<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 0-23560
XCELLENET, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1749705
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 CONCOURSE PARKWAY, SUITE 850
ATLANTA, GA 30328
(Address of principal executive offices) (Zip Code)
(770) 804-8100
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No ____
-------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 par value - 8,149,905 shares as of May 6, 1997
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
- ----------------------------------------------------------------------------------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES
Software license fees $ 8,871 $6,931
Software upgrade fees and services 4,479 2,519
- ----------------------------------------------------------------------------------------------------
13,350 9,450
- ----------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Costs of license fees 570 477
Costs of software upgrade fees and services 1,688 731
Sales and marketing 5,407 4,368
Product development 2,041 1,341
General and administrative 1,867 1,489
- ----------------------------------------------------------------------------------------------------
11,573 8,406
- ----------------------------------------------------------------------------------------------------
OPERATING INCOME 1,777 1,044
Other income, net 90 288
- ----------------------------------------------------------------------------------------------------
Income before income taxes 1,867 1,332
Provision for income taxes 738 466
- ----------------------------------------------------------------------------------------------------
NET INCOME $ 1,129 $ 866
- ----------------------------------------------------------------------------------------------------
NET INCOME PER SHARE $0.14 $0.11
- ----------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING 8,352 7,852
- ----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
UNAUDITED
MARCH 31, DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------------
1997 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 9,403 $10,587
Short-term investments 2,947 2,157
Trade receivables, net of allowance for doubtful accounts of $602 and $503 15,216 13,306
Prepaid expenses and other current assets 1,331 1,049
Income tax receivable - 793
- -------------------------------------------------------------------------------------------------------------------
Total current assets 28,897 27,892
- -------------------------------------------------------------------------------------------------------------------
Furniture, fixtures and equipment, net 5,600 5,378
Capitalized software development costs, net of accumulated
amortization of $1,805 and $1,566 2,726 2,231
Intangible assets, net of accumulated amortization of $94 2,671 -
Deferred income tax assets 754 754
Other noncurrent assets 439 428
- -------------------------------------------------------------------------------------------------------------------
$41,087 $36,683
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 6,669 $ 4,694
Long-term liabilities 1,259 859
Shareholders' equity 33,159 31,130
- -------------------------------------------------------------------------------------------------------------------
$41,087 $36,683
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
balance sheets.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
- --------------------------------------------------------------------------------------------
1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,129 $ 866
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,038 692
Change in assets and liabilities, net of effects
of purchase of XIS:
Increase in trade receivables (1,510) (545)
Increase in prepaid expenses and other current assets (279) (289)
Decrease in income tax receivable 1,099 426
Increase in current liabilities 732 424
(Decrease) increase in long-term liabilities (34) 11
- --------------------------------------------------------------------------------------------
Total adjustments 1,046 719
- --------------------------------------------------------------------------------------------
Net cash provided by operating activities 2,175 1,585
- --------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in short-term investments (790) (586)
Purchases of furniture, fixtures, and equipment (842) (414)
Additions to capitalized software development costs (734) (430)
Purchase of XIS, net of cash acquired (1,107) -
Other (72) (73)
- --------------------------------------------------------------------------------------------
Net cash used in investing activities (3,545) (1,503)
- --------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of related costs 52 105
Income tax benefits related to exercise of stock options 100 9
Other 34 (37)
- --------------------------------------------------------------------------------------------
Net cash provided by financing activities 186 77
- --------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (1,184) 159
Cash and cash equivalents, beginning of period 10,587 9,304
- --------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 9,403 $9,463
- --------------------------------------------------------------------------------------------
Supplemental disclosures
Interest paid $ 1 $ -
Income taxes paid $ 39 $ 31
- --------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1. In the Company's opinion, the accompanying consolidated interim financial
statements include all adjustments, consisting only of normal, recurring
adjustments, necessary to present fairly the Company's consolidated results
of operations, condensed financial position and cash flows for the periods
indicated. The results of operations for interim periods are not
necessarily indicative of results expected for the entire year. The interim
financial statements should be read in conjunction with the audited
consolidated financial statements as of December 31, 1996 and the notes
thereto included in the Company's Form 10-K for the year ended December 31,
1996 filed with the Securities and Exchange Commission. Certain prior year
amounts have been re-classified to conform with the current year
presentations.
2. Net income per share is computed using the weighted average number of
shares of common stock outstanding plus common equivalent shares. Common
equivalent shares from stock options have been included in the computation
when dilutive. The difference between primary and fully diluted earnings
per share is not material for any periods presented, and fully diluted
earnings per share have therefore been excluded.
3. The Company expenses the production costs of advertising at the time
incurred, except for direct-response advertising, which is capitalized and
amortized over its expected period of future benefits. Direct-response
advertising consists primarily of advertisements in business, financial,
and software magazines and newspapers. The cost of each advertisement is
amortized over the four-month period following the issuance of the
publication in which it appears. Advertising expenditures totaled $447,000
and $659,000 in the three months ended March 31, 1997 and 1996,
respectively. Advertising expense was $538,000 and $422,000 in the three
months ended March 31, 1997 and 1996, respectively. Unamortized advertising
costs included in prepaid expenses were $0 at March 31, 1997.
4. On January 2, 1997, the Company completed the acquisition of XcelleNet
Integration Services, Inc. ("XIS", formerly Electronic Commerce, Inc.) for
a total consideration comprising cash, future payments and stock of
approximately $2,675,000. The transaction was accounted for as a purchase.
The excess of the purchase price over the tangible assets acquired totaled
$2,535,684 and is being amortized over 10 years. The operating results of
XIS since the date of acquisition are included in the accompanying
financial statements.
5. On April 1, 1997, the Company successfully completed a public offering of
its common stock. The offering was comprised of 655,953 shares issued by
the Company (which included 54,544 shares classified as treasury stock in
the Company's accompanying Consolidated Condensed Balance Sheets) and
777,047 shares sold by existing shareholders at an offering price of $17.00
per share. The net proceeds to the Company (after underwriting discounts
and commissions and other related costs associated) totaled approximately
$10,000,000.
6. Effective for periods beginning after December 15, 1997, the Financial
Accounting Standards Board has adopted Statement of Financial Accounting
Standards ("SFAS No. 128), "Earnings per Share". This statement sets out
new guidelines for the calculation and presentation of earnings per share.
The following tables represent a reconciliation of basic and diluted
weighted average shares and a pro forma calculation of earnings per share
using the guidelines of SFAS No. 128. The Company does not anticipate that
the adoption of the statement will materially impact its earnings per share
calculation.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
Basic weighted average shares outstanding 7,468 7,129
Shares of common stock assumed issued upon
exercise of stock options using the "treasury
stock" method as it applies to the computation
of diluted earnings per share 884 723
------ ------
Diluted weighted average shares outstanding 8,352 7,852
====== ======
Net earnings used in the computation of
basic and diluted earnings per share $1,129 $ 866
====== ======
Earnings per share
Basic $ 0.15 $ 0.12
====== ======
Diluted $ 0.14 $ 0.11
====== ======
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
REVENUES. Total revenues increased 41% to $13,350,000 in the three months ended
March 31, 1997 as compared to the same period in 1996. The increase in total
revenues was due to increases in both license fees and in software upgrade fees
and services. Software license fees increased 28% to $8,871,000 in the first
quarter of 1997, compared with $6,931,000 in the first quarter of 1996. Software
license fees from RemoteWare for NT products accounted for 59% of total software
license fees in the first quarter of 1997, compared with less than 1% in the
first quarter of 1996, reflecting increasing market acceptance of the RemoteWare
for NT products first introduced in March 1996. Software license fees as a
percentage of total revenues were 66% in the first quarter, compared with 73% in
the first quarter of 1996, reflecting the effect of the growth in software
upgrade fees and services revenues associated with the January 1997 acquisition
of XcelleNet Integration Services ("XIS", formerly Electronic Commerce, Inc.)
and the Company's larger installed base and the high rate of participation of
RemoteWare customers in the Company's software upgrade and maintenance programs.
See Note 4 of Notes to Consolidated Financial Statements.
Software license fees from new customers increased 92% to $4,493,000 in the
first quarter, compared with $2,341,000 in the first quarter of 1996. License
fees from new customers increased as a percentage of total license fees to 51%
from 34% for the three months ended March 31, 1997 as compared to the same
period in 1996, reflecting increased market acceptance by new customers. The
Company added 84 new customers in the first quarter, compared with 54 in the
first quarter of 1996. The average initial RemoteWare purchase for new customers
was $53,000 in the first quarter, compared with $43,000 in same period in 1996.
The first quarter 1997 software license fees from new customers and the average
deal size were impacted by one license transaction over $500,000, which
accounted for 23% of new customer license fees.
Software license fees from existing customers decreased 5% to $4,378,000 in the
first quarter, compared with $4,590,000 in the first quarter of 1996. Software
license fees from existing customers decreased as a percentage of total license
fees to 49% from 66% for the three months ended March 31, 1997 as compared to
the same period in 1996. The Company believes that the decrease is due to the
Company's focus on development of the RemoteWare for NT products and the
marketing and licensing of those products to new customers.
Software license fees generated by Solution Providers decreased to 27% from 52%
in the three months ended March 31, 1997 as compared to the prior year period,
due to changes to the Company's Solution Provider program that have resulted in
fewer Solution Providers authorized to remarket RemoteWare and lower remarketer
discount rates.
Software upgrade fees and services increased 78% to $4,479,000 in the three
months ended March 31, 1997 as compared to the same period in 1996. Software
upgrade fees increased 54% to $3,392,000 in the three months ended March 31,
1997 as compared to the same period in 1996 primarily due to the Companys
growing customer base and their significant rate of participation in the
Company's software upgrade and maintenance programs. Services revenue increased
246% to $1,087,000 in the three months ended March 31, 1997 as compared to the
same period in 1996, primarily due to the Company's acquisition in January 1997
of XIS.
COSTS OF LICENSE FEES. Costs of license fees increased 19% to $570,000 in the
three months ended March 31, 1997 as compared to the same period in 1996. Costs
of license fees decreased as a percentage of software license fees to 6% from 7%
in the three months ended March 31, 1997 as compared to the prior year period.
The absolute dollar increase in cost of license fees reflects increased
amortization of capitalized software development costs associated with the
development of RemoteWare for NT.
COSTS OF SOFTWARE UPGRADE FEES AND SERVICES. Costs of upgrade fees and services
increased 131% to $1,688,000 in the three months ended March 31, 1997 as
compared to the same period in 1996. Costs of upgrade fees and services
increased as a percentage of software upgrade fees and services revenues to 38%
from 29% in the three months ended March 31, 1997 as compared to the prior year
period. The increase in costs of upgrade fees and services is primarily due to
the Company's January 1997 acquisition of XIS, which expanded the Company's
systems integration business.
SALES AND MARKETING. Sales and marketing expenses increased 24% to $5,407,000 in
the three months ended March 31, 1997 as compared to the same period in 1996.
Sales and marketing expenses decreased as a percentage of revenues to 41% from
46% in the three months ended March 31, 1997 as compared to the prior year
period. The increase in absolute dollar expenses was due primarily to higher
personnel costs and investments in Europe.
PRODUCT DEVELOPMENT. The following table summarizes product development
expenditures:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(in thousands) 1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Product development expenditures $2,775 $1,771
Less: capitalized software development costs 734 430
- --------------------------------------------------------------------------------
Net product development expenses $2,041 $1,341
================================================================================
As a percentage of revenues:
Product development expenditures 21% 19%
Less: capitalized software development costs (6%) (5%)
- --------------------------------------------------------------------------------
Net product development expenses 15% 14%
================================================================================
Capitalized product development rate 26% 24%
================================================================================
</TABLE>
<PAGE>
Product development expenditures (expenses plus capitalized software development
costs) increased 57% to $2,775,000 in the three months ended March 31, 1997 as
compared to the same period in 1996. The increase in product development
expenditures was primarily due to personnel costs (including outside
contractors) for development of RemoteWare for NT. Capitalized software
development costs were $734,000 in the first quarter of 1997 and $430,000 in the
prior year period. All capitalized software development costs in the first
quarter of 1997 related to the development of RemoteWare for NT. Net product
development expenses (product development expenditures less capitalized
software) increased 52% to $2,041,000 for the three months ended March 31, 1997
as compared to the same period in 1996. Net product development expenses as a
percentage of revenues increased to 15% from 14% for the three months ended
March 31, 1997 as compared to the prior year period.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased 25% to
$1,867,000 in the three months ended March 31, 1997 as compared to the same
period in 1996. General and administrative expenses decreased as a percentage of
revenues to 14% from 16% in the three months ended March 31, 1997 as compared to
the prior year period. The absolute dollar increase in general and
administrative expenses was primarily due to additional personnel costs.
OTHER INCOME AND EXPENSE. Other income decreased 69% to $90,000 in the three
months ended March 31, 1997 as compared to the same period in 1996 due primarily
to lower cash balances.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had cash and cash equivalents of $9,403,000,
working capital of $22,228,000 and no debt.
During the first three months of 1997, the Company generated $2,175,000 of cash
from operating activities, primarily from net income plus depreciation and
amortization. Net cashed used in investing activities was $3,545,000 primarily
due to cash payments in connection with the acquisition of XIS, fixed asset
additions, capitalized software development costs and an increase in short-term
investments. Net cashed provided by financing activities was $186,000 primarily
due to proceeds from, and income tax benefits associated with, the exercise of
stock options.
Proceeds from its public offering, which was closed April 1, 1997, totaled
approximately $10 million, net of issuance costs.
The Company believes that its current cash balances, proceeds from its public
offering of common stock and cash flows from operations will be sufficient to
meet its working capital and capital expenditure requirements through at least
1997.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.014 Eighth Amendment to Lease Agreement, Commencement Date Agreement
and Acceptance of Premises between the Registrant and Concourse V
Associates effective November 24, 1996 and executed February 12,
1997
10.26 Restricted Stock Award Agreement effective September 17, 1996
between the Company and Corey M. Smith
11 Statement re: computation of per share earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the registrant during the quarter
ended March 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
XcelleNet, Inc.
(Registrant)
Date: May 15, 1997 By: /s/ SIDNEY V. SACK
--------------------------
Sidney V. Sack
Chief Financial Officer
(Principal Financial and
Authorized Officer)
<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
Exhibits
to
Quarterly Report
on
Form 10-Q
FOR THE QUARTER ENDED
MARCH 31, 1997
____________________
XCELLENET, INC.
(Exact name of registrant as specified in its charter)
================================================================================
<PAGE>
Exhibit
Number Exhibit Description
- ------ -------------------
10.014 Eighth Amendment to Lease Agreement, Commencement
Date Agreement and Acceptance of Premises between
the Registrant and Concourse V Associates
effective November 24, 1996 and executed February
12, 1997
10.26 Restricted Stock Award Agreement effective
September 17, 1996 between the Company and Corey M. Smith
11 Statement re: computation of per share earnings
27.01 Financial Data Schedule
<PAGE>
Exhibit 10.014
EIGHTH AMENDMENT TO LEASE AGREEMENT
-----------------------------------
THIS EIGHTH AMENDMENT TO LEASE AGREEMENT (the "Seventh Amendment") is
made this ______ day of November, 1996, by and between CONCOURSE V ASSOCIATES
(as "Landlord") and XCELLENET, INC. (as "Tenant").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Landlord and Tenant did enter into a Lease Agreement dated as
of August 17, 1990 (the "Original Lease"), for space in that certain building
known as "Concourse Corporate Center V" (the "Building"), as such space is more
particularly described in the Original Lease (the "Premises"); and
WHEREAS, Landlord and Tenant did enter into a First Amendment to Lease
Agreement dated September 30, 1992 (the "First Amendment"), adding certain space
more particularly described therein to the Premises; and
WHEREAS, Landlord and Tenant did enter into a Second Amendment to
Lease Agreement dated August 10, 1993 (the "Second Amendment"); and
WHEREAS, Landlord and Tenant did enter into a Third Amendment to Lease
Agreement dated September 9, 1993 (the "Third Amendment"); and
WHEREAS, Landlord and Tenant did enter into a Fourth Amendment to
Lease Agreement, dated August 15, 1994 (the "Fourth Amendment");
WHEREAS, Landlord and Tenant did enter into a Fifth Amendment to Lease
Agreement, dated February 20, 1995 (the "Fifth Amendment");
WHEREAS, Landlord and Tenant did enter into a Sixth Amendment to Lease
Agreement, dated March __, 1996 (the "Sixth Amendment");
WHEREAS, Landlord and Tenant did enter into a Seventh Amendment to
Lease Agreement, dated as of July __, 1996, (the "Seventh Amendment");
WHEREAS, the Original Lease, First Amendment, Second Amendment, Third
Amendment, Fourth Amendment, Fifth Amendment, Sixth Amendment and Seventh
Amendment are sometimes referred to herein collectively as the "Lease"; and
<PAGE>
WHEREAS, Landlord and Tenant desire to modify and amend the Lease, in
the manner and for the purposes herein set forth.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and for Ten and No/100 Dollars ($10.00) and other good and
valuable consideration, paid by the parties hereto to one another, the receipt
and sufficiency of which are acknowledged by the parties hereto, the parties
hereto hereby covenant and agree as follows:
1. Additional Premises. The "Second Expansion Premises" leased under
-------------------
the Seventh Amendment shall be leased to Tenant as of, and from and after July
1, 1997, and not as of April 1, 1997, as set forth in Seventh Amendment.
2. Transfers, Successors and Assigns. This Eighth Amendment shall
---------------------------------
inure to the benefit of and be binding upon Landlord, Tenant, and their
respective transfers, successors and assigns.
3. Georgia Law. This Eighth Amendment shall be construed and
-----------
interpreted under the laws of the State of Georgia.
4. No Other Modifications. Except as modified by this Eighth
----------------------
Amendment, the Lease remains unmodified and of full force and effect.
IN WITNESS WHEREOF, the undersigned have caused this Eighth Amendment to be
executed under seal and delivered, on the day and year first above written.
"LANDLORD"
CONCOURSE V ASSOCIATES, a Georgia
general partnership
By: Dan Properties, Inc., as
general partner
2/12/97 By: Alan Lang
- --------------------- ------------------------
Date Executed: Its: Assistant Secretary
----------------------
By: JV Georgia One, Inc., as
general partner
By: Alan Lang
------------------------
Its: Assistant Secretary
----------------------
SIGNATURES CONTINUED ON FOLLOWING PAGE
-2-
<PAGE>
SIGNATURES CONTINUED FROM PREVIOUS PAGE
"TENANT"
XCELLENET, INC., a Georgia
corporation
By: Sidney V. Sack
----------------------------
Its: Chief Financial Officer
--------------------------
2/3/97 Attest: Jeanne N. Bateman
- --------------------- -------------------------
Date Executed: Its: VP - Finance, Secretary and
----------------------------
Treasurer
----------------------------
(CORPORATE SEAL)
11/24/96
-3-
<PAGE>
EXHIBIT 10.26
XCELLENET, INC.
RESTRICTED STOCK AWARD AGREEMENT
--------------------------------
XcelleNet, Inc. a corporation organized and existing under the laws of the
State of Georgia (the "Company"), does hereby grant to Corey M. Smith, an
individual resident of the State of Georgia ("Smith"), and Smith does hereby
accept, the following award of restricted stock (the "Award"), effective as of
September 17, 1996 (the "Effective Date"), upon the following terms and
conditions.
1. Grant of Shares. Pursuant to the letter dated September 9, 1996
---------------
outlining the terms of Smith's employment with the Company, and subject to the
terms and conditions of this Restricted Stock Award Agreement (the "Agreement"),
Smith is hereby awarded, as additional compensation for services rendered, ten
thousand (10,000) shares of the Company's $.01 par value Common Stock (the
"Shares"). This Award was approved by the Compensation and Stock Option
Committee of the Board of Directors of the Company on September 17, 1996.
2. Restrictions. The Shares may not be sold, transferred, exchanged,
------------
assigned, pledged, hypothecated or otherwise encumbered prior to January 2,
1997. If Smith's employment with the Company terminates for any reason prior to
January 2, 1997, then Smith shall forfeit all of his right, title and interest
in and to the Shares as of the date of employment termination.
In order to enforce the restrictions imposed upon the Shares, Smith will,
immediately upon receipt of the certificate(s) representing the Shares, deposit
such certificate(s), together with stock powers or other instruments of transfer
appropriately endorsed in blank, with the Company. Further, such certificate(s)
will bear the following legends:
"The securities evidenced by this certificate are subject to the terms
and conditions (including forfeiture and restrictions against
transfer) contained in a Restricted Stock Award Agreement between the
registered owner of the shares and XcelleNet, Inc. Release from such
terms and conditions shall be made only in accordance with the
provisions of such Agreement, copies of which are on file in the
office of the Secretary of XcelleNet, Inc.
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold,
transferred, assigned, or hypothecated unless (i) there is an
effective registration statement under such Act covering such
securities, (ii) the transfer is made in compliance with Rule 144
promulgated under such Act, or (iii) the issuer receives an opinion of
counsel, reasonably satisfactory to the issuer,
<PAGE>
stating that such sale, transfer, assignment or hypothecation is
exempt from the registration requirements of such Act.
"The securities evidenced by this certificate have been issued or sold
in reliance on paragraph (13) of Code section 10-5-9 of the Georgia
Securities Act of 1973, and may not be sold or transferred except in a
transaction which is exempt under such Act or pursuant to an effective
registration statement under such Act."
After the termination of the restrictions on the Shares, new
certificate(s), without the first legend set forth above but retaining the
second and third legends, if appropriate, for the Shares will be delivered to
Smith.
Smith agrees that the Company may also endorse any other legends
required by applicable federal or state securities laws. Any legend endorsed on
a certificate pursuant to this Section 2 and the stop transfer instructions with
respect to the Shares shall be removed, as appropriate, and the Company shall
issue a certificate without such legend to the holder thereof if the sale of the
Shares is registered under the Securities Act of 1933, as amended (the
"Securities Act") and a prospectus meeting the requirements of Section 10 of the
Securities Act is available.
3. Registration Rights
-------------------
As used in this Section 3, the following terms have the respective meanings
set forth below:
Commission: shall mean the Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act;
Exchange Act: shall mean the Securities Exchange Act of 1934, as amended;
------------
Holder: shall mean Smith and any holder of Registrable Securities acquired
------
from Smith (i) by bequest or devise or pursuant to the laws of descent and
distribution upon the death of Smith or (ii) pursuant to a domestic relations
order as defined in Section 414(p)(1)(B) of the Internal Revenue Code of 1986,
as amended ( the "Code"), if the order satisfies Section 414(p)(1)(A) of the
Code;
Person: shall mean an individual, partnership, joint stock company,
------
corporation, trust or unincorporated organization, and a government or agency or
political subdivision thereof;
Register, registered and registration: shall mean a registration effected
-------- ---------- ------------
by preparing and filing a registration statement in compliance with the
Securities Act (and
-2-
<PAGE>
any post-effective amendments filed or required to be filed) and the declaration
or ordering of effectiveness of such registration statement;
Registrable Securities: shall mean the Shares; provided, however, that
----------------------
Registrable Securities shall not include (i) any Shares with respect to which a
registration statement with respect to the sale of such Shares has become
effective under the Securities Act and all such securities have been disposed of
in accordance with such registration statement, (ii) any Shares as are actually
sold pursuant to Rule 144 (or any successor provision thereto) under the
Securities Act ("Rule 144"), or (iii) any Shares as are acquired by the Company
or any of its subsidiaries;
Registration Expenses: shall mean all expenses incurred by the Company in
---------------------
compliance with Sections 3(a), (b) and (c) hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, fees and expenses of one counsel for
all the Holders, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be paid in any
event by the Company);
Security, Securities: shall have the meaning set forth in Section 2(1) of
--------------------
the Securities Act;
Selling Expenses: shall mean all underwriting discounts and selling
----------------
commissions applicable to the sale of Registrable Securities and all fees and
disbursements of counsel for each of the Holders other than fees and expenses of
one counsel for all the Holders.
(a) Company Registration.
--------------------
(i) If the Company shall determine to register before January 2,
1999 any of its equity securities either for its own account or for the account
of Other Stockholders, other than a registration relating solely to benefit
plans, or a registration relating solely to a Commission Rule 145 transaction,
or a registration on any registration form which does not permit secondary sales
or does not include substantially the same information as would be required to
be included in a registration statement covering the sale of Registrable
Securities, the Company will:
(A) promptly give to each of the Holders a written notice
thereof (which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable blue sky
or other state securities laws); and
(B) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made by any
-3-
<PAGE>
Holder within ten (10) business days after the giving of the written notice
from the Company described in clause (i) above, except as set forth in
Section 3(a)(ii) below. Such written request shall specify the amount of
Registrable Securities intended to be disposed of by a Holder and may specify
all or a part of the Holders' Registrable Securities.
Notwithstanding the foregoing, if, at any time after giving such written notice
of its intention to effect such registration and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such equity securities
the Company may, at its election, give written notice of such determination to
the Holders and thereupon the Company shall be relieved of its obligation to
register such Registrable Securities in connection with the registration of such
equity securities (but not from its obligation to pay Registration Expenses to
the extent incurred in connection therewith as provided herein).
(ii) Underwriting. If the registration of which the Company
------------
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise each of the Holders as a part of the written notice
given pursuant to Section 3(a)(i)(A). In such event, the right of each of the
Holders to registration pursuant to this Section 3(a) shall be conditioned upon
such Holders' participation in such underwriting and the inclusion of such
Holders' Registrable Securities in the underwriting to the extent provided
herein. The Holders whose shares are to be included in such registration shall
(together with the Company and the Other Stockholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for the underwriting by the Company or such Other Stockholders, as the
case may be. Such underwriting agreement will contain such representations and
warranties by the Company and such other terms and provisions as are customarily
contained in underwriting agreements with respect to secondary distributions,
including, without limitation, indemnities and contribution to the effect and to
the extent provided in Section 3(d) hereof and the provision of opinions of
counsel and accountants' letters to the effect and to the extent provided in
Section 3(c), and the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of the Holders whose
shares are to be included in such registration. Notwithstanding any other
provision of this Section 3(a), if the representative determines that marketing
factors require a limitation on the number of shares to be underwritten, the
Company shall so advise all holders of securities requesting registration, and
the number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated in the following manner: The
securities of the Company held by officers, directors and Other Stockholders
(other than Other Stockholders exercising the contractual right initiating such
registration ("Other Demanding Holders") or to cause their securities to be
included in such registration ("Other Rights Holders")) shall be excluded from
such registration and underwriting to the extent required by such limitation,
and, if a limitation on the number of shares is still
-4-
<PAGE>
required, the number of shares that may be included in the registration and
underwriting by each of the Holders and such Other Rights Holders shall be
reduced, on a pro rata basis (based on the number of shares held by such
holder), by such minimum number of shares as is necessary to comply with such
limitation. If any of the Holders or any officer, director or Other Stockholder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
(b) Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration, qualification or compliance pursuant to this
Section 3 shall be borne by the Company, and all Selling Expenses shall be borne
by the Holders of the securities so registered pro rata on the basis of the
number of their shares so registered.
(c) Registration Procedures. In the case of each registration
-----------------------
effected by the Company pursuant to this Section 3, the Company will keep the
Holders, as applicable, advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense, the Company
will:
(i) keep such registration effective for a period of one hundred
eighty (180) days or until the Holders, as applicable, have completed the
distribution described in the registration statement relating thereto,
whichever first occurs;
(ii) furnish to each Holder, and to any underwriter before filing
with the Commission, copies of any registration statement (including all
exhibits) and any prospectus forming a part thereof and any amendments and
supplements thereto (including all documents incorporated or deemed
incorporated by reference therein prior to the effectiveness of such
registration statement and including each preliminary prospectus, any summary
prospectus or any term sheet (as such term is used in Rule 434 under the
Securities Act)) and any other prospectus filed under Rule 424 under the
Securities Act, which documents, other than documents incorporated or deemed
incorporated by reference, will be subject to the review of the Holders and
any such underwriter for a period of at least five business days, and the
Company shall not file any such registration statement or such prospectus or
any amendment or supplement to such registration statement or prospectus to
which any Holder or any such underwriter shall reasonably object within five
business days after the receipt thereof; a Holder or such underwriters, if
any, shall be deemed to have reasonably objected to such filing only if the
registration statement, amendment, prospectus or supplement, as applicable,
as proposed to be filed, contains a material misstatement or omission;
-5-
<PAGE>
(iii) furnish to each Holder and to any underwriter, such number of
conformed copies of the applicable registration statement and of each
amendment and supplement thereto (in each case including all exhibits) and
such number of copies of the prospectus forming a part of such registration
statement (including each preliminary prospectus, any summary prospectus or
any term sheet (as such term is used in Rule 434 under the Securities Act))
and any other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, including without limitation documents incorporated or deemed to
be incorporated by reference prior to the effectiveness of such registration,
as each of the Holders or any such underwriter, from time to time may
reasonably request;
(iv) to the extent practicable, promptly prior to the filing of any
document that is to be incorporated by reference into any registration
statement or prospectus forming a part thereof subsequent to the
effectiveness thereof, and in any event no later than the date such document
is filed with the Commission, provide copies of such document to the Holders,
if requested, and to any underwriter, and make representatives of the Company
available for discussion of such document and other customary due diligence
matters, and include in such document prior to the filing thereof such
information as any Holder or any such underwriter reasonably may request;
(v) make available at reasonable times for inspection by the
Holders, any underwriter participating in any disposition pursuant to such
registration and any attorney or accountant retained by the Holders or any
such underwriter, all financial and other records, pertinent corporate
documents and properties of the Company and cause the officers, directors and
employees of the Company to supply all information reasonably requested by
the Holders and any such underwriters, attorneys or accountants in connection
with such registration subsequent to the filing of the applicable
registration statement and prior to the effectiveness of the applicable
registration statement;
(vi) use its reasonable best efforts (x) to register or qualify all
Registrable Securities and other securities covered by such registration
under such other securities or blue sky laws of such States of the United
States of America where an exemption is not available and as the sellers of
Registrable Securities covered by such registration shall reasonably request,
(y) to keep such registration or qualification in effect for so long as the
applicable registration statement remains in effect, and (z) to take any
other action which may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions of the securities
to be sold by such sellers, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where it is not so qualified, or to subject
itself to taxation in any such jurisdiction, or to execute a general consent
to service of
-6-
<PAGE>
process in effecting such registration, qualification or
compliance, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder;
(vii) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or authorities
as may be necessary in the opinion of counsel to the Company and counsel to
the Holders of Registrable Securities to enable the Holders thereof to
consummate the disposition of such Registrable Securities;
(viii) subject to Section 3(f) hereof, promptly notify each Holder of
Registrable Securities covered by a registration statement (A) upon discovery
that, or upon the happening of any event as a result of which, the prospectus
forming a part of such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
(B) of the issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of proceedings
for that purpose, (C) of any request by the Commission for (1) amendments to
such registration statement or any document incorporated or deemed to be
incorporated by reference in any such registration statement, (2) supplements
to the prospectus forming a part of such registration statement or (3)
additional information, or (D) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, and at the
request of any such Holder promptly prepare and furnish to it a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ix) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of any such registration, or the lifting
of any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction;
(x) if requested by any Holder, or any underwriter, promptly
incorporate in such registration statement or prospectus, pursuant to a
supplement or post effective amendment if necessary, such information as the
Holder and any underwriter may reasonably request to have included therein,
including, without limitation, information relating to the "plan of
distribution" of the Registrable
-7-
<PAGE>
Securities, information with respect to the principal amount or number of
shares of Registrable Securities being sold to such underwriter, the purchase
price being paid therefor and any other terms of the offering of the
Registrable Securities to be sold in such offering and make all required
filings of any such prospectus supplement or post-effective amendment as soon
as practicable after the Company is notified of the matters to be
incorporated in such prospectus supplement or post effective amendment;
(xi) furnish to the Holders, addressed to them, an opinion of
counsel for the Company, dated the date of the closing under the underwriting
agreement, if any, or the date of effectiveness of the registration statement
if such registration is not an underwritten offering, and use its reasonable
best efforts to furnish to the Holders, addressed to them, a "cold comfort"
letter signed by the independent certified public accountants who have
certified the Company's financial statements included in such registration,
covering substantially the same matters with respect to such registration
(and the prospectus included therein) and, in the case of such accountants'
letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in underwritten public
offerings of securities and such other matters as the Holders may reasonably
request;
(xii) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, but not more than 18 months,
beginning with the first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;
(xiii) provide promptly to the Holders upon request any document
filed by the Company with the Commission pursuant to the requirements of
Section 13 and Section 15 of the Exchange Act; and
(xiv) use its reasonable best efforts to cause all Registrable
Securities included in any registration pursuant hereto to be listed on each
securities exchange on which securities of the same class are then listed,
or, if not then listed on any securities exchange, to be eligible for trading
in any over-the-counter market or trading system in which securities of the
same class are then traded.
(d) Indemnification.
---------------
(i) The Company will indemnify each of the Holders, as
applicable, each of its officers, directors, members and partners, and each
person controlling each of the Holders, with respect to each registration which
has been effected
-8-
<PAGE>
pursuant to this Section 3, and each underwriter, if any, and each person who
controls any underwriter, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act or the Exchange Act or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each of the Holders, each of its officers, directors, members
and partners, and each person controlling each of the Holders, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
the Holders or underwriter and stated to be specifically for use therein.
(ii) Each of the Holders will, if Registrable Securities held by
it are included in the securities as to which such registration, qualification
or compliance is being effected, indemnify the Company, each of its directors
and officers and each underwriter, if any, of the Company's securities covered
by such a registration statement, each person who controls the Company or such
underwriter, each Other Stockholder and each of their officers, directors,
members and partners, and each person controlling such Other Stockholder against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any such registration statement, prospectus,
offering circular or other document made by such Holder, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements by such Holder therein not misleading, and
will reimburse the Company and such Other Stockholders, directors, officers,
partners, members, persons, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of each of the Holders hereunder and under clause (vi) below shall
be limited to an amount equal to the net proceeds to such Holder of securities
sold as contemplated herein.
-9-
<PAGE>
(iii) Each party entitled to indemnification under this Section
3(d) (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense (unless the Indemnified
Party shall have reasonably concluded that there may be a conflict of interest
between the Indemnifying Party and the Indemnified Party in such action, in
which case the fees and expenses of one such counsel for all Indemnified Parties
shall be at the expense of the Indemnifying Party), and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 3 unless
the Indemnifying Party is materially prejudiced thereby. No Indemnifying Party,
in the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party (which consent shall not be unreasonably withheld or
delayed), consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 3(f)
is held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue (or alleged untrue) statement of a material fact or the
omission (or alleged omission) to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(v) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with any underwritten public offering
contemplated by this
-10-
<PAGE>
Agreement are in conflict with the foregoing provisions, the provisions in such
underwriting agreement shall be controlling.
(vi) The foregoing indemnity agreement of the Company and
Holders is subject to the condition that, insofar as they relate to any loss,
claim, liability or damage made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the Commission at the time the
registration statement in question becomes effective or the amended prospectus
filed with the Commission pursuant to Commission Rule 424(b) (the "Final
Prospectus"), such indemnity or contribution agreement shall not inure to the
benefit of any underwriter or Holder (but only if such Holder was required to
deliver such Final Prospectus) if a copy of the Final Prospectus was furnished
to the underwriter and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.
(e) Information by the Holders. Each of the Holders holding
--------------------------
securities included in any registration shall furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Section 3.
4. Payment of Taxes. Smith will, no later than the date as of which any
----------------
amount related to the Award first becomes includable in Smith's gross income for
federal income tax purposes, pay to the Company, or make other arrangements
satisfactory to the Committee regarding payment of, any federal, state and local
taxes of any kind required by law to be withheld with respect to such amount.
The obligations of the Company under this Agreement will be conditional on such
payment or arrangements, and the Company will, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to Smith.
5. No Right of Continued Employment. Nothing set forth in this Agreement
--------------------------------
or in any action of the Company or the Board of Directors will be held or
construed to confer upon Smith any legal right to be continued in the employ of
the Company.
6. Rights as Shareholder. Smith, as beneficial owner of the Restricted
---------------------
Shares, shall have full voting and dividend rights with respect to the
Restricted Shares from and after the date of grant, regardless of whether the
applicable restrictions have lapsed.
7. Amendment. This Agreement may not be amended except in writing,
---------
signed by the parties hereto.
-11-
<PAGE>
8. Successors. This Restricted Stock Award Agreement shall be binding
----------
upon and inure to the benefit of the heirs, legal representatives, successors,
and permitted assigns of the parties.
XCELLENET, INC.
By: /s/ Dennis M. Crumpler
-----------------------------------
Dennis M. Crumpler
CEO, President and Chairman of the Board
ACCEPTANCE AND ACKNOWLEDGMENTS BY SMITH
I hereby accept the Shares in accordance with and subject to the terms and
conditions set forth above.
I hereby represent, warrant, covenant, and agree with the Company as
follows:
(a) I am acquiring the Shares for my own account without the participation
of any other person, with the intent of holding the Shares for investment and
without the intent of participating, directly or indirectly, in a distribution
of the Shares and not with a view to, or for resale in connection with, any
distribution of the Shares;
(b) I understand and agree that the Shares may not be sold, transferred,
assigned, or hypothecated unless (i) there is an effective registration
statement under the Securities Act covering such securities, (ii) the transfer
is made in compliance with Rule 144 under the Securities Act, or (iii) the
Company receives an opinion of counsel, reasonably satisfactory to the Company,
stating that such sale, transfer, assignment or hypothecation is exempt from the
registration requirements of the Securities Act; and
(c) I understand and agree that the Shares have been issued or sold in
reliance on an exemption from registration under the Georgia Securities Act of
1973, and may not be sold or transferred except in a transaction which is exempt
under such Act or pursuant to an effective registration statement under such
Act.
/s/ Corey M. Smith
-------------------------------
Corey M. Smith
-12-
<PAGE>
EXHIBIT 11
XCELLENET, INC. AND SUBSIDIARIES
Computation of Earnings Per Share of Common Stock
For the Three Months Ended March 31, 1997 and 1996
(amounts in thousands, except per share)
<TABLE>
<CAPTION>
For the Years Ended
March 31,
-----------------
1997 1996
------ -------
<S> <C> <C>
Weighted average number of common shares outstanding 7,468 7,129
Add - Shares of common stock assumed issued upon exercise of
stock options using the "treasury stock" method as it
applies to the computation of primary earnings per share 884 723
------- -------
NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 8,352 7,852
Add - Additional shares of common stock assumed issued upon
exercise of stock options using the "treasury stock" method as it
applies to the computation of fully diluted earnings per share -- --
------- -------
NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING
assuming full dilution 8,352 7,852
======= =======
NET INCOME $1,129 $ 866
======= =======
EARNINGS PER SHARE:
PRIMARY $ 0.14 $ 0.11
======= =======
FULLY DILUTED $ 0.14 $ 0.11
======= =======
</TABLE>
A single presentation of primary earnings per share is made on the Consolidated
Statements of Operations because the effect of assuming full dilution is
insignificant in each period presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY REFERENCES TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 9,403
<SECURITIES> 2,947
<RECEIVABLES> 15,818
<ALLOWANCES> 602
<INVENTORY> 0
<CURRENT-ASSETS> 28,897
<PP&E> 12,209
<DEPRECIATION> 6,609
<TOTAL-ASSETS> 41,087
<CURRENT-LIABILITIES> 6,669
<BONDS> 0
0
0
<COMMON> 75
<OTHER-SE> 33,084
<TOTAL-LIABILITY-AND-EQUITY> 41,087
<SALES> 8,871
<TOTAL-REVENUES> 13,350
<CGS> 570
<TOTAL-COSTS> 2,258
<OTHER-EXPENSES> 9,315
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> 1,867
<INCOME-TAX> 738
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,129
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
