<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 5, 2000
REGISTRATION NO. 333-34694
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TALARIAN CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7372 33-0323810
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
333 DISTEL CIRCLE
LOS ALTOS, CALIFORNIA 94022
(650) 965-8050
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PAUL A. LARSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TALARIAN CORPORATION
333 DISTEL CIRCLE
LOS ALTOS, CALIFORNIA 94022
(650) 965-8050
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
LAIRD H. SIMONS III, ESQ. MICHAEL D. NATHAN, ESQ. MICHAEL A. MORGAN
BARRY J. KRAMER, ESQ. SIMPSON THACHER & BARTLETT CHIEF FINANCIAL OFFICER
DOROTHY L. HINES, ESQ. 425 LEXINGTON AVENUE TALARIAN CORPORATION
JOSHUA N. SUN, ESQ. NEW YORK, NEW YORK 10017-3954 333 DISTEL CIRCLE
JOHN M. SHIELDS, ESQ. (212) 455-2000 LOS ALTOS, CALIFORNIA 94022
FENWICK & WEST LLP (650) 965-8050
TWO PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94306
(650) 494-0600
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value per share.................... $69,000,000 $18,216
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o) under the Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
The purpose of this Amendment No. 1 is solely to file certain exhibits to
the Registration Statement as set forth below in Item 16(a) of Part II.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discount. All amounts shown are estimates, except the Securities
and Exchange Commission Registration Fee, the National Association of Securities
Dealers, Inc. Filing Fee and the Nasdaq National Market Listing Fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $18,216
National Association of Securities Dealers Inc. Filing
Fee....................................................... 7,400
Nasdaq National Market Listing Fee..........................
Blue Sky Fees and Expenses..................................
Transfer Agent and Registrar Fees...........................
Accounting Fees and Expenses................................
Legal Fees and Expenses.....................................
Printing Expenses...........................................
Miscellaneous...............................................
-------
Total..................................................... $
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or the board of directors of a corporation to grant, indemnity to
directors and officers in terms sufficiently broad to permit indemnification
under certain circumstances for liabilities, including reimbursement for
expenses incurred, arising under the Securities Act of 1933, as amended (the
"Securities Act").
As permitted by the Delaware General Corporation Law, the Registrant's
certificate of incorporation provides that its directors shall not be liable to
the Registrant or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent that the exculpation from liabilities
is not permitted under the Delaware General Corporation Law as in effect at the
time such liability is determined. As permitted by the Delaware General
Corporation Law, the bylaws of the Registrant provide that the Registrant shall
indemnify its directors and officers to the full extent permitted by the
Delaware General Corporation Law, subject to certain very limited exceptions.
The Registrant intends to enter into indemnification agreements with each
of its current directors and officers to give such directors and officers
additional contractual assurances regarding the scope of the indemnification set
forth in the Registrant's certification of incorporation and to provide
additional procedural protections in the event of litigation. At present, there
is no pending litigation or proceeding involving a director, officer or employee
of the Registrant regarding which indemnification is sought, nor is the
Registrant aware of any threatened litigation that may result in claims for
indemnification.
Reference is also made to Section 8 of the Underwriting Agreement (Exhibit
1.01 hereto), which provides for indemnification by the Underwriters of the
Registrant and its executive officers and directors for certain liabilities,
including liabilities arising under the Securities Act, in connection with
matters specifically provided in writing by the Underwriters for inclusion in
the Registration Statement.
See also the undertakings set out in response to Item 17.
II-1
<PAGE> 4
Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:
<TABLE>
<CAPTION>
EXHIBIT DOCUMENT NUMBER
---------------- ------
<S> <C>
Underwriting Agreement...................................... 1.01
Registrant's Certificate of Incorporation................... 3.01
Registrant's Bylaws......................................... 3.02
Amended and Restated Investors Rights Agreement dated
February 3, 2000, as amended March 10, 2000 between
Registrant and certain stockholders and warrant holders
named therein............................................. 4.02
Form of Indemnity Agreement................................. 10.01
</TABLE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
In the three years prior to the effective date of this Registration
Statement, we have issued and sold the following unregistered securities:
1. From March 16, 1997 through March 15, 2000, the Registrant has
issued 2,795,441 shares of common stock to its employees, directors and
consultants upon exercise of options for an aggregate consideration of
$2,010,867 in cash.
2. In September 1999, the Registrant issued 552,600 shares of common
stock to GlobalCast Communications, Inc., a California corporation, in
connection with its acquisition of substantially all of the assets of that
company.
3. In September 1999, the Registrant issued 52,400 shares of common
stock to Lucent Technologies, Inc., a Delaware corporation, in
consideration for Lucent's execution of the Letter Agreement with
Registrant dated September 3, 1999 regarding Registrant's succession, upon
its acquisition of GlobalCast Communications, Inc., to GlobalCast's rights,
title and interest in a License Agreement dated July 25, 1997 between
Lucent and GlobalCast as amended January 28, 1998.
4. In February 2000, the Registrant issued and sold 1,571,055 shares
of Series D preferred stock to Nortel Networks Inc., a Delaware corporation
for an aggregate consideration of $10,000,000.74 in cash.
5. In March 2000, the Registrant issued 348,215 shares of common stock
to shareholders of WhiteBarn, Inc., an Illinois corporation, in connection
with the merger of WhiteBarn, Inc. into the Registrant.
The sales and issuances of the above securities were determined to be
exempt from registration under the Securities Act in reliance upon Section 4(2)
of the Securities Act or Regulation D promulgated thereunder, or Rule 701
promulgated under Section 3(b) of the Securities Act as transactions by an
issuer not involving a public offering or transactions under compensation
benefit plans and contracts relating to compensation as provided under Rule 701.
The recipients of the securities in each transaction represented their
intentions to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution and appropriate legends were
affixed to the share certificates issued in these transactions. All recipients
had adequate access, through their relationships with the Registrant, to
information about the Registrant.
II-2
<PAGE> 5
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
1.01 Form of Underwriting Agreement.**
2.01 Agreement and Plan of Merger between Talarian Corporation, a
California corporation, and Registrant.**
2.02 Asset Purchase Agreement dated September 30, 1999 between
Registrant and GlobalCast Communications, Inc., a California
corporation.*
2.03 Agreement and Plan of Merger dated March 7, 2000 between
Registrant and WhiteBarn, Inc., an Illinois corporation.
3.01 Registrant's Amended and Restated Articles of Incorporation
as filed February 4, 2000.*
3.02 Registrant's Bylaws as adopted March 28, 1991.*
3.03 Form of First Amended and Restated Certificate of
Incorporation to be effective before the closing of the
offering.**
3.04 Form of Second Amended and Restated Certificate of
Incorporation to be effective upon the closing of the
offering.**
3.05 Restated Bylaws to be effective upon the closing of the
offering.**
4.01 Specimen Common Stock Certificate.**
4.02 Amended and Restated Investors Rights Agreement dated
February 3, 2000, as amended March 10, 2000 between
Registrant and certain stockholders and warrant holders
named therein.*
5.01 Opinion of Fenwick & West LLP.**
10.01 Form of Indemnity Agreement.*
10.02 Registrant's 1991 Stock Option Plan and related documents.*
10.03 Registrant's 1998 Equity Incentive Plan and related
documents.*
10.04 Registrant's 2000 Employee Stock Purchase Plan.*
10.05 Registrant's 2000 Equity Incentive Plan and related
documents.*
10.06 WhiteBarn, Inc. Stock Option Plan.*
10.07 WhiteBarn, Inc. 2000 Equity Incentive Plan.*
10.08 Lease dated February 8, 1995 between Registrant and GVE
Distel Associates.*
10.09 Agreement dated March 13, 2000 between Registrant and
Certain WhiteBarn Shareholders.
10.10 Form of Option Acceleration Agreement between Registrant and
each executive officer.*
10.13 License Agreement dated July 25, 1997 between Lucent
Technologies Inc., a Delaware corporation, and Registrant as
successor to GlobalCast Communications, Inc., a California
corporation, as amended by Amendment No. 1 effective January
28, 1998 and letter dated September 3, 1999.+
10.15 Standard Inbound License Agreement (Product Source Code)
dated September 30, 1999 between Registrant and Novell,
Inc., a Delaware corporation.+
10.16 Sublease dated July 18, 1997 between Registrant and
BroadVision, Inc., a Delaware corporation.*
10.17 Sub-Sublease dated November 18, 1997 between Registrant and
Fenwick & West LLP, a California limited liability
partnership, as amended as of February 1, 1999.*
10.18 Commitment Agreement dated March 13, 2000 between the
Registrant, Mark Mahowald and Wagner & Associates, P.C.
10.19 Agreement dated February 3, 2000 between Registrant and
Nortel Networks Inc.+
</TABLE>
II-3
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
10.20 Form of Registrant's Software License and Distribution
Agreement*
21.01 Subsidiaries of the Registrant.*
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).**
23.02 Consent of KPMG LLP, independent accountants (Talarian).*
23.03 Consent of KPMG LLP, independent accountants (GlobalCast).*
23.04 Consent of KPMG LLP, independent accountants (WhiteBarn).*
24.01 Power of Attorney (see page II-5).*
27.01 Financial Data Schedule.*
</TABLE>
- -------------------------
* Previously filed.
** To be filed by amendment.
+ Confidential treatment has been requested for portions of this exhibit.
(b) Financial statement schedules:
Financial statement schedules are omitted because the information called
for is not required or is shown either in the financial statements or the notes
thereto.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under "Item
14 -- Indemnification of Directors and Officers" above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Altos, State of
California, on the 5th day of May, 2000.
TALARIAN CORPORATION
By: /s/ MICHAEL A. MORGAN
------------------------------------
Michael A. Morgan
Vice President, Finance and
Administration and Chief Financial
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ PAUL A. LARSON* President, Chief Executive May 5, 2000
- --------------------------------------------- Officer and Director
Paul A. Larson
/s/ MICHAEL A. MORGAN Vice President, Finance and May 5, 2000
- --------------------------------------------- Administration and Chief Financial
Michael A. Morgan Officer
/s/ THOMAS J. LAFFEY* Vice President, Chief Technology May 5, 2000
- --------------------------------------------- Officer, Secretary and Director
Thomas J. Laffey
</TABLE>
II-5
<PAGE> 8
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ PAUL D. CALLAHAN* Director May 5, 2000
- ---------------------------------------------
Paul D. Callahan
/s/ DAVID I. CAPLAN* Director May 5, 2000
- ---------------------------------------------
David I. Caplan
/s/ DAVID E. GOLD* Director May 5, 2000
- ---------------------------------------------
David E. Gold
/s/ BRIAN T. HOREY* Director May 5, 2000
- ---------------------------------------------
Brian T. Horey
/s/ RICHARD A. NORTZ* Director May 5, 2000
- ---------------------------------------------
Richard A. Nortz
*By: /s/ MICHAEL A. MORGAN
------------------------------------------
Michael A. Morgan
Attorney-In-Fact
</TABLE>
II-6
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
1.01 Form of Underwriting Agreement.**
2.01 Agreement and Plan of Merger between Talarian Corporation, a
California corporation, and Registrant.**
2.02 Asset Purchase Agreement dated September 30, 1999 between
Registrant and GlobalCast Communications, Inc., a California
corporation.*
2.03 Agreement and Plan of Merger dated March 7, 2000 between
Registrant and WhiteBarn, Inc., an Illinois corporation.
3.01 Registrant's Amended and Restated Articles of Incorporation
as filed February 4, 2000.*
3.02 Registrant's Bylaws as adopted March 28, 1991.*
3.03 Form of First Amended and Restated Certificate of
Incorporation to be effective before the closing of the
offering.**
3.04 Form of Second Amended and Restated Certificate of
Incorporation to be effective upon the closing of the
offering.**
3.05 Restated Bylaws to be effective upon the closing of the
offering.**
4.01 Specimen Common Stock Certificate.**
4.02 Amended and Restated Investors Rights Agreement dated
February 3, 2000, as amended March 10, 2000 between
Registrant and certain stockholders and warrant holders
named therein.*
5.01 Opinion of Fenwick & West LLP.**
10.01 Form of Indemnity Agreement.*
10.02 Registrant's 1991 Stock Option Plan and related documents.*
10.03 Registrant's 1998 Equity Incentive Plan and related
documents.*
10.04 Registrant's 2000 Employee Stock Purchase Plan.*
10.05 Registrant's 2000 Equity Incentive Plan and related
documents.*
10.06 WhiteBarn, Inc. Stock Option Plan.*
10.07 WhiteBarn, Inc. 2000 Equity Incentive Plan.*
10.08 Lease dated February 8, 1995 between Registrant and GVE
Distel Associates.*
10.09 Agreement dated March 13, 2000 between Registrant and
Certain WhiteBarn Shareholders.
10.10 Form of Option Acceleration Agreement between Registrant and
each executive officer.*
10.13 License Agreement dated July 25, 1997 between Lucent
Technologies Inc., a Delaware corporation, and Registrant as
successor to GlobalCast Communications, Inc., a California
corporation, as amended by Amendment No. 1 effective January
28, 1998 and letter dated September 3, 1999.+
10.15 Standard Inbound License Agreement (Product Source Code)
dated September 30, 1999 between Registrant and Novell,
Inc., a Delaware corporation.+
10.16 Sublease dated July 18, 1997 between Registrant and
BroadVision, Inc., a Delaware corporation.*
10.17 Sub-Sublease dated November 18, 1997 between Registrant and
Fenwick & West LLP, a California limited liability
partnership, as amended as of February 1, 1999.*
10.18 Commitment Agreement dated March 13, 2000 between the
Registrant, Mark Mahowald and Wagner & Associates, P.C.
10.19 Agreement dated February 3, 2000 between Registrant and
Nortel Networks Inc.+
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<C> <S>
10.20 Form of Registrant's Software License and Distribution
Agreement*
21.01 Subsidiaries of the Registrant.*
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).**
23.02 Consent of KPMG LLP, independent accountants (Talarian).*
23.03 Consent of KPMG LLP, independent accountants (GlobalCast).*
23.04 Consent of KPMG LLP, independent accountants (WhiteBarn).*
24.01 Power of Attorney (see page II-5).*
27.01 Financial Data Schedule.*
</TABLE>
- -------------------------
* Previously filed.
** To be filed by amendment.
+ Confidential treatment has been requested for portions of this exhibit.
<PAGE> 1
EXHIBIT 2.03
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of this 7th day of March 2000, by and among Talarian Corporation
("Talarian"), a California corporation, and WhiteBarn, Inc.
("WhiteBarn"), an Illinois corporation.
R E C I T A L S
A. WhiteBarn and Talarian desire to consummate a merger in which
WhiteBarn will merge with and into Talarian (the "Merger") in accordance with
the terms of this Agreement, so that after the Merger, WhiteBarn shall cease to
exist.
B. For federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
C. WhiteBarn and Talarian desire to make certain representations,
warranties and covenants regarding the Merger and to prescribe various
conditions to the Merger.
A G R E E M E N T
In consideration of the foregoing recitals and the respective
covenants, agreements, representations and warranties contained herein, the
parties, intending to be legally bound, hereby agree as follows:
1 ARTICLE
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, the following terms shall
have the following meanings:
"Action" shall mean any action, claim, suit, litigation,
proceeding, arbitration, mediation or other dispute.
"Agreement with Certain WhiteBarn Shareholders" shall have the
meaning defined in Section 7.9.
<PAGE> 2
"Ancillary Agreements" shall mean the other agreements
executed in connection with this Agreement: the Nondisclosure Agreement, the
Commitment Agreement, the Snyder Agreement and the Agreement with Certain
WhiteBarn Shareholders, each defined below.
"Balance Sheet" shall have the meaning specified in Section
3.8.
"Balance Sheet Date" shall have the meaning specified in
Section 3.8.
"Books and Records" shall mean all books, ledgers, files,
records, manuals and other materials (in any form or medium, including
electronic media) related to WhiteBarn's business, including, but not limited
to, all correspondence, personnel records, vendor lists, operation and quality
control records and procedures, research and development files, Intellectual
Property disclosures and documentation, accounting records and systems,
litigation files, sales order files, purchase order files, advertising
materials, catalogs, product brochures, mailing lists, customer lists,
distribution lists, sales and promotional materials and all other records
utilized by WhiteBarn in connection with its business and all computer hardware,
software and data files necessary to access or review or continue to compile or
utilize any of the foregoing.
"Closing" shall have the meaning defined in Section 9.1.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Contracts" shall have the meaning set forth in Section 3.15.
"Commitment Agreement" shall have the meaning defined in
Section 7.8.
"Disclosure Schedule" shall mean a schedule marked as the
"Disclosure Schedule" prepared by WhiteBarn and delivered to Talarian and
attached to this Agreement.
"Employee Benefit Plan(s)" shall mean any deferred
compensation plan, bonus plan, profit sharing plan, stock option plan, employee
stock purchase plan and any other employee benefit plan, agreement, arrangement
or commitment including, but not limited to, all employee benefit plans as
defined in Section 3(3) of ERISA (a) that WhiteBarn sponsors or to which
WhiteBarn contributes or is required to contribute, or under which WhiteBarn may
incur any liability, and (b) that covers an employee or former employee of
WhiteBarn.
"Encumbrances" shall mean any claim, lien, pledge, option,
charge, security interest, deed of trust, mortgage, restriction, encumbrance or
other right of third parties, of any kind or nature.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and any successor statute, including the
rules and regulations promulgated thereunder.
<PAGE> 3
"Financial Statements" shall have the meaning specified in
Section 3.8.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect on the date of the Agreement.
"Inconsistent Activities" shall have the meaning defined in
Section 5.5.
"Indemnifying Shareholders" shall have the meaning defined in
Section 10.1.
"Intellectual Property" shall mean all of WhiteBarn's
intellectual property rights including, without limitation, all of WhiteBarn's
right, title and interest in and to (a) rights in any patents, patent
applications, trademarks, trademark registrations and applications, service
marks and trade names, copyrights, copyright registrations, trade secrets and
business confidential information; (b) computer software programs and systems
and documentation relating to the foregoing or used or useable in WhiteBarn's
business; and (c) other proprietary information owned, controlled, created or
used or useable by or on behalf of WhiteBarn in connection with the conduct of
WhiteBarn's business in which WhiteBarn has any interest whatsoever, whether or
not registered, including rights or obligations under any license agreement with
any other person.
"Intellectual Property Agreements" shall have the meaning
defined in Section 7.8.
"Laws" shall mean all federal, state or local statutes,
regulations, ordinances, orders, decrees, or any other laws, common law theories
or reported decisions of any state or federal court now or at any time hereafter
in effect, including, without limitation, any of the foregoing relating to, or
imposing liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material.
"Leases" shall have the meaning specified in Section 3.13.
"Major Customers" shall have the meaning set forth in Section
3.16.
"Material Adverse Change" shall have the meaning specified in
Section 3.10.
"Nondisclosure Agreement" shall mean the Nondisclosure
Agreement dated as of February 16, 2000 between Talarian and WhiteBarn.
"Permits" shall mean all franchises, permits, licenses,
qualifications, rights-of-way, easements, municipal and other approvals,
authorizations, orders, consents and other rights from, and filings with, any
governmental authority of any jurisdiction worldwide relating to the conduct of
WhiteBarn's business.
"Regulatory Approvals" shall mean all necessary regulatory
approvals, if any, required for the transfer of ownership or control over
WhiteBarn that is to occur upon consummation of the Merger.
<PAGE> 4
"Representatives" shall mean any officer, director, principal,
stockholder, partner, attorney, accountant, advisor, agent, employee or other
representative of a party hereto.
"Shareholders" shall mean all the holders of WhiteBarn Stock,
as set forth in the Disclosure Schedule hereto.
"Snyder Agreement" shall have the meaning set forth in Section
7.8.
"Talarian Common Stock" shall mean the no-par-value common
stock of Talarian.
"Talarian Disclosure Schedule" shall have the meaning defined
in Section 4.3.
"Talarian Exchange Stock" shall have the meaning defined in
Section 2.4.
"Tax(es)" shall mean all taxes, charges, fees, levies or other
assessments imposed by and required to be paid to any federal, state, local, or
foreign taxing authority, including, without limitation, income, excise,
property, sales, transfer, ad valorem, payroll and franchise taxes (including
any interest, penalties or additions attributable to or imposed on or with
respect to any such assessment) and any estimated payments or estimated taxes.
"Tax Return" shall mean any return, report, information return
or other document (including any related or supporting information) filed or
required to be filed with any federal, state, local or foreign governmental
entity or other authority in connection with the determination, assessment or
collection of any Tax or the administration of any Laws, regulations or
administrative requirements relating to any Tax.
"WhiteBarn Stock" shall have the meaning defined in Section
2.4.
1 ARTICLE
MERGER
1.1 Merger. On the terms and subject to the conditions of this Agreement, on the
Effective Date (defined below), WhiteBarn shall be merged into Talarian in a
statutory merger in accordance with California and Illinois law and Talarian
shall be the surviving corporation in the Merger. On and after the Effective
Date, the separate existence and corporate organization of WhiteBarn shall
cease, and Talarian shall succeed to and possess all of the properties, rights,
privileges and powers and be subject to all of the liabilities and obligations
of WhiteBarn, all without further act or deed.
1.1 Effective Date of Merger. As soon as practicable following the Closing,
WhiteBarn shall cause a certificate of merger and/or other required documents or
officers' certificates (collectively, the "Certificate of Merger"), executed at
the Closing, to be filed with the Secretaries of State of the States of
California and Illinois in accordance with applicable law.
<PAGE> 5
The Merger shall become effective at the time of the filing of the Certificates
of Merger. The time and date on which the Merger shall become effective is
referred to herein as the "Effective Date."
1.1 Certificate of Incorporation, Bylaws, Directors and Officers.
(i) Articles of Incorporation. The Articles of Incorporation of Talarian as in
effect at the Effective Date shall remain in effect and will be the Articles of
Incorporation of the surviving corporation, until further amended.
(i) Bylaws. The Bylaws of Talarian, as in effect at the Effective Date, shall
remain in effect as the Bylaws of the surviving corporation until amended in
accordance with the terms of such Bylaws.
(i) Directors and Officers. The directors and officers of Talarian immediately
prior to the Effective Date shall be the directors and officers, respectively,
of the surviving corporation, in each case, to serve until their respective
successors are duly elected and qualified.
1.1 Conversion of the WhiteBarn Stock. On the Effective Date and by virtue of
the Merger, each outstanding share of Common Stock of WhiteBarn, no par value
per share ("WhiteBarn Stock"), shall be converted, without any action on the
part of the holder thereof, into and represent the right to receive 0.07932
shares of Talarian Common Stock (the "Talarian Exchange Stock") and cash in the
amount of $.09443 (the "Cash Consideration"); provided, however, that fractional
shares of Talarian Exchange Stock to which holders of WhiteBarn Stock are
entitled shall be rounded to the nearest whole share. On the Effective Date,
Talarian shall issue to the Shareholders, upon tender of the WhiteBarn Stock,
the shares of Talarian Exchange Stock into which the WhiteBarn Stock has been
converted as a result of the Merger and the Cash Consideration. The issuance of
the Talarian Exchange Stock under this Agreement shall not be registered under
the federal securities laws, and therefore the stock shall be "restricted stock"
under such laws.
1.1 Existing Options for WhiteBarn Stock. As of the Effective Date, by virtue of
the Merger and without further corporate action, each outstanding option to
purchase shares of WhiteBarn Stock under the WhiteBarn, Inc. Stock Option Plan
and the 2000 WhiteBarn, Inc. Equity Incentive Plan (collectively, the "WhiteBarn
Options"), shall be assumed by Talarian and converted into an option relating to
Talarian Common Stock so as to substitute Talarian Common Stock for WhiteBarn
Stock purchasable thereunder as adjusted as set forth below (each, an "Assumed
Option"). Each Assumed Option shall give the holder thereof the right to
purchase 0.07932 shares of Talarian Common Stock for each share of WhiteBarn
Stock to which such WhiteBarn Options held by such holder relate, at a purchase
price per share equal to (i) 12.60714 multiplied by (ii) the purchase price per
share of WhiteBarn Stock set forth in such WhiteBarn Options (with any
fractional cent being rounded to the next higher full cent); provided, however,
that no Assumed Options shall provide for fractional shares of Talarian Common
Stock and no holder of WhiteBarn Options shall be entitled to any receive cash
in lieu of any fractional shares.
<PAGE> 6
Assumed Options shall be subject to the vesting provisions set forth in the
WhiteBarn Options and the applicable plan to which they relate.
1.1 Press Release. Upon the execution of this Agreement, the parties will make a
joint press release in a mutually agreeable form. The parties will consult with
each other before issuing any further press release or otherwise making any
public announcement concerning the Merger; provided, however, that after the
consummation of the Merger, Talarian shall be entitled to issue such press
releases and make such public announcements regarding the Merger as it shall
determine in its sole discretion.
1 ARTICLE
REPRESENTATIONS AND WARRANTIES OF WHITEBARN
WhiteBarn hereby expressly acknowledges that Talarian, in agreeing to
consummate the transactions contemplated by this Agreement, has relied upon the
following representations and warranties, and no others. WhiteBarn hereby
represents and warrants to Talarian as follows:
1.1 Organization and Qualification of WhiteBarn. WhiteBarn is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Illinois. WhiteBarn has the requisite corporate power and authority to own,
lease and operate its assets and properties and to conduct its business in the
manner in which it is presently conducted. Except as set forth in the Disclosure
Schedule, WhiteBarn is duly qualified and licensed in each jurisdiction where
the nature of the business conducted by it requires such qualification, except
where the failure to so qualify would not have a material adverse effect upon
WhiteBarn's financial condition or results of operations. WhiteBarn has
delivered to Talarian true and complete copies of its Articles of Incorporation
and Bylaws, each as amended to date. Except as set forth in the Disclosure
Schedule, WhiteBarn has no subsidiaries or affiliated companies and does not
otherwise own or control directly or indirectly, any equity interest in any
corporation, association or business entity.
1.1 Capitalization of WhiteBarn. The total authorized and outstanding amounts of
each class of stock of WhiteBarn is set forth on the Disclosure Schedule. Other
than this Agreement, and except as set forth on the Disclosure Schedule, there
is not outstanding any subscription, option, warrant, call, right or other
agreement or commitment obligating WhiteBarn or any of the Shareholders to
issue, sell, deliver or transfer (including any right of conversion or exchange
under any outstanding security or other instrument) any shares of WhiteBarn
Stock or any shares of any other capital stock of WhiteBarn. No bonds,
debentures, notes or other indebtedness of WhiteBarn having the right to vote
(or convertible into or exchangeable or exercisable for securities having the
right to vote) on any matters on which shareholders of WhiteBarn may vote are
issued, outstanding or subject to issuance. All of the shares of WhiteBarn Stock
are duly and validly authorized, issued and outstanding, fully paid and
non-assessable and free and clear of all Encumbrances, except those that may be
created by Talarian and in compliance with applicable securities laws. Upon the
consummation of the Merger, there
<PAGE> 7
shall be no outstanding options to purchase shares of WhiteBarn Stock. Each
holder of WhiteBarn Options is a current employee of WhiteBarn.
1.1 Authorization. Except for the approval of its Shareholders which has not yet
been obtained as of the date this Agreement, WhiteBarn has the requisite
corporate power and authority to execute and deliver this Agreement, to
consummate the transactions contemplated hereby and to perform all of its
obligations hereunder. All actions and proceedings on the part of WhiteBarn, its
officers, directors and Shareholders necessary to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly taken or will be taken prior to the Closing
Date.
1.1 Due Execution and Delivery; Binding Obligations. This Agreement has been
duly executed and delivered by WhiteBarn. This Agreement constitutes the legal,
valid and binding agreement and obligation of WhiteBarn, enforceable against it
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
conveyance or similar Laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability and except as rights of
indemnity or contribution may be limited by federal or state securities or other
laws or the public policy underlying such Laws.
1.1 Compliance with Other Instruments. Except as set forth in the Disclosure
Schedule: (a) WhiteBarn is not in violation of any term of its Articles of
Incorporation or Bylaws, or in any material respect of any term or provision of
any material mortgage, indebtedness, indenture, contract, agreement, instrument,
order, writ, injunction, judgment or decree; (b) WhiteBarn is not in violation
in any material respect of any material order, statute, rule or regulation
applicable to WhiteBarn, its officers, directors or Shareholders; and (c)
WhiteBarn has all material licenses, permits and certificates from governmental
agencies necessary for the conduct of its business as now conducted. No claim
has been made by any governmental authority to the effect that the business
conducted by WhiteBarn fails to comply, in any respect (and no such claim is
anticipated by WhiteBarn), with any law, rule, regulation, or ordinance.
1.1 No Conflict or Violation. Except as provided in the Disclosure Schedule,
neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will result in: (a) a violation of, or a
conflict with, WhiteBarn's Articles of Incorporation, Bylaws or any
subscription, stockholders' or similar types of agreements or understandings to
which WhiteBarn is a party; (b) a material breach of, or a material default (or
an event which, with notice or lapse of time or both would constitute a material
default) under or result in the termination of, or accelerate the performance
required by, or create a right of termination or acceleration under, any
material Contract, agreement, instrument, license, Encumbrance or Permit to
which WhiteBarn is a party or by which WhiteBarn or WhiteBarn's business is
bound; (c) the payment by, or the creation of any obligation (absolute or
contingent) to pay on behalf of WhiteBarn of any severance, termination, "golden
parachute" or other similar payments pursuant to any employment or other
agreements of WhiteBarn; (d) a violation by WhiteBarn or any Shareholder of any
Law, order, judgment, writ, injunction decree or award to
<PAGE> 8
which WhiteBarn or any of the Shareholders is a party or by which it is bound;
or (e) an imposition of any material Encumbrance on WhiteBarn or its assets.
1.1 Consents and Approvals. Except as set forth on the Disclosure Schedule, the
execution and delivery of this Agreement by WhiteBarn, and the consummation of
the transactions contemplated hereby, do not and will not require WhiteBarn or
any Shareholder to obtain as of the Closing Date any authorization, registration
or filing with, or consent or approval of, any Person, including, without
limitation, any federal, state or other governmental authority or regulatory
body, other than the filing of the Certificate of Merger as contemplated by
Section 2.2, above, any state and federal filings that may be required under
applicable securities Laws and the Regulatory Approvals.
1.1 Financial Statements. WhiteBarn has furnished to Talarian copies of (a) the
unaudited balance sheet of WhiteBarn as of December 31, 1999 (the "Balance Sheet
Date"), and the related unaudited statements of income and stockholders' equity
for the year then ended. The financial statements referred to in this section
(the "Financial Statements") are complete and fairly and accurately present in
all material respects the financial condition of WhiteBarn as at the respective
dates thereof and the results of operations of WhiteBarn for the respective
periods covered by the statements of income contained therein, subject to normal
recurring year-end adjustments (and except that footnotes may be omitted).
1.1 Undisclosed Liabilities. Except as set forth on the Disclosure Schedule,
WhiteBarn does not have any liabilities or obligations (absolute, accrued,
contingent or otherwise) required to be disclosed in a balance sheet prepared in
accordance with cash based accounting principles (or, to the best knowledge of
WhiteBarn, any such material liabilities or obligations which are not required
to be disclosed in a balance sheet, except for liabilities and obligations under
any agreement, contract or commitment to which WhiteBarn is a party or by which
any of its properties or assets is bound), except (a) liabilities reflected on
the Balance Sheet, and (b) liabilities incurred since the Balance Sheet Date in
the ordinary course of conducting WhiteBarn's business.
1.1 Absence of Certain Changes or Events. Since the Balance Sheet Date, except
as set forth on the Disclosure Schedule and except as contemplated herein or in
the Ancillary Agreements, there has not been:
(a) Any material adverse change in the financial condition, assets, liabilities,
earnings, or business ("Material Adverse Change") of WhiteBarn.
(a) Any destruction, damage to, or loss of any of WhiteBarn's material assets
(whether or not covered by insurance) used in WhiteBarn's business;
(a) Any material change in accounting methods or practices by WhiteBarn
(including, without limitation, any change in depreciation, amortization or
valuation policies or rates) or material revaluation of any of its assets,
liabilities or reserves reflected on the
<PAGE> 9
Balance Sheet, or any material change in any assumption underlying or methods of
calculating any bad debt, contingency or other reserves related to WhiteBarn's
business;
(a) An increase in the salary or other compensation payable or to become payable
by WhiteBarn to any of its officers, directors, independent contractors or
employees; the declaration, payment, or commitment or obligation of any kind for
the payment, by WhiteBarn, of a bonus or other additional salary or compensation
to any such person; the repayment by WhiteBarn of any loan from such person; the
payment by WhiteBarn of any dividends, distributions or any other payments in
respect of the shares of capital stock of WhiteBarn whether in cash or property,
to any such person;
(a) Any amendment or termination of any Contract, Permit or other agreement
related to WhiteBarn's assets or WhiteBarn's business, or by which WhiteBarn or
any of its material assets or properties used or useable in connection with
WhiteBarn's business are subject, other than an amendment or termination made in
the ordinary course of business consistent with past practice which is
explicitly approved by Talarian; or any entrance into any agreement, contract or
commitment which contains exclusivity or other terms which restrict WhiteBarn's
flexibility in doing business with any third party, whether written or oral;
(a) Any cancellation of indebtedness or waiver or release of any material right
or claim of WhiteBarn related in any way to WhiteBarn's business, other than a
cancellation, waiver or release made in the ordinary course of business
consistent with past practice which is explicitly approved by Talarian;
(a) Any declaration of or agreement to declare or make, any payment or
distribution of any material assets used or useable in connection with
WhiteBarn's business of any kind whatsoever;
(a) Any material sales, transfers, disposals of or agreements to sell, transfer
or otherwise dispose of any of the assets, properties or rights of WhiteBarn
related to WhiteBarn's business, other than sales, transfers, disposals of or
agreements made in the ordinary course of business consistent with past practice
which are explicitly approved by Talarian or any material changes in WhiteBarn's
royalty arrangements;
(a) Any capital expenditure or incurring of any obligation to make any capital
expenditure in connection with the conduct of WhiteBarn's business in excess (in
the aggregate) of $100,000;
(b) Any making of any loan by WhiteBarn to any person or entity;
(a) Any creation or assumption of any mortgage, pledge or other Encumbrance on
any material asset of WhiteBarn;
(a) Any failure to pay or satisfy when due any obligation of WhiteBarn except
where such failure would not constitute a Material Adverse Change of WhiteBarn;
<PAGE> 10
(a) To the best of WhiteBarn's knowledge after reasonable inquiry, any other
event or condition of any character which it is reasonable to expect will,
individually or in the aggregate constitute a Material Adverse Change of
WhiteBarn; or
(a) Any agreement by WhiteBarn or the Shareholders to do or cause any of the
things described in clauses (a) through (l), above.
1.1 Properties. The Disclosure Schedule sets forth a complete and correct list
of all tangible assets owned by WhiteBarn as of the Balance Sheet Date which
have an original book value in excess of $2,000 and that have been treated as
capital assets. WhiteBarn does not own any fee interest in real property. Except
as set forth on the Disclosure Schedule, WhiteBarn has good title to, or a valid
leasehold interest in, or a valid license to use, all of the personal property
material to WhiteBarn's business, in each case free and clear of all
Encumbrances, except for security interests shown on WhiteBarn's financial
statements as securing certain liabilities, purchase money security interests
incurred in connection with the purchase of assets after the Balance Sheet Date
and those relating to assets held under capitalized leases. All material
tangible personal property owned or leased by WhiteBarn is in good order and
operating condition, ordinary wear and tear excepted, and free from any defects,
except for such minor defects which do not substantially interfere with the
continued use thereof in the conduct of normal operations in the manner and to
the extent such assets are presently being used.
1.1 Intellectual Property.
(a) Set forth in the Disclosure Schedule is a complete and correct list of all
of the material Intellectual Property. Except as set forth on the Disclosure
Schedule, (a) the Intellectual Property is owned by WhiteBarn or WhiteBarn has a
valid license or other right to use it, (b) WhiteBarn has not received any
notice or claim disputing WhiteBarn's right to own or use any such Intellectual
Property, (c) to its knowledge, WhiteBarn's right to own or use the Intellectual
Property is not disputed by any third party, and (d) WhiteBarn owns or has
rights to use on reasonable terms all intellectual property needed or used in
its business as it is currently conducted. Except as set forth on the Disclosure
Schedule, the Intellectual Property is owned by WhiteBarn free and clear of any
Encumbrances. WhiteBarn is not infringing upon or otherwise acting adversely to
any property owned by any other person with respect to the Intellectual Property
which has been received and used by WhiteBarn, nor to its knowledge, is there
any Action by any person pending or threatened with respect thereto.
(b) The Disclosure Schedule accurately discloses all material licenses,
sublicenses or agreements by which WhiteBarn holds or has given to others the
right to use the Intellectual Property. WhiteBarn is not in default in any
material respect and, to its knowledge, no third party is in default in any
material respect, under any such license, sublicense or agreement.
(a) WhiteBarn has provided Talarian with a copy of the form or forms of
agreements used by WhiteBarn to protect its proprietary information and trade
secrets and otherwise to protect the Intellectual Property, including without
limitation, any non-solicitation
<PAGE> 11
agreements. The Disclosure Schedule sets forth a complete and accurate
description of such agreements which have been entered into by and between
WhiteBarn and other persons or entities.
1.1 Leases. The Disclosure Schedule sets forth a true, correct and complete list
of all leases, subleases, licenses and other occupancy or lease agreements,
together with all amendments, supplements and nondisturbance agreements
pertaining thereto, under which WhiteBarn leases, subleases, licenses, occupies
or uses any real or material physical personal property (the "Leases"). All of
the Leases are in good standing, legal, valid, binding and in full force and
effect, and there is not under any of such Leases any existing material default,
violation or breach by WhiteBarn or event or condition which after notice or
lapse of time or both would constitute a material default, violation or breach.
WhiteBarn has provided Talarian with true and correct copies of all such Leases.
1.1 Receivables. All receivables of WhiteBarn which are reflected in the Balance
Sheet and all such receivables which have arisen since the Balance Sheet Date
have arisen only from bona fide transactions in the ordinary course of business.
There are no facts or circumstances which would result in any material increase
in the uncollectability of such receivables as a class in excess of the reserves
therefor set forth on the Balance Sheet. The Disclosure Schedule lists as of
January 31, 2000, all receivables of WhiteBarn, which list taken on an aggregate
basis is accurate in all material respects. Such list also includes the amount
owing, the aging of each such receivable and the name of the party from whom
such receivable is owing.
1.1 Contracts.
(a) The Disclosure Schedule contains a complete and correct list of all
agreements, contracts and commitments (collectively, the "Contracts"), whether
written or oral, (i) to which WhiteBarn is a party or by which it is bound, or
(ii) by which any of the assets, properties or WhiteBarn's business is bound and
in either case, which constitute:
(i) Mortgages, indentures, security agreements, and other agreements and
instruments relating to the borrowing of money by or from, or any extension or
credit to or from, WhiteBarn;
(i) Sales agency or material marketing agreement;
(i) Agreements or commitments for capital expenditures;
(i) Brokerage or finder's agreements;
(i) Partnership, joint venture or other arrangements or agreements involving a
sharing of profits or expenses;
<PAGE> 12
(i) Contracts or commitments to sell, lease or otherwise dispose of any assets,
properties or business other than in the ordinary course of WhiteBarn's
business;
(i) Contracts or commitments limiting the freedom of WhiteBarn to compete in any
line of business or in any geographic area or with any person;
(i) Other agreements, contracts and commitments which in any case involve
payments or receipts of more than $10,000 per annum; and
(i) To WhiteBarn's knowledge, any other agreements, contracts and commitments
relating to WhiteBarn's business, operations or financial condition;
(a) WhiteBarn has delivered to Talarian or its Representatives complete and
correct copies of all written Contracts, together with all amendments thereto,
described in Section 3.15(a), and accurate written descriptions of all oral
Contracts described in Section 3.15(a). All of such Contracts are valid and in
full force and effect and WhiteBarn has duly performed in all material respects
all of its obligations under each such Contract to the extent those obligations
have accrued and no default, violation or breach by WhiteBarn under any such
Contract has occurred which affects the enforceability of such Contract or any
parties' rights thereunder.
1.1 Customer Contracts. The Disclosure Schedule sets forth a correct and
complete list of the 20 largest customers (by sales volume) (the "Major
Customers") of WhiteBarn during the 12-month period ended at the Balance Sheet
Date indicating the sales to such Major Customers within such period and listing
any existing contracts between such Major Customer and WhiteBarn. As of the
Balance Sheet Date, WhiteBarn did not have any outstanding Contracts with any
Major Customer requiring material payments or material credits by WhiteBarn to
such customers, except as described on the Disclosure Schedule. Except as set
forth in the Disclosure Schedule, there are no outstanding disputes with any
Major Customer and no Major Customer has refused to do business with WhiteBarn
or, to WhiteBarn's knowledge, has stated its intention not to continue to do
business with or increase or reduce its purchases from WhiteBarn upon
consummation of the transactions contemplated hereby.
<PAGE> 13
1.1 Employment Matters; Employee Benefits.
(a) The Disclosure Schedule sets forth a complete and correct
list of all the names, current annual rates of salary, bonuses, accrued vacation
benefits, accrued sick pay and other compensation of all the present employees
and agents (including independent contractors) of WhiteBarn who provide services
to WhiteBarn or in connection with WhiteBarn's business and whose current annual
cash compensation from WhiteBarn (including salary and bonus) is expected to
equal or exceed $2,000. To WhiteBarn's knowledge, no employee or agent of
WhiteBarn is in violation of any term of any employment contract,
confidentiality agreement or other contract or agreement relating to the
relationship of such employee with WhiteBarn, or with any other party, because
of the nature of WhiteBarn's business now conducted or proposed to be conducted
by WhiteBarn. Except as disclosed in the Disclosure Schedule, there are no
employment or consulting contracts or arrangements, including Employee Benefit
Plans, bonus or profit sharing plans, or other severance or termination
contracts or arrangements which constitute contractual obligations of WhiteBarn
not terminable on 30 days' notice. As of the date hereof, no key employee or
independent contractor of WhiteBarn has terminated his or her relationship with
WhiteBarn since the Balance Sheet Date, and as of the date hereof, to
WhiteBarn's knowledge, no current key employee or independent contractor has
indicated any present or future intention to terminate his or her relationship
with WhiteBarn.
(b) The Disclosure Schedule contains a complete and correct
list of all material Employee Benefit Plans. WhiteBarn has delivered to Talarian
or its Representatives complete, current, and correct copies of all written
Employee Benefit Plans, together with all amendments thereto. All such Employee
Benefit Plans comply with the provisions of and have been administered in
compliance with their terms and applicable law. There are no pending or, to
WhiteBarn's knowledge, threatened governmental audits of any Employee Benefit
Plan, or any pending or, to WhiteBarn's knowledge, threatened lawsuits involving
any Employee Benefit Plan. None of the persons providing services for WhiteBarn
have been improperly classified as being independent contractors, leased
employees, or as being exempt from the payment of wages for overtime.
1.1 Transactions with Affiliated Parties. Except as disclosed in the Disclosure
Schedule, no director, officer, employee, stockholder, partner or agent of
WhiteBarn, and none of their respective spouses or children, no trust of which
any such person is the grantor, trustee or beneficiary, no corporation of which
any such person or party is a controlling stockholder, employee, officer or
director, or any partnership or other entity in which any such person or party
owns an interest (all such persons, trusts, corporations and partnerships being
herein referred to collectively as "Affiliated Parties" and individually as an
"Affiliated Party"), has, or has had, any ownership interest in any property
used in WhiteBarn's business. Except as disclosed in the Disclosure Schedule, no
Affiliated Party is a party to any agreement, contract or commitment with
WhiteBarn.
1.1 Certain Payments. WhiteBarn has not, nor to WhiteBarn's knowledge, has any
person or other entity, directly or indirectly, on behalf of or with respect to
WhiteBarn: (a)
<PAGE> 14
made an unreported political contribution; (b) made or received any material
payment which was not legal to make or receive; (c) engaged in any material
transaction or made or received any material payment which was not properly
recorded in the Books and Records; or (d) created or used any "off-book" bank or
cash account or "slush fund."
1.1 Taxes. WhiteBarn is, and is subject to taxation as, a C corporation. Except
as set forth in the Disclosure Schedule, all Taxes which are due and payable by
WhiteBarn have been paid in full and any Taxes that become due and owing by
WhiteBarn before the Closing Date (whether or not shown on any Tax Return) will
be paid, other than Taxes which are not delinquent and subject to a late
payment; all Tax Returns required to be filed in connection therewith have been
accurately prepared and duly and timely filed, or will be accurately prepared
and duly and timely filed, and all deposits required by Law to be made by
WhiteBarn with respect to any such Taxes have been duly made. WhiteBarn is not
delinquent in the payment of any Taxes nor does WhiteBarn have any Tax
deficiency or claim outstanding, proposed or assessed against it, and there is
no basis for any such deficiency of claim. There is not now in force any
extension of time with respect to the date on which any Tax Return was or is due
to be filed by or with respect to WhiteBarn, or any waiver or agreement by
WhiteBarn for the extension or the assessment of any Tax. WhiteBarn has withheld
and paid all Taxes required to be withheld and paid by WhiteBarn in connection
with amounts paid or owing to any employee, creditor, stockholder or other third
parties. There are no liens on any of the assets of WhiteBarn as a result of any
Tax liabilities except for Taxes not yet due and payable. WhiteBarn has made
available to Talarian complete and correct copies of all federal, state, local
and foreign income or franchise Tax Returns for the last three taxable periods
for which such Tax Returns have been filed and will deliver copies of Tax
Returns filed by WhiteBarn after the date hereof and before the Closing Date.
WhiteBarn is not required to file a Tax Return in any state or local
jurisdiction for any tax period except in the jurisdictions in which it has
filed. WhiteBarn has delivered to Talarian complete and correct copies of all
audit reports (or portions thereof) and statements of deficiencies assessed
against or agreed to by WhiteBarn for any taxable period. WhiteBarn has not been
and will not be required to include any adjustment in taxable income for any
taxable period (or a portion thereof) pursuant to Section 481 or 263A of the
Code or any comparable provision under state or foreign Tax laws as a result of
the transactions, events or accounting methods employed prior to the transaction
contemplated pursuant to this Agreement. WhiteBarn is not now nor has ever been
a party to any Tax sharing, Tax indemnity or Tax allocation agreement. WhiteBarn
has not filed any disclosures under Section 6662 of the Code or comparable
provisions of state, local or foreign law to prevent the imposition of penalties
with respect to any Tax reporting position taken on any Tax return.
1.1 Pending Litigation. Except as disclosed on the Disclosure Schedule, there is
no pending or, to WhiteBarn's knowledge, threatened Action or investigation, at
Law or in equity or otherwise, in, for or by any court or governmental board,
commission, agency, department or office involving WhiteBarn arising from,
relating to or affecting (a) the past, present or proposed operations of
WhiteBarn's business, (b) any alleged act or omission of WhiteBarn or any of
WhiteBarn's officers, directors or employees, or (c) the consummation of the
transactions contemplated hereby.
<PAGE> 15
1.1 Compliance with Laws. Except as set forth in the Disclosure Schedule,
WhiteBarn has complied in all material respects with all existing material Law
now or hereafter applicable to WhiteBarn's business, as presently conducted,
including, without limitation, (a) all environmental Laws, and (b) all
provisions of material Laws relating to labor relations, equal employment
practices, fair employment practices, entitlement, prohibited discrimination,
terms and conditions of employment, wages and hours, or other similar employment
practices or acts. WhiteBarn has not received any notice from or otherwise been
advised that any governmental authority or other person is claiming any
violation or potential violation of any Law.
1.1 Permits. The Disclosure Schedule contains a complete and correct list of all
material Permits which are necessary for the lawful operation of WhiteBarn's
business. All such Permits have been duly made or obtained and are in full force
and effect, and there are no proceedings pending or to WhiteBarn's knowledge,
threatened which may result in the revocation, cancellation or suspension, or
any adverse modification, of any such Permit.
1.1 Insurance. WhiteBarn maintains insurance on all of its properties of a
character generally comparable to insurance carried by persons engaged in the
same or similar business similarly situated against loss or damage of the kinds
and in the amounts customarily insured against. The Disclosure Schedule contains
a true and complete list of all insurance maintained by WhiteBarn with respect
to WhiteBarn's business during the past year.
1.1 Brokers, Finders, etc. All negotiations relating to this Agreement and the
transaction contemplated hereby have been carried on without the intervention of
any person acting on behalf of WhiteBarn or any Shareholder in such a manner as
to give rise to any claim against Talarian, WhiteBarn or any of their respective
Representatives for any brokerage or finders' commission, fee or similar
compensation.
1.1 Books and Records. Except as set forth in the Disclosure Schedule, WhiteBarn
has made and kept (and given Talarian's Representatives access to) the Books and
Records, which, accurately and fairly reflect in all material respects the
activities and transactions of WhiteBarn related to WhiteBarn's business.
1.1 Full Disclosure. No representation, warranty or other statement of WhiteBarn
contained in this Agreement or other written statement furnished by WhiteBarn to
Talarian in connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein relating to
this Agreement and the transactions contemplated thereby or to the business or
financial condition of WhiteBarn not materially misleading when taken as a whole
in the light of the circumstances under which they were made. All financial
statements furnished by WhiteBarn to Talarian in connection with the Agreement,
including without limitation the Financial Statements, were prepared in good
faith.
<PAGE> 16
1 ARTICLE
REPRESENTATIONS AND WARRANTIES OF TALARIAN
Talarian hereby expressly acknowledges that WhiteBarn, in agreeing to
consummate the transactions contemplated by this Agreement, has relied upon the
following representations and warranties, and no others. Talarian hereby
represents and warrants to WhiteBarn as follows:
1.1 Organization. Talarian is a corporation duly organized, validly existing and
in good standing under the Laws of the State of California. Talarian has the
requisite corporate power and authority to own, lease and operate its assets and
to conduct its business in the manner in which it is presently conducted.
Talarian is duly qualified and licensed in each jurisdiction where the nature of
Talarian's business conducted by it requires such qualification, except where
the failure to so qualify would not have a material adverse effect upon
Talarian's financial condition or results of operations. Talarian has delivered
to WhiteBarn true and complete copies of its Articles of Incorporation and
Bylaws, each as amended to date.
1.1 Authorization. Except for the approval of its shareholders, which has not
yet been obtained as of the date of this Agreement, Talarian has the requisite
corporate power and authority to execute and deliver this Agreement, and to
consummate the transactions contemplated hereby, and to perform all of its
obligations hereunder. All actions and proceedings on the part of Talarian
necessary to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
taken.
1.1 Capitalization. The authorized capital stock of Talarian consists of
20,000,000 shares of Talarian Common Stock and 8,920,970 shares of Talarian
Preferred Stock, of which 2,152,692 shares have been designated as Series A
Preferred Stock, 1,422,223 shares have been designated as Series B Preferred
Stock, 3,775,000 shares have been designated as Series C Preferred Stock and
1,571,055 shares have been designated as Series D Preferred Stock. As of the
date of this Agreement, 5,631,992 shares of Talarian Common Stock, 2,017,552
shares of Series A Preferred Stock, 1,388,889 shares of Series B Preferred
Stock, 3,775,000 shares of Series C Preferred Stock and 1,571,055 shares of
Series D Preferred Stock are issued and outstanding. All of such issued and
outstanding shares are duly and validly authorized and issued, fully paid and
non-assessable. Other than pursuant to this Agreement or in connection with the
conversion of Talarian Preferred Stock, there is not outstanding any
subscription, option, warrant, call right or other agreement or commitment
obligating Talarian to issue, sell, deliver or transfer (including any right of
conversion or exchange under any outstanding security or other instrument) any
shares of its capital stock, other than (i) outstanding options to purchase, in
the aggregate, 1,806,153 shares of Talarian Common Stock granted pursuant to
Talarian's option plans for employees, directors and others performing services
for Talarian and (ii) warrants to purchase, in the aggregate, 96,768 shares of
Series A Preferred Stock and 33,334 shares of Series B Preferred Stock.
<PAGE> 17
1.1 Valid Issuance of Talarian Common Stock. Each of the shares of Talarian
Exchange Stock when issued and delivered in accordance with the terms hereof,
will be duly and validly issued, fully paid and non-assessable and free and
clear of Encumbrances, except those that may be created by WhiteBarn or any
Shareholder.
1.1 Due Execution and Delivery; Binding Obligations. This Agreement has been
duly executed and delivered by Talarian. This Agreement constitutes the legal,
valid and binding agreement and obligation of Talarian enforceable against it in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or conveyance or
similar Laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability and except as rights of indemnity or
contribution may be limited by federal or state securities or other laws or the
public policy underlying such Laws.
1.1 No Conflict or Violation. Neither the execution and delivery of this
Agreement, nor Talarian's consummation of the transactions contemplated hereby,
will result in: (a) a violation of, or a conflict with, Talarian's charter
documents, or any subscription, stockholders' or similar types of agreements or
understandings; or (b) a violation by Talarian of any Law, order, judgment,
writ, injunction decree or award to which it is a party or by which any of its
assets are bound.
1.1 Consents and Approvals. The execution and delivery by Talarian of this
Agreement and the consummation of the transactions contemplated hereby, do not
and will not require as of the Closing Date any authorization, registration or
filing with, or consent or approval of, any Person, except any state and federal
filings that may be required under applicable securities Laws and the Regulatory
Approvals.
1.1 Pending Litigation. Except as disclosed on the Talarian Disclosure Schedule,
there is no pending or, to Talarian's knowledge, threatened Action or
investigation, at Law or in equity or otherwise, in, for or by any court or
governmental board, commission, agency, department or office involving Talarian
arising from, relating to or affecting (a) the past, present or proposed
operations of Talarian, (b) any alleged act or omission of Talarian, or (c) the
consummation of the transactions contemplated hereby.
1.1 Certain Changes. Since January 1, 2000, there has been no: (a) Material
Adverse Change of Talarian; (b) destruction, damage to, or loss of any of
Talarian's material assets; (c) amendment, termination or other loss of any
contract involving payments or receipts by Talarian in excess of $500,000 per
year, or Permit related to Talarian's assets or business or by which Talarian or
any of its material assets or properties are subject, other than an amendment or
termination made in the ordinary course of business consistent with past
practice; or (d) dispute between Talarian and any customer or supplier of
Talarian whose transactions with Talarian involve payments or receipts by
Talarian in excess of $500,000 per year and no such customer or supplier has
stated its intention to discontinue to do business with Talarian.
<PAGE> 18
1.1 Brokers, Finders, etc. All negotiations relating to this Agreement and the
transaction contemplated hereby have been carried on without the intervention of
any person acting on behalf of Talarian in such a manner as to give rise to any
claim against Talarian, WhiteBarn, or any of their respective Representatives
for any brokerage or finders' commission, fee or similar compensation.
1.1 Financial Statements. Talarian has furnished to WhiteBarn copies of (a) the
unaudited balance sheet of Talarian as of September 30, 1999, and the related
statement of income and stockholders' equity for the year then ended and (b)
Talarian's unaudited balance sheet as of December 31, 1999, and the related
statement of income and stockholders' equity for the period beginning October 1,
1999 and ending on December 31, 1999. The financial statements referred to in
this section have been prepared in accordance with GAAP, applied on a consistent
basis, and fairly present in all material respects the financial condition of
Talarian as at the respective dates thereof and the results of operations of
Talarian for the respective periods covered by the statements of income
contained therein, subject to normal recurring year-end adjustments (and except
that footnotes may be omitted).
1.1 Taxes. Talarian is, and is subject to taxation as, a C corporation. All
Taxes which are due and payable by Talarian have been paid in full and any Taxes
that become due and owing by Talarian before the Closing Date (whether or not
shown on any Tax Return) will be paid, other than Taxes which are not delinquent
and subject to a late payment; all Tax Returns required to be filed in
connection therewith have been accurately prepared and duly and timely filed, or
will be accurately prepared and duly and timely filed, and all deposits required
by Law to be made by Talarian with respect to any such Taxes have been duly
made. Talarian is not delinquent in the payment of any Taxes nor does Talarian
have any Tax deficiency or claim outstanding, proposed or assessed against it,
and there is no basis for any such deficiency of claim. There is not now in
force any extension of time with respect to the date on which any Tax Return was
or is due to be filed by or with respect to Talarian, or any waiver or agreement
by Talarian for the extension or the assessment of any Tax. Talarian has
withheld and paid all Taxes required to be withheld and paid by Talarian in
connection with amounts paid or owing to any employee, creditor, stockholder or
other third parties. There are no liens on any of the assets of Talarian as a
result of any Tax liabilities except for Taxes not yet due and payable. Talarian
has made available to WhiteBarn complete and correct copies of all federal,
state, local and foreign income or franchise Tax Returns for the last three
taxable periods for which such Tax Returns have been filed and will deliver
copies of Tax Returns filed by Talarian after the date hereof and before the
Closing Date. Talarian is not required to file a Tax Return in any state or
local jurisdiction for any tax period except in the jurisdictions in which it
has filed. Talarian has delivered to WhiteBarn complete and correct copies of
all audit reports (or portions thereof) and statements of deficiencies assessed
against or agreed to by Talarian for any taxable period. Talarian has not been
and will not be required to include any adjustment in taxable income for any
taxable period (or a portion thereof) pursuant to Section 481 or 263A of the
Code or any comparable provision under state or foreign Tax laws as a result of
the transactions, events or accounting methods employed prior to the transaction
contemplated pursuant to this Agreement. Talarian is not now nor has ever been a
party to any Tax sharing, Tax indemnity or Tax
<PAGE> 19
allocation agreement. Talarian has not filed any disclosures under Section 6662
of the Code or comparable provisions of state, local or foreign law to prevent
the imposition of penalties with respect to any Tax reporting position taken on
any Tax return.
1.1 Full Disclosure. No representation, warranty or other statement of Talarian
contained in this Agreement or other written statement furnished by Talarian to
WhiteBarn in connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein relating to
this Agreement and the transactions contemplated thereby or to the business or
financial condition of Talarian not materially misleading when taken as a whole
in the light of the circumstances under which they were made. All financial
statements furnished by Talarian to WhiteBarn in connection with the Agreement,
including, without limitation, the financial statements referred to in Section
4.11, were prepared in good faith.
1 ARTICLE
WHITEBARN'S OBLIGATIONS BEFORE CLOSING
WhiteBarn covenants that during the period from the date of this
Agreement to the Closing Date:
1.1 Notice of Changes. WhiteBarn shall give Talarian prompt written notice of
any change in any of the information contained in the representations and
warranties made in Article 3 referred to herein, which occurs prior to the
Closing Date; provided, however, that providing such notice shall not relieve
WhiteBarn for any breach of, or in any way alter any of, WhiteBarn's
representations and warranties contained herein to the extent such
representations and warranties were untrue as of the date hereof.
1.1 Conduct of Business. Except as specifically contemplated by this Agreement,
WhiteBarn will conduct WhiteBarn's business in the ordinary course of business
and consistent with past practice, and will use all commercially reasonable
effort to preserve intact its advantageous business relationships, to keep
available the service of its employees and to maintain satisfactory
relationships with its contractors, distributors, customers and other persons
sharing business relationships with them. Without limiting the generality of the
foregoing, WhiteBarn will not (1) without consulting with Talarian, terminate
any employees or (2) without the prior written consent of Talarian, take or
undertake or incur or permit to exist any of the acts, transactions, events or
occurrences specified in Section 3.10, above, unless such actions are
specifically contemplated by this Agreement. WhiteBarn shall give Talarian
prompt written notice of any change in any of the information contained in the
representations and warranties made in Article 3 referred to herein which occurs
prior to the Closing Date. Notwithstanding the foregoing, WhiteBarn shall be
permitted to grant additional options to purchase shares of WhiteBarn Stock
under the 2000 WhiteBarn, Inc. Equity Incentive Plan (up to a maximum of
3,530,005 shares thereunder) on terms and conditions mutually agreeable to
Talarian and WhiteBarn.
<PAGE> 20
1.2 Access to Information. Talarian and its counsel, accountants and other
Representatives shall have full access during normal business hours to all
properties, Books and Records, Contracts, Permits and other documents of or
relating to WhiteBarn and WhiteBarn's business so that Talarian may have full
opportunity to make such investigation as it shall desire to make of the affairs
of WhiteBarn relating to WhiteBarn's business. WhiteBarn shall furnish or cause
to be furnished to Talarian and its Representatives all data and information
concerning WhiteBarn's business, finances and properties that may reasonably be
requested. WhiteBarn shall remain fully liable and responsible for all
WhiteBarn's representations, warranties, covenants, agreements and conditions in
this Agreement subject to any limitations contained herein, notwithstanding any
such investigation performed or information received by Talarian.
1.1 Confidentiality. WhiteBarn will hold, and will cause each of WhiteBarn's
employees, officers, directors and other Representatives to hold, in strict
confidence, and to not use to the detriment of Talarian, any confidential or
proprietary information or data concerning Talarian furnished to them in
connection with the transaction contemplated by this Agreement, except for
information generally known to the public; and if the transaction contemplated
by this Agreement is not consummated, such confidence shall be maintained and
WhiteBarn will return to Talarian all such information and data as Talarian may
request.
1.1 No Solicitation. WhiteBarn will not, and will not permit its officers,
directors, employees, investment bankers, financial advisors, attorneys,
accountants, agents or representatives to, solicit, encourage, initiate, enter
into, continue or participate in, or take any other action designed to
facilitate, any negotiations or discussions with or provide any information to
any third party concerning the possible acquisition or sale of WhiteBarn or its
stock, business or assets or any other transaction that would be inconsistent
with the Merger (all of the foregoing, "Inconsistent Activities"). WhiteBarn
will immediately inform Talarian, orally and in writing, of any Inconsistent
Activities or any request for information from, or any contacts, proposals or
other indications by, third parties regarding Inconsistent Activities.
1.1 Consents; Regulatory Approvals; Reasonable Efforts. WhiteBarn agrees to use
its commercially reasonable efforts to take, as promptly as possible, or cause
to be taken, all action and do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement and WhiteBarn will use its commercially
reasonable efforts to obtain the Regulatory Approvals, all waivers, Permits,
consents, other approvals, authorizations and clearances and to effect all
registrations, filings and notices with or to third parties or governmental,
regulatory or public bodies or authorities which are necessary in connection
with the transactions contemplated by this Agreement. Notwithstanding the
foregoing, Talarian waives all right to assert any claim for damages against
WhiteBarn relating to any breach of a non-assignment provision contained in the
contracts set forth in Section 3.6 of the Disclosure Schedule that is caused
solely by the consummation of the Merger.
1.1 Fulfillment of Conditions and Covenants. WhiteBarn shall not take any course
of action inconsistent with the satisfaction of the requirements or conditions
applicable to WhiteBarn set forth in this Agreement. WhiteBarn shall promptly do
all acts and take all
<PAGE> 21
measures as may be appropriate to enable it to perform as early as reasonably
possible the obligations herein required to be performed by it.
1 ARTICLE
TALARIAN'S OBLIGATIONS BEFORE CLOSING
Talarian covenants that during the period from the date of this
Agreement to the Closing Date:
1.1 Notice of Changes. Talarian shall give WhiteBarn prompt written notice of
any change in any of the information contained in the representations and
warranties made in Article 4 referred to herein, which occurs prior to the
Closing Date; provided, however, that providing such notice shall not relieve
Talarian for any breach of, or in any way alter any of, Talarian's
representations and warranties contained herein to the extent such
representations and warranties were untrue as of the date hereof.
1.1 Consents; Regulatory Approvals; Reasonable Efforts. Talarian agrees to
utilize reasonable efforts to take, as promptly as possible, or cause to be
taken, all action and do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement and will use its reasonable efforts to assist WhiteBarn in obtaining
the Regulatory Approvals, all waivers, Permits, consents, other approvals,
authorizations and clearances and to effect all registrations, filings and
notices with or to third parties or governmental, regulatory or public bodies or
authorities which are necessary in connection with the transactions contemplated
by this Agreement.
1.1 Confidentiality. Talarian will hold, and will cause each of its affiliates,
employees, officers, directors and other Representatives to hold, in strict
confidence, and to not use to the detriment of WhiteBarn, any confidential or
proprietary information or data concerning WhiteBarn furnished to them in
connection with the transaction contemplated by this Agreement, except for
information generally known to the public; and if the transaction contemplated
by this Agreement is not consummated, such confidence shall be maintained and
Talarian will return to WhiteBarn all such information and data as WhiteBarn may
request.
1.1 Fulfillment of Conditions and Covenants. Talarian shall not take any course
of action inconsistent with the satisfaction of the requirements or conditions
applicable to it set forth in this Agreement. Talarian shall promptly do all
acts and take all measures as may be appropriate to enable it to perform as
early as possible the obligations herein required to be performed by it.
<PAGE> 22
1 ARTICLE
CONDITIONS TO OBLIGATIONS OF TALARIAN
The obligations of Talarian to perform its obligations under this
Agreement are subject to the satisfaction, on or before to the Closing Date, of
each of the following conditions, unless waived in writing by Talarian:
1.1 Accuracy of Representations and Warranties. All representations and
warranties of WhiteBarn contained in this Agreement shall be true and correct in
all material respects when made and on and as of the Closing Date as though made
on and as of the Closing Date regardless of any additional disclosures made by
WhiteBarn pursuant to Section 5.1 (unless waived by Talarian).
1.1 WhiteBarn's Performance of Covenants. All covenants, agreements and
obligations required by the terms of this Agreement to be performed, satisfied
or complied with by WhiteBarn at or before the Closing Date shall have been duly
and properly performed in all material respects.
1.1 Absence of any Material Adverse Change. There shall not have occurred any
Material Adverse Change in WhiteBarn's business, condition (financial or
otherwise), assets, properties or results of operations of WhiteBarn since the
Balance Sheet Date.
1.1 WhiteBarn's Officers' Certificate. Talarian shall have received a
certificate, dated the Closing Date, signed and verified by each of the
President and Chief Financial Officer of WhiteBarn, and certifying (i) that the
conditions specified in Sections 7.1, 7.2, 7.3, 7.6, 7.7, 7.10, 7.11 and 7.12
have been fulfilled, (ii) the true, correct and complete Articles and Bylaws of
WhiteBarn and the resolutions which have been duly adopted by WhiteBarn's Board
of Directors and the Shareholders with respect to the transactions contemplated
by the Agreement and (iii) the amount of cash and accounts receivables that
WhiteBarn has as of the Closing.
1.1 Opinion of Counsel. Talarian shall have received from Gordon & Glickson LLC,
legal counsel for WhiteBarn, an opinion, dated the Closing Date, in the form set
forth in Exhibit A hereto.
1.1 Authorization of WhiteBarn. All actions necessary to authorize the
execution, delivery and performance of this Agreement by WhiteBarn, and the
consummation of the transactions contemplated herein, shall have been duly and
validly taken.
1.1 Consents and Regulatory Approvals. The Regulatory Approvals, all licenses,
Permits, authorizations, consents and other approvals of and filings with any
governmental or regulatory agency required to be obtained or made in connection
with the consummation of the transactions contemplated by this Agreement shall
have been duly obtained or made by or on behalf of WhiteBarn. All material
consents of other third-parties required to
<PAGE> 23
have been obtained in connection with the consummation of such transactions
shall have been obtained by or on behalf of WhiteBarn.
1.2 Commitment Agreement; Snyder Agreement; Intellectual Property Agreements.
Talarian shall have obtained fully executed original counterparts of (1) the
Commitment Agreement to be entered into between Talarian and Mark Mahowald in
the form of Exhibit B attached hereto (the "Commitment Agreement"), (2) the
Snyder Agreement between Talarian and Scottie Snyder in the form of Exhibit C
attached hereto and (3) the Intellectual Property Agreements to be entered into
between Talarian and each employee and independent contractor of WhiteBarn in
the form attached hereto as Exhibit D (the "Intellectual Property Agreements").
1.1 Agreement with Certain WhiteBarn Shareholders. Talarian shall have obtained
fully executed original counterparts of the Agreement with Shareholders to be
entered into among Talarian, Mark Mahowald, Ron Lachman and the escrow agent
named therein in the form of Exhibit E attached hereto (the "Agreement with
Certain WhiteBarn Shareholders").
1.1 Absence of Certain Changes. WhiteBarn shall have certified in writing to
Talarian that, as of the Closing Date, no key employee of WhiteBarn has
terminated his or her relationship with WhiteBarn since the Balance Sheet Date
or indicated any present or future intention to terminate his or her
relationship with WhiteBarn.
1.1 Shareholder Approval; Option Plan Amendments. Talarian shall have obtained
the approval of the Merger by the holders of Talarian Preferred Stock. WhiteBarn
shall have: (1) obtained the approval of the Merger by its shareholders as
required under Illinois law and such approval shall have been made by all
WhiteBarn shareholders; (2) amended the WhiteBarn Inc. Stock Option Plan (and
obtained the consent of each optionee thereunder to such amendment) to provide,
among other things, that in the event of a merger of WhiteBarn in which
WhiteBarn is not the survivor, the surviving corporation may assume such
options; and (3) amended the 2000 WhiteBarn, Inc. Equity Incentive Plan (if
requested by Talarian), with the amendments acceptable to Talarian in form and
substance.
1.1 Minimum Cash - A/R Requirement. WhiteBarn shall have at least $450,000 prior
to Closing in cash and accounts receivable (collectively, the "Minimum Cash -
A/R Requirement") as of the Closing and shall have provided evidence thereof to
Talarian's satisfaction.
1.1 Termination of Certain Agreements. WhiteBarn shall have caused the
termination of the agreements represented by (i) that certain letter dated
October 14, 1996 by and among Mark Mahowald, Cheryl Mahowald and Ron Lachman and
(ii) that certain letter dated November 4, 1997 by and between Mark Mahowald and
Ron Lachman, each relating to Ron Lachman's investment in WhiteBarn.
<PAGE> 24
1 ARTICLE
CONDITIONS TO OBLIGATIONS OF WHITEBARN
The obligations of WhiteBarn to perform its obligations under this
Agreement are subject to the satisfaction, on or before the Closing Date, of
each of the following conditions, unless waived in writing by WhiteBarn:
1.1 Accuracy or Representations and Warranties. All representations and
warranties of Talarian contained in this Agreement shall be true and correct in
all material respects when made and on and as of the Closing Date as though made
on and as of the Closing Date regardless of any additional disclosures made by
Talarian pursuant to Section 6.1 (unless waived by WhiteBarn).
1.1 Performance of Covenants. All covenants, agreements and obligations required
by the terms of this Agreement to be performed, satisfied or complied with by
Talarian at or before the Closing Date shall have been duly and properly
performed in all material respects.
1.1 Absence of any Material Adverse Change. There shall not have occurred any
Material Adverse Change in Talarian's business condition (financial or
otherwise), assets, properties or results of operation since the date of the
Talarian balance sheet referred to in Section 4.11.
1.1 Officers' Certificate. WhiteBarn shall have received a certificate, dated
the Closing Date, signed and verified by the President and Chief Financial
Officer of Talarian, certifying (i) that the conditions specified in Sections
8.1, 8.2, 8.3, 8.5, 8.6, 8.7 and 8.8 have been fulfilled and (ii) the true,
correct and complete Articles and Bylaws of Talarian and the resolutions which
have been duly adopted by Talarian's Board of Directors and the shareholders
with respect to the transactions contemplated by the Agreement.
1.1 Authorization. All actions necessary to authorize the execution, delivery
and performance of this Agreement by Talarian, and the consummation of the
transactions contemplated herein, shall have been duly and validly taken.
1.1 Shareholder Approval. Talarian shall have obtained the approval of the
Merger by the holders of Talarian Preferred Stock. WhiteBarn shall have obtained
the approval of the Merger by its shareholders as required under Illinois law.
1.1 Registration Rights. Talarian shall have taken all action and obtained all
consents necessary to amend that certain Amended and Restated Investors' Rights
Agreement dated as of February 3, 2000, by and among Talarian and the other
parties thereto, to cause each Shareholder to be included as a Holder under
Section 2 thereof (the "Investors' Rights Amendment").
<PAGE> 25
1.1 Consents and Regulatory Approvals. The Regulatory Approvals, all licenses,
Permits, authorizations, consents and other approvals of and filing with any
governmental or regulatory agency required to be obtained or made in connection
with the consummation of the transactions contemplated by this Agreement shall
have been duly obtained or made by or on behalf of the WhiteBarn. All material
consents of other third-parties required to have been obtained in connection
with the consummation of such transactions shall have been obtained by or on
behalf of WhiteBarn.
1.1 Opinion of Counsel. WhiteBarn shall have received from Riordan & McKinzie,
legal counsel for Talarian, an opinion, dated the Closing Date, in the form set
forth in Exhibit F, attached hereto.
1 ARTICLE
THE CLOSING
1.1 The Closing. On the terms and subject to the satisfaction of the conditions
contained in this Agreement, the closing of the Merger (the "Closing") will take
place on a date to be specified by the parties, which shall be no later than the
second Business Day after satisfaction or waiver of the conditions set forth in
Articles 7 and 8 (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions), in the offices of Talarian commencing at 9:00 a.m., or at such
other place, time and date as may be mutually agreed to by the parties. The date
and time at which the Closing actually occurs is herein referred to as the
"Closing Date."
1.1 Deliveries by WhiteBarn. At the Closing, WhiteBarn shall deliver the
following:
(a) The stock certificates representing all of the shares of the Shareholders'
WhiteBarn Stock which shall be marked to reflect the cancellation and conversion
thereof as a result of the Merger, together with all stock books and records
reflecting the ownership and transfer of shares of WhiteBarn's capital stock;
(a) The certificate contemplated by Section 7.4, above;
(a) The legal opinion contemplated by Section 7.5, above;
(a) Evidence of having obtained consents, if any, required to be obtained by
WhiteBarn pursuant to Section 7.7, above;
(a) The Commitment Agreement and Intellectual Property Agreements contemplated
by Section 7.8, above;
(a) The Agreement with Certain WhiteBarn Shareholders contemplated by Section
7.9, above;
<PAGE> 26
(a) The Certificate of Merger contemplated by Section 2.2, above, executed and
in a form ready for filing with the Secretary of State of the State of Illinois;
(a) All other agreements, documents, instruments and writings required to be
delivered by WhiteBarn at the Closing pursuant to this Agreement; and
(a) Evidence that the agreements referenced in Section 7.14 have been
terminated.
1.1 Deliveries by Talarian. At the Closing, Talarian shall deliver the
following:
(a) Stock certificates representing the number of shares of Talarian Exchange
Stock required to be delivered at the Closing pursuant to Section 2.4, above;
(a) The Cash Consideration required to be delivered at the Closing pursuant to
Section 2.4, above;
(a) The officer's certificate contemplated by Section 8.4, above;
(a) The legal opinion contemplated by Section 8.9, above;
(a) The Certificate of Merger contemplated by Section 2.2 above, executed and in
a form ready for filing with the California Secretary of State;
(a) An executed copy of the Investors' Rights Amendment; and
(a) All other agreements, documents, instruments and writings required to be
delivered by Talarian at the Closing pursuant to this Agreement.
<PAGE> 27
1 ARTICLE
POST CLOSING
1.1 Survival of Representations and Warranties; Indemnification. The Agreement
with Certain WhiteBarn Shareholders shall govern the indemnity made by Mark
Mahowald and Ron Lachman (the "Indemnifying Shareholders") to Talarian.
Regardless of any investigation at any time made by or on behalf of Talarian, or
of any information any party may have in respect thereof, all representations
and warranties made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby by WhiteBarn shall survive the Closing for a
period ending 12 months from the Closing Date, except that all representations
and warranties with respect to tax matters shall survive through the applicable
statute of limitations (each, a "Survival Date"). From and after the applicable
Survival Date, no Indemnifying Shareholder shall have any liability under the
Agreement with Certain WhiteBarn Shareholders with respect to such
representations and warranties and neither Talarian nor any of its shareholders,
affiliates or their Representatives shall assert any claims against any
Indemnifying Shareholder with respect thereto. Notwithstanding the foregoing,
and other than with respect to Section 3.2, above, in the absence of fraud or
intentional misrepresentation, no representation or warranty made hereunder or
pursuant hereto or in connection with the transactions contemplated hereby by
Talarian shall survive the Closing and neither WhiteBarn nor any Shareholder
shall assert any claims against Talarian with respect thereto.
1.1 Expenses. Each of the parties shall pay all costs and expenses incurred by
it or on its behalf in connection with this Agreement and the transactions
contemplated hereby, including, without limiting the generality of the
foregoing, fees and expenses of its own financial consultants, accountants and
counsel. In the event the Merger is consummated, Talarian will pay the
reasonable fees and expenses of WhiteBarn's accountants and attorneys with
respect to the Merger, not to exceed a combined total of $50,000.
1.1 Employee Bonuses. On or before the date of the first Talarian payroll
following the Closing Date, Talarian will pay to the WhiteBarn employees the
cash bonuses set forth on Exhibit G attached hereto.
1 ARTICLE
MISCELLANEOUS PROVISIONS
1.1 Entire Agreement. This Agreement, the Ancillary Agreements, the Disclosure
Schedule and the Talarian Disclosure Schedule together set forth the entire
agreement between the parties with regard to the subject matter of this
Agreement.
1.1 Governing Law. The validity, construction and performance of this Agreement,
and any Action arising out of or relating to this Agreement or any of the
Ancillary Agreements, shall be governed by the Laws, without regard to the Laws
as to choice or conflict of Laws, of the State of California.
<PAGE> 28
1.1 Interpretation. The language in all parts of this Agreement and each of the
other Ancillary Agreements shall be in all cases construed simply according to
its fair meaning and not strictly for or against any party. Whenever the context
requires, all words used in the singular will be construed to have been used in
the plural, and vice versa. The captions of the Sections and Subsections of this
Agreement are for convenience only and shall not affect the construction or
interpretation of any of the provisions of this Agreement. This Agreement shall
be construed without regard to any presumption or other rule requiring
construction against the party causing this Agreement to be drafted. If any
words or phrases in this Agreement or any preliminary draft of this Agreement
shall have been stricken out or otherwise eliminated, whether or not any other
words or phrases have been added, this Agreement shall be construed as if those
words or phrases were never included in this Agreement, and no implication or
inference shall be drawn from the fact that the words or phrases were so
stricken out or otherwise eliminated.
1.1 Waiver and Amendment. This Agreement may be amended, supplemented, modified
and/or rescinded only through an express written instrument signed by all
parties or their respective successors and permitted assigns. Any party may
specifically and expressly waive in writing any portion of this Agreement or any
breach hereof, but only to the extent such provision is for the benefit of the
waiving party, and no such waiver shall constitute a further or continuing
waiver of any preceding or succeeding breach of the same or any other provision.
The consent by one party to any act for which such consent was required shall
not be deemed to imply consent or waiver of the necessity of obtaining such
consent for the same or similar acts in the future, and no forbearance by a
party to seek a remedy for noncompliance or breach by another party shall be
construed as a waiver of any right or remedy with respect to such noncompliance
or breach.
1.1 Assignment. Except as specifically provided otherwise in this Agreement,
neither this Agreement nor any interest herein shall be assignable (voluntarily,
involuntarily, by judicial process, operation of Law or otherwise), in whole or
in part, by either party without first obtaining the prior written consent of
the non-assigning party. Any voluntary attempt at such an assignment, except
pursuant to this Section 11.5 shall be void and, at the option of the
non-assigning party, shall be an incurable breach of this Agreement resulting in
the termination of this Agreement.
1.1 Successors and Assigns. Each of the terms, provisions and obligations of
this Agreement shall be binding upon, shall inure to the benefit of, and shall
be enforceable by the parties and their respective legal representatives,
successors and permitted assigns.
1.1 Notices. All notices, requests, demands and other communications made under
this Agreement shall be in writing, correctly addressed to the recipient at the
addresses set forth under such recipient's signature on the signature page
hereto and shall be deemed to have been duly given: (i) upon delivery, if served
personally on the party to whom notice is to be given; or (ii) on the date or
receipt, refusal or non-delivery indicated on the receipt if mailed to the party
to whom notice is to be given by first class mail, registered or certified,
postage prepaid, or by air courier. Any party may give written notice of a
change of address in
<PAGE> 29
accordance with the provisions of this Section 11.7 and after such notice of
change has been received, any subsequent notice shall be given to such party in
the manner described at such new address.
1.1 Severability. Each provision of this Agreement is intended to be severable.
Should any provision of this Agreement or the application thereof be judicially
declared to be or becomes illegal, invalid, unenforceable or void, the remainder
of this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such illegal, void or unenforceable provision of this Agreement with
a valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such illegal, void or unenforceable
provision.
1.1 Warranty of Authority. Each of the individuals signing this Agreement on
behalf of a party hereto warrants and represents that such individual is duly
authorized and empowered to enter into this Agreement and bind such party
hereto.
1.1 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute a single agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE> 30
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first set forth above.
WHITEBARN, INC.,
an Illinois corporation
By: /s/ MARK MAHOWALD
----------------------
Mark Mahowald
President
By: /s/ CHERYL L. MAHOWALD
----------------------
Cheryl L. Mahowald
Secretary
Address:
29W110 Butterfield Road
Suite 205
Warrenville, IL 60555
Phone No.: (630) 393-7363
Fax No.: (630) 393-9218
TALARIAN CORPORATION,
a California corporation
By: /s/ MICHAEL A. MORGAN
----------------------
Michael A. Morgan
Vice President
By: /s/ THOMAS J. LAFFEY
----------------------
Thomas J. Laffey
Secretary
Address:
333 Distel Circle
Los Altos, CA 94022
Phone No.: (650) 965-8050
Fax No.: (650) 965-9077
<PAGE> 1
Exhibit 10.09
AGREEMENT WITH CERTAIN WHITEBARN SHAREHOLDERS
This AGREEMENT (this "Agreement") is made and entered into as of
this 13th day of March 2000, by and among Talarian Corporation, a California
corporation ("Talarian"), Mark Mahowald, and Ron Lachman (each, a "Shareholder,"
and collectively, the "Shareholders") and Wagner & Associates, P.C. (the "Escrow
Agent").
R E C I T A L S
A. Talarian and WhiteBarn, Inc., an Illinois corporation
("WhiteBarn"), are parties to that certain Agreement and Plan of Merger dated as
of March 7, 2000 (the "Merger Agreement") which provides for a merger of
WhiteBarn with and into Talarian (the "Merger").
B. Pursuant to the Merger Agreement, all the shareholders of
WhiteBarn (including the Shareholders) will receive an aggregate of
approximately 348,215 shares (the "Shares") of the common stock, no par value,
of Talarian (the "Talarian Common Stock") and $414,548 in cash, in exchange for
all the outstanding stock of WhiteBarn (the "WhiteBarn Shares").
C. Pursuant to the Merger Agreement, the Shareholders will place
thirty percent (30%) of the Shares in an escrow account to secure certain
indemnification obligations of the Shareholders in favor of Talarian, on the
terms and subject to the conditions set forth herein.
D. The execution and delivery of this Agreement by the Shareholders
is a condition precedent to the consummation of the Merger by Talarian. The
Shareholders, desiring to facilitate the Merger, are willing to enter into this
Agreement in order to induce Talarian to consummate the Merger.
E. All capitalized terms used herein but which are not otherwise
defined shall have the meanings given to them in the Merger Agreement.
A G R E E M E N T
In consideration of the foregoing recitals and the mutual covenants
and conditions contained herein, the parties, intending to be legally bound,
agree as follows:
1. Indemnification by the Shareholders.
1.1 Each of the Shareholders shall indemnify, defend and hold
harmless Talarian and any of its Affiliates and Representatives, and shall
reimburse Talarian and any of its Affiliates and Representatives, on demand, for
any claim, demand, loss, liability, damage or expense including, without
limitation, any claim for direct damages, interest, penalties and reasonable
attorneys' fees and costs of investigation incurred as a result thereof
(collectively "Damages"), resulting from any of the following:
<PAGE> 2
(a) Any breach or default in the performance by
WhiteBarn of any covenant or agreement of WhiteBarn contained in the Merger
Agreement or pursuant to any agreement, certificate or document delivered to
Talarian by or on behalf of WhiteBarn in connection therewith;
(b) Any breach of warranty or inaccurate or erroneous
representation made by WhiteBarn in the Merger Agreement or pursuant to any
agreement, certificate or document delivered to Talarian by or on behalf of
WhiteBarn in connection therewith;
(c) Any litigation involving WhiteBarn as of the Closing
Date except to the extent described on the Disclosure Schedule and any
litigation arising from the conduct of WhiteBarn's business before the Closing;
(d) any breach of warranty or inaccurate or erroneous
representation made by WhiteBarn in Section 3.20 Taxes of the Merger Agreement;
(e) Any breach or default in the performance by such
Shareholder of any covenant or agreement of such Shareholder contained in
Section 11 of this Agreement;
(f) Any breach of warranty or inaccurate or erroneous
representation made by such Shareholder in Section 11 of this Agreement; and/or
(g) Any breach of warranty or inaccurate or erroneous
representation made by WhiteBarn in Section 3.2 Capitalization of WhiteBarn of
the Merger Agreement.
The Shareholders' obligation to indemnify, defend or hold harmless
Talarian and any of its Affiliates and Representatives from any such Damages
shall terminate on the First Indemnification Termination Date (as defined below)
other than with respect to Damages pursuant to Section 1.1(d) above which shall
terminate on the Applicable Indemnification Termination Date (as defined below)
(other than with respect to proceedings or claims pending at the time of
expiration, which shall continue with respect to such proceedings until such
proceedings are finally resolved). For purposes of this Agreement, an
"Affiliate" of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person, where "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of voting
securities, by contract, as trustee or executor, or otherwise.
The obligation of the Shareholders pursuant to this Section 1.1
shall be several and not joint and shall be shared proportionately among the
Shareholders in accordance with their relative "Percentage Interest" in the
WhiteBarn Shares as set forth on Schedule 1.1 hereto (except with respect to
subparagraphs (e) and (f) above, for which, because these subparagraphs relate
to each Shareholder individually, responsibility shall not be shared
proportionately, but shall be borne entirely by the applicable Shareholder).
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<PAGE> 3
1.2 The parties shall comply with Sections 3 and 4 below for
settlement of the indemnification obligations of the Shareholders to Talarian or
any other party entitled to indemnification under this Section 1 (each, a
"Claiming Party"). If any new claim for indemnification arises which is covered
by the indemnification in this Section 1, the Claiming Party shall notify Mark
Mahowald (the "Lead Shareholder") and the Lead Shareholder shall promptly notify
all the other Shareholders (or, if such claim is pursuant to Sections 1.1(e) or
(f), the Claiming Party shall notify the applicable Shareholder (the "Relevant
Shareholder")). The Shareholders (or the Relevant Shareholder, as applicable)
may contest and defend in good faith at their own cost any claim of third
parties to the extent subject to indemnification under Section 1.1; provided
that the Shareholders (or the Relevant Shareholder, as applicable) shall not be
permitted to settle any claim requiring an admission of liability by the
Claiming Party without the consent of such Claiming Party; and provided,
further, that within 30 days of the Lead Shareholder's (or the Relevant
Shareholder's) receipt of notice of such claim, the Lead Shareholder (or the
Relevant Shareholder, as applicable) notifies the Claiming Party of the
Shareholders' (or the Relevant Shareholders') desire to defend and contest such
claim. If the Lead Shareholder (or the Relevant Shareholder, as applicable) does
not notify the Claiming Party of the Shareholders' (or the Relevant
Shareholders') desire to contest the claim within such 30-day period, then the
Shareholders (or the Relevant Shareholder) shall reimburse any Claiming Party on
demand for any Damages incurred by such Claiming Party at any time after the
date hereof with respect to such claim.
1.3 Notwithstanding the foregoing, in the absence of finally
adjudged fraud or intentional misrepresentation, the Shareholders shall have no
obligation to indemnify, defend, hold harmless or reimburse Talarian or any of
its Affiliates or its Representatives with respect to the matters described
herein, unless and until the aggregate amount of all Damages with respect to
such matters exceeds $50,000 (inclusive of attorneys' fees and costs) in which
event, such persons shall be entitled to indemnification for the full amount of
all Damages suffered or incurred, subject to the next sentence. Notwithstanding
the foregoing, in the absence of finally adjudged fraud or intentional
misrepresentation, the Shareholders shall have no liability pursuant to Sections
1.1(a) through (f) hereunder for Damages which exceed the lesser of (a) $3
million in the aggregate, or (b) the Escrowed Shares.
1.4 The indemnification obligations of the Shareholders
contained in this Section 1 shall be satisfied by an escrow (the "Escrow") as
described herein, provided, however, in the event of finally adjudged fraud or
intentional misrepresentation or claims in connection with Section 1.1(g) to the
extent not satisfied from the Escrow, claims may be made by the Claiming Party
directly against the Shareholders.
2. Establishment of Escrow; Account.
2.1 Deposit in Escrow. Talarian, on behalf of the
Shareholders, hereby deposits with the Escrow Agent, stock certificates
representing an aggregate of 104,464 shares of the Talarian Common Stock (the
"Initial Escrowed Shares"), issued in the name of the Shareholders as described
in Schedule 2.1 hereto. In addition, each of the Shareholders hereby deposits
four stock powers (separate from certificate) endorsed in favor of Talarian. Any
shares of Talarian capital stock that result from any stock dividend,
reclassification, stock split, subdivision or combination of
3
<PAGE> 4
shares, recapitalization, merger or other events generally made with respect to
the Talarian Common Stock in the Escrow Account (as defined below) ("Additional
Shares") shall be delivered to the Escrow Agent and shall be held in the Escrow
Account (and, as required under this Agreement, shall be released from the
Escrow Account). Unless otherwise indicated, as used in this Agreement, the term
"Escrowed Shares" includes the Initial Escrowed Shares and any Additional
Shares. The Escrow Agent agrees to accept delivery of the Escrowed Shares and to
hold the Escrowed Shares in Escrow in accordance with this Agreement and to
release the Escrowed Shares out of Escrow as provided in this Agreement.
2.2 Escrow Account. The Escrow Agent shall maintain the
Escrowed Shares in a separate account (the "Escrow Account").
2.3 Cash Dividends; Voting and Rights of Ownership. Any cash
dividends, dividends payable in property or other distributions of any kind made
in respect of the Escrowed Shares shall become part of the Escrow Account. The
Shareholders shall have the right to vote the Escrowed Shares deposited in the
Escrow Account on their behalf during such time that the Escrowed Shares are
held in Escrow, and Talarian shall take all steps necessary to allow the
exercise of such rights. While the Escrowed Shares remain in the Escrow Agent's
possession pursuant to this Agreement, the Shareholders will retain and shall be
able to exercise all other incidents of ownership of the Escrowed Shares that
are not inconsistent with the terms and conditions hereof.
3. Release from Escrow.
3.1 Release of Escrowed Shares to the Shareholders. The
Escrowed Shares shall be held by the Escrow Agent until required to be released
to either the Shareholders or Talarian as provided for in Sections 3.1 and 3.2.
Within five business days after the first anniversary of the Closing Date (the
"First Release Date") and within five business days after the third anniversary
of the Closing Date (the "Second Release Date"), the Lead Shareholder shall
deliver to the Escrow Agent and Talarian a written notice (a "Release Notice")
setting forth the Escrowed Shares to be released (the "Released Escrowed
Shares") and stating the number of shares from the Released Escrowed Shares to
be released to each of the Shareholders. Provided Talarian has not objected to
the Escrow Agent within five business days after receipt of any Release Notice,
the Released Escrowed Shares to be released to the Shareholders, and the payment
to be made to the Shareholders in lieu of fractional shares, if any (as
indicated below in this Section 3.1) shall be sent to the address specified by
the Shareholders.
The Released Escrowed Shares shall not include (a) any Escrowed
Shares delivered to Talarian in accordance with Section 3.2 below in
satisfaction of Claims (as defined in Section 4.2 below) by Talarian, (b) any
Escrowed Shares subject to delivery to Talarian in accordance with Section 4,
below, with respect to any then pending, but unresolved Claims ("Unresolved
Claims") by Talarian, or (c) with respect to the First Release Date, 5,000 of
the original Escrowed Shares, which shall remain in Escrow until the Second
Release Date unless otherwise released to Talarian hereunder.
4
<PAGE> 5
Within five business days after receipt of the Release Notice, the
Escrow Agent shall deliver (by registered mail or overnight carrier) to the
Shareholders the number of Released Escrowed Shares specified in the Release
Notice and shall pay by check to the Shareholders the amount payable in lieu of
fractional shares, if any. To facilitate this process, no later than the First
Release Date (or Second Release Date, as applicable), Talarian shall (a) take
such action as may be necessary to cause a stock certificate to be issued in the
name of each Shareholder bearing any legends required by this Agreement and
shall provide such certificates to the Escrow Agent, and (b) deposit with the
Escrow Agent sufficient funds to pay the cash amount for fractional shares. Cash
shall be paid in lieu of fractions of Released Escrowed Shares in an amount
equal to the Fair Market Value thereof as of the date of the Release Notice (as
defined below). The Escrow Agent shall not be required to deliver the Released
Escrowed Shares to the Shareholders until it has received the Release Notice
from Talarian and the Lead Shareholder. Upon the resolution of any Unresolved
Claims, the Escrowed Shares that were subject to the Claim shall be promptly
released by the Escrow Agent to Talarian or to the Shareholders as determined
pursuant to the resolution of the Claim and in accordance with this Agreement.
The Escrow Agent shall not be required to invest the funds deposited with it for
payment in lieu of fractional shares, but will make such investment arrangements
as are expressly requested in writing by the Lead Shareholder to the extent
reasonable.
3.2 Release of Escrowed Shares to Talarian. Within five
business days after resolution of any Claim in accordance with Section 4 below,
Talarian and the Lead Shareholder (or the Relevant Shareholder, as applicable)
shall deliver to the Escrow Agent a Release Notice setting forth the number of
shares from the Escrowed Shares having a value which equals the amount, if any,
deemed to be owing to Talarian pursuant to the resolution of the Claim. The
value of the Escrowed Shares shall be determined based on the fair market value
as of the date of the Release Notice (as determined in accordance with Schedule
3.2) (the "Fair Market Value"). In lieu of any fractional shares, any fraction
of a share that would otherwise be released shall be rounded down to the nearest
whole share. Within five business days after receipt of such Release Notice, or
if no such Release Notice is received, then within 20 calendar days after
receipt of any Talarian Demand provided for in Section 4.4(a) below, or a
Talarian Distribution Notice as provided for in Section 4.4(b), below (unless
the Lead Shareholder (or the Relevant Shareholder, as applicable) gives the
Escrow Agent written notice within such 20-day period that the Shareholders (or
the Relevant Shareholder, as applicable) object to the Talarian Demand or
Distribution Notice as provided in Section 4.4(a) or 4.4(b), below, as the case
may be), the Escrow Agent and Talarian shall cause the transfer agent for
Talarian Common Stock to cancel certificates for the number of Escrowed Shares
to be released pursuant to this Section 3.2 and reissue certificates for
Escrowed Shares that are to be either distributed to the Shareholders pursuant
to Section 3.1, above, or retained by the Escrow Agent in Escrow as Escrowed
Shares. Any Escrowed Shares released from Escrow to Talarian may be canceled by
Talarian, without requiring Talarian to pay any consideration whatsoever in
receipt thereof to the Shareholders.
3.3 No Encumbrance. No Escrowed Shares or any beneficial
interest therein may be pledged, sold, assigned or transferred, including by
operation of law, by an Shareholder or may be taken or reached by any legal or
equitable process in satisfaction of any debt or other liability of such
Shareholder, prior to the delivery of the Escrowed Shares by the Escrow Agent to
such Shareholders pursuant to Section 3.1 above.
5
<PAGE> 6
3.4 Power to Transfer Escrowed Shares. The Escrow Agent is
hereby granted the power to effect any transfer of the Escrowed Shares provided
for in this Agreement. Talarian will cooperate with the Escrow Agent in causing
its transfer agent to promptly issue and reissue stock certificates as necessary
to effect such transfers.
4. Resolution of Claims.
4.1 Indemnification Obligations. The Escrowed Shares shall
serve as security only for the indemnity obligations of the Shareholders under
this Agreement. Payment for Damages to be owing to Talarian under such indemnity
shall be made by releasing to Talarian Escrowed Shares as provided in this
Agreement. To the extent the Escrowed Shares are insufficient to fully
compensate Talarian for Damages, Talarian shall only be entitled to pursue any
such Claims against any of the Shareholders to the extent such Damages relate to
claims in connection with Section 1.1(g) or finally adjudged fraud or
intentional misrepresentation.
4.2 Notice of Claims. Promptly after receipt by Talarian of
notice or discovery of any claim, damage or legal action or proceeding giving
rise to indemnification rights under this Agreement (a "Claim"), Talarian shall
give the Lead Shareholder (or Relevant Shareholder, if applicable) written
notice of such Claim and shall provide a copy of such notice to the Escrow
Agent. The Lead Shareholder shall promptly notify the other Shareholders. Each
notice of a Claim by Talarian (the "Notice of Claim") shall be in writing and
shall be delivered on or before the first anniversary of the Closing Date (the
"First Indemnification Termination Date") other than with respect to Claims made
pursuant to Section 1.1(d) which shall be made on or before the expiration of
the statute of limitations for the Tax to which the particular Claim relates
(the "Applicable Indemnification Termination Date").
4.3 No Release to Talarian Until Resolution. Talarian shall
not request the Escrow Agent to release to Talarian any of the Escrowed Shares
held in the Escrow Account pursuant to a Notice of Claim until such Claim has
been resolved in accordance with Section 4.4, below.
4.4 Resolution of Claims. Any Notice of Claim received by the
Shareholders and the Escrow Agent pursuant to Section 4.2, above, shall be
resolved as follows:
(a) Uncontested Claims. If the Lead Shareholder (or the
Relevant Shareholder, as applicable) does not contest a Notice of Claim in a
writing to Talarian within 20 calendar days of receipt of a Notice of Claim,
Talarian may deliver to the Escrow Agent, with a copy to the Shareholders (or
the Relevant Shareholder, as applicable), a written demand by Talarian (a
"Talarian Demand") stating that a Notice of Claim had been given and that no
notice contesting such Claim has been received from the Lead Shareholder (or the
Relevant Shareholder, as applicable) and further stating the number of Escrowed
Shares (valued at the Fair Market Value as of the date of the Talarian Demand)
to be withheld from release to the Shareholders (or the Relevant Shareholder, as
applicable) or to be released to Talarian in accordance with this Section. The
Escrow Agent shall within 20 calendar days after receipt of such Talarian
Demand, unless objected to by the
6
<PAGE> 7
Shareholders as described in Section 3.2 above, release to Talarian that number
of Escrowed Shares as specified in the Talarian Demand and shall notify the
Shareholders (or the Relevant Shareholder, as applicable) of such transfer.
(b) Contested Claims. If the Lead Shareholder (or the
Relevant Shareholder, as applicable) gives written notice contesting all or a
portion of a Notice of Claim to Talarian and the Escrow Agent (a "Contested
Claim") within the 20 calendar day period provided above, matters that are
subject to third party Claims brought against Talarian or any other Claiming
Party in a litigation or arbitration shall await the final decision, award or
settlement of such litigation or arbitration, while matters that arise between
Talarian or any other Claiming Party on the one hand and the Shareholders (or
the Relevant Shareholder, as applicable) on the other hand, including any
disputes regarding performance or non-performance of a party's obligations under
this Agreement ("Arbitrable Claims") shall be settled in accordance with Section
4.4(c), below. Any portion of the Notice of Claim that is not contested shall be
resolved as set forth above in Section 4.4(a), above. If notice is received by
the Escrow Agent that a Notice of Claim is contested by the Shareholders (or the
Relevant Shareholder, as applicable), then the Escrow Agent shall hold in the
Escrow Account, after what would otherwise be the First Release Date (or Second
Release Date, as applicable), Escrowed Shares having a value sufficient to cover
Damages alleged in such Claim (valuing any Escrowed Shares at the Fair Market
Value as of the date the Escrow Agent receives notice that such Claim is being
contested) until the earlier of (i) receipt of a settlement agreement executed
by Talarian and the Shareholders (or the Relevant Shareholder, as applicable)
setting forth the resolution of the Notice of Claim and setting forth the number
of Escrowed Shares to be released to Talarian, or (ii) receipt of a written
notice from Talarian (a "Talarian Distribution Notice") attaching a copy of the
final award or decision of the arbitrator and setting forth the number of
Escrowed Shares, if any, to be released to Talarian as a result of such award,
unless objected to by the Shareholders as described in Section 3.2 above.
Talarian shall provide a copy of the Talarian Distribution Notice to the
Shareholders at the same time as it provides such notice to the Escrow Agent. If
the Escrow Agent institutes an action for interpleader in accordance with
Section 5.6 of this Agreement as a result of a dispute between the parties, the
parties agree to jointly seek to stay such interpleader action pending the
resolution of any arbitration commenced by the parties or, if the parties are
unable to agree, pursuant to this Section 4.4(b) and 4.4(c), below.
(c) Arbitration.
(i) AAA Rules. Any Arbitrable Claim, in any
dispute between Talarian or any other Claiming Party and the Shareholders (or
the Relevant Shareholder, as applicable) under this Agreement, shall be
submitted to final and binding arbitration in the County of Santa Clara, State
of California, which arbitration shall, except as herein specifically stated, be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA") then in effect; provided, however, that the
parties agree first to try in good faith to resolve any Arbitrable Claim that
does not exceed $100,000 by mediation under the Commercial Mediation Rules of
the American Arbitration Association, before resorting to arbitration; provided,
further, that in the event of an arbitration, the arbitration provisions of this
Agreement shall govern over any conflicting rules which may now or hereafter be
contained in the AAA rules.
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<PAGE> 8
(ii) Binding Affect. The final decision of the
arbitrator shall be furnished in writing to the Escrow Agent, the Shareholders
and Talarian and will constitute a conclusive determination of the issue in
question, binding upon the Shareholders and Talarian. The arbitrator shall have
the authority to grant any equitable and legal remedies that would be available
in any judicial proceeding. Any judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction over the subject
matter thereof.
(iii) Compensation of Arbitrator. Any such
arbitration shall be conducted before a single arbitrator who will be
compensated for his or her services at a rate to be determined by the parties
and by the AAA, but based upon reasonable hourly or daily consulting rates for
the arbitrator in the event the parties are not able to agree upon his or her
rate of compensation.
(iv) Selection of Arbitrator. The AAA shall have
the authority to select an arbitrator from a list of arbitrators who are
partners in a nationally recognized firm of independent certified public
accountants from the management advisory services department (or comparable
department or group) of such firm or who are partners in a major law firm;
provided, however, that neither the accounting firm, law firm nor the individual
arbitrator shall be a firm or individual that has within the last three years
rendered, or is then rendering, services to any party or, also in the case of a
law firm, a firm or an individual lawyer, who has appeared, or is then
appearing, as counsel of record in opposition to any party; provided, further,
that the individual arbitrator cannot have any other prior relationship or
affiliation to the Shareholders, Talarian or any of its officers, directors,
consultants, contractors, or employees which is likely to affect or compromise
the arbitrator's independence.
(v) Payment of Costs. The Shareholders (or the
Relevant Shareholder, as applicable) and Talarian will share responsibility for
the attorneys' fees and costs and all costs of arbitration, including those
provided for above, based on the degree to which the arbitrator accepts the
respective positions of the parties, as conclusively determined by the
arbitrator.
(vi) Terms of Arbitration. The arbitrator chosen
in accordance with these provisions shall not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions of
the Merger Agreement or any other documents that are executed in connection
therewith.
(vii) Exclusive Remedy. Arbitration or mediation
under this Section 4.4(c) shall be the sole and exclusive remedy of the parties
for any Arbitrable Claim arising out of this Agreement.
5. Escrow Agent.
5.1 Duties. The duties of the Escrow Agent hereunder shall be
entirely administrative and not discretionary. The Escrow Agent shall be
obligated to act only in accordance with written instructions received by it as
provided in this Agreement and is authorized herewith to
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<PAGE> 9
comply with any orders, judgments or decrees of any court with or without
jurisdiction and shall not be liable as a result of its compliance with the
same.
5.2 Legal Opinions. As to any legal questions arising in
connection with the administration of this Agreement, the Escrow Agent may rely
absolutely upon the joint instruction of Talarian and the Lead Shareholder or
the opinions given to the Escrow Agent by its outside independent counsel and
shall be free of liability for acting and relying on such opinions.
5.3 Signatures. The Escrow Agent may rely absolutely upon the
genuineness and authorization of the signature and purported signature of any
party upon any instruction, notice, release, receipt or other document delivered
to it pursuant to this Agreement.
5.4 Receipts and Releases. The Escrow Agent may, as a
condition to the disbursement of monies or disposition of securities as provided
herein, require from the payee or recipient a receipt therefor and, upon final
payment or disposition, a release of the Escrow Agent from any liability arising
out of its execution or performance of this Agreement, with such release to be
in a form reasonably satisfactory to the Escrow Agent.
5.5 Refrain from Action. The Escrow Agent shall be entitled to
refrain from taking any action contemplated by this Agreement in the event it
becomes aware of any dispute between the Shareholders and Talarian as to any
material facts or as to the happening of any event precedent to such action.
5.6 Interpleader. If any controversy arises between the
parties or with any third party, the Escrow Agent shall not be required to
determine the same or to take any action, but the Escrow Agent in its discretion
may institute such interpleader or other proceedings in connection therewith as
the Escrow Agent may deem proper, and in following such other course, the Escrow
Agent shall not be liable.
5.7 Tax Forms. All persons or entities entitled to receive
interest from the Escrow Account will provide the Escrow Agent with W-9 tax
forms prior to disbursement of interest. Interest earned in the Escrow Account
will be reported as income to the party receiving such interest.
6. Indemnification of Escrow Agent.
6.1 Waiver Indemnification. Talarian and the Shareholders
agree to and hereby do waive any suit, claim, demand or cause of action of any
kind which they may have or may assert against the Escrow Agent arising out of
or relating to the execution or performance by the Escrow Agent of this
Agreement, in accordance with the terms and conditions hereof, unless such suit,
claim, demand or cause of action is based upon the willful neglect or gross
negligence or bad faith of the Escrow Agent. They further agree to indemnify the
Escrow Agent against and from any and all claims, demands, costs, liabilities
and expenses, including reasonable counsel fees, which may be asserted against
it or to which it may be exposed or which it may incur by reason of its
execution or performance of this Agreement, except to the extent attributable to
its willful neglect,
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<PAGE> 10
gross negligence or bad faith. Such agreement to indemnify shall survive until
extinguished by any applicable statute of limitations.
6.2 Conditions to Indemnification. In case any litigation is
brought against the Escrow Agent in respect of which indemnity may be sought
hereunder, the Escrow Agent shall give prompt notice of that litigation to the
parties, and the parties, upon receipt of that notice, shall have the obligation
and the right to assume the defense of such litigation, provided that failure of
the Escrow Agent to give the notice shall not relieve the parties from any of
their obligations under this Section 6 unless that failure prejudices the
defense of any of such litigation by said parties. The cost of defense of any
such litigation shall be borne by Talarian unless the litigation is brought by
or on behalf of the Shareholders, in which case the cost of defense of any such
litigation shall be borne by the Shareholders. At its own expense, the Escrow
Agent may employ separate counsel and participate in the defense. Parties shall
not be liable for any settlement agreed to by the Escrow Agent without their
respective consents.
7. Acknowledgment by the Escrow Agent. By execution and delivery of
this Agreement, the Escrow Agent acknowledges that the terms and provisions of
this Agreement are acceptable and agrees to carry out the provisions of this
Agreement on its part.
8. Resignation or Removal of Escrow Agent; Successor.
8.1 Resignation and Removal.
(a) The Escrow Agent may resign as such following the
giving of 30 days' prior written notice to the other parties. Similarly, the
Escrow Agent may be removed and replaced following the giving of 30 calendar
days' prior written notice to be given to the Escrow Agent jointly by the
Shareholders and Talarian. In either event, the duties of the Escrow Agent shall
terminate 30 calendar days after the date of such notice (or as of such earlier
date as may be mutually agreeable); and the Escrow Agent shall then deliver the
balance of the Escrowed Shares then in its possession to a successor Escrow
Agent as shall be appointed by the other parties as evidenced by a written
notice filed with the Escrow Agent.
(b) If the parties are unable to agree upon a successor,
or shall have failed to appoint a successor prior to the expiration of 30
calendar days following the date of the notice of resignation or removal, then
the acting Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor Escrow Agent or other appropriate relief and any such
resulting appointment shall be binding upon all of the parties.
8.2 Successors. Every successor appointed hereunder shall
execute, acknowledge and deliver to its predecessor and also to the Shareholders
and Talarian, an instrument in writing accepting such appointment hereunder, and
thereupon such successor, without any further act, shall become fully vested
with all the duties, responsibilities and obligations of its predecessor; and
such predecessor, upon the written request of its successor or any of the
parties, shall execute and deliver an instrument or instruments transferring to
such successor all the rights of such predecessor hereunder, and shall duly
assign, transfer and deliver all property, securities and monies
10
<PAGE> 11
held by it pursuant to this Agreement to such successor (a "Successor
Transfer"). Should any instrument be required by any successor for more fully
vesting in such successor, the duties, responsibilities and obligations hereby
vested or intended to be vested in the predecessor, any and all such instruments
in writing shall, on the request of any of the other parties, be executed,
acknowledged and delivered by the predecessor.
8.3 New Custodian. In the event of an appointment of a
successor, upon the consummation of the Successor Transfer, the predecessor
shall cease to be custodian of any funds, securities or other assets and records
previously held by it pursuant to this Agreement, and the successor shall become
such custodian.
8.4 Release. Upon acknowledgment by any successor Escrow Agent
of the receipt of the then remaining balance of the Escrowed Shares, the then
acting Escrow Agent shall be fully released and relieved of all duties,
responsibilities and obligations under this Agreement that may arise and accrue
thereafter.
9. Fee. The Escrow Agent shall be paid for service hereunder in
accordance with the fee schedule attached hereto as Schedule 9. Talarian shall
be responsible for paying all such fees to the Escrow Agent and any successor
thereof. In the event that the Escrow Agent is required to render any service
not provided for in this Agreement and fee schedule, or there is any assignment
of the interest of this Escrow or any modification hereof, the Escrow Agent
shall be entitled to receive from the party requesting the service, assignment
or amendment reasonable compensation for such extraordinary services and
reimbursement for all fees, costs, liability and expenses, including attorneys'
fees.
10. Termination of Escrow. The Escrow created hereby shall terminate
following the Escrow Agent's delivery of all remaining Escrowed Shares to the
Shareholders and/or Talarian pursuant to Section 3 above.
11. Shareholder Representations, Warranties and Covenants. Each
Shareholder represents, warrants and covenants as follows:
11.1 Stock Ownership. Shareholder has good and marketable
title to the WhiteBarn Shares being sold by the Shareholder pursuant to the
Merger Agreement and has full power and authority to surrender the WhiteBarn
Shares without any restrictions, liens, charges, claims, encumbrances or rights
of others of any nature whatsoever. Shareholder, upon request, will execute and
deliver any additional documents necessary or desirable to complete the
surrender of the certificates representing the WhiteBarn Shares surrendered
herewith. All authority herein conferred shall survive the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned.
11.2 Business or Financial Experience. Shareholder, by reason
of his or her business or financial experience or the business or financial
experience of his or her professional advisors who are unaffiliated with, and
are not compensated by, Talarian or any Affiliate or selling
11
<PAGE> 12
agent of Talarian, directly or indirectly, is capable of evaluating the merits
and risks of the transactions contemplated herein and in the Merger Agreement
and has the capacity to protect his or her own interests in connection
therewith. Shareholder is able to bear the economic risk of this investment, and
has such knowledge and experience in financial and business matters that
Shareholder is capable of evaluating the merits and risks of the investment in
the securities to be purchased.
11.3 Accredited Investors. Shareholder is an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act").
11.4 No Distribution. Shareholder is acquiring the Shares for
investment for its own account, not as a nominee or agent, and not with a view
to, or for resale in connection with, any distribution thereof.
11.5 Legends. Shareholder understands that (a) the Shares have
not been registered under the Securities Act by reason of a specific exemption
therefrom, and may not be transferred or resold except pursuant to an effective
registration statement or exemption from registration, and (b) each certificate
representing the Shares will be endorsed with any legend required to be placed
thereon by applicable federal or state securities laws and with legends in
substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
Talarian will instruct the transfer agent not to register the transfer of any of
the Shares unless the conditions specified in the foregoing legend are
satisfied.
11.6 Information. In addition, Shareholder has been furnished
with such materials and has been given access to such information relating to
Talarian as it or its qualified representative has requested and has been
afforded an opportunity to ask questions regarding Talarian and the Shares, all
as Shareholder has found necessary to make an informed investment decision.
12
<PAGE> 13
11.7 Residency. Shareholder is a resident of the State of
Illinois and all communications regarding Shareholder's purchase of the Shares
were sent to Shareholder in Illinois.
11.8 Market Stand-Off. In connection with an underwritten
initial public offering by Talarian of its equity securities pursuant to an
effective registration statement filed under the Securities Act, Shareholder
shall not, directly or indirectly, (1) offer, sell, solicit an offer to buy,
pledge, contract to sell, make any short sale of, loan, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise dispose or transfer of any shares of
Talarian Common Stock or any securities convertible into or exercisable or
exchangeable for Talarian Common Stock, (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any economic
consequences of ownership of Talarian Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Talarian
Common Stock or such other securities, in cash or otherwise, or (3) otherwise
agree to engage in any of the foregoing transactions without the prior written
consent of the Talarian and its underwriters, for such period of time (not to
exceed six months) from and after the effective date of such registration
statement as may be requested by Talarian or such underwriters (with such period
to be no longer than that requested by Talarian (or its underwriters) by
officers, directors and ten parent shareholders of Talarian). Shareholder also
further agrees to enter into any agreement reasonably required by the
underwriters to implement the foregoing.
12. Miscellaneous Provisions.
12.1 Governing Law. The validity, construction and performance
of this Agreement, and any Action arising out of or relating to this Agreement
shall be governed by the Laws, without regard to the Laws as to choice or
conflict of Laws, of the State of California.
12.2 Amendment. This Agreement may be amended, supplemented,
modified and/or rescinded only through an express written instrument signed by
all parties or their respective successors and permitted assigns.
12.3 Assignment. Neither this Agreement nor any interest
herein shall be assignable (voluntarily, involuntarily, by judicial process,
operation of Law or otherwise), in whole or in part, by any of the Shareholders
without the prior written consent of Talarian which consent may not be
unreasonably withheld or delayed
12.4 Notices. All notices, requests, demands and other
communications made under this Agreement shall be in writing, correctly
addressed to the recipient at the addresses set forth under such recipient's
signature on the signature page hereto and shall be deemed to have been duly
given; (a) upon delivery, if served personally on the party to whom notice is to
be given; or (b) on the date or receipt, refusal or non-delivery indicated on
the receipt if mailed to the party to whom notice is to be given by first class
mail, registered or certified, postage prepaid, or by air courier. Any party may
give written notice of a change of address in accordance with the provisions of
this Section 12.4 and after such notice of change has been received, any
subsequent notice shall be given to such party in the manner described at such
new address.
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<PAGE> 14
12.5 Warranty of Authority. Each of the individuals signing
this Agreement on behalf of a party hereto warrants and represents that such
individual is duly authorized and empowered to enter into this Agreement and
bind such party hereto.
12.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single agreement.
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<PAGE> 15
IN WITNESS WHEREOF, each of the parties has executed this Agreement
as of the date first set forth above.
"TALARIAN": THE "SHAREHOLDERS":
TALARIAN CORPORATION,
a California corporation
Mark Mahowald
By: ______________________________ Address:
Name:______________________________ ___________________________________
Its: ______________________________ ___________________________________
___________________________________
Address: Tel. No.:
333 Distel Circle Fax. No.:
Los Altos, CA 94022-1404
Tel. No.: (650) 965-8050
Fax. No.: (650) 965-9077
"ESCROW AGENT":
WAGNER & ASSOCIATES, P.C.
Ron Lachman
By: ______________________________ Address:
Its: ______________________________ ___________________________________
Address: ___________________________________
41 Corporate Plaza, Suite 210 ___________________________________
Irvine, Ca 92606 Tel. No.: _________________________
Tel. No.: (949) 474-6964 Fax. No.: _________________________
Fax. No.: (949) 474-6001
15
<PAGE> 1
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
CONTAINED IN THIS EXHIBIT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.13
LICENSE AGREEMENT
This License Agreement ("Agreement"), effective 7/25/97 (the "Effective Date"),
is between the following Parties: LUCENT TECHNOLOGIES INC., a Delaware
corporation ("LUCENT"), having an office at 600 Mountain Avenue, Murray Hill,
New Jersey 07974, and GLOBALCAST COMMUNICATIONS, INC., a California corporation
("GCAST"), having an office at 46832 Lakeview Boulevard, Fremont, California
94538.
WHEREAS, LUCENT and GCAST each have expertise and technology in the field of
reliable multicasting, and
WHEREAS, LUCENT and GCAST desire that advances in the field of reliable
multicasting be made,
WHEREAS LUCENT and GCAST have entered into a Common Stock Purchase Agreement
having the same Effective Date as this Agreement which Common Stock Purchase
Agreement provides partial consideration for the rights aid licenses granted in
this Agreement, and whereas the rights and licenses granted herein are
contingent upon execution of such Common Stock Purchase Agreement,
NOW THEREFORE the Parties agree as follows:*
ARTICLE I
GRANT OF LICENSES
1.01 GRANT
LUCENT grants to GCAST under LUCENT's PATENT a personal, nonexclusive and
nontransferable (except as expressly provided herein) license to make, have
made, use, lease, sell, offer for sale and import LICENSED PRODUCTS specified in
Appendix B and no other products.
GCAST shall have the sole discretion to add products to or delete products from
Appendix B. GCAST agrees that any product that is so listed in Appendix B will
be designated a LICENSED PRODUCT, in consideration for LUCENT's forbearance from
seeking injunctive relief under LUCENT's PATENT for any products fisted in
Appendix B, and for other good and valuable consideration, GCAST agrees to pay a
royalty in accordance with Article III for so long as a product is designated a
LICENSED PRODUCT.
1.02 DURATION
All licenses granted herein under LUCENT's PATENT shall continue for the entire
unexpired term of LUCENT's PATENT provided that GCAST makes a minimum annual
royalty payment in the manner provided in Section 3.01(a).
- ----------
* Any term in capital letters which is defined in Appendix A - Definitions
shall have the meaning specified therein.
<PAGE> 2
1.03 SCOPE
(a) Licenses granted under this Article I are not to be construed as consent by
LUCENT to any act which may be performed by GCAST, except to the extent impacted
by LUCENT's PATENT.
(b) The grant of each license under this Article I includes the right of GCAST
to grant sublicenses within the scope of such license to GCAST's SUBSIDIARIES
for so long as they remain its SUBSIDIARIES. Any such sublicense may be made
effective retroactively, but not prior to the effective date hereof, nor prior
to the becoming a SUBSIDIARY of GCAST.
1.04 SOLE LICENSE PERIOD
Except as otherwise explicitly set forth below in this Section 1.04, LUCENT
agrees not to license LUCENT's PATENT to any third party to make, use, sell, or
license multicasting protocol software for a period (the "Sole License Period")
beginning with the Effective Date and ending the earliest of: (i) thirty-six
(36) months from the Effective Date, (ii) upon acceptance of RMTP or an RMTP
derivative as a standard by the IETF or (iii) termination of this Agreement.
GCAST acknowledges that pursuant to certain other agreements that LUCENT's
PATENT is already licensed. GCAST further acknowledges that LUCENT is not
precluded from licensing LUCENT's PATENT when replacing and renewing such
certain other agreements provided that the scope of the patents licensed in any
such replacement or renewal agreement (by each party to such agreement) is
similar to the scope of patents licensed in such certain other agreement. As
used in this Section 1.04, "multicasting protocol software" means software that
provides multicast transport layer delivery of information as a primary
function,
ARTICLE II
LICENSED SOFTWARE
2.01 FURNISHING OF LICENSED SOFTWARE
Within a reasonable time after the execution of this Agreement by both Parties,
LUCENT shall furnish LICENSED SOFTWARE to GCAST in the form specified in the
Schedule in Appendix C.
2.02 GRANT OF RIGHT
(a) LUCENT grants to GCAST a personal, nontransferable (except as expressly
provided herein) and nonexclusive right to copy LICENSE SOFTWARE and to use
LICENSED SOFTWARE in the United States and other countries, subject to the
provisions of Section 2.08, solely for internal business purposes, including but
not limited to preparing ADAPTATIONS and testing, demonstrating and supporting
LICENSED SOFTWARE and ADAPTATIONS. GCAST agrees to use and otherwise treat
ADAPTATIONS, and LUCENT agrees to license ADAPTATIONS, the same as LICENSED
SOFTWARE hereunder.
<PAGE> 3
(b) No right is granted for the use of LICENSED SOFTWARE directly for any third
person, or for any use by any third person of LICENSED SOFTWARE except as
expressly provided in this Agreement.
(c) GCAST may make copies of LICENSED SOFTWARE for use, back up or archival
purposes, provided that such copy contains any copyright or proprietary notice
appearing on or in the LICENSED SOFTWARE being copied.
2.03 SUBLICENSING RIGHTS
(a) LUCENT hereby grants GCAST, personal, nontransferable (except as expressly
provided herein) and nonexclusive rights:
(i) to furnish and distribute LICENSED SOFTWARE and ADAPTATIONS to
SUBLICENSEES anywhere in the world for use by such SUBLICENSEE,
provided that GCAST, prior to furnishing such LICENSED SOFTWARE
or ADAPTATIONS, obtains an agreement in writing from such
SUBLICENSEE that:
(1) no ownership interest in the intellectual property of
LICENSED SOFTWARE or ADAPTATIONS is transferred to such
SUBLICENSEE;
(2) if a SUBLICENSEE's rights are terminated for any reason,
such SUBLICENSEE will either destroy or return all copies
of LICENSED SOFTWARE or ADAPTATIONS in its possession;
(3) such SUBLICENSEE will not export or re-export LICENSED
SOFTWARE or ADAPTATIONS without the appropriate United
States and/or foreign government licenses;
(4) such SUBLICENSEE agrees to the provisions of Section 2.11;
and
(5) LUCENT does not warrant LICENSED SOFTWARE or ADAPTATIONS,
does not assume any liability regarding LICENSED SOFTWARE
or ADAPTATIONS and does not undertake to furnish any
support or information regarding LICENSED SOFTWARE or
ADAPTATIONS;
(ii) to grant to such SUBLICENSEES a perpetual (but not irrevocable),
personal, nontransferable (except in the event of a merger,
acquisition or reorganization of such SUBLICENSEE) and
nonexclusive right to modify, use, copy, display, distribute and
prepare SUBLICENSEE ADAPTATIONS based on LICENSE SOFTWARE and/or
on ADAPTATIONS, to copy LICENSE SOFTWARE and ADAPTATIONS, and to
test, demonstrate and support LICENSED SOFTWARE and ADAPTATIONS;
and
(iii) to grant to such SUBLICENSEES the perpetual (but not irrevocable)
right to develop CUSTOMER SOFTWARE, make copies of CUSTOMER
SOFTWARE,
<PAGE> 4
and to furnish (directly or indirectly through its distributors
that agree to provisions no less protective of LUCENT than those
set forth herein) such copies on or through any media and by any
means now or hereafter known (including but not limited to by
transmission) on a stand alone basis or bundled with other
hardware or software to customers anywhere in the world (subject
to SUBLICENSEE satisfying applicable U.S. Government and foreign
government export requirements) for use of such CUSTOMER SOFTWARE
for its intended purposes, provided that GCAST obtains agreement
in writing from such a customer, which may be a shrink wrap
agreement or an agreement that a user must acknowledge before
downloading software, before or at the time furnishing each copy
of CUSTOMER SOFTWARE, that includes the provisions of Section
2.04(a)(i)(1-8) (substituting the SUBLICENSE E for GCAST for
purposes of applying Sections 2.04(a)(i)(1-8)); and
(iv) to grant to such SUBLICENSEES the further perpetual (but not
irrevocable) right to sublicense the rights in this Section
2.03(a) subject to each SUBLICENSEE obligating its SUBLICENSEE to
the terms and conditions of Sections 2.03(a), 2.03(b) and 2.03(c)
in the same manner that GCAST is obligated.
(b) GCAST agrees to sublicense LICENSED SOFTWARE and ADAPTATIONS for fees in a
manner consistent with its pricing for other protocol source code and object
code products.
(c) GCAST shall use diligent efforts to enforce the agreements, with
SUBLICENSEES specified in this Section 2.03.
2.04 CUSTOMER SOFTWARE
(a) LUCENT hereby grants to GCAST personal, nontransferable (except as expressly
provided herein) and nonexclusive rights:
(i) To develop CUSTOMER SOFTWARE, make copies of CUSTOMER SOFTWARE
which is a LICENSED PRODUCT and specified in Appendix B and no
other software, and to furnish (directly or indirectly through
subdistributors that agree to provisions no less protective of
LUCENT than those set forth herein) such copies on or through any
media and by any means now or hereafter known (including but not
limited to by transmission) on a stand alone basis or bundled
with other hardware or software to customers anywhere in the
world (subject to GCAST satisfying applicable U. S. Government
and foreign government export requirements) for use of such
CUSTOMER SOFTWARE for its intended purposes, provided that GCAST
obtains agreement from such a customer, which agreement may be a
shrink wrap agreement or an agreement that a user must
acknowledge before downloading software, before or at the time of
furnishing each copy of CUSTOMER SOFTWARE, that
(1) only a personal, nontransferable and nonexclusive right to
use such copy of CUSTOMER SOFTWARE is granted to such
customer;
<PAGE> 5
(2) no ownership interest in CUSTOMER SOFTWARE is transferred
to such customer;
(3) such customer will not copy CUSTOMER SOFTWARE except as
necessary to use such CUSTOMER SOFTWARE and or backup and
archive purposes in connection with such use;
(4) if a customer's right-to-use is terminated for any reason,
such customer will either destroy or return all copies of
CUSTOMER SOFTWARE in its possession;
(5) such customer will not transfer CUSTOMER SOFTWARE to any
other Party except as authorized by GCAST;
(6) such customer will not export or re-export customer
software without the appropriate United States and/or
foreign government licenses;
(7) such customer will not reverse compile or disassemble
CUSTOMER SOFTWARE except that in Member States of European
Economic Community such acts shall be permitted solely to
the extent permitted by Article 6 of the Council Directive
of 14, May 1991 on the legal protection of computer
programs; and
(8) LUCENT does not warrant CUSTOMER SOFTWARE, does not assume
any liability regarding CUSTOMER SOFTWARE and does not
undertake to furnish any support or information regarding
CUSTOMER SOFTWARE; and
(ii) to use CUSTOMER SOFTWARE without fee solely for testing systems
that are to be delivered to customers and for demonstrating
CUSTOMER SOFTWARE to prospective customers and for maintenance
and support purposes for end users of CUSTOMER SOFTWARE.
GCAST shall have the sole discretion to add software to or delete software from
Appendix B. GCAST agrees that any software that is so listed in Appendix B will
be designated a LICENSED PRODUCT. In consideration for LUCENT's forbearance from
seeking injunctive relief under LUCENT's intellectual property rights for any
software listed in Appendix B, and for other good and valuable consideration,
GCAST agrees to pay a royalty in accordance with Article III for so long as the
software is designated a LICENSED PRODUCT.
(b) GCAST shall use the same level of effort that it uses to enforce customer
agreements with respect to its own software to enforce the agreements with
customers specified in this Section 2.04.
(c) GCAST shall preserve LUCENT's copyright interests by including in CUSTOMER
SOFTWARE AND ADAPTATIONS, and by preserving in LICENSED SOFTWARE, any
appropriate copyright notice or, if GCAST makes copyrightable changes in
developing CUSTOMER SOFTWARE, GCAST's copyright notice.
<PAGE> 6
2.05 LUCENT'S RIGHTS
(a) Subject to Section 2.05(b), LUCENT and its SUBSIDIARIES retain full rights
to use and distribute LICENSED SOFTWARE and to use, modify, display, copy,
distribute and prepare ADAPTATIONS based on LICENSED SOFTWARE.
(b) LUCENT agrees not to grant to any other party, except SUBSIDIARIES of LUCENT
and distributors of LUCENT and its SUBSIDIARIES, any right to sell, license or
otherwise dispose of LICENSED SOFTWARE, ADAPTATIONS or other software,
performing substantially the same function as developed by LUCENT car its
SUBSIDIARIES, as a stand-alone product. LUCENT further agrees not to, and agrees
not to grant to any of its distributors, any third party or any of is
SUBSIDIARIES, the right to sell, license or otherwise dispose of, stand-alone
software products based on LICENSED SOFTWARE, ADAPTATIONS or other software
performing substantially the same function as LICENSED SOFTWARE or ADAPTATIONS
to third parties outside the communications industry.
(c) As used in this Section 2.05, the term "stand alone product" means a product
that: (i) can be used to perform functions substantially similar or identical to
functions performed by LICENSED SOFTWARE except in connection with the
transmission of an end users data that has been processed by a function that is
a material addition to any function performed by LICENSED SOFTWARE (in no way
limiting the foregoing, video teleconferencing is an example of a function that
is a material addition); and/or (ii) a reasonable end user would consider to be
a replacement of or substitute for LICENSED SOFTWARE. As used in this section
2.05, the term "communications industry" means entities, or divisions thereof,
that are primarily telephone operating companies, telephone equipment
manufacturers, long distance telephone service providers, telephone software
providers and cable televisions service providers.
2.06 IMMUNITIES
(a) LUCENT agrees, and shall cause any person to whom LUCENT transfers LUCENT's
PATENT to agree, that to the extent any SUBLICENSEE or end user is not already
licensed under LUCENT's PATENT, such SUBLICENSEE or end user will be immune from
suit for infringement of LUCENT's PATENT as a result of such SUBLICENSEE's or
end users use of LICENSED SOFTWARE, ADAPTATIONS or CUSTOMER SOFTWARE, provided
that the SUBLICENSEE or end user is in compliance with its obligations hereunder
with respect to such LICENSED SOFTWARE, ADAPTATIONS or CUSTOMER SOFTWARE.
(b) The immunities granted under Section 2.06(a) are solely with respect to
LUCENT's PATENT and do not include immunities under any other patent or under
any other form of intellectual property. However, if GCAST discovers a patent
owned or controlled by LUCENT that GCAST believes is necessarily and unavoidably
infringed by the exercise of any of the rights or licenses granted herein, then
LUCENT will consider including such patent within the definition of LUCENT's
PATENT. The granting of immunities under the newly discovered patent shall be at
LUCENT's discretion, but the granting of any such immunities will not be
unreasonably withheld. If LUCENT discovers a patent owned car controlled by
LUCENT that LUCENT believes is necessarily and unavoidably infringed by the
exercise of any of the rights
<PAGE> 7
or licenses granted herein, regardless of whether or not GCAST has previously
brought this to LUCENT s attention, then LUCENT will include such patent within
the definition of LUCENT's PATENT.
2.07 OWNERSHIP
(a) No ownership interest in LICENSED SOFTWARE is transferred to GCAST
hereunder. GCAST's interest in ADAPTATIONS is limited solely to GCAST's
additions and an ADAPTATION is subject in its entirety to LUCENT's intellectual
property rights.
(b) Nothing herein requires GCAST to furnish ADAPTATIONS to LUCENT.
2.08 U.S. EXPORT CONTROL
GCAST hereby assures LUCENT that it will not without a license or license
exception authorized by the Bureau of Export Administration of the U.S.
Department of Commerce, Washington, D.C. 20230, United States of America, if
required.
(i) export or release LICENSED SOFTWARE or CUSTOMER SOFTWARE
(including source code) obtained pursuant to this Agreement to a
national of Country Groups D:1 or E:2 (15 C.F.R. Part 740, Supp.
1), Iran, Iraq, Sudan, or Syria;
(ii) export to Country Groups D:1 or E:2, or to Iran, Iraq, Sudan, or
Syria, the direct product (including processes and services) of
the LICENSED SOFTWARE or CUSTOMER SOFTWARE;
(iii) if the direct product of any information obtained pursuant to
this Agreement is a complete plant or any major component of a
plan, export to Country Groups D:1 or E:2, or to Iran, Iraq,
Sudan, or Syria, the direct product of the plant or major
component.
This assurance will be honored even after the expiration date of this Agreement.
(b) GCAST agrees that it will not, without the prior written consent of LUCENT,
transmit, directly or indirectly, LICENSED SOFTWARE or any portion thereof (of
any other information obtained pursuant to this Agreement or any portion thereof
to any country outside the United States unless the proper export licenses have
been obtained.
2.09 MAINTENANCE
(a) During the one year period following the Effective Date, LUCENT will furnish
maintenance to GCAST at no additional charge, from time to time, in the form of
updates to LICENSED SOFTWARE developed by LUCENT in its regular course of
business. LUCENT will provide to GCAST any such updates created by LUCENT during
such one year period. Such updates will be considered arid treated as LICENSED
SOFTWARE.
<PAGE> 8
(b) Updates to LICENSED SOFTWARE may include minor enhancements and/or revisions
to correct known problems. Appropriate documentation will be included in
updates. One copy of each update will be furnished to GCAST.
2.10 TECHNICAL SUPPORT
LUCENT agrees to provide GCAST with the technical support and other maintenance
specified in Appendix D to facilitate the furnishing and use of LICENSED
SOFTWARE. Such services shall be provided by LUCENT technical employees who
shall be assigned by LUCENT. All such technical assistance arid support services
shall be furnished via telephone or e-mail during LUCENT's regular business
hours or at LUCENT facilities.
2.11 CONFIDENTIALITY
(a) GCAST agrees to hold all parts of the source code for LICENSED SOFTWARE in
confidence for LUCENT. GCAST further agrees not to make any disclosure of the
source code version of the LICENSED SOFTWARE (including methods or concepts
utilized therein to the extent such methods or concepts are trade secrets) to
anyone, except to: (i) employees of GCAST to whom such disclosure is necessary
to the use for which rights are granted hereunder, or (ii) SUBLICENSEES
receiving the source code for LICENSED SOFTWARE pursuant to Section 2.03
provided that GCAST obtains agreement in writing from such SUBLICENSEES that all
parts of the source code for LICENSED SOFTWARE shall be held in confidence for
LUCENT except that such SUBLICENSEES may in turn disclose such source code to
its own SUBLICENSEES that agree to be bound in writing by this terms of this
Section 2.11.
(b) GCAST shall appropriately notify all employees to whom any such disclosure
is made that such disclosure is made in confidence and shall be kept n
confidence by them.
(c) GCAST's obligations under this Section 2.11 shall not apply to any
information relating to LICENSED SOFTWARE (including any method or concept
utilized therein) that:
(i) is or becomes available without restriction to the general public
by acts not attributable to GCAST or its employees,
(ii) was rightfully in GCAST's possession without limitation m
disclosure, or with a limitation on disclosure less strict than
that set forth herein provided GCAST adheres to such
restrictions, before disclosure hereunder to GCAST,
(iii) is rightfully disclosed to GCAST by a third party without
restrictions on disclosure or with a limitation on disclosure
less strict than that set forth herein provided GCAST adheres to
such restrictions, or
(iv) is independently developed by GCAST.
<PAGE> 9
ARTICLE III
ROYALTIES AND PAYMENTS
3.01 ROYALTY CALCULATION
(a) GCAST shall make minimum annual royalty payments of [ ** ] beginning on July
1st, commencing with the annual period beginning on July 1, 1997. Each such
minimum annual royalty payment shall be credited with respect to royalties that
may become payable pursuant to Section 3.01(b) during the respective annual
period ending on the following June 30th. In no event shall any minimum annual
royalty payments made under this Section 3.01(a) or any portion thereof be
refunded to GCAST.
(b) Royalty shall be payable to LUCENT at the rate of [ ** ]: (i) on each
LICENSED PRODUCT which is sold, leased or otherwise disposed of by GCAST or any
of its SUBSIDIARIES; and (ii) on each sublicense granted by GCAST pursuant to
Section 2.03. The royalty rate shall be applied, except as otherwise provided in
this Article III, to the FAIR MARKET VALUE of such LICENSED PRODUCT or
sublicense. Only one royalty payment shall be due with respect to a particular
LICENSED PRODUCT. No multiple royalties shall be payable because any LICENSED
PRODUCT or its manufacture, sale or use is covered by more than one valid claim
in LUCENT's PATENT. No royalty shall be payable with respect to sales of
LICENSED PRODUCTS among GCAST and its SUBSIDIARIES.
3.02 ACCRUAL
(a) Royalty shall accrue upon the receipt of consideration from the first sale,
lease or disposition of a LICENSED PRODUCT by GCAST or its SUBSIDIARIES or upon
the receipt of consideration due from the granting of a sublicense pursuant to
Section 2.03. Obligations to pay accrued royalties shall survive termination of
licenses and rights pursuant to Article IV and the expiration of LUCENT's
PATENT.
(b) When a company ceases to be a SUBSIDIARY of GCAST, royalties which have
accrued with respect to any products of such company, but which have not been
paid, shall become payable with GCAST's next scheduled royalty payment.
(c) Notwithstanding any other provisions hereunder, royalty shall accrue and be
payable only to the extent that enforcement of GCAST's obligation to pay such
royalty would not be prohibited by applicable law.
3.03 RECORDS AND ADJUSTMENTS
(a) GCAST shall keep full, clear and accurate records with respect to all
LICENSED PRODUCTS sold, leased or otherwise disposed of and sublicenses granted
pursuant to Section 2.03 and shall furnish any relevant information which LUCENT
may reasonably prescribe from time to time to enable LUCENT to ascertain the
proper royalty due hereunder on account of LICENSED PRODUCTS sold, leased and
otherwise disposed of by GCAST or any of its SUBSIDIARIES and on account of
sublicenses granted, by GCAST hereunder. GCAST shall retain such records for at
least seven (7) years from the granting of each sublicense and from the
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
<PAGE> 10
sale, lease or putting into use of such LICENSED PRODUCTS. No more than once per
year, LUCENT shall have the right through its mutually acceptable accredited
auditors to make an examination, during normal business hours, of all records
and accounts bearing upon the amount of royalty payable to it hereunder provided
that such auditors agree to maintain the confidentiality of such records and
accounts. Prompt adjustment shall be made to compensate for any errors or
omissions disclosed by such examination. In the event that a previous audit has
revealed a deficiency of greater than five percent (5%) of the total amount owed
LUCENT over at least a year, LUCENT may audit GCAST twice per year in the manner
provided above.
(b) Independent of any such examination, LUCENT will credit to GCAST the amount
of any overpayment of royalties made in error which is identified and fully
explained in a written notice to LUCENT delivered within twelve (12) months
after the due date of the payment which included such alleged overpayment,
provided that LUCENT is able to verify, to its own satisfaction, the existence
and extent of the overpayment.
(e) No refund, credit or other adjustment of royalty payments shall be made try
LUCENT except as provided in this Section 3.03 Rights conferred by Section 3.01
or this Section 3.03 shall not be affected by any statement appearing on any
check or other document; except to the extent that any such right is expressly
waived or surrendered by a Party having such right and signing such statement.
3.04 REPORTS AND PAYMENTS
(a) Within sixty (60) days after the end of each quarterly period ending on
March 31, June 30th, September 30th or December 31st, commencing with the
quarterly period during which this Agreement becomes effective, GCAST shall
furnish to LUCENT at the address specified in Section 5.05 a statement certified
by a responsible official of GCAST or its SUBSIDIARIES showing:
(i) all LICENSED PRODUCTS which were sold, leased or otherwise disposed of by
GCAST or its SUBSIDIARIES;
(ii) all sublicenses granted pursuant to Section 2.03 during such quarterly
period;
(iii) the FAIR MARKET VALUES of such LICENSED PRODUCTS and sublicenses; and
(iv) the amount of royalty payable thereon without regard to any credit
available pursuant to Section 3.01 and the net amount payable after application
of such credit.
If no LICENSED PRODUCT has been so sold, leased or otherwise disposed of, or no
sublicense has been granted the statement shall show that fact LUCENT agrees to
maintain the confidentiality of the reports provided to it under this Section
3.04(a). However, LUCENT will be entitled to share such reports with any
mutually acceptable accredited auditors acting pursuant to Section 3.03(a).
GCAST may add products and software to the list of LICENSED PRODUCT in Appendix
B by providing written notice to LUCENT in GCAST's statement. Any such product
or software will
<PAGE> 11
be deemed a LICENSED PRODUCT as of the quarterly period immediately preceding
the date of the notice and royalty shall be payable in accordance with this
Section 3.04.
GCAST may delete products and software from the list of LICENSED PRODUCTS in
Appendix B in accordance with Section 4.02(a).
LUCENT may at any time make a written request to GCAST to add a product or
software to the list of LICENSED PRODUCTS. If GCAST refuses LUCENT's request,
GCAST may not thereafter add the requested product or software to the list of
LICENSED PRODUCTS without prior written permission from LUCENT.
(b) Within such sixty (60) days specified in Section 3.04(a) GCAST shall pay in
United States dollars to LUCENT at the address specified in Section 5.05 the
royalties payable in accordance with such statement. Any conversion to United
States dollars shall be at the prevailing rate for bank cable transfers as
quoted for the last day of such quarterly period by leading United States banks
in New York City dealing in the foreign exchange market.
(c) Overdue payments hereunder shall be subject to a late payment charge
calculated at an annual rate of three percentage points (3%) over the prime rate
or successive prime rates (as posted in New York City) during delinquency. If
the amount of such charge exceeds the maximum permitted by law, such charge
shall be reduced to such maximum.
ARTICLE IV
TERMINATION
4.01 BREACH
In the event of a material breach of this Agreement by GCAST, LUCENT may, in
addition to any other remedies that it may have, at any time terminate all
licenses and rights granted by it hereunder by not less than two (2) months'
written notice specifying such breach, unless within the period of such notice
all material breaches specified therein shall have been remedied.
4.02 VOLUNTARY TERMINATION
(a) By not less than six (6) months' written notice to LUCENT, GCAST may
voluntarily terminate all or a specified portion of the licenses and rights
granted to it hereunder, including the removal of LICENSED PRODUCTS from
Appendix B. Such notice shall specify the effective date of such termination and
shall clearly specify any affected product or software.
(b) Unless otherwise agreed to in writing, a failure to meet the minimum annual
royalty obligations set forth in Section 3.01 shall be deemed a voluntary
termination by GCAST provided that LUCENT notifies GCAST of its failure to meet
the minimum annual royalty obligations and that GCAST may, without terminating
this Agreement, pay LUCENT the minimum annual royalty amount within thirty (30)
days after GCAST receives such notice. The effective date of such termination
shall be the first day following the thirty (30) day period set forth in this
Section 4.02(b).
<PAGE> 12
(c) if RMTP, ACK PROTOCOLS or one of their derivatives is adopted as an IETF
standard for reliable multicasting, GCAST agrees not to terminate its license
under LUCENT's PATENT in order to negotiate or a lower royalty or obtain a lower
royalty under such standard.
4.03 SURVIVAL
Any termination of licenses and rights of GCAST under the provisions of this
Article IV shall not affect GCAST's licenses, rights and obligations with
respect to any LICENSED PRODUCT made, or any sublicense granted, prior to such
termination.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.01 DISCLAIMER
LUCENT warrants that there are no pending continuations, divisionals or
continuations-in-part of LUCENT's PATENT. LUCENT warrants that the LICENSED
SOFTWARE as furnished does not infringe the copyright or trade secret rights of
any third party. Except as explicitly provided in this Section 5.01, LUCENT and
its SUBSIDIARIES make no other representations OR warranties, expressly or
impliedly. By way of example but not of limitation, LUCENT and its SUBSIDIARIES
make no representations or warranties of merchantability or fitness for any
particular purpose, or that the use of LICENSED SOFTWARE will not infringe any
patent of other intellectual property right (except copyright and trade secret
rights as provided herein). LUCENT and its SUBSIDIARIES shall not be held to any
liability with respect to any claim by GCAST, or a third party on account of, or
arising from, the use of LICENSED SOFTWARE except with respect to any breach of
the warrant set forth in the first sentence of this Section 5.01. In no event
shall LUCENT's liability under this Section 5.01 exceed the sum of the amounts
paid by GCAST under this Agreement and the value of the common stock, which for
purposes of this Section 5.01 shall be thirty nine cents (39 cents) per share,
provided by GCAST pursuant to the Common Stock Purchase Agreement.
5.02 NOTHING CONSTRUED
Nothing contained herein shall be construed as:
(i) conferring by implication, estoppel or otherwise, any license or
right to use any name, trade name, trademark, service mark,
symbol or any other identification or any abbreviation,
contraction or simulation thereof of either Party;
(ii) an obligation upon LUCENT or any of its SUBSIDIARIES to furnish
any person, including GCAST, any assistance of any kind
whatsoever, or any information or documentation other than
LICENSED SOFTWARE, maintenance and technical assistance to be
furnished pursuant to Sections 2.09 and 2.10; or
(iii) a grant to GCAST to sell, lease, sublicense or otherwise transfer
or dispose of LICENSED SOFTWARE, in whole or in part, except as
provided in this Agreement.
<PAGE> 13
5.03 PUBLICITY AND STANDARDS
(a) GCAST agrees that it will not, without the prior written permission of
LUCENT, use in advertising, publicity, packaging, labeling or otherwise any
trade name, trademark, trade device, service mark, symbol of any other
identification or any abbreviation, contraction or simulation thereof owned by
LUCENT or any of its SUBSIDIARIES or used by LUCENT or any of its SUBSIDIARIES
to identify any of its or their products or services.
(b) GCAST agrees that it will not, without the prior written permission of
LUCENT, represent, directly or indirectly, that any product or service of
LICENSEE is a product or service of LUCENT or any of its SUBSIDIARIES or is made
in accordance with or utilizes any information or documentation of LUCENT or any
of its SUBSIDIARIES. GCAST agrees to, and will require all SUBLICENSEES to,
indicate, where appropriate, that CUSTOMER SOFTWARE is based on technology
licensed from LUCENT's Bell Laboratories.
(c) LUCENT and GCAST agree to draft a press announcement relating to she
execution of this Agreement. Such press announcement must be approved by both
Parties prior to its release. The content of such press announcement stall be
limited to statements indicating LUCENT's stock interest in GCAST, the existence
of a patent and software license and of a favorable pricing structure of GCAST
products for LUCENT use. In no event shall specific terms and conditions of this
Agreement be announced, including but not limited to the royalty and fees
payable hereunder. The Parties agree to draft additional press announcements for
release, as may be needed from time to time. Each Party agrees to obtain the
approval of the other Party of any such additional press announcements relating
to this Agreement prior to their release. Approval by a Party shall not be
unreasonably withheld.
(d) LUCENT and GCAST agree to use reasonable efforts to establish RMTP, ACK
PROTOCOLS or their derivatives as IETF standards for reliable multicasting.
Documentation relating to establishing such a standard shall be co-authored by
both Parties or, at LUCENT's discretion, by GCAST with appropriate
acknowledgment to, and approval by, LUCENT.
(e) LUCENT agrees, if RMTP, ACK PROTOCOLS or one of their derivatives s adopted
as an IETF standard for reliable multicasting, that it will license to others
LUCENT's PATENT in a nondiscriminatory manner and under reasonable temps and
conditions, consistent with the goals of both Parties of having RMTP, ACK
PROTOCOLS or one of their derivatives being widely adopted and successful as an
IETF standard. The Parties acknowledge and agree that LUCENT's agreement to
perform as required by Section 5.03(d) above and under this Section 5.03(e)
constitute a substantial portion of the consideration provided by LUCENT
pursuant to this Agreement. LUCENT's entire liability for any failure of
consideration under this Section 5.03(e) shall not exceed the value of the
common stock, which for purposes of this Section 5.03(e) shall be thirty nine
cents (39 cents) per share, provided by GCAST pursuant to the Common Stock
Purchase Agreement.
5.04 NONASSIGNABILITY
The Parties hereto have entered into this Agreement in contemplation of personal
performance, each by the other, and intend that the licenses and rights granted
hereunder to a Party not be
<PAGE> 14
extended to entities other than such Party's SUBSIDIARIES without the other
Party's express written consent. All of the rights, title and interest in this
Agreement and any licenses and rights granted to a Party hereunder may be
assigned to any direct or indirect successor to that portion of the business of
the Party that is subject matter of this Agreement as a result of any
restructuring or reorganization or the merger or acquisition thereof, which
successor shall thereafter be deemed substituted for the Party, effective upon
such assignment; but neither this Agreement nor any rights or obligations
hereunder shall be otherwise assignable or transferable (in insolvency
proceedings or otherwise) by either Party without the express written consent of
the other Party.
5.05 ADDRESSES
(a) Any notice or other communication hereunder shall be sufficiently given to
GCAST when sent by certified mail addressed to GCAST's office specified above,
or to LUCENT when sent by certified mail addressed to Contract Administrator,
Intellectual Property Division, Lucent Technologies Inc., 2333 Ponce de Leon
Boulevard - Suite 511, Coral Gables, Florida 33134. Changes in such addresses
may be specified by written notice.
(b) Payments by GCAST shall be made to LUCENT at Lucent Technologies Inc., Sun
Trust, P.O. Box 913021, Orlando, Florida 32891-3021. Alternatively, payments to
LUCENT may be made by bank wire transfers to LUCENT's account: Lucent
Technologies Licensing, Account No. 910-2-568475, at Chase Manhattan Bank, N.A.,
55 Water Street, New York, New York 10041, United States of America. Changes in
such address or account may be specified by written notice.
5.06 TAXES
GCAST shall pay any tax, duty, levy, customs fee, or similar charge ("taxes"),
including interest and penalties thereon, however designated, imposed as a
result of the operation or existence of this Agreement, including taxes which
GCAST is required to withhold or deduct from payments to LUCENT, except (i) net
income taxes imposed upon LUCENT by any governmental entity within the United
States (the fifty (50) states and the District of Columbia), and (ii) net income
tapes imposed upon LUCENT by jurisdictions outside the United States which are
allowable as a credit against the United States Federal income tax of LUCENT or
any of its SUBSIDIARIES. In order for the exception in (ii) to be effective,
GCAST must furnish to LUCENT evidence sufficient to satisfy the United States
taxing authorities that such taxes have been paid. Such evidence must be
furnished to LUCENT within thirty (30) days of issuance by the local taxing
authority.
5.07 GCAST PRODUCTS
(a) GCAST agrees that LUCENT may purchase unlimited quantities of GCAST
SOFTWARE, which is a protocol product, at no charge for the first forty-eight
(48) months after the furnishing of LICENSED SOFTWARE pursuant to Section 2.01
and at a price of forty percent (40%) of a BEST END USER PRICE thereafter. Each
copy of GCAST SOFTWARE may be purchased for internal use by LUCENT (subject to
GCAST's standard end user agreement), or for redistribution (directly or
indirectly through subdistributors that agree to provisions no less protective
of GCAST than those set forth herein) to LUCENT customers in
<PAGE> 15
the "communications industry" as defined in Section 2.05 and to other LUCENT
customers when sold as a component in a LUCENT product to be resold to LUCENT
customers provided that the LUCENT product cannot serve as a reasonable
cost-competitive alternative to RMTP or CUSTOMER SOFTWARE that includes no
application layer functions. All restrictions and conditions herein, including
but not limited to the restrictions and conditions set forth in Sections
2.04(a)(i)(1-8), 2.07, 2.08, 2.11, 5.01 and 5.06, that pertain to GCAST's
distribution of LICENSED SOFTWARE or LICENSED PRODUCTS will apply to LUCENT as
if LUCENT was GCAST and the GCAST SOFTWARE provided under this Section 5.07 was
LICENSED SOFTWARE or LICENSED PRODUCTS. LUCENT may not sublicense any of the
rights granted to it under this Section 5.07(a).
(b) GCAST agrees that LUCENT may purchase CUSTOMER SOFTWARE for LUCENT's
internal use subject to GCAST's standard end user agreement, which software is
an application product at a price that is no higher than the price charged to
other GCAST customers for similar quantities and terms.
(c) GCAST agrees that LUCENT may purchase all other GCAST products (not subject
to Section 5.07(a) or (b)), for LUCENT's internal use, subject to GCAST's
standard end user agreement, at a BEST END USER PRICE.
(d) In the event (i) LUCENT licenses LUCENT's PATENT to a third party after the
Sole License Period defined in Section 1.04, and (ii) RMTP or an RMTP derivative
has not been accepted as a standard by the IETF, then LUCENT's ability to
purchase LICENSED SOFTWARE at no cost under Section 5.07(a) shall terminate, and
LUCENT shall be entitled to purchase LICENSED SOFTWARE for any purpose at a BEST
END USER PRICE.
(e) All references in this Section 5.07 to the "purchase" of software shall be
construed as references to the purchase of the medium upon which such software
is furnished. The software itself is subject to license and to sale.
5.08 GCAST CODE AND DEMONSTRATIONS
(a) GCAST agrees to offer LUCENT the first opportunity to test and demonstrate
to potential customers any source and object code developed by GCAST designed to
run in network routers or switches based on ACK PROTOCOLS at least three months
prior to making such offer to any third party Subject to GCAST's standard beta
license agreement and appropriate confidentiality provisions protective of
GCAST.
(b) GCAST agrees to demonstrate at LUCENT's request software implementing ACK
PROTOCOLS on Lucent platforms prior to marketing such demonstrated software
provided that LUCENT provides GCAST with all reasonably necessary, hardware and
software support and meets all milestones related to such testing and that
LUCENT makes all reasonably necessary changes to its platforms to enable such
testing.
<PAGE> 16
5.09 CHOICE OF LAW
The Parties are familiar with the principles of New York commercial law, and
desire and agree that the laws of New York, exclusive of its conflicts of laws
provisions, shall apply in any dispute arising with respect to this Agreement.
5.10 INTEGRATION
This Agreement sets forth the entire agreement and understanding between the
Parties as to the subject matter hereof and merges all prior discussions between
them. Neither of the Parties shall be bound by any warranties, understandings or
representations with respect to such subject matter other than as expressly
provided herein or in a writing signed with or subsequent to execution hereof by
an authorized representative of the Party to be bound thereby.
5.11 DISPUTE RESOLUTION
(a) If a dispute arises out of or relates to this Agreement, or the breach,
termination or validity thereof, the Parties agree to submit the dispute to a
sole mediator selected by the Parties or, at any time at the option of a Party,
to mediation by the American Arbitration Association ("AAA"). If not thus
resolved it shall be referred to a sole arbitrator selected by the Parties
within thirty (30) days of the mediation, or in the absence of such selection,
to AAA arbitration which shall be governed by the United States Arbitration Act.
(b) Any award made (i) shall be a bare award limited to a holding for or against
a Party and affording such remedy as is deemed equitable, just and within the
scope of the Agreement; (ii) shall be without findings as to issues (including
but not limited to patent validity and/or infringement) or a statement of the
reasoning on which the award rests; (iii) may in appropriate circumstances
(other than patent disputes) include injunctive relief, (iv) shall be made
within four (4) months of the appointment of the arbitrator, and (v) maybe
entered in any court.
(c) The requirement for mediation and arbitration shall not be deemed a waiver
of any right of termination under this Agreement and the arbitrator is not
empowered to act or make any award other than based solely on the rights and
obligations of the Parties prior to any such termination.
(d) The arbitrator shall determine issues of arbitrability but may not limit,
expand or otherwise modify the temps of the Agreement.
(e) The place of mediation and arbitration shall be New York City.
(f) Each Party shall bear its own expenses but those related to the compensation
and expenses of the mediator and arbitrator shall be borne equally.
(g) A request by a Party to a court for interim measures shall not be deemed a
waiver of the obligation to mediate and arbitrate.
(h) The arbitrator shall not have authority to award punitive or other damages
in excess of compensatory damages and each Party irrevocably waives any claim
thereto.
<PAGE> 17
(i) The Parties, their representatives, other participants and the mediator and
arbitrator shall hold the existence, content and result of mediation and
arbitration in confidence.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
in duplicate originals by its duly authorized representatives on the respective
dates entered below.
LUCENT TECHNOLOGIES INC.
By: /s/ M. R. Greene
-----------------------------------
M. R. Greene
Vice President - Intellectual Property
Date: 7/29/97
--------------------------------
GLOBALCAST COMMUNICATIONS, INC.
By: /s/ Brian Whetten
-----------------------------------
Brian Whetten
Title: President
Date: 7/25/97
--------------------------------
<PAGE> 18
THIS AGREEMENT DOES NOT BIND OR OBLIGATE EITHER PARTY
IN ANY MANNER UNLESS DULY EXECUTED BY AUTHORIZED
REPRESENTATIVES OF BOTH PARTIES
<PAGE> 19
APPENDIX A
DEFINITIONS
ACK PROTOCOLS means the protocols described as the CSP and CP protocols in
LUCENT's PATENT.
ADAPTATION means any derivative work based on LICENSED SOFTWARE, including (i)
any work incorporating any of LICENSED SOFTWARE directly, (ii) any work
incorporating any computer program from LICENSED SOFTWARE rewritten in a
different computer language or converted to operate on a different type of CPU,
(iii) any work utilizing a method or concept from LICENSED SOFTWARE that is
obligated to be kept in confidence hereunder or (iv) any work otherwise covered
by any of LUCENT's intellectual property rights in LICENSED SOFTWARE.
BEST END USER PRICE means, with respect to a product, the lowest price that any
third party pays GCAST to purchase or distribute such product pursuant to a
written agreement of similar scope to an agreement between GCAST and LUCENT for
such product. In determining whether such written agreement is of similar scope,
all of the terms and conditions of such written agreement shall be analyzed as a
whole. Such determination may take into account market entry pricing strategies
(e.g., Internet browser/server pricing strategy), other hardware or software
that may be bundled with the product, the distribution channels of such product,
the rights and obligations of the parties under such written agreement, and
monetary/non-monetary consideration GCAST receives pursuant to such written
agreement. 1f there is no written agreement of similar scope, the Parties will
in good faith negotiate a BEST END USER PRICE.
CPU means central processing unit.
CUSTOMER SOFTWARE means (i) object-code computer programs or code including, or
based on, LICENSED SOFTWARE or an ADAPTATION and (ii) documentation listed in
the Schedule for LICENSED SOFTWARE and any other documentation pertinent to
LICENSED SOFTWARE or an ADAPTATION.
FAIR MARKET VALUE means, with respect to any item (including software) sold,
leased or otherwise disposed of, the value of consideration actually received by
GCAST for such item, excluding therefrom any hardware or software that is
capable of being distributed apart from a LICENSED PRODUCT.
In determining "consideration received" the following shall be excluded:
(a) packing costs;
(b) costs of insurance and transportation;
(c) import, export, excise, sales and value added taxes, and customs
duties; and
(d) amounts repaid or credited by reason of purchase chargebacks,
recalls, rebates (including government mandated rebates)
rejections, defects or returns.
<PAGE> 20
In the event that a LICENSED PRODUCT is sold in combination as a single product
with one or more other products or components for which no royalty would be due
hereunder if sold separately. FAIR MARKET VALUE shall be computed by multiplying
the FAIR MARKET VALUE for the combination product by the fraction A/(A+B), where
A is the FAIR MARKET VALUE for the LICENSED PRODUCT alone and B is the FAIR
MARKET VALUE of such one or more other products or components.
The FAIR MARKET VALUE of a sublicense granted pursuant to Section 2.03 shall be
the value of consideration received, including but not limited to maintenance
fees based upon the distribution of LICENSED SOFTWARE and ADAPTATIONS, up-front
fees and royalty or per-copy fees, actually received by GCAST for the rights
granted to such SUBLICENSEES pursuant to Section 2.03(a), but specifically
excluding amounts GCAST receives for: (i) licensing intellectual property other
than that owned or controlled by LUCENT, and (ii) the performance of services.
GCAST SOFTWARE means any ADAPTATION developed by GCAST or any source or object
code the execution which directly or indirectly infringes LUCENT's PATENT.
IETF means Internet Engineering Task Force.
LICENSED PRODUCT means any product or software specified in Appendix B.
LICENSED SOFTWARE means all or any portion of the software, other information
and documentation specifically listed in the attached Schedule C.
LUCENT'S PATENT means United States Patent 5,541,927 and any reissue,
re-examination and any foreign equivalents thereof.
RMTP means Reliable Multicasting Transport Protocol.
SUBLICENSEE means an entity receiving LICENSED SOFTWARE or ADAPTATIONS pursuant
to Section 2.03 of this Agreement.
SUBLICENSEE ADAPTATION means any ADAPTATION prepared by a SUBLICENSEE.
SUBSIDIARY of a company means a corporation or other legal entity (i) the
majority of whose shares or other securities entitled to vote for election of
directors (or other managing authority) is now or hereafter controlled by such
company either directly or indirectly; or (ii) which does not have outstanding
shares or securities but the majority of whose ownership interest representing
the right to manage such corporation or other legal entity is now or hereafter
owned and controlled by such company either directly or indirectly, but any such
corporation or other legal entity shall be deemed to be a SUBSIDIARY of such
company only as long as such control or ownership and control exists.
<PAGE> 21
APPENDIX B
LICENSED PRODUCTS
<PAGE> 22
APPENDIX C
SCHEDULE FOR LICENSED SOFTWARE
1. RMTP Software Developer's Kit (API)
2. RMFTP (Reliable Multicast File Transfer Protocol)
3. RMTP Engineering Guide
4. RMTP API Document
<PAGE> 23
APPENDIX D
SCHEDULE OF SUPPORT
LUCENT agrees to make the following modifications to its RMTP software and to
deliver such modifications to GCAST by the date shown below:
<TABLE>
<CAPTION>
Modification Delivery Date
------------ -------------
<S> <C>
1. RMTP streaming support thirty (30) days after execution of this
Agreement by both Parties
2. RMTP NACK support thirty (30) days after execution of this
Agreement by both Parties
3. RMTP mufti-level DRs support thirty (30) days after execution of this
Agreement by both Parties
4. Bug fixes sixty (60) days after execution of this
agreement by both Parties
</TABLE>
where
"RMTP streaming support" includes the ability to reliably multicast a
continuous stream of data but does not include streaming of audio and
video.
"RMTP NACK support" includes the capability to send NACKs and to use
NACKs for reliable multicast.
"RMTP mufti-level DR support" includes a static hierarchy of DRs, but
does not include a dynamic/automatic selection DRs.
"Bug fixes" include the following items:
1. Mcastlnit()
a) connects to any port (e.g. 23) while the daemon is
running on port 9000.
b) does not return MCAST_API_CANT_CONNECT_TO_RMTP as the
program exits from Mcastlnit() itself. "can't connect to
localhost.31508: Connection refused"
2. McastConnect()
a) For Receiver McastConnect() returns MCAST_OK instead of
MCAST_BAD_REQUEST
<PAGE> 24
3. McastListen()
a) For Sender McastListen() returns MCAST_OK rather than
MCAST_BAD_REQUEST
b) with Invalid SenderIPAddress (205.300.1.1)
McastListen() returns MCAST_OK
4. McastRecvData()
a) invalid param (NULL pointer) causes core dump
5. McastSendData()
a) invalid param (NULL pointer) causes care dump
6. McastDone()
a) For Receiver McastDone() returns MCAST_OK
7. McastReadStats()
a) invalid param (NULL pointer) causes core dump
8. McastChkForData()
a) invalid param (NULL pointer) causes core dump
b) without calling McastRecvlnit() returns MCAST_OK
c) without calling McastListen() returns MCAST_OK
9. McastGetDebugLevel()
a) invalid param (NULL pointer) causes core dump
10. McastSetDebugLevel()
a) can set any value as debug value - always return
MCAST_OK
LUCENT agrees to execute an acceptance test (to mutually agreed upon and
specified in a separate document) with GCAST on RMTP and RMFTP. LUCENT agrees to
fix any defects found pursuant the such acceptance test.
LUCENT agrees to provide the following technical transfer and support:
1. a two day code walk through for GCAST engineers covering RMTP and RMFTP;
2. test and quality assurance documents since RMTPv1 and RMFTP initial
release; and
3. up to two hundred (200) hours of technical assistance over a six month
period beginning with acceptance of RMTP and RMFTP. Such two hundred
(200) hours shall include any time required to meet the acceptance test
Such technical assistance shall be furnished via telephone or e-mail,
during normal business hours, at LUCENT facilitates and by personnel
assigned by LUCENT. Additional technical assistance may be furnished for
a fee pursuant to a separate agreement.
<PAGE> 25
AMENDMENT NO. 1 TO LICENSE AGREEMENT
This Amendment No 1 to License Agreement (the Amendment) effective as of
January 28, 1998 (the Effective Date), is between the following Parties: LUCENT
TECHNOLOGIES INC., a Delaware corporation ("LUCENT") having an office at 600
Mountain Avenue, Murray Hill, New Jersey 07974 and GLOBALCAST COMMUNICATIONS,
INC., a California corporation ("GCAST"), having as office at 46832 Lakeview
Boulevard, Fremont, California 94538, and amends that certain License Agreement
entered into by LUCENT and GCAST effective as of July 25, 1997 (the Agreement).
WHEREAS in conjunction with the License Agreement, GCAST entered into a
Common Stock Purchase Agreement ("Stock Purchase Agreement") effective July 25,
1997 with Lucent,
WHEREAS the Stock Purchase Agreement provided partial consideration for
the rights and licenses granted in the License Agreement, and
WHEREAS the Parties will amend the Stock Purchase Agreement effective
(insert date) and the Parties likewise wish to amend the Licenses Agreement,
NOW THEREFORE the Parties agree as follow:
1. All capitalized terms not defined in this Amendment shall have the
meaning given to them in the Agreement.
2. Add the following to the end of Section 5.04 of the Agreement:
If as a result of a merger or acquisition pursuant to this Section 5.04,
GCAST assigns this Agreement to 3Com Corporation, Cisco Systems, Inc.,
Northern Telecom Ltd., Motorola, Inc. or LM Ericsson Telephone Co. or to
any of their SUBSIDIARIES, then the restrictions set forth in Section
1.04 on LUCENT's rights to license LUCENT's PATENT shall be of no force
or effect.
3. Except as specifically modified or amended hereby, the Agreement shall
remain in full force and effect and, as modified or amended, is hereby
ratified, confirmed and approved. No provision of this Amendment may be
modified or amended except expressly in a writing signed by both Parties
nor shall any terms be waived except expressly in a writing signed by
the Party charged therewith. This Amendment shall be governed in
accordance with the laws of the State of New York, without regard to
principles of conflicts of laws.
<PAGE> 26
IN WITNESS WHEREOF, each of the Parties has executed this Amendment as
of the date indicated on this Amendment.
GLOBALCAST COMMUNICATIONS, INC. LUCENT TECHNOLOGIES INC.
By: /s/ Brian Whetten By: /s/ M. R. Greene
------------------------------ --------------------------------
Brian Whetten, CTO M. R. Greene
Acting President - Intellectual
Property
Date: 4/7/98 Date: 4/7/98
------------------------------ --------------------------------
<PAGE> 27
September 3, 1999
Paul A. Larson, President and CEO
Talarian Corporation
333 Distel Circle
Los Altos, CA 94022
Re: License Agreement between Lucent and GlobalCast dated July 25, 1997
Dear Mr. Larson:
In connection with the acquisition of assets of GlobalCast Communications, Inc.
("GLOBALCAST") by Talarian Corporation ("TALARIAN"), we understand that TALARIAN
will succeed to the rights, title and interest of GLOBALCAST with respect to the
License Agreement dated July 25, 1997 as amended by Amendment No. 1 effective
January 28, 1998 (together referred to herein as the "GlobalCast License")
between GLOBALCAST and Lucent Technologies Inc. ("LUCENT"). Pursuant to
TALARIAN's request for clarifications and modifications to the GlobalCast
License, and subject to written concurrence as indicated by the signatures
below, in consideration for the receipt of 52,400 shares of TALARIAN common
stock as required by the Common Stock Purchase Agreement between LUCENT and
TALARIAN dated and closing on the date hereof, and contingent upon the closing
of the asset sale contemplated by the Asset Purchase Agreement between
GLOBALCAST and TALARIAN and the closing of the common stock purchase
contemplated by the Common Stock Purchase Agreement between LUCENT and TALARIAN,
LUCENT and TALARIAN agree as follows:
1. This Letter Agreement is effective as of the closing of the asset sale
contemplated by the Asset Purchase Agreement and the closing of the common stock
purchase contemplated by the Common Stock Purchase Agreement.
2. All capitalized terms not defined in this Letter Agreement shall have the
meaning given to them in the GlobalCast License. Except as otherwise
specifically modified or amended herein, all of the provisions in the GlobalCast
License apply to this Letter Agreement and remain in full force and effect as
modified hereby between LUCENT and TALARIAN as successor to GLOBALCAST.
3. LUCENT retains ownership of the LICENSED SOFTWARE. TALARIAN's ownership
interest in any and all ADAPTATIONS or CUSTOMER SOFTWARE is limited solely to
the additions (i.e., contributions) made by TALARIAN (or GLOBALCAST) to the
LICENSED SOFTWARE or to the additions made by TALARIAN (or GLOBALCAST) to
ADAPTATIONS furnished by LUCENT. TALARIAN will own any code written by or on
behalf of it or GLOBALCAST; provided, however, that any and all ADAPTATIONS and
CUSTOMER SOFTWARE developed by any party (including TALARIAN, GLOBALCAST or
their licensees) are subject in their entirety to LUCENT's underlying
intellectual property rights.
4. As used herein in this Letter Agreement, the "TALARIAN End User License
Agreement" means the TALARIAN Corporation End User Terms and Conditions, except
for
<PAGE> 28
Sections 7 and 11 of such Agreement, provided in Exhibit A. To the extent that
the TALARIAN End User License Agreement conflicts with the GlobalCast License
(as amended herein), then the terms of the GlobalCast License shall apply.
5. Upon termination of the sole licensee period provided in Section 1.04 of the
GlobalCast License, LUCENT's obligations under Section 2.05 of such license
terminate.
6. The following Section 4.02(d) is added to the end of Section 4.02 of the
GlobalCast License:
(d) If TALARIAN elects to terminate all of the license rights granted to
it hereunder, then TALARIAN will have no further obligations hereunder
except that the obligations of TALARIAN under Sections 2.03 (c), 2.04
(b) and (c), 2.08, 3.02 (as to royalties accrued prior to the
termination date), 3.03, 3.04 (as to each quarterly period while this
Agreement is in effect), 4.02(c), 5.03 (other than (c), (d) and (e)),
and 5.06 survive expiry or termination of this Agreement for whatever
reason. Termination or expiry of this Agreement for any reason does not
affect any rights of LUCENT which survive termination pursuant to the
previous sentence, or which relate to or which may arise at any future
time from any breach or nonperformance of obligations under this
Agreement occurring prior to the termination or expiry.
7. The following is added to the end of Section 5.04 of the GlobalCast License:
TALARIAN may not transfer or assign, whether as a result of a merger,
acquisition, or otherwise, the GlobalCast License (as modified herein)
to [ ** ] or [ ** ] or to any of their SUBSIDIARIES without the prior
written consent of LUCENT.
8. The text of Section 5.07 of the GlobalCast License is deleted and the
following is inserted:
(a) TALARIAN agrees that LUCENT may purchase unlimited quantities of
GCAST SOFTWARE (in whatever form) that provides multicast transport layer
delivery of information as a primary function (the "Protocol Product") at no
charge for the first forty-eight (48) months after the furnishing of LICENSED
SOFTWARE pursuant to Section 2.01 and at a price of [ ** ] thereafter. Each copy
of the Protocol Product may be purchased for internal use by LUCENT (subject to
the TALARIAN End User License Agreement) and for redistribution (directly or
indirectly through subdistributors that agree to provisions no less protective
of TALARIAN than those set forth in the TALARIAN End User License Agreement) to
LUCENT customers in the "communications industry" as defined in Section 2.05 and
to other LUCENT customers when sold as a component in a LUCENT product to be
resold to LUCENT customers provided that the LUCENT product cannot serve as a
reasonable cost-competitive alternative to RMTP or CUSTOMER SOFTWARE that
includes no application layer functions. LUCENT may not sublicense any of the
rights granted to it under this Section 5.07(a).
(b) TALARIAN agrees that LUCENT may purchase CUSTOMER SOFTWARE developed
by either GLOBALCAST or TALARIAN for LUCENT's internal use subject to the
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
<PAGE> 29
TALARIAN End User License Agreement, which software is an application product at
a price that is no higher than the price charged to other TALARIAN customers for
similar quantities and terms.
(c) TALARIAN agrees that LUCENT may purchase all other products (not
subject to Section 5.07(a) or (b)) that are made generally commercially
available by TALARIAN, in whatever form the products are so made available and
whether or not such products include or are based on LICENSED SOFTWARE, for
LUCENT's internal use, subject to the TALARIAN End User License Agreement, at a
BEST END USER PRICE.
(d) In the event (i) LUCENT licenses LUCENT'S PATENT to a third party
after the Sole License Period defined in Section 1.04 and (ii) RMTP or an RMTP
derivative has not been accepted as a standard by the IETF, then LUCENT's
ability to purchase the Protocol Product at no cost or at a price of [ ** ]
under Section 5.07(a) shall terminate. LUCENT shall be entitled to purchase the
Protocol Product at a BEST END USER PRICE for any purpose.
(e) All references in this Section 5.07 to the "purchase" of software
shall be construed as references to the purchase of the medium upon which such
software is furnished. The software itself is subject to license and not to
sale.
9. A company which succeeds to the rights of TALARIAN with respect to the
GlobalCast License and this Letter Agreement as a result of an acquisition or
merger involving TALARIAN may decide to terminate its obligations under Section
5.07 of the GlobalCast License. In this event, effective as of the date of such
acquisition or merger (unless otherwise provided for herein), the GlobalCast
License shall be modified as follows:
(i) LUCENT's rights to purchase the software at the prices set forth
in Section 5.07 terminate after LUCENT is afforded an opportunity
to exercise the rights granted to LUCENT under that Section for a
period of ninety (90) days, such period commencing the day after
LUCENT receives notification to such effect from the successor to
TALARIAN;
(ii) the exclusivity of TALARIAN (successor)'s license provided for in
Section 1.04 (Sole License Period) terminates;
(iii) LUCENT's obligations under Section 2.05 and, for any licenses
entered into after such acquisition or merger, Section 2.06
terminate;
(iv) rights granted under Section 2.02 are amended such that: a) no
new GCAST SOFTWARE may be prepared and b) such rights are
effective only with respect to ADAPTATIONS developed by TALARIAN
or GLOBALCAST prior to such acquisition or merger;
(v) rights granted under Section 2.03 are amended so that: a) such
rights are effective only with respect to ADAPTATIONS developed
by TALARIAN or GLOBALCAST prior to such acquisition or merger and
b) any new SUBLICENSEES empowered after such acquisition or
merger shall only have
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
<PAGE> 30
rights with respect to ADAPTATIONS developed by TALARIAN or
GLOBAL CAST prior to such acquisition or merger and shall not be
licensed to create new SUBLICENSEE ADAPTATIONS or CUSTOMER
SOFTWARE; and
(vi) rights granted under Sections 2.04 are amended so that such
rights are effective only with respect to CUSTOMER SOFTWARE
developed by TALARIAN or GLOBALCAST prior to such acquisition or
merger.
10. LUCENT acknowledges that it has been informed that TALARIAN has previously
entered into a Software License Agreement dated May 18, 1998 with GLOBALCAST
(the "Talarian/Globalcast Agreement") and that TALARIAN represents that the
Talarian/Globalcast Agreement is currently valid and enforceable. Subject to
this representation by TALARIAN, Lucent agrees that neither this Letter
Agreement nor the anticipated assignment of the Globalcast License to TALARIAN
is intended to affect the continuing validity and enforceability of the
Talarian/Globalcast Agreement (to the extent that it is valid and enforceable by
law), provided that TALARIAN agrees that:
(a) LUCENT is not a party to the Talarian/Globalcast Agreement and has
not nor will not succeed to any obligations or liabilities of GLOBALCAST with
respect to the Talarian/Globalcast Agreement, specifically including, but not
limited to, obligations under Sections 6.1 (Warranties) and 6.3 (Infringement
Indemnity); and
(b) LUCENT is not in any way obligated or liable to TALARIAN under the
Talarian/Globalcast Agreement.
Notwithstanding any other provision herein, to the extent that (i) LUCENT's
LICENSED SOFTWARE as defined in the Globalcast License is included in the
"Licensed Software" and "Documentation" as defined in the Talarian/Globalcast
Agreement (hereinafter referred to as "Globalcast Licensed Software" and
"Globalcast Documentation", respectively), and (ii) TALARIAN is not in breach of
any obligations it assumed for the benefit of LUCENT under the
Talarian/Globalcast Agreement, LUCENT acknowledges and will not interfere with
the following rights granted to TALARIAN, such rights to survive any termination
of the GlobalCast License or this Letter Agreement or the assignment of the
GlobalCast License to TALARIAN, and which rights are assignable without
restriction, notwithstanding Section 7 of this Letter Agreement:
(x) a fully paid-up, royalty-free, non-exclusive, nontransferable,
perpetual, worldwide license to copy, use, modify, create derivative works based
upon the included Lucent's Licensed Software for the sole purpose of
incorporating the Globalcast Licensed Software and the Globalcast Documentation
into TALARIAN's software products (as per Section 3.1 of the Talarian/Globalcast
Agreement), and
(y) a fully paid-up, royalty-free, non-exclusive, nontransferable,
perpetual, worldwide license, with the right to sublicense, to copy, sell,
transmit and distribute and compile (directly or indirectly through dealers,
distributors, VARs, OEMs and other third parties) the source code form of the
included Lucent's Licensed Software in connection with the use, sale,
distribution,
<PAGE> 31
support or maintenance of the TALARIAN software products incorporating the
Globalcast Licensed Software (as per Section 3.2 of the Talarian/Globalcast
Agreement).
TALARIAN shall not be obligated to pay royalties to LUCENT for rights that
TALARIAN has under Section 10 (x) and (y) of this Letter Agreement above. For
clarity purposes, no royalty shall be payable under Section 3.01(b) of the
GlobalCast License for any rights set forth in such Section 10 (x) and (y)
above.
If the foregoing is acceptable to TALARIAN Corporation, please sign and return
the enclosed copy of this Letter Agreement.
Very truly yours,
/s/ James K. Treany, for
Gene G. Partlow
Acting Vice President-Intellectual Property
AGREED TO AND ACCEPTED:
TALARIAN Corporation
By /s/ Paul A. Larson
-------------------------------------
Paul Larson
President and CEO
Date
-----------------------------------
<PAGE> 32
EXHIBIT A
TALARIAN CORPORATION
END USER TERMS AND CONDITIONS
The software listed on the front of this document or attached to this document
and referenced hereto ("Licensed Software") and related user manuals ("User
Manuals") (collectively the "Licensed Software Materials") are licensed, not
sold, to the entity listed on the front of this document or the document
attached hereto ("Licensee") for use only upon the terms of this Agreement.
Licensee owns the media on which the Licensed Software is originally or
subsequently recorded or fixed, but TALARIAN retains ownership of all copies of
the Licensed Software Materials including without limitation all rights in the
Licensed Software as it is incorporated within and/or used with the Application
(as defined below).
1. License. Licensee may: (a) use the Licensed Software Materials only
to develop, support and use an application program for which Licensee provides
data and knowledge bases ("Application"); and (b) reproduce the Licensed
Software only to the extent necessary for safekeeping and archival purposes, and
for the development of the Application, provided that Licensee reproduces all
copyright and proprietary notices that are on the original copy of the Licensed
Software provided to Licensee. TALARIAN will provide Licensee with an
authorization password corresponding to the number and type of licenses
purchased. Licensee agrees not to authorize or knowingly allow the licensed
software to be used in excess of the number and type of licenses purchased
through any data processing network, shared memory option, clustered or
multiprocessor option, or any other means. Licensee agrees to provide prompt
notice to TALARIAN if Licensee moves the Licensed Software Materials to a
location other than the location designated in TALARIAN's sales order
acknowledgement or invoice.
2. Restrictions. Licensee may not: (i) use, copy, adapt, reverse
engineer, modify, rent, lease, distribute or transfer the Licensed Software
Materials, or any copy or merged portion thereof, except as expressly provided
for in this Agreement, or (ii) create any derivative works based on the Licensed
Software Materials, or (iii) decompile or disassemble the Licensed Software
Materials or allow anyone else to do so.
3. Term. The term of this Agreement will commence on the date the
Licensed Software is initially shipped to Licensee (the "Effective Date") and
will thereafter remain in effect unless modified by the mutual agreement of both
parties. Licensee may terminate this Agreement at any time by destroying the
Licensed Software Materials and all copies thereof. This Agreement will
automatically terminate if Licensee fails to comply with any term or condition
of this Agreement. Upon termination Licensee agrees to return to TALARIAN the
Licensed Software Materials together with all copies, modifications and merged
portions thereof or destroy the same and provide written certification to
TALARIAN that Licensee has done so.
4. Limited Warranty. Unless the Licensed Software is delivered as a beta
release (in which case the Licensed Software is licensed "AS IS") TALARIAN
warrants that, for a period of thirty (30) days immediately following the
Effective Date the Licensed Software, if properly installed, will operate in
substantial conformance with the User's Manuals; provided however, that
TALARIAN's sole obligation and liability for any breach of warranty shall be at
<PAGE> 33
TALARIAN's option: (i) to replace or correct the defective Licensed Software or
(ii) to terminate this Agreement and refund the total license fees paid by
Licensee to TALARIAN under this Agreement upon the prompt return of all Licensed
Software Materials, and all copies thereof. TALARIAN MAKES NO OTHER WARRANTIES
WITH RESPECT TO THE LICENSED SOFTWARE OF ANY KIND AND DISCLAIMS ALL SUCH
WARRANTIES AND CONDITIONS, WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. TALARIAN
DOES NOT WARRANT THAT THE LICENSED SOFTWARE WILL MEET LICENSEES REQUIREMENTS OR
THAT THE OPERATION OF THE LICENSED SOFTWARE WILL BE UNINTERRUPTED OR ERROR FREE,
OR THAT ALL PROGRAM ERRORS WILL BE CORRECTED.
5. Maintenance. For a period of thirty (30) days immediately after the
Effective Date (the "Free Maintenance Period"), TALARIAN agrees to provide, at
no additional charge to Licensee: (i) such improvements, enhancements,
modifications, upgrades and new releases to the Licensed Software Materials
(collectively "Maintenance Deliverables"), as (A) are made generally available
to all end user licensees of the Licensed Software Materials during the Free
Maintenance Period, and (B) are not separately priced and identified as a new or
different product by TALARIAN; and (ii) reasonable telephone support during
TALARIAN's regular business hours in accordance with TALARIAN's then current
prevailing policy. All Maintenance Deliverables will be part of the Licensed
Software Materials and subject to the terms and conditions of this Agreement.
Licensee may elect to continue to receive maintenance after the Free Maintenance
Period based upon TALARIAN's then standard maintenance fees.
6. Limitation Of Liability. IN NO EVENT WILL TALARIAN BE LIABLE FOR
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OR THE LOSS OF ANTICIPATED PROFITS
ARISING FROM USE OF THE LICENSED SOFTWARE MATERIALS OR ANY PERFORMANCE OR BREACH
OF THIS AGREEMENT EVEN IF TALARIAN HAS NOTICE OF THE POSSIBILITY OF. SUCH
DAMAGES AND REGARDLESS OF WHETHER ANY REMEDY HEREIN FAILS OF ITS ESSENTIAL
PURPOSE. IN NO EVENT WILL TALARIAN'S LIABILITY EXCEED THE TOTAL LICENSE FEES
PAID TO TALARIAN BY LICENSEE UNDER THIS AGREEMENT.
7. Payment. Licensee agrees to pay TALARIAN the total license fees set
forth on TALARIAN's invoice. The total license fees are due and payable within
thirty (30) days after the date of TALARIAN's invoice for such fees which will
be dated as of the Effective Date. All payments provided for in this Agreement
shall be in U.S. dollars and are exclusive of any taxes, shipping and other
charges. Licensee agrees to pay (and/or reimburse TALARIAN) for any and all
taxes (except for TALARIAN's income taxes), shipping charges, import and/or
export fees and other similar charges with respect to the Licensed Software.
8. Government Licensee. The Government' acknowledges TALARIAN's
representation that the Licensed Software Materials are "Restricted Computer
Software" as that term is defined in Clause 52.227-19 of the Federal Acquisition
Regulations (FAR) and is "Commercial Computer Software" as that term is defined
in Subpart 227.401 of the Department of Defense Federal Acquisition Regulation
Supplement (DFARS). The Government agrees that if the Licensed Software
Materials are supplied to the Department of Defense (DoD),
<PAGE> 34
Government is acquiring only "restricted rights" in the Licensed Software
Materials as that term is defined in Clause 52.227-7013(c)(1) of the DFARS.
RESTRICTED RIGHTS LEGEND
Use, duplication, or disclosure by the Government is subject to restrictions as
set forth in subparagraph (c) (1)(ii) of the Rights in Technical Data and
Computer Software clause at DFARS 52.227-7013. TALARIAN Corporation, 333 Distel
Circle, Los Altos, CA 94022.
9. Export Law Assurances. Licensee acknowledges that the Licensed
Software Materials are subject to export controls imposed by the U.S. Export
Administration Act of 1979, as amended (the "Act"), and the regulations
promulgated thereunder. Licensee agrees and certifies that neither the Licensed
Software Materials nor any direct product thereof is being or will be acquired,
shipped, transferred or reexported, directly or indirectly, into any country
prohibited by the Act and the regulations thereunder or will be used for any
purpose prohibited by the same.
10. Assignment. Licensee may not assign, sub-license or otherwise
transfer Licensees rights under this Agreement without the prior written consent
of TALARIAN and any attempt to do so without such consent shall be void.
11. Publicity. TALARIAN and Licensee shall have the right to use each
other's name and logo in its marketing materials, including web sites.
12. General Provisions. This Agreement will be governed by the laws of
the State of California, except for that body of law dealing with conflicts of
law. Any suit arising out of this Agreement must be brought in the state or
federal courts located in Santa Clara County, California and the parties each
agree that such courts will have in personam jurisdiction with respect to each
of them for purposes of any such suit. A waiver of a breach or default under
this Agreement shall not be a waiver of any other breach or default. Failure of
either party to enforce compliance with any term or condition of the Agreement
shall not constitute a waiver of such term or condition unless accompanied by a
clear written statement signed by a duly authorized officer of TALARIAN that
such term or condition is waived. This Agreement represents the entire agreement
and understanding of the parties relating to the subject matter hereof and
supercedes all prior oral and written representations, discussions,
negotiations, understandings and agreements on such subject matter. Any
modifications or amendments to this Agreement must be in writing and will not be
valid unless signed by duly authorized officers of TALARIAN and Licensee.
Licensee waives any rights Licensee may have under applicable law to have a copy
of this agreement in any other language than English.
<PAGE> 1
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
CONTAINED IN THIS EXHIBIT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.15
NOVELL/COMPANY CONFIDENTIAL
STANDARD INBOUND LICENSE AGREEMENT
(PRODUCT SOURCE CODE)
1. PREAMBLE. This Standard Inbound License Agreement ("Agreement") is
agreed to by Talarian Corporation, a California Corporation with
principal offices at 333 Distel Circle, Los Altos, CA 94022-1404
("Company") and Novell, Inc., a Delaware corporation with principal
offices at 122 East 1700 South, Provo, Utah 84606 ("Novell").
2. PURPOSE. Novell develops and markets computer software products. Company
develops and markets computer software products that will interoperate
with NetWare and other Novell products as specified elsewhere in this
Agreement. This Agreement sets forth the terms and conditions under
which Company will license the Licensed Work defined below to Novell.
3. DEFINITIONS. The following terms shall have the definitions stated
below:
a. Basic SDK - shall mean all versions (including all localized
and/or enabled versions) of the SSSDK (in Binary Code and Source
Code form), all corresponding patches, service packs, developer
kits, updates, and upgrades thereto, all corresponding subsets
and supersets, and all corresponding Development Environment
materials that are not Generally Available, with the exception
that the Basic SDK shall not include use of the following APIs:
[ ** ].
b. Binary Code - shall mean computer programming code that loads and
executes without further processing by a software compiler or
linker or that results when Source Code is processed by a
software compiler.
c. Code - shall mean Binary Code and Source Code.
d. Derivative Work - shall mean a work that is based on one or more
preexisting works (such as a revision, enhancement, modification,
translation, abridgement, condensation, expansion, or any other
form in which such preexisting work may be recast, transformed,
or adapted) and that, if prepared without authorization of the
copyright owner of such preexisting work, would constitute
copyright infringement under US law.
e. Development Environment - shall mean any Code, Documentation,
media or development tool (including compilers, workbenches,
tools, and higher-level or proprietary languages) that are used
or required by a party for the development, maintenance or
implementation of any deliverable. In addition to the foregoing,
Development Environment also includes information necessary for
the deliverable's recipient to acquire any relevant hardware or
software that is created and marketed by third party vendors.
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
<PAGE> 2
f. Documentation - shall mean user manuals and other written
materials in all formats and media that relate to particular Code
including machine-readable text or graphic files subject to
display or print-out.
g. Effective Date - shall mean the later of the dates on which this
Agreement is executed by a duly authorized representative of
Company or Novell.
h. Error - shall mean a: 1) a program function that is described in
user Documentation or the Agreement but is omitted from the Code,
or a program function or user interface that does not operate or
that gives incorrect results when measured against its design
specifications; and/or 2) a failure of the Documentation to
describe accurately a program function required by this
Agreement, to meet other requirements of this Agreement, or to
enable reasonably competent users to correctly operate the
associated Code.
i. General Availability and Generally Available - shall mean, with
respect to a particular item, that the item is available to
members of the general public.
j. Licensed Trademarks - shall mean all word marks, their associated
design marks, and all other trademarks and trade dress used by
Company to identify and/or market the Licensed Works.
k. Licensed Works - shall mean SmartSockets Event Systems and the
Basic SDK. "Licensed Works" shall also include MQexpress if
licensed as set forth in Section 13.b.
l. MQexpress - shall mean all versions (including all localized
and/or enabled versions) of the following works (in Binary Code
and Source Code form), all corresponding patches, service packs,
developer kits, updates, and upgrades thereto, all corresponding
subsets and supersets, and all corresponding Development
Environment materials that are not Generally Available:
MQexpress is a message queuing solution designed to
integrate seamlessly with publish-subscribe middleware,
allowing developers to combine the reliability and
transactional integrity of message queuing capabilities
with the high-volume, high performance capabilities of
publish-subscribe. MQexpress includes a development API
and class libraries which will be referred to as "MQSDK"
for this Agreement, and an independent "MQserver" process
which is required to support MQexpress operation at
runtime. MQexpress is more completely described in Exhibit
D.
m. Novell Directory Enabling Code - shall mean the Code for all
additions and modifications made by Novell to the Licensed Works
Source Code for the purpose of enabling Licensed Works to use any
directory service such as LDAP or Novell Directory Services
(NDS).
n. Novell Enhanced Code - shall mean the Source Code and Binary Code
of Novell's modifications to the Licensed Works that Novell
intends to make
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<PAGE> 3
Generally Available and that is provided to Company pursuant to
Section 11 and Section 12. Novell Enhanced Code shall not include
any Code owned or licensed by RSA Security Incorporated.
o. Novell FCS Date - shall mean the first date that Novell makes the
RT Server Generally Available to commercial customers.
p. Novell SDK FCS Date - shall mean the first date that Novell makes
Basic SDK Generally Available to commercial customers.
q. Novell Products - shall mean all versions of all products
distributed by Novell including but not limited to corresponding
software development kits, updates, upgrades, and service packs,
whether the foregoing are created, marketed, distributed, and/or
sold by Novell or third parties, provided that the products add
significant value add beyond the capabilities contained in the
Licensed Works.
r. Product Distribution Questionnaire - shall mean a questionnaire
in the form supplied in Exhibit C hereto by which Company
represents to Novell its rights with respect to materials
provided to Novell hereunder.
s. SmartSockets Event Systems - shall mean all versions (including
all localized and/or enabled versions) of the following works (in
Binary Code and Source Code form), all corresponding patches,
service packs, developer kits, updates, and upgrades thereto, all
corresponding subsets and supersets, and all corresponding
Development Environment materials that are not Generally
Available:
SmartSockets Event Systems is a publish-subscribe
middleware solution that provides application programming
interfaces (APIs) and class libraries (the SSSDK) to
enable the development of real-time, highly distributed
applications. SmartSockets also includes an independent
"RTserver" process which is required to support
SmartSockets operation at runtime. The SmartSockets Event
System is more completely described in Exhibit D.
t. Source Code - shall mean the human-readable form of computer
programming code and related system Documentation, including all
comments and any procedural language.
u. SSSDK - shall mean the SmartSockets Event Systems development API
and the class libraries that enable the development of real-time,
highly distributed applications as more fully described in
Exhibit D.
v. Talarian Products - shall mean all versions of all products
distributed by Company including but not limited to corresponding
software development kits, updates, upgrades, and service packs,
whether the foregoing are created, marketed, distributed, and/or
sold by Company or third parties, provided that the products add
significant value add beyond the capabilities contained in the
Novell Enhanced Code. In the event of acquisition of Company,
Talarian Products may
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<PAGE> 4
include the acquiring company's products, subject to Novell's
consent which shall not be unreasonably withheld.
w. Year 2000 Compliancy or Year 2000 Compliant - shall mean that (i)
a product accurately process, address, store, and calculate date
data from, into, and beyond the years 1999, 2000 and 2001,
including leap year calculations, and (ii) all of the product's
date-related functionality and data fields identify century and
millennium, and (iii) the product is able accurately to perform
calculations that involve a four-digit year field.
4. PROJECT MANAGERS. Each party shall designate a Project Manager that
shall be responsible for all necessary coordination with the other party
under the Agreement.
5. LICENSE GRANTS TO NOVELL.
a. SmartSockets Event Systems/MQexpress License Grant. Company
grants to Novell a perpetual, irrevocable, non-exclusive,
worldwide, fully paid-up right to use, reproduce, distribute in
Binary Code form (by sale, lease, rental, or otherwise), modify,
display, perform the Licensed Works, and to directly or
indirectly sublicense the foregoing rights, provided that
Novell's use of SmartSockets Event Systems and MQexpress (if
licensed) is in connection with Novell Products. This license
shall be under all of Company's inventions, discoveries, patents,
copyrights, trade secrets, inventors certificates, utility models
(and similar forms of legal protection of any country) and other
proprietary rights, including those of third parties under which
Company has the right to grant licenses, necessary to exercise
the rights granted under this Agreement, regardless of when such
proprietary rights were first conceived, reduced to practice,
created, or perfected.
b. Restrictions. Novell's license rights in Section 5.a are
expressly subject to the following restrictions:
(i) Novell shall only embed components of the Licensed Works
in connection with Novell Products to the extent that
Novell has a good faith reason for embedding such
components.
(ii) Any distribution of RTserver and/or MQserver (other than
error corrections, fixes, updates or materials of a
similar nature) must include a technical dependency on a
Novell Product such that the standalone distribution would
not run without the presence of the Novell Product,
excepting provisional operation when the Novell Product is
inoperable.
(iii) The Source Code for the embedded components of the
SmartSockets Event Systems and MQexpress shall only be
sublicensed in connection with a sublicense of the Novell
Product Source Code in which SmartSockets Event Systems or
MQexpress components are embedded and under terms at least
as protective as those terms applicable to the
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<PAGE> 5
Novell Product Source Code. Upon Company's request, Novell
shall identify any Source Code sublicensees of the
embedded components of the SmartSockets Event Systems and
MQexpress, provided that doing so does not violate a
contractual obligation owed by Novell to a third party.
The license rights granted in this Section 5 are subject
to and conditioned upon the restriction that no component
of the SmartSockets Event Systems and MQexpress Source
Code is provided or licensed directly or indirectly to the
companies listed in Exhibit E. Company may amend the
companies listed in Exhibit E, subject to Novell's
reasonable objection. SmartSockets Event Systems and
MQexpress in Source Code form constitute Confidential
Information of Company.
c. SDK License Grant. In addition to the licenses granted in Section
5.a, Company grants to Novell a perpetual, irrevocable,
non-exclusive, worldwide, royalty-free right to use, reproduce,
distribute in Binary Code form (by sale, lease, rental, or
otherwise), modify, display, and perform the Basic SDK, and to
directly or indirectly sublicense the foregoing rights. This
license shall be under all of Company's inventions, discoveries,
patents, copyrights, trade secrets, inventor's certificates,
utility models (and similar forms of legal protection of any
country) and other proprietary rights, including those of third
parties under which Company has the right to grant licenses,
necessary to exercise the rights granted under this Agreement,
regardless of when such proprietary rights were first conceived,
reduced to practice, created, or perfected.
d. Restrictions. Novell's license rights in Section 5.c are
expressly subject to the following restriction: Novell shall not
sublicense the Basic SDK Source Code to third parties (except to
the extent authorized in Section 5.a) without Company's prior
written consent.
e. API. [ ** ].
f. Licensed Marks. Company grants Novell worldwide, non-exclusive,
non-transferable, royalty free, fully paid-up license to use the
Licensed Trademarks in connection with the distribution and
marketing of Licensed Works, and to directly or indirectly
sublicense the foregoing rights. Company will at all times use
commercially reasonable efforts to preserve the value and
validity of the Licensed Trademarks; furthermore, in the event an
unauthorized third party uses the Licensed Trademarks in a
confusingly similar manner, Company shall have an obligation to
take action to prevent such use. Company shall notify Novell of
all claims that the Licensed Trademarks conflict with the rights
of third parties. Company hereby expressly represents that the
existing Licensed Trademarks are valid and are the exclusive
property of Company. If Novell has a substantial business concern
that Novell will not be able to freely market and distribute the
Licensed Works due to a conflict with a third party over use of
the Licensed Marks, Novell shall notify Company and Company may
provide an alternative,
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
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<PAGE> 6
clean mark. If Company does not provide the alternative marks
within ten (10) business days of receiving written notice from
Novell, Novell shall be free to market and distribute the
Licensed Works under a mark(s) of Novell's choice.
g. Ownership. Unless specifically stated otherwise, this Agreement
shall not change the ownership of any materials developed or
provided under this Agreement.
h. Copyright Notice. Novell shall reproduce copyright notices
included in the Basic SDK, regardless of whether the Basic SDK is
distributed as a Novell product or a Company product.
6. PRODUCT REQUIREMENTS AND DELIVERY. The Product Requirements for the
Licensed Works are the requirements set forth in this Section and in
Exhibit A to this Agreement. Company shall deliver to Novell Licensed
Works that conform to the Product Requirements. Such deliveries shall be
in accordance with the schedules set forth in Exhibit A; to any extent
that Exhibit A does not contain delivery dates for any particular
deliverable, Company shall provide the deliverable to Novell upon the
completion of its development. The initial delivery of MQexpress shall
be within five (5) business days of receipt of the payment specified in
Section 13.b.
a. Product Distribution Questionnaire. Novell requires certain
information about products prior to distribution. Company shall
concurrently with the delivery of any and all Licensed Works
pursuant to this Agreement deliver, or at such other times as
Novell may reasonably request, a document providing certain
information required by Novell. Company shall provide this
information in the form of the then current Product Distribution
Questionnaire attached in Exhibit C. After initial delivery of a
Licensed Work, Company may provide the required information in
the form of the then current Supplemental Product Distribution
Questionnaire also attached in Exhibit C.
b. Globalization. To any extent that Company agrees (as may be
specified in Exhibit A or any amendment to this Agreement) to
develop additional localized or enabled versions of the Licensed
Works, such versions shall comply with Novell's then current
enablement and localization standards.
c. Harmful Code. Company agrees to implement reasonable procedures
adequate to prevent any Code provided to Novell hereunder from
being contaminated with Harmful Code. If Company learns or
suspects that any Code provided to Novell under this Agreement
contains any Harmful Code, Company will immediately notify Novell
and use best efforts to remove the Harmful Code. The remedies
provided by this section are in addition to any other remedies
Novell may have. For purposes of this Section, "Harmful Code"
shall mean any Code constructed with the ability to damage,
interfere with, or adversely affect computer programs, data
files, or hardware without the consent or intent of the computer
user. This definition includes, but is not limited to,
self-replacing and self-propagating programming instructions
commonly called "viruses," "trojan horses" and "worms."
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<PAGE> 7
d. Year 2000. The Licensed Works shall be Year 2000 Compliant.
7. PACKAGING AND END USER LICENSING. Novell will determine the packaging
for the Licensed Work at its sole discretion. Company will
electronically embed the following in the master copy of the Basic SDK
provided to Novell: (i) Company's end user license agreement ("EULA"),
with Company as the licensor, and (ii) the end user Documentation.
Except as agreed to expressly agreed to herein, Novell will have no
obligation to insert or include any brochure or other materials with the
Licensed Work. Company acknowledges that Novell may distribute a
modified version of the Basic SDK, including without limitation removing
the RTServer.
In addition, Company agrees that Novell may, at its option, distribute
the Basic SDK (including modifications) as a Novell product pursuant to
a EULA, with Novell as the licensor, using "Novellized" screens and a
Novell product name.
8. DEVELOPMENT. Company agrees to join the DeveloperNet program; Novell
will provide technical support of any Company development efforts
hereunder through DeveloperNet Labs and if mutually agreed upon through
Novell engineering personnel, in either case such support being subject
to the terms and conditions of a separate DeveloperNet Labs Agreement.
9. MARKETING OBLIGATIONS. The parties agree to perform the following
marketing activities:
a. Company may, at its option, participate in the then current
partner program at the Solution Partner Partnership level,
provided that Company pays all associated fees. Company
acknowledges that there is an annual fee required if it chooses
to participate at this level.
b. For a period of six months from the Novell SDK FCS Date (or
longer as mutually agreed) and subject to Novell's approval as to
form and content, Novell will include a one page marketing insert
in the Novell Developer Solution Pack that is distributed at
trade shows, conferences and other events. Company will be
responsible for printed material production costs and delivery to
Novell.
c. Novell and Company will cooperate to issue a joint press release
to communicate the relationship between the parties. The press
release will be issued at a date determined by Novell, but no
later than 45 days from the Effective Date. Company will be
responsible for drafting the press release and working with
Novell PR on editing and approval cycles. Novell and Company will
cooperate on future press releases announcing product releases,
success stories, and other newsworthy events as mutually agreed
by both parties. Novell will support Company's press relations
efforts through supporting quotes for Company's press
announcements and, when appropriate, provide a spokesperson
and/or participation in Company's press events.
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<PAGE> 8
d. Novell and Company will provide links to the partner section of
their respective web sites.
e. Company will be provided the opportunity to participate in
selected marketing opportunities and programs as described in the
then current Novell Partner Opportunity Planner and the then
current Solution Partner Program Guide.
10. END USER SUPPORT. During the term of the Agreement, Novell and Company
shall provide support for the Licensed Works according to the terms and
conditions of Exhibit B hereto. In addition, Novell may at it's
discretion, perform certain Level 2 Support efforts, which shall in no
way relieve Company of performing Level 2 support as set forth in
Exhibit B hereto. In order to assist Novell, Company shall provide
Novell, at no charge, up to 5 days of technical training for each
release of the Licensed Works sufficient to ensure Novell support
personnel's ability to perform discretionary Level 2 Support for the
Licensed Works.
11. NOVELL ENHANCED CODE. Company acknowledges that Code from RSA Security
Incorporated (the "RSA Code") is required to use the Novell Enhanced
Code, as developed by Novell, and that Novell is granting no rights
under this Agreement to Company with respect to the RSA Code. Company is
solely responsible for securing a license from RSA Security
Incorporated, or a licensee of RSA Security Incorporated, if Company
chooses at its discretion to use the RSA Code relative to the rights and
licenses conveyed by this Agreement. Provided that Company secures the
appropriate rights from RSA Security Incorporated, or an authorized
licensee, Novell will deliver the RSA Code to Company. However, Company
is not obligated to use the RSA Code and may choose an alternative
solution.
Novell grants to Company a perpetual, irrevocable, non-exclusive,
worldwide, royalty-free right to use, reproduce, distribute in Binary
Code form (by sale, lease, rental, or otherwise), modify, display, and
perform the Novell Enhanced Code and to directly or indirectly
sublicense the foregoing rights, provided that Company's use and
distribution of the Novell Enhanced Code is in connection with Talarian
Products. Novell Enhanced Code Source Code shall only be sublicensed in
connection with a sublicense of the Talarian Product Source Code with
which the Novell Enhanced Code is included and under terms at least as
protective as those terms applicable to the Talarian Product Source
Code. Upon Novell's request, Company shall identify any Source Code
sublicensees of the Novell Enhanced Code, provided that doing so does
not violate a contractual obligation owed by Company to a third party.
Company shall use the Directory Enabling Code solely for the purposes of
avoiding a divergent code base and enabling directory integration. The
license rights granted in this Paragraph are subject to and conditioned
upon the restriction that no portion of the Novell Directory Enabling
Source Code is provided or licensed directly or indirectly to the
companies listed in Exhibit E. Novell may amend the companies listed in
Exhibit E, subject to Company's reasonable objection. Novell Enhanced
Code in Source Code form constitutes Confidential Information of Novell.
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<PAGE> 9
Company will use commercially reasonable efforts to incorporate the
Novell Enhanced Code into its SmartSockets Event Systems products and
MQexpress (if licensed) products. Company will notify Novell prior to
making changes to the Novell Enhanced Code and the parties will make
reasonable efforts to agree upon such changes.
12. MAINTENANCE. During the term of the Agreement, each party shall promptly
deliver to the other party all updates, upgrades, patches, maintenance
modifications and error corrections to the Licensed Works and Novell
Enhanced Code, respectively.
13. CONSIDERATION. Unless otherwise stated in this Agreement, each party
shall bear its respective costs in performing hereunder. Each party
shall designate an accounting address; any payment made by a party
hereunder shall be sent to the other party at its designated accounting
address. Sections 13.a and 13.b set forth the entirety of Novell's
obligations to make payments in exchange for the licenses granted to
Novell under this Agreement.
a. Novell License Fee Payments. Novell shall owe Company a
one-time, fully-paid-up license fee to be paid as follows.
[ ** ] DUE UPON THE EFFECTIVE DATE
[ ** ] DUE SEPTEMBER 30, 1999
[ ** ] DUE UPON THE NOVELL FCS DATE, IF SUCH EVENT OCCURS.
b. Optional MQexpress License Fee. In the event that Novell desires,
at its sole option, (but no later than nine months from the
Effective Date) to license MQexpress under the terms of this
Agreement, Novell shall pay Company a one-time, fully-paid-up
license fee to be paid as specified below, at which time
MQexpress will be considered one of the "Licensed Works" and all
rights and obligations under this Agreement with respect to
MQexpress shall become effective.
[ ** ] DUE UPON DELIVER OF MQEXPRESS
[ ** ] DUE UPON NOVELL'S BETA RELEASE OF THE NETWARE PORT
OF MQEXPRESS
[ ** ] DUE UPON THE DATE THAT NOVELL MAKES THE NETWARE
PORT OF MQEXPRESS GENERALLY AVAILABLE TO COMMERCIAL
CUSTOMERS ("MQEXPRESS FCS DATE"), IF SUCH EVENT
OCCURS.
c. Maintenance Fees. In consideration of Company's obligations
pursuant to Sections 10 and 12, Novell shall pay Company the
annual payment of [ ** ] due upon the Novell SDK FCS Date and
each anniversary of the Novell SDK FCS Date for each ongoing year
of the Agreement.
In the event that Novell licenses MQexpress as set forth in
Section 13.b., then Novell shall pay an additional [ ** ], due
upon the MQexpress FCS Date and pro rated on a monthly basis
based on the Novell SDK FCS Date.
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
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<PAGE> 10
Thereafter, the annual payment due upon the Novell SDK FCS Date
shall be increased to [ ** ].
If the Agreement is terminated other than pursuant to the
termination rights set forth in Section 14.a or for termination
by Company for breach by Novell, Company shall refund the
foregoing fee to Novell pro rated on a monthly basis.
d. Invoices. Company shall invoice Novell for all fees owed (except
for those fees due upon the Effective Date), which shall be
payable net 30 days from invoice.
e. Tax Consequences. All license fees are exclusive of all
applicable taxes. The party making payment ("Payer") shall be
responsible for all sales, use, excise, value added and/or
equivalent taxes arising out of the payment and shall either
include such taxes with the payment or shall provide the other
party, in advance, with a valid exemption certificate or other
documentation to successfully claim exemption from the tax. Payer
shall not be responsible for: (a) taxes based upon the other
party's net income, capital, or gross receipts, or (b) any
withholding taxes imposed if such withholding tax is allowed as a
credit against U.S. income taxes of Payee such as a withholding
tax on a royalty payment where such withholding is required by
law. In the event Payer is required to withhold taxes, Payer
agrees to furnish to the other party all required receipts and
documentation substantiating such payment. If Payer is required
by law to remit any tax or duty on behalf, or for the account, of
Payee, the Payee agrees to reimburse Payer within thirty (30)
days after Payer notifies Payee in writing of such remittance.
14. TERM AND TERMINATION. This Agreement shall remain in force for a period
of two (2) years from the Effective Date, unless otherwise terminated as
provided in this Section 14. After the initial term of two (2) years,
this Agreement shall automatically renew for consecutive one (1) year
periods unless either party provides at least 90 days prior written
notice. Termination of this Agreement shall not affect any licenses
granted to Novell or Company prior to termination, and such licenses
shall not be subject to revocation or injunction during the term of this
Agreement or thereafter.
a. Termination Without Cause. Novell may terminate this Agreement
without cause upon not less than ninety (90) days' written notice
to Company. Provided that Company has fully complied with the
terms of this Agreement, Novell's obligations to make any
payments owed pursuant to Section 13.a and 13.b shall survive
termination.
b. Termination for Cause. Either party may terminate this Agreement
for the substantial breach by the other party of a material term.
The terminating party shall first give the other party written
notice of the alleged breach and a reasonable period of at least
thirty (30) days in which to cure the alleged breach. If a cure
is not achieved during the cure period, then the parties shall
submit to mandatory mediation with a mutually agreed upon
mediator, such mediation to be completed within thirty (30) days
and to be held in Salt Lake City, Utah. Termination of the
Agreement shall occur upon the expiration of the cure period
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
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<PAGE> 11
and the subsequent unsuccessful completion of mandatory mediation
as required by this Section. Neither party shall be precluded
from seeking temporary equitable remedies consistent with the
terms of this Agreement.
15. GENERAL TERMS.
a. Assignment. Neither party shall transfer or assign any right or
obligation set forth in this Agreement without the prior written
consent of the other party, which consent shall not be
unreasonably withheld. Such consent shall not be required,
however, for transfer or assignment to an entity acquiring
control of a party hereto.
b. Confidentiality And Information Exchange. It is the intention of
Company and Novell to transfer and/or exchange information,
including confidential information, as may be necessary. The
disclosing party shall be referred to as "Discloser' and the
receiving party as "Recipient."
i. Confidential information may be disclosed in oral, visual,
or written form (including magnetic, optical, or other
media). The Recipient's obligations shall only extend to
Source Code, the terms and conditions of this Agreement,
and to confidential information that is marked as
confidential at the time of disclosure or that is unmarked
(e.g., orally disclosed) but is treated as confidential at
the time of disclosure.
ii. The Recipient shall protect the disclosed confidential
information by using the same degree of care, but no less
than a reasonable degree of care, to prevent the
unauthorized use, dissemination, or publication of the
confidential information as the Recipient uses to protect
its own confidential information of alike nature.
iii. The Recipient's duty to hold confidential information in
confidence expires five (5) years, or in the case of
Source Code fifteen (15) years, after (i) its return or
destruction in the case of confidential information
embodied in received or developed (whichever is later)
Source Code and related descriptions, specifications and
system documentation, or (ii) its receipt or development
(whichever is later) in the case of any other confidential
information. The expiration of the duty of confidentiality
shall not modify other restrictions on the Recipient
including, for example, any restrictions on distribution
of Source Code arising out of a granted copyright license.
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iv. This Agreement imposes no obligation upon Recipient with
respect to information that: (a) was in Recipient's
possession before receipt from the disclosing party
("Discloser"); (b) is or becomes a matter of public
knowledge through no fault of Recipient; (c) is rightfully
received by the Recipient from a third party without a
duty of confidentiality; (d) is disclosed by the Discloser
to a third party without a duty of confidentiality on the
third party; (e) is disclosed under operation of law after
all reasonable means have been afforded to the Discloser
to protect the information; or, (g) is disclosed by the
Recipient with Discloser's prior written approval.
c. Construction. The headings in this Agreement are provided for
reference only and shall not be used as a guide to
interpretation. When used in this Agreement, the singular
includes the plural and the plural includes the singular, and
gender related pronouns include the feminine, masculine and
neuter.
d. Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the parties as to its specific subject
matter and merges all prior discussions between them with regard
to such specific subject matter. Neither of the parties shall be
bound by any conditions, definitions, warranties, understandings,
agreements, or representations, whether written or oral, with
respect to such specific subject matter other than as expressly
provided in the Agreement or as duly set forth on or subsequent
to its effective date, in a written document that is signed by a
duly authorized representative of each party.
e. Export of Technical Data. Each Party agrees to comply with U.S.
export laws and regulations when exporting any materials or any
items licensed or developed under this Agreement or any portion
thereof, or any system containing such materials or items or
portion thereof, or any technical data or other confidential
information, or any direct product of any of the foregoing
(collectively, "Program") from the U.S. or re-exporting a Program
from one foreign country to another. It is the exporting party's
responsibility to comply with the U.S. Government requirements as
they may be amended from time to time. Each party will reasonably
cooperate with the other party in obtaining export licenses or
approvals.
f. Force Majeure. Neither party shall be liable in damages or have
the right to cancel or terminate this Agreement for any delay or
default in performance if such delay or default is caused by
unforeseen conditions or conditions beyond the control of the
delaying or defaulting party, including but not limited to acts
of God, government restrictions, continuing domestic or
international problems such as wars or insurrections, strikes,
fires, floods, work stoppages and embargoes.
g. Freedom Of Action. Unless expressly stated herein and provided
that Recipient does not use the Confidential Information of the
Discloser to do any of the following, this Agreement shall not
prevent either party from (i) entering into any agreement similar
to this Agreement with any corporation or other entity in any
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industry or any non-profit body such as a university or a
government, (ii) developing, manufacturing and/or selling any
product or service that can compete with the other party's
products or services in the marketplace, or (iii) developing for
its products features that are the same as or similar to features
of products of the other party.
h. Intellectual Property Indemnity by Company.
i. Company shall defend or settle any claim made or suit or
proceeding brought against Novell and its subsidiaries or
affiliates under its control, and their directors,
officers, employees, and agents, against any and all
losses, judgments, awards, and costs (including reasonable
legal fees and expenses) arising out of or related to any
claim that the Licensed Trademarks, Licensed Works
infringe or violate the copyright, trademark, trade name,
trade secret, or patent rights of any third party. Company
will defend at its sole expense all suits or proceedings
arising out of the claims described above, provided that
Novell gives Company prompt notice and control of any
claim of which it learns. No settlement that prevents
Novell from continuing to use Licensed Works will be made
without Novell's prior written consent unless Company
procures for Novell the right to continue using the
Licensed Works or replaces or modifies the Licensed Works
so that it becomes non-infringing. Novell will have the
right to participate in the defense of any claim involving
the use of Licensed Works, provided that Company will not
be responsible for indemnifying Novell for the cost of
Novell's attorney's fees should Novell elect to
participate in such defense.
ii. Notwithstanding the foregoing, Company shall have no
indemnification obligations under this Section to the
extent any infringement claim arises from (a)
modifications to the Licensed Works made by other than
Company or its agents, (b) use or combination of Licensed
Works with equipment, programs or information not provided
by Company (provided that the foregoing limitation with
respect to hardware shall not apply if the Licensed Works
are merely being executed on industry standard hardware
and software in accordance with the manner in which
Company intends its Licensed Works to be operated); or (c)
incorporation of Novell Enhanced Code in the Licensed
Works; provided such claim would not have arisen absent
such modification, use, combination or incorporation.
iii. If the Licensed Works, in whole or in part, are or in
Company's opinion may become, the subject of any claim,
suit or proceeding for infringement of, or it is
judicially determined that the Licensed Works, in whole or
in part, infringe any third party's intellectual property
right, or if the Licensed Work's use is enjoined, then
Company may, at its option and expense, and using
reasonable efforts to act as soon as possible: (1) procure
for Novell the right to continue use of the Licensed
Works; (2) replace or modify the Licensed Works so as not
to infringe
13
<PAGE> 14
such third party's intellectual property right while
conforming, as closely as possible, to the specifications
agreed upon by the parties, (3) if the parties mutually
agree, Novell may undertake to replace or modify the
Licensed Works so as not to infringe such third party's
intellectual property right and such work shall be
reimbursed by Company at a mutually agreeable fee
structure.
i. Intellectual Property Indemnity by Novell.
i. Subject to Company's indemnification obligations set forth
above, Novell shall defend or settle any claim made or
suit or proceeding brought against Company and its
subsidiaries or affiliates under its control, and their
directors, officers, employees, and agents, against any
and all losses, judgments, awards, and costs (including
reasonable legal fees and expenses) arising out of or
related to any claim that the Novell Enhanced Code
infringes or violates the copyright, trademark, trade
name, trade secret, or patent rights of any third party.
Novell will defend at its sole expense all suits or
proceedings arising out of the claims described above,
provided that Company gives Novell prompt notice and
control of any claim of which it learns. No settlement
that prevents Company from continuing to use Novell
Enhanced Code will be made without Company's prior written
consent unless Novell procures for Company the right to
continue using the Novell Enhanced Code or replaces or
modifies the Novell Enhanced Code so that it becomes
non-infringing. Company will have the right to participate
in the defense of any claim involving the use of Novell
Enhanced Code, provided that Novell will not be
responsible for indemnifying Company for the cost of
Company's attorney's fees should Company elect to
participate in such defense.
ii. Notwithstanding the foregoing, Novell shall have no
indemnification obligations under this Section to the
extent any infringement claim arises from (a)
modifications to the Novell Enhanced Code made by other
than Novell or its agents, (b) use or combination of
Novell Enhanced Code with equipment, programs or
information not provided by Novell (provided that the
foregoing limitation with respect to hardware shall not
apply if the Novell Enhanced Code are merely being
executed on industry standard hardware and software in
accordance with the manner in which Novell intends its
Novell Enhanced Code to be operated); or (c) incorporation
of Licensed Works in the Novell Enhanced Code; provided
such claim would not have arisen absent such modification,
use, combination or incorporation.
iii. If the Novell Enhanced Code, in whole or in part, are or
in Novell's opinion may become, the subject of any claim,
suit or proceeding for infringement of, or it is
judicially determined that the Novell Enhanced Code, in
whole or in part, infringe any third party's intellectual
property right, or if the Licensed Work's use is enjoined,
then Novell may, at its
14
<PAGE> 15
option and expense, and using reasonable efforts to act as
soon as possible: (1) procure for Company the right to
continue use of the Novell Enhanced Code; (2) replace or
modify the Novell Enhanced Code so as not to infringe such
third party's intellectual property right while
conforming, as closely as possible, to the specifications
agreed upon by the parties, (3) if the parties mutually
agree, Company may undertake to replace or modify the
Novell Enhanced Code so as not to infringe such third
party's intellectual property right and such work shall be
reimbursed by Novell at a mutually agreeable fee
structure.
j. Independent Contractors. Each party is and shall remain an
independent contractor with respect to all performance under this
Agreement. No employee of either party shall be considered an
employee or agent of the other party for any purpose. Nothing in
this Agreement shall be construed to prevent either party from
delegating performance under this Agreement to independent
contractors who have entered into written agreements consistent
with and at least as restrictive as the provisions contained in
this Agreement.
k. Laws. The validity, construction, and performance of this
Agreement will be governed by the substantive laws of the State
of California without regard to any choice of law provisions. The
prevailing party in any action to enforce the terms of this
Agreement entered into hereunder shall be entitled to recover its
costs and expenses, including reasonable attorney's fees,
incurred in connection therewith, in addition to any other relief
to which such party is entitled. Each party shall, at its own
expense, comply with any governmental law, statute, ordinance,
administrative order, rule or regulation relating to its duties,
obligations or performance under this Agreement.
l. Limitation Of Liabilities. THE REMEDIES PROVIDED IN THIS
AGREEMENT ARE THE SOLE AND EXCLUSIVE REMEDIES OF THE PARTIES.
NEITHER PARTY SHALL IN ANY EVENT BE LIABLE FOR INDIRECT, SPECIAL,
RELIANCE, INCIDENTAL, COVER, OR CONSEQUENTIAL LOSS OR DAMAGE OF
ANY KIND ARISING UNDER THIS AGREEMENT, WHETHER IN A CONTRACT,
TORT OR OTHER ACTION FOR OR ARISING OUT OF ALLEGED BREACH OF
WARRANTY, ALLEGED BREACH OF CONTRACT, DELAY, NEGLIGENCE, STRICT
LIABILITY OR OTHERWISE. EXCEPT AS TO THE OBLIGATIONS SET FORTH IN
SECTIONS 15.h, 15.i and 15.b OR IN THE EVENT OF UNAUTHORIZED USE
OF INTELLECTUAL PROPERTY, IN NO EVENT SHALL EITHER PARTY BE
LIABLE UNDER THIS AGREEMENT TO THE OTHER, ITS SUCCESSORS AND
ASSIGNS FOR ANY DAMAGES EXCEEDING TOTAL PAYMENTS PAID OR DUE BY
BOTH PARTIES UNDER THIS AGREEMENT.
m. Notices. Unless otherwise agreed to by the parties, all notices
required under this Agreement shall be deemed effective when
received and made in writing by either (i) registered mail, (ii)
certified mail, return receipt requested, or (iii) overnight
15
<PAGE> 16
mail, or (iv) telephone facsimile transfer with confirmation,
addressed and sent to the receiving party address specified in
Section 1 with the original of the notice being addressed to the
Project Manager and a copy addressed to the receiving party's
General Counsel or legal department.
n. Representations And Warranties.
i. Ownership by Company. As of the Effective Date, Company
represents to Novell that (i) Company has a valid right to
modify, distribute, and sublicense the Licensed Works;
(ii) to the best of its knowledge, the Licensed Works do
not infringe any person's or entity's patent, copyright,
trademark, trade name or trade secret rights; (ii) to the
best of its knowledge, Company has the right to grant to
Novell all rights to Licensed Works granted herein without
violating any rights of any third party; and (iii) to
Company's knowledge there is currently no actual or
threatened suit by any third party based on an alleged
violation of these rights by Company. Company further
agrees to promptly notify Novell of any allegation or
claim that (i) the Licensed Works infringe any
intellectual or proprietary right of a third party, or
(ii) the licenses granted by Company under this Agreement
are not valid.
ii. Ownership by Novell. As of the Effective Date, Novell
represents to Company that (i) Novell has a valid right to
modify, distribute, and sublicense the Novell Enhanced
Code; (ii) to the best of its knowledge, the Novell
Enhanced Code does not infringe any person's or entity's
patent, copyright, trademark, trade name or trade secret
rights; (ii) to the best of its knowledge, Novell has the
right to grant to Company all rights to the Novell
Enhanced Code granted herein without violating any rights
of any third party; and (iii) to Novell's knowledge there
is currently no actual or threatened suit by any third
party based on an alleged violation of these rights by
Novell. Novell further agrees to promptly notify Company
of any allegation or claim that (i) the Novell Enhanced
Code infringes any intellectual or proprietary right of a
third party, or (ii) the licenses granted by Novell under
this Agreement are not valid.
iii. Year 2000. Upon execution of this Agreement, Company will
inform Novell in writing of its year 2000 policies and of
the level of compliance of the Licensed Works with the
Year 2000 warranty below. Company warrants the Licensed
Works are Year 2000 Compliant. If Company breaches this
warranty, in addition to any other remedies available to
Novell and at no additional cost to Novell, Company will
promptly assign senior engineering staff to work full-time
remedying the breach until the Licensed Works comply with
this warranty. This warranty shall survive termination of
this Agreement.
16
<PAGE> 17
iv. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER
PARTY MAKES ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND,
EXPRESS OR IMPLIED, WITH RESPECT TO DELIVERABLES, LICENSED
WORKS, MATERIALS, INVENTIONS, INFORMATION OR ANY OTHER
WORK OR OTHERWISE UNDER THIS AGREEMENT, AND EACH PARTY
HEREBY EXPRESSLY DISCLAIMS ALL SUCH WARRANTIES, INCLUDING
BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY, TITLE, NON-INFRINGEMENT AND FITNESS FOR A
PARTICULAR PURPOSE.
o. Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal or
unenforceable, the remaining provisions shall remain in full
force and effect and shall be interpreted, to the extent
possible, to achieve the purpose of this Agreement as originally
expressed. The parties further agree to substitute for the
invalid provision a valid provision which most closely
approximates the intent and economic effect of the invalid
provision.
p. Subsidiaries. All rights and licenses granted to Novell in this
Agreement shall apply to Novell's subsidiaries. Company agrees
that it may not seek to enforce any obligation of Novell (or its
subsidiaries) through a legal action brought against a subsidiary
except to the extent that such action seeks injunctive relief
against that particular subsidiary. Each party shall remain fully
liable for the acts and omissions of its subsidiaries relative to
this Agreement.
q. Survival Of Terms. In the event of a termination of this
Agreement, the terms of Section 5 (License Grants to Novell),
Section 11 (Novell Enhanced Code), and Section 15 (General Terms)
shall survive termination and continue in effect in accordance
with their terms. In addition, any provision that expressly
states that it survives termination shall also continue in effect
in accordance with its terms.
r. Volume Obligations. Except as explicitly stated in this
Agreement, neither party shall have an obligation (i) to offer
any product or service to any third party by way of sale, license
or otherwise, or (ii) to use any minimum level of effort in the
promotion, marketing, licensing or sales of any products or
services, including products or services of the other party, or
(iii) to purchase or license any minimum amount of products or
services from the other party.
s. Waiver. No waiver of any provision of this Agreement shall be
effective unless it is set forth in a writing that refers to the
provisions so waived and is executed by an authorized
representative of the party waiving its rights. No failure or
delay by either party in exercising any right, power or remedy
will operate as a waiver of any such right, power or remedy.
17
<PAGE> 18
16. SIGNATURES.
IN WITNESS WHEREOF, each party has executed this Agreement by signature of its
authorized representative, and this Agreement shall become effective as of the
Effective Date.
NOVELL, INC. COMPANY
SIGNATURE: /s/ SUSAN ESPY SIGNATURE: /s/ PAUL LARSON
------------------------- -------------------------
NAME: SUSAN ESPY NAME: PAUL LARSON
------------------------- -------------------------
TITLE: V.P. CORP. DEV. TITLE: PRESIDENT & CEO
------------------------- -------------------------
DATE: 9/30/99 DATE: 9/29/99
------------------------- -------------------------
18
<PAGE> 19
EXHIBIT A
PRODUCT REQUIREMENTS
A. MILESTONES.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
DELIVERY SCHEDULE
- --------------------------------------------------------------------------------------
MILESTONE DESCRIPTION MILESTONE DATE
- --------------------------------------------------------------------------------------
<S> <C> <C>
ONE Presentation to Novell As soon as possible after Effect Date.
engineers of the RTserver
network scalability plan
that addresses [ **
].
- --------------------------------------------------------------------------------------
TWO Delivery of shipping Five days after Effective Date.
version 5.2 of Licensed
Works for Linux, Solaris,
and Windows/NT.
- --------------------------------------------------------------------------------------
THREE Source code delivery plan Five days after Effective Date.
covering release content as
well as the alpha, beta, and
release schedules for the
next two releases (5.3 and
6.0) of Licensed Works.
- --------------------------------------------------------------------------------------
FOUR Development Team training Two weeks after Effective Date.
plan.
- --------------------------------------------------------------------------------------
FIVE Support Plan including Three weeks after Effective Date.
support training and support
process.
- --------------------------------------------------------------------------------------
SIX Plan and schedule [ ** Three weeks after Effective Date.
].
- --------------------------------------------------------------------------------------
SEVEN Development Team training. 30 days after Effective Date.
Delivery of Documentation for
the Basic SDK.
- --------------------------------------------------------------------------------------
EIGHT Delivery of Licensed Works 30 days after Effective Date.
Acceptance Test Criteria
(NATC) from Novell to
Company.
- --------------------------------------------------------------------------------------
NINE Delivery of the Novell Prior to shipping of NES beta 1
versions of the Licensed (estimated to be Dec. 1999).
Works with RTlm removed.
- --------------------------------------------------------------------------------------
TEN Delivery of NATC programs 30 days prior to delivery of shipping
(source, executables, and version 5.3 of Licensed Works to
configuration information) Novell.
to Company.
- --------------------------------------------------------------------------------------
</TABLE>
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
<PAGE> 20
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------
ELEVEN Delivery of shipping 30 days after the Licensed Works
version 5.3 of Licensed version 5.3 release date.
Works for Linux, Solaris, and
Windows/NT. [ **
].
- --------------------------------------------------------------------------------------
TWELVE Presentation to Novell As early in the design phase of
engineers of the [ ** version 6.0 of Licensed Works as
]. possible.
- --------------------------------------------------------------------------------------
THIRTEEN Delivery of migration As early in the design phase of
strategy document for version 6.0 of Licensed Works as
migration from release 5.x possible.
to release 6.x releases of
Licensed Works.
- --------------------------------------------------------------------------------------
FOURTEEN Delivery of shipping Upon General Availability.
version 6.0 of Licensed
Works for Linux, Solaris,
and Windows/NT.
- --------------------------------------------------------------------------------------
</TABLE>
The following applies to all subsequent releases.
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------
ONE Presentation to Novell As early in the design phase as
engineers of the next possible.
release [ **
].
- --------------------------------------------------------------------------------------
TWO Delivery of migration As early in the design phase as
strategy document for possible.
migration from current
release to next releases of
Licensed Works.
- --------------------------------------------------------------------------------------
THREE Delivery of new shipping Upon General Availability.
version of Licensed Works
for Linux, Solaris, and
Windows/NT as well as
Documentation for the Basic
SDK.
- --------------------------------------------------------------------------------------
</TABLE>
B. GENERAL REQUIREMENT. The Licensed Works must meet the requirements of,
and provide functionality consistent with the purposes of this
Agreement. Without limiting the generality of the foregoing, each
delivery of the Licensed Works must meet the following requirements:
1. Company will be responsible for the testing and product readiness
of the Licensed Works.
2. The Licensed Works must meet industry standards of quality and
performance, in no event less than the quality and performance of
any Novell Product(s) with which a Licensed Work will be
distributed.
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
2
<PAGE> 21
3. Four (4) hard copies of the complete Licensed Works documentation
set must be delivered to Novell for the NES development team.
4. The documentation for the Licensed Works shall be provided to
Novell in the formats listed below unless other formats are
designated by Novell in writing.
a. Documentation for the licensed Works will be delivered in
HTML format.
b. Printable documentation for the Licensed Works optimized
for printing in a hard copy will be delivered in PDF
format.
5. The Licensed Works shall, at a minimum, have all of the
components, files and functionality at least as great as
contained in all commercially available versions of the Licensed
Works. Furthermore, this functionality cannot be materially
eliminated or reduced without making reasonable efforts to
provide six months prior written notification. Company will make
reasonable efforts to notify Novell as early as possible of
changes to any aspect of the Licensed Works programming
interface, including, but not restricted to, function or method
names, constant names, constant values, function or method return
types, function or method return values, error codes, parameter
types, parameter positions, parameter values, parameter default
values, configuration values, and configuration default values.
6. Company shall submit a Supplementary PDQ that is complete and
current as of the delivery date of each master version of the
Licensed Works.
7. The Licensed Works shall be provided without any proprietary
licensing scheme incorporated into the product.
8. Novell must be provided with a then current document listing all
Licensed Work distribution files, file locations, and
configuration information suitable for Novell to easily integrate
Licensed Work into the NetWare installer.
9. Company will use commercially reasonable efforts to provide the
Licensed Works integrated with all changes, additions,
enhancements, and defect corrections (bug fixes) made by Novell
within one product release cycle of delivery of those changes,
additions, enhancements, and defect corrections to Company.
Furthermore the same will be included in all future versions and
updates of Licensed Works. A relevant level of compatibility
testing will be provided by both Company and Novell's product
groups and Integration Test Labs. Make every reasonable effort to
roll in to base-line. Must work with them to put functionality in
base-line. Escalation process and plan.
10. Each release of Licensed Works must be accompanied by a document
containing a clear list of all code changes since the previous
code drop.
B. TEST & SUPPORT REQUIREMENTS.
1. Company will be responsible for providing Novell with a
documented test plan describing the testing process Company will
use to assure a quality product. This
3
<PAGE> 22
test plan should include, but is not be limited to, an assurance
that Company has used test plans and test cases that exercise all
functionality in their product.
2. The Licensed Works are required to be tested and assured to run
in:
IP-only networking environment
Mixed IP/IPX networking environment
3. Prior to acceptance, the NES Development Team will benchmark the
new release of Licensed Works on the latest release of
Windows/NT. The results must be as good or better than the
benchmark results obtained during the technical due diligence
evaluation of Licensed Works. The NES team leader will formally
sign off on the performance of the new release as part of the
acceptance criteria.
4. The Licensed Works must be able to run [ **
] a Novell supplied test program in a Novell specified client and
server configuration. This stress testing will be performed by
Novell at its SuperLab facility.
C. SCALABILITY REQUIREMENTS. The Licensed Works must meet the requirements
of, and provide functionality consistent with the purposes of this
Agreement. Company will make every effort to provide in each release of
Licensed Works [ ** ].
D. TEST PROGRAMS. Company shall provide the latest version of the
SmartSockets test programs that run in a test harness for each release
of the Licensed Works. Company authorizes Novell to reproduce and
internally use these test programs and harnesses.
4
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
<PAGE> 23
EXHIBIT B
NOVELL CUSTOMER SERVICES SUPPORT DESCRIPTION
(NTS PROVIDES LEVEL 1 SUPPORT)
a. DEFINITIONS. In addition to terms defined in the Agreement, the following
capitalized terms when used in this Exhibit shall have the following
meanings.
1. Incident means a customer reported problem with the Licensed Works.
2. Severity Level means the classification of Incidents according to the
following definitions:
Severity Level 1 means a condition which makes the performance or continued
performance of any one or more mission critical program functions
impossible.
Severity Level 2 means a condition which makes the performance or continued
performance of any one or more significant program functions difficult and
which cannot be circumvented or avoided on a temporary basis by the user.
Severity Level 3 means a limited problem condition which is not critical and
which may be circumvented or avoided on a temporary basis by the user.
3. Support Levels means the classification of technical support to be
provided pursuant to this Exhibit, according to the following
definitions:
Level 1 Support is the service provided to identify, troubleshoot, and
document problems reported in customer Incidents.
Level 2 Support is the service provided to analyze the problem reported
using in-depth troubleshooting techniques, reproduce the problem, or
determine that the problem cannot be reproduced.
Level 3 Support is the service provided to isolate the problem to a
component level, provide a work-around, or provide an Error correction.
b. OBLIGATIONS.
1. Training. Company shall provide Novell, at no charge, up to 5 days of
technical training for each release of the Licensed Works. Such training
must be at a level sufficient to ensure Novell support personnel's
ability to perform Level 1 Support for the Licensed Works.
Company shall also provide Novell periodic training updates on Licensed
Works as reasonably requested by Novell.
In addition, Novell may at it's discretion, perform certain Level 2
Support efforts, which shall in no way relieve Company of performing
Level 2 support as set forth in Exhibit B hereto. In order to assist
Novell, Company shall provide Novell, at no charge, up to 5 days of
technical training for each release of the Licensed Works sufficient to
ensure Novell support personnel's ability to perform discretionary Level
2 Support for the Licensed Works. Novell shall pay Company's
pre-approved travel expenses for such training.
2. Training Materials. Company will provide masters of the training
materials and all product documentation (collectively "Training
Materials"), and Company hereby grants Novell a royalty-free license to
use, reproduce, modify, and distribute the Training Materials and
Derivative
<PAGE> 24
Works thereof as Novell determines necessary to ensure customer
satisfaction, including distribution of the Training Materials to OEMs,
resellers, CNEs, training centers, and other third parties. In addition,
Company authorizes Novell to videotape or otherwise record the training
sessions, and the foregoing license shall apply to videotapes and other
recordings.
Novell hereby grants Company a royalty-free license to use, reproduce,
modify, and distribute Novell's Derivative Works of the Training
Materials as Company determines necessary to ensure customer
satisfaction, including distribution of such Derivative Works to OEMs,
resellers, CNEs, training centers, and other third parties.
3. Information Updates. Company will provide Novell, at no charge, ongoing
and updated technical information and knowledge bases of known
solutions, if any, regarding the Licensed Works ("Information") through
a medium agreed upon by the parties. Company grants Novell a
royalty-free license to (i) reproduce, use, modify, and distribute
through any medium the Information that Company does make Generally
Available, and (ii) reproduce and internally use the Information that
Company does not make Generally Available.
4. Support Tools. Company will provide Novell with all existing support and
engineering tools that may be helpful to Novell in supporting,
understanding, and trouble shooting the Licensed Works. Company grants
Novell a royalty-free license to reproduce and internally use such tools
to support the Licensed Works.
5. Level 2 Support and Level 3 Support. When a Novell Incident is
escalated, Company shall provide Level 2 Support and Level 3 Support and
shall acknowledge and resolve each Incident within the time frames set
forth herein.
a. Company shall acknowledge receipt of escalated Incident within the
following time frame:
Severity Level 1: 1 hour from receipt of message
Severity Level 2: 4 hours from receipt of message
Severity level 3: 24 hours from receipt of message
b. Company shall resolve the Incident or shall reach an agreement with
Novell on a written plan of action for resolving the Incident within
the following time frame.
Severity Level 1: 48 Hours
Severity Level 2: 5 days
Severity Level 3: 10 days
Company will provide one contact 24 hours a day, seven days a week, to
respond to Severity Level 1 issues. Response times for Severity Level 2
and Severity Level 3 issues will be measured according to Company's
normal business hours.
6. Critical Situation Account Escalations. Company will provide one
management-level contact who will be available 24-hours, 7 days per
week, for critical issue escalations. If Novell
6
<PAGE> 25
determines an Incident presents a critical situation for a customer
according to Novell's then-current support policy, Company will provide
on-site technical support to assist Novell in resolving Incidents that
are not resolved by remote support methods. Novell will not be charged
for on-site support to the extent the Incident involves or arises out of
Errors in the Licensed Works. Novell will be charged for on-site support
to the extent the Incident does not involve or arise out of Errors in
the Licensed Works.
7. Web Based Support Forums. Company shall periodically monitor Novell's
web-based support forums for the Licensed Works and respond to
frequently asked questions and correct inaccurate information
contributed to the forum regarding the Licensed Works.
8. Entitlement. Company will provide Novell, at no charge, entitlement for
one primary and two secondary support connections to Company's support
organization(s) in corresponding regions (if any) for each of the
following Novell support groups for the purpose of coordinating support:
- Worldwide Support at Provo/Orem, Utah San Jose, California, or
Bangalore, India (Novell IDC)
- Americas Support Center at Provo/Orem, Utah
- Europe, Middle East and Africa Support Center at Dusseldorf, Germany
- Asia Pacific Support Center at Sydney, Australia
- Japan Support Center (Novell KK) in Setagya-ku, Tokyo, Japan
Novell will provide Company, at no additional fee, entitlement for four (4)
technical contacts worldwide to access Novell Technical Support for the
purpose of troubleshooting problems dealing with the Licensed Works
interacting with Novell products.
i. Acknowledgment. Company acknowledges that providing support to Novell is
a material obligation under this Agreement and paramount in achieving
customer satisfaction. Company acknowledges Novell's representation that
it has entered into contractual obligations that require Novell to
provide timely support to third parties and that Novell is relying on
Company to fulfill its obligations under this Exhibit in order for
Novell to fulfill it's obligations to third parties. If Company breaches
it obligations to respond to an Incident in accordance with the
specified response and resolution times, Novell may, after Company's
failure to cure within three (3) days, take all measures necessary to
resolve the Incident(s) at Company's expense.
j. Duration of Obligations. Company's obligations under this Exhibit shall
expire upon termination of the Agreement. After termination, company
shall provide technical support to Novell at Company's then-current
support rates.
k. Performance. All of Novell's obligations and duties under this Exhibit
may be performed by Novell, its agents, assignees, or other designated
party. Each license granted to Novell pursuant to this Exhibit shall
also include the right to sublicense any or all such rights to third
parties. In addition, Novell may freely assign,
7
<PAGE> 26
transfer or outsource its rights and obligations under this Exhibit to a
third party(s).
l. Quality. Company agrees to participate in support quality reviews to
evaluate current support metrics and discuss how to improve the support
relationship.
8
<PAGE> 27
EXHIBIT D
PRODUCT DESCRIPTION
MQexpress is described in the following documents:
MQexpress Installation Guide
MQexpress Tutorial
MQexpress User's Guide
SmartSockets Event System is described in the following documents:
SmartSockets Read Me First
SmartSockets Utilities manual
SmartSockets Application Programming Interface
SmartSockets User's Guide
SmartSockets Tutorial
SmartSockets API Quick Reference
SmartSockets C++ Class Library
SmartSockets Java Class Library
SmartSockets Java Tutorial
SmartSockets ActiveX Reference
<PAGE> 28
EXHIBIT E
RESTRICTED COMPANIES
Company's restricted companies as set forth in Section 11:
[ ** ]
Novell Restricted Companies as specified in Section 5:
[ ** ]
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
<PAGE> 1
Exhibit 10.18
COMMITMENT AGREEMENT
This COMMITMENT AGREEMENT (this "Agreement") is made and entered
into as of this 13th day of March 2000, by and among Talarian Corporation, a
California corporation ("Talarian"), Mark Mahowald ("the Shareholder"), and
Wagner & Associates, P.C. (the "Escrow Agent").
R E C I T A L S
A. Talarian and WhiteBarn, Inc., an Illinois corporation
("WhiteBarn"), are parties to that certain Agreement and Plan of Merger dated as
of March 7, 2000 (the "Merger Agreement").
B. Pursuant to the Merger Agreement, the Shareholder is receiving
237,960 shares (the "Shares") of the common stock, no par value, of Talarian
(the "Talarian Common Stock"), in exchange for all of the Shareholder's stock of
WhiteBarn (the "WhiteBarn Shares").
C. Talarian places a high value on the services of the Shareholder
and his ability to enhance the strategic position of Talarian.
D. In order to incent the Shareholder to remain employed by Talarian
for at least two years from and following the Closing Date, twenty five percent
(25%) of the Shares are being placed in an escrow account and will be forfeited
if the Shareholder voluntarily terminates his employment or is terminated with
cause prior to the second anniversary of the Closing Date.
E. All capitalized terms used herein but which are not otherwise
defined shall have the meanings given to them in the Merger Agreement.
A G R E E M E N T
In consideration of the foregoing recitals and the mutual covenants
and conditions contained herein, the parties, intending to be legally bound,
agree as follows:
1. Shareholder Covenants. The Shareholder covenants as follows:
1.1 Noncompetition/Nonsolicitation.
(a) During the Applicable Period (as defined below)
the Shareholder will not, without the prior written consent of Talarian,
directly, in the Territory (as defined below), Compete (as defined below) with
the business of Talarian or engage in any Solicitation (as defined below);
provided, however, that nothing herein shall prevent the Shareholder from
owning, directly or indirectly, as a passive investor, in the aggregate not more
than 5% of the outstanding publicly traded stock of any corporation engaged in
such competition.
<PAGE> 2
(b) For the purposes of this Section 1, the term
"Applicable Period" shall mean the period beginning on the Closing Date hereof
and ending on the later to occur of (x) the second anniversary of the Closing
Date or (y) the date one year following the termination of the Shareholder's
employment with Talarian; provided that if the Shareholder's employment is
terminated by Shareholder with Good Reason (as defined herein) or by Talarian
without Cause (as defined herein), then the Applicable Period shall end on the
date of such termination of Shareholder's employment; and provided further that
in any event the Applicable Period shall terminate no later than the third
anniversary of the Closing Date. Notwithstanding the foregoing, the Applicable
Period shall be the one year period following the Closing Date if Talarian does
not consummate an initial public offering of its equity securities pursuant to a
registration statement declared effective under the Securities Act of 1933, as
amended, during such one year period.
(c) For the purposes of this Section 1, the term
"Territory" shall mean North America.
1.2 Definition of Solicitation. For the purposes of this
Agreement, the term "Solicitation" shall mean (a) calling on or soliciting, as a
client or customer, any individual, partnership, corporation or association that
Shareholder knows is a client or customer of Talarian or was a client or
customer of Talarian during the 12 calendar month period immediately preceding
any such act for the purpose of competing with Talarian; (b) hiring or
soliciting or attempting to hire or solicit any employee of Talarian either on
behalf of Shareholder or any other person or entity; or (c) hiring or soliciting
or attempting to hire or solicit any independent sales representative that
Shareholder knows is engaged in the solicitation of customers on Talarian's
behalf or was engaged in the solicitation of customers on Talarian's behalf
during the 12 calendar month period immediately preceding any such act for the
purpose of competing with Talarian.
1.3 Definition of Compete. For purposes of this Agreement, the
term "Compete" shall mean (a) acting as an agent, representative, consultant,
officer, director, independent contractor or employee of any entity or
enterprise, which directly competes with the business of Talarian; (b)
participating in any such directly competing entity or enterprise, or the
affiliate of such entity or enterprise, as a holder of an equity interest or as
an owner, partner, limited partner, joint venturer, creditor or shareholder; or
(c) communicating to any such directly competing entity or enterprise the names
or addresses or any other information concerning any past, present or identified
prospective client or customer of Talarian.
1.4 Confidential Data. The Shareholder agrees that, during the
Applicable Period and except as is appropriate in the course of performance of
his responsibilities under any employment agreement or consulting agreement, the
Shareholder shall keep confidential and not directly or indirectly divulge,
furnish, make accessible to anyone, or appropriate for his own use any
confidential information of Talarian, and that at no time will he divulge,
furnish and make accessible to anyone or appropriate for his own use any trade
secrets of Talarian. The Shareholder and Talarian further acknowledge and agree
that Talarian has a legitimate interest in protecting proprietary customer
information from misappropriation or diversion by the Shareholder or any
competitor. The Shareholder hereby acknowledges and agrees that the prohibitions
against disclosure of confidential
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<PAGE> 3
data recited herein are in addition to, and not in lieu of, any rights or
remedies which Talarian may have available pursuant to the Laws of any
jurisdiction or at common law to prevent the disclosure of trade secrets and
other confidential proprietary data, and the enforcement by Talarian of its
rights and remedies pursuant to this Agreement shall not be construed as a
waiver of any other rights or available remedies which it may possess in Law or
equity absent this Agreement.
1.5 Reasonableness of Restrictions. The Shareholder recognizes
that the territorial and time limitations set forth in Section 1, above, are
reasonable, not burdensome and are properly required for the adequate protection
of Talarian, and in the event that such territorial or time limitations are
deemed to be unreasonable by a court of competent jurisdiction, the Shareholder
and Talarian agree and submit to the reduction of either said territorial or
time limitation, or both, to such an area or period as said court shall deem
reasonable.
1.6 Notice. Talarian agrees that it shall give Shareholder
written notice of, and to the extent possible, an opportunity to cure within 30
days of the date of such notice, any breach or alleged breach by Shareholder, of
the provisions of this Section 1.
1.7 Injunctive Relief. The Shareholder acknowledges that its
expertise in the business is of a special, unique, unusual, extraordinary and
intellectual character, which gives such expertise a peculiar value, and that a
breach by him of the provisions of this Agreement cannot be reasonably or
adequately compensated in damages in an action at Law and that such breach will
cause Talarian irreparable injury and damage. The Shareholder further
acknowledges that he possesses unique skills, knowledge and ability and that
competition in violation of this Agreement would be extremely detrimental to
Talarian. By reason thereof, the Shareholder agrees that Talarian shall be
entitled, in addition to any other remedies each of them may have under this
Agreement or otherwise, to temporary, preliminary and/or permanent injunctive
and other equitable relief to prevent or curtail any breach of this Agreement,
without proof of actual damages that have been or may be caused to Talarian by
such breach or threatened breach; provided, however, that no specification in
this Agreement of a specific legal or equitable remedy shall be construed as a
waiver or prohibition against the pursuing of other legal or equitable remedies
in the event of a breach, by either party.
2. Establishment of Escrow; Account.
2.1 Deposit in Escrow. Talarian, on behalf of the Shareholder,
hereby deposits with the Escrow Agent, a stock certificate representing an
aggregate of 59,490 shares of the Talarian Common Stock (the "Initial Escrowed
Shares"), issued in the name of the Shareholder. In addition, the Shareholder
hereby deposits four stock powers (separate from certificate) endorsed in favor
of Talarian. Any shares of Talarian capital stock that result from any stock
dividend, reclassification, stock split, subdivision or combination of shares,
recapitalization, merger or other events generally made with respect to the
Talarian Common Stock in the Escrow Account (as defined below) ("Additional
Shares") shall be delivered to the Escrow Agent and shall be held in the Escrow
Account (and, as required under this Agreement, shall be released from the
Escrow Account). Unless otherwise indicated, as used in this Agreement, the term
"Escrowed Shares"
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includes the Initial Escrowed Shares and any Additional Shares. The Escrow Agent
agrees to accept delivery of the Escrowed Shares and to hold the Escrowed Shares
in Escrow in accordance with this Agreement and to release the Escrowed Shares
out of the Escrow Account as provided in this Agreement.
2.2 Escrow Account. The Escrow Agent shall maintain the
Escrowed Shares in a separate account (the "Escrow Account").
2.3 Cash Dividends; Voting and Rights of Ownership. Any cash
dividends, dividends payable in property or other distributions of any kind made
in respect of the Escrowed Shares shall become part of the Escrow Account. The
Shareholder shall have the right to vote the Escrowed Shares deposited in the
Escrow Account on his behalf during such time that the Escrowed Shares are held
in Escrow, and Talarian shall take all steps necessary to allow the exercise of
such rights. While the Escrowed Shares remain in the Escrow Agent's possession
pursuant to this Agreement, the Shareholder will retain and shall be able to
exercise all other incidents of ownership of the Escrowed Shares that are not
inconsistent with the terms and conditions hereof.
3. Release from Escrow.
3.1 Release of Escrowed Shares to the Shareholder. The
Escrowed Shares shall be held by the Escrow Agent until required to be released
to either the Shareholder or Talarian as provided for in Sections 3.1 and 3.2.
Provided that the Escrowed Shares have not been released to Talarian pursuant to
Section 3.2 below, upon the occurrence of the first of the following: (i)
Shareholder terminates his employment with Talarian within 30 days of having
Good Reason, (ii) Talarian terminates the Shareholder's employment without Cause
(as defined below) (including for disability or death) or (iii) (provided
Shareholder is still employed) the date two years after the Closing Date (the
date of the first of such events in (i) through (iii) to occur is referred to as
the "Termination Date"), within 10 business days after the Termination Date,
Talarian and the Shareholder (or his estate) shall execute and deliver to the
Escrow Agent a written notice (a "Release Notice") stating that all Escrowed
Shares shall be released to the Shareholder (or his estate). Within five
business days after receipt of the Release Notice, the Escrow Agent shall
deliver (by registered mail or overnight carrier) to the Shareholder (or his
estate) the Escrowed Shares (along with all corresponding stock powers) to the
address specified by the Shareholder (or his estate). The Escrow Agent shall not
be required to deliver the Escrowed Shares to the Shareholder until it has
received the Release Notice from Talarian and the Shareholder (or his estate).
3.2 Release of Escrowed Shares to Talarian. If the Shareholder
is terminated with Cause by Talarian or voluntarily terminates his employment
with Talarian (other than for disability or death or if the Shareholder resigns
within 30 days after having Good Reason) on or prior to the second anniversary
of the Closing Date, Talarian and the Shareholder shall execute and deliver to
the Escrow Agent within 20 days of such termination of employment, a Release
Notice stating that all the Escrowed Shares shall be released to Talarian.
Within five business days after receipt of such Release Notice, the Escrow Agent
shall release the Escrowed Shares to Talarian. The Escrowed Shares released from
Escrow to Talarian may be cancelled by Talarian, without
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<PAGE> 5
requiring Talarian to pay any consideration whatsoever in receipt thereof to the
Shareholder. The Escrow Agent shall not be required to deliver the Escrowed
Shares to Talarian until it has received the Release Notice from Talarian and
the Shareholder (or his estate).
3.3 No Encumbrance. No Escrowed Shares or any beneficial
interest therein may be pledged, sold, assigned or transferred, including by
operation of law, by the Shareholder or may be taken or reached by any legal or
equitable process in satisfaction of any debt or other liability of the
Shareholder, prior to the delivery of the Escrowed Shares by the Escrow Agent to
the Shareholder pursuant to Sections 3.1 and 3.2, above.
3.4 Power to Transfer Escrowed Shares. The Escrow Agent is
hereby granted the power to effect any transfer of the Escrowed Shares provided
for in this Agreement. Talarian will cooperate with the Escrow Agent in causing
its transfer agent to promptly issue stock certificates as necessary to effect
such transfers.
3.5 Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated:
(a) "Cause" shall mean any of the following: (a)
Shareholder knowingly engages or in any manner participates in any activity
which is directly competitive with or intentionally injurious to Talarian or its
business or which violates any material provision of Section 1 hereof, (b)
Shareholder uses alcohol or illegal drugs, which use materially interferes with
the performance of his duties for Talarian; (c) Shareholder is convicted by a
court of competent jurisdiction, or pleads "no contest" to, a felony, or any
other crime involving moral turpitude; (d) Shareholder commits any fraud against
Talarian or uses or intentionally appropriates for his personal use or benefit
any funds or properties of Talarian not authorized by Talarian to be so used or
appropriated; (e) Shareholder intentionally imparts material confidential
information relating to Talarian or its business to third parties other than in
the course of carrying out his duties; or (f) Shareholder fails or refuses to
make a reasonable effort to materially perform the duties and responsibilities
that are within the scope of his employment in the position of Vice President of
Network Development, as reasonably requested by his superiors; if such failure
or refusal is not cured within thirty (30) days after written notice thereof to
Shareholder by Talarian.
(b) "Good Reason" shall mean the occurrence of any
of the following events: (1) the removal of the Shareholder from the position as
Vice President of Network Development or any material change or reduction in the
Shareholder's position, salary, benefits, authority, duties or responsibilities
without his written consent, or (2) a change in the Shareholder's place of
employment to a place which is not within a 20 mile radius of his place of
employment before such change.
4. Arbitration.
4.1 AAA Rules. Any dispute between Talarian and the
Shareholder under this Agreement, shall be submitted to final and binding
arbitration in the County of Santa Clara,
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State of California, which arbitration shall, except as herein specifically
stated, be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA") then in effect; provided, however,
that the parties agree first to try in good faith to resolve any dispute that
does not exceed $100,000 by mediation under the Commercial Mediation Rules of
the American Arbitration Association, before resorting to arbitration; provided,
further, that in the event of an arbitration, the arbitration provisions of this
Agreement shall govern over any conflicting rules which may now or hereafter be
contained in the AAA rules.
4.2 Binding Effect. The final decision of the arbitrator shall
be furnished in writing to the Escrow Agent, the Shareholder and Talarian and
will constitute a conclusive determination of the issue in question, binding
upon the Shareholder and Talarian. The arbitrator shall have the authority to
grant any equitable and legal remedies that would be available in any judicial
proceeding. Any judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction over the subject matter thereof.
4.3 Compensation of Arbitrator. Any such arbitration shall be
conducted before a single arbitrator who will be compensated for his or her
services at a rate to be determined by the parties and by the AAA, but based
upon reasonable hourly or daily consulting rates for the arbitrator in the event
the parties are not able to agree upon his or her rate of compensation.
4.4 Selection of Arbitrator. The AAA shall have the authority
to select an arbitrator from a list of arbitrators who are partners in a
nationally recognized firm of independent certified public accountants from the
management advisory services department (or comparable department or group) of
such firm or who are partners in a major law firm; provided, however, that
neither the accounting firm, law firm nor the individual arbitrator shall be a
firm or individual that has within the last three years rendered, or is then
rendering, services to any party or, also in the case of a law firm, a firm or
an individual lawyer, who has appeared, or is then appearing, as counsel of
record in opposition to any party; provided, further, that the individual
arbitrator cannot have any other prior relationship or affiliation to the
Shareholder, Talarian or any of its officers, directors, consultants,
contractors or employees which is likely to affect or compromise the
arbitrator's independence.
4.5 Payment of Costs. The parties will share responsibility
for the attorneys' fees and costs and all costs of arbitration, including those
provided for above, based on the degree to which the arbitrator accepts the
respective positions of the parties, as conclusively determined by the
arbitrator.
4.6 Terms of Arbitration. The arbitrator chosen in accordance
with these provisions shall not have the power to alter, amend or otherwise
affect the terms of these arbitration provisions or the provisions of the Merger
Agreement or any other documents that are executed in connection therewith.
4.7 Exclusive Remedy. Arbitration or mediation under this
Section shall be the sole and exclusive remedy of the parties for any dispute
arising out of this Agreement.
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5. Escrow Agent.
5.1 Duties. The duties of the Escrow Agent hereunder shall be
entirely administrative and not discretionary. The Escrow Agent shall be
obligated to act only in accordance with written instructions received by it as
provided in this Agreement and is authorized herewith to comply with any orders,
judgments or decrees of any court with or without jurisdiction and shall not be
liable as a result of its compliance with the same.
5.2 Legal Opinions. As to any legal questions arising in
connection with the administration of this Agreement, the Escrow Agent may rely
absolutely upon the joint instruction of Talarian and the Shareholder or the
opinions given to the Escrow Agent by its outside independent counsel and shall
be free of liability for acting and relying on such opinions.
5.3 Signatures. The Escrow Agent may rely absolutely upon the
genuineness and authorization of the signature and purported signature of any
party upon any instruction, notice, release, receipt or other document delivered
to it pursuant to this Agreement.
5.4 Receipts and Releases. The Escrow Agent may, as a
condition to the disbursement of monies or disposition of securities as provided
herein, require from the payee or recipient a receipt therefor and, upon final
payment or disposition, a release of the Escrow Agent from any liability arising
out of its execution or performance of this Agreement, with such release to be
in a form reasonably satisfactory to the Escrow Agent.
5.5 Refrain from Action. The Escrow Agent shall be entitled to
refrain from taking any action contemplated by this Agreement in the event it
becomes aware of any dispute between the Shareholder and Talarian as to any
material facts or as to the happening of any event precedent to such action.
5.6 Interpleader. If any controversy arises between the
parties or with any third party, the Escrow Agent shall not be required to
determine the same or to take any action, but the Escrow Agent in its discretion
may institute such interpleader or other proceedings in connection therewith as
the Escrow Agent may deem proper, and in following such other course, the Escrow
Agent shall not be liable.
5.7 Tax Forms. All persons or entities entitled to receive
interest from the Escrow Account will provide the Escrow Agent with W-9 tax
forms prior to disbursement of interest. Interest earned in the Escrow Account
will be reported as income to the party receiving such interest.
6. Indemnification of Escrow Agent.
6.1 Waiver Indemnification. Talarian and the Shareholder agree
to and hereby do waive any suit, claim, demand or cause of action of any kind
which they may have or may
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assert against the Escrow Agent arising out of or relating to the execution or
performance by the Escrow Agent of this Agreement, in accordance with the terms
and conditions hereof, unless such suit, claim, demand or cause of action is
based upon the willful neglect or gross negligence or bad faith of the Escrow
Agent. They further agree to indemnify the Escrow Agent against and from any and
all claims, demands, costs, liabilities and expenses, including reasonable
counsel fees, which may be asserted against it or to which it may be exposed or
which it may incur by reason of its execution or performance of this Agreement,
except to the extent attributable to its willful neglect, gross negligence or
bad faith. Such agreement to indemnify shall survive until extinguished by any
applicable statute of limitations.
6.2 Conditions to Indemnification. In case any litigation is
brought against the Escrow Agent in respect of which indemnity may be sought
hereunder, the Escrow Agent shall give prompt notice of that litigation to the
parties, and the parties, upon receipt of that notice, shall have the obligation
and the right to assume the defense of such litigation, provided that failure of
the Escrow Agent to give the notice shall not relieve the parties from any of
their obligations under this Section 6 unless that failure prejudices the
defense of any of such litigation by said parties. The cost of defense of any
such litigation shall be borne by Talarian unless the litigation is brought by
or on behalf of the Shareholder, in which case the cost of defense of any such
litigation shall be borne by the Shareholder. At its own expense, the Escrow
Agent may employ separate counsel and participate in the defense. Parties shall
not be liable for any settlement agreed to by the Escrow Agent without the
respective consents.
7. Acknowledgment by the Escrow Agent. By execution and delivery of
this Agreement, the Escrow Agent acknowledges that the terms and provisions of
this Agreement are acceptable and agrees to carry out the provisions of this
Agreement on its part.
8. Resignation or Removal of Escrow Agent; Successor.
8.1 Resignation and Removal.
(a) The Escrow Agent may resign as such following
the giving of 30 days' prior written notice to the other parties. Similarly, the
Escrow Agent may be removed and replaced following the giving of 30 calendar
days' prior written notice to be given to the Escrow Agent jointly by the
Shareholder and Talarian. In either event, the duties of the Escrow Agent shall
terminate 30 calendar days after the date of such notice (or as of such earlier
date as may be mutually agreeable); and the Escrow Agent shall then deliver the
balance of the Escrowed Shares then in its possession to a successor Escrow
Agent as shall be appointed by the other parties as evidenced by a written
notice filed with the Escrow Agent.
(b) If the parties are unable to agree upon a
successor, or shall have failed to appoint a successor prior to the expiration
of 30 calendar days following the date of the notice of resignation or removal,
then the acting Escrow Agent may petition any court of competent jurisdiction
for the appointment of a successor Escrow Agent or other appropriate relief and
any such resulting appointment shall be binding upon all of the parties.
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<PAGE> 9
8.2 Successors. Every successor appointed hereunder shall
execute, acknowledge and deliver to its predecessor and also to the Shareholder
and Talarian, an instrument in writing accepting such appointment hereunder, and
thereupon such successor, without any further act, shall become fully vested
with all the duties, responsibilities and obligations of its predecessor; and
such predecessor, upon the written request of its successor or any of the
parties, shall execute and deliver an instrument or instruments transferring to
such successor all the rights of such predecessor hereunder, and shall duly
assign, transfer and deliver all property, securities and monies held by it
pursuant to this Agreement to such successor (a "Successor Transfer"). Should
any instrument be required by any successor for more fully vesting in such
successor, the duties, responsibilities and obligations hereby vested or
intended to be vested in the predecessor, any and all such instruments in
writing shall, on the request of any of the other parties, be executed,
acknowledged and delivered by the predecessor.
8.3 New Custodian. In the event of an appointment of a
successor, upon the consummation of the Successor Transfer, the predecessor
shall cease to be custodian of any funds, securities or other assets and records
previously held by it pursuant to this Agreement, and the successor shall become
such custodian.
8.4 Release. Upon acknowledgment by any successor Escrow Agent
of the receipt of the then remaining balance of the Escrowed Shares, the then
acting Escrow Agent shall be fully released and relieved of all duties,
responsibilities and obligations under this Agreement that may arise and accrue
thereafter.
9. Fee. The Escrow Agent shall be paid for service hereunder in
accordance with the fee schedule attached hereto as Schedule 9 hereto. Talarian
shall be responsible for paying all such fees to the Escrow Agent and any
successor thereof. In the event that the Escrow Agent is required to render any
service not provided for in this Agreement and fee schedule, or there is any
assignment of the interest of this Escrow or any modification hereof, the Escrow
Agent shall be entitled to receive from the party requesting the service,
assignment or amendment reasonable compensation for such extraordinary services
and reimbursement for all fees, costs, liability and expenses, including
attorneys' fees.
10. Termination. The escrow created hereby shall terminate following
the Escrow Agent's delivery of all Escrowed Shares to the Shareholder or
Talarian pursuant to Section 3, above.
11. Miscellaneous Provisions.
11.1 Governing Law. The validity, construction and performance
of this Agreement, and any Action arising out of or relating to this Agreement
shall be governed by the Laws, without regard to the Laws as to choice or
conflict of Laws, of the State of Illinois.
11.2 No Employment Agreement. Nothing contained in this
Agreement shall confer on Shareholder any right to remain in the employ of, or
to continue providing services
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<PAGE> 10
for, Talarian or any of its subsidiaries or shall limit the ability of Talarian
or any of its subsidiaries to terminate, with or without cause, in its sole
discretion, the employment of Shareholder.
11.3 Amendment. This Agreement may be amended, supplemented,
modified and/or rescinded only through an express written instrument signed by
all parties or their respective successors and permitted assigns.
11.4 Assignment. Neither this Agreement nor any interest
herein shall be assignable (voluntarily, involuntarily, by judicial process,
operation of Law or otherwise), in whole or in part, by the Shareholder without
the prior written consent of Talarian.
11.5 Notices. All notices, requests, demands and other
communications made under this Agreement shall be in writing, correctly
addressed to the recipient at the addresses set forth under such recipient's
signature on the signature page hereto and shall be deemed to have been duly
given; (a) upon delivery, if served personally on the party to whom notice is to
be given; or (b) on the date or receipt, refusal or non-delivery indicated on
the receipt if mailed to the party to whom notice is to be given by first class
mail, registered or certified, postage prepaid, or by air courier. Any party may
give written notice of a change of address in accordance with the provisions of
this Section and after such notice of change has been received, any subsequent
notice shall be given to such party in the manner described at such new address.
11.6 Warranty of Authority. Each of the individuals signing
this Agreement on behalf of a party hereto warrants and represents that such
individual is duly authorized and empowered to enter into this Agreement and
bind such party hereto.
11.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single agreement.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, each of the parties has executed this Agreement
as of the date first set forth above.
"TALARIAN": THE "SHAREHOLDER":
TALARIAN CORPORATION,
a California corporation
Mark Mahowald
By: ______________________________ Address:
Name:______________________________ _______________________________________
Its: ______________________________ _______________________________________
_______________________________________
Address: Tel. No.: ___________________________
333 Distel Circle Fax. No.: ___________________________
Los Altos, CA 94022-1404
Tel. No.: (650) 965-8050
Fax. No.: (650) 965-9077
"ESCROW AGENT":
WAGNER & ASSOCIATES, P.C.
By: ____________________________
Name: ____________________________
Its: ____________________________
Address:
41 Corporate Park, Suite 210
Irvine, CA 92606
Tel. No.: (949) 474-6964
Fax. No.: (949) 474-6001
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<PAGE> 1
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO CERTAIN INFORMATION
CONTAINED IN THIS EXHIBIT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.19
AGREEMENT
This Agreement is entered into as of February 3, 2000 by and between
Talarian Corporation, a California corporation ("Talarian") and Nortel Networks
Inc., a Delaware corporation ("Nortel Networks").
A. As of the date hereof, Nortel Networks is purchasing shares of
Talarian Series D Preferred Stock pursuant to a Series D Preferred Stock
Purchase Agreement dated of even date herewith and related agreements.
B. Nortel Networks and Talarian desire to enter into this agreement
relating to various aspects of their future relationship.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Joint Development Agreement. Nortel Networks and Talarian will
negotiate in good faith to enter into a Joint Development Agreement for Talarian
products within 120 days from the date hereof. The parties acknowledge that
there are many issues involved in such an agreement that they have not yet
considered or discussed.
It is expected that the Joint Development Agreement will address the following
development efforts:
[ ** ]
No agreement pertaining to the matters set forth in this Section 1 shall be
binding until (and unless ) the parties enter into a definitive Joint
Development Agreement.
2. [ ** ]
3. Creation of Talarian Technical Advisory Board. Talarian will create a
Technical Advisory Board ("TAB") with appropriate individuals designated by
Talarian's Board of Directors. The members of the TAB will be compensated for
their participation in the TAB with equity of Talarian.
4. Creation of Test Lab. Talarian agrees that it will establish and
staff a test lab on its site for the purpose of [ ** ]
5. [ ** ]
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
1
<PAGE> 2
6. License to Nortel in Event of Sale of Talarian. In the event Talarian
is acquired by a third party (other than Nortel Networks) at any time (a "Change
of Control"), Talarian agrees that it will provide Nortel Networks with a
non-exclusive, perpetual, worldwide license to use (but not to resell or
distribute (other than in object code as embedded in Nortel Networks products)),
for a period of two years after the Change of Control, the Talarian source code
for (i) any software being licensed to Nortel Networks by Talarian at the time
of the Change of Control, and (ii) any Talarian software rightfully in Nortel's
possession at the time of the Change of Control that Nortel agrees to license on
reasonable terms, all as such exists on such date, together with any subsequent
updates or "bug fixes" made to such software during such two year period. The
source code may only be used for the purpose of, and only to the extent needed
to, run, support and otherwise continue to maintain, any Nortel Networks
products that incorporate or rely on any Talarian software. This provision will
only apply to the first Change of Control of Talarian after the date hereof, but
any second or additional Change of Control shall not limit Talarian's
obligations arising from the first Change of Control. Nortel Networks will pay
Talarian reasonable royalties for this license, to be negotiated by the parties
in good faith.
7. Marketing Exclusivity. For 12 months after the date hereof Nortel and
Talarian will be marketing partners and during such period (i) Nortel will not
become a marketing partner for any type of publish/subscribe and multicast
middleware other than with Talarian and (ii) Talarian will not become a
marketing partner with any of the entities set forth on Exhibit A; provided,
however, that Talarian will not be prohibited from soliciting support from any
third party in the pursuit of IETF standards or similar standards efforts for
multicast protocols. In furtherance of this marketing relationship between
Talarian and Nortel Networks, Talarian agrees that it will, to the extent
reasonable, (i) recommend Nortel Networks equipment to its customers as the
preferred networking solution, (ii) give its customers that are [ ** ]
information about Nortel Networks equipment, (iii) provide Nortel Networks with
advance notice of its scheduled sales calls and allow Nortel Networks to do
joint sales calls with Talarian, including sales calls into [ ** ] accounts, and
(iv) give Nortel Networks access to its customers within Talarian's reasonable
discretion; and Nortel Networks agrees that it will, to the extent reasonable,
(i) recommend Talarian products to its customers as the preferred financial
middleware solution, (ii) give its customers that are [ ** ] information about
Talarian products, (iii) provide Talarian with advance notice of its scheduled
sales calls and allow Talarian to do joint sales calls with Nortel Networks,
including sales calls into [ ** ] accounts, and (iv) give Talarian access to its
customers within Nortel Networks' reasonable discretion.
8. Research and Development Exclusivity. For 12 months after the date
hereof, Talarian will not enter into any agreement pursuant to which Talarian
receives consideration for research and development from any of the parties
listed on Exhibit B hereto, provided however, that Talarian will not be
prohibited from entering into an OEM, ISV, reseller agreement or similar
agreement with any third party for the sale of Talarian software products or
services consistent with the ordinary course of its business.
9. [ ** ]
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
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10. Miscellaneous.
a. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any prior agreement or understanding between the parties with respect
thereto.
b. Amendment Waiver. Any term of this Agreement may be amended
only by a writing signed by Talarian and Nortel Networks. The observance of any
term or provision of this Agreement may be waived only by a writing signed by
the party to be bound by such waiver.
c. Assignment. This Agreement may not be assigned by either party
hereto without the written consent of the other party, except that any party may
assign this Agreement in connection with any merger, consolidation or similar
transaction.
d. Governing Law. This Agreement will be governed by and
construed in accordance with the internal laws of the State of California,
excluding application of any conflict of law doctrines that would make
applicable the law of any other state or jurisdiction, and where appropriate
federal law. The parties hereto submit to the exclusive jurisdiction and venue
of any state or federal court located in Santa Clara County, California for
purposes of any action arising of or related to this Agreement.
e. Notices. Any notice required or permitted to be given
hereunder shall be in writing and shall be effective and deemed given under this
Agreement on the earliest of (i) the date of personal delivery, (ii) the date of
sending by facsimile, (iii) the business day after deposit with a nationally
recognized courier or overnight service or (iv) three business days after
deposit in the United States mail by registered or certified mail, return
receipt requested. All notices not delivered personally or by facsimile will be
sent with postage and other charges prepaid and properly addressed to the party
to be notified at the address set forth below, or at such other address as the
party may designate by ten (10) days advance written notice to the other party
hereto.
Notices to Talarian: Talarian Corporation
333 Distel Circle
Los Altos, CA 94022
Attn: President
Notices to Nortel: Nortel Networks Inc.
600 Technology Park
Massachusetts, MA 01821
Attn: VP, Strategy & Technology Investments
with a copy to:
Nortel Networks Inc.
4401 Great America Parkway
Santa Clara, CA 95052
Attn: Law Department
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first written above.
NORTEL NETWORKS INC. TALARIAN CORPORATION
By: /s/ Paul D. Callahan By: /s/ Paul Larson
-------------------------------- --------------------------------
Paul Larson, President & CEO
Its: V.P., Strategy and Technology
-------------------------------
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EXHIBIT A
[ ** ]
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
5
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EXHIBIT B
[ ** ]
**Confidential treatment has been requested with respect to certain
information contained in this document. Confidential portions have been
omitted from the public filing and have been filed separately with the
Securities and Exchange Commission.
6
