUATION.................................... 7
7.0 DEFAULT AND TERMINATION........................................ 7
8.0 TITLE, RISK OF LOSS............................................ 8
9.0 FORCE MAJEURE.................................................. 8
10.0 CONFIDENTIAL INFORMATION & PROPRIETARY MATERIAL................ 9
11.0 INSURANCE AND INDEMNITY........................................ 9
12.0 GENERAL LIMITATION OF LIABILITY................................ 10
13.0 INDEPENDENT CONTRACTOR......................................... 11
14.0 HIRING/COMPETITION............................................. 12
15.0 GENERAL PROVISIONS............................................. 12
16.0 INFRINGEMENT INDEMNIFICATION................................... 13
17.0 MARKS.......................................................... 13
</TABLE>
- --------------------------------------------------------------------------------
i 05/17/99
<PAGE>
Third Party Service Provider Agreement
- --------------------------------------------------------------------------------
This Third Party Service Provider Agreement ("Agreement") entered into this
25/th/ day of May, 1999 (the "Effective Date") by and between DAVOX(R)
Corporation., a corporation organized under the laws of the State of Delaware,
hereinafter referred to as "DAVOX(R)", with its principal place of business at 6
Technology Park Drive, Westford, Massachusetts, 01886 and Grumman Systems
Support Corporation, a corporation organized under the laws of Maryland with its
principal place of business at 10 Orville Drive, Bohemia NY 11716, herein
referred to as "GSSC", sets forth the terms and conditions under which GSSC will
provide Maintenance Services (as hereinafter defined) to DAVOX's(R) end user
customers ("Customers").
DEFINITIONS
"Customer" means an entity which purchases Products directly or indirectly from
DAVOX(R) for internal use and not for resale and who has requested to purchase
maintenance services for such Products from DAVOX(R).
1. "Hardware" means the hardware provided by DAVOX(R) to GSSC or Customers.
2. "Product(s)" means any standalone or combination of Hardware and Software
relating to DAVOX(R) CAS and UNISON(R) systems listed in Exhibit D, including
any future replacement system.
3. "Software" means all software system programs proprietary to DAVOX(R), and
provided by DAVOX(R) in machine readable, object printed, or interpreted form,
including any modifications, improvements, updates, enhancements or extensions
thereto or copies thereof, and including flow charts, logic diagrams, program
listings and operating instructions.
4. "Territory" means the specific Customer sites in the United States and
Canada agreed upon by DAVOX(R) and GSSC for GSSC to perform maintenance service.
5. "Work Order Number" means that number which DAVOX(R) issues to GSSC to
authorize GSSC to make a service call pursuant to a previously issued Work
Authorization Form. Such Work Order Numbers will normally be provided by
DAVOX(R) to GSSC on a verbal, Fax or electronic basis to the service dispatch
facility as designated by GSSC. Requests for service from the Customer are not
valid requests, and any such calls acted on by GSSC shall be at the sole risk,
cost and expense of GSSC. Consequently, GSSC shall have no obligation to respond
to customer originated service calls.
6. "Work Authorization Forms" means that certain document which DAVOX(R)
issues to GSSC to authorize GSSC to perform Maintenance Service for a specific
Customer, for specific Product, at a specific location. This document will
specify the commencement date(s) and any special requirements of DAVOX(R) and/or
the Customer, (Exhibit G).
7. "Certified Representative" means GSSC's employee trained by DAVOX(R) or
trained by GSSC's certified trainer, as trained and certified by DAVOX(R), on
the Products to be maintained in accordance with Exhibit B.
8. "OEM Equipment" means any non-DAVOX(R) manufactured call center hardware or
other equipment which DAVOX(R) may distribute to its Customers and/or for which
the Customers purchase maintenance services from DAVOX(R).
- --------------------------------------------------------------------------------
1 05/17/99
<PAGE>
Third Party Service Provider Agreement
- --------------------------------------------------------------------------------
"Prelude TM" is a non-expandable, eight (8) slot variation of the DAVOX(R)
UNISON(R) system.
"System" or "Call Center System" means the Hardware and Software integrated
therewith into a Customer's call center management system.
"Maintenance Service" shall mean those services necessary or expended in the
resolution of a reported trouble, fault or failure within a DAVOX(R) Unison or
CAS system.
"Parts" or "Spare Parts" shall mean those hardware components, Field Replaceable
Units (FRU's), peripheral components, printed circuit boards (PCB's) or whole
unit computing devices including printers, drives and any other such hardware
devices used in the restoration to an operating condition the DAVOX(R) Unison
or CAS systems described herein.
"Good Working Condition" is the operating condition of a particular hardware
component, unit, computing device defined by the operating parameters and
performance standards established and published by the manufacturer in the
operation of the manufactured equipment.
In consideration of the terms herein set forth, DAVOX(R) and GSSC agree as
follows:
1.0 APPOINTMENT OF GSSC
1.1 DAVOX(R) hereby appoints GSSC as its exclusive service representative
within the Territory pursuant to the terms and conditions of this Agreement,
except as otherwise provided in this Agreement or where DAVOX(R) distributors
have sold System(s) and through agreement(s) with DAVOX(R) are eligible to
provide all, or a portion of the required Product support services or when
DAVOX(R) is otherwise restricted by its Customer's requirements. GSSC agrees,
during the term of this agreement, not to solicit or otherwise enter into
relationships with an entity which is a direct or indirect DAVOX(R) competitor,
nor to enter into a materially similar agreement with any such entity. Except as
otherwise provided herein, (R) the parties agree during the term of this
Agreement, not to solicit or enter into similar relationships with an entity
which is a direct or indirect competitor of GSSC for like service of Products .
The foregoing shall in no way restrict DAVOX(R)'s right to solicit comparison
services and pricing from GSSC competitors in anticipation of a renewal or
termination of this Agreement nor restrict DAVOX(R)'s right not to renew this
Agreement upon any future expiration.
1.2 Subject to the provisions of Section 1.1 hereof, when DAVOX(R) has an
obligation to provide Maintenance Service (as defined in Exhibit `A') pursuant
to the terms and conditions of contracts by and between DAVOX(R) and its
Customers, DAVOX(R) shall appoint GSSC in accordance with the following:
A. DAVOX(R) shall appoint GSSC as its service representative to provide
Maintenance Service for Customers located within the Territory. These
Customers will be serviced from the city set forth in Exhibit F which
is geographically closest to the System installation site (the
"Service Cities").
B. Service Cities may be added to the GSSC Service City Schedule from
time to time and GSSC shall provide DAVOX(R) with written notice
within ten (10) days of such addition(s). In the event that a new
Service City is requested to be added by DAVOX(R), GSSC shall conduct
necessary and appropriate research and financial analysis to determine
the
- --------------------------------------------------------------------------------
2 05/17/99
<PAGE>
Third Party Service Provider Agreement
- --------------------------------------------------------------------------------
commercial practicality of such a request. GSSC shall honor such
requests subject to such GSSC research findings and mutually agreeable
terms between the parties.
C. Service Cities may be deleted from the GSSC Service City Schedule from
time to time upon not less than ninety (90) day's prior written notice
to DAVOX(R). In the event a Service City is deleted, GSSC and
DAVOX(R) agree that Maintenance Service coverage may be handled, at
DAVOX'(R)'s option, as follows:
D. (i) GSSC shall continue to provide Maintenance Service coverage to
Customers previously serviced from the deleted Service City utilizing
resources from another Service City or other GSSC location. Such
Service coverage will be made available for 12 months or through the
end of any then current maintenance contracts between Customer and
DAVOX(R)., whichever is less. Neither DAVOX(R) nor its Customers
shall incur any additional charges for coverage furnished from an
alternative location under this provision. DAVOX(R) shall use
reasonable efforts to make any contract changes with its Customers
which may be necessary to reflect that such Service shall be provided
from GSSC's alternative location; or
E. (ii) DAVOX(R) shall have the right, without penalty, to make
alternative arrangements for the provision of Maintenance Services to
Customers who were previously serviced from such deleted Service
Cities. Any such arrangements shall not be deemed a breach by
DAVOX(R) of the exclusivity granted in Section 1.1 of this
Agreement.
F. In the event that GSSC deletes a Service City or is in default of its
obligation hereunder, or refuses to furnish Maintenance Services to a
Customer, DAVOX(R) shall have the right, without penalty, to establish
alternate forms of Maintenance Service coverage, including, without
limitation, providing services itself or through a non-GSSC related
third party service provider.
G. In the event a Customer requests that DAVOX(R) provide Maintenance
Service directly and not through a third party, DAVOX(R) shall use its
reasonable efforts to obtain Customer's permission for GSSC to
directly contact Customer, in combination with DAVOX(R) sales
personnel, for the purpose of promoting GSSC as DAVOX(R)'s service
representative. In such case, DAVOX(R) will make reasonable efforts,
as appropriate in DAVOX(R)'s determination, to encourage Customer to
accept Maintenance Services through GSSC. Notwithstanding anything
herein to the contrary, DAVOX(R) shall not be obligated to appoint
GSSC as its service representative with respect to any Customer who
has requested or who requests that DAVOX(R) provide maintenance
directly and not through a third-party.
1.3 Products, subject to Maintenance Service under the terms of this Agreement,
will be added, deleted and/or revised under this Agreement by means of Work
Authorization Form prepared and signed by DAVOX(R) and submitted to GSSC.
2.0 TERM
2.1 This Agreement will commence on the Effective Date. Unless otherwise
determined as provided herein, this Agreement will have a term of three (3)
years (the "Term"), with subsequent amendment(s) for continuance of service,
unless terminated by either party pursuant to the provisions hereof. Either
party will have the right to terminate this Agreement as of the end of the
- --------------------------------------------------------------------------------
3 05/17/99
<PAGE>
Third Party Service Provider Agreement
- --------------------------------------------------------------------------------
Term or as of the end of any subsequent annual renewal thereof, upon not less
than 90 days' prior written notice to the other party.
3.0 GSSC RESPONSIBILITIES
GSSC's responsibilities to provide Maintenance Services hereunder shall include:
3.1 Rendering Maintenance Service, subject to the terms and conditions set
forth herein and in (Exhibit A) for the Customers and Product listed on the Work
---------
Authorization Forms submitted and accepted in accordance with this Agreement.
3.2 Sending qualified GSSC employees to DAVOX's(R) training classes as set
forth in (Exhibit B);
---------
3.3 Providing installation, upgrade and "Move, Add, Change" (MAC) services to
DAVOX(R) in accordance with the terms and conditions set forth in (Exhibit C);
---------
3.4 Managing Parts in accordance with the terms and conditions set forth in the
Schedule of Parts Services (Exhibit E);
---------
3.5 Paying all valid invoices as rendered by DAVOX(R) in accordance with
Article 5 below.
3.6 Using its best efforts to restore Product to good working condition.
3.7 Keeping DAVOX(R) advised of any complaints made by Customers or others
with respect to the Products or Maintenance Services.
3.8 Maintaining a staff of employees with sufficient resources, technical
knowledge and training, as defined in Exhibit B, to fulfill GSSC's obligations
under this Agreement.
3.9 Maintaining an inventory of parts sufficient to provide Maintenance
Services in accordance with its obligations hereunder specifically including,
without limitation, the obligations specified in the (Exhibit A).
---------
3.10 Warranties, Representations, & Guarantees: GSSC warrants, represents, and
guarantees to DAVOX(R) that GSSC will:
A. Perform its obligations hereunder in a prompt, courteous, efficient
and workmanlike manner.
B. Comply with all applicable federal, state, and municipal laws,
ordinances and regulations in carrying out the terms of this Agreement
and pay and discharge at its own expense any and all costs, charges,
fees, and taxes that may be levied or imposed by any and all
authorities upon or by reason of its performance under this Agreement.
C. GSSC shall not make any representation(s), promise(s), or warranty(s)
or give any performance guaranty to any Customer with respect to the
Products or Maintenance Services.
D. In the event GSSC or its personnel are permitted access to
DAVOX(R)'s computer/data processing and transmission network (the
"Network") such access
- --------------------------------------------------------------------------------
4 05/17/99
<PAGE>
Third Party Service Provider Agreement
- --------------------------------------------------------------------------------
shall be granted solely for the benefit of DAVOX(R) and exclusively
for the purpose of enabling GSSC to fulfill its obligations to
DAVOX(R) hereunder. GSSC warrants and represents to DAVOX(R) that it
shall access only those areas of the Network which DAVOX(R)
specifically directs or authorizes GSSC to access and only for the
purpose of fulfilling GSSC's obligations hereunder.
All information, data, and material contained in or residing on the
Network, which GSSC may obtain directly or indirectly, intentionally
or inadvertently, while on DAVOX(R)'s site or via remote dial-in
access and whether obtained by specific direction of DAVOX(R) or
otherwise, shall be considered confidential information.
GSSC warrants and represents that it shall not (nor shall it directly
assist any other person in any manner to) directly insert or attach
into or on, or otherwise take, create, do, or cause to be done, in
relation to the Network, any business application, personal computer
or workstation, or any equipment, software, or other technology to
which GSSC may have access, any bug, virus, encryption, time bomb, or
other such item, device, or activity which would impede, interrupt,
delay, destroy, or otherwise impair DAVOX(R)'s, its employees',
customers', subcontractors', advisors' or others' use of such Network,
equipment, software, or other technology or any computer technology,
equipment or software which may be associated therewith.
GSSC shall indemnify, defend and hold DAVOX(R) harmless from and
against any claim, loss, damage, cost, or other expense which
DAVOX(R) may incur as a result of any breach of this section
provided in no event shall GSSC's liability for such breach exceed a
total amount of $1,000,000.
E. EXCEPT AS EXPRESSLY SET FORTH HEREIN, GSSC MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, TO DAVOX(R) OR TO ANY OTHER PERSON
OR ENTITY REGARDING ANY SERVICES, RESOURCES, EQUIPMENT, SOFTWARE OR
OTHER ITEMS PROVIDED BY GSSC PURSUANT TO THIS AGREEMENT OR THE RESULTS
TO BE DERIVED FROM THE USE THEREOF INCLUDING, WITHOUT LIMITATION THE
MILLENNIUM COMPLIANCY OF ANY PRODUCT. GSSC EXPRESSLY DISCLAIMS THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. GSSC DOES NOT WARRANT THAT THE OPERATION OF ANY SOFTWARE WILL
BE UNINTERRUPTED OR ERROR FREE.
4.0 DAVOX(R)'s RESPONSIBILITIES
DAVOX(R)'s responsibilities hereunder shall include:
4.1 Making available, all proprietary Parts and diagnostics software necessary
for the service and maintenance of the Product;
4.2 Providing installation, service and removal instruction and documentation
for all Products to be maintained pursuant to the Agreement;
4.3 Providing training for GSSC's Trainer personnel as described in the
Training and Documentation Schedule (Exhibit B)
- --------------------------------------------------------------------------------
5 05/17/99
<PAGE>
Third Party Service Provider Agreement
- --------------------------------------------------------------------------------
4.4 Providing the support services to GSSC as described in (Exhibit A); and
---------
4.5 Paying all valid invoices as rendered by GSSC in accordance with Article 5
below and (Exhibit D).
---------
4.6 DAVOX(R) will periodically provide GSSC, at no charge, with the data,
diagrams, and other technical materials that DAVOX(R) deems appropriate for GSSC
to support the Products within the Territory. DAVOX(R) may limit the number of
copies, if any, of such technical materials that GSSC will be authorized to
make. GSSC will reproduce all confidentiality and proprietary notices on each
copy it reproduces.
4.7 Warranties, Representations, & Guarantees: DAVOX(R) warrants, represents,
and guarantees to GSSC that DAVOX(R) will:
A. Perform its obligations hereunder in a prompt, courteous, efficient
and workmanlike manner.
B. Comply with all applicable federal, state, and municipal laws,
ordinances and regulations in carrying out the terms of this Agreement
and pay and discharge at its own expense any and all costs, charges,
fees, and taxes that may be levied or imposed by any and all
authorities upon or by reason of its performance under this Agreement.
C. In the event DAVOX(R) or its personnel are permitted access to GSSC's
computer/data processing and transmission network (the "Network") such
access shall be granted solely for the benefit of GSSC and exclusively
for the purpose of enabling DAVOX(R) to fulfill its obligations to
GSSC hereunder. DAVOX(R) warrants and represents to GSSC that it shall
access only those areas of the Network which GSSC specifically directs
or authorizes DAVOX(R) to access and only for the purpose of
fulfilling DAVOX(R) obligations hereunder.
All information, data, and material contained in or residing on the
Network, which DAVOX(R) may obtain directly or indirectly,
intentionally or inadvertently, while on GSSC's site or via remote
dial-in access and whether obtained by specific direction of GSSC or
otherwise, shall be considered the confidential information.
DAVOX(R) warrants and represents that it shall not (nor shall it
directly or indirectly assist any other person in any manner to)
directly or indirectly insert or attach into or on, or otherwise take,
create, do, or cause to be done, in relation to the Network, any
business application, personal computer or workstation, or any
equipment, software, or other technology to which DAVOX(R) may have
access, any bug, virus, encryption, time bomb, or other such item,
device, or activity which would impede, interrupt, delay, destroy, or
otherwise impair GSSC, its employees', customers', subcontractors',
advisors' or others' use of such Network, equipment, software, or
other technology or any computer technology, equipment or software
which may be associated therewith.
- --------------------------------------------------------------------------------
6
<PAGE>
Third Party Service Provider Agreement
- --------------------------------------------------------------------------------
5.0 CHARGES, INVOICES, PAYMENT AND TAXES
5.0 Charges - Charges shall be as set forth in the Schedule of Maintenance
Service Rates (Exhibit D).
---------
5.1 Invoices - Subject to the terms set forth in Exhibit D, GSSC shall issue to
---------
DAVOX(R) invoices monthly in arrears. Each invoice rendered by GSSC shall
include the Customer name, DAVOX(R) site code number, and applicable GSSC
Service City from which Services were provided. Invoices applicable to "Time and
Materials Services", (as specified in Exhibit D shall also include the DAVOX(R)
---------
Service Call Number, date and duration of each Service call, and any other
detail which DAVOX(R) may reasonably request. Invoices will be submitted to
DAVOX(R) within 60 days of service completion.
5.2 Payment - Payment for each valid invoice will be made in full within 30
days after receipt of invoice and supporting documentation. GSSC shall have the
right to apply a late fee of one and one half percent (1.5%) per month to all
outstanding uncontested invoices not remitted within 30 days of DAVOX(R)'s
receipt of same, provided however that GSSC shall first give DAVOX(R) ten (10)
days written notice of such non-payment and application of such interest.
5.3 Taxes - Prices set forth in this Agreement are exclusive and GSSC
shall pay all applicable local, state, or federal sales taxes. Reseller
certificate must be provided by DAVOX(R) to GSSC if applicable.
6.0 GSSC PERFORMANCE EVALUATION
6.1 A Customer survey may, at DAVOX(R)'s sole discretion, be periodically
taken by DAVOX(R) regarding GSSC's responsiveness, product knowledge, problem
solving skills and Customer interaction skills. Copies of survey ratings shall
be supplied to GSSC. GSSC shall not be held responsible for any rating to the
extent that such rating is a result of DAVOX(R)'s omissions or of GSSC
complying specifically with DAVOX(R)'s instructions. Survey results are an
indicator of overall performance based on customers perception and may be
utilized as a tool to address process improvement where needed.
7.0 DEFAULT AND TERMINATION
7.1 The failure of either party to perform any material obligation under this
Agreement shall be deemed a default thereunder. If the non-defaulting party
provides notice to the other of such default, including the details thereof, and
such default is not cured within thirty (30) days of the defaulting party's
receipt of such notice, the non-defaulting party may immediately terminate this
Agreement by giving 30 day written notice to the other party of the effective
termination date.
7.2 DAVOX(R) shall have the right to terminate this Agreement immediately
upon written notice to GSSC if GSSC shall delete five (5%) percent or more of
its Service Cities pursuant Article 1.2C or if GSSC's fails to meet its
contracted obligations relative to service delivery criteria and its performance
shall become detrimental to or otherwise have a negative impact on DAVOX(R)'s
Product.
7.2 Termination of this Agreement will not adversely affect any rights or
obligations of either party existing as of or incurred prior to the effective
date of termination. DAVOX(R) shall have the
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Third Party Service Provider Agreement
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right to solicit bids for services provided under this agreement (90) ninety
days prior to the effective termination date.
8.0 TITLE, RISK OF LOSS
8.1 This Agreement shall, in no event, grant to GSSC any right, title or
interest in or to any Product or Parts other than any Parts which GSSC may
specifically purchase hereunder.
A. If GSSC should purchase Parts from DAVOX(R) hereunder, GSSC will take
title to such Parts at DAVOX(R)'s loading dock and GSSC will bear the
risk of loss or damage with respect to any such Parts which may be
lost or damaged in shipment.
B. For Parts which GSSC does not purchase hereunder ("DAVOX(R) owned
Parts"), GSSC will acquire no title and DAVOX(R) will bear the risk of
loss or damage with respect to DAVOX(R) owned Parts lost or damaged in
shipment. GSSC shall bear the risk of loss or damage with respect to
DAVOX(R) owned Parts in accordance with the terms and conditions set
forth in Exhibit E.
---------
8.2 All right, title, and interest in or to any Software shall at all times
remain with DAVOX(R). Subject to the terms of this Agreement including,
without limitation, those terms set forth in the Software License Agreement
marked as Exhibit I and incorporated herein by reference, DAVOX(R) hereby
----------------------------------------------
grants to GSSC a personal, non-transferable, non-exclusive license (the
"License") to use the Software which DAVOX(R) may furnish to GSSC hereunder.
Such use shall be solely for purposes of providing Maintenance Services to
Customers under the terms of this Agreement.
GSSC shall include any and all copyright and proprietary notices placed on the
Software by DAVOX(R) on all copies of the Software.
GSSC shall not disclose, provide or otherwise make available the Software or
Source Code or any Part or copy thereof to any third party. The Software and the
Source Code shall be deemed Confidential information of DAVOX(R) for purposes
of this Agreement and shall be protected accordingly as specified in the Mutual
Non-Disclosure Agreement marked as Exhibit L attached hereto and incorporated
---------
herein by reference. All copies of Software and Source Code, whether provided
by DAVOX(R) or made by GSSC in accordance with this Agreement, including
without limitation, translations, compilations or partial copies are the
property of DAVOX(R) and may not be used or disclosed except as permitted by
this Agreement.
9.0 FORCE MAJEURE
9.1 If the performance of this Agreement, or any obligation hereunder is
prevented, restricted, or interfered with by reason of fire, flood, earthquake,
explosion, or other casualty or accident, strikes or labor disputes, inability
to procure or obtain delivery of parts, supplies or power, war or other
violence, any law, order, proclamation, regulation, ordinance, demand or
requirement of any governmental agency, or any other act or condition whatsoever
beyond the reasonable control of the affected party, the party so affected, upon
giving prompt notice to the other party, shall be excused from such performance
to the extent of such prevention, restriction, or interference; provided
however, that the party so affected shall take all reasonable steps to avoid or
remove such cause of nonperformance and shall promptly resume performance
hereunder. Notwithstanding anything in this Agreement to the contrary, in the
event that GSSC is unable to
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Third Party Service Provider Agreement
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perform its obligations hereunder, DAVOX(R) shall have the right to establish
alternative sources of Maintenance Service coverage, including providing Service
itself or contracting with a third party
10.0 CONFIDENTIAL INFORMATION & PROPRIETARY MATERIAL
10.1 Confidentiality. The parties hereto acknowledge that the Products
incorporate confidential and proprietary information developed or acquired by or
licensed to the respective parties (the "Information") and agree to be bound by
the terms and conditions set forth in the Non-Disclosure Agreement attached
hereto, marked as Exhibit L and incorporated herein by reference.
---------
10.2 Non-Removal of Notices. Neither party will allow the removal or defacement
of any confidentiality or proprietary notice placed on the Products or other
items of Information. The placement of copyright notices on these items will not
constitute publication or otherwise impair their confidential nature.
Ownership & System Or Product Based Inventions:
A. All patents copyrights, circuit layouts, trade secrets and other
proprietary rights in or related to the Products are and will remain
the exclusive property of DAVOX(R) or its licensors, whether or not
specifically recognized or perfected under the laws of the Territory.
10.3 Third Party Rights. Each party represents that, by this Agreement, they
take no action that jeopardizes its or its licensors' proprietary rights nor
acquires any right in the Products, Software, or Information, or other
proprietary material of the other party except the limited use rights specified
in Exhibit I.
10.4 Use. Both parties will use the Products and other items of Information
exclusively to perform its marketing and service activities pursuant to this
Agreement. Except as specifically contemplated in (Exhibit B) and as may be
---------
specifically authorized in (Exhibit I), GSSC will not copy, translate, modify or
----------
adapt the Products, promotional literature, Software, or other items of
Information or DAVOX's(R) proprietary materials without DAVOX's(R) prior written
approval.
11.0 INSURANCE AND INDEMNITY
11.1. GSSC shall, at all times during the term of this Agreement, at its sole
cost and expense, carry the following insurance coverages written by reputable
insurance companies admitted to and authorized to do business in the state in
which the insurance policy is written.
A. Workers' Compensation Insurance with a broad form all states
endorsement covering all employees for statutory limits in accordance
with the laws of the states in which GSSC will be providing Services;
B. Employers' Liability Insurance with a limit of not less than
$2,000,000 for bodily injury for each accident; and $2,000,000 for
bodily injury by disease for each employee and for the policy limit;
C. Commercial General Liability Coverage, written on an occurrence basis
including completed operations, covering claims for bodily injury
including death, personal injury, and property damage regardless of
when such claims are filed, with a combined single limit of
$2,000,000 per occurrence.
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Third Party Service Provider Agreement
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D. Upon execution of this Agreement and immediately upon renewal of any
coverage required hereunder, GSSC shall provide DAVOX(R) with
certificates of insurance, issued by or on behalf of the appropriate
insurance companies, showing:
1. that the insurance coverage required under this Section 13 is in
force; and
2. that the insurance company(ies) issuing such policy(ies) have
agreed to notify both GSSC and DAVOX(R) of any modification or
cancellation of such policy(ies) at least thirty (30) calendar
days prior to the effective date of such change or cancellation.
E. All insurance required by this Agreement shall be provided on a
"primary basis" regardless of any other insurance DAVOX(R) may elect
to purchase and maintain. Accordingly, no insurance coverage required
of GSSC shall be subject to an "excess" or "pro-rata" type of other
insurance clause nor shall any coverage by subject to any clause which
would be contrary to the aforesaid intent of the parties.
F. Except for GSSC's Workers' Compensation Insurance, all of the policies
required of GSSC shall include DAVOX(R) as an Additional Insured,
identifying DAVOX as "DAVOX(R) Corporation and its divisions or
subsidiaries".
G. In the event that GSSC fails to deliver the certificate of insurance
to DAVOX(R) as required hereunder, DAVOX(R) shall notify GSSC in
writing and GSSC shall have twenty (20) days to furnish a certificate
as required by this Section, if GSSC fails to provide said certificate
to DAVOX(R) then, DAVOX(R), at its sole discretion and solely for
DAVOX(R)'s own benefit, shall have the right to obtain the insurance
coverage as expressly covered herein, and the premium and other
related cost shall be charged to GSSC. GSSC's failure to exercise its
discretion in this regard does not relieve GSSC from its obligations
or liabilities hereunder, nor create any liability on the part of
DAVOX(R).
11.2 Nothing in this Section 11.0 shall be deemed to expand or modify the
rights, remedies and liabilities of the parties as set forth elsewhere in this
Agreement.
12.0 GENERAL LIMITATION OF LIABILITY
12.1 EXCEPT FOR GSSC'S OBLIGATIONS UNDER SECTION 11 AND CLAIMS ARISING OUT OF
BREACH OF SECTION 8 AND 10, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF
PROFITS, REVENUE, DATA, OR USE, INCURRED BY EITHER PARTY ARISING OUT OF THE
AGREEMENT, WHETHER IN CONTRACT OR IN TORT, EVEN IF THE OTHER PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
12.2 GSSC will be installing Year 2000 Date Change (Millennium Software
Readiness) Upgrade Services as and when provided by DAVOX(R) as more
specifically set forth in Exhibit C in accordance with this Agreement and the
parties previously executed Amendment to Third Party Service Provider Agreement
dated 15 September 1998. In respect to the Year 2000 Date Change Upgrade
Services mentioned above, in no event shall GSSC be responsible for any breach
of its obligations under this Agreement if such breach directly results from an
inability in the Hardware or Software to correctly process, provide, and/or
receive date data and dates, or properly
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Third Party Service Provider Agreement
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exchange accurate date data and dates with products or deliverables provided by
GSSC under this Agreement, provided such products or deliverables provided by
GSSC correctly process, provide, and/or receive dates and date data, or properly
exchange accurate date data and dates. GSSC assumes no responsibilities or
obligations hereunder to cause Hardware or Software to accurately exchange date
data and dates with any other product. The foregoing sentence shall not apply in
the event that GSSC modifies Hardware or Software beyond that permitted herein
and in doing so, GSSC creates an inability in the Hardware or Software to
correctly process, provide, and/or receive date data and dates, or properly
exchange accurate date data and dates with other products. In such an event,
GSSC hereby indemnifies and agrees to hold harmless DAVOX(R) from and against
any and all claims, demands, and actions, and any liabilities, or damages
including court costs and reasonable attorney fees, directly resulting from the
GSSC modifications. GSSC's obligations and DAVOX(R)'s right to enforcement in
the event of such GSSC modifications shall survive the termination of this
Agreement for any reason. DAVOX(R) agrees to give GSSC prompt notice of any such
claim, demand or action and shall, to the extent GSSC requests and DAVOX(R) is
not adversely affected, cooperate fully at GSSC's cost and expense with the
defense and settlement thereof.
12.3 GSSC is not responsible for and DAVOX(R) acknowledges that it is the end-
user's sole and exclusive obligation to back-up all software and data. Except
in the case of GSSC's negligence or willful misconduct, DAVOX(R) hereby
indemnifies and agrees to hold harmless GSSC from and against any and all
claims, demands, actions, liabilities, or damages including court costs and
reasonable attorney fees, directly resulting from Hardware or Software received
from DAVOX for Year 2000 Date Change (Millennium Software Readiness) Upgrade
Services performed by GSSC in accordance with this Agreement and the Amendment
to Third Party Service Provider Agreement dated 15 September 1998. DAVOX(R)'s
obligations, and GSSC's right to enforcement in respect to the foregoing shall
survive termination of this Agreement for any reason. GSSC agrees to give
DAVOX(R) prompt notice of any such claim, demand, or action and shall, to the
extent DAVOX(R) requests and GSSC is not adversely affected, cooperate fully
at DAVOX(R)'s cost and expense with the defense and settlement thereof.
12.4 UNLESS EXPRESSLY SET FORTH ELSEWHERE IN THIS AGREEMENT, GSSC, ITS PARENT,
SUBSIDIARIES AND THEIR AFFILIATES, SUBCONTRACTORS AND SUPPLIERS MAKE NO
WARRANTIES, EXPRESSED OR IMPLIED, AND SPECIFICALLY DISCLAIM ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR THE FITNESS OR SUITABILITY
OF THE HARDWARE OR SOFTWARE ON WHICH THE SERVICES ARE PERFORMED, OR ANY
MODIFICATIONS THEREOF, FOR ANY SPECIFIC APPLICATION, PERFORMANCE, RESULT OR USE.
NO WARRANTY OR REPRESENTATION SHALL BE BINDING ON GSSC UNLESS IN WRITING AND
SIGNED BY AN AUTHORIZED REPRESENTATIVE OF GSSC.
13.0 INDEPENDENT CONTRACTOR
13.1 DAVOX(R) and GSSC are independent parties. Nothing in this Agreement
shall be construed to make either party an agent, employee, franchisee, joint
venture, partner or legal representative of the other party. Except as otherwise
provided in this Agreement, neither party holds, has nor may represent itself to
have any authority to act on the others behalf.
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Third Party Service Provider Agreement
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14.0 HIRING/COMPETITION
14.1 During the term of this Agreement and for six (6) months thereafter, GSSC
and DAVOX(R) agree to refrain from soliciting for employment without the prior
written consent of the other, their respective employees.
14.2 GSSC agrees not to knowingly solicit existing or future DAVOX(R)
customers with any offer to provide direct services for support of DAVOX(R)
Products. If during the term of this Agreement, existing or future DAVOX(R)
customers request service directly from GSSC on DAVOX(R) Product, those
requests will be forwarded to DAVOX(R).
15.0 GENERAL PROVISIONS
15.1 This Agreement is not assignable, in whole or in part, by either party
without the prior written consent of the other party, and any attempt to make
such assignment shall be void, except for assignments to wholly owned
subsidiaries or affiliates. Notwithstanding the above, DAVOX(R) has the right
to assign its rights hereunder to a parent that owns more than 50% of
DAVOX(R)'s assets, provided the parent is not a direct competitor of GSSC.
15.2 The following provisions shall survive the expiration or termination of
this Agreement; Sections 8, 10, 11, 12, 13, 14, and 15, and any other obligation
which, by its nature, is intended to survive expiration or termination.
15.3 This Agreement, including the Exhibits hereto, is the complete and
exclusive statement of the agreement between the parties and supersedes any and
all prior agreements and communications with respect to the subject matter. The
terms of this Agreement shall apply notwithstanding any proposed variations or
additions which may be contained in any purchase order or other communication
submitted by GSSC. No DAVOX(R) or GSSC employee other than the authorized
person or officer of GSSC or DAVOX(R) shall have any actual or apparent
authority to modify the terms of this Agreement in any way. All authorized
modifications shall be in writing and signed by such authorized representative
of DAVOX(R) and GSSC.
15.4 In case any one or more of the provisions contained in this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement, but this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein.
15.5 Any item or service furnished by DAVOX(R) or GSSC in furtherance of this
Agreement, although not specifically identified in it, shall nevertheless be
covered by this Agreement unless specifically covered by some other written
agreement executed by GSSC and an authorized representative of DAVOX(R).
15.6 Whenever notice or requests may be or are required to be given by either
party to the other, such notices shall be in writing and shall be sent by fax
(transmission confirmed) or by registered or certified mail, return receipt
requested, or its equivalent, postage prepaid. Notice shall be deemed effective
one hour after faxing or ten (10) days following the date sent by registered or
certified mail. The addresses of the parties (unless and until written notice of
change shall have been given) shall be as follows:
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Third Party Service Provider Agreement
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DAVOX(R) Corporation Grumman Systems Support Corporation
6 Technology Park Drive 10 Orville Drive
Westford, MA 01886 Bohemia, N.Y. 11716
FAX No. (978) 952-0201 FAX No. (516) 563-6881
Attn: Contract Administration Attn: Doug Hoffman
15.7 It is the intent of the parties to explore expanded service opportunities
relative to the Products in terms of installation, remedial maintenance and
extended support and to design and implement such new programs and service
levels as the parties may mutually agree.
15.8 All rights and remedies conferred under this Agreement or by any other
instrument or law shall be cumulative, are in addition to any other rights or
remedies available at law or in equity, and may be exercised singularly or
concurrently. Failure by either party to enforce any provision shall not be
deemed a waiver of future enforcement of that or any other provision.
15.9 This Agreement shall be governed and construed in accordance with the laws
of the United States and the Commonwealth of Massachusetts.
16.0 INFRINGEMENT INDEMNIFICATION
16.1 DAVOX(R) will defend GSSC against any claim that DAVOX(R)'s
proprietary Hardware or Software supplied hereunder infringes on any valid
United States patent or copyright and will pay resulting costs, damages and
attorney's fees if (i) GSSC promptly notifies DAVOX(R) in writing of such
claim, (ii) GSSC gives DAVOX(R) sole control of the defense and all related
settlement negotiations and (iii) GSSC, provides DAVOX(R) with reasonable
assistance in the defense of such claim. If any claim which DAVOX(R) is
obligated to defend has occurred or is likely to occur, GSSC agrees to permit
DAVOX(R), at its option and expense, either to procure the right for GSSC to
continue using the Hardware or Software, or to replace or modify the Hardware or
Software so that it becomes non-infringing. If neither of the foregoing
alternatives is available on terms which are acceptable to DAVOX(R), GSSC
agrees to return the Hardware or Software upon written request by DAVOX(R) and
GSSC shall be released of any obligation for the support of such Hardware or
Software.
16.2 DAVOX(R) shall have no obligations to GSSC under any provisions of this
Section with respect to any claim based on the use of Hardware or Software in
combination with equipment, devices, or software not supplied by DAVOX(R) or
upon the use of the Hardware or Software in a manner for which they were not
intended or modification of the Hardware or Software by persons other than
DAVOX(R). The foregoing states the sole and exclusive liability of DAVOX(R)
for infringement of any kind and is in lieu of all warranties, express or
implied, in regard thereto.
16.3 GSSC agrees not to modify or combine with any equipment, device or
software not supplied by DAVOX(R) any DAVOX(R) Product provided hereunder
unless directed to do so in writing by DAVOX(R).
17.0 MARKS
17.1 Ownership. All trademarks, service marks, trade names, logos or other
words or symbols identifying the products of DAVOX(R)'s business (the "Marks")
are and will remain the exclusive property of DAVOX(R) or its licensors,
whether or not specifically recognized or perfected under the laws of the
Territory. GSSC will not take any action that jeopardizes DAVOX(R)'s or its
licensors'
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Third Party Service Provider Agreement
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proprietary rights or acquire any right in the Marks, except the limited use
rights specified in Section 17.2. GSSC will not register, directly or
indirectly, any trademark, service mark, trade name, copyright, company name or
other proprietary or commercial right which is identical or confusingly similar
to the Marks or which constitute translations thereof into the language(s)
spoken within the Territory. In addition, all trademarks, service marks, trade
names, logos or other words or symbols identifying the products of GSSC's
business (the "Marks") are and will remain the exclusive property of GSSC or its
licensors, whether or not specifically recognized or perfected under the laws of
the Territory. DAVOX(R) will not take any action that jeopardizes GSSC's or its
licensors' proprietary rights or acquire any right in the Marks, except the
limited use rights specified in Section 17(2). DAVOX(R) will not register,
directly or indirectly, any trademark, service mark, trade name, copyright,
company name or other proprietary or commercial right which is identical or
confusingly similar to the Marks or which constitute translations thereof into
the language(s) spoken within the Territory.
17.2 Use. All advertisements and promotional materials will (i) clearly
identify DAVOX(R) or GSSC or its licensors as the owner of the Marks, (ii)
conform to DAVOX(R)'s or GSSC's then-current trademark and logo guidelines and
(iii) otherwise comply with any local notice or marking requirement contemplated
under the laws of the Territory. Before publishing or disseminating any
advertisement or promotional materials bearing a Mark, the publishing party
will deliver a sample of the advertisement or promotional materials to either
DAVOX(R) or GSSC for prior written approval. If DAVOX(R) or GSSC notifies
the other party that the use of the Mark is inappropriate, the notifying
party will not publish or otherwise disseminate the advertisement or
promotional materials until they have been modified in writing by to GSSC or
DAVOX(R)'s.
17.3 Infringement. GSSC or DAVOX(R) will immediately notify the respective
party if either party learns (i) of any potential infringement of the Marks by a
third party or (ii) that the use of the Marks within the Territory may infringe
the proprietary rights of a third party. The infringed party DAVOX(R) will
determine the steps to be taken under these circumstances at their own sole
expense, if any. Each party will (i) provide the other with the assistance that
DAVOX(R) may reasonably be requested at the sole expense of the requesting
party, if any, and (ii) take no steps on its own without the others party's
prior written approval.
By execution hereof, the signer for GSSC and DAVOX(R) hereby certifies that
he/she has read, understands and is duly authorized to execute this Agreement on
behalf of their company.
GRUMMAN SYSTEMS SUPPORT CORPORATION DAVOX(R) CORPORATION
- ----------------------------------- --------------------
BY: /s/ Douglas R. Hoffman BY: /s/ John J. Connolly
------------------------------ -----------------------------
NAME: Douglas R. Hoffman NAME: John J. Connolly
------------------------------ -----------------------------
TITLE: Director TITLE: V.P. of Finance - CFO
------------------------------ -----------------------------
DATE: 5/27/99 DATE: 5/25/99
------------------------------ -----------------------------
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EXHIBIT A
SCHEDULE OF MAINTENANCE SERVICES
1. Upon receipt and acceptance of a DAVOX(R) Work Authorization Form for any
given Customer, GSSC will provide Maintenance Services for the Product
situated at such Customer location. Each Work Authorization Form shall
include all those Hardware components located at a specific Customer site and
comprising a specific CAS or Unison system.
2. DAVOX(R) will contract directly with each Customer using Maintenance
Agreements. DAVOX(R) shall have the right, at its sole discretion, to
modify the form of Maintenance Agreement at any time.
3. Customers will contact the DAVOX(R) Worldwide Support Center in Westford, MA
(the "WSC") with all requests for Service.
4. Upon receipt of Customer's call to the WSC, DAVOX(R) will, prior to
contacting GSSC, attempt to identify the cause of the problem reported by the
Customer ("fault isolation") and will, as DAVOX(R) is reasonably able,
instruct the Customer via telephone on steps to be taken to remedy the
problem.
5. In the event DAVOX(R) determines that GSSC's on-site assistance is required
to resolve a Customer Hardware problem (the "On-Site Service"), the WSC will
contact the GSSC dispatch facility and request such on-site service via
facsimile transmission, or electronic tasking (electronic-mail, system
sharing), with voice confirmation, as mutually agreed to. A valid request by
DAVOX(R) must include a Work Order Number, which must also appear on all
documents relating to the Service call in question. The WSC is the only party
that is authorized to initiate a Service call to GSSC on behalf of DAVOX(R)'s
Customers.
6. Unless otherwise agreed to in writing, GSSC will use it's best efforts to
provide a (4) hour response for all requests for On-Site Service called into
GSSC during contracted business hours. Such response time will be measured
from GSSC's receipt of request from DAVOX(R) to GSSC's arrival at Customer's
site located within 50 miles of the nearest Service City (the "Response
Time"). GSSC will use its best efforts not to exceed an eight (8) hour
Response Time to Customers who are situated from 51 to 100 miles of the
nearest Service City. On-Site Service requests for sites located beyond 100
miles from a GSSC Service City will be responded to on a best effort basis.
GSSC will use its best effort to arrive at the Customer's site as quickly as
possible when the Customer status is identified by DAVOX(R) as being
"critical"
In the event a service request is made outside the contracted service period
(i.e., PPM, PEM, as specified in Exhibit D), GSSC will use its best efforts
---------
to comply with the Service request. GSSC reserves the right to comply with
such requests for Service outside of the contracted Service periods, to the
extent that reasonably necessary labor resources and parts are available. In
all such instances, GSSC will use its best efforts to provide parts and labor
from the nearest GSSC Service City.
Service requests received by GSSC outside contracted business hours (as
measured in the Service City) will be handled on a best effort basis.
Extended Hours of Coverage are consecutive contract hours past the Principal
Period of Maintenance (PPM) as defined in Exhibit D and incorporated herein
---------
by reference ("PPM"). Extended Hours of Coverage are a
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continuance of remedial services only, and are provided on a standby basis
only after the initial PPM. Extended Hours of Coverage applies only to
fully contracted Customers and shall be reserved for those occasions in
which Severe Failures have occurred. "Severe Failures" are defined as
"down" Systems; those failure types by which a System has lost the ability
for more than half of the Customer agents to take inbound or outbound
calls.
7. GSSC will prepare and submit to DAVOX(R) a Field Service Activity Report or
a system generated Service Management report for each Service call
performed by GSSC (the "Service Activity Report"). With respect to those
activities that will result in a Per Call Time & Materials invoice by GSSC
to DAVOX(R), as specified in Exhibit D, or when DAVOX(R) specifically
requests, a Service Activity Report will be delivered to DAVOX(R) if
specifically requested, GSSC will deliver to DAVOX(R) the Field Service
Activity Report immediately upon completion of the service activity. Each
such Service Activity Report will reference the Work Order Number as issued
by DAVOX(R).
8. GSSC will render Services in a professional and workmanlike manner so as to
restore the Equipment to good working condition and will use its best
efforts to maintain a courteous, positive customer service environment.
9. Maintenance Service initiated during contracted business hours will
continue for one hour past the PPM and will be treated as having been
completed during contracted business hours at no additional cost to
DAVOX(R). Maintenance Services continuing for more than one hour past the
PPM will be billed at GSSC's then current Time and Materials rate.
10. If engineering changes, feature changes, or safety changes are developed by
DAVOX(R) for installed items of Product (the "FCOs), such FCOs will be
installed by DAVOX(R) or if DAVOX(R) requests, GSSC will install such FCOs
on a Per Call Services basis (per Exhibit D) or a mutually agreed to fixed
fee basis. All components, parts and instruction packages necessary for
GSSC to install FCOs will be delivered by DAVOX(R) to GSSC at no additional
cost to GSSC.
11. GSSC shall have no obligation to perform Services on Product if the End-
User does not provide GSSC with reasonable access to the Product and a
reasonably safe place in which to perform such Service. The Customer shall
provide free and full access to the Product, attachments or other equipment
required to provide the specified services. The Customer shall provide at
no charge, hardware documentation and system diagnostics, adequate working
space and facilities in the immediate area of the equipment to be serviced.
The Customer shall provide and maintain a stable environment including but
not limited to electric power, humidity and temperature, necessary for
performance of its equipment as specified by the equipment as specified by
the equipment manufacturer.
12. GSSC will ensure that its personnel who will be performing the Services
hereunder are appropriately trained and knowledgeable. GSSC will ensure
that its personnel attend such training as specified in Exhibit K and
---------
incorporated herein by reference and that such training classes are
attended by its personnel in a timely manner.
GSSC and DAVOX(R) agree that training requirements, as augmented throughout
the term of this Agreement, will be addressed on a per incident basis and
negotiated to the mutual satisfaction of both parties.
13. GSSC will accept maintenance Service responsibility as of the effective
date on the Work Authorization Form, a sample of which is marked as Exhibit
-------
G and incorporated herein by
-
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<PAGE>
reference provided however, that such effective date will be after
completion of the applicable required training classes, as outlined in
Exhibit B. GSSC will continue such Service for the full term of the
---------
applicable Maintenance Agreement. DAVOX(R) may discontinue GSSC's Services
as to any Product by sending to GSSC a fully completed and executed Work
Authorization Form designating the effective date of such discontinuance.
Such discontinuance will become effective with respect to the Product
thirty (30) days after receipt of the Work Authorization Form or as may be
otherwise agreed to in writing by the parties. If DAVOX(R) finds it
necessary to terminate or suspend maintenance Service because of payment
delinquency by its Customer, then the requirement for (30) day advance
notice will be waived; such termination or suspension will be effective
immediately upon notification to GSSC by DAVOX(R).
14. In the event that any Product being maintained under the terms and
conditions of this Agreement is relocated and such relocation is to a site
serviced by a different Service City, GSSC will continue to maintain the
Product at the new location if:
a. Such Product is installed by GSSC, or
b. GSSC has conducted an inspection after installation at the new location
and accepts such Product for Maintenance Service under this Agreement;
and,
c. DAVOX(R) has delivered to GSSC a fully completed and executed Work
Authorization Form.
d. Zone charges will be applied as defined in Exhibit D.
---------
If, in GSSC's sole discretion, the Product does not qualify for Maintenance
Service because of transit damage, warehouse deterioration, excessive wear,
poor or improper service by other than GSSC, damage from any other cause
and/or improper installation by other than GSSC, GSSC shall prepare a
formal written report to DAVOX(R) detailing its findings. If GSSC is
requested to perform such repairs as it deems necessary to qualify the
Product for Maintenance Service, then GSSC will invoice DAVOX(R) for such
repairs in accordance with the Per Call Services Schedule.
GSSC obligations under this Agreement do not include the following supplies
and environmental support conditions:
- Electrical work and telecommunications external to the equipment
list;
- Operating supplies or accessories including tapes, disks, paper,
toner, drums, cartridges or other such media;
- Services or parts required to repair damage caused by or resulting
from faulty or failed telecommunications and electrical power or
air conditioning, hardware design problems, media incompatibility,
operator errors, neglect or misuse by an entity other than GSSC;
- Hardware, firmware, microcode and software maintenance (including
but not limited to deficiencies or defects, of any nature, caused,
directly or indirectly by the Year 2000 "millennium bug");
- Service on equipment which has been modified or altered without
prior GSSC consent or at direction of manufacture;
- Replacement or refurbishment of equipment which is worn beyond
reasonable repair due to extensive use and/or age.
- --------------------------------------------------------------------------------
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15. From time to time, DAVOX(R) may require special services on products not
covered by this Agreement. To the extent that DAVOX(R) provides a Work
Authorization Form and a Work Order Number; GSSC agrees to provide such
service on a best effort basis. Such service will be billed to DAVOX(R) at
the Per Call Rates in Exhibit D.
---------
16. From time to time, DAVOX(R) may wish to make the Service provisions
contained herein available and applicable to new product (e.g., product
which DAVOX(R) secures from another supplier and provides to a Customer as
part of a package tailored to such Customer's requirements or a newly
developed DAVOX(R) proprietary product). GSSC agrees to cooperate with
DAVOX(R) with a view toward developing an appropriate service program for
such new product.
17. DAVOX(R) will provide GSSC with technical telephone support directly
related to DAVOX(R) proprietary Hardware and Software at no additional cost
to GSSC. DAVOX(R) will also provide on-site technical assistance, when
required and as mutually agreed to, at no additional cost to GSSC.
DAVOX(R) reserves the right, however, to charge GSSC, DAVOX(R)'s then
current time and material rates if DAVOX(R) has provided such on-site
technical assistance and such problem should reasonably have been
resolvable by GSSC without DAVOX(R)'s on-site assistance.
18. Optional Services:
(a) Dedicated On-Site Engineer: Upon DAVOX(R)'s written request, GSSC
--------------------------
will provide resident on-site labor resources at those Customer sites for
which DAVOX(R) has contracted with the Customer to provide such resources.
"Resident on-site labor" shall mean a person or persons in GSSC's employ
who is/are assigned to a Customer's site; is a dedicated engineer to that
site for the duration of a term mutually agreed to by DAVOX(R) and GSSC,
such on-site term not to be less than 40 hours per week for 12 consecutive
months, plus reasonable and necessary lead time for GSSC hiring and
applicable training. In such event, GSSC will assume personnel hiring,
training and labor backfill coverage requirements If the options of this
Section are exercised, mutually agreed upon requirements will be discussed.
GSSC shall not be responsible for any additional logistical requirements
outside those employed per the processes and requirements discussed in
Exhibit E, Schedule of Parts Services. If such option has been selected by
DAVOX(R), GSSC will ensure continuous staffing where absences exceed 2
consecutive days in the incidence of vacations, sick days, terminations,
transfers, resignations, and/or any other absence(s) of the regularly
scheduled personnel.
(b) Dedicated Labor Resource: Subject to DAVOX(R)'s written request, GSSC
------------------------
will also provide to DAVOX(R) dedicated resource(s) for non-site-
dedicated events and activities. Dedicated Labor Resources will be
available solely to DAVOX(R), for DAVOX(R) direction, for not less
than 40 hours per week for 12 consecutive months plus lead time for
hiring and training where applicable, with allowances made for
reasonable vacation, sick and holiday leave hours. Dedicated resources
will remain GSSC employees with full time availability to DAVOX(R).
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Exhibit D (Item B5) provides the rate structure for on-site and
dedicated labor resources according to the skill level requirements
to be selected by DAVOX(R).
(d) In-House GSSC Technical Support Representative: GSSC will provide
-----------------------------------------------
to it's own Field Service Customer Representatives first call
remedial technical support in DAVOX(R)'s Unison line of Products and,
to the extent as defined by the DAVOX(R) Unison Physical Layer,
DAVOX(R) course #103PL or equivalent, curriculum found in Exhibit K,
Training Curriculums. Such GSSC remedial technical support shall be
provided Monday through Friday 8:00 AM through 5:00PM, at no
additional cost to DAVOX(R). Subject to GSSC's compliance with
DAVOX(R)'s reasonable site and security rules and regulations, GSSC
shall deliver such support from DAVOX(R)'s Westford, MA facility,
unless otherwise decided by GSSC, with backup support provided from
various GSSC locations. DAVOX(R) shall provide the dedicated In-House
--------
GSSC Technical Support Representative with a workstation, access to
-------------------------------------
DAVOX(R)'s Management System and access to DAVOX(R)'s internal
personnel and resources as may be necessary for the fulfillment of
GSSC's obligations hereunder.
19. Technical support for DAVOX(R)'s CAS legacy Products shall be
provided by GSSC on a best effort basis and through mutual
cooperation of the parties.
20. GSSC and DAVOX(R) agree to further develop and/or expand GSSC's
technical support capabilities to the mutual satisfaction of both
parties. Expansion may include, but not be limited to, additional
hours of coverage, time zone coverage, additional product support
and/or the addition and/or expansion of software oriented support.
21. GSSC and DAVOX(R) agree, on an ongoing basis, to jointly develop and
to formalize control procedures and forms to satisfy the intent
stated above. Wherever practicable, DAVOX(R) agrees to use existing
procedures and forms of GSSC.
--- END ---
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EXHIBIT B
TRAINING, DOCUMENTATION AND ESCALATION SCHEDULE
TRAINING
Call Center System Maintenance training will be held at either DAVOX(R) or GSSC
facilities, as mutually agreed to by both parties. GSSC provides all
prerequisite training at no cost to DAVOX(R) and allows for 1 week (Mon.-Fri.
continuous) DAVOX(R) proprietary training at no charge to DAVOX(R). DAVOX(R)will
provide and/or make available the required hardware, documentation and
diagnostics, at no cost to GSSC.
Call center system maintenance training will consist of the understanding and
troubleshooting of DAVOX(R) proprietary hardware and software and is currently
delivered through DAVOX(R) course # 103PL, Physical Layer or equivalent.
Call center system maintenance training will consist of:
1. Prerequisites
GSSC will provide personnel prerequisite skills consisting of the basic
understanding of Unix commands and hardware troubleshooting, a basic
understanding of the principles, operation and troubleshooting of Network
environments and a basic understanding of telephony including T1 technology.
2. DAVOX(R) Proprietary Hardware Maintenance
This course is designed to teach system maintenance professionals the skills and
concepts necessary to perform the first level of diagnostic testing and
maintenance of the different configurations of Unison Systems. The course is
built around activities that teach the proper use of diagnostic tools to
troubleshoot and maintain the Systems down to the level of "field replaceable
units" and is provided through DAVOX(R) course # 103 PL, Physical Layer or
equivalent.
3. System Administration
This class provides a hands-on approach in setting up, maintaining, and trouble-
shooting several types of typical work environments with the emphasis being
placed on non hardware issues and is provided through DAVOX(R)course # 103 PL,
Physical Layer or equivalent.
4. In addition to the aforementioned training requirements, the geographical
locations and/or Service Cities of Chicago, Dallas, Southern CA, Northern CA,
Denver, St. Louis, Atlanta, Philadelphia, NY-Boston, and Florida shall require
at least one GSSC engineer with a high quality of customer and communication
skills to be fully trained and competent in the maintenance and support of Sun
Microsystems hardware product, T1 / Telco knowledgeable, and have completed and
be deemed by DAVOX(R) to be reasonably proficient in the DAVOX(R) "UNISON
Supervisor" # 101UST or equivalent, "Physical Layer" # 103PL or equivalent, and
"Architecture" # 102A or equivalent courses.
GSSC will provide personnel in select cities with the aforementioned training
and with training paths and curriculums as specified and requested by DAVOX(R).
Where personnel expansion is required to facilitate a request, GSSC reserves the
right to invoice DAVOX(R) per the rates described in exhibit D, Schedule of
Maintenance Service Rates, Dedicated Labor Staff. Cities where existing
personnel may be selected by GSSC to facilitate a skill set requirement request
will not be considered DAVOX(R) dedicated labor.
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All expenses including, but not limited to, commercial travel, lodging and per
diem will be invoiced for training beyond DAVOX(R) course #103PL or equivalent.
GSSC will also invoice at the prevailing T&M rates any and all overtime and
travel hours incurred outside the Monday- Friday, 8:30 AM - 5:30 PM work week
during or for the training period.
Training requests from DAVOX(R) for courses and curriculums not provided by
DAVOX(R) or GSSC, and that require an outside provider will be invoiced to
DAVOX(R) at cost, plus associated administrative fees. Furthermore, GSSC will
invoice at the prevailing T&M rates any and all overtime and travel hours
incurred outside the Monday - Friday, 8:30-5:30 work week for courses taken per
DAVOX(R)'s request and delivered from an outside provider.
GSSC and DAVOX(R) will mutually develop and agree to an implementation schedule
in order to facilitate any requests for advanced training in a particular city
(s).
5. From time to time and at DAVOX(R)'s sole discretion, DAVOX(R) may make
available training in the field by way of documentation, videotape, local
seminars etc. to update GSSC's personnel on new Products or enhancements. Such
additional field training classes shall be made available at no additional cost
to GSSC. Written notice will be provided to GSSC as to the time and location of
such training.
CALL/TROUBLE TICKET TRACKING
Call problem/resolution information, based on Customer help calls to DAVOX(R)
and on information contained in the Field Service Reports provided by GSSC to
DAVOX(R), will be maintained by the WSC. All Work Orders, RA's, call logs, etc.
are logged with reports generated through DAVOX(R)'s database.
DOCUMENTATION
All DAVOX(R) documentation (i.e. Engineering notes, FCOs, Installation Guides,
Service Manuals, Diagnostic Manuals, Media and Illustrated Parts Catalogs for
Products) and technical information (the "Documentation") resides on the
DAVOX(R) intranet (the "Web") and is under the control of the DAVOX(R)
Documentation Department. Each time a Document is added, changed, or deleted
from the Web, a broadcast electronic mail message is sent throughout DAVOX(R) as
notification of such addition, change, or deletion. All Documentation required
by GSSC to fulfill its obligations under this agreement will be provided by
DAVOX(R), either electronically or in hard copy format at no cost to GSSC. It is
DAVOX(R)'s responsibility to provide written notice to GSSC of DAVOX(R)'s Web
address and written notice of any changes to that address.
GSSC may copy the Documentation, in its entirety, subject to the proper
inclusion of any and all copyright and proprietary notices appearing in or on
the original Documentation as provided by DAVOX(R), but only for use with the
Systems as may be reasonably necessary for GSSC to fulfill its obligations
hereunder. All copies of such Documentation, whether provided by DAVOX(R) or
otherwise, including, without limitation, translations, compilations, or partial
copies, are and shall remain the sole property of DAVOX(R) and may not be used
or disclosed except as permitted by this Agreement.
ESCALATION
GSSC understands the need to establish the lines of communication and identify
the responsible personnel and/or departments to resolve customer problems. As
mutually agreed to, GSSC will adhere to the current DAVOX(R) Service Call
Escalation Schedule during any and all applicable GSSC Service to be provided
hereunder.
--END--
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<PAGE>
EXHIBIT C
SCHEDULE OF INSTALLATION, UPGRADE and MOVE, ADD, CHANGE (MAC)
SERVICES
GSSC will, upon request from DAVOX(R), provide installation, Upgrade, and "Move,
Add, Change" (MAC) services as directed.
1. Installation Services (Phase I)
1.1. Installation services are offered per the rate schedule found in
Exhibit D (Item B2) Rates.
1.2. GSSC will provide Unison System installation services in accordance
and as defined by the DAVOX(R) Physical Layer training curriculum
(course #103PL or equivalent) found in Exhibit K, Training
---------
Curriculums. GSSC and DAVOX(R) have mutually developed and agreed to
verify operability, hardware functionality and connectivity through
system diagnostics and mutually developed and agreed to procedures and
processes defined by the Unison Physical Layer Installation Checklist,
Exhibit M.
---------
1.3. Installation Service consists of: unboxing and validation of all
Unison System Hardware as recorded on the DAVOX(R) "Pick Slip" which
accompanies the shipment to the Customer site, the installation of
such System Hardware, as well as System options and peripheral System
devices as shipped with the System.
1.4. Requests for installation will be provided by DAVOX(R) per dispatch
procedures specified in Exhibit J attached hereto, as well as by
---------
DAVOX(R) notification by voice and/or electronic hardcopy to the GSSC
installation coordinator. Request for an installation activity will be
provided to the GSSC identified Installation Coordinator no less than
30 days prior to the scheduled install activity DAVOX(R)'s request
will include; schedule date, Customer name, installation address,
overview of activity and the responsible DAVOX(R) System Integration
Manager (SIM) name and phone.
1.5. GSSC will coordinate the labor resource required and direct the
contact between GSSC and the SIM. The SIM will forward to the GSSC
assigned Installation Service Engineer the DAVOX(R) Site Preparation
Questionnaire and the site specific Unison System Configuration Layout
as found in sample Exhibit P attached hereto and incorporated
--------------------------------
herein by reference, prior to an installation. It is also agreed
-------------------
that any and all information pertaining to a Unison installation
(i.e.: IP addresses), to the extent that this information will assist
in the successful integration of a Unison System, will be forwarded to
the GSSC assigned Installation Service Engineer prior to an
installation.
1.6. GSSC will, upon completion of an installation, forward to the SIM an
executed copy of the Unison Physical Layer Installation Checklist, a
sample of which is marked as Exhibit M attached hereto and
-----------------------------
incorporated herein by reference.
--------------------------------
1.7. GSSC and DAVOX(R) agree to develop and augment installation processes
and procedures in accordance with their standard business practices
via written request, statements of work, and through formal contract
amendment as required.
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<PAGE>
1.8. GSSC will not be responsible for local utility or in-house
communication wiring. Sites must be properly prepared to receive
equipment including, but not limited to, proper furniture, A/C utility
electric, communication/LAN cabling and be in accordance with local
safety and building codes.
In the event of any delays caused by Customer failure to provide such
proper environment or access, GSSC will escalate such delays to
DAVOX(R). GSSC and DAVOX(R) will determine an appropriate and mutually
agreeable approach to resolve such Customer delays or reschedules as
they arise.
Provided GSSC has given DAVOX(R) notice of such conditions and/or
delays, as well as the need for a return trip to the Customer site
together with the additional costs to be incurred, and DAVOX(R) has
received approval from the Customer, GSSC shall have the right to
invoice for return trips to a site not properly prepared, provided
such conditions prevent and/or adversely and materially impact the
successful installation of Hardware or Software. GSSC also reserves
the right to charge additional fees if DAVOX(R) requests GSSC to
correct deficiencies related to site preparedness.
1.9 DAVOX(R) recommends that all GSSC implementation engineers have a Lap
Top PC that has, at a minimum, communication ability (modem) with the
following software installed thereon; MS Office (Word & Excel), MS
Project, and Visio Standard (5.0) or compatible software.
1.10 DAVOX(R) will provide GSSC with a written Installation Evaluation
Report, in a form similar to that which marked as Exhibit O attached
---------
hereto and incorporated herein by reference, for each incident where a
GSSC engineer performs a DAVOX(R) Installation or a major hardware
upgrade.
2. Removal Service
2.1. Removal Service consists of:
Shutting off the electric current to the System by removing its
connection to the power source and removing its connection with all
data and communication networks ("Disconnecting the Product"); and
Making the Product ready for shipment, including securing cables and
movable or removable panels and subassemblies.
GSSC will not be responsible for the physical relocation of
equipment(s) or the materials necessary to prepare equipment for
shipment (tape, boxes etc,) unless requested by DAVOX(R) in writing to
provide such materials and reimbursed by DAVOX(R).
3. Upgrade Services
3.1. Upgrade Services are offered per the Rate Schedule found in Exhibit D.
---------
Upgrade services may consist of Hardware System(s) and/or components
thereof and/or Software revisions and/or patches and/or as otherwise
directed by DAVOX(R) ("Upgrade Event").
Upgrade Event(s) will be dispatched in accordance with the dispatch
processes and procedures specified in Exhibit J attached hereto and
---------
incorporated herein by reference, unless otherwise agreed to in
writing by the parties.
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<PAGE>
Notification of an upgrade activity will be provided to GSSC in
writing no less than 14 days prior to the scheduled upgrade activity.
Notification will include but not be limited to; schedule date,
customer name, address and overview of activity.
3.2. GSSC and DAVOX(R) agree that from time to time special projects or
major upgrade undertakings may arise and may require special
consideration. GSSC and DAVOX(R) agree to develop implementation
programs to the mutual satisfaction of both parties and to develop and
execute formal amendments to this Agreement as required.
3.3. DAVOX(R) will provide all necessary software and associated hardware
as, in its sole discretion, it deems necessary to complete an Upgrade
of a particular Customer's Unison Call Center (the "Call Center") in
accordance with DAVOX(R)'s Upgrade requirements. Upgrade Kits, where
applicable, will be configured and shipped to the applicable Customer
site by DAVOX(R).
3.4. Where applicable DAVOX(R) will determine the site-specific
hardware/software requirements necessary to establish a site-specific
system profile via a system dial-in audit script that determines the
existing Sun Solaris and DAVOX(R) Unison software release(s) and
system configuration. Upon determination of the system profile,
DAVOX(R) will provide GSSC with a site-specific report ("System
Template"). The System Template shall be included in the Upgrade Kit
to be delivered to the applicable Customer site or, as may be deemed
necessary, sent directly to GSSC by DAVOX(R).
3.5. In the event of any delays caused by Customer's failure to provide
such proper environment or access, GSSC will escalate such delays to
DAVOX(R). GSSC and DAVOX(R) will determine an appropriate and mutually
agreeable approach to resolve such Customer delays or reschedules as
they arise.
3.6. Year 2000 Date Change (Millennium Software Readiness) Upgrades
This Statement of Work sets forth the agreement of the Parties as
related to the software/hardware upgrade activity required to comply
with DAVOX(R)'s Year 2000 Date Change ("Y2K") readiness requirements
for DAVOX(R)'s Unison and In/Unison family of product(s).
A. Scope
(1) Each SUN Sparc and SUN Ultra computer system installed in
DAVOX(R)'s Customers' Unison Call Center environment(s) will be
required to be upgraded in order to accommodate the DAVOX(R)
Year 2000 Date Change (the "Upgrade"). DAVOX(R) has estimated
that this requirement currently represents approximately 170 SUN
Ultra 3.X and 310 SUN Sparc 2.X systems.
(2) Each Upgrade will require an estimated 12-16 hours per SUN Sparc
2.X system and 2-4 hours per SUN Ultra 3.X systems.
(3) A standard Upgrade will consist of:
. SUN Solaris 2.3 with Y2K software patches
. DAVOX(R) Unison software 2.3.0 with Y2K patches
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<PAGE>
. An initial `disk dump' backup before the start of an Upgrade;
and
. A full system back-up upon successful completion of an
Upgrade.
. SUN Ultra 3.X systems will also require a Sybase Y2K patch.
. Upgrade components, if any, for the SUN Sparc 10's and SUN
Classics will be determined by DAVOX(R) on or before
September 1, 1998.
All Upgrades will be completed by GSSC within a 10 month window beginning
September 1, 1998 and running through June 30, 1999.
The parties have agreed that 40-50% of all Upgrades are expected to be
accomplished outside the Principle Period of Maintenance as defined in the
Agreement.
GSSC is currently providing 4-5 non-Y2K software upgrades per week in addition
to its standard DAVOX(R) Product service delivery activities (remedial,
installation and MAC events). GSSC will provide sufficient resources to
accomplish at least 7 additional Upgrades for an expected total of 11-12
software upgrades per week.
B. Software/Hardware Upgrade Components
(1) DAVOX(R) will provide all necessary software and associated hardware
as, in its sole discretion, it deems necessary to complete the Upgrade
of a particular Customer's Unison Call Center (the "Call Center") in
accordance with DAVOX(R)'s Y2K Upgrade requirements ("Upgrade Kits").
Upgrade Kits will include, but may not be limited to, the following
items for all DAVOX(R) components within a Call Center requiring the
Upgrade:
. DAVOX(R), Sun, & Sybase software patches
. Incremental software revisions.
. Hardware essential to software loading, back-up, and installation.
. Site-specific system profile/template
(2) Upgrade Kits will be configured and shipped to the applicable Customer
site by DAVOX(R).
(3) DAVOX(R) shall have the option to have GSSC maintain, configure,
ship/receive, coordinate and control the Upgrade Kits within the Y2K
program. If and when mutually agreed to by both parties, GSSC and
DAVOX(R) will develop and implement the procedures and processes
necessary to transition the Upgrade Kit responsibilities to GSSC
C. Y2K System Configurations.
DAVOX(R) will determine the site-specific hardware/software requirements
necessary to establish a site-specific system profile and to facilitate an
Upgrade via a system dial-in audit script that determines the existing Sun
Solaris and DAVOX(R) Unison software release(s) and system configuration.
Upon determination of the system profile, DAVOX(R) will provide GSSC with a
site-specific report ("System Template"). The System Template shall be
included in
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<PAGE>
the Upgrade Kit to be delivered to the applicable Customer site or, as may
be deemed necessary, sent directly to GSSC by DAVOX(R).
D. Y2K Notification/Scheduling
(1) Unless otherwise specified below, notification and scheduling of
Upgrade services will be conducted in accordance with the processes
set forth in the Agreement.
(2) DAVOX(R) will use its reasonable efforts to provide the named GSSC
Upgrade Coordinator with not less than 5 business days' advance
written/electronic notice of a need for Y2K Upgrade services. GSSC
will provide it's reasonable efforts to facilitate an Upgrade request
received within less than such 5 days notification. In the event that
less than such 5 day notice is provided and GSSC is otherwise unable
to complete the requested Upgrade, DAVOX(R) will have the option to
reschedule a previously scheduled upgrade (Y2K Upgrade or otherwise)
in order that GSSC may make the necessary resources available to
facilitate such Upgrade.
(3) In the event of any delays caused by Customer failure to provide such
proper environment or access, GSSC Y2K Coordinator will escalate such
delays to the named DAVOX(R) Y2K Coordinator. The GSSC Y2K
Coordinator, and/or his/her manager, and the DAVOX(R) Y2K Coordinator
will determine an appropriate and mutually agreeable approach to
resolve such Customer delays or reschedules as they arise.
E. Y2K Training
1) DAVOX(R) will provide to GSSC one (1) Y2K Upgrade training class for
up to twelve (12) GSSC employees (including trainers) at DAVOX(R)'s
Westford, MA headquarters at no additional charge to GSSC. It is
agreed by the Parties that existing GSSC personnel who are experienced
in DAVOX(R)'s other, non-Y2K upgrade processes and procedures will not
be required to attend training unless the parties shall, mutually and
on a case by case basis, agree otherwise.
2) DAVOX(R) will provide the trainer(s) and all classroom materials and
laboratory equipment as DAVOX(R) deems necessary and appropriate for
the above referenced training class. GSSC shall be solely responsible
for all costs and expenses related to its employees' attendance at
such training class including, but not limited to, travel,
accommodations, subsistence and, as applicable, compensation for time.
DAVOX(R) will have no obligation to reimburse GSSC for any such
additional costs or expenses, nor for the trainee's time spent
preparing for, travelling to or from, or in training.
3) Any future classroom training which GSSC may deem to be necessary for
new Upgrade technicians will be provided by GSSC trainers to GSSC
staff. Should such training be required, GSSC shall provide DAVOX(R)
with not less than thirty (30) days prior written notice of the
scheduled training date & site, trainer's name, name and date of hire
of the applicable trainees, and specific material to be covered.
Subject to timely receipt of such notification, DAVOX(R) will provide,
at no additional cost to GSSC, sufficient numbers and quantities of
hardware, software and documentation as DAVOX(R) deems reasonably
appropriate. DAVOX(R) will reimburse GSSC for the Trainer's time at
the rate of $95.00/hr (prorated for partial hours). DAVOX(R) will have
no obligation to reimburse GSSC for the trainee's time spent preparing
for, travelling to or from, or in training. Further,
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<PAGE>
DAVOX(R) reserves the right to audit such additional training classes
and GSSC agrees to cooperate with DAVOX(R) in the event of DAVOX(R)
should reasonably request any modifications to a specific class or
generally to the GSSC Upgrade training program.
F. Y2K Documentation
(1) DAVOX(R) will provide GSSC implementation documentation as deemed
reasonably necessary by DAVOX(R) for the successful completion of
Upgrades. Documentation will include, but may not be limited to:
. SUN and Unison Upgrade procedures
. Site documentation with regard to system configuration (to be
included in Upgrade Kits)
. Contact(s), phone #, address
. Site hardware/software audit forms (optional).
. DAVOX(R) may, at DAVOX(R)'s sole discretion, elect to include any
additional materials, information, and/or site-specific requests,
material, documents, or otherwise as DAVOX(R) shall deem necessary
or appropriate for the specific situation. DAVOX(R) and GSSC will
mutually develop and/or agree to such additional material prior to
applicable implementation.
(2) Unless otherwise specified or agreed between the parties, the
documentation will be forwarded to GSSC prior to the applicable
Upgrade request to the extent that GSSC's prior review of such
documentation will assist in effective and efficient Upgrade
completion.
(3) GSSC will, promptly upon Upgrade completion, provide to DAVOX(R) a
Customer signed copy of a GSSC field service report (the "FSR")
acknowledging GSSC's work as performed on site. If a Customer is
unavailable, fails, or refuses to sign the FSR, GSSC will forward such
unsigned FSR to the attention of the DAVOX(R) Upgrade Coordinator with
a full explanation of the related circumstances.
G. Technical Support
(1) DAVOX(R) will make available such technical support resources as
reasonably required by GSSC field service personnel engaged in Upgrade
activities.
(2) DAVOX(R) will, on or before September 1, 1998, provide to GSSC the
necessary GSSC procedure(s) required for GSSC's field service
personnel to obtain such Upgrade related technical support. These
procedures will include, directly or indirectly, and will not
necessarily be limited to dial-in access numbers, support response
times, resources necessary to support the potential volume of
activity, and an awareness that technical support coverage is to be
requested and/or provided in such a manner as to limit a potential
Upgrade delay due to a such technical support.
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H. Upgrade Pricing
(1) Unless otherwise specified below, fee schedules, invoicing
requirements and payment terms applicable to Upgrade services will be
in accordance with the corresponding and applicable terms set forth in
the Agreement.
(2) GSSC will invoice DAVOX(R) at a rate of:
. [CONFIDENTIAL TREATMENT REQUESTED]/*/ per hour for Upgrade
activity performed during the Principle Period of Maintenance
(PPM, Mon-Fri 8am-5pm), including travel time;
. [CONFIDENTIAL TREATMENT REQUESTED]/*/ per hour for Upgrade
activity performed Outside the Principle Period of Maintenance
(OPPM, Mon-Fri, 5pm-8am and Sat. 24 hrs), including travel time;
and
. [CONFIDENTIAL TREATMENT REQUESTED]/*/ per hour for Upgrade
activity performed on Sundays and Holidays, including travel
time.
--END--
- ------------------------------------------------------------------------------
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
C-7
<PAGE>
EXHIBIT D
SCHEDULE OF PRODUCTS, SERVICE CITIES, MAINTENANCE SERVICE AND
APPLICABLE RATES
A. Periods Of Maintenance
1. Period of Principal Maintenance ("PPM") - is defined as nine (9)
---------------------------------------
consecutive hours per day of maintenance support, Monday - Friday,
excluding New Year's Day, the Fourth of July, and Christmas Day
("Holidays"). The PPM will be contained within the time period from
8:30 AM to 5:30 PM.
PPM pricing shall be component-based charges calculated on a monthly
basis as specified in Exhibit D-1 attached hereto and incorporated
herein by reference ("Basic Monthly Maintenance Charge" or "BMMC")
2. Periods of Extended Maintenance ("PEM") - is defined as consecutive
---------------------------------------
hours per day, excluding Holidays, that are added to the initial nine
(9) hours PPM to provide the Customer with more than nine (9) hours
per day of remedial maintenance coverage. PEM must immediately follow
the PPM so as to result in continuous hours of coverage. Contracted
maintenance support that includes weekend coverage is also be included
in the calculation of PEM.
PEM availability and applicable charges therefor are specified in
Exhibit D-2 attached hereto and incorporated herein by reference.
DAVOX(R) will be charged a surcharge to the BMMC ("Uplifts") for PEM
services as specified in Exhibit D-2 attached.
3. Contracted Period of Maintenance ("CPM") - may be a combination of,
----------------------------------------
but in all events shall be contained within either, PPM and PEM, and
shall be specified on the applicable Customer site-specific Work
Authorization Form.
DAVOX(R) will be charged a surcharge to the applicable CPM BMMC
("Uplifts for Expanded Zone Coverage") upon the following schedule:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
UPLIFT MILES
(for Expanded Zone Coverage)
-------------------------------------------------------------------------
<S> <C>
No additional charge 0 - 50
-------------------------------------------------------------------------
15% 51-100
-------------------------------------------------------------------------
Reimbursement of actually incurred reasonable Over 100
expenses, plus half the reasonable travel
hours devoted to a specific service call.
-------------------------------------------------------------------------
</TABLE>
4. Standard Time and Material ("T&M") - is defined as services provided
----------------------------------
but not covered by contractual obligation. All GSSC travel and on-site
hours, any and all materials reasonably provided and any and all
directly related, reasonably incurred expenses are
- --------------------------------------------------------------------------------
D-1
<PAGE>
directly reimbursable by DAVOX(R). GSSC shall use its best efforts
to respond and perform the agreed upon services. A minimum 2 hour
portal-to-portal charge shall apply.
Charges for T&M services shall be as specified in Section B(4) below.
5. Contracted Time and Material ("CT&M") - is defined as mutually agreed
-------------------------------------
to Service(s) and response time(s) and mutually agreed to event
notification and coordination criteria. In all such events, CT&M
projects will be documented by written amendment to this Agreement
unless expressly denoted by this Agreement, and executed by an
authorized representative of each party.
6. Mandatory Response Time and Material - is defined as time and material
------------------------------------
activity outside Standard time and material, Scheduled time and
material and/or Contracted time and material parameters. All travel
and site hours, any and all materials provided and any and all
expenses incurred are directly reimbursed and a minimum of 2 hours
apply. Mandatory Response T&M may be facilitated from any GSSC
location whereby resources may be available. Where DAVOX(R)
requests Mandatory response to a service activity GSSC will use its
best efforts to comply. Where GSSC meets an on-site response within 4
hours and site is less than 100 miles from the GSSC service city GSSC
will be entitled to the full Mandatory T&M Rate. If GSSC responds
outside the 4 hour response window and the site is less than 100 miles
from the GSSC Service city than the Standard T&M rates shall apply.
Where GSSC meets an on-site response within 8 hours and the site is
greater than 100 miles from the GSSC service city GSSC will be
entitled to the full Mandatory T&M Rate. If GSSC responds outside the
8 hour response window and the site is greater than 100 miles from the
GSSC Service city than the Standard T&M rates shall apply.
B. GSSC'S Service Rates
1. PPM pricing is specified in attached Exhibit D-1.
2. PEM pricing is specified in attached Exhibit D-2.
3. CPM pricing shall be a combination of PPM & PEM pricing and as
specified in paragraph 3 above.
4. Standard T&M pricing
-----------
i. Minimum charge = 2 hr. minimum charge
ii. Calculation = measured round trip travel time to/from GSSC
Service Location to Customer site ("Portal to Portal") +
on-site service time + reasonable and actual related
expenses.)
iii. Rates: $[CONFIDENTIAL TREATMENT REQUESTED]/*/hour Mon-Sat,
0830 hours - 1730 hours
$[CONFIDENTIAL TREATMENT REQUESTED]/*/hour Mon-Sat,
1731 hours - 0829 hours
$[CONFIDENTIAL TREATMENT REQUESTED]/*/hour Sundays and
Holidays
$[CONFIDENTIAL TREATMENT REQUESTED]/*/Mile
- --------------------------------------------------------------------------------
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
D-2
<PAGE>
5. Contracted T&M pricing (Unless otherwise stated by Amendment or
Agreement)
Calculation =
. If Portal to Portal less than 100 miles = 2 hour minimum
charge + on-site service time + reasonable and actual
related expenses
. If Portal to Portal greater than 100 miles = measured 1-way
travel time to/from GSSC Service Location to Customer site +
on-site service time + reasonable and actual related
expenses.
ii. Rates:
. Upgrades, Moves, Adds and Changes
$[CONFIDENTIAL TREATMENT REQUESTED]/*//hour Mon-Sat, 0830
hours - 1730 hours
$[CONFIDENTIAL TREATMENT REQUESTED]/*//hour Mon-Sat, 1731
hours - 0829 hours
$[CONFIDENTIAL TREATMENT REQUESTED]/*//hour Sundays and
Holidays
$[CONFIDENTIAL TREATMENT REQUESTED]/*//Mile
. 6. Installation Pricing (Phase I)
. $[CONFIDENTIAL TREATMENT REQUESTED]/*//hour, Mon-Sun, including
Holidays . 1 Way Travel Hours
. $[CONFIDENTIAL TREATMENT REQUESTED]/*//Mile
Mandatory T&M
$[CONFIDENTIAL TREATMENT REQUESTED]/*//Hr, Mon-Sun, Including Holidays
Calculation =
. If Portal to Portal less than 100 miles = 2 hour minimum charge +
on-site service time + reasonable and actual related expenses and
on site response is within 4 hours
. If Portal to Portal greater than 100 miles = measured 1-way travel
time to/from GSSC Service Location to Customer site + on-site
service time + reasonable and actual related expenses and on-site
response is within 8 hours.
6. CONSIGNED INVENTORY MANAGEMENT AND DELIVERY (Exhibit E, Spare Parts)
$[CONFIDENTIAL TREATMENT REQUESTED]/*//Month (not to exceed
$[CONFIDENTIAL TREATMENT REQUESTED]/*//annum)
DAVOX(R) reserves the right to review and renegotiate these fees based
upon the anticipated cost savings resulting from CAS and CRS attrition
and its impact on storage space and shipment activity.
7. ON-SITE and DEDICATED STAFF
. Dedicated On-Site Engineer
- --------------------------------------------------------------------------------
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
D-3
<PAGE>
$[CONFIDENTIAL TREATMENT REQUESTED]/*/ per annum
Overtime will be billed per the Standard T&M rates above
Baseline skill level per DAVOX(R) course #103PL
. Dedicated Labor Resource
$[CONFIDENTIAL TREATMENT REQUESTED]/*/ Annual
Overtime will be billed per the Standard T&M rates above
Baseline Skill Level per DAVOX(R) course #'s 100UO,
101UST, 102UA and 103PL
8. Invoices: Where practical, GSSC will provide DAVOX(R) with valid
invoices within 30 days following Services performed by GSSC. DAVOX(R)
will pay such valid invoices 30 days from its receipt of same.
In no event shall DAVOX(R) be responsible for paying any invoice
received by it more than sixty (60) days after the performance of the
applicable Services unless
. such late invoice is accompanied by a written explanation of the
delay;
. such explanation is signed by the respective GSSC Region Manager; and
. such explanation is reasonably acceptable to DAVOX(R).
9. Tools
As a minimum, GSSC field engineers will be provided a "Lap Top" personal
Computer or equivalent computing device configured with no less than
modem and MS Office (Word and Excel) at no charge to DAVOX(R).
Additional software or specific hardware, requested or required by
DAVOX(R), will be invoiced to DAVOX(R) at cost, plus associated
administration fee's.
--- END ---
- --------------------------------------------------------------------------------
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
D-4
<PAGE>
EXHIBIT D-1
CAS (Collection Agency Systems)
<TABLE>
<CAPTION>
MFG MODEL DESCRIPTION BMMC REF MAC
<S> <C> <C> <C> <C> <C>
DVX CAS 50 Auto Dialer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX CAS 500 Auto Dialer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX CAS 1000 Auto Dialer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX CAS 2000 Auto Dialer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX DN04-01 Net CRS Intrfce Adaptr $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX CL04-01 Expansion Controller $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX CL06-XX Master Controller $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX CL08-XX Synchronous Expnsn Contrllr $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX CL09-01 Asynchronous Controller $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX DN01-01 Net Cntrllr Intrfce Adpter $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX CRS Comm Resrce Srvr (8 port) $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
DVX CRS Comm Resrce Srvr (16 port) $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
SUN Various SPARCstation II $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
SUN Various SPARCstation IPC $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Wyse Datamanager PC 20MB & 80MB $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (2) T&M
AST Datamanager PC 80MB & 150MB $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (2) T&M
Genicom 3210 Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Genicom 3410 Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Okidata Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
HP Paintjet Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
GNP Comm Intrfce 8&16 Port Term Intrfce $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (3) T&M
Logicraft Rmt Com Srvr PC 8&16 Port $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Sony Optical Drive $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Pinnacle Micro Optical Drive $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Chase IOLAN Term Serv 8&16 Port $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Exabyte 8MM Ext. Tape Sub-System $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
</TABLE>
________________________________________________________________________________
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Exhibit D-1
<PAGE>
Exhibit D-1 (pg.2)
UNISON (Call Center Systems)
<TABLE>
<CAPTION>
MFG MODEL DESCRIPTION BMMC REF MAC
<S> <C> <C> <C> <C> <C>
SUN Various Ultra 60 $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (5) (6) T&M
SUN Various Ultra 5 $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (5) (6) T&M
SUN Various Ultra II $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (5) (6) T&M
SUN Various Ultra I $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (5) (6) T&M
SUN Various SPARCstation 20 $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
SUN Various SPARCstation 5 $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
SUN Various SPARCstation 10 $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
SUN Various SPARCclassic $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Various Various 4.0GB Ext. Hard Drive N/C (4) T&M
Various Various 1.05GB Ext Hard Drive $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (4) T&M
Various Various 2.1GB Ext Hard Drive $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (4) T&M
SUN X1062A SCSI S-Bus Diff N/C T&M
SUN X1018A S-Bus SUNswift 100MB N/C T&M
SUN X1014A Token Ring PCB N/C T&M
DAVOX(R) DCS DIALER $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ (1) T&M
INTEL PCEM72144F Modem $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
US Robotics 14.4kb & 28.8kb Modem $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
GENICOM 3410 Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
DEC LA-424 Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
DEC LA-400 Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
HP 550/560 Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
HP 660C Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
HP 694 Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
HP 682C Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
HP 693C Color Deskjet Printer $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
SUN CPRN-360 NEWSprinter CL+ $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Bay Networks FE516 100 Base T Hub $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Bay Networks CY2012001 30T E-Net Converter $ [CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
</TABLE>
________________________________________________________________________________
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Exhibit D-1
<PAGE>
Exhibit D-1 (pg.3)
UNISON (Call Center Systems) CON'T
<TABLE>
<CAPTION>
MFG MODEL DESCRIPTION BMMC REF MAC
<S> <C> <C> <C> <C> <C>
Digi Milan MIL5008H 100 Base TX Hub $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Technologies
Digi Milan MIL4000H 10 Base T Hub $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Technologies
Syquest Syjet 1.5E Optical Drive $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
SONY RM-S350 Optical Drive $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Pinnacle Micro PMO-130 Optical Drive $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Iomega 1GB Outsider Jazz Drive $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
AST 386 Personal Computer $[CONFIDENTIAL TREATMENT REQUESTED]/*/ (2) T&M
AST 486 Personal Computer $[CONFIDENTIAL TREATMENT REQUESTED]/*/ (2) T&M
Dell Computer TWR 220-1906 Personal Computer $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Logicraft RCS Personal Computer $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
GNP Comm Interface $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Chase Iolan Terminal Server $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
SUN X6202A, X843A, 170 8MM Ext. Tape Sub-Sys $[CONFIDENTIAL TREATMENT REQUESTED]/*/ (4) T&M
Mammoth
SUN X6230A 8MM Ext. Tape Sub-Sys N/C (4) T&M
Cisco 2513 E-Net/Token Dual Router $[CONFIDENTIAL TREATMENT REQUESTED]/*/ T&M
Storage Superflex 5000 Disk Array N/C (1) T&M
Dimensions
</TABLE>
(1) Spares provided by DAVOX(R)
(2) Assumes standard configuration consisting of internal hard drive, floppy
drive, external color monitor.
(3) No Longer Manufactured or Supported By OEM, Serviced through existing
availability of parts/spares
(4) Included with Ultra Systems
(5) Quantitative Sparing, Local, District, Regional and National Sparing
provided per install base and geographical distribution.
(6) BMMC may vary with Model/Type
________________________________________________________________________________
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Exhibit D-1
<PAGE>
EXHIBIT D - 2
DAVOX(R) Extended Coverage (Periods of Extended Maintenance)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Coverage 7X24 6X16
- ------------------------------------------------------------------------------------------------------------------------------
Response 2hr 4hr 8hr Bst efrt 2hr 4hr 8hr
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Mileage 0-35 0-50 51-100 100+ 0-35 0-50 51-500
- ------------------------------------------------------------------------------------------------------------------------------
Price: Base Var Var Var Var Var Var Var
- ------------------------------------------------------------------------------------------------------------------------------
Uplift /*/ /*/ /*/ Exp+.5 trvl /*/ /*/ /*/
- ------------------------------------------------------------------------------------------------------------------------------
Retainer/City/Mnth $ /*/ $ /*/ $ /*/ $ /*/ $ /*/ $ /*/ $ /*/
- ------------------------------------------------------------------------------------------------------------------------------
SERVICE CITIES
- ------------------------------------------------------------------------------------------------------------------------------
PC CITY/STATE
- ------------------------------------------------------------------------------------------------------------------------------
1103 Meriden CT
- ------------------------------------------------------------------------------------------------------------------------------
1104 Boston MA
- ------------------------------------------------------------------------------------------------------------------------------
1106 Buffalo NY
- ------------------------------------------------------------------------------------------------------------------------------
1108 Toronto CN
- ------------------------------------------------------------------------------------------------------------------------------
1202 Long is NY
- ------------------------------------------------------------------------------------------------------------------------------
1205 NYC NY
- ------------------------------------------------------------------------------------------------------------------------------
1206 Fairfld NJ
- ------------------------------------------------------------------------------------------------------------------------------
2101 Wash DC/Rock
- ------------------------------------------------------------------------------------------------------------------------------
2103 Rchmnd VA
- ------------------------------------------------------------------------------------------------------------------------------
2105 Phil PA
- ------------------------------------------------------------------------------------------------------------------------------
2114 Charlotte NC
- ------------------------------------------------------------------------------------------------------------------------------
2201 Atlanta GA X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
2202 Chattanooga TN
- ------------------------------------------------------------------------------------------------------------------------------
2208 Orlando FL
- ------------------------------------------------------------------------------------------------------------------------------
2210 Huntsville AL
- ------------------------------------------------------------------------------------------------------------------------------
2212 Tampa FL
- ------------------------------------------------------------------------------------------------------------------------------
3101 Pitts PA
- ------------------------------------------------------------------------------------------------------------------------------
3102 Cincin OH
- ------------------------------------------------------------------------------------------------------------------------------
3103 Detroit MI
- ------------------------------------------------------------------------------------------------------------------------------
3105 Louisvill KY
- ------------------------------------------------------------------------------------------------------------------------------
3106 Clevlind OH
- ------------------------------------------------------------------------------------------------------------------------------
3109 Columbus OH
- ------------------------------------------------------------------------------------------------------------------------------
3112 Indianap IN
- ------------------------------------------------------------------------------------------------------------------------------
3113 Kan Cty KS
- ------------------------------------------------------------------------------------------------------------------------------
3201 Minneapolis MN
- ------------------------------------------------------------------------------------------------------------------------------
3201 Chicago IL X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3202 Omaha NE X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3203 St Louis MO X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3301 Austin TX X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3301 San Antonio TX X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3302 Houston TX
- ------------------------------------------------------------------------------------------------------------------------------
3303 Dallas TX X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3305 Denver CO X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
3307 Ponca City OK
- ------------------------------------------------------------------------------------------------------------------------------
3308 New Orleans LA
- ------------------------------------------------------------------------------------------------------------------------------
5101 Seattle WA
- ------------------------------------------------------------------------------------------------------------------------------
5102 Salt Lake City UT
- ------------------------------------------------------------------------------------------------------------------------------
5103 San Francisco CA X X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------
5106 Los Angeles CA
- ------------------------------------------------------------------------------------------------------------------------------
5107 San Diego CA
- ------------------------------------------------------------------------------------------------------------------------------
5109 Phoenix AZ
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Coverage 5X16
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Response BST EFRT 2HR 4HR 8HR BST EFRT
- ---------------------------------------------------------------------------------------------------------------
Mileage 100+ 0-35 0-50 51-100 100+
- ---------------------------------------------------------------------------------------------------------------
Price: Base Var Var Var Var Var
- ---------------------------------------------------------------------------------------------------------------
Uplift Exp+.5 trvl /*/ /*/ /*/ Exp+.5 trvl
- ---------------------------------------------------------------------------------------------------------------
Retainer/City/Mnth $ /*/ $ /*/ $/*/ $ /*/ $ /*/
- ---------------------------------------------------------------------------------------------------------------
SERVICE CITIES
- ---------------------------------------------------------------------------------------------------------------
PC CITY/STATE
- ---------------------------------------------------------------------------------------------------------------
1103 Meriden CT
- ---------------------------------------------------------------------------------------------------------------
1104 Boston MA
- ---------------------------------------------------------------------------------------------------------------
1106 Buffalo NY
- ---------------------------------------------------------------------------------------------------------------
1108 Toronto CN
- ---------------------------------------------------------------------------------------------------------------
1202 Long is NY
- ---------------------------------------------------------------------------------------------------------------
1205 NYC NY
- ---------------------------------------------------------------------------------------------------------------
1206 Fairfld NJ
- ---------------------------------------------------------------------------------------------------------------
2101 Wash DC/Rock
- ---------------------------------------------------------------------------------------------------------------
2103 Rchmnd VA
- ---------------------------------------------------------------------------------------------------------------
2105 Phil PA
- ---------------------------------------------------------------------------------------------------------------
2114 Charlotte NC
- ---------------------------------------------------------------------------------------------------------------
2201 Atlanta GA X X X X X
- ---------------------------------------------------------------------------------------------------------------
2202 Chattanooga TN X X X X
- ---------------------------------------------------------------------------------------------------------------
2208 Orlando FL X X X X
- ---------------------------------------------------------------------------------------------------------------
2210 Huntsville AL X X X X
- ---------------------------------------------------------------------------------------------------------------
2212 Tampa FL X X X X
- ---------------------------------------------------------------------------------------------------------------
3101 Pitts PA X X X X
- ---------------------------------------------------------------------------------------------------------------
3102 Cincin OH X X X X
- ---------------------------------------------------------------------------------------------------------------
3103 Detroit MI X X X X
- ---------------------------------------------------------------------------------------------------------------
3105 Louisvill KY X X X X
- ---------------------------------------------------------------------------------------------------------------
3106 Clevlind OH X X X X
- ---------------------------------------------------------------------------------------------------------------
3109 Columbus OH X X X X
- ---------------------------------------------------------------------------------------------------------------
3112 Indianap IN X X X X
- ---------------------------------------------------------------------------------------------------------------
3113 Kan Cty KS X X X X
- ---------------------------------------------------------------------------------------------------------------
3201 Minneapolis MN X X X X
- ---------------------------------------------------------------------------------------------------------------
3201 Chicago IL X X X X X
- ---------------------------------------------------------------------------------------------------------------
3202 Omaha NE X X X X X
- ---------------------------------------------------------------------------------------------------------------
3203 St Louis MO X X X X X
- ---------------------------------------------------------------------------------------------------------------
3301 Austin TX X X X X X
- ---------------------------------------------------------------------------------------------------------------
3301 San Antonio TX X X X X X
- ---------------------------------------------------------------------------------------------------------------
3302 Houston TX X X X X
- ---------------------------------------------------------------------------------------------------------------
3303 Dallas TX X X X X X
- ---------------------------------------------------------------------------------------------------------------
3305 Denver CO X X X X X
- ---------------------------------------------------------------------------------------------------------------
3307 Ponca City OK X X X X
- ---------------------------------------------------------------------------------------------------------------
3308 New Orleans LA X X X X
- ---------------------------------------------------------------------------------------------------------------
5101 Seattle WA X X X X
- ---------------------------------------------------------------------------------------------------------------
5102 Salt Lake City UT X X X X
- ---------------------------------------------------------------------------------------------------------------
5103 San Francisco CA X X X X X
- ---------------------------------------------------------------------------------------------------------------
5106 Los Angeles CA X X X X
- ---------------------------------------------------------------------------------------------------------------
5107 San Diego CA X X X X
- ---------------------------------------------------------------------------------------------------------------
5109 Phoenix AZ X X X X
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: 1. Service delivered 100+ miles from a GSSC service center will
receive travel hours one way.
2. Retainer pricing is monthly per service city. Wherein a service
city meets the retainer fee through the uplifted sum of all the
accounts in that particular service city, the retainer fee will
be waived. For example; If a service city is receiving a $450/mo
retainer fee and there are 18 accounts at a BMMC of @50 ea with
a $25 (10%16) uplift, GSSC will waive the retainer fee. (18 x
$25 = $450)
3. As an option, 6 x 16 coverage will be delivered from the closest
GSSC service city with that capability, as indicated above.
- --------------------------------------------------------------------------------
/*/ INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Exhibit D-2
<PAGE>
EXHIBIT E
SCHEDULE OF CONSIGNED INVENTORY ("PARTS") SERVICES
1. DAVOX(R) shall furnish, on a consigned basis and in the quantities mutually
agreed upon by GSSC and DAVOX(R), all spare Hardware parts necessary for
the maintenance of DAVOX(R) proprietary Hardware in accordance with this
Agreement (the "Parts"). Quantity of Parts to be provided by DAVOX(R) shall
be determined based on mutual agreement and shall consider Customer
location, quantities of Customers within any given Service City service
area, quantity and mix of DAVOX(R) product required to service such
Customers, and actual usage experienced.
2. The Parts shall at all times be subject to DAVOX's(R) direction and
control. Upon termination of this Agreement, GSSC shall return all Parts
then remaining in its possession to DAVOX(R).
3. DAVOX(R) reserves the right to require GSSC to return for any reason any or
all Parts then in GSSC's possession. DAVOX(R) reserves the right to verify
the condition of any returned Parts through its own internal testing and
inspection procedures, within five (5) business days of receipt.
4. Any Part which has been damaged as a result of or due to GSSC's negligent
act shall be paid for by GSSC but such damaged Part shall be returned to
and shall become the property of DAVOX(R).
5. During the term of this Agreement, GSSC will provide the following Parts
services to DAVOX(R):
a. Maintain depots for stocking of Parts in select Service Cities and
GSSC's National Logistics Stocking Depot, located in Longmont, CO.
GSSC will keep records of the receipt, disbursement and use of such
Parts;
b. Maintain all Parts in its possession or control as separate and
distinct from any other parts belonging to any other party which may
be held at the same location.
c. Utilize at least the same care and procedures, which shall in no event
be less than reasonable care, in the safekeeping and record keeping of
DAVOX's(R) Parts as it uses in maintaining its own parts and inventory
records;
Conduct annual inventories, at GSSC's expense of the Parts and provide
DAVOX(R) with an inventory report immediately after its completion.
GSSC will have ninety (90) days to reconcile any inventory
discrepancies identified by DAVOX(R). GSSC's responsibility for
unreconciled inventory discrepancies will be subject to a 3% annual
industry standard shrinkage factor.
In the event any discrepancy is identified by DAVOX(R) and
unreconcilable by GSSC, GSSC shall reimburse DAVOX(R) for such missing
Parts at DAVOX's(R) then current commercial price for same. GSSC
agrees to permit, during its regular business hours and upon request
by DAVOX(R), an annual on-site audit of any of GSSC
- --------------------------------------------------------------------------------
Exhibit E-1
<PAGE>
location where Parts are stocked. DAVOX(R) may request additional
inventories to be taken and GSSC will comply at a mutually agreeable
time.
d. If DAVOX(R) does not notify GSSC of any discrepancies within sixty
(60) days of receipt of a reconciliation inventory report,
specifically identifying any discrepancies, such inventories will be
deemed to be conclusive and agreed to by DAVOX(R); GSSC will have no
further liability for any future discrepancies which may be identified
with respect to the specific inventory and levels referenced therein.
Procure and maintain sufficient inventory to support OEM Equipment and
comply with such Equipment manufacturer's requirements related
thereto.
e. Replenish and/or expand the inventory of Parts as mutually agreed to
by DAVOX(R) and GSSC.
f. Provide to DAVOX(R) Part Usage Reports and Material & Service
Measurements (the "Metrics") pursuant to Exhibit N and as mutually
agreed to by DAVOX(R) and GSSC.
g. Provide Parts control and management staff ("Logistics") Monday
through Friday 6AM to 6PM, Mountain Time, and pager availability of
standby Logistics personnel on all remaining days and times at GSSC's
National Logistics Stocking Depot located in Longmont, CO. to ensure
that DAVOX(R) has year-round access to the Parts 24 hrs/day, 7
days/week.
6. During the term of this Agreement and any extensions thereof, when DAVOX(R)
has been informed that Parts have been used to replace a faulty DAVOX(R)
proprietary component, board, subassembly, or assembly at a DAVOX(R)
Customer site, DAVOX(R) will express ship a replacement to GSSC at no cost
to GSSC. The replaced faulty part shall be shipped to DAVOX(R) at
DAVOX's(R) expense within ten (10) days of GSSC's receipt of the
replacement Part. GSSC will utilize this program to repair and/or replace
failed DAVOX(R) proprietary Hardware at no cost to GSSC. DAVOX(R) shall be
responsible for all costs related to shipping, handling, taxes, and in-
transit insurance.
7. Title in and to all Parts shall remain vested in DAVOX(R) until such Parts
are actually installed at a Customer site. Upon such installation, title to
such Part(s) shall automatically transfer to such Customer. Notwithstanding
the foregoing, GSSC shall be and shall remain responsible for the
safekeeping and handling of any Parts while such Parts are in its
possession or control. Title to any Hardware or component part thereof
which GSSC may replace with a Part shall vest in DAVOX(R) immediately upon
GSSC's removal of such Hardware or component part from the Customer's
System installation.
GSSC will not acquire nor be granted any right, title or interest in or to
any equipment or to any spare Parts which DAVOX(R) may supply unless GSSC
specifically purchases them. GSSC will bear the risk of all loss or damage
with respect to equipment and Parts in GSSC's possession.
8. Subject to GSSC's inventory maintenance obligations set forth above, in the
event that Parts supply commitments described in this Agreement are not
maintained by DAVOX(R) and it becomes necessary for GSSC to notify DAVOX(R)
that one or more Parts are required for an emergency, then DAVOX(R) will
take reasonably prompt action to ship the Parts required by GSSC, at
DAVOX's(R) expense, by the best method as determined by DAVOX(R) and to
such location as may be mutually agreed upon by DAVOX(R) and GSSC within 24
hours of receipt
- --------------------------------------------------------------------------------
Exhibit E-2
<PAGE>
of such notice from GSSC. In such event, the measurement of GSSC's response
time shall commence upon receipt of such emergency Parts at the location to
which the parties agreed the Parts would be delivered.
9. GSSC will not be obligated to respond to any service requests unless
sufficient Parts are available to the responding GSSC engineer either at
the GSSC Service City office location or at the Customer site provided,
however, that GSSC has notified DAVOX(R) of its requirements pursuant to
paragraphs 1 and 8 above and provided further that DAVOX(R) has failed to
respond accordingly.
10. The cost of repair, transportation and handling of Parts to and from
DAVOX(R) shall be paid by DAVOX(R). For non-proprietary OEM Equipment
parts, the cost of repair, transportation and handling will be at no cost
to DAVOX(R) and will be the responsibility of GSSC.
11. Within thirty (30) days of expiration or termination of this Agreement,
GSSC will provide DAVOX(R) with a final written reconciliation inventory,
together with the return shipment of remaining Parts and any other
materials, Hardware, Software, documentation, and any other DAVOX(R)
property then in GSSC's possession or control, to DAVOX(R) at DAVOX's(R)
expense. GSSC shall, however, be responsible for packing all such Parts and
other materials in such a manner so as to reasonably ensure their safety
and security during transit.
12. GSSC shall conduct all Hardware repairs contemplated hereunder in
accordance with the OEM Equipment manufacturer's recommended diagnostic
processes and procedures and troubleshooting guidelines. Where whole unit
system exchanges are requested by DAVOX(R), DAVOX(R) will assume all costs
associated with the whole unit exchange unless in the course of repair,
GSSC and DAVOX(R) mutually agree that a whole unit exchange is necessary
and required.
14. OEM spare equipment/component part stocking is based on a minimum install
base of equipment(s) and whereby minimum quantities of like product exist
in geographical densities. GSSC employs a single central stocking approach
to products and components with insufficient install base or insufficient
geographical distributions. Where new products are introduced with
Indefinite Deliveries and Indefinite Quantities GSSC will initially stock
spare components at its National Logistics Center in Longmont, CO.
15. Where DAVOX(R) employs equipment that requires identical component exchange
and where specific manufacturer and model number are not provided per the
work authorization form and where the use of components equivalent in
operation and manufacturer support are prohibited, GSSC and DAVOX(R) agree
to mutually develop a stocking and sparing implementation approach and
plan.
--- END ---
- --------------------------------------------------------------------------------
Exhibit E-3
<PAGE>
EXHIBIT F
SCHEDULE OF GSSC'S SERVICE CITIES
PC CITY STATE ZIP
1103 Meriden CT 6450
1104 Boston MA 1801
1106 Buffal0 NY 14226
1108 Toronto CN L7N2G1
1202 Long Is NY 11716
1205 New York City NY 11101
1206 Fairfield NJ 7004
2101 Wash DC/Rock MD 20850
2103 Richmond VA 23111
2105 Philadelphia PA 19403
2114 Charlotte NC 28210
2201 Atlanta GA 30341
2202 Chattanooga TN 37415
2208 Orlando FL 32809
2210 Huntsville AL 35603
2211 Miami FL 33328
2212 Tampa FL 33609
3101 Pittsburgh PA 15085
3102 Cincinnati OH 45005
3103 Detroit MI 48083
3106 Cleveland OH 44136
3109 Columbus OH 43017
3112 Indianapolis IN 46952
3113 Kansas City KS 66211
3114 Louisville KY 40202
3201 Minneapolis MN 55077
3201 Chicago IL 60173
3202 Omaha NE 68113
3203 St Louis MO 63043
3301 Austin TX 78704
3302 Houston TX 77092
3303 Dallas TX 75080
3305 Denver CO 80112
3307 Ponca City OK 74601
3308 New Orleans LA 70577
5101 Seattle WA 98124
5102 Salt Lake City UT 84108
5103 San Francisco CA 94588
5106 Los Angeles CA 90670
5107 San Diego CA
5109 Phoenix AZ 85044
5109 Tucson AZ
- --------------------------------------------------------------------------------
F-1
<PAGE>
EXHIBIT G
SAMPLE WORK AUTHORIZATION FORM
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
TYPE DAVOX(R) PN VENDOR PN $ USD EA. QTY TOTAL
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
30T CONVERTER 906204 bay networks cy2012001 $ X $
- --------------------------------------------------------------------------------------------------------
16P 100 BASE TX 906213 bay networks netgear fe516 $ X $
- --------------------------------------------------------------------------------------------------------
TMNL SVR 906154 chase iolan plus 16 $ X $
- --------------------------------------------------------------------------------------------------------
ROUTER TR 906208 cisco 2513 enet/token ring $ X $
- --------------------------------------------------------------------------------------------------------
DCS 905349 DAVOX(R) $ X $
- --------------------------------------------------------------------------------------------------------
PTR LA400 906151 dec dot mtrx la400 $ X $
- --------------------------------------------------------------------------------------------------------
PRINTER HP 693 906193 hp 693c $ X $
- --------------------------------------------------------------------------------------------------------
10T HUB 906121 milan technology x4710h $ X $
- --------------------------------------------------------------------------------------------------------
ULTRA 2/2300 906251 sun a14-uec2-17e-256ac $ X $
- --------------------------------------------------------------------------------------------------------
ULTRA 5/270 906257 a21-ufe1a9j-128cg $ X $
- --------------------------------------------------------------------------------------------------------
ULTRA 60/300 906254 sun a23-uec2-9l-256ac $ X $
- --------------------------------------------------------------------------------------------------------
ULTRA 2 906187 sun a14-uba2 $ X $
- --------------------------------------------------------------------------------------------------------
SPARC 20 906092 sun sparc 20/712 $ X $
- --------------------------------------------------------------------------------------------------------
SPARC 5 906184 sun s5kx2-170-32-p17unison $ X $
- --------------------------------------------------------------------------------------------------------
EXT 1GIG 906114 sun x5102a $ X $
- --------------------------------------------------------------------------------------------------------
EXT 2GIG 906115 sun x5152a $ X $
- --------------------------------------------------------------------------------------------------------
EXT 4GIG 906130 sun x5203a $ X $
- --------------------------------------------------------------------------------------------------------
EXT 4GIG 906261 sun sg.xdsk010a-4g $ X $
- --------------------------------------------------------------------------------------------------------
EXT 4GIG 906190 sun x5213a $ X $
- --------------------------------------------------------------------------------------------------------
CALL VISOR PC 906167 Dell $ X $
- --------------------------------------------------------------------------------------------------------
8MM TAPE DRV 906201 sun x6230a 20-40gb $ X $
- --------------------------------------------------------------------------------------------------------
MO DISK 906233 syquest 1.5gb $ X $
- --------------------------------------------------------------------------------------------------------
MODEM 28.8 906168 us rob 000839-0x $ X $
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
EXTENDED 16X5 /*/ $
- --------------------------------------------------------------------------------------------------------
EXTENDED 16X6 /*/ $
- --------------------------------------------------------------------------------------------------------
EXTENDED 24X7 /*/ $
- --------------------------------------------------------------------------------------------------------
GRAND TOTAL MONTH $
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
CLIENT:
- --------------------------------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------------------------------
ADDRESS:
- --------------------------------------------------------------------------------------------------------
CONTACT:
- --------------------------------------------------------------------------------------------------------
PHONE:
- --------------------------------------------------------------------------------------------------------
SERVICE COVERAGE:
- --------------------------------------------------------------------------------------------------------
START DATE:
- --------------------------------------------------------------------------------------------------------
END DATE:
- --------------------------------------------------------------------------------------------------------
PRODUCT: UNISON
- --------------------------------------------------------------------------------------------------------
SYSTEM:
- --------------------------------------------------------------------------------------------------------
NOTES:
- --------------------------------------------------------------------------------------------------------
SITE CODE:
- --------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
/*/ INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
G-1
<PAGE>
EXHIBIT I
SOFTWARE LICENSE AGREEMENT
GSSC shall not reverse compile, disassemble or otherwise reverse engineer, embed
within any other software product, or modify in any manner, including
modifications to source code with respect thereto, the software, in whole or in
part. The software may be copied, in whole or in part, only to the extent
necessary for GSSC's use on GSSC's designated single CAS products, controller
unit, personal computer, workstations or UNISON(R) products for back-up purposes
or to replace a worn or defective copy.
If GSSC is unable to operate the software on the single designated CAS products,
controller unit, personal computer, workstation or UNISON(R) products due to an
equipment malfunction, the software may be transferred temporarily to another
CAS, controller unit, personal computer, workstation or UNISON(R) during the
period of equipment malfunction.
GSSC shall include any and all copyright and proprietary notices placed on the
Software by DAVOX(R) on all copies of the Software.
GSSC shall not disclose, provide or otherwise make available the Software or
Source Code or any Part or copy thereof to any third party. The Software and the
Source Code shall be deemed Confidential information of DAVOX(R) for purposes of
Section 10 of this Agreement. All copies of Software and Source Code, whether
provided by DAVOX(R) or made by GSSC in accordance with this Agreement,
including without limitation, translations, compilations or partial copies are
the property of DAVOX(R) and may not be used or disclosed except as permitted by
this Agreement. All right, title and interest to, and all applicable rights in
patents, copyrights, and trade secrets in, the Software shall at all times
remain vested in DAVOX(R) or in any third party from whom DAVOX(R) has acquired
rights to license the Software. DAVOX(R) shall indemnify and hold GSSC and its
agents harmless from any claim or liability arising from patent, copyright or
trade secret infringement, subject to and in accordance with the terms in
Section 16.1 of this Agreement.
The license granted to GSSC hereunder shall expire upon expiration or
termination of this Agreement. GSSC agrees, upon expiration of such license term
or upon notice of termination, to immediately return or destroy the Software,
the Source Code and all portions and copies thereof as directed by DAVOX(R),
and, if required, to certify in writing as to the destruction or return of the
Software, the Source Code and all copies thereof.
If necessary, DAVOX(R) will take action to enforce compliance with the terms of
the license on its behalf and on behalf of any third party for which it licenses
the Software. In the event it becomes necessary to furnish GSSC with Software
related to Smart Management Center (SMC) products the parties agree that such
Software will be loaned to GSSC in accordance with the terms set forth
hereunder, and such other terms as may be required by DAVOX's(R) third-party
software vendors and mutually agreed to in writing by the parties.
________________________________________________________________________________
I-1
<PAGE>
EXHIBIT J
DISPATCH
GSSC and DAVOX(R) have mutually agreed on the process and procedures by which a
Service request is dispatched by DAVOX(R) to GSSC (the "Dispatch Process") and
the dispatch dynamics thereof, Exhibit J-1 details the ETA process and is
-----------
attached hereto and incorporated herein by reference.
1. Service, Installation and MAC activity requests are accepted by GSSC only
from authorized and identified DAVOX(R) representative(s).
2. At a minimum, DAVOX(R) will provide the Customer Site name, Site address,
Site contact and phone number, equipment type to be serviced, description of
problem or requested activity, recommended or implicated failing component (if
applicable), DAVOX(R) support/management contact (if applicable), DAVOX(R) site
code, GSSC site contract number and any and all special instructions as
applicable.
3. GSSC staffs its Customer Service Center 7 days per week, 24 hours per day
and 365 days per year. GSSC will accept dispatches from authorized DAVOX(R)
personnel any day or time and will dispatch within that Customers contracted
PPM. In those instances where requests for services are outside the PPM, are
dispatched by DAVOX(R) and are not considered a scheduled activity, will be
invoiced at the Time and Material Rates as stated in Exhibit D, paragraph B.
4. GSSC and DAVOX(R) are currently seeking to develop a consolidation of their
respective Service Management Systems. It is anticipated that an electronic
merge of DAVOX's(R) and GSSC's service management systems will eventually allow
GSSC direct communication in providing ETA, Update and Call Closure information
directly to DAVOX's(R) management system. Additionally, it is anticipated that
dispatches will be directly and electronically sent by DAVOX(R) and received by
GSSC, for dispatch to GSSC's field service organization.
________________________________________________________________________________
J-1
<PAGE>
EXHIBIT J - 1
GSSC / DAVOX(R)REMEDIAL SERVICE CALL ETA PROCESS
[FLOW CHART OF GSSC / DAVOX(R)REMEDIAL SERVICE CALL ETA PROCESS]
- --------------------------------------------------------------------------------
J-2
<PAGE>
EXHIBIT K
TRAINING CURRICULUM(S)
APPLICATION DEVELOPMENT TOOLS
Overview
This course teaches you how to develop new applications as well as make changes
to existing applications. We will cover the full use of the Application
Development tools to make and install applications. You must successfully pass
the final lab exercise to have access to the application tools at your site.
Who Should Attend
IS personnel responsible for design and development of applications. This course
is required for those who want use of the application tools at their site.
Prerequisites
Knowledge of file structures, download/upload transfer methods and general
concepts of a predictive dialer.
Objectives
Upon completion of the course you should be able to:
. Design, develop and modify your own application map
. Define the download and upload process
. Customize an import and export file layout
. Create a call script profile
. Define application default parameters
. Identify the form components of Screen Builder
. Create a form
. Create screen branches
. Define agent and system initiated termination codes and their associated
components
================================================================================
K-1
<PAGE>
Application Tool
The Application Tool provides you with a set of integrated file and database
tools used to build and modify applications. It includes both File Tools and
Database Tools.
File Tools Include
. Make Application Maps to write database tables into files
. Application Map Editor to create or modify application maps
. Install Application Map to load files into database tables
Database Tools Include
. Import/Export Tool to define manual downloads and uploads
. Call Guide to create, modify and delete call script profiles and
application default parameters
. Screen Builder to create or modify agent hit screens
. Term Code Editor to define the codes entered by agents to describe how a
call ended
3 Day Course
DAVOX(R) Course Number 105 (ADT) or equivalent.
UNISON SYSTEM ARCHITECTURE
Overview
This course is a basic overview of the hardware and software architecture of the
Unison system. It introduces the internal processing of the system, and
supervisor activities as they are related to the system servers.
Who Should Attend
Individuals responsible for supporting and troubleshooting the
Unison system.
================================================================================
K-2
<PAGE>
Prerequisites
Ability to use a mouse and operate a PC in a Windows environment.
A basic understanding of UNIX commands (such as find, grep, cd, 1s, more, ps,
rsh).
Unison Supervisor Training (UST 101) or equivalent or Unison Overview (UO 100)
or equivalent.
Objectives
. Upon completion of the course you should be able to:
. Identify the Unison system architecture layers
. Explain basic hardware set-up of the system
. Explain the process flow for downloads and uploads
. Identify and explain the major software servers
. Access system messages and system logs
. Develop a troubleshooting strategy using diagnostic tools
3 Day Course
DAVOX(R) Course Number 102 (UA) or equivalent.
PHYSICAL LAYER
Overview
In this course you will learn the necessary skills to install the Unison
hardware in a network environment and troubleshoot your Unison hardware.
Who Should Attend
Individuals responsible for
. Installation and verification of configurations
. Communication between all hardware devices
. Maintenance of the Unison hardware.
================================================================================
K-3
<PAGE>
Prerequisites
. Basic LAN/WAN
. Basic T1/E1
. Knowledge of SQL (i.e., isql command, select statement)
. A basic understanding of UNIX commands (such as find, grep, cd, 1s, more,
ps, rsh)
Objectives
Upon completion of the course you should be able to:
. Identify the site and environment requirements
. Identify the function and hardware components of the Unison system
. Identify and describe the function, hardware and software of the SMC, TRS,
Supervisor workstations and agent terminals
. Connect Unison components and test network connection between hardware
components
. Perform a logical shutdown/reboot procedure
. Perform a full system backup/restore
. Identify the function of, install, test and troubleshoot the Unidisk, CCR
and TM Report drives
. Identify the function of, remove, install, test and troubleshoot NIS, XDM
and Smart Access(TM) software
. Identify the function of, configure ports, and identify logical and
physical connections made through a terminal server
. Identify the function and components of the DCS
. Identify, customize and modify databases
. Identify the function, requirements and installation of Unison SCALETM
5 Day Course DAVOX(R)
Course Number 103 (PL) or equivalent.
===============================================================================
K-4
<PAGE>
EXHIBIT K (con't)
TRAINING CURRICULUM(S)
UNISON SUPERVISOR TRAINING
Overview
This course prepares call center supervisors and managers to operate the Unison
system.
Who Should Attend
Call center supervisors and managers who arc responsible for:
. Verifying downloaded call records from the host database
. Organizing call records into campaigns
. Assigning agents to campaigns
. Tracking status of campaigns, agents, trunk lines, and systems
. Generating call center reports
Prerequisites
Ability to use a mouse and operate a PC in a Windows environment.
Objectives
Upon completion of the course you should be able to:
. Identify call center terms, conventions, and concepts
. Identify Unison hardware components
. Operate the Unison workstation
. Verify download of call tables
. Create, manage, and modify campaigns
. Create and modify filters
. Describe an exclusion list process
================================================================================
K-5
<PAGE>
. View and monitor agent statistics and trunk statistics
. Perform functions as Agent Manager
. Identify end of day procedures
. Understand how to get your agents up and running
4 Day Course
DAVOX(R) Course Number 101 (UST) or equivalent.
===============================================================================
K-6
<PAGE>
EXHIBIT L
[LOGO OF DAVOX CORPORATION]
MUTUAL NON-DISCLOSURE AGREEMENT
THIS AGREEMENT is made this 25th day of May, 1999 by and between DAVOX(R)
Corporation, a Delaware corporation with its principle place of business located
at 6 Technology Park Drive, Westford, Massachusetts, 01886 ("DAVOX(R)") and
Grumman Systems Support Corporation, a Maryland corporation, with its principle
place of business located at 10 Orville Drive, Bohemia, New York, 11716
("Company").
WHEREAS, DAVOX(R) and the Company each desire to divulge certain information
which the divulging party deems to be proprietary and confidential, specifically
including, without limitation, the following: (the "Information") and
WHEREAS, each party desires to disclose the Information for the specific purpose
of discussing and evaluating the possibility of the parties entering into a
joint business relationship with regard to either or both party's products,
services, and/or customers (the "Business Purpose").
NOW THEREFORE, the parties agree and undertake as follows:
1) The party disclosing Information hereunder shall be called the "Discloser"
and the party receiving Information hereunder shall be called the
"Recipient".
2) For purposes of this Agreement, Information shall include all information
relating to Discloser, its business or affairs, or the business or affairs
of its customers, which Discloser may disclose hereunder and which
Discloser considers commercially valuable, proprietary, and confidential to
Discloser.
3) Information may be disclosed (a) in written, graphical, or electronic
format if marked or otherwise identified as being confidential, or (b)
orally or visually.
4) For the purposes of this Agreement, Information shall not include
information which:
a) is in or subsequently becomes part of the public domain through no
fault of the Recipient;
b) is lawfully received from a third party having the right to disclose
such information;
c) is independently developed by Recipient without breach of this
Agreement;
d) is disclosed with the prior written approval of Discloser; or
e) Recipient is required to disclose by law, regulation or order of a
competent authority; provided, however, that Recipient shall give
-------- -------
Discloser not less than fifteen (15) days' advance written notice of
any such requirement in order that Discloser may seek a restrictive
order or similar equitable relief which Discloser may deem necessary
to protect the subject Information.
5) The Recipient acknowledges that all Information shall remain the property
of Discloser and the Recipient agrees:
a) to maintain and protect all information (including all portions or
copies thereof) against theft, damage, loss or unauthorized access in
at least the same manner as its own proprietary and confidential
information is maintained and protected. In no event shall Recipient
use less than reasonable care in its efforts to maintain and protect
the Information;
b) except as specifically permitted hereunder or as specifically
consented to in writing by Discloser, not to directly or indirectly
disclose, exploit, copy, modify, or otherwise reproduce any
Information at any time during or after the period of relationship
between the parties;
c) not to disclose, and to ensure that its employees, officers,
directors, representatives, contractors or agents ("Recipient
Employee(s)") do not disclose, the Information other than to those
Recipient Employees with a specific "need to know" such Information;
- --------------------------------------------------------------------------------
L-1
<PAGE>
d) to ensure that any Recipient Employee to whom the Information has been
disclosed has agreed in writing to maintain, during and after such
Recipient Employee's relationship with Recipient, the confidentiality
of any third party confidential information which such Recipient
Employee may be entrusted with;
e) to inform any Recipient Employee to whom the Information may be
disclosed, of the Recipient's obligations hereunder and to use its
best efforts to insure compliance with this Agreement by all such
Recipient Employees; and
f) not to use, and to ensure that Recipient Employees do not use, any
Information except for the Business Purpose.
6) Nothing contained in this Agreement shall be construed as granting or
conferring by implication or otherwise any right, title, or ownership, by
license or otherwise, in or to Discloser's trademarks, inventions,
copyrights, patents or other intellectual property or proprietary rights.
7) Discloser makes no representation or warranty and accepts no liability in
respect of the accuracy or completeness of any or all of the Information
and shall have no responsibility for Recipient's use of the Information nor
for the claims of third parties howsoever arising from Recipient's use or
possession of any Information.
8) Recipient understands that any future-oriented Information or plans (i.e.
product, marketing, financial, or other) are subject to change without
notice at any time and that Discloser shall have no obligations to execute
such plans and shall have no liability as a result of any change to such
plans.
9) Upon the earlier of receipt of a written request from Discloser or
termination of the business relationship between the parties for any
reason, Recipient shall return to Discloser any and all Information then in
its possession, custody or control and shall not retain any copies of the
same. Upon request, Recipient shall certify to Discloser as to the
completion of such activity.
10) Recipient acknowledges and agrees that a breach by it or any Recipient
Employee of any provision of this Agreement will result in irreparable harm
and monetary damages to Discloser for which there may be no adequate remedy
at law. In the event of such breach or any threatened breach, Discloser
shall be entitled to injunctive relief and such other and further equitable
relief as may be appropriate. Recipient shall immediately notify Discloser
in writing of any breach or threatened breach of this Agreement of which it
becomes aware, and shall offer all reasonable assistance and co-operation
to Discloser in Discloser's efforts to regain possession and control of the
Information and to prevent further unauthorized use of same.
11) Recipient agrees to indemnify and hold harmless Discloser from and against
all losses, damages or claims which Discloser may incur or suffer to the
extent that such loss, damage, or claim is a direct result of any breach of
this Agreement by Recipient, Recipient Employees, or any third party to
whom Recipient may disclose the Information.
12) This Agreement shall be binding upon the Recipient, Recipient's Employees,
and Recipient's successors and permitted assigns and shall inure to the
benefit of Discloser, its successors, agents and assignees.
13) This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, excluding its conflicts of law principles.
14) If any provision or application of this Agreement is held to be invalid or
unenforceable in any respect, the validity or enforceability of any of the
other provisions shall not in any way be affected or impaired. In such
event, the offending provision shall be deemed null and void and shall be
rewritten so that it reflects the parties' original intentions as closely
as possible and in such a manner that it shall be valid and enforceable.
15) This Agreement sets forth the entire understanding between the parties with
respect to the subject matter hereof and supercedes any and all prior
communications, commitments, and obligations between the parties, whether
written or oral. This Agreement may not be modified, changed or amended,
except by a writing signed by both parties.
- --------------------------------------------------------------------------------
L-2
<PAGE>
AGREED TO: AGREED TO:
_____________________________ DAVOX(R) CORPORATION
BY: /s/ Douglas R. Hoffman BY: /s/ John J. Connolly
-------------------------- ----------------------------
NAME: Douglas R. Hoffman NAME: John J. Connolly
------------------------ --------------------------
TITLE: Director TITLE: V.P. Finance & CEO
----------------------- -------------------------
DATE: 5/27/99 DATE: 5/25/99
------------------------ --------------------------
- --------------------------------------------------------------------------------
L-3
<PAGE>
EXHIBIT M
PHYSICAL LAYER
INSTALLATION CHECKLIST
I. Purpose
The Unison installation checklist is to be used by all those involved in the
integration of a UNISON call center and in order to communicate the successful
implementation and/or to highlight any and all discrepancies as a result of an
installation effort.
Additionally, the checklist will provide the necessary metrics to assist DAVOX
(R) System Integration Managers (SIM) in accomplishing their tasks along with
serving as a performance metric in achieving the goals and milestones
established by GSSC and DAVOX(R).
The checklist also provides installation personnel a guideline in performance
expectations and specific task requirements necessary to integrate a UNISON call
center.
II. Procedure
Prior to starting any Unison integration the installers should have a site
specification inventory, provided by the DAVOX(R)(R) System Integration Manager
(SIM) defining the system layout and configuration.
During a UNISON install activity service installation personnel will use, as a
guideline and task execution document, the Grumman Physical Layer Install
checklist. As items are attempted or successfully concluded they should be
checked off indicating that particular task(s) completion.
Immediately upon completion of the checklist and inventory a copy should be
faxed to Bob Lennon at DAVOX(R) headquarters in Westford, MA at 508 952-0206.
Bob will distribute copies as necessary to all cognizant personnel.
A copy is to be left on site for the SIM and be included as part of that
particular sites log. GSSC install personnel should provide a folder for this
and include all relevant documentation as it pertains to the site.
- --------------------------------------------------------------------------------
M-1
<PAGE>
Installer__________________________________________Date of Install:_____________
DAVOX(R) SYSTEMS INTEGRATION MANAGER____________________________________________
SITE NAME_______________________________________________________________________
- --------------------------------------------------------------------------------
1. Equipment (According to spec)
----------------------------
Site Spec Received Date ___________
Check here Number Missing
if all accounted for How Many? if any
Sparc Stations _____ _____ _____
Monitors _____ _____ _____
Keyboards _____ _____ _____
Mice _____ _____ _____
DSP cards _____ _____ _____
T1 Cards _____ _____ _____
Dig Sw. cards _____ _____ _____
Op Interface cards _____ _____ _____
Slac Cards _____ _____ _____
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. EQUIPMENT INTERCONNECT VERIFICATION
-----------------------------------
A. SPARC STATIONS
--------------
Check if OK
Sparc LAN Connections
SMC to Work_a, Work_b, ... _____
SMC to TRS_a, TRS_b... _____
NIS Running on every Sparc Station _____
Banner up on every Sparc Work Station _____
(If no graphics monitor to display banner check
to see if CLM is running)
Supervisory Logon OK on every Sparc Station _____
B. PC SUPERVISORS
--------------
Lan Connections to proper Work Station _____
Supervisory Logon OK on every Super PC _____
(Banner must come up)
Can Logout and back in OK _____
C. AGENT TERMINALS
---------------
All agent terminals can get Logon screens _____
Allows logon of individual Agend Ids on all _____
Terminals
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
M-2
<PAGE>
- --------------------------------------------------------------------------------
3. DTM
---
DSP's Load up (LEDs have proper reading) _____
Spans in sync _____
Configuration tables checked out _____
Host file on SMC or TRS reflect all DSPs _____
DSP conn connected on all DSP cards _____
Lines on all spans have been dialed on _____
(Using Isrvr commands)
Situation for answer, no answer, and busy _____
have been checked out
All agent and supervisor audio have been _____
checked out (full logon short of campaign)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. HOST ISSUES
-----------
(Fill in where applicable)
FTP has been tried and test file can be xfer'd _____
Please Document for FTP set-up
Host Name __________
IP / Address __________
FTP Logon ID __________
FTP Password __________
Xfer Commands __________
RCS loads up correctly and can be ping'd _____
RCS containment files in RCS directory _____
RJE set-up and logon information for host _____
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. MISCELLANEOUS
-------------
Inventory form completed _____
Modem installed and checked _____
8MM installed and seen by system _____
MO disk installed and seen by system _____
Complete system backup _____
- --------------------------------------------------------------------------------
6. COMMENTS OR ISSUES (Add attachments as required)
------------------
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
Signature______________________________________________ Date __________________
- --------------------------------------------------------------------------------
M-3
<PAGE>
EXHIBIT N
MATERIAL AND SERVICE METRICS
I. Material Metrics:
GSSC shall provide the following material metrics on a monthly basis
providing the following information on a DAVOX(R) provided document
substantially in the form attached hereto. Supporting documentation is
available upon request.
DAVOX(R) Statistics
1. Period of Activity
2. Product Type
3. # of Requests for Period
4. # of Priority one Requests
5. Requests Filled Same Day
6. Requests Shipped Same Day
7. Parts Shipped to Replenish Kit(s)
8. Parts Shipped to Customer/Site
9. # of After Hours Requests
10. # of Requests Shipped Counter to Counter
11. Shipments Received DOA
DAVOX(R) Inventory Variance
1. Part #
2. Stock Level
3. Quantity On Hand
4. Variance
5.
II. Service Performance Metrics:
1. GSSC shall provide, on a document substantially similar to the form
attached hereto, monthly Response and Repair Times Metrics Reports for
contracted accounts PPM Service requests calculate response times
incrementally from 0-2 to over 48 hours. Reporting options include
GSSC organizational service delivery levels; branch, district, region
and national.
2. Response Time reports are calculated per the contractual response
times as found in Exhibit A, Schedule of Maintenance Services, which
---------
are further defined by an
- --------------------------------------------------------------------------------
N-1
<PAGE>
individual sites distance, as measured by highway miles, from the GSSC
office providing DAVOX(R) services. All supporting service detail
documentation will be provided in addition to the overview charts.
Response time reporting options include GSSC's organizational service
delivery levels; branch, district, region and national.
3. Repair Time reports will be provided per the response time format
described in item 1. Repair time reporting options include GSSC's
organizational service delivery levels; branch, district, region and
national.
- --------------------------------------------------------------------------------
N-2
<PAGE>
EXHIBIT N (CON'T)
MATERIAL AND SERVICE METRICS
II. Service Metrics
Davox Metrics
Targeted Response Time (All Categories)
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
N-3
<PAGE>
Davox Metrics
Targeted Response Time (8hr Performance)
[CHART APPEARS HERE]
Davox Metrics
Targeted Response Time (4hr Performance)
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
N-4
<PAGE>
Davox Metrics
Time to Repair (Remedial)
[CHART APPEARS HERE]
Davox Metrics
Remedial Response Time (Best Effort Performance)
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
N-5
<PAGE>
Davox Metrics
Events Opened/Closed (All Categories)
[CHART APPEARS HERE]
Davox Metrics
First Call Fix (All Categories
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
N-6
<PAGE>
Davox Metrics
Service Call Resolution (All Categories)
[CHART APPEARS HERE]
Davox Metrics
Down Time Report (Remedial)
[CHART APPEARS HERE]
- --------------------------------------------------------------------------------
N-7
<PAGE>
EXHIBIT O
[LOGO OF DAVOX CORPORATION]
- --------------------------------------------------------------------------------
GSSC INSTALLATION EVALUTION FORM
<TABLE>
<S> <C> <C>
Customer Name and Address: GSSC Engineer: DAVOX(R) SIM:
__________________________ ____________________ _____________________
Site Code: Install Date:
__________________________ ____________________ _____________________
1. Was the GSSC Engineer on-site in the specified time frame for the installation? Yes No
If no, please explain:
______________________________________________________________________________________________________
2. Did the GSSC Engineer provide a voice to voice hand-off of the installation to you? Yes No
If no, please explain:
______________________________________________________________________________________________________
3. Did the GSSC Engineer properly complete and provide the Physical Layer Install Checklist and
Inventory form to you? Yes No
If no, please explain:
______________________________________________________________________________________________________
4. From your testing, was the system installed, tested, and functional per the Physical Layer
Install Checklist and Inventory form? Yes No
If no, please explain:
______________________________________________________________________________________________________
5. Were any issues or delays with the installation communicated to you prior to the GSSC
Engineer leaving the site? Yes No
If no, please explain:
______________________________________________________________________________________________________
6. Were the systems components clearly and correctly labeled? Yes No
If no, please explain:
______________________________________________________________________________________________________
7. Were all cables labeled and tie wrapped in an orderly fashion? Yes No
If no, please explain:
______________________________________________________________________________________________________
8. Any other comments regarding the installation?
______________________________________________________________________________________________________________________
SIM Signature: _____________________________ Date: _____________________
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
O-1 05/17/99
<PAGE>
EXHIBIT P
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DAVOX(R) Install/Site Inventory
Form:
- ---------------------------------------------------------------------------------------------------------------------------------
Send Completed Form To: C. Donahue at donahue@DAVOX(R).com
- ---------------------------------------------------------------------------------------------------------------------------------
L. Smetana at [email protected]
- ---------------------------------------------------------------------------------------------------------------------------------
M. Masem at [email protected]
- ---------------------------------------------------------------------------------------------------------------------------------
GSSC FE Name:
- ---------------------------------------------------------------------------------------------------------------------------------
DAVOX(R) SIM Name:
- ---------------------------------------------------------------------------------------------------------------------------------
Date Installed:
- ---------------------------------------------------------------------------------------------------------------------------------
Account Name:
- ---------------------------------------------------------------------------------------------------------------------------------
Address:
- ---------------------------------------------------------------------------------------------------------------------------------
State:
- ---------------------------------------------------------------------------------------------------------------------------------
ZIP:
- ---------------------------------------------------------------------------------------------------------------------------------
Suite/Floor:
- ---------------------------------------------------------------------------------------------------------------------------------
DAVOX(R) Site Code:
- ---------------------------------------------------------------------------------------------------------------------------------
Customer Site Contact(s)
- ---------------------------------------------------------------------------------------------------------------------------------
Name:
- ---------------------------------------------------------------------------------------------------------------------------------
Phone:
- ---------------------------------------------------------------------------------------------------------------------------------
Customer Site Contact(s)
- ---------------------------------------------------------------------------------------------------------------------------------
Name:
- ---------------------------------------------------------------------------------------------------------------------------------
Phone:
- ---------------------------------------------------------------------------------------------------------------------------------
Add Rows as Necessary for Serial Number or Additional Equipment
- ---------------------------------------------------------------------------------------------------------------------------------
TYPE DAVOX(R) PN MANU MODEL DESCRIPTION SERIAL NUMBER
- ---------------------------------------------------------------------------------------------------------------------------------
30T CONVERTER 906204 bay networks cy2012001 Base T Converter
- ---------------------------------------------------------------------------------------------------------------------------------
16P 100 BASE TX 906213 bay networks FE 516 Base T Converter
- ---------------------------------------------------------------------------------------------------------------------------------
TRMNL SVR 906154 chase iolan 16 port Terminal Server
- ---------------------------------------------------------------------------------------------------------------------------------
ROUTER TR 906208 Cisco 2513 enet/token ring router
- ---------------------------------------------------------------------------------------------------------------------------------
DCS 905349 DAVOX(R) 905349 Dialer
- ---------------------------------------------------------------------------------------------------------------------------------
PTR LA400 906151 Dec la400 dot matrix printer
- ---------------------------------------------------------------------------------------------------------------------------------
PRINTER HP 693 906193 HP 693c color printer
- ---------------------------------------------------------------------------------------------------------------------------------
10T HUB 906121 Milan Technology x4710H Base T Hub
- ---------------------------------------------------------------------------------------------------------------------------------
ULTRA 2/2300 906251 SUN a14-uec2-17e-256ac Server
- ---------------------------------------------------------------------------------------------------------------------------------
ULTRA 5/270 906257 SUN a21-ufe1a9j-128cg Server/Workstation
- ---------------------------------------------------------------------------------------------------------------------------------
ULTRA 60/300 906254 SUN a23-uec2-9l-256ac Server
- ---------------------------------------------------------------------------------------------------------------------------------
ULTRA 2 906187 SUN a14-uba2 Server
- ---------------------------------------------------------------------------------------------------------------------------------
SPARC 20 906092 SUN 20/712 Server
- ---------------------------------------------------------------------------------------------------------------------------------
SPARC 5 906184 SUN s5kx2-170-32-p17 Server/Workstation
- ---------------------------------------------------------------------------------------------------------------------------------
EXT 1GIG 906114 SUN x5102a External Drive
- ---------------------------------------------------------------------------------------------------------------------------------
EXT 2GIG 906115 SUN x5152a External Drive
- ---------------------------------------------------------------------------------------------------------------------------------
EXT 4GIG 906130 SUN x5203a External Drive
- ---------------------------------------------------------------------------------------------------------------------------------
EXT 4GIG 906261 SUN sg-xdsk010a-4g External Drive
- ---------------------------------------------------------------------------------------------------------------------------------
EXT 4GIG 906190 SUN x5213a External Drive
- ---------------------------------------------------------------------------------------------------------------------------------
CALL VISOR PC 906167 dell Dimension 133 TWR 220-1906 Personal Computer
- ---------------------------------------------------------------------------------------------------------------------------------
8MM TAPE DRV 906201 SUN x6230a (20-40GB) 8mm tape drive
- ---------------------------------------------------------------------------------------------------------------------------------
MO DISK 906233 syquest 1.5GB External CD Rom
- ---------------------------------------------------------------------------------------------------------------------------------
MODEM 28.8 906168 us robotics 000839-OX Modem
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
P-1
<PAGE>
Sample Unison Configuration Layout
[PLAN OF UNISON APPEARS HERE]
- --------------------------------------------------------------------------------
P-2 05/17/99
<PAGE>
EXHIBIT 10.12
DAVOX CORPORATION EXECUTIVE COMPENSATION PLAN
The compensation arrangements between Davox Corporation (the "Company") and
each of its executive officers are based on the Company's Executive Compensation
Plan (the "Plan"), the terms of which are described herein.
The Company's executive compensation program is administered by the two
member Compensation Committee of the Board of Directors (the "Compensation
Committee"). The two members of the Compensation Committee are non-employee
Directors. Pursuant to the authority delegated by the Board of Directors, the
Compensation Committee establishes each year the compensation of the Chief
Executive Officer, and together with the Chief Executive Officer, establishes
the compensation of the other executive officers of the Company pursuant to the
Plan.
The Plan is designed to reward executive officers whose performance yields
improvement in corporate operating results, market share and shareholder value.
The ultimate goal of the Plan is to align the interests of management with those
of the stockholders. Compensation under the Plan is comprised of cash
compensation in the form of annual base salary, incentive compensation in the
form of performance-based cash bonuses, and long-term incentive compensation in
the form of stock options.
In setting cash compensation levels for executive officers, the
Compensation Committee takes into account such factors as: (i) the Company's
past financial performance and future expectations, (ii) the general and
industry-specific business environment, and (iii) corporate and individual
performance goals. The base salaries are established at levels comparable to the
amounts paid to senior executives with comparable qualifications, experience and
responsibilities at other companies located in the northeastern United States of
similar size and engaged in a similar business to that of the Company.
Incentive compensation in the form of performance-based bonuses for the
Company's executive officers is based upon management's success in meeting the
Company's financial and strategic goals as well as meeting individual
performance goals. Target levels of revenue and net income are set annually, and
bonuses are allocated to the executive officers contingent upon the achievement
of the target levels. In addition, based on the Company's exceeding both target
revenues and target net income, additional bonuses are awarded to executive
officers in the same proportion as bonuses are allocated under the Plan.
Incentive compensation in the form of stock options is designed to provide
long term incentives to executive officers, to encourage the executive officers
to remain with the Company and to enable optionees to develop and maintain a
significant, long-term stock ownership position in the Company's Common Stock.
The Compensation Committee grants stock options to the Company's executive
officers in consideration of the strategic goals and direction of the Company.
<PAGE>
EXHIBIT 10.15
-------------
OEM AGREEMENT
-------------
THIS AGREEMENT ("Agreement") is made and entered into by and between Kana
Communications, Inc., a Delaware corporation with its principal offices located
at 87 Encina Avenue, Palo Alto, CA 94301 ("Kana"), and Davox Corporation, a
Delaware corporation with its principal offices located at 6 Technology Park
Drive, Westford, MA 01886 ("OEM").
RECITALS
--------
WHEREAS, Kana manufactures, sells, licenses, supports, maintains and/or
otherwise distributes products and desires to grant OEM the right to sell,
sublicense, install, support and/or maintain one or more of those products (as
hereinafter defined) upon the terms and conditions set forth below,
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth below, the parties agree as follows:
1. DEFINITIONS
a. "Bundled Product" shall mean the Ensemble Customer Contact Suite
offering or other OEM product offered to OEM 's End-Customers containing
Software.
b. "Software" shall mean all software designated in Exhibit A, and all
related documentation provided therewith. Kana reserves the right to
make deletions, additions, substitutions and modifications to the
Software in its sole discretion upon not less than ninety (90) days
prior written notice.
c. "Specifications" shall mean those portions of Kana's published materials
made available for distribution with the Software and which describe the
specific functionality of the Software.
d. "End-Customer" shall mean a purchaser and/or OEM of any Software for
such purchaser's and/or OEM's actual use and not intended for resale.
e. "Territory" shall mean worldwide.
2. LICENSE. Subject to the terms of this Agreement, Kana grants to OEM a
nontransferable, nonsublicensable, nonexclusive, limited license to use the
Software only in the Territory and in accordance with the documentation
supplied by Kana only for the purpose of demonstrating the software in
object code form only to potential End-Customers.
3. OEM LICENSE.
a. Subject to the terms of this Agreement, Kana also grants to OEM a
nontransferable, nonexclusive, limited license to sublicense the
Software only as part of a Bundled Product, only in the Territory in
object code form only to End-Customers, either directly or through its
distribution partner ("OEM Partners"), for use only within the
Territory. Each product licensed by OEM that incorporates Software shall
be distributed by OEM only pursuant to an End-Customer License Agreement
signed by End-Customer prior to distribution of the Bundled Product to
that End-Customer, and which shall provide at as least much protection
to Kana as the terms of this Agreement. OEM agrees that in the event
such license is breached by an End Customer and such breach impacts
Kana's proprietary interests, it shall either: (i) enforce the End-
Customer License Agreement in order to protect the proprietary rights of
Kana hereunder, or (ii) in the event OEM fails to enforce such End-
Customer License Agreement to protect Kana's proprietary rights
hereunder, then to the extent legally
Kana Communications, Inc.
Software Support Agreement
Page 1
<PAGE>
permitted OEM hereby assigns its rights under such Sublicense Agreement
to Kana, but only to the extent necessary to protect Kana's rights
hereunder.
b. OEM may use its OEM Partners to distribute the Bundled Product provided
that OEM's obligations hereunder are not diminished, and OEM shall
ensure that such OEM Partners have entered into distribution agreements
that are at least as protective of Kana's interests hereunder with
comparable training, service, support and similar requirements. OEM
agrees that in the event such distribution agreement is breached by an
OEM Partner and such breach impacts Kana's proprietary and other
interests, it shall either: (i) enforce such distribution agreement in
order to protect the proprietary rights of Kana hereunder, or (ii) in
the event OEM fails to enforce such distribution agreement to protect
Kana's rights hereunder, then to the extent legally permitted OEM hereby
assigns its rights under such distribution agreement to Kana, but only
to the extent necessary to protect Kana's rights hereunder.
4. OWNERSHIP.
a. OEM may not decompile, reverse engineer or modify the Software, or
create derivative works therefrom and, except as described otherwise in
this Agreement, shall be bound by the terms herein. Notwithstanding the
foregoing, Kana grants OEM the right to integrate the Software within
OEM's software and products, subject to Kana's rights in the Software.
b. Notwithstanding the foregoing, and unless otherwise mutually agreed upon
in writing by the parties, to the extent that OEM conceives, learns, or
reduces to practice any work of authorship, idea or know-how (whether or
not patentable) directly derived from or directly relating to the
Software in the course of performance under this Agreement ("Work
Product") OEM hereby assigns such Work Product to Kana and any patent
rights, copyrights (including moral rights; provided that non-assignable
moral rights are waived to the extent permitted by law), trade secret
rights, and other rights with respect thereto. OEM agrees to take any
action reasonably requested by Kana to evidence, perfect, obtain,
maintain, enforce or defend the foregoing at Kana's cost.
c. OEM agrees that to the extent that any rights in any Work Product,
directly derived from or directly relating to the Software, are not
assigned to Kana hereunder:
i. OEM grants to Kana a world-wide permanent, irrevocable, royalty-
free, unlimited, fully paid-up license to such Work Product;
ii. OEM agrees not to assert, file or otherwise raise any claim or
action against Kana for the infringement of any rights of OEM in
such Work Product, directly derived from or directly relating to the
Software; and
d. OEM agrees that each copy of any Software, documentation, and all
packaging media used for their distribution, shall include reproductions
of the copyright notices and other proprietary legends of Kana as Kana
designates, in computer object code format or otherwise, which accompany
such items. OEM shall not remove, efface or obscure any copyright
notices or other proprietary notices or legends from any Kana materials
provided herein. Subject to the foregoing, OEM is permitted to, at its
own cost, brand the Bundled Software under its trademark, tradename and
other marks and names owned by OEM, including, without limitation,
developing packaging, documentation, marketing collateral splash
screens, and similar items with OEM's brand.
e. Any symbols, trademarks and service marks adopted by Kana to identify
the Software ("Trademarks") belong to Kana and OEM shall have no rights
in such Trademarks except as
Kana Communications, Inc.
Software Support Agreement
Page 2
<PAGE>
expressly set forth herein. OEM shall use such Trademarks only in
accordance with Kana's guidelines for use of the Trademarks. Any
symbols, trademarks and service marks adopted by OEM to identify the
Bundled Product belong to OEM and Kana shall have no rights in such
Bundled Product trademarks except as expressly set forth herein. Kana
shall use such Bundled Product trademarks only in accordance with OEM's
guidelines for use of such trademarks.
5. NON-EXCLUSIVITY BY KANA. Kana may appoint other companies to purchase,
resell, license, sublicense, install, support, maintain and/or otherwise
distribute one or more of its Software, including without limitation, those
that may compete with OEM. Kana reserves the sole and exclusive right to
solicit, authorize, approve, disapprove or terminate any current or
prospective OEM. Nothing in this Agreement shall be construed to prohibit
Kana from selling, licensing, sublicensing, installing, supporting,
maintaining and/or otherwise distributing its Software directly, indirectly,
or through other channels.
6. OBLIGATIONS OF OEM. OEM shall:
a. Promote and sublicense, install, support and/or maintain (as hereinafter
defined) the Software as part of the Bundled Product;
b. At OEM's discretion, inform current and potential Customers of new
Software offerings, as well as of enhancements to current Software;
c. Include with the Software any and all documentation included by Kana
(which may be under OEM's private label brand) at time of shipment or as
otherwise required by Kana;
d. Maintain sufficient demonstration units and facilities for supporting,
marketing and promotion of the Software as part of the Bundled Product;
e. Represent Kana, the Software and the Bundled Product in a professional,
responsive and favorable manner at all times during the term of this
Agreement;
f. Provide installation, integration and other services to End-Customers at
commercially reasonable standards;
g. Promptly transmit to Kana any current or potential End-Customer
complaints, concerns or other information concerning Kana or the
Software;
h. In OEM's sole discretion, make professional and timely responses to
prospective End-Customer leads to the extent provided by Kana;
i. Place the `Powered by Kana' logo on OEM's website and a software splash
screen in a mutually agreeable location prior to distribution by OEM of
any Software;
j. Use its best efforts to inform Kana of any known violations or
infringements under any End-Customer License Agreement;
k. Ensure that all personnel engaged in the sale and support of the
Software attend the applicable training courses specified in Exhibit C
of this Agreement entitled `TRAINING'; and
l. Within thirty (30) days following the mutual execution of this
Agreement, prepare and provide to Kana a written forecast of anticipated
Software licenses under this Agreement for the next twelve (12) months.
OEM shall prepare and provide an updated forecast quarterly thereafter.
Such forecasts are not binding on Kana or OEM.
Kana Communications, Inc.
Software Support Agreement
Page 3
<PAGE>
7. OBLIGATIONS OF KANA.
a. Kana shall make available to OEM reasonable quantities, in camera ready
format, of Kana's standard marketing, technical, End-Customer and
promotional materials so as to allow OEM to private label such
materials. Additionally, Kana shall provide to OEM all updates to such
documentation as soon as reasonable with the objective that such
documentation would be delivered within five (5) business days from the
date that such is approved internally at Kana. Kana will, at OEM's cost,
also make available to OEM reasonable quantities of Kana's artwork,
graphics, presentational materials and other promotional materials,
which Kana has developed or may develop to promote Kana and the
Software.
b. Kana shall provide to OEM a master copy of the Software (the "Master
Copy") for integration into the Bundled Products provided however, that
license keys must be obtained from Kana for each Software order. Such
Software shall be enabled to allow OEM to replace the Kana logo with
OEM's private label wherever the Kana logo appears
c. Not less than on a quarterly basis, Kana shall provide to Davox, a
product development roadmap. Such roadmap should provide to OEM
information relating to Kana's current and future product development
plans. In addition, Kana shall invite Davox to participate in its "beta"
programs.
d. Kana shall make available the necessary training of OEM personnel to
enable it to effectively market and resell the Software and to train,
implement and support it in an End Customer environment at the price set
forth on Exhibit A.
e. Kana shall provide to OEM twenty (20) copies of the Software for use by
OEM internally for non-production evaluation, demonstration and
development purposes only, free of charge, to allow OEM to effectively
resell and integrate the Software. Maintenance and other services
related to these copies, to the extent ordered, shall be charged the fee
specified on Exhibit A.
f. As provided herein, Kana shall respond promptly to reports from OEM of
End-Customer or OEM complaints, concerns or problems concerning the
Software.
g. Subject to mutual agreement on integration, cost and support issues, OEM
shall have the opportunity to bundle any improvements or modifications
to the Software and new products offered by Kana.
h. Kana agrees to provide and maintain an application programmer interface
(API) into the Software that will allow its integration with Davox's
Ensemble. The parties will work together to develop a mutually agreed
upon specification, including a schedule for availability, which will be
completed and delivered to Davox by Nov. 30, 1999. Kana will use
commercially reasonable efforts to meet the terms of that schedule.
8. INTEGRATION.
a. The parties shall cooperate with one another in good faith in order to
complete the integration of the Software into OEM's Ensemble customer
contact suite or other OEM product(s). Each party shall make available
in a timely manner at no charge to the other party all technical data,
files, documentation, sample output, or other information and resources
reasonably required by the requesting party for the performance of the
Integration Services. All such technical data, files, documentation,
sample output, or other information and resources shall be deemed
Confidential Information as defined hereunder.
Kana Communications, Inc.
Software Support Agreement
Page 4
<PAGE>
i. Tasks that are primarily the responsibility of OEM's personnel will
remain OEM's responsibility and will remain under OEM's supervision,
management and control, even if Kana assists OEM in performing such
tasks. OEM shall reasonably cooperate with Kana and provide such
reasonable assistance as both parties may reasonably determine, in
connection with Kana's efforts to obtain all consents, approvals and
authorizations of and cooperation from third parties needed by Kana to
effectuate the transactions contemplated hereby and give all reasonable
notices to third parties which may be reasonably necessary or reasonably
required in order to effectuate the transactions contemplated hereby.
OEM and Kana each shall bear any costs resulting from the other's
failure to meet these obligations.
9. SUPPORT. OEM shall provide pre and post-installation support and service for
the Software to OEM's End-Customers in accordance with Exhibit B. OEM's
support obligations shall be undertaken only by personnel who have completed
Kana's training and have obtained Kana's authorization. OEM shall provide
support at the response levels described in Exhibit B attached hereto.
Subject to payment of the appropriate support fees set forth in Exhibit A,
Kana shall provide technical support as described in Exhibit B.
10. PAYMENT
a. OEM shall pay Kana the OEM Fee as set forth in Exhibit A and Exhibit A-1
for each copy of the Software and maintenance services that it sub-
licenses to End-Customers pursuant to this Agreement. OEM's payments of
Fees hereunder shall be due and payable forty-five (45) days after the
date of Kana's invoice, which invoice shall not be issued (i) for
Licenses, Professional Services and Training until after the date of the
applicable order from OEM; and (ii) for Maintenance and Support, until
the end of the warranty period set forth in Section 16(a) of this
Agreement. Along with such payment, OEM shall provide Kana with a
detailed report of all Software licensed, maintenance contracts signed
and other services provided to any party which OEM is required to
furnish payment to Kana. Such report shall include information
reasonably available to OEM, including, by way of example, and without
limitation, the name of each End-Customer, the location of each
installation and instance of each piece of Software, and other
information as may be reasonably requested by Kana and agreed to by OEM.
b. Kana reserves the sole right to change the "OEM Fee" for any Software
after the second (2/nd/) year of the Initial Term in a manner consistent
with changes to Kana's standard price list Kana will provide OEM with
not less than ninety (90) days prior written notice of any such change.
c. The payment method hereunder will be as Kana reasonably directs from
time to time. All License and OEM Fees are exclusive of shipping, taxes,
duties and the like, which shall be paid by OEM. All undisputed late
payments (i.e., payments that have not been received by Kana within
thirty (30) days from the date OEM receives written notice of such
payment being late) shall be assessed a service charge of 1.5% per month
to the extent allowed by law. For international shipments, outside the
United States, OEM will be responsible in advance for all applicable
shipping charges, taxes, customs charges, duties, brokerage fees or
common carrier charges.
d. OEM shall keep, maintain and preserve for at least three (3) years
following termination or expiration of the term of this Agreement or any
renewal(s) thereof, accurate records relating to OEM's obligations
hereunder. Such records shall be maintained as Confidential Information,
but shall be available for inspection and audit as provided herein. Kana
shall have the right at least once per calendar year to have an
independent public accountant, reasonably acceptable to OEM, examine
OEM's relevant books, records and accounts
Kana Communications, Inc.
Software Support Agreement
Page 5
<PAGE>
specifically relating to this Agreement for the purpose of verifying the
accuracy of payments made as required under this Agreement. Such
independent public accountant must agree in writing to be bound to the
confidentiality provision contained in this Agreement. Kana acknowledges
and agrees that such accountant shall not have access to the books,
records, and accounts relating to other products or services except as
such books, records and accounts also directly relate to the payments
due hereunder. Each audit will be conducted at OEM's place of business,
or other place agreed to by the Parties, during OEM's normal business
hours and with at least thirty (30) days prior written notice to OEM.
Kana shall pay the fees and expenses of the auditor for the examination;
provided that should any examination disclose a greater than five
percent (5%) shortfall in the payments due Kana for the period being
audited, OEM shall pay the reasonable fees and expenses of the auditor
for that examination.
11. TERM AND TERMINATION
a. The term of this Agreement shall be for a period of five (5) years,
beginning on the date this Agreement is executed by OEM ("Effective
Date"). Thereafter, this Agreement shall be renewed for successive one
(1) year terms without further notice, unless terminated sooner as
provided under the provisions herein, or unless either party elects not
to renew this Agreement by providing the other party notice thereof not
less than thirty (30) days prior to the renewal date.
b. For purposes of this Agreement, OEM shall be in default if it:
i. breaches a material term or condition of this Agreement and fails to
cure such breach within thirty (30) days of Kana's written notice to OEM
of such material breach, except that no such cure period shall apply to
any breaches by OEM of the terms of Sections 4 or 15 of this Agreement;
ii. shall cease conducting business in the normal course, become
insolvent, make a general assignment for the benefit of creditors,
suffer or permit the appointment of a receiver for its business or
assets, or shall avail itself of or become subject to any proceeding
under the Federal Bankruptcy Act or any other federal or state statute
relating to insolvency or the protection of rights of creditors;
iii. is unable or unwilling to provide Software support to End-
Customers that have been sold Software by OEM hereunder, other than as a
result of a breach by Kana of its obligations under this Agreement;
iv. fails to maintain Kana Qualification (as defined in the Section
entitled `TRAINING' below) and fails to cure such breach within thirty
(30) days of Kana's notice to OEM of such breach);
v. assigns or purports to assign or otherwise transfer this Agreement
or any of its rights hereunder to any other party without the prior
written approval of Kana or as otherwise permitted in this Agreement; or
vi. OEM fails to pay to Kana the Fees in the amounts and schedule set
forth in Exhibit A hereto and fails to cure such breach within thirty
(30) days of Kana's notice to OEM of such breach).
vii.
Kana Communications, Inc.
Software Support Agreement
Page 6
<PAGE>
c. Upon the occurrence of an event of default as described in Section 11(b)
by OEM, Kana may immediately terminate this Agreement by providing
written notice of such termination to OEM.
d. During the first two years of this Agreement, in the event Kana seeks to
assign this Agreement to any of the following competitors of OEM -
Genesys/Alcatel, Cisco/Geotel, Lucent, Aspect, Interactive Intelligence,
Apropos, eShare, EIS, Quintus, Kana shall notify OEM of Kana's intent to
assign, including the identity of the proposed assignee. OEM shall then
have a period of ten (10) business days to terminate this Agreement,
such termination to be effective immediately. Upon such termination, OEM
shall have no obligation with respect to any Minimum Commitments
following the termination date.
e. Upon termination or expiration of this Agreement by either party
pursuant to the provisions set forth herein, the following provisions
shall apply:
i. After termination, Kana shall not be required to accept purchase
orders or make any shipments to OEM, and Kana reserves the right to
require advance payment, or other agreed arrangements, for any
shipments made or service performed.
ii. Following termination or expiration of this Agreement, Kana shall
continue to honor its maintenance and warranty obligations as
provided for in this Agreement with regard only to Software sold by
OEM prior to the date of termination or expiration. Kana will
continue to provide maintenance service to any end user that OEM
has registered with Kana until such obligation ends. Thereafter,
Kana agrees to offer support to OEM at then current Kana rates and
terms for a period of two (2) years. Thereafter, OEM shall, at its
sole discretion, direct End-Customers to purchase support services
directly from Kana. To the extent End-Customer enters into a
maintenance and support agreement with Kana, Kana shall provide
maintenance support to such End-Customer.
iii. The expiration and/or termination of this Agreement shall not alter
the rights, duties or obligations of the parties under this
Agreement including without limitation payment obligations, which
arise prior to the date of expiration or termination. In the case
of the Minimum Guaranteed amounts set forth on Exhibit A, the
entire amount shall be due in full within ten (10) business days of
termination.
iv. Following termination, OEM shall be entitled to deploy any copies
of prepaid but undeployed Software, including any related
documentation and supporting materials. To the extent OEM desires
to take additional training or obtain maintenance and support for
such Software deployments after termination, such fees will be at
the then current list prices for such services.
12. TRADEMARKS, PRODUCT MARKINGS AND GOODWILL
a. OEM acknowledges that the marks "Kana", "Kana CMS", Kana logo, and all
other trademarks, trade names or service marks that Kana may designate
from time to time (the "Marks"), and all registrations thereof, are good
and valid and are solely and exclusively owned by Kana. OEM agrees that
it will use and display the Marks only in the form or for the purposes
authorized by Kana in this Agreement. OEM further acknowledges that this
Agreement does not grant OEM any right, title or interest in the Marks
or goodwill associated with Kana and the Software as represented and
symbolized by the Marks.
b. OEM shall not take any action, or fail to take any action, during or
after the term of this Agreement, which could adversely affect the
validity or enforceability of Kana's Marks.
Kana Communications, Inc.
Software Support Agreement
Page 7
<PAGE>
c. In order to preserve and protect the goodwill, reputation and image of
Kana and the Software, OEM shall:
i. Not engage in any deceptive, misleading or unethical practices,
which are or might be detrimental to Kana or the Software;
ii. Refrain from making any false, misleading or deceptive
representations with regard to Kana or the Software; and
iii. Refrain from making any representations, warranties or guarantees
to Customers or prospective Customers or other third parties with
respect to the specifications, features or capabilities of the
Software that are inconsistent with the literature or other
information provided or prepared by Kana.
d. Immediately following the expiration or termination of this Agreement
for any reason, OEM shall discontinue use of the aforementioned Marks
and return, or dispose of, as Kana may direct, any signs or other
promotional displays directly or indirectly referencing or relating to
Kana and/or any of the Software or Marks. If, after expiration or
termination of this Agreement, OEM makes any further use of the Marks,
except as necessary to complete any ongoing obligations under this
Agreement, such use shall be deemed a breach of this Agreement for which
no adequate remedy at law exists. In such case, Kana may be entitled to
seek immediate injunctive relief from an appropriate court. This
provision shall not apply to any Bundled Products or related
documentation delivered to OEM as a result of a prepaid license fees, as
a result of unfulfilled orders, or the provision of support as described
in Section 11(e)(ii) or 11(e)(iv).
13. TRAINING.
a. An appropriate number of personnel of OEM engaged in the sales, support,
development or maintenance of the Software shall obtain the appropriate
Kana Qualification. Kana Qualification is obtained by completing Kana's
training requirements as currently defined by Kana in Exhibit C, and as
otherwise generally required of partners under the Kana partner
programs.
b. Kana shall make available its standard training program to the number of
employees of OEM set forth in Exhibit C hereto. OEM may purchase
training for additional employees at the rate set forth in Exhibit C.
All out of pocket costs, including without limitation costs associated
with travel to the training location, are at the expense of OEM.
14. INDEMNIFICATION
a. Kana agrees, at its own expense, to defend or, at its option, to settle,
any claim or action brought against OEM or any End-Customer to the
extent it is based on a claim that the Software as used within the scope
of this Agreement infringes or violates any copyright, trademark, trade
secret or U.S. patent of a third party, and will indemnify and hold OEM
and such End-Customer harmless from and against any damages, costs and
fees reasonably incurred (including reasonable attorneys' fees) by or
which are assessed against OEM or such End-Customer that are directly
attributable to such claim or action. OEM agrees that Kana shall be
released from the foregoing obligation unless OEM or such End-Customer
provides Kana with: (i) prompt written notification of the claim or
action once it becomes aware; (ii) sole control and authority over the
defense or settlement thereof; and (iii) at cost to Kana, all reasonably
available information, assistance and authority to settle and/or defend
any such claim or action, except that Kana may not enter into any
settlement of any claim hereunder which settlement shall subject OEM and
such End-Customer to any liability
Kana Communications, Inc.
Software Support Agreement
Page 8
<PAGE>
or obligations unless OEM approves such settlement agreement in writing,
which approval shall not be unreasonably withheld. Notwithstanding the
foregoing, Kana shall have no liability hereunder based on (i) use of a
superseded or modified release of the Software, except for such
alteration(s) or modification(s) which have been made by Kana or under
Kana's direction, if such infringement would have been avoided by the use
of a current unaltered release of the Software that Kana provided to OEM or
such End-Customer prior to OEM or End-Customer's receipt of such threat or
claim, or (ii) the combination, operation, or use of any Software furnished
under this Agreement with programs not furnished by or approved by Kana if
such infringement would have been avoided by the use of the Software
without such programs. In the event that an injunction is obtained against
OEM or such End-Customer prohibiting use of the Software by reason of
Kana's infringement of a patent, copyright or other intellectual property
right of any third party, Kana will, at its option and expense, either (a)
secure for OEM and such End-Customer the right to continue using the
Software; (b) replace or modify the Software to make it non-infringing, but
functionally equivalent; or, if neither of the foregoing are available on
commercially reasonable terms as determined solely by Kana in its
reasonable opinion (c) direct OEM and such End-Customer to discontinue
using the Software, and provide OEM or such End-Customer with a refund of
all monies paid by OEM or such End-Customer within the forty-eight (48)
months prior to such injunction.
b. OEM agrees, at its own expense, to defend or, at its option, to settle, any
claim or action brought against Kana to the extent it is based on a claim
that the Bundled Product infringes or violates any copyright, trademark,
trade secret or U.S. patent of a third party, and will indemnify and hold
Kana harmless from and against any damages, costs and fees reasonably
incurred (including reasonable attorneys' fees) by or which are assessed
against Kana that are directly attributable to such claim or action . Kana
agrees that OEM shall be released from the foregoing obligation unless Kana
provides OEM with: (i) prompt written notification of the claim or action;
(ii) sole control and authority over the defense or settlement thereof; and
(iii) at no cost to OEM, all reasonably available information, assistance
and authority to settle and/or defend any such claim or action, except that
OEM may not enter into any settlement of any claim hereunder which
settlement shall subject Kana to any liability or obligations unless Kana
approves such settlement agreement in writing, which approval shall not be
unreasonably withheld. Notwithstanding the foregoing, OEM shall have no
obligation under this Section (b) to the extent such infringement would
have arisen from use of the Software alone or in combination with other
items provided or approved by Kana, other than items supplied by OEM. OEM's
obligation under this Section (b) shall not restrict or limit Kana's
obligations under Section 14(a).
15. CONFIDENTIALITY AND NON-DISCLOSURE
a. Each party (the "Receiving Party") acknowledges that, during the term of
this Agreement, it may receive from or on behalf of the other party (the
"Disclosing Party"), information relating to the Disclosing Party
("Confidential Information"). Such Confidential Information shall belong
solely to the Disclosing Party and includes, but is not limited to, this
Agreement, trade secrets, know-how, inventions (whether or not patentable),
techniques, processes, programs, ideas, algorithms, schematics, testing
procedures, software design and architecture, computer code, internal
documentation, design and function specifications, product requirements,
problem reports, analysis and performance information, software documents,
and other technical, business, product, marketing and financial
information, plans and data, and any documents derived therefrom. The
Software and all Ensemble software shall be deemed Confidential
Information.
b. Notwithstanding the foregoing, Confidential Information shall not
include information that:
<PAGE>
i. is or subsequently becomes public without breach of this Agreement by
the Receiving Party, its officers, directors, employees or agents;
ii. was previously in the Receiving Party's possession (in written or
other recorded form) with no obligation to maintain confidentiality;
iii. was received from a third party not under any obligation of
confidentiality to the Disclosing Party; or
iv. was developed by the Receiving Party's employees, agents, contractors,
and/or representatives independently of, and without reference to, any
Confidential Information.
c. The Receiving Party acknowledges that all Confidential Information is the
exclusive property and trade secrets of the Disclosing Party or its owner
as appropriate. The Receiving Party agrees not to use or disclose any
Confidential Information in any manner adverse to the best interests of the
Disclosing Party or contrary to the Disclosing Party's express
instructions, and to discontinue all use of Confidential Information
immediately upon the expiration or termination of this Agreement for any
reason. The Receiving Party further agrees that its right to use
Confidential Information is limited solely to the use thereof in connection
with this Agreement. OEM shall also advise all of its employees, officers,
directors, agents and sales representatives of the obligations herein and
shall ensure such parties compliance with these requirements.
d. The Receiving Party shall provide the Disclosing Party with written notice
within ten (10) days of any known loss, theft, piracy or unintended or
unauthorized disclosure of any Confidential Information.
e. The foregoing confidentiality requirements shall survive the termination or
expiration of this Agreement, and shall continue for a period of seven (7)
years thereafter, provided, however Confidential Information considered a
trade secret shall be maintained in a confidential manner for as long as
such Confidential Information is considered a trade secret. The Receiving
Party agrees and acknowledges that a breach of this confidentiality and
non-disclosure obligation will likely result in irreparable harm to the
Disclosing Party for which no adequate remedy at law exists. In such case,
the Receiving Party agrees that the Disclosing Party shall be entitled to
seek immediate injunctive relief from an appropriate court.
16. LIMITED WARRANTIES
a. Limited Software Warranty. Kana warrants that, for a period of one-
-------------------------
hundred eighty (180) days from the date OEM orders the Software from Kana,
(a) the Software will in all material respects operate in accordance with
the accompanying printed materials, and (b) the medium upon which the
Software is provided by Kana to OEM shall be free from defects in material
and workmanship under normal use. This warranty covers only problems
reported to Kana during the warranty period.
b. Kana represents and warrants that all services performed hereunder shall be
performed in a professional and workmanlike manner.
c. Year 2000 Warranty: Kana represents and warrants until January 31, 2001
------------------
that the Software is designed to be used prior to, during, and after the
year 2000 A.D. and that it will operate during such time periods without
error relating to date data which represent or reference different
centuries or more than one century; that no value for current date will
cause interruptions in normal operation; that all manipulations of
calendar-related data (dates, durations, days of week, etc.) will produce
correct results for all valid date values; that date
Page 10
<PAGE>
elements in interfaces and data storage permit specifying century to
eliminate date ambiguity; and that for any date element represented without
century, the correct century is unambiguous for all manipulations involving
that element. Notwithstanding the foregoing, OEM acknowledges and agrees
that (a) the Software does not identify or remedy Year 2000 problems in
third party operating systems or other applications not supplied by Kana
and (ii) the Software operates with the date information it receives; thus,
if incorrect date information is provided by the user, the operating system
or from any other external product or other source, this information will
be used by the Software as received. The foregoing Year 2000 Compliance
Warranty shall not apply to Year 2000 problems caused by such external
sources. Notwithstanding any other provision herein, in any action to
recover damages resulting directly or indirectly from a computer date
failure, including any action based on an alleged computer date failure,
the damages that may be recovered by OEM shall be limited to the extent
those damages are incurred as a proximate and direct result of Kana's
noncompliance or such Software's failure.
d. Warranty Tracking. It is OEM's obligation to maintain sufficient
-----------------
documentation and records to track Software warranties for its Customers.
Kana assumes no responsibility to monitor or inform OEM of the tracking or
expiration of applicable warranties for Software sold or licensed by OEM;
such responsibility is solely that of OEM.
e. Exclusions From Warranties. KANA DOES NOT WARRANT THAT THE OPERATION OF
--------------------------
ANY PRODUCT WILL BE UNINTERRUPTED OR ERROR-FREE. THE LIMITED WARRANTIES
PROVIDED HEREIN ARE NON-TRANSFERABLE, EXCEPT TO END-CUSTOMERS THAT HAVE
PROPERLY LICENSED THE SOFTWARE AND ONLY FOR THE WARRANTY PERIOD AS MEASURED
FROM THE ORDER DATE BY OEM FROM KANA, CONTINGENT UPON THE PROPER
INSTALLATION AND USE OF THE RESPECTIVE PRODUCT IN ACCORDANCE WITH KANA'S
SPECIFICATIONS, AND SUBJECT TO ALL LIMITATIONS AND RESTRICTIONS SET FORTH
HEREIN. THESE WARRANTIES DO NOT APPLY TO ANY PRODUCT THAT (i) IS IN AN
OPERATING ENVIRONMENT THAT DOES NOT COMPLY WITH KANA'S SPECIFICATIONS; (ii)
HAS BEEN REPAIRED OR MODIFIED BY PERSONS OTHER THAN KANA OR ITS AUTHORIZED
TECHNICIANS (WHICH SHALL INCLUDE DAVOX EMPLOYEES WHO HAVE OBTAINED KANA
QUALIFICATIONS HEREUNDER); OR (iii) HAS BEEN DAMAGED OR RENDERED
UNSERVICEABLE BY IMPROPER MAINTENANCE, ABUSE OR NEGLIGENCE ON THE PART OF
PARTIES, OTHER THAN KANA.
f. Limited Remedies Under Warranties. Subject to the restrictions and
---------------------------------
limitations contained herein, and within the applicable warranty period,
Kana shall, free of charge, at its sole option, promptly repair or replace
defective or nonconforming Software or components thereof; provided
however, that Kana is notified in writing or by electronic mail of the
defect or nonconformity within the applicable warranty period. Kana's
response levels under its warranty obligations will be the same as Kana's
support obligations as described in Exhibit B. All replaced Software or
components thereof shall become Kana's property. THIS LIMITED REMEDY
CONSTITUTES OEM'S SOLE AND EXCLUSIVE REMEDY UNDER THE LIMITED WARRANTIES.
g. Disclaimer of Other Warranties. THE EXPRESS WARRANTIES SET FORTH
------------------------------
HEREIN ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION THE IMPLIED WARRANTIES OF TITLE, MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, WHICH ARE HEREBY SPECIFICALLY DISCLAIMED.
Page 11
<PAGE>
17. LIMITATIONS OF LIABILITY\REMEDIES
a. OEM AND CUSTOMER'S SOLE REMEDIES FOR KANA'S NONPERFORMANCE OR OTHER
LIABILITY OF ANY KIND ARISING HEREUNDER, WHETHER IN CONTRACT OR IN TORT,
ARE LIMITED TO THE EXPRESS REMEDIES PROVIDED HEREIN. EXCEPT AS PROVIDED
UNDER SECTION 14 AND OTHER THAN FOR BREACHES OF SECTION 15, IN NO EVENT
WILL EITHER PARTY'S LIABILITY TO THE OTHER OR TO ANY END-CUSTOMER FOR
DAMAGES OF ANY NATURE, WHETHER ARISING UNDER A THEORY OF CONTRACT, TORT,
STRICT LIABILITY OR OTHERWISE, EXCEED IN THE AGGREGATE THE TOTAL AMOUNTS
PAID BY OEM HEREUNDER.
b. EXCEPT AS PROVIDED FOR BREACHES OF SECTION 15, NEITHER PARTY WILL BE LIABLE
FOR ANY SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR FOR ANY
LOSS OF PROFIT, REVENUE, SOFTWARE OR DATA, COMPUTER VIRUSES AND TOLL FRAUD
EVEN IF THE OTHER PARTY SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
POTENTIAL LOSS OR DAMAGE.
c. BOTH PARTIES ACKNOWLEDGE THAT THE PRICES CHARGED TO HEREIN CONTEMPLATE THE
FOREGOING ALLOCATION OF RISKS. EACH PARTY IS SOLELY RESPONSIBLE FOR THE
PROTECTION AND BACK-UP OF ALL ITS -SUPPLIED DATA AND SOFTWARE USED IN
CONJUNCTION WITH THIS AGREEMENT.
18. SOURCE CODE ESCROW. During the term of this Agreement, Kana shall add OEM
as a beneficiary to Kana's source code escrow agreement. Kana grants to OEM a
limited, nonexclusive, nontransferable, nonsublicensable internal-use-only
license to the source materials for the Software, to allow OEM to maintain,
correct errors, support its use of the Software and continue exercising the
license under the terms of this Agreement (but not to otherwise modify or create
derivative works of the Software) upon the occurrence of the following release
conditions
a. Kana materially breaches its Maintenance and Support obligations set forth
in Exhibit B or its warranty obligation to OEM under Section 16(e); and
i. OEM provides to Kana written notice of the material breach and of
OEM's intent to exercise this Source Code Escrow right; and
ii. for a period of at ninety (90) days after Kana's receipt of the
foregoing written notice, Kana is unwilling or simply refuses to
provide support services in material breach of Kana's maintenance and
support obligations set forth on Exhibit B; and
iii. provided that this subpart (a) shall not apply in the case where Kana
is using its best commercially reasonable efforts to resolve the
material breach; or
iv. Kana makes an assignment for the benefit of creditors, seeks
protection under any bankruptcy, receivership or comparable
proceeding, or if any such proceeding is instituted against Kana (and
not dismissed within ninety (90) days).
19. MISCELLANEOUS PROVISIONS
a. Governing Law and Forum Selection. This Agreement shall be construed
---------------------------------
and enforced in accordance with the laws of the State of Illinois United
States of America and all disputes hereunder shall be resolved in the
courts governing, Chicago, Illinois and the parties consent
<PAGE>
to jurisdiction therein. The United Nations Convention on Contracts for the
International Sale of Goods shall not apply to this Agreement.
b. Injunctive Relief. The parties acknowledge and agree that due to the
-----------------
unique nature of the Software, the Bundled Product and the parties'
Confidential and Proprietary Information, there can be no adequate remedy
at law for any breach of the confidentiality obligations hereunder and
OEM's obligations with respect to the Software, and that any such breach
may allow third parties to unfairly compete with the parties hereto
resulting in irreparable harm and, therefore, that upon any such breach or
threat thereof, the non-breaching party shall be entitled to seek an
injunction and any other appropriate equitable relief, in addition to
whatever remedies it may have at law.
c. Non-Solicitation. During the term of this Agreement, neither party shall
----------------
directly solicit to hire any employee of the other except with the prior
written consent of the other; provided, however, that neither party shall
be prevented from (i) soliciting to hire employees through classified
advertising or (ii) hiring any employee of the other party so long as such
hiring was not initially solicited, directly, by the hiring party. General
advertisements shall not be deemed "solicitation" hereunder.
d. No Assignment. The rights and obligations of the parties hereunder
-------------
shall neither be assigned, subcontracted, delegated or otherwise
transferred without the prior written consent of Kana. Otherwise, this
Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. An assignment
as permitted herein shall not diminish any rights or duties that either
party may have prior to the effective date of assignment. Notwithstanding
the foregoing, OEM may assign this Agreement to any successor, whether
direct or indirect, who is not, in Kana's reasonable opinion, a competitor
of Kana, by way of purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of OEM, provided that OEM
provides Kana with reasonable prior written notice.
e. Force Majeure. Neither party shall be considered in default due to any
-------------
delay or failure in performance hereunder based on fire, strike, embargo,
requirement of governmental, civil or military authority, act of God or the
public enemy, failure of suppliers, or other causes beyond the reasonable
control of Kana or OEM. When the delaying cause ceases, performance will
resume, subject to an equitable schedule adjustment if necessary. If the
delaying cause continues for more than sixty (60) days, the party injured
by the other's inability to perform may by written notice cancel the
affected purchase order or part thereof as to the Software not already
delivered or service not performed.
f. Compliance With Laws. Each party shall comply with all federal, state
--------------------
and local laws and regulations which may be applicable, including without
limitation, those applying to employers, the procurement of permits, export
documents, licenses or certificates where needed, and those applying to
packing, labeling and shipping, whether the shipment or services are
interstate, intrastate or outside of the continental United States. Each
party shall bear all costs associated with its compliance with laws,
including but not limited to procurement of permits, licenses or
certificates. OEM agrees that Kana Software will not be shipped into a
restricted country as defined under the United States Export Regulation,
Part 740.3 (d) and 772, as amended. Each party (the "Indemnifying Party")
agrees to indemnify, hold harmless and defend the other party from and for
any loss, damage, liability, claim or demand, fines or penalties, including
costs, expenses and reasonable attorneys' fees, claimed or assessed against
such other party or that may be sustained by such other party by reason of
the Indemnifying Party's failure to comply with this Section.
<PAGE>
g. Governing Language. The English language shall govern and control any
------------------
translations of this Agreement into any other language.
h. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument; however, this
Agreement shall be of no force or effect until executed by both parties.
i. Notices. All notices, requests, demands and other communications called
-------
for or contemplated hereunder shall be in writing and shall be deemed to
have been duly given when (i) personally delivered; (ii) two (2) days after
mailing by certified or registered first-class mail, prepaid, return
receipt requested; (iii) one (1) day after deposit with any nationally
recognized overnight courier, with written verification of receipt; (iv)
facsimile, with written verification of receipt and follow-up by mail, and
addressed to the party as follows (or at such other address as the parties
may designate by written notice):
Kana Communications Inc. Davox Corporation
87 Encina Ave. 6 Technology Park Drive
Palo Alto, CA 94301 Westford, MA 01886
Attention: Corporate Counsel Attention: General Counsel
Facsimile: (650) 566-2401 Facsimile: (978) 952-0795
j. No Implied Waivers. The failure of either party at any time to require
------------------
performance by the other party of any provision hereof shall not affect in
any way the full rights to require such performance at any time thereafter
unless such waiver is in writing. The waiver by either party of a breach of
any provision hereof shall not be taken, construed, or held to be a waiver
of the provision itself or a waiver of any breach thereafter or any other
provision hereof unless specifically stated in writing.
k. Captions and Section Headings. Captions and section headings used herein
-----------------------------
are for convenience only, are not a party of this Agreement, and shall not
be used in construing it.
l. Severability. A judicial determination that any provision of this
------------
Agreement is invalid, in whole or in part, shall not affect the
enforceability of those provisions found not to be invalid.
m. Authority. The persons and parties executing this Agreement warrant that
---------
they have the requisite and full authority to do so in the designated
capacity.
n. No Conflicting Agreements. To the best of either parties knowledge, the
-------------------------
parties warrant and represent that they are not bound by any other
agreements, restrictions or obligations, contractual or otherwise, nor will
either party enter into or assume any contract, restriction or obligation,
which would directly breach the provisions of this Agreement.
o. Relationship of the Parties. Kana and OEM are acting solely as licensor
---------------------------
and OEM, respectively. All sublicenses of Software by OEM shall be for
OEM's own account as a principal and not as an agent of Kana. OEM shall act
in all respects as an independent contractor and not as a legal
representative or agent of Kana. This Agreement shall not be construed to
create a relationship of partners, joint venturers, brokers, employees,
agents, master or servant between the parties. Neither party shall have the
right or authority to assume or create any responsibility, expressed or
implied, in the name of the other or to bind the other in any manner or
thing whatsoever.
Page 14
<PAGE>
p. Survival. All obligations incurred under this Agreement which by their
--------
nature would survive, including without limitation the obligations
contained in Sections 1, 4, 10, 11, 12, 15, 17 and 19 herein, shall be
deemed to survive the cancellation, termination or expiration of this
Agreement.
q. Entire Agreement. his Agreement constitutes the entire agreement between
----------------
the parties hereto pertaining to the subject matter hereof, superseding any
and all previous proposals, representations or statement, oral or written.
Any previous agreement between the parties pertaining to the subject matter
of this Agreement are hereby expressly canceled and terminated. The terms
and conditions of each party's purchase orders, invoices,
acknowledgments/confirmations or similar documentation shall not apply to
any order hereunder, and any such terms and conditions thereon shall be
deemed to be objected to without the need of further notice or objection.
Other than as expressly permitted herein, any modifications of this
Agreement must be in writing and signed by authorized representatives of
both parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the latter
date of execution.
KANA COMMUNICATIONS, INC. DAVOX CORPORATION
By: /s/ Michael McCloskey By: /s/ Alphonse M. Lucchese
----------------------------- -------------------------------
Name: Michael McCloskey Name: Alphonse M. Lucchese
--------------------------- -----------------------------
(print or type) (print or type)
Title: CEO Title: Chairman / CEO
--------------------------- ----------------------------
Date: Nov. 16, 1999 Date: Nov. 16, 1999
--------------------------- ----------------------------
Page 15
<PAGE>
Exhibit A
Software Description, OEM Fees and Minimum Guaranteed
1. Software Description: Kana's U.S. and Canada Price List is attached as
--------------------
Exhibit A-1. Kana shall promptly provide to OEM Kana's international List
Price.
2. Discount: During the initial five -year term of this Agreement, Kana grants
--------
OEM the following pricing:
- --------------------------------------------------------------------------------
Software [CONFIDENTIAL TREATMENT REQUESTED]/*/ off the
then current applicable List Price for the
Software.
- --------------------------------------------------------------------------------
Third Level Support [CONFIDENTIAL TREATMENT REQUESTED]/*/ of the
then current applicable List Price for the
Software.
- --------------------------------------------------------------------------------
Professional Services $[CONFIDENTIAL TREATMENT REQUESTED]/*/ per
day.
- --------------------------------------------------------------------------------
Training [CONFIDENTIAL TREATMENT REQUESTED]/*/ off the
then current List Price for Training.
- --------------------------------------------------------------------------------
After the initial five-year term, the parties shall mutually agree to an
appropriate discount schedule, else the Agreement shall terminate. If under
this present agreement the value of the maintenance fees paid to Kana by Davox
for support exceeds [CONFIDENTIAL TREATMENT REQUESTED]/*/ annually, Davox
reserves the right to renegotiate the support fees portion of the agreement down
to better represent the volume of business.
3. Minimum Guaranteed: During the first two years of this Agreement, OEM
------------------
agrees to order from, and pay for, at least $[CONFIDENTIAL TREATMENT
REQUESTED]/*/ worth of the Software (net of discounts). This minimum commitment
shall be met through non-refundable cumulative Software orders as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Period # Cumulative Commitment Order by no later than the
(net of discounts) following Due Dates:
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. $[CONFIDENTIAL TREATMENT REQUESTED]/*/ $[CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------
2. $[CONFIDENTIAL TREATMENT REQUESTED]/*/ $[CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------
3. $[CONFIDENTIAL TREATMENT REQUESTED]/*/ $[CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------
4. $[CONFIDENTIAL TREATMENT REQUESTED]/*/ $[CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------
5. $[CONFIDENTIAL TREATMENT REQUESTED]/*/ $[CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------
6. $[CONFIDENTIAL TREATMENT REQUESTED]/*/ $[CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------
7. $[CONFIDENTIAL TREATMENT REQUESTED]/*/ $[CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------
8 $[CONFIDENTIAL TREATMENT REQUESTED]/*/ $[CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------
Total: $[CONFIDENTIAL TREATMENT REQUESTED]/*/
- --------------------------------------------------------------------------------------------------------
</TABLE>
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Page 16
<PAGE>
To the extent OEM has not ordered the Minimum Commitment amount as of the
respective Due Date, then effective on such Due Date, OEM shall be deemed to
have ordered on a non-refundable basis Software in an amount equal to the
difference between the amount actually ordered by OEM and the Minimum Commitment
as of that date (the "Minimum Difference Order"). OEM shall be deemed to have
ordered such Software reflected in the Minimum Difference Order, and may
immediately or any time thereafter (even after termination of this Agreement),
draw-down such Software from the Master Copy. In order to draw-down such
Software, OEM shall request from Kana a license key to use the Software. The
draw-down for each such key shall be calculated based on the appropriate price
for such Software as determined by this Schedule A. Kana may immediately after
the Due Date invoice OEM for such Minimum Difference Order, regardless of
whether OEM actually draws-down such Software.
4. Upfront Training. Kana agrees to offer a one-time upfront sales, support
-----------------
and technical training course for up to a total of 20 OEM personnel (the
"Upfront Training"). OEM shall be required to take the Upfront Training in
groupings as reasonably determined by Kana, with the current expectation that
one (1) technical training session will be held at the principal offices of Kana
and one (1) sales/support training session will be held at the principal offices
of OEM. Kana shall waive the course fees for the Upfront Training, provided
that OEM pays all out-of-pocket expenses of Kana.
Page 17
<PAGE>
EXHIBIT A-1
<TABLE>
<S> <C>
Kana Response - Server Pricing
Kana Response - Standard........................... US$[CONFIDENTIAL TREATMENT REQUESTED]/*/ per server
. Kana Mail
. Kana Control
. Kana Reports
. 5 seats/1/
Additional Products:
Kana Direct........................................ $[CONFIDENTIAL TREATMENT REQUESTED]/*/ per server
Kana Link.......................................... $[CONFIDENTIAL TREATMENT REQUESTED]/*/ per server
Kana Forms......................................... $[CONFIDENTIAL TREATMENT REQUESTED]/*/ per server
Kana Notify (introductory price)................... $[CONFIDENTIAL TREATMENT REQUESTED]/*/ per server
Kana Classify (introductory price)................. $[CONFIDENTIAL TREATMENT REQUESTED]/*/ per server
Total seat licenses (Price per seat)
. Seats 0 - 5................. included in initial license
. Seats 6 - 10................................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Seats 11 - 20.................................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Seats 21 - 50.................................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Seats 51 and above............................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
----------------------------------------------------------------
Kana Response - Enterprise Bundle................... $[CONFIDENTIAL TREATMENT REQUESTED]/*/ per server
. Kana Mail
. Kana Control
. Kana Reports
. Kana Direct
. Kana Link
. Kana Notify
. 20 seats/1/
Total seat licenses (Price per seat)
. Seats 0 - 20......................... in initial license
. Seats 21 - 50................................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Seats 51 and above.............................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
a. Kana Connect - Server Pricing
Kana Connect.................................................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. First 500k active profiles
. Kana Campaign
. Kana Rollout
. Kana Connect Reports
Additional 500k active profiles................................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
</TABLE>
----------------------------------------------------------------
Notes:
. Seats are discounted based on the total number of seats
purchased. For instance, the 10/th/ seat purchased is
$[CONFIDENTIAL TREATMENT REQUESTED]/*/ The 11/th/ seat is
$[CONFIDENTIAL TREATMENT REQUESTED]/*/.
. Prices do not include technical support, professional services,
shipping, or taxes
. All prices are in US dollars
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Page 18
<PAGE>
b. Kana Response - Seat Pricing
Kana Response - Bundled (minimum number of seats: 30)
. Kana Mail, Kana Control, Kana Reports, Kana Direct, Kana Link,
Kana Forms, Kana Notify
<TABLE>
<S> <C>
Total seat licenses (Price per seat)
. Seats 0 - 50.................................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Seats 51 - 100.................................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Seats 101 - 300................................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Seats 301 and above............................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
Kana Response - Unbundled
. Kana Mail, Kana Control, Kana Reports
o Seats 0 - 50............................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 51 - 100........................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 101 - 300.......................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 301 and above...................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Kana Forms
o Seats 0 - 50............................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 51 - 100........................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 101 - 300.......................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 301 and above...................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Kana Direct
o Seats 0 - 50............................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 51 - 100........................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 101 - 300.......................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 301 and above...................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Kana Link
o Seats 0 - 50............................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 51 - 100........................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 101 - 300.......................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 301 and above...................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Kana Classify
o Seats 0 - 50............................. $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 51 - 100........................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 101 - 300.......................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
o Seats 301 and above...................... $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
. Kana Notify
o Separate Instance........................ $ [CONFIDENTIAL TREATMENT REQUESTED]/*/
</TABLE>
c. Kana Connect
See Kana - Connect server pricing.
----------------------------------------------------------------------
Notes:
. All seat license purchases require a minimum of 30 seats
. Seats are discounted based on the total number of seats
purchased
. Prices do not include technical support, professional services,
shipping, or taxes
. All prices are in US dollars
/*/ [CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED
AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED
MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Page 19
<PAGE>
EXHIBIT B
SUPPORT
Level 1 Support
Support provided by DAVOX to it's End Users, either by telephone, modem or on
site, for the purpose of providing "how-to" information, environmental problem
isolation or correction of End User errors
Web based Case Logging and Online Access to Davox's Apriori "knowledge based
solutions tool"
Level 2 Support
Support provided by DAVOX to its End Users, either by telephone, modem or on-
site, for the purpose of diagnosing, product isolation and duplication of
technical problems and providing preventive maintenance in accordance with Davox
service and maintenance guidelines. Support includes installation or
replacement of hardware and installation or reinstallation of software and/or
patches. Support also includes diagnosis of difficulties caused by or related
to Local Area Network or external telecommunications connectivity or devices.
Level 3 Support
Support provided by Davox Technical Support either by telephone or modem, when
DAVOX'S Level 2 Support activities have failed to solve a problem, . Such
support includes advanced diagnostic services. Level 3 Support will provide a
complete resolution, a temporary fix or alternative procedure restoring full
service. When a temporary fix or alternative procedure is provided, a complete
resolution will be supplied as soon as practical thereafter Level 3 Support will
also submit Defects to Kana.
Development/Engineering Support
Support provided by KANA Engineering to KANA Technical Support when Level 3
Support is not successful, and passed on to DAVOX, to provide higher level
diagnostic services and corrective action that may include the development of
patches or other product design or modification changes. Kana will also accept
Defects from Davox Level 3 Support for resolution.
OEM maintains an organization and process to provide support for the Software.
Support under this Agreement shall include (i) diagnosis of problems or
performance deficiencies of the Software and (ii) a resolution of the problem or
performance deficiencies of the Software. OEM will provide telephone software
support 24 hours a day, 365 days per year. OEM will use diligent efforts to
cure, as described below, reported and reproducible errors in the Software. OEM
utilizes the following four (4) severity levels to categorize reported problems:
Severity 1 Critical Business Impact
The impact of the reported deficiency is such that the End-Customer is unable to
either use the Software or reasonably continue work using the Software. OEM
will commence work on resolving the deficiency within one-half hour of
notification.
Page 20
<PAGE>
Severity 2 High Business Impact
Important features of the Software are not working properly and there are no
acceptable, alternative solutions. While other areas of the Software are not
impacted, the reported deficiency has created a significant, negative impact on
the End-Customer's productivity or service level. OEM will commence work on
resolving the deficiency within one (1) hour of notification.
SeveritY 3 Medium Business Impact
Important features of the Software are unavailable, but an alternative solution
is available or non-essential features of the Software are unavailable with no
alternative solution. The End-Customer impact, regardless of product usage, is
minimal loss of operational functionality or implementation resources. OEM will
commence work on resolving the deficiency within one (1) business day of
notification.
Severity 4 Low Business Impact
End-Customer submits a Software information request, software enhancement or
documentation clarification which has no operational impact. The implementation
or use of the Software by the End-Customer is continuing and there is no
negative impact on productivity. OEM will provide an initial response regarding
the request within one (1) business week.
Support For OEM Kana will maintain an organization and process to provide
support for the Software. Support shall include (i) diagnosis of problems or
performance deficiencies of the Software and (ii) a resolution of the problem or
performance deficiencies of the Software. Kana will provide telephone software
support on a business day basis. Business day is defined as 6:00 AM through 6:00
PM pacific time, excluding holidays and weekends with provisions for 24by7
Emergency phone support for Critical and High Business Impact Calls with
Response times of 30 minutes for Critical and 60 minutes for High. OEM shall be
permitted access to remotely accessible tools and/or informational databases if
and when they become available.
MAINTENANCE
During the term of this agreement, Kana will provide the OEM with copyrighted
patches, updates, releases and new versions of the Software along with other
generally available technical material. These maintenance materials including
the Software may not be used to increase the licensed number of versions or
copies of the Software. OEM agrees not to use or transfer the prior version but
to destroy or archive the prior version of the Software. All patches, updates,
release and new versions shall be considered part of the Software and shall be
subject to the license agreement related to the Software. The foregoing and any
other support to be provided by Kana is subject to payment to Kana of the
support fees set forth on Exhibit A. Kana will provide Davox the same level of
service(s) as above during the Warranty period.
DAVOX'S Obligations Before Requesting Service from KANA
In all cases, prior to requesting support from KANA, OEM shall take steps to
ensure that a problem is not caused by the End-Customer's operating system,
telephone system, telephony service provider, Local Area Network or
software/hardware not furnished by KANA. OEM shall also attempt to correct the
problem by utilizing its KANA-trained personnel to perform system diagnosis and
shutdown/restart procedures to diagnose or correct problems in accordance with
KANA service and maintenance guidelines.
Escalation Procedure
Page 21
<PAGE>
KANA shall incorporate a procedure to prioritize each service call received from
OEM and, when appropriate, notify KANA Management and, as agreed, OEM management
to ensure serious system problems are communicated and resolved promptly.
Unless otherwise noted, all hours are clock hours not business hours.
Critical - 30 min. response.
High - 60 min. response.
Medium - 1 business day
Low - 5 business days
Training and Troubleshooting Tools and Goals
OEM should have access to Kana End-User and Maintenance training, including Kana
internal training courses to prepare and enable OEM Support Personnel to deliver
the services as stated in the Description section under Level 1, 2 and 3
Support. OEM will also have access to Kana troubleshooting tools and guides in
support of products resold under this agreement. In connection with training,
Kana will make available to OEM general courseware, syllabus, laboratory
exercises, tests and post training evaluations. forms Pricing for such training
shall be as set forth on Exhibit A. To the extent available, Kana will provide
OEM with WEB access to information and documentation.
Reporting
KANA shall offer DAVOX reports on the number of calls received from DAVOX and
status of defects affecting DAVOX'S sites, including current open and closed
calls and their associated priority. Information shall be provided in a format
and at a frequency mutually agreed to by DAVOX and KANA. KANA may, based upon
report information, recommend that DAVOX'S personnel attend refresher training
classes if the number of calls for assistance has been unusually high.
Exclusions
Kana shall not be responsible for correcting any errors not attributable to
Kana. Kana is not required to provide any Support relating to problems arising
out of:
a. altered, damaged, or modified Software;
b. Software that is not the most current release or the immediately
previous release, or where it is within 6 months following the
release of the current release, the second release prior to the
current release;
c. Software problems caused by OEM or End-Customer's negligence,
abuse, or misapplication, by use of the Software other than as
specified in the Documentation, or by other causes beyond the
control of Kana; or
d. Software installed on any computer hardware or operating system
not supported by Kana.
End-Customers currently on a valid service contract with Davox will be allowed
to upgrade to said supported release free of charge according to the terms and
conditions of this agreement and their agreement with Davox.
Page 22
<PAGE>
General
Each party acknowledges that it has read this Agreement, they understand the
agreement and agree to be bound by its terms. Further, both parties agree that
this is the complete and exclusive statement of the Agreement between the
parties, which supersedes and merges all prior proposals, understandings and all
other agreements, oral and written, between the parties relating to this
Agreement. This Agreement may not be modified or altered except by written
instrument duly executed by both parties. The Software and the use thereof is
subject to the license agreement related to the Software.
Page 23
<PAGE>
Exhibit C
Training
[LOGO OF KANA COMMUNICATION]
Kana Education Course Schedule
As of 11/12/99
Kana Response: Installation, Configuration, and Troubleshooting
- --------------------------------------------------------------------------------
Description: This is the core module for understanding the product from a
technical perspective and having the ability to install, configure, and
troubleshoot the solution.
Schedule:
Cost: $500 a day per student to enroll in one of our scheduled courses OR $4000
a day for up to 10 people at customer's facility.
Length: 2.5 days
Regular Schedule:
November 15-17, 1999
December 6-8, 1999
January, 2000 Dates TBD
February, 2000 Dates TBD
Developing Your Content
- --------------------------------------------------------------------------------
Description: Providing a methodology on content and workflow development is key
to a successful implementation. This course describes the information gathering
process consultants will complete with customers that will provide them with a
highly effective solution for their particular business needs.
Cost: $500 a day per student to enroll in one of our scheduled courses OR $4000
a day for up to 10 people at customer's facility.
Length: 1 day
Page 24
<PAGE>
Schedule:
November 18, 1999
December 9, 1999
January, 2000 Dates TBD
February, 2000 Dates TBD
Kana Connect
________________________________________________________________________________
DESCRIPTION: This is the core module for understanding the product from a
technical perspective and having the ability to install and configure the
Connect solution.
Length: 3 days
Cost: $500 a day per student to enroll in one of our scheduled courses OR $4000
a day for up to 10 people at customer's facility.
Schedule:
November 3-5, 1999
December 13-15, 1999
January, 2000 Dates TBD
February, 2000 Dates TBD
Kana Link: Developing Using Kana's Apis
________________________________________________________________________________
DESCRIPTION: This course provides an introduction to developers and integrators
on how to develop custom application and integration using Kana Link.
Cost: $500 a day per student to enroll in one of our scheduled courses OR $4000
a day for up to 10 people at customer's facility.
Length: 2 days
Schedule:
Beta release in December 1999
Full rollout and monthly delivery beginning in January 2000
Advanced Rule Administration with Kana Response 4.5
________________________________________________________________________________
DESCRIPTION: While basic setup and administration of rules is relatively easy
and is covered in the standard administration training, to understand the full
power and functionality of our rules requires a more advanced training course.
This course provides
Page 25
<PAGE>
an in-depth analysis of our rule engine including, models on creating rules in a
complex organization, the use of regular expressions in a rule, and other
advanced rule functionality.
Cost: $500 a day per student to enroll in one of our scheduled courses OR $4000
a day for up to 10 people at customer's facility.
Length: 1 day
Schedule:
Beta release in January 2000 (following 4.5 release)
Full rollout and monthly delivery beginning in February 2000
Kana Data Model and Custom Reporting
________________________________________________________________________________
DESCRIPTION: Understanding the Kana data model is critical for reports
administrators as well as administrators needing to access data directly from
our database. This course provides a detailed look at our data model, including
foreign key relationships, views, and stored procedures.
Cost: $500 a day per student to enroll in one of our scheduled courses OR $4000
a day for up to 10 people at customer's facility.
Length: 1 day
Schedule:
Beta release in December 1999
Full rollout and monthly delivery beginning in January 2000
Kana Classify Deployment
_______________________________________________________________________________
Cost: $600 a day per student to enroll in one of our scheduled courses OR $4000
a day for up to 10 people at customer's facility.
Length: 2.5 days
Schedule:
Beta release in December 1999
Full rollout and monthly delivery beginning in January 2000
Kana Forms
_______________________________________________________________________________
Page 26
<PAGE>
Description: This course enables the participants to implement the Kana Forms
solution, including linking the Web Form Handler to the client's web site,
creating KXMF documents, and developing custom fields.
Length: 1 day
Cost: $500 a day per student to enroll in one of our scheduled courses OR $4000
a day for up to 10 people at customer's facility.
Schedule:
Beta release in January 2000
Full rollout and monthly delivery beginning in February 2000
Page 27
<PAGE>
________________________________________________________________________________
Functional Implementation: Business Processes
________________________________________________________________________________
Course Description
Providing a methodology on content and workflow development is key to a
successful implementation. This course describes the information gathering
process consultants will complete with customers that will provide them with a
highly effective solution for their particular business needs.
Target Audience
Targeted primarily at the business content developer within an
organization or the Consultant that will work with a customer on
developing their content and workflow. Technical Consultants may also
find this useful in understanding the solution Kana Response provides
within an organization.
Prerequisites
Students should either have participated in the Kana Response:
Installation, Configuration, and Troubleshooting course, or be familiar
with the 3.0 product.
Learning Objectives
At the completion of this course students will be able to:
. Describe the implementation process and supporting documentation
. Design an effective workflow and content model, including categories.
. Add, modify, and configure all content administration modules
Delivery
This training will be instructor led and include hands-on and discussion
based modules.
Course Length
1 day
Modules
Items to cover in the training:
Page 28
<PAGE>
. Implementation methodology
. Designing your content and workflow
. Understanding how environmental factors influence customer server
. Developing the appropriate content based on business needs and performance
expectations
. Administration in Kana Response
. Content Administration
. Processing rule design and deployment
. Getting the most out of Kana Reports
. Customer and End user Training
. Training process
. Training tools available
. Customer Case Studies and Best Practices
Page 29
<PAGE>
_______________________________________________________________________________
Kana Response 4.0 Installation, Configuration, and Administration
_______________________________________________________________________________
Course Description
This is the core module for understanding the product from a technical
perspective and having the ability to install, configure, and troubleshoot
the solution.
Target Audience
Technical and System Administrators that need to implement and support a
Kana Response solution should attend this course.
Prerequisites
Familiarity with database applications, Internet protocols, and client
server technology. An understanding of SQL and NT Server are also
important.
Learning Objectives
At the completion of this course students will be able to:
. Define various Internet standards and how they relate to Kana Response
. Prepare an environment for the install
. Install and configure the Kana Response solution
. Perform server administration and maintenance
. Troubleshoot system problems
Delivery
This course will be delivered hands-on and will include various
presentations and labs. It will include the development of a fully
functioning Kana Response system.
Course Length
2.5 Days
Page 30
<PAGE>
Modules
Items covered in the training:
. Product Introduction and Demo
. Technology Overview and Architecture
. Kana Response 4.0
. Mail protocols
. Web protocols
. Database
. Installation and Infrastructure
. Hardware and software requirements
. Preparing the environment for installation
. Redundancy and failover
. Installation, including multiple instance installs
. Administration.
. System parameters: Services, service watcher, registry keys,
kana.properties, server parameters
. Mail receiver and sender preferences
. Server parameters
. Administering rules
. System logs
. Maintenance
. Testing
. Functional and technical system testing
. Moving into production
. Troubleshooting in a live environment
. Error Logs
. Client and server errors
. Database specific errors
Page 31
<PAGE>
. Kana Reports
. Installation and configuration
. Creating custom reports
Page 32
<PAGE>
EXHIBIT 10.16
-------------
FIRST AMENDMENT TO LEASE
------------------------
THIS FIRST AMENDMENT TO LEASE dated as of December 24, 1999, between
MICHELSON FARM - WESTFORD TECHNOLOGY PARK TRUST VI, having a mailing address c/o
The Gutierrez Company, Burlington Office Park, One Wall Street, Burlington,
Massachusetts 01803, as landlord (the "Landlord"), and DAVOX CORPORATION, having
a mailing address at 6 Technology Park Drive, Westford, Massachusetts 01886, as
tenant (the "Tenant").
WITNESSETH
WHEREAS, Landlord and Tenant have entered into that certain Lease, dated as
of February 28, 1997 (hereinafter, the "Lease") with respect to Building #6, so-
called (as more particularly defined in the Lease as the "Premises"), located in
the Michelson Farm-Westford Technology Park, Westford, Massachusetts (as in the
Lease more particularly described, the "Office Park");
WHEREAS, the Term of the Lease will expire on September 30, 2000, subject
to Tenant's option to extend set forth in Section 3.2 of the Lease;
WHEREAS, Landlord and Tenant have agreed to amend the Lease to extend the
initial Term Expiration Date to eight (8) years following the Term Commencement
Date for the Additional Premises (as hereinafter defined), or approximately
November 15, 2000;
WHEREAS, Landlord desires to build and lease and Tenant desires to lease
and occupy an approximately 25,000 square foot additional two-story building
expansion (the "Additional Premises");
WHEREAS, Tenant desires to renovate the Original Premises (as hereinafter
defined) and to make tenant improvements to the Additional Premises and Landlord
desires to complete such renovations and build such tenant improvements; and
WHEREAS, Landlord and Tenant have agreed to make certain additional
amendments to the Lease to set forth the additional provisions with respect to
the Additional Premises.
NOW, THEREFORE, Landlord and Tenant, in consideration of the Premises, the
covenants expressed herein and in the Lease, and other good and valuable
consideration, the receipt and the sufficiency of which are hereby acknowledged,
hereby agree that the Lease shall be amended as follows:
1. Article I, Section 1.1 of the Lease is hereby amended as follows:
By deleting Section 1.1 in its entirety and by replacing the same with
Section 1.1 attached hereto as Schedule "A" and made a part hereof.
<PAGE>
2. Article 1, Section 1.2 of the Lease is hereby amended as follows:
By adding after the last line thereof the following:
"Exhibit A-1 Schedule of Plans Showing Additional Premises and
Outline
Specifications for Additional Premises
Exhibit E-1 List of Liens, Restrictions and Encumbrances
Exhibit F Form of Work Change Order
Exhibit G Definition of Cost
Exhibit H Certificate of Substantial Completion
Exhibit I Certificate of Final Completion
Exhibit J List of Overhead and General Conditions"
3. Article III, Section 3.2 of the Lease is hereby amended by (i)
deleting the words "three (3) years" in the first and second line thereof and by
replacing the same with the following words "five (5) years", (ii) deleting the
date "30th day of September, 1999" in the third line thereof and by replacing
the same with the following words "such date which is twelve (12) months prior
to the Term Expiration Date", and (iii) adding at the end thereof, the following
sentence: "Tenant's right to extend the Term hereunder shall be conditioned upon
Tenant not being in default of this Lease pursuant to Article XIX hereof at the
time of exercise hereunder and at the time of commencement of the Extended
Term."
4. Article VII of the Lease is hereby amended by (i) deleting the words
"Exhibit E" in subparagraph (c), lines 2 and 3 thereof, and by replacing the
same with the words "Exhibit E-l", and by (ii) adding the following after the
last line in subparagraph (e) thereof-"Notwithstanding anything in this (e) to
the contrary, Landlord's covenants herein shall not apply to the Additional
Premises until such time as the Term Commencement Date for the Additional
Premises shall have occurred."
5. Article IX of the Lease is hereby amended by deleting such Article in
its entirety and by replacing the same with the following:
<PAGE>
"ARTICLE IX
Construction
9. Initial Construction of Additional Premises and Renovation of Original
----------------------------------------------------------------------
Premises
--------
A. Base Building Work
------------------
Landlord will construct the base building for the Additional Premises and
related site improvements (including the design and construction of the
parkingdeck) in accordance with the preliminary construction drawings/conceptual
plans, as further developed by Landlord, and the outline specifications dated
December 22, 1997, revised August 24, 1999, October 25, 1999 and December 16,
1999 (collectively, the "Landlord's Plans"). A schedule of Landlord's Plans is
attached hereto as Exhibit A-1 (all of such work set forth in the Landlord's
Plans shall hereinafter be collectively referred to as the "Base Building
Work").
Any changes, alterations or additions to the Base Building Work as
requested by Tenant may result in additional cost to Tenant, however, such
additional cost shall be supported by written documentation provided to Tenant,
as hereinafter provided.
B. Tenant Improvements to Additional Premises and Tenant Improvements to
---------------------------------------------------------------------
Original Premises
-----------------
Tenant further acknowledges that Landlord shall construct additional tenant
improvements over and above the Base Building Work (the "Expansion Tenant
Improvements") in the Additional Premises, and additional tenant improvements to
the Original Premises (the "Existing Tenant Improvements") as more particularly
set forth in Section 9 (C) below, in accordance with a set of specifications to
be prepared by Tenant and a complete set of construction drawings for the
Expansion Tenant Improvements and the Existing Tenant Improvements (collectively
hereinafter referred to at times as the "Building Upgrades") to be prepared by
Tenant, as hereinafter provided, subject to final approval by Landlord and
Tenant (collectively, the "Tenant's Plans"). Landlord and Tenant hereby
acknowledge and agree that Tenant shall select an architect and/or an engineer
approved by Landlord in advance, which such approval shall not be unreasonably
withheld or delayed (collectively, "Tenant's Architect") for preparation of
Tenant's Plans, and the costs of services of such Tenant's Architect shall be
borne solely by Tenant, Landlord hereby agreeing, however, that it shall, in
connection therewith, provide in-house space planning and design services to
Tenant at no cost to Tenant. Landlord and Tenant hereby further agree that
Tenant shall be solely responsible for coordinating with Tenant's Architect for
the timely preparation of Tenant's Plans in accordance with the terms and
provisions of this Lease. Tenant shall have until May 15, 2000 to deliver to
Landlord the Tenant's Plans. Landlord and Tenant shall use reasonable efforts
to reach agreement on the Tenant's Plans by May 31, 2000. In reaching such
agreement, Landlord and Tenant shall approve portions of the Tenant's Plans that
are in acceptable form and shall note their respective objections to the
portions that are unacceptable to each of them. If final agreement on the
Tenant's Plans is not reached by June 9, 2000, then Landlord and Tenant shall
attempt to mutually agree on an acceptable extension of time to complete the
Building Upgrades and the parties shall continue to use reasonable efforts to
reach agreement as soon as possible thereafter.
<PAGE>
Revisions to the Tenant's Plans shall be made expeditiously by Tenant's
Architect and shall be reviewed promptly by Landlord for approval.
Notwithstanding the foregoing, however, Landlord and Tenant hereby further agree
that all portions of the Tenant's Plans that may affect the Base Building Work,
including without limitation the slabs/underground utilities, roof, perimeter
walls, structural steel and foundations, must be delivered to Landlord by Tenant
on or before January 31, 2000 and approved by the parties promptly thereafter.
Landlord will not approve construction drawings which involve any
construction, alterations or additions requiring unusual expense to readapt the
Additional Premises or the Original Premises to general office, light
manufacturing and assembly and other Permitted Uses on the Term Expiration Date,
unless Tenant first gives assurances acceptable to Landlord that such
readaptation will be made prior to such termination without expense to Landlord.
Landlord and Tenant hereby further agree to acknowledge in writing when final-
approval by Landlord and Tenant of the Tenant's Plans has occurred.
Landlord shall have fifteen (15) days after final approval on Tenant's
Plans, which such final approval has been acknowledged in writing as aforesaid,
to price the cost of the Building Upgrades in accordance with Section 9 (C)
below.
Landlord and Tenant shall cooperate during the above time periods so that
each party makes the other aware of their progress with respect to the foregoing
plans, selections and pricing, as well as timing, availability or cost
constraints of Tenant's selections or specifications and proposed alternates.
Landlord shall cause the Additional Premises and Existing Tenant
Improvements to be completed in accordance with Landlord's Plans and Tenant's
Plans, all of such work to be performed by Landlord's general contractor,
Gutierrez Construction Co., Inc. The Tenant may request changes to the Base
Building Work (or the Building Upgrades after final approval of the Tenant's
Plans by Landlord and Tenant) by altering, adding to, or deducting from the Base
Building Work or the Building Upgrades (as applicable) as set forth in
Landlord's Plans or approved Tenant's Plans, subject to Landlord's prior written
approval (each such requested change shall be submitted in accordance with the
form of Work Change Order attached hereto as Exhibit F).
A change in Base Building Work initiated by the Tenant in writing (or in
the Building Upgrades as aforesaid which affects the Base Building Work) may
also necessitate an adjustment in the Scheduled Term Commencement Date(s).
Landlord agrees to provide Tenant with written notice, within five (5) days from
Tenant's suggested change, if any such adjustment in the Scheduled Term
Commencement Date(s) will be necessary based upon the change in the Base
Building Work (or the Building Upgrades, as applicable) initiated by Tenant. In
addition, Landlord agrees to provide Tenant, upon Tenants' request, with
sufficient itemization and backup documentation to facilitate analysis and to
confirm the cost of any such changes in the Building Upgrades initiated by
Tenant.
In addition, Tenant shall pay any additional amount equal to the Actual
Cost (as defined herein) of any increases to the total cost of the Base Building
Work due to such changes,
<PAGE>
including the costs of any changes from the outline specifications comprising of
a portion of the Landlord's Plans, plus a cost for overhead and general
conditions of seven percent (7%) of such cost and a Landlord's contractor's fee
of six percent (6%) of such cost, less appropriate credits for any Base Building
Work deleted (hereinafter referred to as the "Net Additional Cost of Base
Building Work"). The Net Additional Cost of Base Building Work shall be due and
payable to Landlord in the manner specified in Section 9 (C) below.
In addition, Landlord will also disapprove any changes, alterations or
additions requested by Tenant which will unreasonably delay completion of the
Base Building Work or Building Upgrades due to materials or equipment having
long delivery times or which would cause construction sequencing delays, unless
Tenant agrees that the Scheduled Term Commencement Date(s) will be extended
accordingly, by such alterations or additions, giving due consideration to
Landlord's obligation to use reasonable efforts to accelerate construction to
make up for lost time due to delays. Landlord agrees to promptly, not to exceed
five (5) days, provide Tenant with written notice of any such delays resulting
in the extension of the Scheduled Term Commencement Date(s).
All Tenant improvements, changes and additions (except for Tenant's
business fixtures, equipment and personal property, including without
limitation, demountable partitions, manufacturing equipment, telephone or
computer systems, which such fixtures, equipment and personal property shall
remain the property of Tenant and shall be removed at the expiration of the
Term) shall be part of the Premises (and shall remain therein at the end of the
Term); and such other items shall be removed or left as the Landlord and Tenant
agree in writing prior to the installation thereof. Tenant agrees to repair, at
its sole cost and expense, any damage to the Premises caused by any such removal
in accordance with this paragraph, unless caused by Landlord or its
representatives.
C. Net Additional Cost of Base Building Work and Building Upgrades
---------------------------------------------------------------
Payments
--------
So long as Landlord has approved Tenant's Plans in writing, as hereinabove
set forth, Landlord and Tenant agree that Landlord's general contractor will
construct the Building Upgrades as aforesaid at cost (as hereinafter defined)
plus a fee for overhead and supervision of seven percent (7%) of such cost, plus
a general contractor's fee of six percent (6%) of such cost, less an allowance
equal to $5.50 per square foot applicable to the cost of the Existing Tenant
Improvements (the "Tenant Improvement Allowance").
In order to provide for payment by Tenant of the cost of the Building
Upgrades, and any Work Change Orders provided for hereunder, including but not
limited to, the Net Additional Cost of Base Building Work, less the Tenant
Improvement Allowance as aforesaid, Tenant shall advance to Landlord, or its
contractor, as the case may be, within fifteen (15) days of receipt (plus such
additional time if Landlord submits the same to Tenant prior to the tenth (10th)
of each month as hereinafter provided, however in no event shall Tenant be
obligated to advance such funds earlier than the twenty-fifth (25th) of each
month) of each of Landlord's monthly requisitions therefor, the total amount of
any such requisition (collectively, "Tenant's Payments"). Landlord agrees that
it shall use reasonable efforts to submit such monthly requisitions to Tenant
prior to the tenth (10th) of each month (the anticipated date of submission
<PAGE>
of the same to Tenant), if possible, so that Tenant may have such additional
time upon receipt to advance funds to Landlord hereunder. Each construction
requisition submitted by Landlord in connection with the Building Upgrades only
shall include copies of all subcontractors' and suppliers' applications for
payment and satisfactory evidence of payment of all previous invoices submitted
by subcontractors and suppliers, except for applicable retention being withheld
in accordance with the terms of such obligations, and except for holdbacks
disclosed in writing for deficient work or disputed items. In addition,
Landlord's architect shall certify that the subject work specified in each of
such monthly requisitions has been substantially completed, and a copy of such
certification shall accompany each requisition furnished to Tenant hereunder. In
no event shall any of such costs due and payable hereunder relating to the
Additional Premises and relating to the Existing Tenant Improvements remain
unpaid by Tenant as of the Term Commencement Date for the Additional Premises
(as hereinafter defined in Section 9.2), and on such date which is thirty (30)
days after Substantial Completion of the Existing Tenant Improvements.
Failure by Tenant to timely pay to Landlord the monthly amounts as herein
provided in this Article IX shall constitute a default by Tenant under this
Lease, provided that Landlord has given written notice to Tenant and Tenant
thereafter fails to cure such default within the applicable cure periods as
specified in Article XIX of the Lease. Any late payments due by Tenant to
Landlord hereunder, which continue for a period of more than five (5) days from
the date thereof, shall commence to accrue interest at a rate equal to two
percent (2%) per annum in excess of the then prime rate of interest being
charged by Fleet National Bank, or its successor, otherwise if non-existent by a
majority of the national banks in Boston.
For purposes hereof, the Net Additional Cost of Base Building Work, and the
total cost of the Building Upgrades performed by the Landlord's contractor,
shall be the Actual Cost of any of such work performed by Landlord, or
Landlord's contractor, as specified herein, less the Tenant Improvement
Allowance as aforesaid, as modified by approved Work Change Orders as aforesaid.
Landlord and Tenant further agree that the certification of cost by Gutierrez
Construction Co., Inc. shall be based on the definition of cost, as more
particularly set forth in Exhibit G hereto (the "Actual Cost"). Any changes to
the Tenant's Plans after the approval of the Tenant's Plans and any changes to
Landlord's Plans shall be in accordance with said form of Work Change Order
attached hereto as Exhibit F. Landlord shall provide Tenant with construction
cost estimates based on Tenant's Plans, including a breakdown thereof (if
available), the name of the subcontractor, if available, and the work and/or
materials to be provided. Unless otherwise mutually agreed upon by Landlord and
Tenant, in the pricing of the cost of the Building Upgrades, Landlord agrees to
obtain three (3) bids from qualified subcontractors selected from a master list
of subcontractors mutually prepared by Landlord and Tenant prior to the
soliciting of bids for the Building Upgrades, but only to the extent that a
particular item exceeds five thousand dollars ($5,000.00). Giving due
consideration to factors such as price and delivery commitments and to
Landlord's construction experience, Landlord shall have the right to select
which such subcontractor shall be awarded the work for the Building Upgrades.
Upon Tenant's request, Landlord hereby agrees to furnish Tenant, within five (5)
days of such request, with copies of such subcontractor bids used by Landlord in
connection with the pricing of the Building Upgrades. In addition, in the event
that Landlord and Tenant are unable to agree on the cost of any portion of said
work, Landlord's Construction
<PAGE>
Representative(s) and Tenant's Construction Representative(s), as set forth in
Section 9.4 below, shall, within ten (10) days of their inability to agree on a
price, select a third party familiar with building construction who shall
establish within ten (10) days of his selection the cost of the portions of the
work in dispute determined as set forth above. Said third party shall be
mutually chosen by Landlord and Tenant. The cost determined by said third party
shall be final and binding on Landlord and Tenant, and Landlord and Tenant shall
share equally the cost of such third party.
Upon commencement of the Building Upgrades, Landlord and Tenant hereby
further agree, each acting reasonably and in good faith, to attend and
participate in construction meetings (weekly if necessary) with Landlord's
general contractor's construction manager(s) during such construction process.
D. Tenant's Construction Work
--------------------------
Tenant agrees that any construction included in Tenant's Plans which Tenant
specifies to be done by itself or its contractors, if applicable (hereinafter
referred to as "Tenant's Construction Work"), which may include equipment, and
Tenant's installation of furnishings and furniture and later changes or
additions, shall be coordinated with any work being performed by Landlord in
such a manner as to maintain harmonious labor relations and not damage the
Premises (including the Additional Premises being constructed hereunder), the
Building or Lot or interfere with the operation of the Building or with any of
Landlord's construction work hereunder, including but not limited to, the
construction of the Base Building Work and Building Upgrades. It is hereunder
agreed and understood by and between Landlord and Tenant that Landlord's general
contractor shall construct the Base Building Work and Building Upgrades only and
that a contractor of Tenant's own choosing shall construct Tenant's Construction
Work as herein provided. In no event shall Tenant be obligated to select
Landlord's general contractor for construction of the Tenant's Construction Work
hereunder. Tenant (including its contractors, agents or employees) shall have
access to the Additional Premises and may perform Tenant's Construction Work on
the Additional Premises prior to or after the Scheduled Term Commencement Date
for the Additional Premises and to prepare the Additional Premises for occupancy
by Tenant provided that (i) Tenant's contractors, agents or employees work in a
harmonious labor relationship with Landlord's general contractor, (ii) prior
advance notice is given to Landlord's general contractor specifying the work to
be done (iii) no work shall be done or fixtures or equipment installed by Tenant
in such manner as unreasonably to interfere with any work being done by or for
Landlord on the Additional Premises, and (iv) Tenant has obtained, at its sole
cost and expense, any and all permits and approvals necessary in connection with
such work, if any. During the period of any such preoccupancy of the Additional
Premises by Tenant in connection with Tenant's Construction Work prior to the
Scheduled Term Commencement Date for the Additional Premises such preoccupancy
shall be subject to all the terms, covenants and conditions contained in this
Lease.
9.2 Preparation of Premises for Occupancy
-------------------------------------
Landlord is obligated to perform the construction work set forth in the
Landlord's Plans and the Tenant's Plans, and therefore, Landlord agrees to have
the Additional Premises (which
<PAGE>
such term refers to the Base Building Work and the Expansion Tenant
Improvements) and the Existing Tenant Improvements (i.e. the Base Building Work
and the Building Upgrades) ready for occupancy by November 15, 2000 (the
"Scheduled Term Commencement Date for the Additional Premises") and within four
(4) weeks after such portion of the Original Premises that is being renovated is
vacated by Tenant (i.e. on a phase by phase basis) (the "Scheduled Term
Commencement Date for the Existing Tenant Improvements'), as such date(s) may be
extended hereunder for a period equal to that of (i) any delays due to Force
Majeure as defined in Section 9.5 hereof, and (ii) the number of days of delay
caused by Tenant including without limitation days of delay due to Work Change
Orders initiated by Tenant as aforesaid.
Landlord and Tenant agree that time is of the essence, and Landlord agrees
to use reasonable efforts to accelerate construction to make up for time lost
due to any delays.
The Term of this Lease with respect to the Additional Premises shall
commence on the date the Additional Premises (which such term refers to the
Base Building Work and the Expansion Tenant Improvements as aforesaid) are
deemed ready for occupancy as set forth below (the "Terra Commencement Date for
the Additional Premises").
The Additional Premises shall be deemed ready for occupancy on the earlier
of:
(a) the date on which the Tenant occupies all, or any portion of, the
Additional Premises and commences operations therein (expressly excluding,
however, any preoccupancy by Tenant for purposes of completing the Tenant's
Construction Work as set forth in Section 9 (D) above); or
(b) the date on which the Additional Premises are Substantially Completed,
as defined below, as certified by Landlord's architect, and Landlord has
delivered to Tenant copies of all permits and approvals required to be obtained
from any governmental agency prior to occupancy of the Additional Premises by
Tenant, including, without limitation, a certificate of occupancy from the Town
of Westford or a temporary certificate of occupancy from the Town of Westford
which allows Tenant to use and occupy the Additional Premises and which
temporary certificate of occupancy is not conditional on the performance of any
work other than the Punch List Work as defined below, except that such permit(s)
and approval(s) shall not be required as a condition of Substantial Completion
if Landlord is unable to secure the same due solely to Tenant's failure to
complete Tenant's Construction Work as specified in Section 9 (D) above (which
such date, subject to additional terms and provisions of this Section, shall
hereinafter be referred to as the date of "Substantial Completion" or which such
work shall hereinafter be referred to as "Substantially Completed").
An AIA Certificate of Substantial Completion by the Landlord's architect
(which such Certificate shall be in the form attached hereto as Exhibit H) shall
evidence the Landlord's determination that it has performed all such
obligations, except for completing the landscaping work and completing the
finish paving course, if applicable, and minor items stated in such Certificate
to be incomplete or not in conformity with such requirements, all of which work
will not unreasonably interfere with Tenant's use or occupancy of the Premises
and all of which work and shall be identified in the Certificate of Substantial
Completion (collectively such landscaping
<PAGE>
work, finish paving course work and minor items are referred to herein as the
"Punch List Work") shall be promptly completed. Tenant shall have the right
within fifteen (15) days after Tenant's receipt of such Certificate of
Substantial Completion to notify Landlord of any disagreement with said
Certificate and to identify additional items of Punch List Work, all of which
shall be completed by Landlord thirty (30) days after notice thereof by Tenant.
Landlord agrees to furnish to Tenant said Certificate of Substantial Completion,
regardless of whether Tenant is occupying the Additional Premises (or any
portion thereof) or not, upon performance of all of the obligations set forth
above.
If weather interferes with Landlord's ability to finish the final course of
paving and outside work or such other Punch List Work which such work does not
substantially interfere with Tenant's occupancy, within thirty (30) days after
the date of Substantial Completion as herein provided, said work can be
completed by Landlord reasonably thereafter, so long as such delay does not and
will not interfere with or prevent Landlord from obtaining a certificate of
occupancy upon completion of all other work herein described.
After Landlord has completed all Base Building Work and Building Upgrades,
including all Punch List Work, Landlord's architect shall forward to Tenant a
Certificate of Final Completion, such Certificate to be in the form attached
hereto as Exhibit I. In addition, upon completion of all such work, including
all Tenant's Construction Work by Tenant, Landlord shall forward to Tenant a
final certificate of occupancy from the Town of Westford.
9.3. General Provisions Applicable to Construction
---------------------------------------------
All construction work required or permitted by this Lease, whether by
Landlord or by Tenant (or by their respective subcontractors), shall be done in
a good and workmanlike manner, in compliance with this Agreement, and in
compliance with all applicable laws and all lawful ordinances, regulations and
orders of any governmental authority and insurers of the Building. Either party
may inspect the work of the other at reasonable times and may give notice of
observed defects. Notice of such defects shall be in writing and shall be
rectified by Landlord or by Tenant, as the case may be, within thirty (30) days
of the original date of the notice. Failure to provide notice hereunder shall
not be the basis for any liability or for injury or damage caused by such defect
or waiver of right to cause any defect to be corrected.
9.4. Representatives
---------------
Landlord hereby acknowledges and agrees that only the following persons, Ed
Cunniffe, Mark Albonesi or John J. Connolly or any successors to either of them
holding the same title or any other person delegated the authority from him in
writing (hereinafter "Tenant's Construction Representatives") has the authority
to act on Tenant's behalf and represent Tenant's interests with respect to all
matters requiring Tenant's action in this Article. No consent, authorization or
other action by Tenant with respect to matters set forth in this Article shall
bind Tenant unless in writing and signed by one of the aforementioned persons.
Landlord hereby expressly recognizes and agrees that no other person claiming to
act on behalf of Tenant is authorized to do so. If Landlord complies with any
request or direction presented to it by anyone claiming to act on behalf of
Tenant who does not have the title and position mentioned above, such compliance
<PAGE>
shall be at Landlord's sole risk and responsibility and shall not in any way
alter or diminish the obligations and requirements created and imposed by this
Article, and Tenant shall have the right to enforce compliance with this Article
without suffering any waiver or abrogation of any of its rights hereunder.
Tenant hereby acknowledges and agrees that only the following persons:
Arturo J. Gutierrez, John A. Cataldo, Dennis G. Bailey, or P. Agustin Rios, or
any successors to either of them holding the same title or any other person
delegated the authority from either of them in writing (hereinafter "Landlord's
Construction Representatives") have the authority to act on Landlord's behalf
and represent Landlord's interests with respect to all matters requiring
Landlord's action in this Article. No consent, authorization or other action by
Landlord with respect to matters set forth in this Article shall bind Landlord
unless in writing and signed by one of the aforementioned persons. Tenant
hereby expressly recognizes and agrees that no other person claiming to act on
behalf of Landlord is authorized to do so. If Tenant complies with any request
or direction presented to it by anyone claiming to act on behalf of Landlord who
does not have the title and position mentioned above, such compliance shall be
at Tenant's sole risk and responsibility and shall not in any way alter or
diminish the obligations and requirements created and imposed by this Article,
and Landlord shall have the right to enforce compliance with this Article
without suffering any waiver or abrogation of any of its rights hereunder.
9.5. Force Majeure
-------------
As used in this Article and elsewhere in the Lease, "Force Majeure" shall
mean the definition set forth in Section 26.12 of this Lease.
9.6. Warranty
--------
The Base Building Work and Building Upgrades shall be warranted against
construction defects in materials and in workmanship for a period of one (1)
year from the date of Substantial Completion as determined pursuant to Section
9.2. only. Upon the expiration of said one (1) year period, Landlord shall
assign to Tenant any and all warranties and guarantees (including without
limitation standard HVAC and roof warranties) with respect to the Base Building
Work and Building Upgrades, and to the extent that any of such warranties and
guarantees are not assignable, Landlord agrees to enforce the same for the
benefit of Tenant, at Tenant's expense; provided, however, that Tenant shall not
be responsible to pay for any such enforcement by Landlord against its own
employees or against Gutierrez Construction Co., Inc. or against any of its
other affiliates (including their respective employees)."
9.7. Arbitration by Architects
-------------------------
Whenever there is a disagreement between the parties with respect to
construction by Landlord of the Base Building Work or the Building Upgrades,
except as otherwise expressly set forth herein, such disagreement shall be
definitively determined by the following procedure: Each of Landlord and Tenant
shall appoint one (1) independent architect, such two (2) architects will then
(within five (5) days of their appointment) appoint a third independent
architect licensed in the Commonwealth of Massachusetts with not less than ten
(10) years experience.
<PAGE>
Each architect shall establish within ten (10) days of their appointment the
matter in dispute. In case of any dispute with respect to dollar amounts or
lengths of time or dates such as the date of Substantial Completion, the dollar
amount or length of time or date shall be the average of the two closest
determinations by the three (3) architects, with the determination of the
architect which was not closest to another architect's determination excluded
from such calculation. In case of any dispute not involving dollar amounts or
lengths of time or dates (i.e. the approval of plans) the determination by at
least two (2) of the three (3) architects shall be required in order to resolve
the matter in dispute. Landlord and Tenant shall each bear the cost of the
architect selected by them respectively and shall share equally the cost of the
third architect. During such arbitration period, the parties agree to cooperate
with one another so as to proceed with construction and with their respective
obligations hereunder in a timely manner. Each determination under this Section
9.7 shall be binding upon Landlord and Tenant."
6. Article XXVI, Section 26.10 of this Lease, is hereby amended by
deleting all previous language in its entirety and by replacing the same with
the following:
"Tenant's occupancy of the Premises (which such term includes the
Additional Premises following the Term Commencement Date for the Additional
Premises) shall include the right to the exclusive use of 4.3 per 1,000 square
feet of space, as shown on Exhibit A-1."
7. Landlord and Tenant (each, a "representing party") each represents and
warrants to the other that no conversations or negotiations were had by the
representing party with any broker, finder or similar person concerning the
consummation of this First Amendment to Lease. Landlord and Tenant (each, an
"indemnifying party") each hereby indemnifies and holds the other harmless from
and against all loss, cost, liability, claim, damage, and expense (including,
without limitation, court costs and reasonable attorney's fees) incurred in
connection with or arising out of any claims for brokerage commissions, finder's
fees, or other compensation resulting from or arising out of any conversations,
negotiations or actions had by the indemnifying party or anyone acting on behalf
of such indemnifying party with any broker, finder or similar person in
connection with this First Amendment to Lease. The terms of this paragraph
shall survive expiration or earlier termination of the Lease.
8. Except as modified hereinabove set forth, the Lease (as amended by
this First Amendment) is hereby ratified and confirmed.
9. This First Amendment to Lease may be signed in any number of
counterparts and each thereof shall be deemed to be an original and all such
counterparts but one and the same agreement. Landlord's obligations to perform
hereunder is subject to the condition precedent that this First Amendment to
Lease be approved by Dynex Commercial, Inc.
<PAGE>
IN WITNESS WHEREOF, the parties have set their hands and seals the day and
year first above written.
LANDLORD:
MICHELSON FARM -WESTFORD
TECHNOLOGY PARK VI LIMITED
PARTNERSHIP
By: THE GUTIERREZ COMPANY,
SOLE GENERAL PARTNER
/s/ Carol A. Jones BY: /s/ Arturo J. Gutierrez
- --------------------------- -------------------------------------
Witness Arturo J. Gutierrez, as President
TENANT:
DAVOX CORPORATION
BY: /s/ Mark Donovan
___________________________ -------------------------------------
Witness
ITS: Sr. VP Services & Operations
-------------------------------------
<PAGE>
CONSENT OF MORTGAGEE
--------------------
The undersigned Mortgagee hereby consents and approves the terms and
provisions set forth in this First Amendment to Lease dated as of ___________
___, 1999 by and between Michelson Farm --Westford Technology Park VI Limited
Partnership ("Landlord") and Davox Corporation ("Tenant").
MORTGAGEE:
DYNEX COMMERCIAL, INC.
____________________________ BY:____________________________
Witness
ITS:___________________________
DATE:__________________________
<PAGE>
SCHEDULES
Schedule A Section 1.1
EXHIBITS
Exhibit A-1 Schedule of Plans Showing the Additional Premises
and Outline Specifications for Additional Premises
Exhibit E-1 List of Liens, Restrictions and Encumbrances
Exhibit F Form of Work Change Order
Exhibit G Definition of Cost
Exhibit H Certificate of Substantial Completion
Exhibit I Certificate of Final Completion
Exhibit J List of Overhead and General Conditions
<PAGE>
SCHEDULE "A"
1.1 SUBJECTS REFERRED TO:
---------------------
Each reference in this Lease to any of the following terms shall mean:
Landlord: Michelson Farm - Westford Technology Park VI
Limited Partnership
Managing Agent: The Gutierrez Company
Landlord's and Managing Agents Michelson Farm - Westford Technology Park
Address: VI Limited Partnership
c/o The Gutierrez Company
One Wall Street
Burlington, Massachusetts 01803
Landlord's Representative: John A. Cataldo
Tenant: Davox Corporation
Tenant's Address 6 Technology Park Drive
(for Notice and Billing) Westford, Massachusetts 01886
Attention: General Counsel
Tenant's Representative Ed Cunniffe
Building: (A) Prior to the Term Commencement Date for
the Additional Premises, as determined
pursuant to Section 9.2 hereof: Building Six
in the Michelson Farm-Westford Technology
Park, Westford, Massachusetts, containing
approximately 62,000 gross square feet on the
lot (the "Lot") shown on Exhibit "A" of this
Lease.
(B) After and including the Term Commencement
Date for the Additional Premises, as
determined pursuant to Section 9.2 hereof,
Building Six in the Michelson Farm-Westford
Technology Park, Westford, Massachusetts,
containing approximately 87,000 gross square
feet on the lot (the "Lot") shown on Exhibit
"A-1" of this Lease.
Term Commencement Date: (A) For the Original Premises (as hereinafter
defined): October 1, 1997
(B) For the Additional Premises (as
hereinafter
<PAGE>
defined): See Section 9.2 of this
Lease.
Scheduled Term Commencement Date Per Section 9.2.
for the Additional Premises and
for the Existing Tenant Improvements:
Term Expiration Date: (A) Prior to the Term Commencement
Date for the Additional Premises,
as determined pursuant to Section
9.2 hereof: September 30, 2000, or
upon the Term Commencement Date for
the Additional Premises, whichever
is later. (B) After and including
the Term Commencement Date for the
Additional Premises, as delivered
pursuant to Section 9.2 hereof:
Eight (8) years following the Term
Commencement Date for the
Additional Premises, as determined
pursuant to Section 9.2 hereof.
Fixed Rent: (A) Prior to the Term Commencement
Date for the Additional Premises,
as determined pursuant to Section
9.2 hereof: $480,500/year;
$40,041.67/month; $7.75/rsf (B)
After and including the Term
Commencement Date for the
Additional Premises, as determined
pursuant to Section 9.2 hereof:
Years 1-3 $1,035,300.00/year;
$86,275.00/month; $11.90/rsf; Years
4-8 $1,148,400.00/year;
$95,700.00/month; $13.20/rsf
Special Provisions: Option to Extend - See Article III
Estimated Annual Tenant's Proportional (A) Prior to the Term Commencement
Share of Common Area Maintenance: Date for the Additional Premises,
as determined pursuant to Section
9.2 hereof: $45,880.00/year;
$3,823.33/month; $.74/rsf (B) After
and including the Term Commencement
Date for the Additional Premises,
as determined pursuant to Section
9.2 hereof: $69,600.00/year;
$5,800.00/month; $.80/rsf
Permitted Uses: General office; light manufacturing
and assembly; laboratory; research
and development and for any other
ancillary uses.
<PAGE>
Original Premises: The Building consisting of approximately
62,000 gross square feet, and the areas
which are the subject of all appurtenant
rights and easements set forth or referred
to in Section 2.1 of this Lease.
Additional Premises: The two-story building expansion
consisting of approximately 25,000 gross
square feet.
Premises: (A) Prior to the Term Commencement Date
for the Additional Premises, as determined
pursuant to Section 9.2 hereof: The
Building consisting of approximately
62,000 gross square feet, and the areas
which are the subject of all appurtenant
rights and easements set forth or referred
to in Section 2.1 of this Lease. (B) After
and including the Term Commencement Date
for the Additional Premises, as determined
pursuant to Section 9.2 hereof: The
Building consisting of approximately
87,000 gross square feet, and the areas
which are the subject of all appurtenant
rights and easements set forth or referred
to in Section 2.1 of this Lease.
Security Deposit: $40,041.67
Guarantor: None
<PAGE>
EXHIBIT "A-1"
-------------
SCHEDULE OF LANDLORD'S PLANS
----------------------------
1. Plan entitled "Schematic Phase Two Layout for Building Six, Davox
Corporation" by The Gutierrez Company dated January 12, 1998 and revised
December 13, 1999.
2. Plan entitled "Conceptual Master Site Plan. Westford Technology Park" by
The Gutierrez Company dated November 29, 1999.
3. Gutierrez Construction Co., Inc. Outline Specifications for Westford
Technology Park Building 6 Expansion dated December 22, 1997, revised
August 24, 1999, revised October 25, 1999, and revised December 16, 1999.
<PAGE>
GUTIERREZ CONSTRUCTION CO., INC.
OUTLINE SPECIFICATIONS
FOR
WESTFORD TECHNOLOGY PARK
BUILDING 6 EXPANSION
WESTFORD, MASSACHUSETTS
December 22, 1997
Revised August 24, 1999
Revised October 25, 1999
Revised December 16, 1999
<PAGE>
OUTLINE SPECIFICATIONS
I N D E X
- - - - -
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
DIVISION 1 - GENERAL REQUIREMENTS 3
- ---------------------------------
Section 1A - Scope of the Work
Section 1B - Assumptions
Section 1C - Area Summary
DIVISION 2 - SITE WORK 4
- ----------------------
Section 2A - Site Work
DIVISION - CONCERE 5
- ------------------
Section 3A - Concrete
Section 3B - Precast Concrete
DIVISION 5 - METALS 6
- -------------------
Section 5A - Structural Steel
Section 5B - Miscellaneous and Ornamental Iron
DIVISION 6 - CARPENTRY 7
- ----------------------
Section 6A - Rough Carpentry
Section 6B - Millwork
DIVISION 7 - MOISTIJRE PROTECTION 8
- ---------------------------------
Section 7A - Roofing and Flashing
Section 7B - Waterproofing, Dampproofing and Caulking
DIVISION 8 - DOORS, WINDOWS AND GLASS 9
- -------------------------------------
Section 8A - Wood Doors
Section 8B - Metal Door Frames
Section 8C - Finish Hardware
Section 8D - Aluminum Entrance
Section 8E - Glass and Glazing
Outline Specifications - Index
DIVISION 9 - FINISHES 11
- ---------------------
Section 9A - Floor Finishes and Vinyl Base
Section 9B - Acoustical Work
Section 9C - Painting
Section 9D - Gypsum Drywall at the Base Building
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 9E - Exterior Soffits
Section 9F - Insulation
Section 9G - Ceramic Tile
DIVISION 10 - SPECIALTIES
- -------------------------
Section 10A -Toilet Partitions 13
Section 10B - Toilet Accessories
DIVISION 12 - FURNISHING 14
- ------------------------
Section 12A - Blinds
DIVISION 15 - MECHANICAL 15
- ------------------------
Section 15A - Plumbing
Section 15B - Heating Ventilating and Air
Conditioning
Section 15C - Sprinklers
DIVISION 16 - ELECTRICAL 19
- ------------------------
Section 16A - Electrical Work
DIVISION 17 - EXCLUSIONS 21
- ------------------------
</TABLE>
<PAGE>
DIVISION 1
----------
GENERAL REQUIREMENTS
--------------------
SECTION 1A - SCOPE OF THE WORK
- ------------------------------
1A-01 Gutierrez Construction Co., Inc. will provide all labor, material and
equipment necessary to complete the construction of the subject
building in accordance with these Outline Specifications dated
December 1997, revised August 24, 1999, October 25, 1999 and December
16, 1999: the preliminary drawings as prepared by Symmes, Maini &
McKee Associates, Inc. dated __________________, and the Site Plan of
Land dated _____________________ as prepared by Symmes, Maini & McKee
Associates, Inc.
SECTION 1B - ASSUMPTIONS
- ------------------------
1B-01 All required utilities of adequate size and capacity will be available
at the site or in the existing building.
1B-02 This proposal is based on Class 11-C construction as specified in the
Massachusetts State Building Code.
SECTION 1C - AREA SUMMARY
- -------------------------
1C-01 The addition is a two (2) story, "open office" office building for a
total of twenty five thousand square feet (25,000 S.F.).
1C-02 Parking spaces to be provided for 4.30 spaces per 1,000 square feet of
building area.
<PAGE>
DIVISION 2
----------
SITE WORK
---------
SECTION 2A - SITE WORK
- ----------------------
2A-01 The site work, parking lots, driveways, landscaping, lawn irrigation
and all else required for a complete usable product will be of the
same quality and quantity provided for the existing building.
<PAGE>
DIVISION 3
----------
CONCRETE
--------
SECTION 3A - CONCRETE
- ---------------------
3A-01 Provide all plain and reinforced concrete work, including all
necessary form work, sleeves, inserts, etc. Concrete material shall be
3,000 p.s.i.
3A-02 Floor slab-on-grade shall be five inch (5") thick concrete reinforced
with welded wire fabric for a live load rating of 200 p.s.f. The
second floor slab shall be designed for a total (dead and live) load
of 100 p.s.f.
3A-03 Foundations shall be continuous reinforced concrete footings and walls
and individual spread reinforced concrete footings under columns. All
foundations shall bear on engineered fill, natural soil or ledge.
SECTION 3B - PRECAST CONCRETE
- -----------------------------
3B-01 Precast concrete exterior spandrel panels shall be designed to meet
wind loading as required by the governing code(s) and shall have an
exposed aggregate finish to match the existing building.
<PAGE>
DIVISION 5
----------
METALS
------
SECTION 5A - STRUCTURAL STEEL
- -----------------------------
5A-01 All structural steel work shall conform to the "Specifications for
Design, Fabrication Erection of Structural Steel for Buildings" of the
American Institute of Steel Construction and the requirements of the
local building code. All steel shall be ASTM-A-36.
5A-02 The structure shall be steel columns, beams or trusses, and bar
joists. The building shall be designed in accordance with the building
code requirements.
5A-03 The roof construction shall be 22 gauge, prime-painted metal roof
decking. Roof shall be designed to support a live load of 35 p.s.f.
plus the loading required for a EPDM ballasted roofing system.
5A-04 Second floor framing systems shall be designed to support a total
(dead and live) load of 100 p.s.f. Floor decking shall be 28 gauge
Fab-Form metal deck or equal.
5A-05 The first floor, second floor and roof elevations will match the
existing building.
5A-06 Provide wind framing and attachment for precast concrete.
5A-07 Provide framing and supports for roof top equipment as may be
required.
SECTION 5B - MISCELLANEOUS AND ORNAMENTAL IRON
- ----------------------------------------------
5B-01 Provide manhole and catch basin frames and covers where required.
5B-02 Stair shall be metal pan, concrete filled type. Stair shall be
provided with integral nosings. Handrails shall be tubular steel,
except as otherwise indicated on the drawings.
5B-03 Provide all necessary channel iron supports for the glass entrance.
<PAGE>
DIVISION 6
----------
CARPENTRY
---------
SECTION 6A - ROUGH CARPENTRY
- ----------------------------
6A-01 Provide all wood blocking and rough carpentry required.
6A-02 Install wood doors, metal door frames and finish hardware.
SECTION 6B - MILLWORK
- ---------------------
6B-01 Provide a plastic laminate sill at perimeter windows.
6B-02 Provide plastic laminate lavatory counter tops in the toilet rooms.
<PAGE>
DIVISION 7
----------
MOISTURE- PROTECTION
--------------------
SECTION 7A - ROOFING AND FLASHING
- ---------------------------------
7A-01 The roof shall be insulated to yield a "U" factor of .06. Roof loading
is to be in accordance with the building code requirements. The
roofing shall be a EDPM roofing system as manufactured by Carlysle,
Firestone, General Tile or approved equal as selected by Gutierrez
Construction Co., Inc. A ten (10) year labor and material and an
additional ten (10) years on materials, manufacturer's standard
guarantee is included.
7A-02 Flashing at the precast concrete parapets and HVAC equipment shall be
provided.
SECTION 7B - WATERPROOFING, DAMPPROOFING AND CAULKING
- -----------------------------------------------------
7B-01 Interior caulking shall be the type appropriate for the application.
7B-02 Caulk perimeter of all exterior doors and windows with monolastic,
meric Thiokol caulking or approved equal.
7B-03 All precast concrete joints shall be caulked with monolastomeric
Thiokol caulking or approved equal.
<PAGE>
DIVISION 8
----------
DOORS, WINDOWS AND GLASS
------------------------
SECTION 8A - WOOD DOORS
- -----------------------
8A-01 Interior base building wood doors shall be 3'0" x 7'0" by 1 3/4" solid
core, plain sliced, red oak. Provide fire rated doors as required by
code. All oak doors are to have matching edges.
8A-02 Includes 3'0" x 7'0" x 1 3/4" solid core Red Oak doors at nineteen
partitioned offices. Includes a 24" x 6" vision panel.
SECTION 8B - METAL DOORS AND FRAMES
- -----------------------------------
8B-01 All interior base building door frames shall be three piece, pressed
metal, single and/or double rabbet door frames with proper anchors for
partitions. Provide fire rated frames as required by code.
8B-02 Includes three pieces knockdown hollow metal frames at nineteen
partitioned offices.
SECTION 8C - FINISH HARDWARE
- ----------------------------
8C-01 Finish hardware shall be standard grade Russwin, Schlage, or approved
equal.
8C-02 Key schedule shall be pet the Owner's requirements.
8C-03 Lockset to have removable cores.
8C-04 Includes one and one half pair of butts (hinges), cylindrical latches
and a door stop at nineteen partitioned offices.
SECTION 8D - ALUMINUM ENTRANCE
- ------------------------------
8D-01 Aluminum door frame assemblies, including window trim, shall be
anodized aluminum to match the existing.
8D-02 Aluminum entrances shall be complete with all hardware (pivot hinges,
push/pulls, closers, etc.) except cylinder, which is to be furnished
under Section 8C, Finish Hardware.
<PAGE>
SECTION 8E - GLASS AND GLAZING
- ------------------------------
8E-01 Glass for entrances shall be 1/4" tempered. Entrance doors shall be
3'0" x 7'0" with glass transom.
8E-02 The exterior glass shall be 1" insulating, solar bronze as
manufactured by LOF, PPG or approved equal. Glass area shall be kept
under 50% of the exterior wall area. Includes Manufacturer's Standard
ten (10) year warranty for the insulated glass units.
8E-03 The aluminum framing for glass shall be dark bronze, anodized aluminum
with a thermal break as manufactured by Alumiline, Kawneer or approved
equal. All window are to be the fixed type.
<PAGE>
DIVISION 9
----------
FINISHES
--------
SECTION 9A - FLOOR FINISHES AND VINYL BASE
- ------------------------------------------
9A-01 An allowance of fourteen dollars ($14.00) per square yard has been
included for all flooring at tenant areas.
9A-02 Resilient base shall be 4" high vinyl cove or straight as applicable
at all perimeter walls and columns.
9A-03 Includes standard 4" vinyl base at nineteen partitioned offices.
SECTION 9B - ACOUSTICAL WORK
- ----------------------------
9B-01 All base building lobbies and toilet rooms shall have lay-in, reveal
edge units of 3/4" x 24" x 24", mineral acoustic tile. Suspension
system shall be exposed "T" grid suspension system and suspension
members and tile shall be finished white. Ceiling height shall be 8'6"
in the lobbies and 7'6" in the toilet rooms.
9B-02 Acoustical ceilings at all tenant areas shall be 5/8" x 24" x 24",
mineral fissured, nondirectional tile in an exposed "T" grid
suspension system. Tile and suspension system shall be finished
white., Ceiling heights shall be 8'6".
SECTION 9C - PAINTING
- ---------------------
9C-01 All ferrous metals shall receive a touch-up coat, a prime coat and one
(1) coat of enamel. Exterior metals shall receive one (1) coat of
rust inhibitor primer.
9C-02 Perimeter walls and columns are to receive two (2) coats of latex
paint. At the Owner's option, the lobbies and toilet rooms will be
painted with Polomyx or approved equal.
9C-03 Interior doors shall receive two (2) coats of semi-gloss paint, or one
(1) coat of sealer and two (2) coats of polyurethane, at the Owner's
option.
9C-04 Hollow metal door frames shall receive two (2) coats of latex enamel
paint.
9C-05 Exposed ceilings shall not be painted.
9C-06 Includes two (2) coats of latex paint on the walls of nineteen
enclosed offices.
9C-07 Includes sealer coat and two (2) coats of polyurethane at nineteen
office doors and two (2) coats of latex enamel on the door frames.
<PAGE>
DIVISION 9
----------
FINISHES
--------
SECTION 9D - GYPSUM DRYWALL FOR THE BASE BUILDING
- -------------------------------------------------
9D-01 Provide a sheetrock enclosure at the stair fire rating as required by
applicable code.
9D-02 The interior of the exterior walls shall be furred with metal studs,
insulated and covered with drywall in all finished areas. The
interior face of all precast concrete will be insulated with a minimum
of 3 1/2" of foil faced fiberglass insulation.
9D-03 At the Owner's option, interior steel columns will be painted Tubular
Type, or "H" Columns enclosed with drywall and painted.
9D-04 Ceiling high sheetrock partition at nineteen 10'0" x 12'0" partitioned
offices. Partition will be 2 1/2" galvanized 25 gauge metal studs at
24" O.C. extended tp deck with one layer of 5/8" sheetrock on both
sides to 6" above ceilings with Batt Insulation taped and sanded ready
for paint.
SECTION 9E - EXTERIOR SOFFITS
- -----------------------------
9E-01 All exposed exterior soffits shall be (EIFS) dryvit.
SECTION 9F - INSULATION
- -----------------------
9F-01 Foil faced, blanket type insulation shall be provided behind all
exterior walls, except behind the spandrel panels where rigid
insulation may be used.
9F-02 Rigid insulation shall be provided at the perimeter foundation walls.
SECTION 9G - CERAMIC TILE
- -------------------------
9G-01 Toilet rooms shall receive 1" x 1" or 2" x 2" unglazed, ceramic floor
tile and 41/4" x 41/4" glazed, ceramic tile, full height at the wet
walls. Remaining walls will be painted.
<PAGE>
DIVISION 10
-----------
SPECIALTIES
-----------
SECTION 10A - TOILET PARTITIONS
- -------------------------------
10A-01 Partitions shall be manufacturer's standard, ceiling hung with a
manufacturer's standard baked enamel finish. Provide toilet
partitions for the water closets and screens for the urinals.
SECTION 10B - TOILET ACCESSORIES
- ---------------------------------
10B-01 Provide stainless steel accessories. Accessories shall include double
roll toilet paper holders, paper towel dispenser/disposals, in-counter
liquid soap dispensers, sanitary napkin vendors and disposals.
<PAGE>
DIVISION 12
-----------
FURNISHINGS
-----------
SECTION 12A - BLINDS
- --------------------
12A-01 Blinds shall be installed at all exterior wall office windows to match
existing building. Vertical blinds shall be LouverDrape Model EL
(Elite) or approved equal, both traversing and rotating type.
12A-02 Blinds shall have top track only with manufacturer's standard baked
enamel finish.
12A-03 Blades are to be PVC solid color, 31/2" wide, 0.03" thickness. Color
shall be manufacturer's standard color as selected by the Owner and
Architect.
<PAGE>
DIVISION 15
-----------
MECHANICAL
----------
DIVISION 15A- PLUMBING
- ----------------------
15A-01 CODES, ORDINANCES AND PERMITS
-----------------------------
1. All material and workmanship shall be in strict accordance with
the following codes:
A. Massachusetts State Plumbing Code
B. Massachusetts State Building Code
C. National Fire Codes
D. Requirements of the Town of Westford, Massachusetts
E. Department of Public Health
15A-02 SANITARY WASTE AND VENT SYSTEM
------------------------------
Interior waste and vent piping shall convey wastes to the sanitary
waste system and shall be vented through the roof as required by code.
15A-03 ROOF DRAINAGE SYSTEM
--------------------
Interior roof drains shall be adequately sized and installed to drain
all roof surfaces and shall be connected to the storm drain outside
the building line.
15A-04 COLD AND HOT WATER SYSTEMS
--------------------------
1. Cold and hot water systems shall be installed to service all
fixtures and equipment indicated on the final design drawings
requiring cold and hot water.
2. Cold and hot water shall be sized in accordance with the latest
requirements of the applicable plumbing code.
15A-05 PIPING AND FITTINGS
-------------------
1. Piping and fittings shall be cast iron for sanitary and storm and
copper for water, all conforming to the latest ASTM and/or F.S.
standards.
15A-06 PIPING AND DRAINAGE ACCESSORIES
-------------------------------
1. Roof drains, wall/ground hydrants, cleanouts and fixture carriers
shall be as manufactured by J.R. Smith, Josam, Zurn or approved
equal. Pressure
<PAGE>
reducing valves and back flow precentor, if required, shall be as
manufactured by Watts or approved equal.
15A-07 INSULATION
----------
1. Horizontal rain leaders and all roof drains shall be insulated.
15A-08 PLUMBING FIXTURES
-----------------
1. Water closets shall be wall-hung, elongated, flush valve closet
with 1 1/2" top stud and exposed valve as manufactured by
Kohler/company or approved equal, with white, open front seats,
no cover.
2. Urinals shall be wall hung, white with 1 1/2" top stud, exposed
valve as manufactured by Kohler Company or approved equal.
3. Lavatories shall be drop-in, counter type.
4. Drinking fountains (one on each floor) as required by applicable
code requirements shall be electric, semi-recessed, wall mounted
type as manufactured by Halley Taylor or approved equal and will
meet ADA Requirements.
5. Provide four (4) showers, one at each toilet room.
6. One electric hot water heater, sized to suit the building
requirements, shall be provided.
7. The number of plumbing fixtures shall be as indicated on the
final design drawings.
8. Handicap type fixtures will be provided in the toilet rooms as
required by applicable codes.
15A-09 TESTING
-------
All piping systems shall be tested in accordance with the applicable
codes.
SECTION 15B - HEATING, VENTILATING AND AIR CONDITIONING
- -------------------------------------------------------
15B-01 Provide 70 tons of rooftop, variable volume, heating, ventilating and
air conditioning to provide comfort heating and cooling on a year-
round basis with controlled night set back and economizing features,
and shall meet all applicable code requirements. Equipment shall be
as manufactured by Carrier, Trane or approved equal as selected by
Gutierrez Construction Co., Inc. A low voltage, automatic temperature
control system will also be provided. Includes VAV Units, ductwork
and diffusers for an "open office" layout at tenant areas.
<PAGE>
DIVISION 15 - MECHANICAL (Continued)
------------------------
SECTION 15B - HEATING, VENTILATING AND AIR CONDITIONING (Continued)
- ----------- -----------------------------------------
15B-03 DUCTWORK
--------
All ductwork shall be galvanized steel to meet ASHRAE Standards.
Flexible duct runouts shall not exceed eight feet (8').
15B-04 GRILLES AND DIFFUSERS
---------------------
Diffusers with balancing dampers shall be as manufactured by Titus
or approved equal. Diffusers in office areas at the perimeter of
the shall be 2' and 4' long, non-insulated, lineal slot type,
approximately 10' on center. Interior diffusers shall serve areas
not exceeding 300 square fee or floor area. Return grilles shall
be white plastic eggcrate. Above the ceiling shall be used as a
return air plenum.
15B-05 TOILET ROOM EXHAUST
-------------------
A toilet room exhaust system shall be installed in accordance with
the code requirements.
15B-06 HEATING, VENTILATING AND AIR CONDITIONING SYSTEM
------------------------------------------------
A zoned heating, ventilating and air conditioning system,
including distribution duct work, diffusers return air grilles and
thermostatic control for general open office use and nineteen
partitioned offices shall be provided.
SECTION 15C - SPRINKLERS
- ------------------------
15C-01 An automatic, wet pipe, light hazard sprinkler system at base
building and open office areas shall be provided. System shall be
designed to meet ISO and NFPA #13 Requirements. Heads for the base
building and open office areas shall be chrome plated, semi-
recessed, pendent type. Heads in open areas with no ceilings shall
be the brass, upright type. Testing shall be in accordance with
ISO and NFPA Pamphlet No. 13. Furnish and install tamper and flow
stitches. Wiring shall be by the electrical subcontractor.
15C-02 Includes sprinkler heads at nineteen partitioned offices.
<PAGE>
DIVISION 16
-----------
ELECTRICAL
----------
SECTION 16A - ELECTRICAL WORK
- -----------------------------
16A-01 SERVICE ENTRANCE
----------------
Electrical service will be connected to the existing switchboard
locate don the first floor in the existing building.
16A-02 CODES AND STANDARDS
-------------------
Materials and workmanship shall conform with the latest editions of
the following applicable codes, standards and specifications:
1. National Board of Fire Underwriters
2. Underwriter's Laboratories, Inc.
3. National Electrical Code
4. National Bureau of Standards Handbook 11-30, National Safety Code
5. Local and State Building Codes, and all other authorities having
jurisdiction
16A-03 RACEWAYS AND CONDUCTORS
-----------------------
Generally, wiring will consist of insulated conductors installed in
3/4" minimum size, rigid, zinc coated, steel conduit. Flexible
conduit will be sued for terminal connection at all motors.
Electrical metallic tubing will be sued in areas above hung ceilings.
Aluminum conduit may be used on concealed areas or in areas eight feet
(8') above the floor. No aluminum conduit will be used in concrete or
underground. BX may be used where allowed by applicable codes. Above
the ceiling is used as a return air plenum. Conductors will be 600
volt copper, except where otherwise noted. Wire/Cable #2 and larger
may be aluminum with high press lugs. Raceways from the panel boards
to the ceiling will be provided. The following conductors will be
used:
1. Power: #12 Minimum 75 (Degrees) C THWN
2. Lighting #12 Minimum 75 (Degrees) C THWN
3. Control: #14 Minimum 75 (Degrees) C THWN
4. Fixture: #16 Minimum 90 (Degrees) C THWN
5. Alarm: #14 Minimum 75 (Degrees) C THWN
16A-04 GROUNDING SYSTEM
----------------
Grounding will consist of copper-clad, steel rods connected with bare
copper cable. The grounding system will be connected to the existing
ground in the
<PAGE>
power plan. The interconnection conductors will be built into the main
feeder cable. Building steel and all electrical equipment will be
grounded.
16A-05 FEEDER CIRCUITS
---------------
Feeders will supply 480/227 volt power from the main distributor to
distribution panels. Main service will be adequately sized to serve
the building's requirements as specified in these outline
specifications.
16A-06 TRANSFORMERS
------------
Dry-type transformers will be provided for 120/208 volt panels and
will be sized for 4 watts per square foot of power.
16A-07 PANELBOARDS
-----------
Panelboards will be 480/277 volt, 3-phase, 4-wire and 120/208 volt, 3-
phase, 4-wire with bolted in circuit breakers. Panelboards will be
sized for the HVACX and 2 watts per square foot at 480 volts for the
277 volt light fixtures and 4 watts per square foot at 480 volts for
120/208 volt power. Panelboards will be located in electrical closets
on each floor. There will be one (1) electrical closet per floor.
16A-08 WIRING DEVICES, OUTLETS AND SWITCHES
------------------------------------
1. Switches will be the quiet, toggle type, NEMA Standard.
a. Switches for open office areas will be located in the vicinity
of the lobby.
b. Provide one (1) switch at nineteen partitioned offices.
2. Convenience outlets will be duplex grounding type, 20 Amp. rated,
NEMA S Standard.
a. Provide one (1) multi-circuit, 20 Amp. rated, 120 Volt duplex
wall outlets at every ten feet (10') of perimeter wall.
b. Provide three (3) multi-circuit, 20 amp rated, 120 volt duplex
wall outlet at nineteen partitioned offices (total of 57
outlets).
3. Device plates will be ivory colored plastic.
<PAGE>
16A-09 INDOOR LIGHTING
---------------
Lighting will be fluorescent, parabolic and/or incandescent for the
base building. Lighting in Office/R&D areas will be 277 Volt, 24" x
48", lay-in, parabolic, 18 cell troffers with electronic ballasts and
T-8 lamps.
Provide one (1) light fixture for every ninety six (96) square feet of
usable area in tenant space.
16A-10 OUTDOOR LIGHTING
----------------
Outdoor lighting will be adjusted for the expansion to produce similar
lighting conditions.
16A-11 EMERGENCY WORK (Continued)
--------------
Provide emergency power for exit lights, emergency lighting and local
fire alarm system. Power source for emergency power shall be wet cell
batteries located in the electrical rooms.
16A-12 TELEPHONE EQUIPMENT
-------------------
Provide two (2) 4" sleeves through the second and third floor slabs.
Interconnection and telephone equipment will be by the telephone
company. Telephone interface will be the responsibility of the tenant
and interface equipment will be located in the tenant space.
16A-13 FIRE ALARM SYSTEM
-----------------
The existing fire alarm system will be modified to receive the
additional pull stations and horn/strobe units required for the open
office layout.
<PAGE>
DIVISION 17
-----------
EXCLUSIONS
----------
1. Power wiring for any special equipment or outlets other than those
specified in these Outline Specifications.
2. Special floor finishes, other than those specified.
3. Special wall finishes, other than those speified.
4. Special millwork items other than those specified.
5. Health Department or other regulatory agency requirements resulting from
tenant's operations unknown to Gutierrez Construction Co., Inc.
6. Furniture, furnishings, etc.
7. Security, intercom or sound system.
8. Vending machines or provisions for such.
9. Kitchen equipment.
10. Moveable partitions.
11. Special exhaust systems.
12. Underfloor duct systems.
13. Drinking fountains, other than those specified.
14. Drywall partitions, including demising walls and painting for tenant areas
except for those specified in Section 9D.04.
15. Doors, frames and hardware for tenant areas except for those specified in
Section 8A.02.
16. Vinyl base for tenant areas other than those specified.
17. Power distribution, lights, outlets, light switches, exit signs/lights,
and emergency lights at tenant areas other than those specified.
18. Special modifications required for a day care centre, if any.
19. Sprinkler piping and heads at tenant areas other than those specified.
20. HVAC air terminal units, duct work, grilles and diffusers at tenants areas
other than those specified.
<PAGE>
21. An emergency/standby generator and UPS System is not included.
<PAGE>
EXHIBIT E-1
[As of March 27, 1998]
1. Electric Easement from Arturo J. Gutierrez, et al., Trustees, Michelson
Farm-Westford Technology Park IV Limited Partnership ("Partnership IV") and
Partnership VI to Massachusetts Electric Company, dated July 28, 1987,
recorded at Book 4200, Page 274.
2. Easement to New England Telephone and Telegraph Company, dated May 1, 1987,
recorded July 2, 1987.
3. Terms and provisions of Grant of Easements made as of January 1, 1987, by
and among Stock Family Limited Partnership et al., recorded March 14, 1988
and Book 4435, Page 121.
4. Terms and provisions of Sewer Line Easement made as of February 18, 1988,
by Arturo J. Gutierrez, et al., Trustees, Partnership IV and Partnership
VI, recorded March 14, 1988 at Book 4435, Page 110.
5. Vault Easement to New England Telephone and Telegraph Company dated July
23, 1987 and recorded at Book 4180, Page 66.
6. Matters shown on a survey by Howe Surveying Associates, Inc. dated March
16, 1998 entitled "ALTA/ACSM Land Title Survey of Lot 6B."
7. Amended and Restated Declaration of Easements and Maintenance Agreement
dated as of September 3, 1997 and recorded at Book 8793, Page 245 with the
Easement Plan dated June 13, 1996, revised July 11, 1996, August 15, 1996,
August 22, 1996, April 16, 1997 and July 27, 1997 and recorded in Plan Book
195, Plan 64.
8. Order of Conditions (DEQE File Nos. 334-207, 208, 209 and 210) issued by
the Westford Conservation Commission on April 14, 1986 and recorded at Book
3459, Page 212, Order of Conditions (DEQE File Nos. 334-207A, 208, 209 and
210A) issued by the Westford Conservation Commission on November 23, 1987
and recorded at Book 447, Page 129, Order of Conditions (DEP File NO. 334-
207B, 208A, 209A, 210B) issued by the Westford Conservation Commission and
recorded at Book 5857, Page 257 and Order of Conditions (DEP File NO. 334-
639) issued by the Westford Conservation Commission and recorded at Book
7256, Page 71.
9. Notice of Right of First Refusal between Partnership VI and Lotus
Development Corporation recorded in Book 8163, Page 11.
10. Mortgage Deed and Security Agreement dated March 23, 1998 from Partnership
VI to Dynex Commercial, Inc. in the principal amount of $5,750,000.00 and
recorded on March 27, 1998 at Book 9160, Page 21.
11. Assignment of Leases and Rents from Partnership VI to Dynex Commercial,
Inc. dated March 23, 1998 and recorded on March 27, 1998 at Book 9160, Page
80.
<PAGE>
12. UCC-1 Financing Statement naming Partnership VI as Debtor and Dynex
Commercial, Inc. as Secured Party recorded on March 27, 1998 at Book 9160,
Page 93.
13. An unrecorded Lease with Davox Corporation dated February 28, 1997, as
affected by a Subordination, Nondisturbance and Attornment Agreement with
Dynex Commercial, Inc.
<PAGE>
EXHIBIT "F"
LANDLORD, TENANT, CONTRACTOR
CHANGE PROPOSAL FORM
--------------------
Project: _________________________
_________________________ R___________ NR_________
Proposal No. _________________________
From: (Landlord)_______________________ BB__________ TW_________
To: (Contractor)________________________
CC: (Tenant)____________________________
________________________________________________________________________________
Step 1: Contractor: Provide an estimate for the described work.
Architect: Develop proper plans and specifications to clarify
described work.
Description: (List Drawings)
-----------
Landlord:________________________Reason:______________________________
________________________________________________________________________________
Step 2: Contractor: Proceed with work as definitive plans become
available.
Landlord:________________________Date:________________________________
________________________________________________________________________________
Step 3: Cost of Work
a. Cost of the work $_________________
(See attached breakdown)
b. Overhead and General Conditions $_________________
c. Subtotal $_________________
d. Add construction fee $_________________
e. Total Cost of Work $_________________
Submitted by:_________________________________ ____________________________
Date
Contractor
- ----------
________________________________________________________________________________
Step 4: The submitted Cost of Work has been reviewed and is (not) approved.
_____________________________ ________________________________
Architect Date
Design Fees - $_________________
TOTAL COST OF PROPOSAL $_________________
________________________________________________________________________________
Step 5: FINAL ACTION
a. The Tenant _____________________ Hereby agrees to reimburse the
Name of Firm
Landlord the Total Cost of Proposal shown in Step 4 above.
_________________________________________ _______________________
Authorized Tenant's Representative Date
b. This bulletin is approved (rescinded) and the work above is (not)
to be performed. Cost of this work shall be included in Change
Order No. ____
_________________________________________ _______________________
Landlord Date
<PAGE>
EXHIBIT "G"
-----------
COST OF THE WORK
----------------
REIMBURSABLE COSTS:
- ------------------
The following 8 numbered items shall be used to determine and calculate the Cost
of the Work:
The term Cost of the Work shall mean direct costs necessarily incurred and paid
by the Contractor in the proper performance of the Tenant's Work, changes in
Landlord's Work initiated by Tenant, and Tenant Alterations work performed by
Landlord. Such costs shall be at rates not higher than the standard paid in the
greater Boston area and shall include and be limited to the items set forth
below.
1. Costs of all materials, supplies and equipment incorporated in
the work, including costs of transportation thereof.
2. Payments made by the Contractor to subcontractors for work
performed pursuant to subcontracts.
3. Rental charges of all necessary machinery and equipment,
exclusive of hand tools, used at the site in performance of the
work, whether rented from the Contractor or others, including
installation, minor repairs and replacements, dismantling,
removal, transportation and delivery costs thereof, at rental
charges consistent with those prevailing in the greater Boston
area.
4. Sales, use, or similar taxes related to the work and for which
the Contractor is liable, which are imposed by any governmental
authority.
5. Permit fees associated with Cost of the Work as defined in this
Exhibit and deposits lost for causes other than due to the
Contractor's negligence.
6. Losses and expenses, due to physical damage, not compensated by
insurance or otherwise and excluding any deductible, sustained by
the Contractor as a result of Davox' fault or negligence in
connection with the work, provided they have resulted from causes
other than the fault or neglect of the Contractor or its
representatives. Such losses shall include settlements made with
the written consent and approval of the Tenant. If, however, such
loss requires reconstruction and the Contractor is placed in
charge thereof, he shall be paid for his services a fee of six
percent (6%) of the cost of such work.
7. Costs incurred due to an emergency affecting the safety of
persons and property, not compensated by insurance or otherwise
and excluding any deductible, sustained by the Contractor in
connection with the work, provided they have resulted from causes
other than the fault or neglect of the Contractor or its
representatives.
<PAGE>
8. Other costs incurred in the performance of the work if and to the
extent approved in advance in writing by the Tenant.
Note: All other work and items customary or necessary to complete the Tenant's
Work, Landlord's Work beyond such work listed in the outline specifications, and
Tenant Alterations work completed by Landlord shall be provided by Landlord as
part of its overhead and supervision fees, for which Landlord shall be paid
seven percent (7%) of the Cost of the Work as defined in Numbers 1 through 8
above.
<PAGE>
EXHIBIT "H"
----------
CERTIFICATE OF OWNER [_]
SUBSTANTIAL COMPLETION ARCHITECT [_]
AIA DOCUMENT G704 CONTRACTOR [_]
FIELD [_]
(Instructions on reverse side) OTHER [_]
________________________________________________________________________________
PROJECT: PROJECT NO.:
(Name and address)
CONTRACT FOR:
CONTRACT DATE:
TO OWNER: TO CONTRACTOR:
(Name and address) (Name and address)
DATE OF ISSUANCE:
PROJECT OR DESIGNATED PORTION SHALL INCLUDE:
The Work performed under this Contract has been reviewed and found, to the
Architect's best knowledge, information and belief, to be substantially
complete. Substantial Completion is the stage in the progress of the Work when
the Work or designated portion thereof is sufficiently complete in accordance
with the Contract Documents so the Owner can occupy or utilize the Work for its
intended use. The date of Substantial Completion of the Project or portion
thereof designated above is hereby established as
Which is also the date of commencement of applicable warranties required by the
Contract Documents, except as stated below:
________________________________________________________________________________
A list of items to be completed or corrected is attached hereto. The failure to
include any items on such list does not alter the responsibility of the
Contractor to complete all Work in accordance with the Contract Documents.
____________________________ ___________________________ _____________________
ARCHITECT BY DATE
The Contractor will complete or correct the Work on the list of items attached
hereto within days from the above date of
Substantial Completion.
____________________________ ___________________________ _____________________
CONTRACTOR BY DATE
The Owner accepts the Work or designated portion thereof as substantially
complete and will assume full possession thereof at
(time) on (date).
____________________________ ___________________________ _____________________
OWNER BY DATE
________________________________________________________________________________
The responsibilities of the Owner and the Contractor for security, maintenance,
heat, utilities, damage to the Work and insurance shall be as follows:
(Note - Owner's and Contractor's legal and insurance counsel should determine
and review insurance requirements and coverage.)
CAUTION: You should use an original AIA document which has this caution printed
in red. An original assures that changes will not be obscured as may occur when
documents are reproduced.
<PAGE>
INSTRUCTION SHEET
FOR AIA DOCUMENT G704, CERTIFICATE OF SUBSTANTIAL COMPLETION
- --------------------------------------------------------------------------------
A. GENERAL INFORMATION
1. Purpose
(NOT LEGIBLE)
2. Related Documents
(NOT LEGIBLE)
3. Use of Current Documents
Prior to using any AIA document, the user should consult the AIA, an
AIA component chapter or a current AIA Documents List to determine the
current edition of each document.
4. Limited License for Reproduction
AIA Document G704 is a copyrighted work and may not be reproduced or
excerpted from in substantial part without the express written
permission of the AIA. The G704 document is intended to be used as a
consumable-that is, the original document purchased by the user is
intended to be consumed in the course of being used. There is no
implied permission to reproduce this document, nor does membership in
The American Institute of Architects confer any further rights to
reproduce G704.
A limited license is hereby granted to retail purchasers to reproduce
a maximum of ten copies of a completed or executed G704, but only for
use in connection with a particular Project.
B. COMPLETING THE G704 FORM
1. After the words "Project or Designated Portion shall include: ",
insert a detailed description of the Project or portion(s) of the
Project that have been accepted as being substantially complete.
2. Determine Work to be completed.
Provide a list of items that are to be completed or corrected.
Determine dates for completion of the Work.
Establish an amount to be withheld to complete the Work.
C. EXECUTION OF THE DOCUMENT
The G704 document should be executed in not less than triplicate by the
Owner, Architect and Contractor, each of whom retains an original.
<PAGE>
EXHIBIT "I"
----------
CERTIFICATE OF FINAL COMPLETION
-------------------------------
Project: Westford Technology Park Lease Date:
Building 6 Expansion
Location: Westford, Massachusetts Date:
Owner: Michelson Farm - Westford Technology
Park VI Limited Partnership Trade:
( ) All work has been completed in accordance with Contract Documents.
( ) All work has been completed in accordance with Contract Documents,
except for that listed in attached schedule for which a credit has been taken.
Final Inspection was made _____________________ in the presence of:
Remarks:
Owner must have completed or corrected all punch list items or accepted credit
for unsatisfactory or incomplete work and submitted all Close-out Documents as
listed on Close-out Documents - Record & Transmittal Form.
This is to certify that Davox Corporation will not be held responsible for any
bills, liens, claims or demands in connection with the above noted project. All
workmanship and materials are hereby guaranteed in accordance with stipulations
in the contract documents and the lease on Certificate of Substantial
Completion.
TENANT:
DAVOX CORPORATION
By:________________________________ By:_________________________________
Title:_____________________________ Title:______________________________
Date:______________________________ Date:_______________________________
<PAGE>
EXHIBIT "J"
----------
OVERHEAD AND GENERAL CONDITION ITEMS
------------------------------------
1. Wages paid for labor in the direct employ of Gutierrez Construction Co.,
Inc. ("Contractor") in the performance of the work under applicable
collective bargaining agreements, or under a salary or wage schedule agreed
upon by the Landlord, and Contractor, and including such welfare or other
benefits, if any, as may be payable with respect thereto.
2. Salaries of Contractor's personnel when stationed at the field office, in
whatever capacity employed, and a proportionate share of the project
manager and construction managers' salaries, whether at the job site or in
the main office. Personnel engaged at shops or on the road in expediting
the production or transportation of materials or equipment shall be
considered as stationed at the field office and their salaries paid for
that portions of their time spent on the work.
3. Cost of contributions, assessments or taxes incurred during the performance
of the work for such items as unemployment compensation and social
security, insofar as such cost is based on wages, salaries or other
remuneration paid to employees of the Contractor and included in the Cost
of the Work under subparagraphs 9 and 10.
4. The portion of reasonable travel and subsistence expenses of the Contractor
or of his officers or employees incurred while traveling in discharge of
duties connected with the work.
5. Cost, including transportation and maintenance, of all materials, supplies,
equipment, temporary facilities and hand tools not owned by the workers,
which are consumed in the performance of the work, and cost less salvage
value on such items used but not consumed which remain the property of the
Contractor.
6. Cost of premiums for all bonds and insurance, which the Contractor is
required by the construction contract or this Lease, to purchase and
maintain.
7. Minor expenses such as telegrams, long distance telephone calls, telephone
service at the site, expressage, drawing reproduction, mail service,
special deliveries, and similar petty cash items incurred in connection
with the Tenant's Work.
8. Cost of all clean up and removal of debris.
9. The cost of temporary power, lights, and heat.
10. The cost of temporary enclosures and partitions.
<PAGE>
Exhibit 10.17
DAVOX CORPORATION
CHAIRMAN & CHIEF EXECUTIVE OFFICER
SEVERANCE AGREEMENT - 2000
DAVOX Corporation ("DAVOX") will provide to you the following terms and
condition of salary and benefits continuation:
(1.) DAVOX shall provide medical benefits continuation, at Davox's cost and
salary continuation at a rate equal to your base salary in effect at the
time of a qualifying termination, as set forth in subclause 2, or at a
rate based on the combined value of base salary plus bonus earned in the
prior year, whichever is greater. Salary continuation shall continue for
a period of (12) months or until such time as you assume new employment,
whichever comes first. In addition, you will receive medical coverage at
Devox's cost, as may be in effect at the time of the qualifying
termination, commencing upon the date of termination, for a period of
twelve (12) months or until such time as you assume new employment,
whichever comes first;
(2.) DAVOX shall provide continuation of salary and benefits as set forth in
subclause (1) in the event your employment is terminated for the
following reasons: (a) economic layoff; (b) downsizing or merger, which
results in the elimination of your position as Chairman of the Board and
Chief Executive Officer; or (c) reorganization or merger of Davox which
would require you to relocate.
Following the effective data of termination, as set forth in writing and
furnished to you by DAVOX, your employment with DAVOX shall cease and you shall
not hold yourself as an employee, agent, or representative of DAVOX.
Continuation of salary and benefits shall further be subject to your compliance
with any then existing company policies and such other terms as may be in effect
between you and DAVOX pertaining to the disclosure of confidential or
proprietary information.
DAVOX has final authority to determine all questions of eligibility to receive
benefits under this arrangement and to interpret and construe the terms of this
arrangement.
Approval:
/s/ Alphonse M. Lucchese 3/1/00
--------------------------------------- -----------
Chairman & Chief Executive Officer Date
/s/ Michael Kaufman 2/29/00
--------------------------------------- -----------
Michael Kaufman Date
/s/ Scott Asen 3/1/00
--------------------------------------- -----------
Scott Asen Date
<PAGE>
Exhibit 10.18
DAVOX CORPORATION
SENIOR VICE PRESIDENT FINANCE & CHIEF FINANCIAL OFFICER
SEVERANCE AGREEMENT - EFFECTIVE MAY 4, 1999
DAVOX Corporation ("DAVOX") will provide to you the following terms and
condition of salary and benefits continuation;
(1.) DAVOX shall provide a continuation of your base salary and medical
benefits at DAVOX's cost, as may be in effect at the time of a qualifying
terminations as set forth in subclause 2 commencing upon the date of
termination, for a period of twelve (12) months or until such time as you
assume new employment, whichever comes first.
(2.) DAVOX shall provide continuation of salary and benefits as set forth in
subclause (1) in the event your employment is terminated for reasons
other than for cause.
Following the effective date of termination, as set forth in writing and
furnished to you by DAVOX, your employment with DAVOX shall cease and you shall
not hold yourself as an employee, agent or representative of DAVOX.
Continuation of salary and benefits shall further be subject to your compliance
with any then existing company policies and such other terms as may be in effect
between you and DAVOX pertaining to the disclosure of confidential or
proprietary information.
This agreement shall supercede any previous or written agreements pertaining to
severance.
DAVOX has final authority to determine all questions of eligibility to receive
benefits under this arrangement and to interpret and construe the terms of this
arrangement.
Approvals:
/s/ Alphonse M. Lucchese 6/8/99
--------------------------------------- -------
Chairman & Chief Executive Officer Date
/s/ John J. Connolly 6/8/99
------------------------------------------------------- ------
Senior Vice President Finance & Chief Financial Officer Date
<PAGE>
EXHIBIT 10.19
DAVOX CORPORATION
SENIOR VICE PRESIDENT NORTH AMERICAN SALES OPERATIONS
SEVERANCE AGREEMENT - 2000
DAVOX Corporation ("DAVOX") will provide to you the following terms and
condition of salary and benefits continuation:
(1.) DAVOX shall provide a continuation of your base salary and medical
benefits at DAVOX's cost, as may be in effect at the time of a
qualifying termination as set forth in subclause 2, commencing upon
the date of termination, for a period of six (6) months or until such
time as you assume new employment, whichever comes first;
(2.) DAVOX shall provide continuation of salary and benefits as set forth
in subclause (1) in the event your employment is terminated for the
following reasons: (a) economic layoff; (b) downsizing of the North
American Sales Operations organization which results in the
elimination of your position as Senior Vice President North American
Sales Operations; or (c) reorganization of the North American Sales
Operations organization which would require you to relocate.
Following the effective date of termination, as set forth in writing and
furnished to you by DAVOX, your employment with DAVOX shall cease and you shall
not hold yourself as an employee, agent, or representative of DAVOX.
Continuation of salary and benefits shall further be subject to your compliance
with any then existing company policies and such other terms as may be in effect
between you and DAVOX pertaining to the disclosure of confidential or
proprietary information.
DAVOX has final authority to determine all questions of eligibility to receive
benefits under this arrangement and to interpret and construe the terms of this
arrangement.
Approval
/s/ Alphonse M. Lucchese 3/1/00
-------------------------------------- ---------------
Chairman & Chief Executive Officer Date
/s/ Joseph R. Coleman 3/1/99
-------------------------------------- ---------------
Senior Vice President North American Sales Operations Date
<PAGE>
EXHIBIT 10.20
DAVOX CORPORATION
SENIOR VICE PRESIDENT OPERATIONS & CUSTOMER SERVICE
SEVERANCE AGREEMENT - 2000
DAVOX Corporation ("DAVOX") will provide to you the following terms and
condition of salary benefits continuation:
(1.) DAVOX shall provide a continuation of your base salary and medical
benefits at DAVOX's cost, as may be in effect at the time of a
qualifying termination as set forth in subclause 2, commencing upon the
date of termination, for a period of six (6) months or until such time
as you assume new employment, whichever comes first;
(2.) DAVOX shall provide continuation of salary and benefits as set forth in
subclause (1) in the event your employment is terminated for the
following reasons: (a) economic layoff; (b) downsizing of the
Operations or Customer Service organization which results in the
elimination of your position as Senior Vice President Operations &
Customer Service, or (c) reorganization of the Operations or Customer
Service organization which would require you to relocate.
Following the effective date of termination, as set forth in writing and
furnished to you by DAVOX, your employment with DAVOX shall cease and you shall
not hold yourself as an employee, agent or representative of DAVOX.
Continuation of salary and benefits shall further be subject to your compliance
with any then existing company policies and such other terms as may be in effect
between you and DAVOX pertaining to the disclosure of confidential or
proprietary information.
DAVOX has final authority to determine all questions of eligibility to receive
benefits under this arrangement and to interpret and construe the terms of this
arrangement.
Approval:
/s/ Alphonse M. Lucchese 3/1/00
--------------------------------------------- --------
Chairman & Chief Executive Officer Date
/s/ Mark Donovan 2/28/00
--------------------------------------------------- --------
Senior Vice President Operations & Customer Service
<PAGE>
EXHIBIT 10.21
DAVOX CORPORATION
SENIOR VICE PRESIDENT INTERNATIONAL OPERATIONS
SEVERANCE AGREEMENT - 2000
DAVOX Corporation ("DAVOX") will provide to you the following terms and
condition of salary and benefits continuation:
(1.) DAVOX shall provide a continuation of your base salary and medical
benefits at DAVOX'S cost, as may be in effect at the time of a
qualifying termination as set forth in subclause 2, commencing upon
the date of termination, for a period of six (6) months or until such
time as you assume new employment, whichever comes first;
(2.) DAVOX shall provide continuation of salary and benefits as set forth
in subclause (1) in the event your employment is terminated for the
following reasons: (a) economic layoff; (b) downsizing of the
International Sales organization which results in the elimination of
your position as Senior Vice President International Operations; or
(c) reorganization of the International Sales organization which would
require you to relocate.
Following the effective date of termination, as set forth in writing and
furnished to you by DAVOX, your employment with DAVOX shall cease and you shall
not hold yourself as an employee, agent, or representative of DAVOX.
Continuation of salary and benefits shall further be subject to your compliance
with any existing company policies and such other terms as may be in effect
between you and DAVOX pertaining to the disclosure of confidential or
proprietary information.
DAVOX has final authority to determine all questions of eligibility to receive
benefits under this arrangement and to interpret and construe the terms of this
arrangement.
Approval:
/s/ Alphonse M. Lucchese 3/1/00
------------------------------------------ ------------
Chairman & Chief Executive Officer Date
/s/ Douglas W. Smith 01-03-00
------------------------------------------ ------------
Senior Vice President International Sales Date
<PAGE>
Exhibit 21
Davox Corporation
List of Subsidiaries
Name of Subsidiary Jurisdiction of Incorporation
- ------------------ -----------------------------
Davox (Asia Pacific) Pte. Ltd. Singapore
Davox GmbH Germany
Davox (Canada) Inc. Nova Scotia
Davox (Europe) Limited England
Davox Sales Corporation Barbados
Davox Belgium S.P.R.L Belgium
Davox International Holdings, Inc. Massachusetts
Davox Mexico, S. de R.L. de C.V. Mexico
Davox Securities Corporation Massachusetts
<PAGE>
Exhibit 24.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 10-K, into the Company's previously filed
Registration Statements File Nos. 333-83687, 333-52551, 333-30727, 333-16209,
333-07003, 33-47618, 33-47619, 33-51578, and 33-89582.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 3, 2000
<PAGE>
Exhibit 24.3
Consent of Independent Auditors
We consent to the use of our report dated February 28, 1998, with respect to the
financial statements of AnswerSoft, Inc. included in this Annual Report (Form
10-K) of Davox Corporation.
We also consent to the incorporation by reference in the Registration Statements
of Davox Corporation on Form S-8 (File Nos. 33-89582, 333-07003, 333-16209,
333-30727, 333-52551, 33-47618, 33-47619, 33-51578, and 333-83687) of our report
dated February 28, 1998, with respect to the financial statements of AnswerSoft,
Inc. included in this Annual Report (Form 10-K) of Davox Corporation.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Dallas, Texas
March 2, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 JAN-01-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 34,433 31,759
<SECURITIES> 30,770 27,711
<RECEIVABLES> 21,951 17,134
<ALLOWANCES> 1,631 1,175
<INVENTORY> 0 0
<CURRENT-ASSETS> 92,614 82,831
<PP&E> 5,050 5,298
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 99,043 89,423
<CURRENT-LIABILITIES> 26,529 20,096
<BONDS> 0 0
0 0
0 0
<COMMON> 1,456 1,435
<OTHER-SE> 71,058 67,892
<TOTAL-LIABILITY-AND-EQUITY> 99,043 89,423
<SALES> 53,757 53,818
<TOTAL-REVENUES> 92,354 88,948
<CGS> 9,809 10,510
<TOTAL-COSTS> 30,710 30,114
<OTHER-EXPENSES> 13,259 12,086
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 14,123 12,922
<INCOME-TAX> 2,118 4,393
<INCOME-CONTINUING> 12,005 8,529
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 12,005 8,529
<EPS-BASIC> 0.89 0.60
<EPS-DILUTED> 0.85 0.58
</TABLE>
