<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-288-42
SPATIAL TECHNOLOGY INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 84-1035353
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
2425 55TH STREET, SUITE 100, BOULDER, COLORADO 80301
(address of principal executive offices) (Zip Code)
</TABLE>
(303) 449-0649
(Registrant's telephone number, including area code)
Indicate by check 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
--- ---
As of July 1, 1997, there were outstanding 7,430,132 shares of the
Registrant's Common Stock (par value $0.01 per share).
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
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SPATIAL TECHNOLOGY INC.
INDEX
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets, December 31, 1996
and June 30, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations, three and six
months ended June 30, 1996 and 1997 . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows, three and six
months ended June 30, 1996 and 1997 . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
2
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SPATIAL TECHNOLOGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except shares)
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1996 1997
--------- ---------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 8,407 $ 6,928
Accounts receivable, net of allowance of $50 and $87 in 1996 and
1997, respectively 1,542 2,076
Prepaid expenses and other 341 435
--------- ---------
Total current assets 10,290 9,439
Equipment, net 423 742
Purchased computer software, net 358 106
--------- ---------
$ 11,071 $ 10,287
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 314 $ 339
Accrued royalties payable 366 372
Other accrued expenses 755 956
Deferred revenue 1,325 1,346
--------- ---------
Total current liabilities 2,760 3,013
--------- ---------
Stockholders' Equity:
Common stock, $.01 par value; 22,500,000 shares authorized;
7,369,888 and 7,430,132 shares issued in 1996 and 1997,
respectively 74 74
Additional paid-in capital 23,351 23,539
Accumulated deficit (15,034) (16,249)
Foreign currency translation adjustment (80) (90)
--------- ---------
Total stockholders' equity 8,311 7,274
--------- ---------
$ 11,071 $ 10,287
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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SPATIAL TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1997 1996 1997
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Revenue:
License fees . . . . . . . . . . . . . . . . . $ 1,397 $ 956 $ 2,348 $ 1,570
Royalties . . . . . . . . . . . . . . . . . . 510 532 1,228 1,299
Maintenance and other . . . . . . . . . . . . 745 697 1,461 1,406
--------- ---------- --------- ---------
Total revenue . . . . . . . . . . . . . 2,652 2,185 5,037 4,275
--------- ---------- --------- ---------
Cost of sales:
License fees . . . . . . . . . . . . . . . . . 62 83 148 151
Royalties . . . . . . . . . . . . . . . . . . 48 40 113 96
Maintenance and other . . . . . . . . . . . . 145 59 300 128
--------- ---------- --------- ---------
Total cost of sales . . . . . . . . . . 255 182 561 375
--------- ---------- --------- ---------
Gross profit . . . . . . . . . . . . . . 2,397 2,003 4,476 3,900
--------- ---------- --------- ---------
Operating expenses:
Sales and marketing . . . . . . . . . . . . . 939 968 1,674 1,891
Research and development . . . . . . . . . . . 894 916 1,755 1,804
General and administrative . . . . . . . . . . 437 630 767 1,204
Acquired in-process research and development and
severance costs . . . . . . . . . . . . . . . -- 399 -- 399
--------- ---------- --------- ---------
Total operating expenses . . . . . . . . 2,270 2,913 4,196 5,298
--------- ---------- --------- ---------
Earnings (loss) from operations . . . . 127 (910) 280 (1,398)
Other income (expense)
Interest income . . . . . . . . . . . . . . . 7 100 12 207
Interest expense . . . . . . . . . . . . . . . (28) -- (64) (1)
Other, net . . . . . . . . . . . . . . . . . . -- (1) 1 (2)
--------- ---------- --------- ---------
Total other income (expense) . . . . . . (21) 99 (51) 204
--------- ---------- --------- ---------
Earnings (loss) before income taxes . . 106 (811) 229 (1,194)
Income tax expense (benefit) . . . . . . . . . . (19) (7) 45 21
--------- ---------- --------- ---------
Net earnings (loss). . . . . . . . . . . $ 125 $ (804) $ 184 $ (1,215)
========= ========== ========= =========
Earnings (loss) per common share . . . . . . . . $ 0.02 $ (0.11) $ 0.03 $ (0.16)
========= ========== ========= =========
Weighted average number of common shares and . .
common equivalent shares outstanding . . . . . 5,357 7,454 5,330 7,465
========= ========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
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SPATIAL TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
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Six Months Ended
June 30,
----------------------------------
1996 1997
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Cash flows from operating activities:
Net earnings (loss) $ 184 $ (1,215)
Adjustments to reconcile net earnings (loss) to net cash
provided (used) by operating activities:
Acquired in-process research and development -- 200
Depreciation and amortization 115 152
Common stock issued for services 20 --
Changes in operating assets and liabilities:
Accounts receivable (400) (534)
Prepaid expenses and other 8 (94)
Accounts payable (175) 25
Accrued expenses 326 207
Deferred revenue 559 21
----------- ---------
Net cash provided (used) by operating activities 637 (1,238)
----------- ---------
Cash flows from investing activities:
Additions to equipment (75) (419)
Additions to purchased computer software (200) --
----------- ---------
Net cash used by investing activities (275) (419)
----------- ---------
Cash flows from financing activities:
Principal payments on notes payable (725) --
Proceeds from notes payable 225 --
Proceeds from issuance of stock 392 188
----------- ---------
Net cash provided (used) by financing activities (108) 188
----------- ---------
Foreign currency translation adjustment affecting cash (17) (10)
----------- ---------
Net increase (decrease) in cash and cash equivalents 237 (1,479)
Cash and cash equivalents at beginning of period 153 8,407
----------- ---------
Cash and cash equivalents at end of period $ 390 $ 6,928
=========== =========
Supplemental disclosures:
Cash paid for interest $ 29 $ 1
=========== =========
Cash paid for income taxes $ 91 $ 44
=========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
5
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SPATIAL TECHNOLOGY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1997
A. FINANCIAL STATEMENT PRESENTATION
The accompanying audited and unaudited condensed consolidated financial
statements of the Company have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
Company believes the disclosures included in the condensed consolidated
financial statements, when read in conjunction with the Company's consolidated
financial statements and notes thereto included in the Company's annual report
on Form 10-KSB for the year ended December 31, 1996, are adequate to make the
information presented not misleading.
Certain prior year financial statement balances have been reclassified to
conform to the 1997 presentations.
B. EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is computed using the weighted average number of
shares of common and common equivalent shares resulting from outstanding
options and warrants. Fully diluted earnings per share are the same as primary
earnings per share.
C. NOTES PAYABLE
In May 1997 the Company amended its revolving line of credit with a bank.
The amended line of credit provides for maximum borrowings of $1,000,000
through May 1998 and bears interest at the bank's prime rate plus 0.25%. As of
June 30, 1997, the Company had no borrowings under this line of credit. The
amended line of credit also includes an equipment financing line of credit
providing for maximum borrowings of $500,000. The equipment financing line of
credit bears interest at the bank's prime rate plus 0.75% and is payable in
thirty-six equal monthly installments beginning on March 31, 1998.
D. SUBSEQUENT EVENTS
Effective June 30, 1997 the Company entered into a Separation and Release
Agreement with the former President of the Company, which provides for a lump
sum severance payment, consulting fees and other benefits totaling
approximately $150,000. Such amount was charged to operations in June 1997.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
presented here. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this section and those
discussed in the Company's Form 10-KSB for the year ended December 31, 1996,
particularly those contained in "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
RESULTS OF OPERATIONS
Revenue
Total revenue for the quarter ended June 30, 1997 decreased 18% to $2.2
million from $2.7 million reported for the quarter ended June 30, 1996. This
decrease resulted from decreased license fees and maintenance and other
revenue, which was partially offset by higher royalty revenue. License fees
decreased 32% to $956,000 for the second quarter of 1997 from $1.4 million
reported in the second quarter of 1996. The decrease in license fees is
attributed primarily to fewer license contracts in North America in 1997 as
compared to 1996. Maintenance and other revenue decreased 6% to $697,000 for
the quarter ended June 30, 1997 as compared to $745,000 reported for the
quarter ended June 30, 1996. Royalties increased 4%, growing to $532,000 for
the second quarter of 1997 from $510,000 reported for the same quarter in 1996.
Excluding non-refundable prepaid royalties, royalty revenue increased 17%,
growing from $410,000 in the quarter ended June 30, 1996 to $478,000 in the
quarter ended June 30, 1997. Increased royalties resulted from an increase in
the number of the Company's customers shipping ACIS-based software
applications. International revenue represented 44% of total revenue for the
second quarter of 1997 as compared to 40% for the second quarter of 1996.
For the six month period ended June 30, 1997 total revenue decreased 15% to
$4.3 million as compared to $5.0 million reported for the same six month period
in 1996, resulting primarily from decreased license fees and maintenance and
other revenue, partially offset by increased royalties. License fees
decreased 33% to $1.6 million in the six month period ended June 30, 1997 as
compared to $2.3 million for the comparable prior year period. The decrease in
license fees was attributed primarily to fewer license contracts in North
America and Japan in 1997 as compared to 1996. Maintenance and other revenue
decreased 4% to $1.4 million for the six month period ended June 30, 1997 as
compared to $1.5 million reported for the comparable period in 1996, resulting
primarily from a decrease in the number of annual maintenance contracts
renewed. Royalties increased 6%, growing to $1.3 million for the six month
period ended June 30, 1997 from $1.2 million reported for the six month period
ended June 30, 1996. Increased royalties resulted from an increase in the
number of the Company's customers shipping ACIS-based software applications.
International revenue represented 49% of total revenue for the six months ended
June 30, 1997 as compared to 44% for the six months ended June 30, 1996.
Cost of Sales
Cost of sales consists of royalty payments by the Company to third party
developers, support costs, manufacturing costs (primarily media duplication,
manuals, and shipping) and amortization of purchased computer software. Total
cost of sales decreased 29% to $182,000 for the quarter ended June 30, 1997 from
$255,000 reported in the quarter ended June 30, 1996. For the six month period
ended June 30, 1997 total cost of sales decreased 33% to $375,000 from $561,000
reported in the comparable prior year period. For all periods presented the
decrease in total cost of sales was primarily due to lower manufacturing and
support costs. Manufacturing costs decreased $36,000 and $86,000 in the three
and six month periods ended June 30, 1997, respectively, as compared to the
comparable prior year periods. Manufacturing costs decreased in each reported
period of 1997 as compared to 1996 primarily due to a product release update
distributed at the end of the first quarter of 1996, whereas no update was
shipped in the first half of 1997. Decreased manufacturing costs are also due
to the Company's transition to CD-ROM based media as its primary media format
and to the use of on-line documentation at the end of the first quarter of 1996,
resulting in cost savings. Support costs decreased $45,000 and $84,000 in the
three and six month periods ended June 30, 1997, respectively, as compared to
the comparable prior year periods primarily due to organization changes;
management of customer support has been combined with other research and
development functions. As a percent of total revenue, cost of sales decreased
to 8% for the second quarter of 1997 as compared to 10% for the second
7
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quarter of 1996, and decreased to 9% for the six month period ended June 30,
1997 as compared to 11% for the comparable prior year period.
Operating Expenses
Sales and marketing expense increased slightly to $968,000 for the quarter
ended June 30, 1997 as compared to $939,000 reported in the quarter ended June
30, 1996. For the six month period ended June 30, 1997 sales and marketing
expense increased 13% to $1.9 million from $1.7 reported for the six month
period ended June 30, 1996. Increased sales and marketing expense reflected
lower commission expense offset by higher spending on marketing in 1997 as
compared to 1996. Commission expense decreased as a result of lower license
fees in both the three and six month periods ended June 30, 1997 as compared to
the same prior year periods. Increased marketing expense was primarily due to
increased spending on marketing programs and increased staffing in support of
heightened marketing activities on the part of the Company in 1997 as compared
to 1996. Marketing program expenses increased in 1997 for public relations,
direct mail promotions and advertising campaigns. As a percent of total
revenue, sales and marketing expense increased to 44% for the three and six
month periods ended June 30, 1997 as compared to 35% and 33% for the three and
six month periods ended June 30, 1996, respectively.
Research and development expense increased slightly to $916,000 for the
quarter ended June 30, 1997 from $894,000 reported in the same prior year
quarter. For the six month periods ended June 30, 1997 and 1996 research and
development expense was $1.8 million. As a percent of total revenue, research
and development expense increased to 42% for the three and six month periods
ended June 30, 1997 from 34% and 35% for comparable prior year periods. The
Company accounts for research and development expense in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 86, under which the
Company is required to capitalize software development costs after
technological feasibility is established. Capitalizable software development
costs incurred to date have not been significant; therefore, the Company has
expensed all of these costs in the periods incurred.
General and administrative expense increased 44% to $630,000 for the
quarter ended June 30, 1997 from $437,000 reported for the quarter ended June
30, 1996. For the six month period ended June 30, 1997 general and
administrative expense increased 57% to $1.2 million from $767,000 reported for
the same period in 1996. Increased general and administrative expense for all
periods presented was primarily attributable to increased spending on
insurance, professional fees and other costs associated with the Company's
reporting obligations as a public company. Additionally, legal expense
increased in 1997 as compared to 1996 due to costs associated with ongoing
litigation as described in "Legal Proceedings". As a percent of total revenue,
general and administrative expense increased to 29% for the second quarter of
1997 as compared to 16% for the second quarter of 1996 and 28% for the six
month period ended June 30, 1997 as compared to 15% for the comparable prior
year period.
Acquired In-process Research and Development and Severance Costs
In the quarter ended June 30, 1997 the Company took a $200,000 non-cash
write off related to acquired technology, reflecting a change in the Company's
development strategy. The Company also incurred a $150,000 charge during the
second quarter of 1997 for severance costs in connection with the Separation
and Release Agreement with the former president of the Company.
Other Income (Expense), net
Other income increased to $99,000 for the quarter ended June 30, 1997 as
compared to an expense of $21,000 reported for the quarter ended June 30, 1996.
For the six month period ended June 30, 1997 other income increased to $204,000
as compared to an expense of $51,000 reported for the six month period ended
June 30, 1996. Increased other income reflects higher interest income
resulting from the investment of proceeds from the Company's initial public
offering which was completed in October 1996.
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Income Tax Expense
Income tax expense reflected a credit of $7,000 in the quarter ended June
30, 1997 as compared to a credit of $19,000 for the quarter ended June 30,
1996. For the six month period ended June 30, 1997 income tax expense
decreased to $21,000 as compared to $45,000 reported in the six month period
ended June 30, 1996. For the quarters ended June 30 1997 and 1996 the net
income tax benefit reflects adjustments for actual payments less than
originally accrued for contracts executed in prior periods. Income tax expense
for these periods included only withholding taxes on foreign sales.
FLUCTUATIONS IN QUARTERLY RESULTS
The Company has experienced in the past and expects to continue to
experience significant fluctuations in quarterly operating results due to a
number of factors that are difficult to forecast, including, among others, the
volume of orders received within a quarter, demand for the Company's products,
the product mix purchased by the Company's customers, competing capital budget
considerations of the Company's customers, introduction and enhancement of
products by the Company and its competitors, market acceptance of new products,
reviews in the industry press concerning the products of the Company or its
competitors, changes or anticipated changes in pricing by the Company or its
competitors and general economic conditions. Due to the foregoing factors, it
is possible that the Company's operating results for some future quarters may
fall below the expectations of securities analysts and investors.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had $6.9 million in cash and cash
equivalents. Cash and cash equivalents decreased $1.5 million for the six
month period ended June 30, 1997, as compared to an increase in cash and cash
equivalents of $237,000 for the comparable prior year period.
Net cash used by operating activities was $1.2 million for the six month
period ended June 30, 1997 as compared to cash provided by operations of
$637,000 for the six month period ended June 30, 1996. Net cash used for
operations in 1997 was primarily the result of the net loss for the six month
period ended June 30, 1997, combined with an increase in accounts receivable,
partially offset by the non-cash write off of acquired in-process research and
development and increased accrued expenses. Cash provided by operations in the
six month period ended June 30, 1996 was primarily due to an increase in
deferred revenue and accrued expenses, which was partially offset by increased
accounts receivable.
Net cash used by investing activities for the six month period ended June
30, 1997 totaling $419,000 reflects cash used for capital equipment purchases.
For the six month period ended June 30, 1996 net cash used by investing
activities of $275,000 included $75,000 for capital equipment purchases and
$200,000 for additions to purchased computer software. In June 1997 the
Company charged the $200,000 to operations. See "Results of Operations -
Acquired In-process Research and Development and Severance Costs".
Net cash provided by financing activities was $188,000 for the six month
period ended June 30, 1997, reflecting the issuance of stock in connection with
the exercise of stock options. Net cash used by financing activities in the six
month period ended June 30, 1996 of $108,000 reflects cash used for principal
payments on notes payable, partially offset by cash provided by the issuance of
stock in connection with the exercise of stock warrants and options.
In May 1997 the Company amended its revolving line of credit with a bank.
The amended line of credit provides for maximum borrowings of $1,000,000
through May 1998 and bears interest at the bank's prime rate plus 0.25%. As of
June 30, 1997, the Company had no borrowings under this line of credit. The
amended line of credit also includes an equipment financing line of credit
providing for maximum borrowings of $500,000. The equipment financing line of
credit bears interest at the bank's prime rate plus 0.75% and is payable in
thirty-six equal monthly installments beginning on March 31, 1998.
The Company believes existing cash, together with existing credit
facilities and cash generated from operations, will be sufficient to meet the
Company's operating and capital requirements for the foreseeable future
including at least the next twelve months.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
On April 30, 1997, the Company filed a Complaint for Damages and Injunctive
Relief and Jury Demand in the District Court of Boulder County, Colorado
against Rolf Fischer, Ronald E. Davidson and Hyper Tree Technologies, L.L.C.
On June 9, 1997, Hyper Tree Technologies, L.L.C. removed the action to the
United States District Court for the District of Colorado. Both Mr. Fischer
and Mr. Davidson were employees of the Company until their resignations
effective on March 31, 1997. Additionally, Mr. Davidson served as an executive
officer of the Company as Vice President, Pacific Rim Sales. In the Complaint,
the Company alleges that Messrs. Fischer and Davidson have acted to deprive
the Company of its rights to a technology known as "Lean Design". The Company
is seeking relief against the defendants for breach of contract and employment
duties, unfair competition, fraud, misappropriation of trade secrets and
conspiracy, among other items, and has requested a jury trial to resolve the
issues in dispute.
Although no counterclaims have been filed, the Company expects the
litigation to be contentious. The Company states no opinion as to the
likelihood that any counterclaims will be filed or as to the degree of exposure
the Company may face from any counterclaims.
Item 2. Changes in Securities:
None
Item 3. Defaults on Senior Securities:
Not Applicable
Item 4. Submission of Matters to Vote of Security Holders:
An Annual Meeting of the Company's Stockholders was held on May 8, 1997 in
Boulder, Colorado for the following purposes:
(a) To approve an amendment to the Restated Certificate of Incorporation to
provide for the classification of the Board of Directors into three classes
with three staggered terms. The following votes were cast by the Company's
stockholders with respect to the amendment to the Restated Certificate of
Incorporation:
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<CAPTION>
Shares Voted For Shares Voted Against Shares Voted Withheld Abstentions Broker Non-Votes
---------------- -------------------- --------------------- ----------- ----------------
<S> <C> <C> <C> <C>
3,654,218 992,510 0 34,100 1,700,111
</TABLE>
The foregoing votes did not result in the adoption of such proposal.
(a) To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997. The
following votes were cast by the Company's stockholders with respect to the
ratification of the Company's auditors:
<TABLE>
<CAPTION>
Shares Voted For Shares Voted Against Shares Voted Withheld Abstentions Broker Non-Votes
---------------- -------------------- --------------------- ----------- ----------------
<S> <C> <C> <C> <C>
6,346,039 11,800 0 23,100 0
</TABLE>
The foregoing votes resulted in the adoption of such proposal.
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Item 5. Other Information:
None
Item 6. Exhibits and Reports on Form 8-K:
a) Exhibits
<TABLE>
<S> <C>
10.27 Amended and Restated Loan and Security Agreement between the Registrant and
Silicon Valley Bank, dated as of August 15, 1995, as amended.
10.28 Separation and Release Agreement between the Registrant and Jerry T. Sisson,
dated as of June 23, 1997.
10.29 Employment Agreement between the Registrant and R. Bruce Morgan, dated as of
July 1, 1997.
27 Financial Data Schedule
</TABLE>
b) Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPATIAL TECHNOLOGY INC.
Date August 8, 1997 /s/ R. Bruce Morgan
-------------- ----------------------------
R. Bruce Morgan
President, Chief Operating
Officer and Director
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page
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<S> <C> <C>
10.27 Amended and Restated Loan and Security Agreement between the Registrant and
Silicon Valley Bank, dated as of August 15, 1995, as amended.
10.28 Separation and Release Agreement between the Registrant and Jerry T. Sisson,
dated as of June 23, 1997.
10.29 Employment Agreement between the Registrant and R. Bruce Morgan, dated as of
July 1, 1997.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 10.27
AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This Amendment to Loan and Security Agreement is entered into as of May
30, 1997 by and between Silicon Valley Bank ("Bank") and Spatial Technology
Inc. ("Borrower").
RECITALS
Borrower and Bank are parties to an Amended and Restated Loan and Security
Agreement dated as of August 15, 1996, as amended from time to time (the
"Agreement"). The parties desire to amend the Agreement in accordance with the
terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. The following definitions contained in Section 1.1 are amended to
read as follows:
"Committed Line" means One Million Dollars ($1,000,000).
"Maturity Date" means February 28, 2001.
"Revolving Maturity Date" means May 29, 1998.
2. Section 2.1 is amended to read as follows:
2.1 Advances.
(a) Subject to and upon the terms and conditions of this
Agreement, Bank agrees to make Advances to Borrower in an aggregate amount
not to exceed the Committed Line minus the face amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit minus
the Foreign Exchange Reserve. Subject to the terms and conditions of this
Agreement, amounts borrowed pursuant to this Section 2.1 may be repaid and
reborrowed at any time prior to the Revolving Maturity Date.
(b) Whenever Borrower desires an Advance, Borrower will
notify Bank by facsimile transmission or telephone no later than 3:00 p.m.
California time, on the Business Day that the Advance is to be made. Each
such notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of Exhibit B hereto. Bank is authorized to make
Advances under this Agreement, based upon instructions received from a
Responsible Officer, or without instructions if in Bank's discretion such
Advances are necessary to meet Obligations which have become due and remain
unpaid. Bank shall be entitled to rely on any telephonic notice given by a
person who Bank reasonably believes to be a Responsible Officer, and
Borrower shall indemnify and hold Bank harmless for any damages or loss
suffered by Bank as a result of such reliance. Bank will credit the amount
of Advances made under this Section 2.1 to Borrower's deposit account.
(c) The Revolving Facility shall terminate on the Revolving
Maturity Date, at which time all Advances under this Section 2.1 shall be
immediately due and payable.
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3. New Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4 are added to the
Agreement, as follows:
2.1.1 Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement, Bank agrees to issue or cause to be issued letters of credit (each a
"Letter of Credit," collectively, the "Letters of Credit") for the account of
Borrower in an aggregate face amount not to exceed (i) the lesser of the
Committed Line or the Borrowing Base minus (ii) the then outstanding principal
balance of the Advances minus the Foreign Exchange Reserve provided that the
face amount of outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit) shall not in any case exceed Two Hundred Thousand Dollars
($200,000). Each such Letter of Credit shall have an expiry date no later than
the Revolving Maturity Date, unless Borrower's Letter of Credit reimbursement
obligation is secured by cash on terms acceptable to Bank at any time after the
Revolving Maturity Date. All such Letters of Credit shall be, in form and
substance, acceptable to Bank in its sole discretion and shall be subject to
the terms and conditions of Bank's form of application and letter of credit
agreement. All amounts actually paid by Bank in respect of a letter of credit
shall, when paid, constitute an Advance under this Agreement.
(b) The obligation of Borrower to immediately
reimburse Bank for drawings made under Letters of Credit shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement and such Letters of Credit, under all
circumstances whatsoever. Borrower shall indemnify, defend and hold Bank
harmless from any loss, cost, expense or liability, including, without
limitation, reasonable attorneys' fees, arising out of or in connection with
any Letters of Credit.
2.1.2 Letter of Credit Reimbursement; Reserve.
(a) Borrower may request that Bank issue Letter
of Credit payable in a currency other than United States Dollars. If a demand
for payment is made under any such Letter of Credit. Bank shall treat such
demand as an advance to Borrower of the equivalent of the amount thereof (plus
cable charges) in United States currency at the then prevailing rate of
exchange in San Francisco, California, for sales of that other currency for
cable transfer to the country of which it is the currency.
(b) Upon the issuance of any Letter of Credit
payable in currency other than United States Dollars, Bank shall create a
reserve under the Committed Line for Letters of Credit against fluctuations in
currency exchange rates, in an amount equal to ten percent (10%) of the face
amount of such Letter of Credit. The amount of such reserve may be amended by
Bank from time to time to account for fluctuations in the exchange rate. The
availability of funds under the Committed Line shall be reduced by the amount
of such reserve for so long as such Letter of Credit remains outstanding.
2.1.3 Foreign Exchange Contract; Foreign Exchange
Settlements.
(a) Subject to the terms of this Agreement,
Borrower may enter into foreign exchange contracts (the "Exchange Contracts")
not to exceed an aggregate amount of $200,000 (the "Contract Limit"), pursuant
to which Bank shall sell to or purchase from Borrower foreign currency on a spot
or future basis. Borrower shall not request any Exchange Contracts at any time
it is out of compliance with any of the provisions of this Agreement. All
Exchange Contracts must provide for delivery of settlement on or before the
Revolving Maturity Date. The amount available under the Committed Line at any
time shall be reduced by the following amounts (the "Foreign Exchange Reserve")
on any given day (the "Determination Date"): (i) on all outstanding Exchange
Contracts on which delivery is to be
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effected or settlement allowed more than two business days after the
Determination Date, 10% of the gross amount of the Exchange Contracts; plus
(ii) on all outstanding Exchange Contracts on which delivery is to be
effected or settlement allowed within two business days after the
Determination Date, 100% of the gross amount of the Exchange Contracts.
(b) Bank may, in its discretion, terminate the Exchange
Contracts at any time (a) that an Event of Default occurs or (b) that there
is no sufficient availability under the Committed Line and Borrower does
not have available funds in its bank account to satisfy the Foreign
Exchange Reserve. If Bank terminates the Exchange Contracts, and without
limitation of any applicable indemnities, Borrower agrees to reimburse Bank
for any and all fees, costs and expenses relating thereto or arising in
connection therewith.
(c) Borrower shall not permit the total gross amount of all
Exchange Contracts on which delivery is to be effected and settlement
allowed in any two business day period to be more than $200,000 (the
"Settlement Limit"), nor shall Borrower permit the total gross amount of
all Exchange Contracts to which Borrower is a party, outstanding at any one
time, to exceed the Contract Limit. Notwithstanding the above, however, the
amount which may be settled in any two (2) business day period may be
increased above the Settlement Limit up to, but in no event to exceed, the
amount of the Contract Limit under either of the following circumstances:
(i) if there is sufficient availability under the
Committed Revolving Line in the amount of the Foreign Exchange Reserve as
of each Determination Date, provided that Bank in advance shall reserve the
full amount of the Foreign Exchange Reserve against the Committed Line; or
(ii) if there is insufficient availability under the
Committed Line, as to settlements with any two (2) business day period,
provided that Bank, in its sole discretion, may: (A) verify good funds
overseas prior to crediting Borrower's deposit account with Bank (in the
case of Borrower's sale of foreign currency); or (B) debit Borrower's
deposit account with Bank prior to delivering foreign currency overseas (in
the case of Borrower's purchase of foreign currency).
(d) In the case of Borrower's purchase of foreign currency,
Borrower in advance shall instruct Bank upon settlement either to treat the
settlement amount as an advance under the Committed Line, or to debit
Borrower's account for the amount settled.
(e) Borrower shall execute all standard form applications
and agreements of Bank in connection with the Exchange Contracts and,
without limiting any of the terms of such applications and agreements,
Borrower will pay all standard fees and charges of Bank in connection with
the Exchange Contracts.
(f) Without limiting any of the other terms of this
Agreement or any such standard form applications and agreements of Bank,
Borrower agrees to indemnify Bank and hold it harmless from and against any
and all claims, debts, liabilities, demands, obligations, actions, costs
and expenses (including, without limitation, attorneys' fees of counsel of
Bank's choice), of every nature and description which it may sustain or
incur, based upon, arising out of, or in any way relating to any of the
Exchange Contracts or any transactions relating thereto or contemplated
thereby.
2.1.4 Equipment Advances. Borrower may request one or more cash
advances (individually, an "Equipment Advance" and, collectively, the
"Equipment Advances") in a principal amount of up to Five Hundred Thousand
Dollars ($500,000). The Equipment
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<PAGE> 4
Advances shall be used to finance unencumbered Equipment approved by Bank
(which Borrower shall, in any case, have purchased after January 1, 1997).
Each Advance shall not exceed One Hundred Percent (100%) of the book value
of the Equipment to be financed that was purchased on or before February
28, 1997, and the cost of Equipment acquired after February 28, 1997,
excluding tax, installation and maintenance expenses. Interest shall
accrued from the date of each Equipment Advance at a floating rate equal to
Three Quarters of One Percent (0.75%) above the Prime Rate. The Equipment
Advance will be payable in thirty-six (36) equal monthly installments of
principal, plus accrued interest, beginning on March 31, 1998, and
continuing on the last Business Day of each month through the Maturity
Date, on which date the remaining principal balance and all accrued but
unpaid interest shall be immediately due and payable.
4. Section 2.3(a) is amended to read as follows:
(a) Interest Rate. Except as set forth in Section 2.3(b),
any Advances shall bear interest, on the average Daily Balance, at a rate
equal to One Quarter of One Percentage Points (0.25%) above the Prime Rate.
5. Section 6.3 is amended to read as follows:
6.3 Financial Statements, Reports, Certificates. Borrower shall
deliver to Bank: (a) when Liquidity under Section 6.12 is less than 2.5 to
1.0, as soon as available, but in any event within thirty (30) days after
the end of each month, a company prepared balance sheet and income
statement covering Borrower's consolidated operations during such period,
certified by a Responsible Officer; (b) as soon as available, but in any
event within ninety (90) days after the end of Borrower's fiscal year,
audited consolidated financial statements of Borrower prepared in
accordance with GAAP, consistently applied, together with an unqualified
opinion on such financial statements of an independent certified public
accounting firm reasonably acceptable to Bank; (c) within five (5) days
upon becoming available, copies of all statements, reports and notices sent
or made available generally by Borrower to its security holders or to any
holders of Subordinated Debt and all reports on Form 10-K and 10-Q filed
with the Securities and Exchange Commission; (d) promptly upon receipt of
notice thereof, a report of any legal actions pending or threatened against
Borrower or any Subsidiary that could result in damages or costs to
Borrower or any Subsidiary of One Hundred Thousand Dollars ($100,000) or
more; (e) prompt notice of any material change in the composition of the
Intellectual Property Collateral, including, but not limited to, any
subsequent ownership right of the Borrower in or to any Copyright, Patent
or Trademark not specified in any intellectual property security agreement
between Borrower and Bank or knowledge of an event that materially
adversely effects the value of the Intellectual Property Collateral: and
(f) such budgets, sales projections, operating plans or other financial
information as Bank may reasonably request from time to time.
Borrower shall deliver to Bank with the quarterly financial
statements a Compliance Certificate signed by a Responsible Officer in
substantially the form of Exhibit D hereto.
6. Section 6.8, 6.9 and 6.10 are amended, and Sections 6.11 and 6.12 are
added, to read as follows:
6.8 Quick Ratio. Borrower shall maintain, as of the last day of
each fiscal quarter, a ratio of Quick Assets to Current Liabilities
(excluding deferred maintenance revenues) of at least 2.00 to 1.00.
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<PAGE> 5
6.9 Tangible Net Worth. Borrower shall maintain, as
of the last day of each fiscal quarter, a Tangible Net Worth plus deferred
maintenance revenues of not less than Six Million Five Hundred Thousand Dollars
($6,500,000).
6.10 Profitability. Borrower shall not suffer a loss
in excess of Seven Hundred Fifty Thousand Dollars ($750,000) in any fiscal
quarter.
6.11 Debt/Tangible Net Worth. Borrower shall
maintain, as of the last day of each fiscal quarter, a ratio of Total
Liabilities, excluding deferred maintenance revenues, to Tangible Net Worth of
not more than 0.5 to 1.0.
6.12 Minimum Liquidity/Debt Service Coverage. Subject
to the remainder of this Section, Borrower shall maintain, as of the last day of
each fiscal quarter (and as of the last day of each calendar month at any time
when Liquidity is less than 2.5 to 1.0), Liquidity of at least 2.0 to 1.0.
"Liquidity" means a ratio of (a) the sum of (i) cash and cash equivalents plus
(ii) fifty percent (50%) of Borrower's net Accounts less outstanding Advances
to (b) outstanding Equipment Advances. Notwithstanding the foregoing, from and
after the time Borrower achieves a Debt Service Coverage for two consecutive
fiscal quarters of at least 1.5 to 1.0, and for so long as Borrower maintains
as of the last day of each fiscal quarter thereafter a Debt Service Coverage of
at least 1.5 to 1.0, Borrower shall not be subject to the minimum Liquidity set
forth above. "Debt Service Coverage" means, as of the last day of each fiscal
quarter, a ratio of (a) quarterly net income plus depreciation and
amortization, annualized, to (b) the current portion of total long term debt.
7. Unless otherwise defined, all capitalized terms in the Amendment
shall be as defined in the Agreement. Except as amended, the Agreement remains
in full force and effect.
8. Borrower represents and warrants that the Representations and
Warranties contained in the Agreement are true and correct as of the date of
this Amendment (except such representations and warranties to be expressly true
as of a specific date), and that no Event of Default has occurred and is
continuing.
9. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
10. As a condition to the effectiveness of this Amendment, Borrower
shall pay Bank a fee of Four Thousand Three Hundred Seventy Five Dollars
($4,375) plus all Bank Expenses incurred in connection with the preparation of
this Amendment.
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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the first date above written.
SPATIAL TECHNOLOGY, INC.
By: /s/ MARK C. VELLEQUETTE
------------------------------------
Mark C. Vellequette
Title: VP Finance & Administration
SILICON VALLEY BANK
By:
------------------------------------
Title:
---------------------------------
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<PAGE> 1
EXHIBIT 10.28
SEPARATION AND RELEASE AGREEMENT
This SEPARATION AND RELEASE AGREEMENT (the "Agreement") is made and
entered into by and between SPATIAL TECHNOLOGY INC. ("Spatial") and JERRY T.
SISSON ("Mr. Sisson") (collectively "parties") as of the Execution Date of this
Agreement as defined in paragraph 20 below.
I. RECITALS
WHEREAS, effective June 23, 1997 Mr. Sisson has tendered his
resignation as Director, President and Chief Operating Officer, and any and all
other positions he may have held with Spatial; and
WHEREAS, Mr. Sisson tendered his resignation voluntarily and at his
election and in his discretion; and
WHEREAS, Spatial has accepted Mr. Sisson' resignation; and
WHEREAS, the parties wish to make the separation amicable but
conclusive and to settle all claims between them on the terms and conditions
set forth herein; and
WHEREAS, Mr. Sisson accepts the benefits of this Agreement with the
acknowledgment that , upon satisfaction by Spatial of Spatial's obligations in
this Agreement, Mr. Sisson will have been fully and satisfactorily compensated.
II. COVENANTS
THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
1. RESIGNATION. Mr. Sisson has tendered and Spatial has accepted
Mr. Sisson's resignation as the Director, President and Chief Operating Officer
with Spatial effective immediately and his employment and any and all other
positions he may hold with Spatial, effective as of June 30, 1997 ("Separation
Date").
2. PAYMENTS AND BENEFITS. Although Spatial has no policy or
procedure requiring payment of any severance benefits, Spatial agrees to the
following as part of this Agreement:
(a) LUMP SUM PAYMENT. Spatial will pay Mr. Sisson, in the form
of a check, the sum of $55,000 minus all legally required deductions and
withholdings ("Payment"). The Payment shall be made within ten calendar days
after the Execution Date of this Agreement and will be delivered by overnight
delivery service or hand delivery.
<PAGE> 2
(b) CONSULTING AGREEMENT. Spatial hereby engages Mr. Sisson
as an independent consultant for Spatial on the following terms and conditions:
(1) The term of the consulting agreement shall
be six (6) months, commencing July 1, 1997 and ending on
December 31, 1997 (the "Consulting Period").
(2) Spatial shall pay Mr. Sisson the sum of
$9,200.00 per month on the twenty-fifty (25th) day of each
month, for consulting services to be provided by Mr. Sisson
for the month in which payment was made. Mr. Sisson shall be
treated as an independent contractor, and no amounts shall be
withheld from any such payments.
(3) If Mr. Sisson provides consulting services
to Spatial, which exceed eighty (80) hours per month, Mr.
Sisson shall present a statement to Spatial reasonable
detailing all consulting services performed during that month
and the hours expended. Spatial shall pay Mr. Sisson the sum
of $115.00 per hour for all such consulting services which
exceed eighty (80) hours in any month provided that Spatial
has specifically authorized in writing Mr. Sisson to exceed 80
hours. Mr. Sisson shall present such statement to Spatial
within fifteen (15) days of the end of the month in which the
consulting services were performed, and Spatial shall pay the
outstanding balance on the first day of the following month.
(4) Mr. Sisson shall not be required to
provide the consulting services to Spatial unless Spatial
requests such consulting services in writing, specifying in
reasonable detail the matters for which consulting services
are sought. Mr. Sisson shall perform such services as
requested by the Company; provided that such services shall be
in the general scope of the work and projects for which Mr.
Sisson was responsible prior to the Separation Date.
(5) The incentive bonuses that Mr. Sisson
would have been entitled to if Mr. Sisson had remained an
employee during the initial six month term (up to $12,500 on
September 30, 1997 and December 31, 1997, $6,250 per quarter
of which is subject to satisfaction of certain previously
established "personal performance objectives" and $6,250 per
quarter of which is subject to the previously established
"company performance objectives") shall be paid to Mr. Sisson
upon satisfaction of such objectives; provided that, Spatial
and Mr. Sisson shall agree on a quarterly basis to revised
personal performance objectives consistent with Mr. Sisson's
services as a consultant.
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<PAGE> 3
(6) In addition, Mr. Sisson shall be paid
commissions on an individual customer basis for the closing of
specific customer accounts that the Company has requested in
writing he service. The rate of such commissions shall be
agreed to on a case by case basis and shall be set forth in a
written addendum to the consulting agreement.
(7) The consulting agreement may be terminated
by Sisson at any time. Spatial may terminate the agreement at
any time, but only after payment of all remaining sums Mr.
Sisson would have received through the Consulting Period.
After completion of the Consulting Period, Spatial and the Mr.
Sisson may elect to extend the consulting agreement, but only
upon execution of a written extension signed by each of
Spatial and Mr. Sisson.
(8) Subject to Mr. Sisson's continuation as a
consultant to the Company, Mr. Sisson' stock options shall
continue to vest in accordance with the options existing
vesting schedule and the Spatial Stock Option Plan ("SOP").
Mr. Sisson understands that such extension of the vesting
provisions will cause the option to no longer be classified as
an incentive stock option for tax purposes. Following
termination of his consulting relationship with the Company,
Mr. Sisson will have six months to exercise all then vested
shares subject to his option. Except for the continued
vesting and exercise provisions set forth above, the terms,
limitations, prerequisites, requirements, mechanics and
conditions of the SOP shall apply in full to any and all other
aspects of the options and the exercise thereof.
(9) To the extent permitted by the federal
COBRA law, Mr. Sisson will be eligible to continue his health
insurance benefits. Spatial will pay any amounts necessary to
be paid to insure continuation of COBRA coverage during the
Consulting Period. A COBRA notification has been provided to
Mr. Sisson setting forth his rights and responsibilities with
regard to COBRA.
(10) Spatial agrees to reimburse Mr. Sisson
for those reasonable business expenses he necessarily or
reasonable incurred while consulting for Spatial provided
that, Mr. Sisson shall receive written approval of all
expenses that will obligate the Company to reimburse Mr.
Sisson more than $35.00 in the aggregate.
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(11) Spatial shall provide to Mr. Sisson with
a personal computer, operating software and fax/printer during
the term of the consulting agreement. At the end of the
Consulting Period, Mr. Sisson will have the option to
purchase the personal computer and fax/printer for the than
fair value of those items.
(c) SAVINGS PLAN. Participation by Mr. Sisson in any Spatial
savings or retirement plan will terminate as of June 30, 1997. At the date
hereof, Mr. Sisson has contributed $6,749.96 to the savings plan for 1997.
Spatial will gross up Mr. Sisson's last paycheck in an amount equal to
1,550.00.
(d) OTHER COMPENSATION. Except as expressly provided herein,
Mr. Sisson acknowledges that he will not receive (nor is he entitled to
receive) any additional consideration, payments, reimbursements or benefits of
any kind; provided that Spatial pays Mr. Sisson the salary normally due to him
on June 30, 1997, and pays the bonus for the second quarter of 1997 when
calculated and distributed to other executives of Spatial. Mr. Sisson
acknowledges that at the time of the Separation Date, Spatial paid to him in
full any and all wages, salary and compensation due through the Separation
Date, and all amounts due for accrued but unused vacation and time off up
through the Separation Date.
3. DENIAL OF LIABILITY. Mr. Sisson acknowledges that any payment
by Spatial pursuant to this Agreement is made in compromise of disputed claims,
that in making such payment, Spatial in no way admits any liability to Mr.
Sisson and that Spatial expressly denies any such liability.
4. SPATIAL PROPERTY. Prior to the Execution Date of this
Agreement, Mr. Sisson will return to Spatial all Spatial documents (and all
copies thereof) and any other Spatial property in his possession, custody or
control, including, but not limited to, financial information, customer lists,
Spatial files, notes, cellular telephones, contracts, drawings, records,
business plans and forecasts, financial information, specifications,
computer-recorded information, software, tangible property, credit cards, entry
cards, identification badges and keys, and any materials of any kind which
contain or embody any proprietary or confidential material of Spatial (and all
reproductions thereof).
5. NON-SOLICITATION. Mr. Sisson agrees that for one year after
the Separation Date of this Agreement, he will not, either directly or through
others, solicit or attempt to solicit any employee, consultant, or independent
contractor of Spatial to terminate his or her relationship with Spatial in
order to become an employee, consultant or independent contractor to or for any
other person or entity.
6. PROPRIETARY INFORMATION OBLIGATIONS. Mr. Sisson acknowledges
that he continues to be bound by the terms of the Proprietary Information and
Inventions
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Agreement, executed by Mr. Sisson on July 6, 1993 and a copy of which is
attached hereto as Exhibit A.
7. NONDISPARAGEMENT. Mr. Sisson and Spatial agree that neither
party will at any time disparage the other to third parties in any manner likely
to be harmful to the other party, their business reputation, or the personal or
business reputation of its directors, shareholders, and employees.
Notwithstanding the prohibition in the preceding sentence, each party shall
respond accurately and fully to any question, inquiry, or request for
information when required by legal process. Spatial agrees that it will confirm
Mr. Sisson' dates of employment, position and the fact of the organizational
restructuring if it receives an inquiry.
8. CONFIDENTIALITY. The provisions of this Agreement shall be
held in strictest confidence by Mr. Sisson and Spatial and shall not be
publicized or disclosed in any manner whatsoever. Notwithstanding the
prohibition in the preceding sentence: (a) the parties may disclose this
Agreement in confidence to their respective attorneys, accountants, auditors,
tax preparers, and financial advisors; (b) Spatial may disclose this Agreement
as necessary to fulfill standard or legally required corporate reporting or
disclosure requirements; and (c) the parties may disclose this Agreement
insofar as such disclosure may be necessary to enforce its terms or as
otherwise required by law.
9. RELEASE OF CLAIMS. In consideration for the consideration
set forth in this Agreement above and the mutual covenants of Spatial and Mr.
Sisson, Mr. Sisson hereby releases, acquits and forever discharges Spatial, its
affiliated corporations and entities, its and their officers, directors,
agents, servants, attorneys, employees, shareholders, successors and assigns of
and from any and all claims, liabilities, demands, causes of action, costs,
expenses, attorneys' fees, damages, indemnities and obligations of every kind
and nature, in law, equity, or otherwise, known or unknown, suspected and
unsuspected, disclosed and undisclosed, liquidated or contingent, arising out
of or in any way related to agreements, events, acts or conduct at any time
prior to and including the Execution Date, including but not limited to: any
and all such claims and demands directly or indirectly arising out of or in any
way connected with Mr. Sisson' employment with Spatial or the termination of
that employment; claims or demands related to salary, bonuses, commissions,
stock, stock options, or any ownership interests in Spatial, vacation pay,
fringe benefits, expense reimbursements, sabbatical benefits, severance
benefits, or any other form of compensation; claims pursuant to any federal,
any state or any local law, statute, common law or cause of action including,
but not limited to, the federal Age Discrimination in Employment Act of 1967,
as amended ("ADEA") under the terms set forth in paragraph 10 below, the
federal Civil Rights Act of 1964, as amended; the federal Americans with
Disabilities Act of 1990; the Colorado Wage Claim Act, Colo. Rev. Stat. Section
8-4-101 et seq.; tort law; contract law; wrongful discharge; discrimination;
harassment; fraud; defamation; libel; emotional distress; and breach of the
implied covenant of good faith and fair dealing. The release and discharge set
forth above specifically excludes (i) the obligations of Spatial under this
Agreement; (ii) the obligations of Spatial contained in the Indemnification
Agreement between Spatial and
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<PAGE> 6
Mr. Sisson dated the 17th day of October 1996, and (iii) Spatial's obligations
under its 401(k) plan to Mr. Sisson, each of which shall remain in full force
and effect.
10. ADEA WAIVER AND RELEASE. Mr. Sisson acknowledges that he is
knowingly and voluntarily waiving and releasing any rights he may have under
the federal Age Discrimination in Employment Act of 1967, as amended ("ADEA
Waiver and Release"). Mr. Sisson acknowledges that the consideration given for
this ADEA Waiver and Release, provided for in paragraph 2(a) and 2(b) above, is
in addition to anything of value to which Mr. Sisson was already entitled. The
parties agree and acknowledge that Mr. Sisson has been advised by this writing,
as required by the ADEA that: (a) this ADEA Waiver and Release does not apply
to any claims under ADEA that may arise after the date that Mr. Sisson signs
this Agreement; (b) Mr. Sisson has the right to and is advised to consult with
an attorney prior to executing this Agreement; (c) Mr. Sisson has twenty-one
calendar days to consider this ADEA Waiver and Release (although he may choose
to voluntarily execute this ADEA Waiver and Release earlier); and (d) Mr.
Sisson has seven calendar days following the date that each party signed this
Agreement to revoke this ADEA Waiver and Release by sending, via certified
United States mail, written notice of revocation to the attention of CEO,
Spatial, 2425 55th Street, Suite 100, Boulder, CO 80301. The parties
acknowledge and agree that revocation by Mr. Sisson of the ADEA Waiver and
Release is not effective to revoke his waiver or release of any other claims
pursuant to this Agreement.
11. TAX CONSEQUENCES. Mr. Sisson expressly acknowledges that
Spatial has not made, nor herein makes, any representation about the tax
consequences of any payment made by Spatial to Mr. Sisson pursuant to this
Agreement.
12. VOLUNTARY AND KNOWINGLY. Mr. Sisson acknowledges that in
executing this Agreement, he has reviewed it and understands its terms and has
had an opportunity to seek advice of counsel of his own choosing, and was fully
advised of his rights under law, and acted knowingly and voluntarily.
13. DUTY TO EFFECTUATE. The parties agree to perform any lawful
additional acts, including the execution of additional agreements, as are
reasonably necessary to effectuate the purpose of this Agreement.
14. ENTIRE AGREEMENT. This Agreement, including Exhibit A,
constitutes the complete, final and exclusive embodiment of the entire
agreement between Mr. Sisson and Spatial with regard to the subject matter
hereof. Notwithstanding the foregoing, nothing contained herein shall terminate
or otherwise modify the Indemnification Agreement between Spatial and Mr.
Sisson effective as of October 17, 1996. This Agreement is entered into
without reliance on any promise or representation, written or oral, other than
those expressly contained herein. It may not be modified except in a writing
signed by Mr. Sisson and a duly authorized officer of Spatial.
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<PAGE> 7
15. SUCCESSORS AND ASSIGNS. This Agreement shall bind the heirs,
personal representatives, successors, assigns, executors and administrators of
each party, and insure to the benefit of each party, its heirs, successors and
assigns.
16. APPLICABLE LAW. This Agreement shall be deemed to have been
entered into and shall be construed and enforced in accordance with the laws of
the State of Colorado.
17. FORUM. Any action to enforce or requiring interpretation of
this Agreement must be brought in a forum located within the State of Colorado.
18. SEVERABILITY. If any provision of this Agreement is
determined to be invalid or unenforceable, in whole or in part, this
determination will not affect any other provision of this Agreement, and the
provision in question shall be modified so as to be rendered enforceable.
19. ENFORCE ACCORDING TO TERMS. The parties intend this Agreement
and exhibits to be enforced according to their terms.
20. EXECUTION DATE. This Agreement is effective on the later
date of the dates that each party signed this Agreement ("Execution Date").
21. SECTION HEADINGS. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not
affect in any the meaning or interpretation of this Agreement.
22. ATTORNEYS' FEES. In the event legal action is brought to
enforce the terms of this Agreement, the prevailing party shall be entitled to
recover reasonable costs of such action, including attorneys' fees.
23. SPATIAL'S RELEASE OF SISSON. Except as otherwise set forth
in this Agreement, Spatial hereby releases, acquits and forever discharges Mr.
Sisson of and from any and all claims, liabilities, demands, causes of action,
costs, expenses, attorneys' fees, damages, indemnities and obligations of every
kind and nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, arising out of or in any way related to
agreements, events, acts or conduct at any time prior to and including the
execution date of this Agreement of his employment, provided that he was acting
in the scope of his employment .
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7
<PAGE> 8
IN WITNESS WHEREOF, the parties have duly authorized and caused this
Agreement to be executed as follows:
JERRY T. SISSON, an individual SPATIAL TECHNOLOGY INC.,
a Delaware corporation
By: /s/ JERRY T. SISSON By: /s/ RICHARD M. SOWAR
--------------------------------- --------------------------------------
Jerry T. Sisson Richard M. Sowar, Chief Executive
Officer
Date: June 23, 1997 Date: June 23, 1997
8
<PAGE> 9
EXHIBIT A OF EXHIBIT 10.28
PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
July 6, 1993
SPATIAL TECHNOLOGY INC.
2425 55th Street, Building A
Boulder, CO 80301
Ladies and Gentlemen:
The following confirms an agreement between me and Spatial Technology
Inc., a Delaware corporation ( the "Company," which term includes the Company's
subsidiaries, successors and assigns), which is a material part of the
consideration for my employment by the Company:
1. "Proprietary Information" is information that was or is
developed by, became or becomes known by, or was or is assigned or otherwise
conveyed to the Company, and which has commercial value in the Company's
business. Proprietary Information includes, without limitation, trade secrets,
financial information, product plans, customer lists, marketing plans and
strategies, forecasts and other business information, improvements, inventions,
formulas, ideas, circuits, mask works, works of authorship, processes, computer
programs, algorithms, techniques, schematics know-how and data. I understand
that my employment creates a relationship of confidence and trust between me
and the Company with respect to Proprietary Information of the Company or its
customers which may be learned by me during the period of my employment.
2. In consideration of my employment by the Company and the
compensation received by me from the Company from time to time, I hereby agree
as follows:
(a). All Proprietary Information and all patents, copyrights, trade
secret rights, rights with respect to masks works and other rights ( including
throughout, without limitation, any extensions, renewals, continuations or
divisions of any of the foregoing) in connection therewith shall be the sole
property of the Company. I hereby assign to the Company any rights I may have
or acquire in such Proprietary Information. At all times, both during my
employment by the Company and after its termination, I will keep in confidence
and trust and will not use or disclose any Proprietary Information or anything
relating to it without the written consent of the Company, except as may be
necessary in the ordinary course of performing my duties to the Company.
(b). In the event of the termination of my employment by me or by
the Company for any reason, I shall return all documents, records, apparatus,
equipment and other physical property, or any reproduction of such property,
whether or not pertaining to Proprietary Information, furnished to me by the
Company or produced by myself or others in connection with my employment, to
the Company immediately as and when requested by the Company.
(c). I will promptly disclose to the Company, or any persons
designated by it, all "inventions", which includes all improvements,
inventions, formulas, ideas, circuits, mask works, works of authorship,
processes, computer programs, algorithms, techniques, schematics, know-how and
data, whether or not patentable, made or conceived or reduced to practice or
developed by me, either alone or jointly with others, during the term of my
employment and for one (1) year thereafter. To the extent the Company does not
have rights therein hereunder, such disclosure shall be received by the Company
in confidence and does not extend the assignment made in Section (e) below.
(d). During the term of my employment and for one (1) year
thereafter, I will not encourage or solicit any employee of the Company to
leave the Company for any reason or to devote less than all of
<PAGE> 10
any such employee's efforts to the affairs of the Company, provided that the
foregoing shall not affect any responsibility I may have as an employee of the
Company with respect to the bona fide hiring and firing of Company personnel.
(e). I agree that all Inventions which I make, conceive, reduce to
practice or develop ( in whole or in part, either alone or jointly with others)
during my employment shall be the sole property of the Company and to the
extent permitted by law shall be "works made for hire". The Company shall be
the sole owner of all patents, copyrights, trade secret rights with respect to
mask works and other intellectual property or other rights in connection
therewith. I hereby assign to the Company any rights I may have or acquire in
such Inventions. I agree to perform, during and after my employment, all acts
deemed necessary or desirable by the Company to permit and assist it, at the
Company's expense, in obtaining and enforcing patents, copyrights, trade secret
rights, rights with respect to mask works or other rights on such Inventions
and/or any other Inventions I have or may at any time assign to the Company in
any and all countries. Such acts may include, but are not limited to,
execution of documents and assistance or cooperation in legal proceedings. I
hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents, as my agents and attorneys-in-fact to act for and in my
behalf and instead of me, to execute and file any applications or related
filings and to do all other lawfully permitted acts to further the prosecution
and issuance of patents, copyrights, trade secret rights, rights with respect
to mask works or other rights thereon with the same legal force and effect as
if executed by me.
(f). I attach hereto as Exhibit A a complete list of all Inventions
or improvements to which I claim ownership and that I desire to remove from the
operation of the Agreement, and I covenant that such list is complete. If no
such list is attached to this Agreement, I represent that I have no such
Inventions and improvements at the time of signing this Agreement.
(g). I represent that my performance of all the terms of this
Agreement will not breach any agreement of obligation to keep in confidence
proprietary information acquired by me in confidence or in trust prior to my
employment by the Company. I have not entered into, and I agree I will not
enter into, any agreement either written or oral in conflict herewith or in
conflict with my employment with the Company.
3. In consideration of the foregoing, the Company agrees that it
will not request as part of my employment that I divulge or make use of
confidential information of any of my former employers that has commercial
value to the business of the former employer who developed such information.
4. This Agreement shall be effective as of the first day of my
employment by the Company, and shall be binding upon me, my heirs, executors,
assigns, and administrators and shall inure to the benefit of the Company, its
subsidiaries, successors and assigns.
5. I acknowledge and understand that the Company will incur
irreparable harm and damage in the event that I breach or violate any of the
terms or conditions of this agreement, and I hereby agree that in addition to
any rights or remedies of law the Company may have for such breach or
violation, the Company shall be entitled to seek equitable remedies, including
the enforcement of this Agreement by injunction, specific performance, or any
other similar relief.
Dated: July 6, 1993
/s/ Jerry T. Sisson
---------------------------------------
, Employee
-----------------------------
Accepted and Agreed to :
Spatial Technology Inc.
By
----------------------------------
<PAGE> 11
Exhibit A
Spatial Technology Inc.
2425 55th Street Building A
Boulder, CO 80301
Ladies and Gentlemen:
1. The following is a complete list of all inventions or
improvements relevant to the subject matter of my employment by Spatial
Technology Inc. ( the "Company") that have been made or conceived or first
reduced to practice by me alone or jointly with others prior to my employment
by the Company that I desire to remove from the operation of the Company's
Proprietary Information and Inventions Agreement.
X No inventions or improvements.
- ---------
See below:
- ---------
Additional sheets attached.
- ---------
2. I propose to bring to my employment the following materials
and documents of a former employer:
X No materials or documents.
- ---------
See below.
- ---------
/s/ Jerry T. Sisson
----------------------------------------
, Employee
------------------------------
<PAGE> 1
EXHIBIT 10.29
SPATIAL TECHNOLOGY INC.
EMPLOYMENT AGREEMENT
FOR
R. BRUCE MORGAN
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 1st day
of July, 1997, in the City of Boulder, Colorado by and between R. BRUCE MORGAN
("Executive") and SPATIAL TECHNOLOGY INC., a Delaware corporation (the
"Company").
WHEREAS, the Company desires to employ Executive to provide personal
services to the Company, and wishes to provide Executive with certain
compensation and benefits in return for his services; and
WHEREAS, Executive wishes to be employed by the Company and provide
personal services to the Company in return for certain compensation and
benefits;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed by and between the parties hereto as
follows:
1. EMPLOYMENT BY THE COMPANY.
1.1 Subject to terms set forth herein, the Company agrees to employ
Executive and Executive hereby accepts such employment effective as of the date
first written above. During the term of his employment with the Company,
Executive will devote his best efforts and substantially all of his business
time and attention (except for vacation periods and reasonable periods of
illness or other incapacities permitted by the Company's general employment
policies) to the business of the Company.
1.2 Executive shall serve in an executive capacity and shall perform
such duties as are customarily associated with his then existing title(s),
consistent with the Bylaws of the Company and as required by the Company's
Board of Directors (the "Board").
1.3 The employment relationship between the parties shall also be
governed by the general employment policies and practices of the Company,
including those relating to protection of confidential information and
assignment of inventions, except that when the terms of this Agreement differ
from or are in conflict with the Company's general employment policies or
practices, this Agreement shall control.
2. COMPENSATION.
2.1 SALARY. Executive shall receive for services to be rendered
hereunder an base monthly salary of $12,500, payable in equal semi-monthly
installments.
1
<PAGE> 2
2.2 DISCRETIONARY BONUS. Executive will be eligible for a discretionary
bonus, in amounts up to $25,000 per quarter to be determined solely by the
Compensation Committee in its discretion upon achievement of revenue and profit
objectives (the "Objectives") established from time to time by the Compensation
Committee.
2.3 STANDARD COMPANY BENEFITS. Executive shall be entitled to all
rights and benefits for which he is eligible under the terms and conditions of
the standard Company benefits and compensation practices which may be in effect
from time to time and provided by the Company to its employees generally,
currently including medical, disability, dental, vision, 401(k), employee stock
purchase .plan, life insurance, vacation and holidays.
2.4 RELOCATION EXPENSES. The Company will reimburse Executive the cost
of moving his household goods to Boulder and temporary housing expenses up to a
maximum of $25,000 in the aggregate. The Company shall make such reimbursements
reasonably promptly following receipt of the completion of an expense report
and presentation of documentary evidence of such expense in accordance with the
Company's expense reimbursement practices.
2.5 OPTIONS. Executive shall receive an option to purchase 250,000
shares of the Company's Common Stock at the current fair market value per share
on the later of the date of approval by the Company's Compensation Committee or
your first date of employment. This Option shall vest and become exercisable as
to 31,250 shares on the six month anniversary of Executive's first day of
employment and the remaining 218,750 shares shall vest in equal monthly
installments over the remaining three and one-half years. The option shall be
subject to additional terms and conditions as more fully described in the
Company's Stock Option Plan and form of Stock Option Agreement attached hereto
as EXHIBIT A.
2.6 LOAN. The Company shall loan Executive $25,000 for the sole purpose
of exercising the stock option Executive holds in his present employer. The
loan shall be secured by the shares of capital stock issued to the Executive
(the "Shares"), bear interest equal to 6.07% and shall be due and payable on
the earlier of the date Executive ceases to be an employee of the Company, one
year from the date of this Agreement and the date(s) the Shares are sold by the
employee (but only to the extent of the proceeds of such sale).
3. PROPRIETARY INFORMATION OBLIGATIONS.
3.1 AGREEMENT. Executive agrees to continue to execute and abide by the
Proprietary Information and Inventions Agreement attached hereto as EXHIBIT B.
3.2 REMEDIES. Executive's duties under the Proprietary Information and
Inventions Agreement shall survive termination of his employment with the
Company. Executive acknowledges that a remedy at law for any breach or
threatened breach by him of the
2
<PAGE> 3
provisions of the Proprietary Information and Inventions Agreement would be
inadequate, and he therefore agrees that the Company shall be entitled to
injunctive relief in case of any such breach or threatened breach.
4. OUTSIDE ACTIVITIES. Except with the prior written consent of the
Company's Board, Executive will not, during the term of this Agreement,
undertake or engage in any other employment, occupation or business enterprise,
other than those in which Executive is a passive investor. Executive may engage
in civic and not-for-profit activities so long as such activities do not
interfere with the performance of his duties hereunder.
5. TERMINATION OF EMPLOYMENT. Either the Executive or the Company may
terminate the employment relationship at any time for any reason whatsoever,
with or without cause or advance notice. This "at-will" employment relationship
cannot be changed except in a writing signed by the Company's Chief Executive
Officer and expressly approved by the Board. If the Company terminates
Executive's employment without cause at any time, Executive will receive as a
lump sum payment equal to the six months of Executive's base salary with the
Company, less payroll deductions and required withholdings, in exchange for the
execution of a release of all claims against the Company. If Executive resigns
or if Executive's employment is terminated for cause, all compensation and
benefits will cease immediately, and Executive will receive no severance
benefits. For purpose of this Agreement, "cause" shall mean: (i) conviction of
any felony or any crime involving moral turpitude or dishonesty; (ii)
participation in a fraud or act of dishonesty against the Company; (iii)
willful breach of the Company's policies; (iv) intentional damage to the
Company's property; (v) material breach of this Agreement or Executive's
Proprietary Information and Inventions Agreement; or (vi) failure to carry out
the duties of the Executive's position after being provided notice of such
failure and a reasonable opportunity to cure such failure. Physical or mental
disability shall not constitute "cause."
6. NONSOLICITATION. While employed by the Company, and for two (2) years
immediately following the Executive's termination of employment, Executive
agrees not to interfere with the business of the Company by soliciting,
attempting to solicit, inducing, encouraging or causing any employee of the
Company to terminate his or her employment in order to become an employee,
consultant or independent contractor to or for any other party.
7. GENERAL PROVISIONS.
7.1 NOTICES. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by telex) or the third day after mailing by first class mail,
to the Company at its primary office location and to Executive at his address
as listed on the Company's then current payroll records.
7.2 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed,
3
<PAGE> 4
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provisions had never been contained herein.
7.3 WAIVER. If either party should waive any breach of any provisions
of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
7.4 COMPLETE AGREEMENT. This Agreement and the Exhibits attached
hereto, constitute the entire agreement between Executive and the Company and
it is the complete, final, and exclusive embodiment of their agreement with
regard to this subject matter. It is entered into without reliance on any
promise or representation other than those expressly contained herein, and it
cannot be modified or amended except in a writing signed by the Chief Executive
Officer or Chairman of the Board of the Company and expressly approved by the
Board of Directors.
7.5 COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
7.6 HEADINGS. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
7.7 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors, assigns, heirs, executors and administrators,
except that Executive may not assign any of his duties hereunder and he may not
assign any of his rights hereunder without the written consent of the Company,
which shall not be withheld unreasonably.
7.8 CHOICE OF LAW. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the State
of Colorado. The Company and the Executive hereby agree that the state and
federal courts located in the County of Denver shall have exclusive
jurisdiction over any actions arising herefrom.
7.9 SURVIVAL. The provisions of this Agreement shall survive the
termination of Executive's employment and the assignment of this Agreement by
the Company to any successor in interest or other assignee.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
SPATIAL TECHNOLOGY INC.
By: /s/ RICHARD M. SOWAR
------------------------------
Richard M. Sowar
Chief Executive Officer
By: /s/ R. BRUCE MORGAN
------------------------------
R. Bruce Morgan
5
<PAGE> 6
EXHIBIT A OF EXHIBIT 10.29
STOCK OPTION AGREEMENT
Spatial Technology, Inc. (the "COMPANY"), pursuant to its 1996 Equity
Incentive Plan (the "PLAN"), has granted you an option to purchase the number
of shares of the common stock of the Company ("COMMON STOCK") at the exercise
price set forth in the Notice of Grant of Stock Option (the "GRANT NOTICE").
Defined terms not explicitly defined in this agreement but defined in the
Plan shall have the same definitions as in the Plan.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is set forth in the Grant Notice
(the "OPTION SHARES").
2. VESTING. Subject to the limitations contained herein, your option will
vest as provided in the Grant Notice, provided that vesting will cease upon the
termination of your Continuous Status as an Employee, Director or Consultant.
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price per share of this option is set
forth in the Grant Notice, being not less than the fair market value of the
Common Stock on the date of grant of this option.
(b) METHOD OF PAYMENT. Payment of the exercise price by cash or check
is due in full upon exercise of all or any part of your option, provided that,
you may elect, to the extent permitted by applicable law, to make payment of
the exercise price under one of the following alternatives:
(i) Payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which, prior to the issuance of Common
Stock, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds.
(ii) Provided that the number of shares being purchased exceeds
one thousand (1,000) and at the time of payment the Company's Common Stock is
publicly traded and quoted regularly in the Wall Street Journal, payment by
delivery of shares of Common Stock of the Company already owned by you, held
for the period required to avoid a charge of the Company's reported earnings,
and owned free and clear of any liens, claims, encumbrances or security
interest, which Common Stock shall be valued at its fair market value on the
date preceding the date of exercise; or
(iii) Payment by a combination of the above methods.
1
<PAGE> 7
4. EXERCISE PRIOR TO VESTING. If permitted in the Grant Notice, and
subject to the provisions of your option contained herein, you may elect, at
any time that is both (i) during your Continuous Status as an Employee,
Director or Consultant and (ii) during your option's term, to exercise all or
part of your option, including the nonvested portion of your option; provided,
however, that:
(i) a partial exercise of your option shall be deemed to cover
first vested shares and then the earliest vesting installment of unvested
shares;
(ii) any shares so purchased from installments which have not
vested as of the date of exercise shall be subject to the purchase option in
favor of the Company as described in the Company's form of Early Exercise Stock
Purchase Agreement;
(iii) you shall enter into the Company's form of Early Exercise
Stock Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred; and
(iv) your option shall not be exercisable with respect to any
unvested installment to the extent such exercise would cause the aggregate fair
market value of any shares subject to incentive stock options granted you by
the Company (valued as of their grant date) which would become exercisable for
the first time during any calendar year to exceed $100,000.
5. WHOLE SHARES. Your option may only be exercised for whole shares.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Securities Act of
1933, as amended (the "Securities Act"), or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act.
7. TERM. The term of this option commences on the date of grant, and
expires on the Expiration Date set forth in the Grant Notice (the "Expiration
Date," which date shall be no more than ten (10) years from the date this
option is granted), unless this option expires sooner as set forth below or in
the Plan. In no event may this option be exercised on or after the Expiration
Date. This option shall terminate prior to the Expiration Date as follows:
three (3) months after the termination of your Continuous Status as an
Employee, Director or Consultant with the Company or an Affiliate of the
Company unless one of the following circumstances exists:
(a) Your termination of Continuous Status as an Employee, Director or
Consultant is due to your disability or death, in which event this option shall
terminate on the earlier of the Expiration Date set forth above or twelve (12)
months following such termination of employment.
(b) If during any part of such three (3) month period you may not
exercise your option solely because of the condition set forth in Section 6
above, then your option will not expire until the earlier of the Expiration
Date set forth above or until this option shall have been
2
<PAGE> 8
exercisable for an aggregate period of three (3) months after your termination
of Continuous Status as an Employee, Director or Consultant.
(c) If the exercise of your option within three (3) months after
termination of your Continuous Status as an Employee, Director or Consultant
with the Company or with an Affiliate of the Company would result in liability
under section 16(b) of the Securities Exchange Act of 1934, as amended, then
your option will expire on the earlier of (i) the Expiration Date, (ii) the
tenth (10th) day after the last date upon which exercise would result in such
liability or (iii) six (6) months and ten (10) days after the termination of
your Continuous Status as an Employee, Director or Consultant with the Company
or an Affiliate of the Company.
In order to obtain the federal income tax advantages associated with an
"incentive stock option," the Code requires that at all times beginning on the
date of grant of the option and ending on the day three (3) months before the
date of the option's exercise, you must be an employee of the Company or an
Affiliate of the Company, except in the event of your death or permanent and
total disability. The Company has provided for continued vesting or extended
exercisability of your option under certain circumstances for your benefit, but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you provide services to the Company or an Affiliate of the
Company as a consultant or exercise your option more than three (3) months
after the date your employment with the Company and all Affiliates of the
Company terminates.
8. EXERCISE.
(a) You may exercise the vested portion of your option during its term
(and the unvested portion of your option if the Grant Notice permits), by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other
person as the Company may designate, during regular business hours, together
with such additional documents as the Company may then require.
(b) By exercising this option you agree that:
(i) as a condition to any exercise of this option, the Company
may require you to enter an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of
(A) the exercise of this option; (B) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise; or (C) the
disposition of shares acquired upon such exercise;
(ii) you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of this option that occurs within two (2) years after the
date of this option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of this option; and
(iii) if, pursuant to the terms of the Grant Notice, you have
exercised all or a portion of your option prior to the time that it has fully
vested, and you cease to be an employee of the Company for any reason, or no
reason, with or without cause, the Company may
3
<PAGE> 9
purchase from you, or your personal representative, as the case my be, at the
price per share paid by you pursuant to this Stock Option Agreement, up to but
not exceeding the number of shares of stock held by you which have not vested.
9. LOCK-UP. You agree that the Company (or a representative of the
underwriters) may, in connection with an underwritten registration of the
offering of any securities of the Company under the Securities Act, require
that you not sell or otherwise transfer or dispose of any shares of Common
Stock or other securities of the Company during such period (not to exceed one
hundred eighty (180) days) following the effective date of the registration
statement filed under the Securities Act as may be requested by the Company or
the representative of the underwriters. You further agree that the Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing resolutions until the end of such period.
10. ADJUSTMENTS UPON CHANGES IN STOCK. This option shall become fully
vested under certain circumstances as provided in Section 13(b) of the Plan.
11. TRANSFERABILITY. This option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during your life only
by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise this
option subject to all terms and conditions stated herein.
12. OPTION NOT A SERVICE CONTRACT. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the
Company, or of the Company to continue your employment with the Company. In
addition, nothing in this option shall obligate the Company or any Affiliate of
the Company, or their respective stockholders, board of directors, officers or
employees to continue any relationship which you might have as a Director or
Consultant for the Company or Affiliate of the Company.
13. NOTICES. Any notices provided for in this option or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the address you
last provided to the Company.
14. GOVERNING PLAN DOCUMENT. This option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of this option,
including without limitation the provisions of the Plan relating to option
provisions, and is further subject to all interpretations, amendments, rules
and regulations which may from time to time be promulgated and adopted pursuant
to the Plan. In the event of any conflict between the provisions of this option
and those of the Plan, the provisions of the Plan shall control.
4
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Stock Option
Agreement as of the ____ day of _______________, 199___.
SPATIAL TECHNOLOGY INC. PURCHASER
By:
-------------------------- ------------------------------
Name:
------------------------- ------------------------------
[Print Name]
Title:
------------------------ ------------------------------
Address:
----------------------
------------------------------
------------------------------
<PAGE> 11
NOTICE OF EXERCISE
Spatial Technology, Inc.
2425 55th Street, Building A
Boulder, CO 80301
Date of Exercise:
-------
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.
<TABLE>
<CAPTION>
Type of option (check one): Incentive [ ] Nonstatutory [ ]
<S> <C> <C>
Option Grant Number:
-----------------
Number of shares as to which
option is exercised:
-----------------
Total exercise price: $
-----------------
Cash payment delivered
herewith: $
-----------------
</TABLE>
By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the 1996 Equity Incentive Plan, (ii) to
provide for the payment by me to you (in the manner designated by you) of your
withholding obligation, if any, relating to the exercise of this option, and
(iii) if this exercise relates to an incentive stock option, to notify you in
writing within fifteen (15) days after the date of any disposition of any
shares of Common Stock issued upon exercise of this option that occurs within
two (2) years after the date of grant of this option or within one (1) year
after such shares of Common Stock are issued upon exercise of this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of Spatial Technology, Inc.
(the "SHARES"), which are being acquired by me for my own account upon exercise
of the Option as set forth above:
I agree that, if required by Spatial Technology, Inc. (or a representative
of the underwriters) in connection with an underwritten registration of the
offering of any securities of Spatial Technlogy, Inc. under the Securities Act
of 1933, as amended, I will be subject to the sale restrictions described in my
Stock Option Agreement.
1
<PAGE> 12
I further agree that all Shares shall be subject to the repurchase
provisions set forth in the Stock Option Agreement and, if applicable, the
Early Exercise Stock Purchase Agreement.
Very truly yours,
-------------------------------
2
<PAGE> 13
EXHIBIT B OF EXHIBIT 10.29
PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
, 199
---------------------- --
SPATIAL TECHNOLOGY INC.
2425 55th Street, Building A
Boulder, CO 80301
Ladies and Gentlemen:
The following confirms an agreement between me and Spatial Technology
Inc., a Delaware corporation ( the "Company," which term includes the Company's
subsidiaries, successors and assigns), which is a material part of the
consideration for my employment by the Company:
1. "Proprietary Information" is information that was or is
developed by, became or becomes known by, or was or is assigned or otherwise
conveyed to the Company, and which has commercial value in the Company's
business. Proprietary Information includes, without limitation, trade secrets,
financial information, product plans, customer lists, marketing plans and
strategies, forecasts and other business information, improvements, inventions,
formulas, ideas, circuits, mask works, works of authorship, processes, computer
programs, algorithms, techniques, schematics know-how and data. I understand
that my employment creates a relationship of confidence and trust between me
and the Company with respect to Proprietary Information of the Company or its
customers which may be learned by me during the period of my employment.
2. In consideration of my employment by the Company and the
compensation received by me from the Company from time to time, I hereby agree
as follows:
(a). All Proprietary Information and all patents, copyrights, trade
secret rights, rights with respect to masks works and other rights ( including
throughout, without limitation, any extensions, renewals, continuations or
divisions of any of the foregoing) in connection therewith shall be the sole
property of the Company. I hereby assign to the Company any rights I may have
or acquire in such Proprietary Information. At all times, both during my
employment by the Company and after its termination, I will keep in confidence
and trust and will not use or disclose any Proprietary Information or anything
relating to it without the written consent of the Company, except as may be
necessary in the ordinary course of performing my duties to the Company.
(b). In the event of the termination of my employment by me or by
the Company for any reason, I shall return all documents, records, apparatus,
equipment and other physical property, or any reproduction of such property,
whether or not pertaining to Proprietary Information, furnished to me by the
Company or produced by myself or others in connection with my employment, to
the Company immediately as and when requested by the Company.
(c). I will promptly disclose to the Company, or any persons
designated by it, all "inventions", which includes all improvements,
inventions, formulas, ideas, circuits, mask works, works of authorship,
processes, computer programs, algorithms, techniques, schematics, know-how and
data, whether or not patentable, made or conceived or reduced to practice or
developed by me, either alone or jointly with others, during the term of my
employment and for one (1) year thereafter. To the extent the Company does not
have rights therein hereunder, such disclosure shall be received by the Company
in confidence and does not extend the assignment made in Section (e) below.
(d). During the term of my employment and for one (1) year
thereafter, I will not encourage or solicit any employee of the Company to
leave the Company for any reason or to devote less than all of
<PAGE> 14
any such employee's efforts to the affairs of the Company, provided that the
foregoing shall not affect any responsibility I may have as an employee of the
Company with respect to the bona fide hiring and firing of Company personnel.
(e). I agree that all Inventions which I make, conceive, reduce to
practice or develop ( in whole or in part, either alone or jointly with others)
during my employment shall be the sole property of the Company and to the
extent permitted by law shall be "works made for hire". The Company shall be
the sole owner of all patents, copyrights, trade secret rights with respect to
mask works and other intellectual property or other rights in connection
therewith. I hereby assign to the Company any rights I may have or acquire in
such Inventions. I agree to perform, during and after my employment, all acts
deemed necessary or desirable by the Company to permit and assist it, at the
Company's expense, in obtaining and enforcing patents, copyrights, trade secret
rights, rights with respect to mask works or other rights on such Inventions
and/or any other Inventions I have or may at any time assign to the Company in
any and all countries. Such acts may include, but are not limited to,
execution of documents and assistance or cooperation in legal proceedings. I
hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents, as my agents and attorneys-in-fact to act for and in my
behalf and instead of me, to execute and file any applications or related
filings and to do all other lawfully permitted acts to further the prosecution
and issuance of patents, copyrights, trade secret rights, rights with respect
to mask works or other rights thereon with the same legal force and effect as
if executed by me.
(f). I attach hereto as Exhibit A a complete list of all Inventions
or improvements to which I claim ownership and that I desire to remove from the
operation of the Agreement, and I covenant that such list is complete. If no
such list is attached to this Agreement, I represent that I have no such
Inventions and improvements at the time of signing this Agreement.
(g). I represent that my performance of all the terms of this
Agreement will not breach any agreement of obligation to keep in confidence
proprietary information acquired by me in confidence or in trust prior to my
employment by the Company. I have not entered into, and I agree I will not
enter into, any agreement either written or oral in conflict herewith or in
conflict with my employment with the Company.
3. In consideration of the foregoing, the Company agrees that it
will not request as part of my employment that I divulge or make use of
confidential information of any of my former employers that has commercial
value to the business of the former employer who developed such information.
4. This Agreement shall be effective as of the first day of my
employment by the Company, and shall be binding upon me, my heirs, executors,
assigns, and administrators and shall inure to the benefit of the Company, its
subsidiaries, successors and assigns.
5. I acknowledge and understand that the Company will incur
irreparable harm and damage in the event that I breach or violate any of the
terms or conditions of this agreement, and I hereby agree that in addition to
any rights or remedies of law the Company may have for such breach or
violation, the Company shall be entitled to seek equitable remedies, including
the enforcement of this Agreement by injunction, specific performance, or any
other similar relief.
Dated: , 199
----------------- --
----------------------------------------
, Employee
---------------------------
Accepted and Agreed to :
Spatial Technology Inc.
By
----------------------------------
<PAGE> 15
Exhibit A
Spatial Technology Inc.
2425 55th Street Building A
Boulder, CO 80301
Ladies and Gentlemen:
1. The following is a complete list of all inventions or
improvements relevant to the subject matter of my employment by Spatial
Technology Inc. ( the "Company") that have been made or conceived or first
reduced to practice by me alone or jointly with others prior to my employment
by the Company that I desire to remove from the operation of the Company's
Proprietary Information and Inventions Agreement.
No inventions or improvements.
- ---------
See below:
- ---------
Additional sheets attached.
- ---------
2. I propose to bring to my employment the following materials
and documents of a former employer:
No materials or documents.
- ---------
See below.
- ---------
---------------------------------------
, Employee
-----------------------------
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