<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1998
REGISTRATION NO. 333-49767
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------
SCC COMMUNICATIONS CORP.
(Exact name of Registrant as specified in its charter)
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DELAWARE 7374 84-0796285
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
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6285 LOOKOUT ROAD
BOULDER, COLORADO 80301
(303) 581-5600
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------------
MR. GEORGE K. HEINRICHS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SCC COMMUNICATIONS CORP.
6285 LOOKOUT ROAD
BOULDER, COLORADO 80301
(303) 581-5600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
Copies to:
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JEREMY W. MAKARECHIAN, ESQ. MARK L. JOHNSON, ESQ.
BROBECK, PHLEGER & HARRISON LLP FOLEY, HOAG & ELIOT LLP
1125 SEVENTEENTH STREET ONE POST OFFICE SQUARE
SUITE 2525 BOSTON, MASSACHUSETTS 02109
DENVER, COLORADO 80202 (617) 832-1000
(303) 293-0760
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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, as amended (the "Securities Act"), 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, please 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, 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, 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. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 23, 1998
[SCC LOGO]
3,300,000 SHARES
COMMON STOCK
------------------------------
Of the 3,300,000 shares of Common Stock offered hereby, 2,100,000 shares
are being sold by SCC Communications Corp. ("SCC" or the "Company"), and
1,200,000 shares are being sold by the Selling Stockholders. See "Principal and
Selling Stockholders." The Company will not receive any of the proceeds from the
sale of shares by the Selling Stockholders. Prior to this offering, there has
been no public market for the Common Stock of the Company. See "Underwriting"
for information relating to the method of determining the initial public
offering price. It is currently estimated that the initial public offering price
will be between $13.00 and $15.00 per share. Application has been made to have
the Common Stock quoted on the Nasdaq National Market under the proposed symbol
"SCCX."
------------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 7.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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============================================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO PROCEEDS TO
PUBLIC COMMISSIONS COMPANY(1) SELLING STOCKHOLDERS
- ----------------------------------------------------------------------------------------------------------------------------
Per Share....................... $ $ $ $
- ----------------------------------------------------------------------------------------------------------------------------
Total(2)........................ $ $ $ $
============================================================================================================================
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(1) Before deducting expenses payable by the Company estimated at $800,000.
(2) The Company and certain Selling Stockholders have granted the Underwriters a
30-day option to purchase up to an additional 495,000 shares of Common Stock
solely to cover over-allotments, if any. See "Underwriting." If such option
is exercised in full, the total Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company and Proceeds to Selling Stockholders will
be $ , $ , $ and $ , respectively.
------------------------------
The Common Stock is offered by the Underwriters as stated herein, subject
to receipt and acceptance by them and subject to their right to reject any order
in whole or in part. It is expected that delivery of such shares will be made
through the offices of BancAmerica Robertson Stephens, San Francisco,
California, on or about , 1998.
BANCAMERICA ROBERTSON STEPHENS HAMBRECHT & QUIST
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 3
Diagram consisting of four boxes encircled in text (starting at top, moving
clockwise):
WIRELESS ILECS-CLECS WIRELINE PCS-CELLULAR
Tag line above Diagram:
9-1-1 is an Essential Part of the Operational Support Systems Market
Upper left box text:
Planning & Engineering
Decision support
Network design and optimization
Product planning and development
Upper right box text:
Service Provisioning
Inventory management
Provisionary/assignment
Service activation
Service order processing
[With 9-1-1 Database Management logo]
Lower left box text:
Operations
HR/payroll/financial
Network management
Repair/craft interface
Security
Workforce management
[With 9-1-1 Network Management logo]
Lower right box text:
Customer Care & Billing
Billing
Customer service and support
Marketing and sales
Pricing/rating
SCC logo below diagram
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET FOR THE COMMON STOCK OF
THE COMPANY, INCLUDING ENTERING STABILIZING BIDS EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
<PAGE> 4
Inside Panel:
SCC Solution Set
SCC provides 9-1-1 OSS services to ILECs, CLECs and wireless carriers throughout
North America. SCC focuses on developing innovative and automated solutions to
provide customers with a comprehensive system for managing large amounts of
dynamic subscriber information.
NDSC Services
Through its NDSC, SCC offers a comprehensive, cost-effective solution to the
9-1-1 service provisioning needs of ILECs, CLECs and wireless carriers by
enabling them to outsource virtually all aspects of the operations of their
9-1-1 data management. Services include system activation, routine data
administration, event transaction processing and performance management, with a
high level of security and survivability.
Enhanced Public Safety Services
SCC offers enhancements to its 9-1-1 OSS services that provide additional
features and functionality. Services currently include 9-1-1Net, Private Switch
ALI and 9-1-1Connect. In addition, SCC expects to introduce Subscriber ALI and
Emergency Warning & Evacuation System by late 1998.
License Products
SCC offers 9-1-1 OSS software to customers that elect to manage their own 9-1-1
data records rather than outsourcing such operations. SCC also provides custom
software development services to customers with specific or local requirements
through its engineering department. The engineering department develops,
customizes and enhances the software using a structured approach to perform
requirements analysis, software development and quality assurance.
Commercial Services
SCC is developing new products and services such as dynamic call routing for
multi-location call centers for both telecommunication carriers and others and
improved address information for the billing, ordering and provisioning
departments of telecommunication carriers.
[SCC logo Above Map]
Tag Line Above Map:
Providing 9-1-1 OSS Services Throughout North America...
Continued Tag Line Below Map:
and Leveraging Our Infrastructure and Expertise Beyond 9-1-1...
[Map of United States Communications Network]
Text Underneath Map:
This map is an artistic impression of SCC's contracted network and processing
elements
Customer Names Below Map:
Ameritech AT&T Wireless Bell Canada Nextel 360 degrees Communications Time
Warner Telecom US WEST Communications Vanguard Cellular WorldCom, Inc. ...and
others
SCC Strategy -- Key Elements
Maintain and extend leadership in wireline 9-1-1 data management market
Capitalize on emerging wireless carrier opportunities
Maintain and extend leadership position in National Clearinghouse Services
Provide additional services to telecommunications carriers
Develop applications for new commercial products
Expand international operations
<PAGE> 5
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES
OR AN OFFER TO, OR A SOLICITATION OF, ANY PERSON IN ANY JURISDICTION WHERE SUCH
AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------------------
TABLE OF CONTENTS
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PAGE
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Summary..................................................... 4
Risk Factors................................................ 7
Use of Proceeds............................................. 17
Dividend Policy............................................. 17
Capitalization.............................................. 18
Dilution.................................................... 19
Selected Financial Data..................................... 20
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 21
Business.................................................... 30
Management.................................................. 41
Certain Transactions........................................ 47
Principal and Selling Stockholders.......................... 48
Description of Capital Stock................................ 51
Shares Eligible for Future Sale............................. 53
Underwriting................................................ 55
Legal Matters............................................... 57
Experts..................................................... 57
Additional Information...................................... 57
Glossary of Terms........................................... 58
Index to Financial Statements............................... F-1
</TABLE>
------------------------------
9-1-1 Extended Architecture, 9-1-1NRC, 9-1-1XA, 9-1-1 National Reference
Center, 9-1-1 Net and 9-1-1 Connect are trademarks of the Company. This
Prospectus contains other product names, trade names and trademarks of the
Company and of other organizations.
3
<PAGE> 6
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and Financial Statements and Notes thereto appearing elsewhere in
this Prospectus. This Prospectus contains forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from the results discussed in the forward-looking statements. Factors
that could cause or contribute to such differences include those discussed under
"Risk Factors," as well as those discussed elsewhere in this Prospectus. Certain
terms used herein are defined under the heading "Glossary of Terms."
THE COMPANY
SCC is the leading provider of 9-1-1 operations support systems ("OSS")
services to incumbent local exchange carriers ("ILECs"), competitive local
exchange carriers ("CLECs") and wireless carriers in the United States. The
Company has redefined the U.S. market for 9-1-1 OSS by creating the first and
largest 9-1-1 service bureau, the SCC National Data Services Center ("NDSC"),
with over 70 million subscriber data records under management throughout North
America. The Company manages the data that enable a 9-1-1 call to be routed to
the appropriate public safety agency along with accurate and timely information
about the caller's identification and location. Through SCC's NDSC, the Company
offers a comprehensive, cost-effective solution to the 9-1-1 service
provisioning needs of ILECs, CLECs and wireless carriers by enabling them to
outsource virtually all aspects of the operations of their 9-1-1 data management
services, including system activation, routine data administration, event
transaction processing and performance management, with a high level of security
and survivability. In addition, the Company licenses its 9-1-1 OSS software to
carriers that wish to manage the delivery of 9-1-1 data management services
in-house. Representative carriers using SCC's 9-1-1 OSS solution include
Ameritech, AT&T Wireless Services, BellSouth, MCI, Sprint PCS and Worldcom
Network SVCS.
Today, 9-1-1 is a fundamental element of local exchange service and
carriers' OSS infrastructure. 9-1-1 service involves the routing of emergency
calls to the appropriate public safety answering point ("PSAP") responsible for
dispatching police, fire and other emergency services. When a caller dials
9-1-1, information about the caller's location, telephone number and the
jurisdictionally appropriate PSAP must be quickly accessed from carriers'
network and mission-critical data servers. Thus, delivery of 9-1-1 service
presents a difficult OSS challenge for carriers because it requires the
coordination of data from multiple sources, the review and processing of the
data, the resolution of data errors and conflicts, and the insertion of the data
into network and mission-critical data servers. ILECs, CLECs and wireless
carriers require a 9-1-1 solution that addresses these OSS challenges and cost
effectively provides a high degree of data integrity and reliability, allows
them to comply with regulatory mandates, and addresses their need to provide
additional value-added services. ILECs are seeking to reduce the significant
capital expenditures associated with supporting rapidly evolving 9-1-1
infrastructure and upgrading their 9-1-1 data management and network control
services to meet PSAP requirements and technological advancements. CLECs and
wireless carriers, many of which are relatively small and new to the markets in
which they are now competing, are seeking to increase their own subscriber bases
while minimizing their investment in OSS technology infrastructure and
personnel, as well as the relationships with PSAPs necessary to provide 9-1-1
service. Carriers with these requirements may choose to develop their own
proprietary solutions, to license the 9-1-1 software and manage the delivery of
9-1-1 service themselves, or to outsource their 9-1-1 OSS needs.
Through SCC's NDSC, the Company provides the data management services that
ILECs, CLECs and wireless carriers need to deliver 9-1-1 calls to the
appropriate PSAP, along with critical information such as caller location and
call-back number that PSAPs need to respond effectively to emergencies. Complex
data screening and preparation are completed to initialize properly the
underlying systems necessary for 9-1-1 call routing and information display for
the call taker. SCC's NDSC frequently receives and processes electronic
transmissions from ILECs, CLECs and wireless carriers detailing subscriber and
coverage updates and public safety jurisdiction boundary changes from PSAPs.
Records identified as potentially having problems are automatically separated
for manual review and analysis by SCC data integrity analysts. Using the updated
4
<PAGE> 7
information, SCC's 9-1-1 OSS then provides the information to route the 9-1-1
call and transmit essential information to the emergency service provider.
The Company's objective is to be the leading national provider of 9-1-1 OSS
and other complementary services to ILECs, CLECs and wireless carriers. SCC
focuses on developing innovative and automated solutions to provide customers
with a comprehensive system for managing large amounts of dynamic subscriber
information. Key elements of the Company's strategy are to: (i) maintain and
extend its leadership position in the 9-1-1 wireline data management market;
(ii) capitalize on emerging wireless carrier opportunities; (iii) maintain and
extend its leadership position in national clearinghouse services; (iv) provide
additional services to telecommunications carriers; (v) develop applications for
new commercial products; and (vi) expand international operations.
The Company was incorporated in July 1979 in the State of Colorado under
the name of Systems Concepts of Colorado, Inc., and was reincorporated in
September 1993 in the State of Delaware under the name SCC Communications Corp.
The Company's principal executive offices are located at 6285 Lookout Road,
Boulder, Colorado 80301. Its telephone number is (303)581-5600.
THE OFFERING
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Common Stock Offered by the Company................ 2,100,000 shares
Common Stock Offered by the Selling Stockholders... 1,200,000 shares
Common Stock to be Outstanding after the 10,442,853 shares(1)
Offering.........................................
Use of Proceeds.................................... For repayment of certain indebtedness, working
capital and other general corporate purposes,
and possible acquisitions. See "Use of
Proceeds."
Proposed Nasdaq National Market Symbol............. SCCX
</TABLE>
- ------------
(1) Based on shares outstanding as of April 30, 1998. Includes 6,383,723 shares
of Common Stock to be issued upon conversion of convertible preferred stock
and exercise of a warrant concurrently with the closing of the offering made
hereby. Excludes 1,114,046 shares of Common Stock issuable upon exercise of
stock options outstanding as of April 30, 1998 at a weighted average
exercise price of $3.11 per share, and 286,078 shares of Common Stock
reserved for grant of future options as of April 30, 1998, under the
Company's 1990 Stock Option Plan. On the effective date of the Registration
Statement of which this Prospectus is a part, an additional 500,000 share
reserve will be created under the Company's 1998 Stock Incentive Plan. See
"Management -- Benefit Plans -- 1998 Stock Incentive Plan."
5
<PAGE> 8
SUMMARY FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
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THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------- ---------------
1995 1996 1997 1997 1998
------- ------- ------- ------ ------
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STATEMENT OF OPERATIONS DATA:
Revenue......................................... $ 7,413 $14,802 $27,072 $5,132 $7,902
Costs and expenses.............................. 6,727 13,329 23,738 4,639 6,940
Other expense, net.............................. 368 527 879 150 301
Income from continuing operations before income
taxes......................................... 318 946 2,455 343 661
Provision (benefit) for income taxes............ 16 9 (2,328) 24 46
Net income from continuing operations........... 302 937 4,783 319 615
Loss from discontinued operations, net of tax
and disposal of discontinued division......... (1,746) (562) (2,908) (253) --
Net income (loss)............................... (1,444) 375 1,875 66 615
Net income (loss) from continuing operations per
share(1):
Basic......................................... $ (0.02) $ 0.15 $ 2.17 $ 0.07 $ 0.20
Diluted....................................... $ (0.02) $ 0.11 $ 0.54 $ 0.04 $ 0.07
Net income (loss) per share(1):
Basic......................................... $ (1.07) $ (0.17) $ 0.61 $(0.07) $ 0.20
Diluted....................................... $ (1.07) $ 0.05 $ 0.21 $ 0.01 $ 0.07
</TABLE>
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MARCH 31, 1998
------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(2) AS ADJUSTED(3)
-------- -------------- --------------
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BALANCE SHEET DATA:
Cash and cash equivalents............................... $ 1,177 $ 1,177 $23,109
Working capital......................................... (2,031) (2,031) 20,351
Total assets............................................ 23,328 23,328 45,260
Long-term debt.......................................... 9,642 9,642 6,998
Total stockholders' equity (deficit).................... (11,485) 4,810 29,836
</TABLE>
- ------------
(1) See Note 2 of Notes to Financial Statements for an explanation of the
determination of shares used in computing net income (loss) from continuing
operations per share.
(2) Reflects the conversion of convertible preferred stock into an aggregate of
6,188,575 shares of Common Stock and the exercise of an outstanding warrant
to acquire 195,148 shares of Common Stock. See Note 4 of Notes to Financial
Statements.
(3) Reflects the conversion of convertible preferred stock into an aggregate of
6,188,575 shares of Common Stock, the exercise of an outstanding warrant to
acquire 195,148 shares of Common Stock, the sale of 2,100,000 shares of
Common Stock by the Company and the application of the estimated net
proceeds therefrom (assuming an initial public offering price of $14.00).
See "Use of Proceeds," "Capitalization" and Note 4 of Notes to Financial
Statements.
------------------------------
Except as otherwise indicated herein, all information presented in this
Prospectus (i) gives effect to a 1-for-3 reverse stock split, (ii) reflects the
conversion of all outstanding shares of the Company's mandatorily redeemable,
convertible preferred stock, par value $.001 (the "Convertible Preferred
Stock"), into an aggregate of 6,188,575 shares of Common Stock and the exercise
of an outstanding warrant to acquire 195,148 shares of Common Stock, (iii) gives
effect to the filing of an Amended and Restated Certificate of Incorporation
upon the closing of this offering to, among other things, create a new class of
undesignated preferred stock and (iv) assumes no exercise of the Underwriters'
over-allotment option.
6
<PAGE> 9
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. The following factors, in addition to the other information
contained in this Prospectus, should be carefully considered in evaluating the
Company and its business before purchasing shares of the Common Stock offered
hereby. This Prospectus contains forward-looking statements that involve risks
and uncertainties. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed below as well as that discussed elsewhere in this Prospectus.
SIGNIFICANT FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
The Company has experienced fluctuations in its quarterly operating results
and anticipates that such fluctuations will continue and could intensify.
Fluctuations in operating results may result in volatility in the price of the
Company's Common Stock. Although the Company was profitable in seven of its last
eight quarters, there can be no assurance that the Company's profitability will
continue in the future or, if the Company is profitable, that its levels of
profitability will not vary significantly between quarters.
The Company experienced a net loss of approximately $453,000 in 1997,
exclusive of the benefit for income taxes, as a result of losses from
discontinued operations of approximately $876,000 and losses on the disposal of
such operations of approximately $2.0 million. The Company's operating results
may fluctuate as a result of many factors, including the length of the sales
cycle for new or existing customers, the size, timing or duration of significant
customer contracts, fluctuations in the number of subscriber records under
management, timing of new service offerings, demand by license customers for new
development services, customer acceptance of service offerings, ability of the
Company to hire, train and retain qualified personnel, increased competition,
changes in operating expenses, changes in the Company's strategy, the financial
performance of the Company's customers, changes in telecommunications
legislation and regulations that may affect the competitive environment for the
Company's services, and general economic factors. The Company's contracts for
data management services generally include a non-recurring initial fee, and
therefore, the Company may recognize significantly increased revenue for a short
period of time upon commencing services for a new customer.
The Company's expense levels are based in significant part on its
expectations regarding future revenue. The Company's revenue is difficult to
forecast because the market for the Company's services is evolving rapidly and
the length of the Company's sales cycle, the size and timing of significant
customer contracts and license fees and the timing of recognition of
non-recurring initial fees vary substantially among customers. Accordingly, the
Company may be unable to adjust spending in a timely manner to compensate for
any unexpected shortfall in revenue. Any significant shortfall could therefore
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, the Company hired a significant number
of employees in 1996, 1997 and the first quarter of 1998, and expects to
continue hiring additional employees during the remainder of 1998. The Company
expects that this increase will affect the Company's operating margins for the
short term. There can be no assurance that the Company can continue to report
operating profits, and failure to do so could have a material adverse effect on
the Company's business, financial condition and results of operations.
Based on all of the foregoing, the Company believes that future revenue,
expenses and operating results are likely to vary significantly from quarter to
quarter. As a result, quarter-to-quarter comparisons of operating results are
not necessarily meaningful or indicative of future performance. Furthermore, it
is possible that in some future quarter the Company's operating results will be
below the expectations of public market analysts or investors. In such event, or
in the event that adverse conditions prevail, or are perceived to prevail, with
respect to the Company's business or generally, the market price of the
Company's Common Stock would likely be materially adversely affected. See
"Selected Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
7
<PAGE> 10
LENGTHY SALES CYCLE
Potential customers of the Company typically commit significant resources
to the technical evaluation of the Company's services and products and the
Company typically spends substantial time, effort and money providing education
regarding the Company's 9-1-1 OSS solution. The evaluation process often results
in an extensive and lengthy sales cycle, typically ranging between six months
and two years, making it difficult for the Company to forecast the timing and
magnitude of sales contracts. Delays associated with customers' internal
approval and contracting procedures, procurement practices, and testing and
acceptance processes are common. For example, customers' budgetary constraints
and internal acceptance reviews may cause potential customers to delay or forego
a purchase. The delay or failure to complete one or more large contracts could
have a material adverse effect on the Company's business, financial condition
and results of operations and cause the Company's operating results to vary
significantly from quarter to quarter. See "-- Significant Fluctuations in
Quarterly Results of Operations" and "Business -- Sales and Marketing."
RELIANCE ON SIGNIFICANT CUSTOMERS
The Company historically has depended on, and expects to continue to depend
on, large contracts from a limited number of significant customers. During the
year ended December 31, 1996, the Company recognized approximately 82% of its
total revenue from continuing operations from Ameritech and U.S. WEST, each of
which accounted for greater than 10% of the Company's revenue in such year.
During the year ended December 31, 1997, the Company recognized approximately
81% of its total revenue from continuing operations from Ameritech, BellSouth
Inc. and U.S. WEST, each of which accounted for greater than 10% of the
Company's revenue in such year. The Company believes that these customers will
continue to represent a substantial portion of the Company's total revenue in
the future. Certain of the Company's contracts with these customers allow them
to cancel their contracts with the Company in the event of changes in
regulatory, legal, labor or business conditions. The Company's contracts with
these customers expire between 2004 and 2005. The loss of any of these customers
would have a material adverse effect on the Company's business, financial
condition and results of operations. Recently SBC Communications, Inc., which is
not a customer of the Company, agreed to acquire Ameritech. The Company cannot
predict what effect, if any, this acquisition will have on the Company and there
can be no assurance that this acquisition or any future consolidation in the
telecommunications industry will not have a material adverse effect on the
Company's business, financial condition and results of operation. None of the
Company's major customers has any obligation to purchase additional products or
additional services beyond those currently contemplated by their existing
contracts. Consequently, the failure by the Company to develop relationships
with significant new customers could have a material adverse effect on the rate
of growth in the Company's revenue, if any. If the Company fails to monitor and
maintain adequately the quality and expand the breadth of its services and
products, advance its technology or continue to price its services and products
competitively, one or more of its major customers may select alternative
providers or seek to develop services and products internally. See "Business --
Customers."
RATE OF ADOPTION BY PUBLIC SAFETY ANSWERING POINTS
A growing percentage of the Company's revenue is derived from the
management of 9-1-1 data records for wireless carriers. Recognizing the public
safety need for improved wireless 9-1-1 service, the Federal Communications
Commission (the "FCC") issued Report & Order 94-102 (the "Order") on June 12,
1996, a directive that mandated the adoption of 9-1-1 technology by wireless
carriers in two phases. Phase I required wireless carriers to provide to
requesting PSAPs at the time of a 9-1-1 call, the caller's telephone number and
location of the receiving cell site. Wireless carriers had to comply with Phase
I mandates by the later of April 1, 1998, or six months after the PSAP request.
Phase II requires wireless carriers to locate a 9-1-1 caller to within 125
meters, subject to FCC guidelines. Wireless carriers must comply with Phase II
mandates for requesting PSAPs by October 1, 2001. The Company believes that the
technological challenges confronting wireless carriers attempting to comply with
the Order will encourage them to outsource their 9-1-1 services. If many
wireless carriers decide not to outsource such services, the Company's business,
financial condition and results of operations could be materially and adversely
affected. If PSAPs delay demanding services complying
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with the Order from wireless carriers, the Company would experience a delay in
receiving revenue under its current wireless contracts that, because the Company
has already incurred costs in expectation of such revenue, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
DEPENDENCE ON NEW PRODUCTS AND SERVICES; RAPID TECHNOLOGICAL CHANGE
The market for the Company's services is characterized by rapid
technological change, frequent new product or service introductions, evolving
industry standards and changing customer needs. The Company currently intends to
begin offering in late 1998 both its Subscriber ALI product, which will allow
subscribers to enter personal information into their 9-1-1 records, and its
Emergency Warning and Evacuation System, which will allow PSAPs to call all
numbers in a given area and warn of imminent danger. The introduction of
products and services embodying new technologies and the emergence of new
industry and technology standards can render existing products and services
obsolete and unmarketable in short periods of time. The Company expects other
vendors regularly to introduce new products and services, as well as
enhancements to their existing products and services, that will compete with the
services and products offered by the Company. As a result, the life cycles of
the Company's services and products are difficult to estimate. The Company
believes that its future success will depend in large part on its ability to
maintain and enhance its current service and product offerings, to develop and
introduce regularly new services and products that will keep pace with
technological advances and satisfy evolving customer requirements, and to
achieve acceptable levels of sales of its new services and products through its
current customers that resell the Company's solutions to their subscribers.
However, there can be no assurance that the Company will not experience
difficulties that could delay or prevent the successful development,
introduction or marketing of such new services and products or that its new
services and products will adequately meet the requirements of the marketplace
and achieve market acceptance. Announcements of currently planned or other new
service and product offerings by the Company or its competitors may cause
customers to defer the purchase of existing Company services and products. The
Company's inability to develop on a timely basis new services or products, or
the failure of such new services or products to achieve market acceptance, could
have a material adverse effect on the Company's business, financial condition
and results of operations. The development of new, technologically advanced
products and services is a complex and uncertain process requiring high levels
of innovation, as well as the accurate anticipation of technological and market
trends. There can be no assurance that the Company will successfully develop,
introduce or manage the transition to new services and products. Furthermore,
services and products such as those offered by the Company may contain
undetected or unresolved errors when they are first introduced or as new
versions are released. There can be no assurance that, despite extensive testing
by the Company, errors will not be found in new services and products after
commencement of commercial availability, resulting in delay in or loss of market
acceptance and sales, diversion of development resources, injury to the
Company's reputation or increased service and warranty costs, any of which could
have a material adverse effect on the Company's business, financial condition
and results of operations. Significant delays in meeting deadlines for announced
service or product introductions or performance problems with such products or
upgrades could result in an undermining of customer confidence in the Company's
services and products, which would materially adversely affect its customer
relationships as well.
In addition, the Company plans to introduce transaction-based services and
software products to industries different from those the Company has
traditionally supported. There can be no assurance that the Company will be
successful in developing and marketing these new services and products or that
its current or new services and products will adequately meet the demands of its
new markets. Because it is generally not possible to predict the time required
and costs involved in reaching certain research, development and engineering
objectives related to entering new markets, actual development costs could
exceed budgeted amounts and estimated development schedules could require
extensions. Furthermore, there can be no assurance that the Company will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of these services and products. If the Company is
unable to develop and introduce new services and products to these new markets
in a timely manner, or if a new release of a product or service to such new
markets does not achieve market acceptance, the Company's business, financial
condition and results of operations could be materially adversely affected.
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DEPENDENCE ON A SINGLE SERVICE OFFERING; SUSTAINABILITY OF GROWTH
The Company currently derives substantially all of its revenue from the
provision of its 9-1-1 OSS solution to ILECs, CLECs and wireless carriers.
Accordingly, the Company is susceptible to adverse trends affecting this market
segment, such as government regulation, technological obsolescence and the entry
of new competition. The Company expects that this market will continue to
account for substantially all of its revenue in the near future. As a result,
the Company's future success will depend on its ability to continue to sell its
9-1-1 OSS solution to ILECs, CLECs and wireless carriers, maintain and increase
its market share by providing other value-added services to the market, and
successfully adapt its technology and services to other related markets. There
can be no assurance that markets for the Company's existing services and
products will continue to expand or that the Company will be successful in its
efforts to penetrate new markets. See "Business -- Strategy."
FIXED PRICE CONTRACTS AND OTHER PROJECT RISKS
During 1997, approximately 75% of the Company's revenue was generated on a
fixed price per subscriber basis. The Company generally enters into contracts
with a ten-year term for wireline data management services and with a
two-to-five-year term for wireless data management services for which the
Company generally receives a fixed monthly fee based upon the number of
subscribers and upon the services selected by the customer. Therefore, the
Company's failure to estimate accurately the resources required for a fixed
price per subscriber contract could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."
The Company provides 9-1-1 OSS services that are critical to the public's
perception of its customers. The Company's failure to meet a customer's
expectations in the performance of its services could damage the Company's
reputation and adversely affect its ability to attract new business, and may
have a material adverse effect upon its business, financial condition and
results of operations. The Company has undertaken, and in the future may
undertake, projects in which the Company guarantees performance based upon
defined operating specifications. Unsatisfactory performance may result in
client dissatisfaction and a reduction in payment to, or payment of damages by,
SCC, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations.
Because the Company's services and products are utilized by its customers
to provide critical 9-1-1 services, the provision of services and licensing of
software by the Company may entail the risk of product liability and related
claims. The Company's agreements with its customers typically require the
Company to indemnify its customers for the Company's own acts of negligence. The
Company currently has product liability insurance that, subject to liability
limitations and customary exclusions, covers claims resulting from the failure
of the Company's services or products to perform the function or serve the
purpose intended. To the extent that any claims are not covered by such
insurance, the Company's business, financial condition and results of operations
may be materially and adversely affected by a successful product liability
claim.
EMERGING TELECOMMUNICATIONS MARKET AND NEW CARRIERS; REGULATORY UNCERTAINTY
The Company provides its 9-1-1 OSS solution to telecommunications carriers
in the wireline and wireless markets. Although these markets have experienced
significant growth and have been characterized by increased deregulation and
competition in recent years, there can be no assurance that such trends will
continue at similar rates or that the Company will be able to market and sell
effectively its products and services in such markets. In addition, many of the
new entrants in the telecommunications market are companies that lack
significant financial and other resources. To cultivate relationships with such
new market entrants, the Company may be required to offer alternative pricing
arrangements, which may provide for deferred payments. However, there can be no
assurance that the Company will be able to develop such relationships or that
new carriers that become customers of the Company will gain market acceptance
for their telecommunications services. If the Company permits customers that do
not have adequate financial resources to pay the Company for its services on a
deferred basis, the Company ultimately may be unable to collect
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payments for such services. Because the Company historically has depended on a
limited number of long-term customer relationships, the failure of the Company
to develop relationships with, make sales to, or collect payments from new
telecommunications carriers, or the failure of the Company's customers to
compete effectively in the telecommunications market, could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, the telecommunications industry is experiencing
substantial consolidations and changes that are unpredictable, and any such
consolidation or change could have a material adverse effect on the Company's
business, financial condition and results of operations.
9-1-1 services generally are funded by a locally imposed fee per subscriber
per month. A portion of this tax is paid to the local carrier providing the
9-1-1 services. The Company generally receives a monthly fee per subscriber from
its customers for management of 9-1-1 data records, allowing the carrier to
match its fixed revenue stream for 9-1-1 services with a fixed cost for record
management. Changes by local governments in the funding mechanism for 9-1-1
services or the parties responsible for the provision of such services could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The market for the Company's services and products has been influenced by
the adoption of regulations under the Telecommunications Act of 1996 (the "1996
Act"), the new duties imposed on ILECs by the 1996 Act to open the local
telephone markets to competition, and the new requirements imposed on wireless
carriers by the Order. Therefore, any changes to such legal requirements, the
adoption of new regulations by federal or state regulatory authorities under the
1996 Act or any legal challenges to the 1996 Act could have a material adverse
effect upon the market for the Company's services and products. Although the
1996 Act was designed to expand competition in the telecommunications industry,
the realization of the objectives of the 1996 Act is subject to many
uncertainties, including judicial and administrative proceedings designed to
define rights and obligations pursuant to the 1996 Act, actions or inactions by
ILECs and other carriers that affect the pace at which changes contemplated by
the 1996 Act occur, resolution of questions concerning which parties will
finance such changes, and other regulatory, economic and political factors.
The Company is aware of certain litigation challenging the validity of the
1996 Act and the local telephone competition rules adopted by the FCC to
implement the 1996 Act. The U.S. Eighth Circuit Court of Appeals has invalidated
the pricing methodology and unbundling requirements adopted by the FCC while
upholding a portion of the FCC's local competition rules, and both the U.S.
federal government and ILECs have filed petitions for review with the U.S.
Supreme Court. In a recent decision, a U.S. District Court in Texas declared
unconstitutional the provisions of the 1996 Act requiring the Regional Bell
Operating Companies (the "RBOCs") to comply with certain conditions, including
local number portability ("LNP"), in order to receive regulatory approval to
enter long distance markets. The U.S. Department of Justice, representing the
FCC, has appealed this decision. Such litigation may serve to delay
implementation of the 1996 Act, which could adversely affect demand for the
Company's services and products. Any delays in the deadlines imposed by the 1996
Act, the FCC or the Order, or any invalidation, repeal or modification in the
requirements imposed by the 1996 Act, the FCC or the Order, could have a
material adverse effect on the Company's business, financial condition and
results of operations. Moreover, customers may require, or the Company otherwise
may deem it necessary or advisable, that the Company modify its services and
products to address actual or anticipated changes in the regulatory environment.
Any other delays in implementation of the 1996 Act, or other regulatory changes,
could materially adversely affect the Company's business, financial condition
and results of operations.
RISK OF SYSTEM FAILURES
The Company's operations are dependent upon its ability to maintain its
computer and telecommunications equipment and systems in effective working
order, and to protect its systems against damage from fire, natural disaster,
power loss, telecommunications failure or similar events. Although all of the
Company's mission-critical systems and equipment are designed with built-in
redundancy and security, there can be no assurance that a fire, natural
disaster, power loss, telecommunications failure or similar event would not
result in an interruption of the Company's services. Any damage, failure or
delay that causes interruptions in the Company's operations could have a
material adverse effect on the Company's business, financial condition and
results of operations. Furthermore, any future addition or expansion of the
Company's facilities to increase
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capacity could increase the Company's exposure to damage from fire, natural
disaster, power loss, telecommunications failure or similar events. There can be
no assurance that the Company's property and business interruption insurance
will be adequate to compensate the Company for any losses that may occur in the
event of a system failure or that such insurance will continue to be available
to the Company at all or, if available, that it will be available on
commercially reasonable terms. See "Business -- Products and Services."
MANAGEMENT OF CHANGE
The Company has expanded its operations rapidly over the past several
years, placing significant demands on its administrative, operational and
financial personnel and systems. Additional expansion by the Company may further
strain its management, operational, financial reporting, and other systems and
resources. There can be no assurance that the Company's systems, resources,
procedures, controls and existing space will be adequate to support such
expansion of the Company's operations. The Company's future operating results
will depend substantially on the ability of its officers and key employees to
manage changing business conditions and to implement and improve its management,
operational, financial control and other reporting systems. In addition, the
Company's future operating results depend on its ability to attract, train and
retain qualified consulting, technical, sales, financial, marketing and
management personnel. Failure to hire, train or retain qualified personnel
necessary to keep pace with the Company's development of products and services
could have a material adverse effect on the Company's business, financial
condition and results of operations. Continued expansion will require the
Company's management to: enhance management information and reporting systems;
standardize implementation methodologies of SCC's NDSC; further develop its
infrastructure; and continue to maintain customer satisfaction. If the Company
is unable to respond to and manage changing business conditions, the quality of
the Company's products and services, its ability to retain key personnel and its
business, financial condition and results of operation could be materially
adversely affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Management."
HIGHLY COMPETITIVE MARKET; COMPETITION
The market for 9-1-1 OSS solutions is intensely competitive and the Company
expects competition to increase in the future. The Company believes that the
principal competitive factors affecting the market for 9-1-1 OSS services
include flexibility, reliability, manageability, technical features, wireless
support, performance, ease of use, price, scope of product offerings, and
customer service and support. Although the Company believes that its solution
competes favorably with respect to such factors, there can be no assurance that
the Company can maintain its competitive position against current and potential
competitors, especially those with significantly greater financial, marketing,
support service, technical and other competitive resources.
The Company's principal competitors generally fall within one of three
categories: internal development departments of major carriers or consulting
firms that support such departments; relatively smaller companies that offer
applications with limited scope; and larger companies that are either in the
process of entering the Company's market or have the potential to develop
products and services that compete with the Company's service offerings.
A number of companies currently market or have under development software
products and services to provide 9-1-1 administration. The Company competes with
a few smaller companies, including XYPoint Corporation, for the provision of
9-1-1 data management services to wireless carriers, although the Company
expects more significant competition in the future. Mergers or consolidations
among these competitors or acquisitions of these companies by larger competitors
would make them more formidable competitors to the Company. There can be no
assurance that the Company's current and potential competitors will not develop
products and services that may be more effective than the Company's current or
future 9-1-1 solutions or that the Company's technologies and offerings will not
be rendered obsolete by such developments.
Finally, there are a number of companies that market and sell various
products and services to telecommunications carriers, such as billing software
and advanced telecommunications equipment, that have been broadly adopted by the
Company's customers and potential customers. In addition, vendors of
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telecommunications software and hardware in the future may enhance their
products to include functionality that is currently provided by the Company's
solutions. The widespread inclusion of the functionality of the Company's
service offerings as standard features of other telecommunications software or
hardware could render the Company's services obsolete and unmarketable,
particularly if the quality of such functionality were comparable to that of the
Company's services. Furthermore, even if the 9-1-1 functionality provided as
standard features by telecommunications software or networking hardware is more
limited than that of the Company's services, there can be no assurance that a
significant number of customers would not elect to accept more limited
functionality in lieu of purchasing additional products or services. For
example, Lucent Technologies offers carriers software systems with functionality
similar to the Company's services. Many of these larger companies have longer
operating histories, greater name recognition, access to larger customer bases
and significantly greater financial, technical and marketing resources than the
Company. As a result, they may be able to adapt more quickly to new or emerging
technologies and changes in customer requirements, or to devote greater
resources to the promotion and sale of their products and services, than the
Company. If these companies were to introduce products or services that
effectively compete with the Company's service offerings, they could be in a
position to substantially lower the price of their 9-1-1 products and services
or to bundle such products and services with their other product and service
offerings.
For the foregoing reasons, there can be no assurance that the Company will
be able to compete successfully against its current and future competitors.
Increased competition may result in price reductions, reduced gross margins and
loss of market share, any of which could materially and adversely affect the
Company's business, financial condition and results of operations. See
"Business -- Competition."
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends in large part on the continued service
of its key management, sales, product development and operational personnel,
including George Heinrichs, President and Chief Executive Officer, John Sims,
Chief Operating Officer, and Nancy Hamilton, Chief Financial Officer, and on the
Company's ability to continue to attract, motivate and retain highly qualified
employees, including technical, managerial and sales and marketing personnel.
Additionally, the Company expects to continue to expand the number of employees
engaged in sales, marketing and product development. However, competition in the
recruitment of highly qualified personnel in the software and telecommunications
services industry is intense and has become particularly significant in the
Denver metropolitan area. The inability to hire and retain qualified personnel
or the loss of the services of key personnel could have a material adverse
effect upon the Company's current business, development efforts and future
business prospects. If such personnel do not remain active in the Company's
business, the Company's operations could be materially adversely affected. The
Company currently maintains a key person life insurance policy only with respect
to Mr. Heinrichs. The Company is the named beneficiary of this $1,000,000
policy. See "Business -- Employees" and "Management."
DEPENDENCE ON PROPRIETARY RIGHTS
The Company's success and its ability to compete depends significantly upon
its proprietary rights. The Company relies primarily on a combination of
copyright, trademark and trade secret laws, as well as confidentiality
procedures and contractual restrictions to establish and protect its proprietary
rights. There can be no assurance that such measures will be adequate to protect
the Company's proprietary rights. Further, the Company may be subject to
additional risks as it enters into transactions in foreign countries where
intellectual property laws are not well developed or are difficult to enforce.
Legal protections of the Company's proprietary rights may be ineffective in such
countries. Litigation to defend and enforce the Company's intellectual property
rights could result in substantial costs and diversion of resources, and could
have a material adverse effect on the Company's business, financial condition
and results of operations, regardless of the final outcome of such litigation.
Despite the Company's efforts to safeguard and maintain its proprietary rights,
there can be no assurance that the Company will be successful in doing so or
that the steps taken by the Company in this regard will be adequate to deter
misappropriation or independent third-party development of the Company's
technology, or to prevent an unauthorized third party from copying or otherwise
obtaining and using the
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Company's technology. There also can be no assurance that others will not
independently develop similar technologies or duplicate any technology developed
by the Company. Any such events could have a material adverse effect on the
Company's business, financial condition and results of operations.
As the number of entrants to the Company's markets increases and the
functionality of the Company's services and products increases and overlaps with
the products and services of other companies, the Company may become subject to
claims of infringement or misappropriation of the intellectual property rights
of others. In certain of its customer agreements, the Company agrees to
indemnify its customers for any expenses or liabilities resulting from claimed
infringements of patents, trademarks or copyrights of third parties. In certain
limited instances, the amount of such indemnities may be greater than the
revenue the Company may have received from the customer. There can be no
assurance that third parties will not assert infringement or misappropriation
claims against the Company in the future with respect to current or future
product or service offerings. Any claims or litigation, with or without merit,
could be time consuming, result in costly litigation or require the Company to
enter into royalty or licensing arrangements. Such royalty or licensing
arrangements, if required, may not be available on terms acceptable to the
Company, if at all, and could have a material adverse effect on the Company's
business, financial condition and results of operations.
RISKS ASSOCIATED WITH INTERNATIONAL SALES
Although substantially all of the Company's revenue is generated from sales
to customers in the United States, the Company has generated revenue in Canada
and intends to enter additional international markets, which will require
significant management attention and financial resources. International sales
are subject to a variety of risks, including difficulties in establishing and
managing international distribution channels, and in translating products and
related materials into foreign languages. International operations are also
subject to difficulties in collecting accounts receivable, staffing, managing
personnel and enforcing intellectual property rights. Other factors that can
adversely affect international operations include fluctuations in the value of
foreign currencies and currency exchange rates, changes in import/export duties
and quotas, introduction of tariff or non-tariff barriers and economic or
political changes in international markets. There can be no assurance that these
factors will not have a material adverse effect on the Company's future
international sales and, consequently, on the Company's business, financial
condition and results of operations. Furthermore, any inability to obtain
foreign regulatory approvals on a timely basis could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview" and "Business -- Strategy."
RISKS RELATING TO POTENTIAL ACQUISITIONS
As part of its overall strategy, the Company regularly evaluates
opportunities to enter into strategic acquisitions, including potential business
combinations and significant investments in complementary companies, assets,
products and technologies, although the Company has no present arrangements,
commitments or agreements with respect to any acquisition. Acquisitions involve
a number of operating risks that could materially adversely affect the Company's
business, financial condition and results of operations, including the diversion
of management's attention to assimilate the operations, products and personnel
of the acquired companies, the amortization of acquired intangible assets, and
the potential loss of key employees of the acquired companies. Furthermore,
acquisitions may involve businesses in which the Company lacks experience.
Because management has limited experience in acquisitions and the Company has no
experience in integrating acquired companies or technologies into its
operations, there can be no assurance that the Company will be able to manage
one or more acquisitions successfully, or that the Company will be able to
integrate the operations, products or personnel gained through any such
acquisitions without a material adverse effect on the Company's business,
financial condition and results of operations. See "Use of Proceeds."
YEAR 2000 CAPABILITY
Many currently installed computer and software products are coded to accept
only two digit entries in the date code field. These date code fields will need
to accept four digit entries to distinguish twenty-first century dates from
twentieth century dates. As a result, in less than two years, computer systems
and/or software used
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by many companies may need to be upgraded to comply with such "Year 2000"
requirements. Significant uncertainty exists in the software industry concerning
the potential effects associated with such compliance.
The Company believes that the purchasing patterns of customers and
potential customers may be significantly affected by Year 2000 issues. Many
companies are expending significant resources to correct or patch their current
software systems for Year 2000 compliance. These expenditures may result in
reduced funds available to purchase services such as those offered by the
Company. Additionally, Year 2000 issues could cause a significant number of
companies, including current customers of the Company, to re-evaluate their
current system needs, and as a result, consider switching to other systems or
suppliers. This could have a material adverse effect on the Company's business,
financial condition and results of operations.
Certain of the Company's current contracts with its customers require that
the Company warrant Year 2000 capability by a certain date. Any failure to
achieve Year 2000 compliance by such date could have a material adverse effect
on the Company's business, financial condition and results of operations.
Although the Company is designing its services and products to be Year 2000
capable and tests third-party software that is incorporated with the Company's
services and products, there can be no assurance that the Company's services and
products, particularly when such products and services incorporate third-party
software, will contain all necessary date code changes in time. The Company
expects to incur approximately $125,000 in costs in 1998 in making its services
and products Year 2000 compliant. Any additional unanticipated expenses could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company utilizes off-the-shelf and custom software developed internally
and by third parties. To the extent that such software and systems do not comply
with Year 2000 requirements, there can be no assurance that potential systems
interruptions or the cost necessary to update such software will not have a
material adverse effect on the Company's business, financial condition and
results of operations.
NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to this offering there has been no public market for the Company's
Common Stock, and there can be no assurance that an active public market for the
Company's Common Stock will develop or be sustained after the offering. The
initial offering price will be determined by negotiation among the Company and
the Underwriters based upon several factors. See "Underwriting" for a discussion
of the method of determining the initial public offering price. The trading
price of the Company's Common Stock could be subject to wide fluctuations in
response to variations in operating results, announcements of technological
innovations or new products by the Company or its competitors, changes in
financial estimates by securities analysts, and other events or factors. In
addition, the stock market has experienced volatility that has particularly
affected the market prices of equity securities of many high technology
companies and that often has been unrelated to the operating performance of such
companies. These broad market fluctuations may materially adversely affect the
market price of the Company's Common Stock.
IMMEDIATE AND SUBSTANTIAL DILUTION
The purchasers of Common Stock in this offering will experience immediate
and substantial dilution in the net tangible book value per share of their
Common Stock. At an assumed initial public offering price of $14.00 per share
and after deducting estimated offering expenses payable by the Company and
estimated underwriting discounts and commissions, investors in this offering
will incur dilution of $11.04 per share. See "Dilution."
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Sales of a substantial number of shares of Common Stock in the public
market following this offering could adversely affect the market price for the
Company's Common Stock. The number of shares of Common Stock available for sale
in the public market is limited by restrictions under the Securities Act of
1933, as amended (the "Securities Act"), and lock-up agreements under which the
holders of such shares have agreed not to sell or otherwise dispose of any of
their shares for a period of 180 days after the date of this Prospectus without
the prior written consent of the BancAmerica Robertson Stephens. However,
BancAmerica Robertson Stephens, in its sole discretion and at any time without
notice, may release all or any portion of the securities subject to lock-up
agreements. When determining whether or not to release shares from the lock-up
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agreements, BancAmerica Robertson Stephens may consider, among other factors,
the holder's reasons for requesting the release, the number of shares for which
the release is being requested and market conditions at the time. As a result of
these restrictions, based on shares outstanding and options granted as of April
9, 1998, assuming no options are exercised between April 9, 1998 and the date of
this Prospectus, the following shares of Common Stock will be eligible for
future sale: on the date of this Prospectus, 3,361,469 shares (including the
3,300,000 shares offered hereby) will be eligible for sale; an additional
6,774,435 shares will be eligible for sale 180 days after the date of this
Prospectus. In addition, the Company intends to register on a registration
statement on Form S-8, approximately 90 days following the effective date of
this offering, a total of 1,901,055 shares of Common Stock subject to
outstanding options or reserved for issuance under the 1998 Stock Incentive
Plan. Upon expiration of the lock-up agreements referred to above, holders of
approximately 6,383,723 shares of Common Stock will be entitled to certain
registration rights with respect to such shares. If such holders, by exercising
their registration rights, cause a large number of shares to be registered and
sold in the public market, such sales could have a material adverse effect on
the market price for the Company's Common Stock. See "Shares Eligible for Future
Sale."
CONTROL BY EXISTING STOCKHOLDERS; EFFECTS OF CERTAIN ANTI-TAKEOVER PROVISIONS
Following the completion of this offering, members of the Board of
Directors and the executive officers of the Company, together with members of
their families and entities that may be deemed affiliates of or related to such
persons or entities, will beneficially own approximately 52.7% of the
outstanding shares of Common Stock of the Company. Accordingly, these
stockholders will be able to elect all members of the Company's Board of
Directors and determine the outcome of corporate actions requiring stockholder
approval, such as mergers and acquisitions. This level of ownership by such
persons and entities may have a significant effect in delaying, deferring or
preventing a change in control of the Company and may adversely affect the
voting and other rights of other holders of Common Stock. Certain provisions of
the Company's Amended and Restated Certificate of Incorporation, Amended and
Restated Bylaws, Delaware law and equity incentive plans also may discourage
certain transactions involving a change in control of the Company. This level of
ownership by such persons and entities, when combined with the ability of the
Board of Directors to issue "blank check" preferred stock without further
stockholder approval, may have the effect of delaying, deferring or preventing a
change in control of the Company. See "Management -- Directors and Executive
Officers," "Certain Transactions," "Principal and Selling Stockholders" and
"Description of Capital Stock."
MANAGEMENT'S DISCRETION OVER PROCEEDS OF THE OFFERING
The primary purposes of this offering are to create a public market for the
Common Stock, to facilitate future access by the Company to public equity
markets and to obtain additional equity capital. As of the date of this
Prospectus, the Company has no specific plans as to the use of the net proceeds
from this offering, other than to pay $4,610,000 of outstanding bank
indebtedness and a related prepayment premium; accordingly, the Company's
management will have broad discretion as to the application of such net
proceeds. Pending any such uses, the Company plans to invest the net proceeds in
short-term, investment grade, interest-bearing securities. See "Use of
Proceeds."
NO DIVIDENDS
The Company has not paid any cash or other dividends on its Common Stock,
nor does it expect to pay dividends in the foreseeable future. See "Dividend
Policy."
BENEFITS OF THE OFFERING TO CURRENT STOCKHOLDERS
The completion of the offering made by this Prospectus will provide
significant benefits to the current stockholders of the Company, including
certain of its Directors and officers. The net proceeds to the Selling
Stockholders from the sale of the 1,200,000 shares of Common Stock offered by
them hereby, assuming an initial public offering price of $14.00 and after
deducting estimated underwriting discounts and commissions, are estimated to be
approximately $15.6 million. The Company will not receive any of the proceeds
from the sale of shares by the Selling Stockholders. The completion of this
offering will also create a public market for the Common Stock and thereby is
expected to increase the market value of the investment by current stockholders
in the Company. Upon the closing of this offering at the assumed initial public
offering price of
16
<PAGE> 19
$14.00, the difference between the aggregate purchase price paid or payable by
the Company's named executive officers for shares of Common Stock held by them
or subject to options held by them and the aggregate market value of such shares
will be approximately $11.1 million. See "Dilution."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,100,000 shares of
Common Stock offered by the Company hereby, assuming an initial public offering
price of $14.00 and after deducting estimated expenses payable in connection
with this offering and estimated underwriting discounts and commissions, are
estimated to be approximately $26,542,000 ($30,643,000 if the Underwriters'
over-allotment option is exercised in full). The Company will not receive any
proceeds from the sale of Common Stock by the Selling Stockholders. The
principal purposes of this offering are to create a public market for the
Company's Common Stock, to facilitate future access by the Company to public
equity markets and to increase the Company's equity capital.
The Company intends to use $4.6 million of the proceeds to pay outstanding
bank indebtedness and a related prepayment premium. Of this amount, $4.0 million
will be used to prepay outstanding indebtedness and to pay a prepayment premium
of $160,000, pursuant to the Company's loan agreement with a bank. Such
indebtedness currently bears interest at the rate of 11% per annum and requires
principal payments of $250,000 beginning on March 31, 2001 and each subsequent
quarter end through December 31, 2002. Thereafter, principal payments of
$500,000 are due on March 31, 2003 and each subsequent quarter end, with the
final payment becoming due on November 30, 2003. Additionally, the Company
intends to use a portion of the proceeds to repay $450,000 outstanding under its
line of credit. Borrowings under the line of credit bear interest at prime rate
plus 1% (9.5% at April 30, 1998) and are due on April 15, 1999. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
The Company expects to use its remaining net proceeds (estimated to be
approximately $21.9 million) for product development and general corporate
purposes, including working capital. A portion of the net proceeds also may be
used for the acquisition of businesses, products and technologies that are
complementary to those of the Company. While the Company regularly evaluates
opportunities to enter into strategic acquisitions, including potential business
combinations and investments in complementary companies, assets, products and
technologies, the Company has no present arrangements, commitments or agreements
with respect to any acquisition. Pending such uses, the Company intends to
invest the net proceeds from this offering in short-term, investment-grade,
interest-bearing securities.
DIVIDEND POLICY
The Company has never declared or paid dividends on its capital stock and
does not anticipate paying cash dividends within the foreseeable future. Certain
covenants contained in the Company's line of credit agreement and a loan
agreement restrict the payment of any dividends without the lender's prior
consent. Payments of future dividends, if any, will be at the discretion of the
Company's Board of Directors, subject to the restrictions discussed above, after
taking into account various factors, including the Company's financial
condition, operating results, cash needs and expansion plans. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
17
<PAGE> 20
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1998: (i) on an actual basis; (ii) on a pro forma basis giving effect
to the conversion of all outstanding shares of Convertible Preferred Stock and
the exercise of an outstanding warrant to purchase shares of Common Stock, all
upon the closing of this offering; and (iii) on a pro forma basis, as further
adjusted to reflect the receipt of the estimated net proceeds from the sale of
2,100,000 shares of Common Stock offered by the Company hereby at an assumed
initial public offering price of $14.00 and the application of the net proceeds
therefrom as described under "Use of Proceeds." This table should be read in
conjunction with the Financial Statements and Notes thereto appearing elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt............................................ $ 9,642 $ 9,642 $ 6,998
======== ======== ========
Mandatorily redeemable, convertible preferred stock
(Series A, B, C, D, E and F), $.001 par value; 6,188,575
shares authorized; 6,188,575 shares issued and
outstanding, actual; none issued or outstanding, pro
forma or pro forma as adjusted.......................... 14,774 -- --
Putable common stock warrant.............................. 1,521 -- --
Stockholders' equity (deficit):
Preferred stock, $.001 par value; 15,000,000 shares
authorized; none issued or outstanding............... -- -- --
Common stock, $.001 par value; 30,000,000 shares
authorized; 1,958,284 shares outstanding, actual;
8,342,007 shares outstanding, pro forma; 10,442,007
shares outstanding, pro forma as adjusted(1)......... 2 8 10
Additional paid-in capital.............................. 453 16,742 43,282
Treasury stock, 36,250 shares, at cost.................. (3) (3) (3)
Stock subscriptions receivable.......................... (99) (99) (99)
Accumulated deficit..................................... (11,838) (11,838) (13,354)
-------- -------- --------
Total stockholders' equity (deficit)............ (11,485) 4,810 29,836
-------- -------- --------
Total capitalization............................ $ 14,452 $ 14,452 $ 36,834
======== ======== ========
</TABLE>
- ------------
(1) Excludes 1,116,126 shares of Common Stock issuable upon exercise of stock
options outstanding as of March 31, 1998 at a weighted average exercise
price of $3.13 per share, and 117,442 shares of Common Stock reserved for
grant of future options as of March 31, 1998, under the 1990 Stock Option
Plan. From April 1, 1998 to April 30, 1998, the Company issued 846 shares of
Common Stock upon the exercise of outstanding options and granted options to
purchase 3,333 shares of Common Stock pursuant to the 1990 Stock Option
Plan. In addition, the number of shares reserved for issuance under the 1990
Stock Option Plan was increased by 166,667 shares effective April 7, 1998.
On the effective date of the Registration Statement of which this Prospectus
is a part, an additional 500,000 share reserve will be created under the
Company's 1998 Stock Incentive Plan. See "Management -- Benefit
Plans -- 1998 Stock Incentive Plan."
18
<PAGE> 21
DILUTION
The pro forma net tangible book value of the Company at March 31, 1998 was
approximately $4,354,000, or $0.52 per share. Pro forma net tangible book value
per share represents the total amount of the Company's tangible assets less
total liabilities, divided by the number of shares of Common Stock outstanding
after giving effect to the conversion of all outstanding Convertible Preferred
Stock and the exercise of an outstanding warrant. After giving effect to the
sale of 2,100,000 shares of Common Stock offered hereby by the Company at an
assumed initial public offering price of $14.00 per share and after deducting
estimated offering expenses payable by the Company and estimated underwriting
discounts and commissions, the Company's pro forma net tangible book value at
March 31, 1998, would have been $30,896,000, or $2.96 per share. This represents
an immediate dilution of $11.04 per share to new investors purchasing shares of
Common Stock in this offering. The following table illustrates this dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $ 14.00
Pro forma net tangible book value per share as of March
31, 1998............................................... $ 0.52
Increase per share attributable to new investors.......... 2.44
--------
Pro forma net tangible book value per share after the
offering.................................................. 2.96
--------
Net tangible book value dilution per share to new
investors................................................. $ 11.04
========
</TABLE>
The following table summarizes, on a pro forma basis as of March 31, 1998,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by
existing stockholders and to be paid by new investors at an assumed initial
public offering price of $14.00 per share (before deducting estimated
underwriting discounts and commissions and other expenses of this offering):
<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).... 8,342,007 79.9% $12,932,000 30.5% $ 1.55
New investors(1)............ 2,100,000 20.1 29,400,000 69.5 $14.00
---------- ----- ----------- -----
Total............. 10,442,007 100.0% $42,332,000 100.0%
========== ===== =========== =====
</TABLE>
- ------------
(1) Sales by the Selling Stockholders in this offering will reduce the number of
shares held by the existing stockholders to 7,142,007 or approximately 68.4%
of the total number of shares of Common Stock outstanding after this
offering, and will increase the number of shares to be purchased by new
investors to 3,300,000 or approximately 31.6% of the total number of shares
of Common Stock outstanding after the offering. See "Principal and Selling
Stockholders."
The foregoing tables assume no exercise of outstanding options. As of March
31, 1998, there were outstanding stock options to purchase an aggregate of
1,116,126 additional shares of Common Stock at a weighted average exercise price
of $3.13 per share. To the extent that these options are exercised, there will
be further dilution to new investors. See "Management -- Benefit Plans -- 1998
Stock Incentive Plan" and Note 5 of Notes to Financial Statements.
19
<PAGE> 22
SELECTED FINANCIAL DATA
The following selected financial data are qualified by reference to and
should be read in conjunction with the Company's Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus. The statement of
operations data for the years ended December 31, 1995, 1996 and 1997 and the
balance sheet data at December 31, 1996 and 1997 are derived from, and are
qualified by reference to, the audited Financial Statements and Notes included
elsewhere in this Prospectus. The statement of operations data for the years
ended December 31, 1994 and 1993 and the balance sheet data at December 31,
1993, 1994 and 1995 are derived from audited financial statements not included
in this Prospectus. The data presented as of March 31, 1998 and for the three
months ended March 31, 1997 and 1998 are derived from unaudited Financial
Statements included elsewhere in this Prospectus. In the opinion of management,
these unaudited Financial Statements include all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the data for such
periods. The results of operations for the three months ended March 31, 1998 are
not necessarily indicative of the results to be expected for the full year or
for any future period.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
---------------------------------------------- -----------------
1993 1994 1995 1996 1997 1997 1998
------ ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Data management services......................... $ -- $ 170 $ 3,531 $13,165 $24,005 $ 4,861 $ 7,533
Licenses and implementation services............. 4,799 1,830 3,882 1,637 3,067 271 369
------ ------- ------- ------- ------- ------- -------
Total revenue.............................. 4,799 2,000 7,413 14,802 27,072 5,132 7,902
Costs and expenses:
Cost of data management services................. -- 1,137 2,840 7,996 15,378 3,123 4,798
Cost of licenses and implementation services..... 2,148 789 1,041 596 1,283 98 153
Sales and marketing.............................. 1,080 1,262 2,016 3,204 3,850 933 843
General and administrative....................... 439 227 830 1,533 3,227 485 1,146
------ ------- ------- ------- ------- ------- -------
Total costs and expenses................... 3,667 3,415 6,727 13,329 23,738 4,639 6,940
------ ------- ------- ------- ------- ------- -------
Income (loss) from operations...................... 1,132 (1,415) 686 1,473 3,334 493 962
Other expenses, net................................ 8 10 368 527 879 150 301
------ ------- ------- ------- ------- ------- -------
Income (loss) from continuing operations before
income taxes..................................... 1,124 (1,425) 318 946 2,455 343 661
Provision (benefit) for income taxes............... 298 53 16 9 (2,328) 24 46
------ ------- ------- ------- ------- ------- -------
Net income (loss) from continuing operations....... 826 (1,478) 302 937 4,783 319 615
Income (loss) from operations of discontinued
division, net of tax............................. 103 (1,956) (1,746) (562) (876) (253) --
Loss from disposal of discontinued division........ -- -- -- -- (2,032) -- --
------ ------- ------- ------- ------- ------- -------
Net income (loss).................................. $ 929 $(3,434) $(1,444) $ 375 $ 1,875 $ 66 $ 615
====== ======= ======= ======= ======= ======= =======
PER SHARE DATA(1):
Net income (loss) from continuing operations per
share:
Basic............................................ $ 0.68 $ (1.36) $ (0.02) $ 0.15 $ 2.17 $ .07 $ .20
====== ======= ======= ======= ======= ======= =======
Diluted.......................................... $ 0.15 $ (1.36) $ (0.02) $ 0.11 $ 0.54 $ .04 $ .07
====== ======= ======= ======= ======= ======= =======
Net income (loss) per share:
Basic............................................ $ 0.78 $ (3.02) $ (1.07) $ (0.17) $ 0.61 $ (0.07) $ 0.20
====== ======= ======= ======= ======= ======= =======
Diluted.......................................... $ 0.16 $ (3.02) $ (1.07) $ 0.05 $ 0.21 $ 0.01 $ 0.07
====== ======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------- MARCH 31,
1993 1994 1995 1996 1997 1998
------- ------- ------- -------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 1,139 $ 721 $ 1,004 $ 32 $ 2,503 $ 1,177
Working capital (deficit).............................. (3,729) (7,468) (8,135) (7,345) (2,670) (2,031)
Total assets........................................... 6,150 6,422 11,755 18,482 21,106 23,328
Long-term debt......................................... 230 494 1,934 3,318 6,891 9,642
Total stockholders' deficit(2)......................... (2,547) (5,845) (4,614) (13,068) (11,867) (11,485)
</TABLE>
- ------------
(1) See Note 2 of Notes to Financial Statements for an explanation of the
determination of the shares used in computing net income (loss) per share.
(2) The Company has never declared or paid dividends on any of its capital
stock.
20
<PAGE> 23
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under "Risk Factors" and elsewhere in this Prospectus.
The following discussion should be read in conjunction with the Financial
Statements and Notes thereto included elsewhere in this Prospectus.
OVERVIEW
SCC is the leading provider of 9-1-1 OSS services to ILECs, CLECs and
wireless carriers in the United States. The Company manages the data that enable
a 9-1-1 call to be routed to the appropriate public safety agency with accurate
and timely information about the caller's identification and location. The
Company was incorporated in July 1979 in the State of Colorado under the name
Systems Concepts of Colorado, Inc. and was reincorporated in September 1993 in
the State of Delaware under the name SCC Communications Corp. Prior to 1995,
substantially all of the Company's revenue was derived from the sale of software
licenses and related implementation services to ILECs and public safety
agencies. During 1994, the Company began investing in infrastructure to provide
its 9-1-1 OSS solution to telephone operating companies seeking to outsource
such operations. The Company signed its first 9-1-1 data management services
contract in August 1994 and added to the number of records under management
during 1995, 1996 and 1997. The Company began to recognize revenue from wireless
carriers in the third quarter of 1997, and a growing percentage of the Company's
revenue has been derived from the management of 9-1-1 data records for wireless
carriers.
SCC's data management services revenue is derived from contracts with
ILECs, CLECs and wireless carriers pursuant to which the Company provides an
outsourcing solution for its customers' 9-1-1 data management. Revenue included
in data management services generally includes a non-recurring initial fee for
the design and implementation of the 9-1-1 OSS, conversion of the customer's
data to the Company's systems, hiring and training of personnel, and other costs
required to prepare for the processing of customer data. Non-recurring fees are
recognized on the percentage-of-completion method over the period required to
perform the tasks necessary to prepare for the processing of customer data. The
Company also generally receives a monthly service fee based on the number of
subscriber records under management, which is recognized in the period in which
the services are rendered. Data management services revenue also may include
revenue from enhanced products and services, which are recognized in the period
to which the services are performed. Related costs are expensed as they are
incurred. Data management services revenue comprised 48%, 89% and 89% of the
Company's total revenue in the years ended December 31, 1995, 1996 and 1997,
respectively, and 95% in the three months ended March 31, 1998.
SCC's licenses and implementation services revenue is derived from
contracts with ILECs pursuant to which the Company provides a 9-1-1 software
license or related products and services such as implementation, training,
software enhancements and interfaces to its customers' systems. Licenses and
implementation services revenue is recognized using the percentage-of-completion
method. The related costs include third-party licenses, direct labor and related
expenses, and are expensed as incurred. Subsequent to system installation, the
Company provides its customers with maintenance services that are recognized
ratably over the related contract period on a straight-line basis. The Company's
licenses and implementation services revenue is derived from a limited number of
customers and consequently the concentration of customers can result in
quarterly fluctuations based on the timing of the signing of new contracts and
completion of existing contracts. Margins on such contracts also may fluctuate
based on the elements included in the contract. Licenses and implementation
services revenue comprised 52%, 11% and 11% of the Company's total revenue in
the years ended December 31, 1995, 1996 and 1997, respectively, and 5% in the
three months ended March 31, 1998.
During the year ended December 31, 1996, the Company recognized
approximately 82% of total revenue from continuing operations from Ameritech and
U.S. WEST, each of which accounted for greater than 10% of
21
<PAGE> 24
the Company's total revenue in such periods. During the year ended December 31,
1997, the Company recognized approximately 81% of total revenue from Ameritech,
BellSouth Inc. and U.S. WEST, each of which accounted for greater than 10% of
the Company's total revenue in such periods. During the three months ended March
31, 1998, the Company recognized approximately 92% of total revenue from four
customers, each of which accounted for greater than 10% of the Company's total
revenue in such periods. See "Risk Factors -- Reliance on Significant
Customers."
As of December 31, 1997, the Company had net operating loss carryforwards
of $9.6 million available to offset future net income for U.S. federal income
tax purposes. Thus, the Company's income tax provision for past fiscal years
consisted of alternative minimum taxes, state income taxes in states where the
Company has not had net operating loss carryforwards to offset net income, and
foreign taxes. As of December 31, 1997, the Company reversed $2.5 million of the
valuation allowance on its deferred tax assets as the Company believes that it
is more likely than not that such tax benefits will be realized. There is no
assurance that the Company's remaining deferred tax benefit will be offset by
future taxable income or will not be restricted in the future due to
transactions entered into by the Company or changes in tax legislation.
In June 1997, the Company sold the net assets of its Premise Products
Division. The sale of the Company's Premise Products Division resulted in a net
loss from the sale of $2.0 million. Net losses from operations of this division
totaled $1.7 million, $562,000 and $876,000 in 1995, 1996 and 1997,
respectively, and are presented in the Company's financial statements as loss
from operations of discontinued division.
Historically, substantially all of the Company's revenue has been generated
from sales to customers in the United States. However, the Company has generated
revenue in Canada and intends to enter additional international markets, which
may require significant management attention and financial resources.
International sales are subject to a variety of risks. See "Risk
Factors -- Risks Associated with International Sales."
The Company's quarterly and annual operating results have varied
significantly in the past. The variation in operating results will likely
continue and may intensify. Although the Company was profitable in seven of its
last eight quarters, there can be no assurance that the Company's profitability
will continue in the future or, if the Company is profitable, that its levels of
profitability will not vary significantly between quarters. Accordingly, the
Company believes that period to period comparisons of results of operations are
not necessarily meaningful and should not be relied upon as indications of
future performance. The Company's operating results may fluctuate as a result of
many factors, including the length of the sales cycles for new or existing
customers, the size, timing or duration of significant customer contracts,
fluctuations in number of subscriber records under management, timing or
duration of service offerings, ability of the Company to hire, train and retain
qualified personnel, increased competition, changes in operating expenses,
changes in Company strategy, the financial performance of the Company's
customers, changes in telecommunications legislation and regulations that may
affect the competitive environment for the Company's services, and general
economic factors. The Company's contracts for 9-1-1 OSS services generally
include a non-recurring initial fee, and therefore, the Company may recognize
significantly increased revenue for a short period of time upon commencing
services for a new customer.
The Company's expense levels are based in significant part on its
expectations regarding future revenue. The Company's revenue is difficult to
forecast because the market for the Company's 9-1-1 OSS services is rapidly
evolving. In addition, the Company's sales cycle and the size and timing of
significant customer contracts, license fees and non-recurring initial fees vary
substantially among customers depending on the level of service provided.
Accordingly, the Company may be unable to adjust spending in a timely manner to
compensate for any unexpected shortfall in revenue. Any significant shortfall
could therefore have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company hired
additional employees in 1996, 1997 and the three months ended March 31, 1998,
and expects to continue hiring additional employees during 1998. The Company
expects that this increase will affect the Company's operating margins for the
short term. There can be no assurance that the Company can continue to report
operating profits, and failure to do so is likely to have a material adverse
effect on the Company's financial results. See "Risk Factors -- Significant
Fluctuations in Quarterly Results of Operations" and "-- Management of Change."
22
<PAGE> 25
RESULTS OF OPERATIONS
The following table sets forth certain statement of operations data of the
Company expressed as a percentage of total revenue for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- --------------
1995 1996 1997 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Data management services................. 47.6% 88.9% 88.7% 94.7% 95.3%
Licenses and implementation services..... 52.4 11.1 11.3 5.3 4.7
----- ----- ----- ----- -----
Total revenue.................... 100.0 100.0 100.0 100.0 100.0
Costs and expenses:
Cost of data management services......... 38.3 54.0 56.8 60.8 60.7
Cost of licenses and implementation
services.............................. 14.0 4.0 4.7 1.9 1.9
Sales and marketing...................... 27.2 21.6 14.2 18.2 10.7
General and administrative............... 11.2 10.4 11.9 9.5 14.5
----- ----- ----- ----- -----
Total costs and expenses......... 90.7 90.0 87.6 90.4 87.8
----- ----- ----- ----- -----
Income from operations..................... 9.3 10.0 12.4 9.6 12.2
Other expenses, net........................ 5.0 3.6 3.2 2.9 3.8
----- ----- ----- ----- -----
Net income from continuing operations
before income taxes...................... 4.3 6.4 9.2 6.7 8.4
Provision (benefit) for income taxes....... 0.2 -- (8.5) 0.5 0.6
----- ----- ----- ----- -----
Net income from continuing operations...... 4.1 6.4 17.7 6.2 7.8
Loss from operations of discontinued
division, net of tax..................... (23.6) (3.8) (3.2) (4.9) --
Loss from disposal of discontinued
division................................. -- -- (7.5) -- --
----- ----- ----- ----- -----
Net income (loss).......................... (19.5)% 2.6% 7.0% 1.3% 7.8%
===== ===== ===== ===== =====
Cost of data management services as a
percent of data management services
revenue.................................. 80.4% 60.7% 64.1% 64.2% 63.7%
===== ===== ===== ===== =====
Cost of licenses and implementation
services as a percent of licenses and
implementation services revenue.......... 26.8% 36.4% 41.8% 36.2% 41.5%
===== ===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
Revenue
Total Revenue. Total revenue increased 54%, from $5.1 million in the first
quarter of 1997 to $7.9 million in the first quarter of 1998.
Data Management Services Revenue. Revenues from data management services
increased 55%, from $4.9 million in the first quarter of 1997 to $7.5 million in
the first quarter of 1998, representing approximately 95% of total revenue in
both periods. The increase resulted primarily from (i) non-recurring and monthly
fees from wireless customers in the first quarter of 1998, as the Company did
not begin to earn revenue from wireless customers until the third quarter of
1997, (ii) increased monthly fees from wireline customers, as the Company had
not completed the transition of records for a major customer in the first
quarter of 1997, and (iii) non-recurring fees from enhanced services provided in
the first quarter of 1998.
Licenses and Implementation Services. Revenue from licenses and
implementation services increased 36%, from $271,000 in the first quarter of
1997 to $369,000 in the first quarter of 1998, as the Company earned revenue in
1998 related to a contract that was not in place in the first quarter of 1997.
23
<PAGE> 26
Costs and Expenses
Cost of Data Management Services. Cost of data management services consists
primarily of labor and costs of interconnection with customers' systems and the
Company's infrastructure. Cost of data management services increased 54%, from
$3.1 million in the first quarter of 1997 to $4.8 million in the first quarter
of 1998, representing 61% and 64% of total revenue and data management services
revenue, respectively, in both periods. The dollar increase was due to the
addition of personnel and expansion of facilities to accommodate growth in the
Company's wireless and wireline operations.
Cost of Licenses and Implementation Services. Cost of licenses and
implementation services consists primarily of labor, license fees for third
party software and related expenses. Cost of licenses and implementation
services increased 56%, from $98,000 in the first quarter of 1997 to $153,000 in
the first quarter of 1998, representing 2% of total revenue in both periods and
36% and 42% of licenses and implementation services revenue in the first quarter
of 1997 and the first quarter of 1998, respectively. The increase in dollars and
as a percent of licenses and implementation services revenue was due to work
performed on a contract in the first quarter of 1998 which contained higher cost
elements, including third-party software, than contracts in process in the first
quarter of 1997.
Sales and Marketing. Sales and marketing expenses consist primarily of
expenses related to salaries and commissions, travel, trade shows and sales
collateral. Sales and marketing expenses decreased 10%, from $933,000 in the
first quarter of 1997 to $843,000 in the first quarter of 1998, representing 18%
and 11% of total revenue in the first quarter of 1997 and the first quarter of
1998, respectively. The decrease was primarily due to decreased commissions and
bonuses in the first quarter of 1998 caused by a change in the structure of the
incentive plans and a bonus paid to an individual in the first quarter of 1997,
as well as the transfer of a vice president to a general and administrative
position. These decreases were offset by increased headcount and public
relations costs.
General and Administrative. General and administrative expenses consist
primarily of expenses related to the Company's information systems, finance,
human resources, legal, executive and financial planning departments. General
and administrative expenses increased 136%, from $485,000 in the first quarter
of 1997 to $1.1 million in the first quarter of 1998, representing 10% and 15%
of total revenue in the first quarter of 1997 and the first quarter of 1998,
respectively. The dollar increase was due to (i) the reassignment of certain
continuing resources, infrastructure and related general and administrative
expenses applicable to continuing operations, (ii) addition of personnel and
computer equipment in the accounting, information systems and human resources
departments to support the Company's growth and (iii) increased executive
bonuses due to increased profitability in the first quarter of 1998.
Other Expenses, Net. Net other expenses consist primarily of interest
expense from the Company's borrowings and leases for capital equipment, offset
by interest income earned on the Company's cash balances. Other expenses
increased 101%, from $150,000 in the first quarter of 1997 to $301,000 in the
first quarter of 1998, representing 3% and 4% of total revenue in the first
quarter of 1997 and the first quarter of 1998, respectively. The dollar increase
was primarily due to interest related to the 4.0 million loan from a bank that
was outstanding in the first quarter of 1998, which was partially offset by
decreased interest expense resulting from a lower balance outstanding on the
Company's line of credit in the first quarter of 1998.
Provision for income taxes. The Company's income tax provision increased
from $24,000 in the first quarter of 1997 to $46,000 in the first quarter of
1998 due to increased income generated in states where the Company did not have
net operating loss carryforwards available to offset net income.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Revenue
Total Revenue. Total revenue increased 83%, from $14.8 million in 1996 to
$27.1 million in 1997.
Data Management Services Revenue. Revenue from data management services
increased 82%, from $13.2 million in 1996 to $24.0 million in 1997, representing
approximately 89% of total revenue in both years. This increase resulted from an
increase in non-recurring and monthly fees from existing customers, increased
24
<PAGE> 27
sales of new services to existing customers, and the realization of
non-recurring and monthly fees from both wireline and wireless customers.
Licenses and Implementation Services Revenue. Revenue from licenses and
implementation services increased 87%, from $1.6 million in 1996 to $3.1 million
in 1997. The increase resulted from the addition of a new contract in 1997.
Costs and Expenses
Cost of Data Management Services. Cost of data management services
increased 92%, from $8.0 million in 1996 to $15.4 million in 1997, representing
54% and 57%, respectively, of total revenue and 61% and 64%, respectively, of
data management services revenue. The increase as a percentage of total revenue
and data management services revenue resulted from the addition of employees and
other resources in early 1997 in anticipation of wireless contracts, although
the Company did not begin recognizing revenue from such contracts until the
third quarter of 1997.
Cost of Licenses and Implementation Services. Cost of licenses and
implementation services increased 115%, from $596,000 in 1996 to $1.3 million in
1997, representing 4% and 5%, respectively, of total revenue and 36% and 42%,
respectively, of licenses and implementation services revenue. The increase as a
percentage of associated revenue was due to the inclusion of higher cost
elements, including third-party software, in contracts performed in 1997.
Sales and Marketing. Sales and marketing expenses increased 20%, from $3.2
million in 1996 to $3.9 million in 1997, representing 22% and 14%, respectively,
of total revenue. The increase in dollar amount was primarily due to increases
in salaries, recruiting, relocation and travel costs caused by an increase in
the sales force and increased marketing activities in 1997. The remaining
increase was due to the reassignment of marketing resources and related expenses
to the Company's continuing operations.
General and Administrative. General and administrative expenses increased
111%, from $1.5 million in 1996 to $3.2 million in 1997, representing 10% and
12%, respectively, of total revenue. Approximately $1.0 million of the increase
is related to the reassignment of certain continuing resources, infrastructure
and related general and administrative expenses applicable to the Company's
continuing operations. The remaining dollar and percentage increases resulted
primarily from increased costs necessary to develop and maintain the internal
and customer support information systems, increased depreciation expense in
1997, increased executive bonuses paid and accrued in 1997, and expansion of the
Company's facilities to accommodate the Company's growth.
Other Expenses, Net. Other expenses increased 67%, from $527,000 in 1996 to
$879,000 in 1997, representing 4% and 3% of total revenue in 1996 and 1997,
respectively. The increase in dollar amount resulted from an increase in
interest expense caused by an increase in capital leases, a higher average
balance outstanding on the Company's line of credit in 1997, and interest
expense related to a $4.0 million borrowing in November 1997. This increase was
partially offset by an increase in interest income recognized, as the Company's
average cash balance increased in 1997.
Provision (Benefit) for Income Taxes. The Company's income tax provision
(benefit) changed from a provision of $9,000 in 1996 to a benefit of
$(2,328,000) in 1997. In 1997, the Company recorded an income tax benefit of
$2.5 million due to the reversal of a portion of the Company's valuation
allowance on its deferred tax assets. Excluding this benefit, the Company had an
income tax provision of $172,000. This increase over 1996 was due to a foreign
income tax refund received in 1996. In addition, the Company's state income tax
provision increased in 1997, as the Company generated more income in states in
which the Company did not have net operating loss carryforwards available to
offset net income.
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<PAGE> 28
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Revenue
Total Revenue. Total revenue increased 100%, from $7.4 million in 1995 to
$14.8 million in 1996.
Data Management Services Revenue. Revenue from data management services
increased 273%, from $3.5 million in 1995 to $13.2 million in 1996, representing
48% and 89%, respectively, of total revenue. The increase in dollar amount
resulted from increased revenue from non-recurring and monthly fees in 1996 from
both existing and new wireline customers.
Licenses and Implementation Services Revenue. Revenue from licenses and
implementation services decreased 58%, from $3.9 million in 1995 to $1.6 million
in 1996, representing 52% and 11%, respectively, of total revenue. The decrease
resulted from the implementation of a large project in 1995 without a comparable
amount of new business in 1996.
Costs and Expenses
Cost of Data Management Services. Cost of data management services
increased 182%, from $2.8 million in 1995 to $8.0 million in 1996, representing
38% and 54%, respectively, of total revenue and 80% and 61%, respectively, of
data management services revenue. Cost of data management services was greater
as a percentage of the related revenue in 1995 because the Company was building
the infrastructure for its data management services business, including hiring
and training employees, building the network infrastructure, preparing
facilities and converting data to the Company's systems. Cost of data management
services was higher as a percentage of total revenue in 1996 due to the
increased percentage of data management services revenue.
Cost of Licenses and Implementation Services. Cost of licenses and
implementation services decreased 43%, from $1.0 million in 1995 to $596,000 in
1996, representing 14% and 4%, respectively, of total revenue and 27% and 36%,
respectively, of licenses and implementation services revenue. The increase as a
percentage of associated revenue was due to the inclusion of higher cost
elements, including third-party software, on contracts in 1996.
Sales and Marketing. Sales and marketing expenses increased 59%, from $2.0
million in 1995 to $3.2 million in 1996, representing 27% and 22%, respectively,
of total revenue. The increase in dollar amount was primarily due to increased
salary, travel and related facilities costs caused by an increase in the sales
force, increased sales commissions and bonuses due to increased revenue, and
increased costs for trade shows. The remaining increase was due to an increase
in certain marketing expenses from the growth of continuing operations of the
Company.
General and Administrative. General and administrative expenses increased
85%, from $830,000 in 1995 to $1.5 million in 1996, representing 11% and 10%,
respectively, of total revenue. This increase in dollar amount was primarily due
to salaries, travel and other costs related to the hiring of management and
other personnel in anticipation of growth in 1996. The increase was partially
offset by decreased relocation, bad debt and consulting expenses.
Other Expenses, Net. Net other expenses increased 43%, from $368,000 in
1995 to $527,000 in 1996, representing 5% and 4%, respectively, of total
revenue. The increase in dollar amount was due to an increase in interest
expense primarily related to additional capital leases for equipment required to
operate the Company's data management services business. This increase was
partially offset by a decrease in interest expense caused by the conversion to
equity and repayment of certain notes payable in 1996.
Provision for Income Taxes. The income tax provision decreased 44%, from
$16,000 in 1995 to $9,000 in 1996. This decrease was primarily due to a foreign
income tax refund received in 1996, offset by additional income generated in
1996 in states in which the Company did not have net operating loss
carryforwards available to offset net income.
26
<PAGE> 29
QUARTERLY RESULTS OF OPERATIONS
The following table sets forth quarterly results of operations data in
dollars and as a percentage of total revenue for each of the nine quarters in
the period ended March 31, 1998. This quarterly information is unaudited, has
been prepared on the same basis as the annual financial statements and, in the
opinion of the Company's management, reflects all normal recurring adjustments
necessary for a fair presentation of the information for the periods presented,
when read in conjunction with the Company's Financial Statements and Notes
thereto appearing elsewhere in this Prospectus. Operating results for any
quarter are not necessarily indicative of results for any future period. See
"Risk Factors -- Significant Fluctuations in Quarterly Operating Results of
Operations."
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEP. 30, DEC. 31, MAR. 31, JUNE 30, SEP. 30, DEC. 31, MAR. 31,
1996 1996 1996 1996 1997 1997 1997 1997 1998
-------- -------- -------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Data management services..... $2,253 $3,241 $3,573 $4,098 $4,861 $ 5,241 $6,394 $7,509 $7,533
Licenses and implementation
services................... 567 596 238 236 271 536 834 1,426 369
------ ------ ------ ------ ------ ------- ------ ------ ------
Total revenue.......... 2,820 3,837 3,811 4,334 5,132 5,777 7,228 8,935 7,902
Costs and expenses:
Cost of data management
services................... 1,435 1,732 2,236 2,593 3,123 3,434 4,174 4,647 4,798
Cost of licenses and
implementation services.... 258 207 120 11 98 254 457 474 153
Sales and marketing.......... 539 949 752 964 933 1,067 901 949 843
General and administrative... 309 370 419 435 485 525 930 1,287 1,146
------ ------ ------ ------ ------ ------- ------ ------ ------
Total costs and
expenses............. 2,541 3,258 3,527 4,003 4,639 5,280 6,462 7,357 6,940
------ ------ ------ ------ ------ ------- ------ ------ ------
Income from operations......... 279 579 284 331 493 497 766 1,578 962
Other expenses, net............ 102 112 150 163 150 208 193 328 301
------ ------ ------ ------ ------ ------- ------ ------ ------
Income from continuing
operations before income
taxes........................ 177 467 134 168 343 289 573 1,250 661
Provision (benefit) for income
taxes........................ 12 34 (53) 16 24 20 40 (2,412) 46
------ ------ ------ ------ ------ ------- ------ ------ ------
Net income from continuing
operations................... 165 433 187 152 319 269 533 3,662 615
Loss from operations of
discontinued division, net of
tax.......................... (30) (366) (39) (127) (253) (623) -- -- --
Loss from disposal of
discontinued division........ -- -- -- -- -- (2,032) -- -- --
------ ------ ------ ------ ------ ------- ------ ------ ------
Net income (loss).............. $ 135 $ 67 $ 148 $ 25 $ 66 $(2,386) $ 533 $3,662 $ 615
====== ====== ====== ====== ====== ======= ====== ====== ======
AS A PERCENTAGE OF TOTAL
REVENUE:
Revenue:
Data management services..... 79.9% 84.5% 93.8% 94.6% 94.7% 90.7% 88.5% 84.0% 95.3%
License and implementation
services................... 20.1 15.5 6.2 5.4 5.3 9.3 11.5 16.0 4.7
------ ------ ------ ------ ------ ------- ------ ------ ------
Total revenue.......... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Costs and expenses:
Cost of data management
services................... 50.9 45.1 58.7 59.8 60.9 59.4 57.7 52.0 60.7
Cost of licenses and
implementation services.... 9.1 5.4 3.1 0.3 1.9 4.4 6.3 5.3 1.9
Sales and marketing.......... 19.1 24.7 19.7 22.2 18.2 18.5 12.5 10.6 10.7
General and administrative... 11.0 9.7 11.0 10.0 9.4 9.1 12.9 14.4 14.5
------ ------ ------ ------ ------ ------- ------ ------ ------
Total costs and
expenses............. 90.1 84.9 92.5 92.3 90.4 91.4 89.4 82.3 87.8
------ ------ ------ ------ ------ ------- ------ ------ ------
Income from operations......... 9.9 15.1 7.5 7.7 9.6 8.6 10.6 17.7 12.2
Other expenses, net............ 3.6 2.9 3.9 3.8 2.9 3.6 2.7 3.7 3.8
------ ------ ------ ------ ------ ------- ------ ------ ------
Income from continuing
operations before income
taxes........................ 6.3 12.2 3.6 3.9 6.7 5.0 7.9 14.0 8.4
Provision (benefit) for income
taxes........................ 0.4 0.9 (1.4) 0.4 0.5 0.3 0.6 (27.0) 0.6
------ ------ ------ ------ ------ ------- ------ ------ ------
Net income from continuing
operations................... 5.9 11.3 5.0 3.5 6.2 4.7 7.3 41.0 7.8
Loss from operations of
discontinued division, net of
tax.......................... (1.1) (9.5) (1.0) (2.9) (4.9) (10.8) -- -- --
Loss from disposal of
discontinued division........ -- -- -- -- -- (35.2) -- -- --
------ ------ ------ ------ ------ ------- ------ ------ ------
Net income (loss).............. 4.8% 1.8% 4.0% 0.6% 1.3% (41.3)% 7.3% 41.0% 7.8%
====== ====== ====== ====== ====== ======= ====== ====== ======
Cost of data management
services as a percent of data
management services
revenue...................... 63.7% 53.4% 62.6% 63.3% 64.2% 65.5% 65.3% 61.9% 63.7%
====== ====== ====== ====== ====== ======= ====== ====== ======
Cost of licenses and
implementation services as a
percent of licenses and
implementation services
revenue...................... 45.5% 34.7% 50.4% 4.7% 36.2% 47.4% 54.8% 33.2% 41.5%
====== ====== ====== ====== ====== ======= ====== ====== ======
</TABLE>
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<PAGE> 30
LIQUIDITY AND CAPITAL RESOURCES
Since its inception the Company has funded its operations through cash
provided by operations, supplemented by equity and debt financing and leases on
capital equipment. As of March 31, 1998, the Company had $1.2 million in cash
and cash equivalents and $2.9 million in net accounts receivable. In 1996, the
Company generated cash from financing activities through the issuance of shares
of Convertible Preferred Stock for $4.0 million. In addition, the Company
borrowed $4.0 million in 1997 from a bank. The loan bears interest at 11%
through May 31, 1999, and at 12% thereafter through maturity. Principal payments
of $250,000 are due beginning on March 31, 2001, and will be payable at each
subsequent quarter end through December 31, 2002. Principal payments of $500,000
are due on March 31, 2003 and at each subsequent quarter end, with the final
payment due November 30, 2003. The Company may prepay the loan after June 30,
1998; however, a prepayment premium will be due equal to 4% of the amount
outstanding if prepaid between June 30, 1998 and November 30, 1998, 3% if
prepaid between December 1, 1998 and November 30, 1999 and 2% if prepaid between
December 1, 1999 and November 30, 2000. The loan is secured by a first priority
security interest in substantially all of the Company's assets. As of the date
of this Prospectus, the Company was in compliance with all covenants related to
this debt. The Company intends to use a portion of the proceeds from this
offering to prepay the $4.0 million of borrowings and to pay a prepayment
premium of $160,000.
The Company used cash in 1996 and 1997 of $2.4 million and $2.6 million,
respectively, for the purchase of capital assets, primarily for use in the
delivery of its data management services. The Company anticipates making a
comparable level of capital expenditures during 1998, although it currently has
no material commitments for capital expenditures. The Company also paid $2.5
million and $3.6 million in 1996 and 1997, respectively, toward its lease
obligations for capital equipment. The Company hired a significant number of new
employees in 1996, 1997 and the first three months of 1998, and expects to
continue hiring a significant number of additional employees during the
remainder of 1998.
The Company has a line of credit with a bank equal to the lesser of 75% of
qualifying accounts receivable or $2.0 million available to meet operating
needs. Amounts borrowed under the line of credit bear interest at prime rate
plus 1% (9.5% at April 30, 1998) and are due April 15, 1999. The Company intends
to renew this line of credit. The credit line is collateralized by certain
assets of the Company. As of March 31, 1998, $450,000 was outstanding on the
line of credit. During 1996 and 1997, the Company had net borrowings under its
bank notes and line of credit of $623,000 and $2.8 million, respectively. The
Company intends to use a portion of the proceeds from this offering to repay the
$450,000 outstanding under its line of credit.
The Company is designing its services and products to be Year 2000 capable
and tests third-party software that is incorporated with the Company's services
and products. There can be no assurance, however, that the Company's services
and products, particularly when such services and products incorporate third-
party software, will contain all necessary date code changes in time. The
Company expects to incur approximately $125,000 in costs in 1998 in making its
services and products Year 2000 compliant. Any additional unanticipated expenses
could have an adverse effect on the Company's business, financial condition and
results of operations. See "Risk Factors -- Year 2000 Capability."
The Company believes that the remaining net proceeds from this offering,
together with cash generated from operations, will be sufficient to fund its
anticipated working needs, capital expenditures and any potential future
acquisitions for at least 1999. In the event the Company's plans or assumptions
change or prove to be inaccurate, or if the Company consummates any unplanned
acquisitions of businesses or assets, the Company may be required to seek
additional sources of capital. Sources of additional capital may include public
and private equity and debt financings, sales of nonstrategic assets and other
financing arrangements.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income." This statement, effective for fiscal years beginning
after December 15, 1997, would require the Company to report components of
comprehensive income in a financial statement that is displayed with the same
prominence as other
28
<PAGE> 31
financial statements. Comprehensive income is defined by Concepts Statement No.
6, "Elements of Financial Statements," as the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from nonowner sources. It includes all changes in equity during a period except
those resulting from investments by owners and distributions to owners. The
Company adopted SFAS 130 in the first quarter of 1998, however, the Company did
not have any transactions which would require additional disclosure under SFAS
130.
Also in June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131 ("SFAS 131"), "Disclosures about Segments of an Enterprise and
Related Information." This statement, effective for financial statements for
periods beginning after December 15, 1997, requires that a public business
enterprise report financial and descriptive information about its reportable
operating segments. Generally, financial information is required to be reported
on the basis that it is used internally for evaluation of segment performance
and deciding how to allocate resources to segments. The adoption of SFAS 131 is
not expected to have a material impact on the Company's financial statements.
29
<PAGE> 32
BUSINESS
THE COMPANY
SCC Communications Corp. ("SCC" or the "Company") is the leading provider
of 9-1-1 operations support systems ("OSS") services to incumbent local exchange
carriers ("ILECs"), competitive local exchange carriers ("CLECs") and wireless
carriers in the United States. The Company has redefined the U.S. market for
9-1-1 OSS by creating the first and largest 9-1-1 service bureau, the SCC
National Data Services Center ("NDSC"), with over 70 million subscriber data
records under management throughout North America. The Company manages the data
that enable a 9-1-1 call to be routed to the appropriate public safety agency
with accurate and timely information about the caller's identification and
location. Through SCC's NDSC, the Company offers a comprehensive, cost-effective
solution to the 9-1-1 service provisioning needs of ILECs, CLECs and wireless
carriers by enabling them to outsource virtually all aspects of the operations
of their 9-1-1 data management services, including system activation, routine
data administration, event transaction processing and performance management,
with a high level of security and survivability. In addition, the Company
licenses its 9-1-1 OSS software to carriers that wish to manage the delivery of
9-1-1 data management services in-house. Representative carriers using SCC's
solution include Ameritech, AT&T Wireless Services, BellSouth, MCI, Sprint PCS
and Worldcom Network SVCS.
ILECs, CLECs and wireless carriers require a 9-1-1 solution that cost
effectively provides a high degree of data integrity and reliability, allows
them to comply with regulatory mandates, and addresses their need to provide
additional value-added services. Through SCC's NDSC, the Company provides the
data management services that ILECs, CLECs and wireless carriers need to deliver
9-1-1 calls to the appropriate PSAP, along with critical information such as the
caller's location and call-back number that PSAPs need to respond effectively to
emergencies. Complex data screening and preparation are completed to initialize
properly the underlying systems necessary for 9-1-1 call routing and information
display for the call taker. SCC's NDSC frequently receives and processes
electronic transmissions from ILECs, CLECs and wireless carriers detailing
subscriber and coverage updates and public safety jurisdiction boundary changes
from PSAPs. Records identified as potentially having problems are automatically
separated for manual review and analysis by SCC data integrity analysts. Using
the updated information, SCC's 9-1-1 OSS then provides the information to route
the 9-1-1 call and transmit essential information to the emergency service
provider.
INDUSTRY BACKGROUND
Historically, telecommunications carriers in the United States operated in
a highly regulated environment, with both local and long distance service
providers operating as monopolies. The U.S. telecommunications market opened to
competition with the 1984 breakup of AT&T into seven independent Regional Bell
Operating Companies ("RBOCs"). In the early 1990's, the RBOCs and other ILECs,
anticipating regulatory changes that would introduce competition in their local
exchange markets, began restructuring their service models to provide increased
operating efficiencies and new revenue opportunities. Competitive pressures on
the ILECs intensified with the passage of the Telecommunications Act of 1996
(the "1996 Act"), which allowed CLECs, long distance carriers and wireless
carriers to enter local exchange markets. In addition, the regulatory mandates
of the 1996 Act required each carrier to modify its technical infrastructure to
allow for fair and equal access by other carriers. ILECs, CLECs and wireless
carriers began to seek competitive advantages by differentiating their service
offerings, improving service quality, decreasing time to market, introducing new
services and increasing cost efficiencies. To gain these advantages, carriers
streamlined their business practices, in part by updating technological
infrastructure.
Previously, carriers operated effectively using closed and proprietary
systems to provision and manage their networks. In order to deliver services
demanded by an increasingly competitive market, service providers today require
more advanced service provisioning, operations, customer care and billing, and
planning and engineering systems. These systems that collectively constitute a
carrier's OSS directly support the routine processes and procedures of a
carrier's telecommunications operating infrastructure. Historically, carriers'
OSS have typically been "legacy" mainframe-based systems that in many cases
utilized incompatible and inflexible software and technologies. These OSS were
further strained by the many incremental changes that
30
<PAGE> 33
had been made in order to accommodate new technologies, such as new advanced
switching capabilities, and the proliferation of value-added services, such as
greater consumer choice in mix of services. Recent improvements in OSS, however,
have allowed carriers to offer more advanced services by incorporating new
technologies to improve the reliability of existing infrastructure and to comply
with the regulatory requirements of the 1996 Act. For example, next-generation
customer care and billing systems, which interact with multiple carriers'
systems across the increasingly complex telecommunications network environment,
collect and process customer usage data and generate invoices, enhance the
billing collection process, and provide information regarding customer behavior.
9-1-1, another essential OSS service, similarly requires close coordination of
data and network elements, because changes in customer service information
usually affect the data needed for 9-1-1 services.
9-1-1 service involves the routing of emergency calls to the appropriate
public safety answering point ("PSAP") responsible for dispatching police, fire
and other emergency services. Most jurisdictions in the United States now
provide enhanced 9-1-1 services ("Enhanced 9-1-1 or E9-1-1"), which also provide
the caller's telephone number and location to the call taker at the PSAP. When a
caller dials 9-1-1, information about the caller's location, telephone number
and the jurisdictionally appropriate PSAP must be quickly accessed from
carriers' network and mission-critical data servers. Carriers need current,
accurate information about their subscribers in order to facilitate a prompt
response to a 9-1-1 call. Each service order received by a carrier and each
change in PSAP jurisdiction, including expansion to accommodate new addresses,
may affect the information required for the proper handling of a 9-1-1 call.
Thus, delivery of 9-1-1 service presents a difficult OSS challenge for carriers
because it requires the coordination of data from multiple sources, the review
and processing of the data, the resolution of data errors and conflicts and the
insertion of the data into network and mission-critical data servers.
Today, 9-1-1 is a fundamental element of local exchange service and
carriers' OSS infrastructure. According to the National Emergency Number
Association, more than 85% of the current wireline telephone subscribers in the
United States are covered by some type of 9-1-1 service and 95% of that coverage
is E9-1-1 service. The provisioning of 9-1-1 services presents even greater
challenges for wireless carriers, since the mobility of wireless callers makes
the callers' locations difficult to determine. The Cellular Telephone
Information Association estimates that approximately 83,000 9-1-1 calls are made
each day from wireless phones, representing approximately 25% of all 9-1-1
calls. The Company believes that approximately 25% of wireless callers cannot
identify their locations. Most of the existing wireless infrastructure requires
modification to enhance the location data so that wireless calls can be
accurately routed to the appropriate PSAP. Recognizing the public safety need
for improved wireless 9-1-1 services, the Federal Communications Commission (the
"FCC") issued Report & Order 94-102 (the "Order") on June 12, 1996, a directive
that mandated the adoption of 9-1-1 technology by wireless carriers in two
phases. Phase I required wireless carriers to provide to requesting PSAPs at the
time of a 9-1-1 call, the caller's telephone number and location of the
receiving cell site. Wireless carriers had to comply with Phase I mandates by
the later of April 1, 1998, or six months after the PSAP request. Phase II
requires wireless carriers to locate a 9-1-1 caller to within 125 meters,
subject to FCC guidelines. Wireless carriers must comply with Phase II mandates
for requesting PSAPs by October 1, 2001. The FCC wireless mandates, the wireless
industry's desire to continue to improve emergency services and increasing
pressure from public safety agencies have rapidly accelerated the demand for
E9-1-1 wireless services.
ILECs, CLECs and wireless carriers require a 9-1-1 solution that cost
effectively provides a high degree of data integrity and reliability, allows
them to comply with regulatory mandates, and addresses their need to provide
additional value-added services. ILECs are seeking to reduce the significant
capital expenditures associated with supporting rapidly evolving 9-1-1
infrastructure and upgrading their 9-1-1 data management and network control
services to meet PSAP requirements and technological advancements. CLECs and
wireless carriers, many of which are relatively small and new to the markets in
which they are now competing, are seeking to increase their own subscriber bases
while minimizing their investment in OSS technology infrastructure and
personnel, as well as in the relationships with PSAPs necessary to provide 9-1-1
service. ILECs, CLECs and wireless carriers are also seeking a comprehensive
9-1-1 solution that effectively operates in multiple geographic locations over a
wide variety of legacy systems. In addition, the 9-1-1 OSS services
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offered by carriers and other service providers increasingly include
complementary add-on products and services, such as public warning services,
that enable them to reduce costs and generate value-added services for their
customers. Carriers with these requirements may choose to develop their own
proprietary solutions, to license the 9-1-1 OSS software and manage the delivery
of the 9-1-1 services themselves, or to outsource their 9-1-1 OSS needs.
THE SCC SOLUTION
The Company has redefined the U.S. market for 9-1-1 OSS by creating the
first and largest 9-1-1 service bureau, the SCC National Data Services Center,
with over 70 million subscriber data records under management throughout North
America. Through its NDSC, the Company offers a comprehensive, cost-effective
solution to the 9-1-1 service provisioning needs of ILECs, CLECs and wireless
carriers by enabling them to outsource virtually all aspects of the operations
of their 9-1-1 data management services, including system activation, routine
data administration, event transaction processing and performance management,
with a high level of security and survivability. The Company delivers an
outsourcing solution that can interface with each carrier's proprietary or open
system. In addition, the Company licenses its 9-1-1 OSS software to carriers
that wish to control the delivery of 9-1-1 services in-house. The Company
believes that its solution offers the following principal features and benefits:
Focus on Data Integrity. The accuracy of subscriber records that
identify and provide location information regarding the caller is an
essential element of 9-1-1 service. Using its software solution, SCC
conducts more than 60 logical tests to prepare the data for use in 9-1-1
operations. The Company's systems interface with other elements of a
carrier's OSS to provide timely and accurate subscriber location
information. Transactions identified by the system as requiring further
analysis are researched and resolved by a team of data integrity analysts.
Survivability and Reliability. SCC offers large scale,
mission-critical transaction processing through reliable, scalable
operating platforms. To provide high assurance of continued service, SCC
has designed systems that provide critical 9-1-1 data with multiple layers
of redundancy by deploying over 20 fault-tolerant, geographically dispersed
servers to provide multiple sources of 9-1-1 data. Since the launch of its
NDSC more than three years ago, SCC's systems for 9-1-1 information
delivery have provided uninterrupted service to its customers. SCC has also
developed a comprehensive disaster recovery program for its central data
administration operations.
Leading-Edge Technology. The Company believes it is the technological
leader in the 9-1-1 data management services industry based on its advances
in the areas of systems architecture, spatial data management and advanced
network integration. The Company's innovations include advance intelligent
call routing support, local number portability ("LNP") data transaction
support, technologies that improve 9-1-1 availability, a transaction-based
map maintenance system, a spatial coordinate-based E9-1-1 management system
and large-scale Internet applications for E9-1-1. The Company was the first
to demonstrate data management support capable of interfacing with wireless
systems that complied with both the Phase I and Phase II mandates of the
Order, and also has developed systems for the use of spatial coordinate
data for use in managing and routing non-address specific 9-1-1 calls.
Flexible Business Model. PSAPs generally pay carriers a capitated rate
based on the number of subscribers located in a particular PSAP's
jurisdiction. By outsourcing its data management and service provisioning
needs to the Company, a carrier can avoid costly capital expenditures and
fix its expenses for 9-1-1 services on a per subscriber basis.
Additionally, outsourcing allows carriers to customize their service
packages both to meet the needs of their subscribers and to comply with
regulatory mandates. The Company provides CLECs and wireless carriers with
clearinghouse services to format and insert subscriber data into the
appropriate 9-1-1 systems. Alternatively, carriers may elect to license
9-1-1 OSS software directly from the Company and manage the 9-1-1 data
themselves.
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STRATEGY
The Company's objective is to be the leading national provider of 9-1-1 OSS
and other complementary services to ILECs, CLECs and wireless carriers. SCC
focuses on developing innovative and automated solutions to provide customers
with a comprehensive system for managing large amounts of dynamic subscriber
information. Key elements of the Company's strategy are to:
Maintain and Extend Leadership Position in Wireline 9-1-1 Data
Management Market. SCC currently manages more than 70 million wireline
subscriber data records out of an estimated 178 million total wireline
telephone subscriber records in the United States. The Company intends to
maintain and extend its market leadership in the wireline 9-1-1 OSS systems
market by adding new service and license customers, increasing the number
of subscriber data records under management, enhancing its existing 9-1-1
services and supporting the evolving telecommunications infrastructure.
Capitalize on Emerging Wireless Carrier Opportunities. The Company
believes there is a significant opportunity to offer outsourcing services
to wireless carriers given the growing public demand for effective wireless
9-1-1 services and the FCC mandates for minimum service performance. The
Company intends to take advantage of this opportunity by leveraging its
position as the first company to offer both Phase I and Phase II compliant
solutions and its large market share in both the wireline and wireless data
management services industry.
Maintain and Extend Leadership Position in National Clearinghouse
Services. The Company believes opportunities exist to sell 9-1-1
clearinghouse services to CLECs which, in order to activate 9-1-1 service
for their customers, must provide subscriber and network information that
is compatible with an ILEC's 9-1-1 OSS. CLECs and wireless carriers, many
of which are relatively small and new to the markets in which they are now
competing, are seeking to grow their own subscriber bases while minimizing
their investment in OSS technology infrastructure and personnel, as well as
in the relationships with PSAPs and other service providers necessary to
provide 9-1-1 services. SCC plans to build upon its position as a neutral,
carrier-independent service provider by working cooperatively with newly
emerging dial tone providers, including CLECs, fixed-position wireless
carriers and cable television carriers, to increase its sales of 9-1-1
clearinghouse services.
Provide Additional Services to Telecommunications Carriers. ILECs,
CLECs and wireless carriers are seeking to apply emerging technologies in
response to competitive pressures and regulatory mandates. For example, the
Company has developed off-switch routing capabilities for carriers that
have deployed the advanced intelligent network and created LNP transaction
sets in response to the LNP mandates of the 1996 Act. By leveraging the
experience and economies of scale it has obtained in managing the 9-1-1 OSS
infrastructure for multiple carriers, the Company is well-positioned to
continue to develop and offer flexible, scalable solutions that allow
carriers to cost-effectively support new technological developments and
regulatory mandates.
Develop Applications for New Commercial Products. By leveraging its
core competency of managing dynamic subscriber location information, the
Company believes that it is well-positioned to expand into additional
markets outside 9-1-1 OSS services. The Company currently has under
development new products and services such as dynamic call routing for
multi-location call centers for both telecommunications carriers and others
and improved address information for operations areas of telecommunications
carriers such as their billing, ordering and provisioning departments.
Expand International Operations. SCC believes that a significant
opportunity to generate additional long-term revenue may be created by
partnering with established telecommunications carriers and systems
integration firms to design, implement, maintain and operate effective,
reliable emergency communications systems in countries other than the
United States or Canada. The Company intends to expand internationally to
address the needs of this market for telecommunications emergency services.
There can be no assurance that the Company will achieve its objective or any of
the key elements of its strategy. See "Risk Factors."
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SERVICES AND PRODUCTS
SCC's 9-1-1 OSS solution enables a 9-1-1 call to be routed to the
appropriate PSAP along with accurate and timely information about the caller's
identification and location. Complex data screening and preparation is completed
to initialize properly the underlying systems necessary for 9-1-1 call routing
and information display for the call taker. SCC's NDSC frequently receives and
processes electronic transmissions from ILECs, CLECs and wireless carriers
detailing subscriber and coverage updates and public safety jurisdiction
boundary changes from PSAPs. Records identified as potentially having problems
are automatically separated for manual review and analysis by SCC data integrity
analysts. Using the updated information, SCC's 9-1-1 OSS then provides the
information to route the 9-1-1 call and transmit essential information to the
emergency service provider.
[CHART]
(1) When a caller dials 9-1-1, the call is directed to the 9-1-1 voice switch.
(2) The 9-1-1 switch queries SCC's dispersed 9-1-1 servers to determine the
jurisdictionally appropriate PSAP. The 9-1-1 OSS automatically responds with
call routing information.
(3) The 9-1-1 voice switch routes the call to the appropriate PSAP.
(4) Simultaneously, SCC's 9-1-1 OSS directs subscriber information, including
caller's address and call-back number, to call-taker's screen at the PSAP.
(5) PSAP dispatches personnel and equipment to assist.
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BASE SERVICES OF SCC NATIONAL DATA SERVICES CENTER
Through SCC's NDSC, the Company provides the data management services that
ILECs, CLECs and wireless carriers need to deliver 9-1-1 calls to the
appropriate PSAP, along with critical information such as caller location and
call-back number that PSAPs need to respond effectively to emergencies. Services
include:
System Preparation and Administration. Before providing 9-1-1 data
management services to its customers, SCC must collect, organize, review
and analyze the data necessary to initialize the system properly. Data
preparation includes collecting information on PSAP jurisdictional
boundaries, performing a full inventory of addresses located in an area and
loading the subscriber information into the Company's systems. To improve
data quality and, therefore, 9-1-1 service, the Company performs diagnostic
reviews and analyses of information loaded into the NDSC systems. SCC
engages over 80 data integrity analysts to facilitate the creation,
maintenance and transition of key information.
Routine Data Administration. SCC's NDSC receives and automatically
processes service order updates from ILECs, CLECs and wireless carriers on
a regular basis, in order to maintain current data in the 9-1-1 OSS.
Service order updates include address changes, telephone number changes and
other information pertinent to 9-1-1 call processing. To maintain reliable
9-1-1 service, SCC usually receives between 100,000 and 500,000 service
orders per day and frequently receives boundary updates from PSAPs
reflecting changes in jurisdiction boundaries for PSAP responses. When SCC
receives a service order update or jurisdiction change, information
received must be checked for complete and appropriate data, and then
distributed throughout SCC's network of geographically dispersed servers.
Event Transaction Processing. When a caller dials 9-1-1 in an area
served by the Company, a request for information is automatically generated
by the PSAP answering the call and sent to one of the Company's
fault-tolerant servers. The server rapidly responds to the call taker with
information from the OSS database regarding the caller's location and
call-back number. Automated support is also available for real-time switch
control to direct the routing of the call.
Performance Management. SCC monitors and reports the performance of
its service operations by measuring response time, systems availability,
data accuracy and error resolution intervals, among other performance
measurements. Using these measurements as a basis, SCC designs and
implements programs to improve continuously the 9-1-1 OSS services provided
by its NDSC.
Mapping Services. Since traditional mapping services do not provide
the frequent updates necessary for the provision of emergency services, SCC
maintains a team of geographic information system experts, who work with
carriers and public safety officials to document, review and analyze call
routing boundaries and specific address information. The mapping services
department uses advanced tools to improve existing mapping information with
new and more detailed geographical information for optimal management of
9-1-1 call records. The mapping services department also assists in system
preparation and quality control programs to provide the SCC's NDSC with
current geographical information.
Clearinghouse Services. SCC's clearinghouse department provides a
single point of contact to process and format 9-1-1 data for CLECs and
independent telephone companies. CLECs and independent telephone companies
can utilize the services of the Company's clearinghouse department to offer
service in numerous localities without having to independently develop the
9-1-1 OSS systems, procedures and expertise necessary for each community.
CLECs and independent telephone companies electronically transmit
subscriber information to the clearinghouse department. The information is
then reformatted to comply with the destination community's local
standards, tested for detectable errors and delivered to the appropriate
9-1-1 data systems. The Company can process information for its
clearinghouse customers even if the data will be inserted in a system
operated by a carrier that does not utilize the Company's services or
products.
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ENHANCED SERVICES OF SCC NATIONAL DATA SERVICES CENTER
The Company offers enhancements to its 9-1-1 OSS services that provide
additional features and functionality. These services are targeted to specific
markets and are sold directly by the Company or indirectly through the Company's
customers.
9-1-1Net. 9-1-1Net, an online tool, creates an active communication channel
serving the NDSC, carriers and PSAPs. Through 9-1-1Net, users can view live
address routing rules, send address updates, review inbound call load, error
statistics and ALI discrepancy reports, and receive new product updates.
Private Switch ALI. Private telephone switches, commonly known as PBX's,
create a challenge for E9-1-1 operations because information describing the
individual caller's phone station or extension within a PBX may not be available
to the network receiving the 9-1-1 call. In the case of large facilities such as
campuses, hotels and hospitals, emergency response personnel may not have
adequate information to quickly determine the location of the caller. Private
Switch ALI allows PBX system managers to create and transmit appropriate data
records that identify a caller's extension or location within a facility for the
9-1-1 OSS.
9-1-1Connect. SCC provides wireless carriers with 9-1-1 OSS services that
are similar to those provided to wireline customers and that fully comply with
Phase I of the Order. Once a wireless carrier receives a request from a PSAP to
activate wireless 9-1-1 services, SCC's program managers develop a plan with the
wireless carrier to activate service, including development of ILEC network
interconnections for both data and voice that are specific to the local wireless
network configuration and interface requirements. The program managers develop
graphic coverage area maps that are superimposed on maps of current public
safety agency boundaries. Routing recommendations can then be made and
coordinated with the appropriate PSAP.
Subscriber ALI. The Company is currently preparing to test Subscriber ALI,
which is designed to allow subscribers to supply personal information in their
9-1-1 records such as medical condition, disability and language of choice. When
a subscriber calls 9-1-1, data previously provided by the subscriber will be
displayed along with traditional 9-1-1 information to the PSAP. A subscriber
also can designate a third party to be notified in the event a 9-1-1 call is
initiated from the subscriber's telephone. For example, parents away from home
would be notified when a child or babysitter calls 9-1-1 from their telephone.
The Company currently anticipates that this service will be available by late
1998.
Emergency Warning and Evacuation System. The Company is currently
developing its Emergency Warning and Evacuation System to initiate outbound
calls selectively in the event of potential disasters such as flash flooding,
hazardous materials incidents, industrial accidents and localized weather
events. The Emergency Warning and Evacuation System will utilize spatially
classified location information and up-to-date telephone subscriber data and
will be able to deliver voice or fax warnings to a geographically targeted
population. SCC intends to offer its Emergency Warning and Evacuation System by
late 1998.
LICENSE PRODUCTS
The Company offers 9-1-1 OSS software to customers that elect to manage
their own 9-1-1 data records rather than outsourcing such operations to SCC. SCC
also provides custom software development services to customers with specific or
local requirements through its engineering department. The engineering
department develops, customizes and enhances the software using a structured
approach to perform requirements analysis, software development and quality
assurance.
COMMERCIAL SERVICES
Many of the underlying elements used by the Company in managing large
volumes of dynamic subscriber information have commercial applications in other
industries. For instance, the Company has developed and is testing a dynamic
call routing system that will allow telecommunications carriers to support
real-time assignment of routing destinations for calls processed in public
telecommunications networks. Historically, calls have been routed pursuant to
preplanned and preprogrammed routing instructions. The Company's dynamic call
assignment will allow greater flexibility in call routing to respond to call
load or other complex non-network factors. The Company also intends to offer
improved address information to other operations
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areas of telecommunications carriers such as their billing, ordering and
provisioning departments. Carriers can increase efficiencies and improve
customer service by responding to service calls with more accurate subscriber
location information.
SERVICE AND PRODUCT PRICING
Pricing for SCC's NDSC services usually includes a non-recurring initial
fee due upon execution of a contract with a customer. Thereafter, customers
generally pay a monthly fee based on the number of subscriber records maintained
by the NDSC and upon the services selected by the customer. The Company
typically enters into ten-year agreements for wireline base services and two to
five-year agreements for wireless base services. During the contract term, SCC
may offer customers enhanced services, which may be provided on a revenue
sharing basis. SCC also licenses software, hardware and professional services
necessary for the management of 9-1-1 services to its customers in exchange for
license and implementation services fees and maintenance fees.
SERVICE INFRASTRUCTURE AND ARCHITECTURE
The Company's operations include central data administration and
distributed systems for real-time 9-1-1 transaction support. Based on large
scale, fault-tolerant Tandem computers, the Company's major processing systems
are configured to provide high reliability. They are also designed to provide
significant capacity for continued growth using the Tandem NSK scalable
message-based architecture.
The Company's central data administration systems, located in Boulder,
Colorado, are a key element of its 9-1-1 OSS, and are used to perform routine
data maintenance and to support new customer transition and initial system
loads. SCC's NDSC also maintains a central monitoring facility in Boulder that
operates 24 hours a day, seven days a week. Data network access for the central
administration systems is provided using traditional T-1 connectivity to the
networks operated by SCC and its customers. To improve reliability and
survivability, the primary links are designed to have three or more backup paths
to access SCC's distributed networks, including VSAT satellite links. A
"hot-site" emergency business recovery facility has been established in New York
and can be activated to continue routine operations in the event of a disaster
at the Boulder site. Electronic processing necessary to handle actual 9-1-1
calls is geographically distributed and remains a local service for each region,
so SCC's central data administration systems are not in the actual 9-1-1 call
path.
Distributed throughout the U.S., the Company's real-time 9-1-1 OSS servers
are located in shared, hardened computer facilities. The systems are deployed in
pairs or quads. System pairs are intentionally distributed to different
geographic locations to provide an additional level of reliability. These
systems provide data display for thousands of public safety agencies throughout
the service areas of SCC's customers. Direct interface to telephone control
switches is also supported on these platforms, providing the information
necessary to route calls to the jurisdictionally appropriate PSAP. The Company
also uses a number of Microsoft NT servers for internal administrative
processing and extranet support.
CUSTOMERS
The Company provides its services to a range of telecommunications service
providers, including ILECs, CLECs and wireless carriers. The Company also
licenses its software and provides 9-1-1 data clearinghouse services directly
and indirectly to over 600 independent telephone companies. During the year
ended December 31, 1996, the Company recognized approximately 82% of total
revenue from continuing operations from Ameritech and U.S. WEST, each of which
accounted for greater than 10% of the Company's revenue in such periods. During
the year ended December 31, 1997, the Company recognized approximately 81% of
total revenue from Ameritech, BellSouth Inc. and U.S. WEST customers, each of
which accounted for greater than 10% of the Company's revenue in such period.
During the three months ended March 31, 1998, the Company recognized
approximately 92% of total revenue from Ameritech, AT&T, BellSouth Inc. and U.S.
WEST customers, each of which accounted for greater than 10% of the Company's
revenue in such period. No other customers accounted for more than 10% of the
Company's total revenue in such periods. See "Risk Factors -- Reliance on
Significant Customers."
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The Company typically enters into contracts with carriers and their
affiliates to provide services to some or all of the carrier's operating
entities. Set forth below is a list of carriers utilizing the Company's services
or products, which the Company believes are representative of the Company's
overall customer base.
ILECs. The Company's customers include Ameritech, BellSouth Inc. and U.S.
WEST.
CLECs. The Company's customers include ICG Telecom, MCI and Worldcom
Network SVCS.
Wireless Carriers. The Company's customers include 3608 Communications
Company, AT&T Wireless Services, Sprint PCS, U.S. WEST Wireless and Vanguard
Cellular Systems.
License Customers. The Company's license customers include Bell Atlantic,
Bell Canada, Pacific Bell and GTE Network Services.
SALES AND MARKETING
The Company's marketing efforts are focused on targeting key carriers and
PSAPs in each geographical market through advertising in telecommunications
industry publications, participation in trade shows, presentations at technical
conferences and other initiatives. Additionally, SCC employees serve as the
chairpersons and members of key standards committees related to emergency
communications services. The Company's sales strategy relies on direct channels
of distribution for its services. The Company has dedicated account teams to
work with each existing and potential customer. The Company's account teams
develop relationships with 9-1-1 service providers through a consultative,
problem-solving sales process and work closely with customers and potential
customers to determine how their needs can be fulfilled by the Company's
services. As of April 30, 1998, the Company employed 18 persons in its sales and
marketing organization. Sales cycles range from six months to over two years.
See "Risk Factors -- Significant Fluctuations in Quarterly Results of
Operations" and "-- Lengthy Sales Cycle."
RESEARCH AND DEVELOPMENT
The Company directs its research and development efforts toward providing
highly scalable applications that enable a more efficient 9-1-1 OSS process that
improves data quality. Development efforts currently in process are focused on
further embedding and using spatial coordinate data to manage geographic
assignment and other data, further enhancing the Company's wireless offerings.
These offerings include improving the Company's software, integrating standard
Web browser technology, and the development of decision support systems. By late
1998, the Company expects to introduce Subscriber ALI, which will allow
subscribers to append medical and other important data to their ALI record, and
Emergency Warning and Evacuation System, which will allow PSAPs to call all
numbers in a given area and warn of imminent danger. Research and development
expenses totaled approximately $338,000, $230,000 and $738,000 for December 31,
1995, 1996, and 1997, respectively. See "-- Products and Services -- Enhanced
Services of SCC National Data Services Center" and "Risk Factors -- Dependence
on New Products; Rapid Technological Change."
COMPETITION
The market for 9-1-1 OSS solutions is intensely competitive and the Company
expects competition to increase in the future. The Company believes that the
principal competitive factors affecting the market for 9-1-1 OSS solutions
include effectiveness with existing infrastructure, reliability, manageability,
technical features, wireless support, performance, ease of use, price, scope of
product offerings, and customer service and support. Although the Company
believes that its solution competes favorably with respect to such factors,
there can be no assurance that the Company can maintain its competitive position
against current and potential competitors, especially those with significantly
greater financial, marketing, service support, technical and other competitive
resources.
The Company's principal competitors generally fall within one of three
categories: internal development departments of major carriers or consulting
firms that support such departments; relatively smaller companies that offer
applications with limited scope; and larger companies that are either in the
process of entering the Company's market or have the potential to develop
products and services that compete with the Company's
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service offerings. Potential customers sometimes rely on their own internal
development teams to formulate 9-1-1 OSS systems or to retain consultants to
undertake such a project. The Company believes that its 9-1-1 OSS solution
competes favorably with internally developed systems, which are expensive to
develop and maintain, may not provide a comprehensive, reliable approach to
9-1-1 OSS services, and may not provide the flexibility to adapt readily to
regulatory, technological and market changes.
In addition, a number of companies currently market or have under
development software products and services to provide 9-1-1 administration. The
Company competes with a few smaller companies, including XYPoint Corporation,
for the provision of 9-1-1 OSS services to wireless carriers, although the
Company expects more significant competition to emerge in the future. The
Company believes that, to date, none of these relatively smaller companies offer
products or services that are as robust in features or as comprehensive in scope
as the Company's products and services. Although it is likely that the product
development efforts of these companies eventually will enable them to offer a
line of products or services to compete with the Company's current service
offerings, the Company intends to continue to dedicate significant resources for
product and service development in order to expand the Company's capabilities
ahead of these competitors. Notwithstanding, the Company expects additional
competition from these established competitors and from other emerging
companies. Mergers or consolidations among these competitors or acquisitions of
these companies by larger competitors would make them more formidable
competitors to the Company. There can be no assurance that the Company's current
and potential competitors will not develop products and services that may be
more effective than the Company's current or future 9-1-1 data management
solutions or that the Company's technologies and offerings will not be rendered
obsolete by such developments.
Finally, there are a number of companies that currently market and sell
various products and services to telecommunications carriers, such as billing
software and advanced telecommunications equipment, that have been broadly
adopted by the Company's customers and potential customers. In addition, vendors
of telecommunications software and hardware in the future may enhance their
products to include functionality that is currently provided by the Company's
solutions. The widespread inclusion of the functionality of the Company's
service offerings as standard features of other telecommunications software or
hardware could render the Company's services obsolete and unmarketable,
particularly if the quality of such functionality were comparable to that of the
Company's services. Furthermore, even if the 9-1-1 functionality provided as
standard features by telecommunications software or networking hardware is more
limited than that of the Company's services, there can be no assurance that a
significant number of customers would not elect to accept more limited
functionality in lieu of purchasing additional products or services. For
example, Lucent Technologies offers carriers software systems with functionality
similar to the Company's services. Many of these larger companies have longer
operating histories, greater name recognition, accesses to larger customer bases
and significantly greater financial, technical and marketing resources than the
Company. As a result, they may be able to adapt more quickly to new or emerging
technologies and changes in customer requirements, or to devote greater
resources to the promotion and sale of their products and services, than the
Company. The Company believes that the entry of these larger companies into its
market will require them to undertake operations that are currently not within
their core areas of expertise, and thus expose them to significant uncertainties
in the product development process or in providing a range of products and
services to comprehensively address the 9-1-1 requirements which the Company's
services addresses. However, if these companies were to introduce products or
services that effectively compete with the Company's service offerings, they
could be in a position to substantially lower the price of their 9-1-1 products
and services or to bundle such products and services with their other product
and service offerings.
For the foregoing reasons, there can be no assurance that the Company will
be able to compete successfully against its current and future competitors.
Increased competition may result in price reductions, reduced gross margins and
loss of market share, any of which would materially and adversely affect the
Company's business, financial condition and results of operations. See "Risk
Factors -- Highly Competitive Market; Competition."
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PROPRIETARY RIGHTS
The Company's success and its ability to compete depends significantly upon
its proprietary rights. The Company relies primarily on a combination of
copyright, trademark and trade secret laws, as well as confidentiality
procedures and contractual restrictions to establish and protect its proprietary
rights. There can be no assurance that such measures will be adequate to protect
the Company's proprietary rights. Further, the Company may be subject to
additional risks as it enters into transactions in foreign countries where
intellectual property laws are not well developed or are difficult to enforce.
Legal protections of the Company's proprietary rights may be ineffective in such
countries. Litigation to defend and enforce the Company's intellectual property
rights could result in substantial costs and diversion of resources, and could
have a material adverse effect on the Company's business, financial condition
and results of operations, regardless of the final outcome of such litigation.
Despite the Company's efforts to safeguard and maintain its proprietary rights
both in the United States and abroad, there can be no assurance that the Company
will be successful in doing so or that the steps taken by the Company in this
regard will be adequate to deter misappropriation or independent third-party
development of the Company's technology, or to prevent an unauthorized third
party from copying or otherwise obtaining and using the Company's technology.
There also can be no assurance that others will not independently develop
similar technologies or duplicate any technology developed by the Company. Any
such events could have a material adverse effect on the Company's business,
financial condition and results of operations.
As the number of entrants to the Company's markets increases and the
functionality of the Company's products and services increases and overlaps with
the products and services of other companies, the Company may become subject to
claims of infringement or misappropriation of the intellectual property rights
of others. In certain of its customer agreements, the Company agrees to
indemnify its customers for any expenses or liabilities resulting from claimed
infringements of patents, trademarks or copyrights of third parties. In certain
limited instances, the amount of such indemnities may be greater than the
revenue the Company may have received from the customer. There can be no
assurance that third parties will not assert infringement or misappropriation
claims against the Company in the future with respect to current or future
products or services. Any claims or litigation, with or without merit, could be
time consuming, result in costly litigation or require the Company to enter into
royalty or licensing arrangements. Such royalty or licensing arrangements, if
required, may not be available on terms acceptable to the Company, if at all,
and could have a material adverse effect on the Company's business, financial
condition and results of operations.
EMPLOYEES
As of April 30, 1998, the Company employed 249 full-time employees in eight
states. Of these employees, 34 were involved in research and development, 18 in
sales and marketing, 165 in technical support and operations and 32 in
administration and finance. No employees are covered by any collective
bargaining agreements. The Company believes that its relationships with its
employees are good.
FACILITIES
The Company's principal administrative, sales and marketing, research and
development and support facilities consist of approximately 80,000 square feet
of office space in Boulder, Colorado. The Company occupies these premises under
a lease expiring December 31, 2002. As of March 31, 1998, the annual base rent
for this facility was approximately $670,000; however, the lease agreement
provides for periodic defined increases in rent through the lease term.
LEGAL PROCEEDINGS
The Company is not a party to any litigation that it believes could have a
material adverse effect on the Company or its business.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Directors and executive officers and their ages as of April
30, 1998, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
George K. Heinrichs.............. 40 President, Chief Executive Officer and Director
John J. Sims..................... 42 Chief Operating Officer
Nancy K. Hamilton................ 45 Chief Financial Officer
John G. Hill(1).................. 57 Director
Darrell A. Williams(1)(2)........ 38 Director
David Kronfeld(2)................ 50 Director
</TABLE>
- ------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
George K. Heinrichs has been the President and a Director of the Company
since he cofounded the Company in 1979, and also has served as Chief Executive
Officer since February 1995. Prior to founding the Company, Mr. Heinrichs served
in a variety of public safety and criminal justice positions.
John J. Sims has been Chief Operating Officer of the Company since November
1995. From 1977 until October 1995, Mr. Sims was employed by Tandem Computers,
Inc., where he held a number of positions including Vice President of Sales and
General Manager for Worldwide Telecommunications, Director of Materials
Management, Vice President of Management Information Systems and Vice President
of the Tandem Alliance Group.
Nancy K. Hamilton has been the Chief Financial Officer and Senior Vice
President of the Company since December 1993. Prior to joining the Company, Ms.
Hamilton was Vice President and Chief Financial Officer of Fischer Imaging
Corp., a manufacturer of medical imaging systems, from January 1993 to November
1993. Prior to January 1993, Ms. Hamilton served in a variety of senior
management positions, including Chief Financial Officer, at NBI, Incorporated,
which at that time was a developer of hardware and software and a systems
integrator.
John G. Hill has been a Director of the Company since January 1990. Since
1989, Mr. Hill has been a general partner of Hill, Carman Ventures, a limited
partnership which is the general partner of The Hill Partnership III, a venture
capital fund and a stockholder of the Company. Since 1981, Mr. Hill has been the
General Partner of Hill Ventures. Mr. Hill currently serves as a director of
Genicom Corporation, a provider of midrange printer solutions, network
integration and multivendor services.
David Kronfeld has been a Director of the Company since March 1998 and
previously served as a Director of the Company from February 1992 until July
1996. Mr. Kronfeld has been a manager of JK&B Management L.L.C. since its
founding in October 1995. Since 1989, Mr. Kronfeld has been a general partner of
Boston Capital Ventures Limited Partnership, Boston Capital Ventures II Limited
Partnership, Boston Capital Ventures III, L.P. and Business Development
Partners, L.P., all of which are venture capital funds and stockholders of the
Company, and a general partner of Boston Capital Ventures, a venture capital
fund.
Darrell A. Williams has been a Director of the Company since February 1998.
Mr. Williams is Vice President, Venture Capital in the Ameritech Development
Corporation, which he joined in January 1995. From 1992 to 1995, Mr. Williams
was Director, Investment Acquisitions and Divestitures of Ameritech Corporation.
BOARD COMMITTEES
The Company has a standing Audit Committee currently composed of Darrell A.
Williams and David Kronfeld. The Audit Committee reviews and supervises the
Company's financial controls, including selecting the Company's auditors,
reviewing the books and accounts of the Company, meeting with the officers of
the Company regarding the Company's financial controls, acting upon
recommendations of auditors, and taking
41
<PAGE> 44
such further action as the Committee deems necessary to complete an audit of the
books and accounts of the Company, as well as other matters that may come before
it or as directed by the Board of Directors of the Company.
The Company has a standing Compensation Committee currently composed of
John G. Hill and Darrell A. Williams. The Compensation Committee reviews and
acts on matters relating to compensation levels and benefits plans for the
Company's executive officers and key employees. The Compensation Committee is
also responsible for granting stock awards, stock options, stock appreciation
rights and other awards to be made under the Company's existing incentive
compensation plans.
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned during the 1997
fiscal year for services rendered in all capacities to the Company and its
subsidiaries during such fiscal year by the Company's Chief Executive Officer
and each of the two other executive officers whose annual bonus and salary for
such fiscal year exceeded $100,000 (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SHARES
-------------------- UNDERLYING
NAME AND PRESENT PRINCIPAL POSITION SALARY BONUS OPTIONS(1)
- ----------------------------------- -------- -------- ------------
<S> <C> <C> <C>
George K. Heinrichs................................... $173,746 $180,000 66,667
President and Chief Executive Officer
John J. Sims.......................................... 225,000 100,000 120,000
Chief Operating Officer
Nancy K. Hamilton..................................... 148,750 100,000 57,333
Chief Financial Officer and Senior Vice President
</TABLE>
- ------------
(1) The options listed in the table were granted under the 1990 Stock Option
Plan. See "-- Option Grants During Last Fiscal Year."
OPTION GRANTS DURING LAST FISCAL YEAR
The following table sets forth information concerning the stock option
grants made to each of the Named Officers in the 1997 fiscal year.
OPTION GRANTS DURING LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(2)
OPTIONS EMPLOYEES IN PER EXPIRATION ---------------------
NAME GRANTED(1) FISCAL YEAR SHARE DATE 5% 10%
- ---- ---------- ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
George K. Heinrichs........ 66,667 19.6% $7.50 10/21/07 $314,449 $776,875
John J. Sims............... 66,666 19.7 6.00 02/18/07 251,555 637,491
53,334 15.7 7.50 10/21/07 251,561 637,505
Nancy K. Hamilton.......... 15,666 4.6 4.50 02/18/07 44,335 112,354
41,667 12.3 7.50 10/21/07 196,531 498,049
</TABLE>
- ------------
(1) The options were granted to each of the Named Officers pursuant to the 1990
Stock Option Plan. Each option vests 24% one year from the date of grant and
2% each month thereafter.
(2) The five percent and ten percent assumed annual rates of compounded stock
price appreciation are mandated by the rules of the Securities and Exchange
Commission. There can be no assurance provided to the option holder or any
other holder of the Company's securities that the actual stock price
appreciation over the ten-year option term will be at the assumed five
percent and ten percent levels or at any other defined level.
42
<PAGE> 45
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning option exercises and
option holdings for the 1997 fiscal year with respect to each of the Named
Officers. None of the Named Officers exercised any options during the 1997
fiscal year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-MONEY
NUMBER OF SECURITIES UNDERLYING OPTIONS AT
UNEXERCISED OPTIONS AT DECEMBER 31, 1997 DECEMBER 31, 1997(1)
---------------------------------------- ----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
George K. Heinrichs......... 220,785 115,514 $2,924,482 $ 976,656
John J. Sims................ 54,558 175,501 652,139 1,538,509
Nancy K. Hamilton........... 96,483 78,667 1,232,315 670,835
</TABLE>
- ------------
(1) There was no public trading market for the Common Stock on December 31,
1997. Accordingly, solely for purposes of this table, the values in these
columns have been calculated on the basis of the assumed initial public
offering price of $14.00 per share (rather than a determination of the fair
market value of the Common Stock on December 31, 1997), less the aggregate
exercise price of the options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board was formed in 1995, and
the current members of the Compensation Committee are John G. Hill and Darrell
Williams. Prior to April 1998, George K. Heinrichs and Mr. Hill were the members
of the Compensation Committee. Throughout the year ended December 31, 1997, Mr.
Heinrichs was an officer of the Company. No executive officer of the Company
serves as a member of the Board of Directors or Compensation Committee of any
entity that has one or more executive officers serving as a member of the
Company's Board of Directors or Compensation Committee.
DIRECTOR COMPENSATION
Directors currently are not compensated for serving on the Board of
Directors. The Company reimburses its directors for all reasonable and necessary
travel and other incidental expenses incurred in connection with their
attendance at meetings of the Board of Directors. The Company has not previously
granted non-employee Board members options to purchase shares of Common Stock,
although the Company may grant options to its non-employee directors in the
future at the discretion of the Board. See "-- Benefit Plans -- 1998 Stock
Incentive Plan."
BENEFIT PLANS
1998 Stock Incentive Plan
The Company's 1998 Stock Incentive Plan (the "1998 Plan") is intended to
serve as the successor equity incentive program to the Company's 1990 Stock
Option Plan, as amended (the "Predecessor Plan"). The 1998 Plan was adopted by
the Board and the stockholders on April 7, 1998 (the "Plan Effective Date").
A total of 1,901,055 shares of Common Stock have been authorized for
issuance under the 1998 Plan. Such share reserve consists of (i) the number of
shares available for issuance under the Predecessor Plan on April 7, 1998,
including the shares subject to outstanding options and (ii) an additional
increase of approximately 500,000 shares. In addition, the share reserve will
automatically be increased on the first trading day of each calendar year,
beginning with the 1999 calendar year, by an amount equal to 3% of the total
number of shares of Common Stock outstanding on the last trading day in December
of the immediately preceding calendar year, but in no event shall any such
annual increase exceed 731,000 shares. To the extent any unvested shares of
Common Stock issued under the Predecessor Plan are repurchased by the Company
after the date on which the Common Stock is first registered under Section 12 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), at the
exercise price paid per share, in connection with the holder's termination of
service, those repurchased shares will be added to the reserve of Common Stock
available for issuance under the 1998 Plan, but in no event shall more than
476,776 shares be added to the reserve from such repurchases. In no event may
any one participant in the 1998 Plan receive option grants,
43
<PAGE> 46
separately exercisable stock appreciation rights or direct stock issuances for
more than 500,000 shares of Common Stock in the aggregate per calendar year.
On the date on which the Common Stock is first registered under Section 12
of the Exchange Act, outstanding options issued under the Predecessor Plan will
be incorporated into the 1998 Plan, and no further option grants will be made
under the Predecessor Plan. The incorporated options will continue to be
governed by their existing terms, unless the Plan Administrator elects to extend
one or more features of the 1998 Plan to those options. Except as otherwise
noted below, the incorporated options have substantially the same terms as will
be in effect for grants made under the Discretionary Option Grant Program of the
1998 Plan.
The 1998 Plan is divided into five separate components: (i) the
Discretionary Option Grant Program, under which eligible individuals in the
Company's employ or service (including officers, non-employee Board members and
consultants) may, in the Plan Administrator's discretion, be granted options to
purchase shares of Common Stock at an exercise price not less than their fair
market value on the grant date; (ii) the Stock Issuance Program, under which
such individuals may, in the Plan Administrator's discretion, be issued shares
of Common Stock directly, through the purchase of such shares at a price not
less than their fair market value at the time of issuance or as a bonus tied to
the performance of services; (iii) the Salary Investment Option Grant Program,
which may, in the Plan Administrator's discretion, be activated for one or more
calendar years and thereby allow executive officers and other highly compensated
employees the opportunity to invest a portion of their base salary in special
below-market stock option grants; (iv) the Automatic Option Grant Program, under
which option grants will automatically be made at periodic intervals to eligible
non-employee Board members to purchase shares of Common Stock at an exercise
price equal to their fair market value on the grant date; and (v) the Director
Fee Option Grant Program, which may, in the Plan Administrator's sole
discretion, be activated for one or more calendar years and thereby allows
non-employee Board members the opportunity to apply all or any portion of the
annual retainer fee otherwise payable to them in cash each year to the
acquisition of special below-market option grants. The Discretionary Option
Grant, Stock Issuance Program and Automatic Option Program become effective on
the date on which the Underwriting Agreement to be executed in connection with
this offering is executed (the "Underwriting Date"). The implementation date of
the Salary Investment Option Grant Program and the Director Fee Option Program
will be decided by the Compensation Committee.
The Discretionary Option Grant Program and the Stock Issuance Program will
be administered by the Compensation Committee. The Compensation Committee as
Plan Administrator will have complete discretion to determine which eligible
individuals are to receive option grants or stock issuances under those
programs, the time or times when such option grants or stock issuances are to be
made, the number of shares subject to each such grant or issuance, the status of
any granted option as either an incentive stock option or a non-statutory stock
option under the Federal tax laws, the vesting schedule to be in effect for the
option grant or stock issuance, and the maximum term for which any granted
option is to remain outstanding. The Compensation Committee will also have the
exclusive authority to select the executive officers and other highly
compensated employees who may participate in the Salary Investment Option Grant
Program in the event that program is activated for one or more calendar years,
but neither the Compensation Committee nor the Board will exercise any
administrative discretion with respect to option grants made under the Salary
Investment Option Grant Program or under the Automatic Option Grant or Director
Fee Option Grant Program for the non-employee Board members.
In the event the Plan Administrator elects to activate the Salary
Investment Option Grant Program for one or more calendar years, each executive
officer and other highly compensated employee of the Company selected for
participation may elect, prior to the start of the calendar year, to reduce his
or her base salary for that calendar year by a specified dollar amount not less
than $10,000 nor more than $50,000. If such election is approved by the Plan
Administrator, the individual will automatically be granted, on the first
trading day in January of the calendar year for which that salary reduction is
to be in effect, a non-statutory option to purchase that number of shares of
Common Stock determined by dividing the salary reduction amount by two-thirds of
the fair market value per share of Common Stock on the grant date. The option
will be exercisable at a price per share equal to one-third of the fair market
value of the option shares on the grant date. As a result, the total spread on
the option shares at the time of grant (the fair market value of the option
shares on the grant date less the aggregate exercise price payable for those
shares) will be equal to the amount
44
<PAGE> 47
of salary invested in that option. The option will vest in a series of 12 equal
monthly installments over the calendar year for which the salary reduction is to
be in effect and will be subject to full and immediate vesting upon certain
changes in the ownership or control of the Company.
The Company has not previously granted non-employee Board members options
to purchase shares of Common Stock. However, under the Automatic Option Grant
Program, each individual who first becomes a non-employee Board member at any
time after the Underwriting Date will automatically be granted an option to
purchase 15,000 shares of Common Stock on the date such individual joins the
Board, provided such individual has not been in the prior employ of the Company.
In addition, on the date of each Annual Stockholders Meeting held on or after
the Underwriting Date, each non-employee Board member who is to continue to
serve as a non-employee Board member (including individuals who joined the Board
prior to the Underwriting Date) will automatically be granted an option to
purchase 3,000 shares of Common Stock, provided such individual has served on
the Board for at least six months.
Each automatic grant for the non-employee Board members will have a term of
10 years, subject to earlier termination following the optionee's cessation of
Board service. Each automatic option will be immediately exercisable for all of
the option shares; however, any unvested shares purchased under the option will
be subject to repurchase by the Company, at the exercise price paid per share,
should the optionee cease Board service prior to vesting in those shares. The
shares subject to each initial 15,000 share automatic option grant will vest
over a four-year period, as follows: (i) 25% of the option shares upon the
optionee's completion of one year of Board service measured from the grant date
and (ii) the balance of the option shares in a series of 36 successive equal
monthly installments upon the optionee's completion of each additional month of
service measured from the first anniversary of the grant date. The shares
subject to each annual 3,000 share grant will vest upon the optionee's
completion of one year of Board service measured from the grant date. However,
the shares subject to each automatic option grant will immediately vest in full
upon certain changes in control or ownership of the Company or upon the
optionee's death or disability while a Board member.
Should the Director Fee Option Grant Program be activated in the future,
each non-employee Board member will have the opportunity to apply all or a
portion of the annual retainer fee otherwise payable in cash to the acquisition
of a below-market option grant. The option grant will automatically be made on
the first trading day in January in the calendar year for which the retainer fee
would otherwise be payable in cash. The option will have an exercise price per
share equal to one-third of the fair market value of the option shares on the
grant date, and the number of shares subject to the option will be determined by
dividing the amount of the retainer fee applied to the program by two-thirds of
the fair market value per share of Common Stock on the grant date. As a result,
the total spread on the option (the fair market value of the option shares on
the grant date less the aggregate exercise price payable for those shares) will
be equal to the portion of the retainer fee invested in that option. The option
will become exercisable for the option shares in a series of twelve (12) equal
monthly installments over the calendar year for which the election is to be in
effect. However, the option will become immediately exercisable for all the
option shares upon (i) certain changes in the ownership or control of the
Company or (ii) the death or disability of the optionee while serving as a Board
member.
The Board may amend or modify the 1998 Plan at any time, subject to any
required stockholder approval. The 1998 Plan will terminate on the earliest of
(i) April 30, 2008, (ii) the date on which all shares available for issuance
under the 1998 Plan have been issued as fully-vested shares or (iii) the
termination of all outstanding options in connection with certain changes in
control or ownership of the Company.
1998 Employee Stock Purchase Plan
The Company's Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors in March 1998 and approved by the Company's
stockholders in April 1998. A total of 200,000 shares of Common Stock have been
reserved for issuance under the Purchase Plan. There is automatically added to
the Purchase Plan in March of each year (i) that number of shares needed to
restore the maximum aggregate shares available to 200,000 shares or (ii) a
lesser amount determined by the Board. The Purchase Plan, which is intended to
qualify under Section 423 of the Code, provides for two six-month offering
periods each year beginning on the first of January and the first of July,
respectively; however, the initial offering period began on
45
<PAGE> 48
March 1, 1998 and continues through December 31, 1998. The Purchase Plan is
administered by a committee of at least two disinterested Directors appointed by
the Board. Employees (including officers and employee directors) of the Company
are eligible to participate if they are employed by the Company on a regular
full time or part time basis and if they are regularly scheduled to work more
than 20 hours per week. The Purchase Plan permits eligible employees to purchase
shares of Common Stock through periodic payroll deductions at a price equal to
the lower of 85% of the fair market value of the Company's Common Stock at the
beginning or end of the offering period. Employees may end their participation
in the offering at any time during the offering period, and participation ends
automatically on termination of employment with the Company. The Board of
Directors has the power to amend or terminate the Purchase Plan as long as such
action does not adversely affect any outstanding rights to purchase stock
thereunder.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS
The Company's Amended and Restated Certificate of Incorporation eliminates,
subject to certain exceptions, directors' personal liability to the Company or
its stockholders for monetary damages for breaches of fiduciary duties. The
Amended and Restated Certificate of Incorporation does not, however, eliminate
or limit the personal liability of a Director for (i) any breach of the
Director's duty of loyalty to the Company or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided in Section 174 of the Delaware General
Corporation Law or (iv) any transaction from which the Director derived an
improper personal benefit.
The Company's Restated Bylaws, which will become effective upon the closing
of this offering, provide that the Company shall indemnify its Directors and
executive officers to the fullest extent permitted under the Delaware General
Corporation Law and may indemnify its other officers, employees and other agents
as set forth in the Delaware General Corporation Law. In addition, the Company
plans to enter into indemnification agreements (the "Indemnification
Agreements") with each of its Directors and executive officers, effective upon
the effectiveness of the Registration Statement of which this Prospectus forms a
part. The indemnification agreements will contain provisions that require the
Company, among other things, to indemnify its Directors and executive officers
against certain liabilities (other than liabilities arising from intentional or
knowing and culpable violations of law) that may arise by reason of their status
or service as Directors or executive officers of the Company or other entities
to which they provide service at the request of the Company and to advance
expenses they may incur as a result of any proceeding against them as to which
they could be indemnified. The Company believes that these provisions and
agreements are desirable to attract and retain qualified Directors and officers.
The Company has obtained an insurance policy covering Directors and officers for
claims that such Directors and officers may otherwise be required to pay or for
which the Company is required to indemnify them, subject to certain exclusions.
EMPLOYMENT AGREEMENTS AND COMPENSATION PLAN
Employment Agreements
The Company does not presently have any employment contracts with the Named
Officers.
Management Incentive Compensation Plan
In early 1998, the Compensation Committee of the Board of Directors
approved a Management Incentive Compensation Plan, under which selected key
employees, including executive officers, are eligible to receive bonus payments.
At the beginning of the year, financial objectives were established and approved
by the Compensation Committee for each participant in the program. A minimum
performance level must be achieved by the Company before any bonus may be earned
by a participant. Thereafter, an established progression rewards higher levels
of achievement with greater bonus payments. Aggregate bonuses payable under the
Management Incentive Compensation Plan in any one year will be limited to a
pre-determined percentage of each participant's salary.
46
<PAGE> 49
CERTAIN TRANSACTIONS
In connection with the Company's Series F Preferred Stock Financing on
March 5, 1996, the Company and the holders of Convertible Preferred Stock
entered into a Fourth Amended and Restated Registration Rights Agreement (the
"Registration Rights Agreement"). Pursuant to the Registration Rights Agreement,
holders of Convertible Preferred Stock that will be converted into Common Stock
in connection with this offering have the right, beginning six months after the
date of this offering and subject to certain limitations and conditions, to
require the Company to file registration statements under the Securities Act to
register all or a part of their shares of Common Stock. The Company, in certain
circumstances, may defer such registrations, and the Underwriters have the
right, subject to certain limitations, to limit the number of shares included in
such registrations. In the event that the Company proposes to register any of
its securities under the Securities Act, either for its own account or for the
account of other securities holders, the holders of Convertible Preferred Stock
are entitled to include their shares of Common Stock in such registration,
subject to marketing and other limitations. Generally, the Company is required
to bear all of the expenses of such registration. Ameritech Development Corp.,
which holds in the aggregate 23.5% of the outstanding capital stock of the
Company (on an as-converted basis), The Hill Partnership III, L.P. (the "Hill
Partnership"), which holds in the aggregate 25.7% of the outstanding capital
stock of the Company (on an as-converted basis), Boston Capital Ventures Limited
Partnership and its affiliates, which hold in the aggregate 25.0% of the
outstanding capital stock of the Company (on an as-converted basis), are parties
to the Registration Rights Agreement. John G. Hill, an affiliate of The Hill
Partnership, and Darrell A. Williams, an affiliate of Ameritech Development
Corp., are Directors of the Company.
The Company provides 9-1-1 OSS services pursuant to a 9-1-1 Services
Agreement dated as of August 31, 1994, as amended, between Ameritech Information
Systems, Inc. and the Company. Pursuant to a Master Lease dated as of March 11,
1996, with Ameritech Credit Corporation, the Company leases certain personal
property. Additionally, the Company is a party to a Consulting Agreement dated
October 27, 1997 with Ameritech Mobile Communications, Inc. pursuant to which
the Company performed a market survey regarding the provision of 9-1-1 service
to cellular telephone subscribers. Ameritech Information Systems, Inc.,
Ameritech Credit Corporation and Ameritech Mobile Communications, Inc. are
affiliates of Ameritech Development Corp. The Company received net proceeds of
approximately $3,226,000, $6,606,000 and $6,959,000 in 1995, 1996 and 1997,
respectively, pursuant to these agreements.
The Company believes that the terms of the transactions described above
were no less favorable to the Company than would have been obtained from an
unaffiliated third party. Any future transactions between the Company and any of
its officers, Directors or principal stockholders will be on terms no less
favorable to the Company than could be obtained from unaffiliated third parties
and will be approved by a majority of the independent and disinterested members
of the Board of Directors.
The Company plans to enter into the Indemnification Agreements with its
Directors and executive officers, effective upon the effectiveness of the
Registration Statement of which this Prospectus forms a part. Subject to the
provisions of the Indemnification Agreements, the Company shall indemnify and
advance expenses to such Directors and executive officers in connection with
their involvement in any event or occurrence that arises in their capacity as,
or as a result of, their positions with the Company. See
"Management -- Limitations on Liability and Indemnification Matters."
47
<PAGE> 50
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 30, 1998, and as adjusted to
reflect the sale of 3,300,000 shares of the Company's Common Stock offered
hereby by (i) each person who is known by the Company to beneficially own more
than 5% of the Company's Common Stock, (ii) each of the Company's Directors,
(iii) each of the Named Officers, (iv) all current executive officers and
Directors as a group and (v) other Selling Stockholders.
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY OWNED NUMBER BENEFICIALLY OWNED
PRIOR TO OFFERING(1) OF AFTER OFFERING(1)(11)
-------------------- SHARES ---------------------
NUMBER PERCENT OFFERED(11) NUMBER PERCENT
---------- ------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
5% STOCKHOLDERS, DIRECTORS, NAMED OFFICERS
AND ALL DIRECTORS AND EXECUTIVE OFFICERS AS A
GROUP
The Hill Partnership III(2).................. 2,139,516 25.6% 311,989 1,827,527 17.5%
A Limited Partnership 885 Arapahoe Boulder,
Colorado 80302
John G. Hill(2).............................. 2,139,516 25.6 311,989 1,827,527 17.5
Boston Capital Ventures Limited 2,083,945 25.0 304,477 1,779,468 17.0
Partnership(3).............................
45 School Street Boston, Massachusetts
02109
David Kronfeld(3)............................ 2,083,945 25.0 304,477 1,779,468 17.0
Ameritech Development Corporation(4)......... 1,961,054 23.5 285,965 1,675,089 16.0
30 S. Wacker Drive, 37th Floor Chicago,
Illinois 60606
Darrell A. Williams(4)....................... 1,961,054 23.5 285,965 1,675,089 16.0
George K. Heinrichs(5)....................... 454,317 5.3 32,174 422,143 4.0
Nancy K. Hamilton(6)......................... 109,634 1.3 10,500 99,134 *
John J. Sims(7).............................. 87,432 1.0 -- 87,432 *
All Directors and executive officers as a 6,835,898 77.9 945,105 5,890,793 54.2
group (6 persons)(8).......................
OTHER SELLING STOCKHOLDERS
John Quinlan................................. 389,976 4.7 49,314 340,662 3.3
Stephen Meer(9).............................. 304,052 3.6 42,380 261,672 2.5
R. Chris Roark............................... 276,082 3.3 21,757 254,325 2.4
Donald Van Wie............................... 212,227 2.5 14,000 198,227 1.9
Banc One Capital Partners, II, LLC (10)...... 195,148 2.3 97,574 97,574 *
c/o Banc One Capital Corporation
150 East Gay Street
Columbus, Ohio 43215
Jesse Simmons................................ 75,000 * 5,250 69,750 *
David Paulson................................ 71,666 * 8,166 63,500 *
Ronald J. Carroll............................ 63,000 * 4,410 58,590 *
Steve Lowe................................... 37,666 * 2,636 35,030 *
Michael Radicella............................ 20,000 * 700 19,300 *
Mark Flolid.................................. 19,333 * 1,353 17,980 *
Frances Esterbrook........................... 12,916 * 904 12,012 *
David Hose................................... 10,866 * 606 10,260 *
Kriston Chapman.............................. 9,260 * 2,100 7,160 *
Patrick Sloter............................... 8,044 * 567 7,477 *
</TABLE>
48
<PAGE> 51
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY OWNED NUMBER BENEFICIALLY OWNED
PRIOR TO OFFERING(1) OF AFTER OFFERING(1)(11)
-------------------- SHARES ---------------------
NUMBER PERCENT OFFERED(11) NUMBER PERCENT
---------- ------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
Robert Umbreit............................... 5,602 * 1,423 4,179 *
Gary Ellis................................... 3,373 * 595 2,778 *
Thomas Barlow................................ 2,533 * 420 2,113 *
Paul Brill................................... 2,400 * 168 2,232 *
Robert G. Heil............................... 1,200 * 136 1,064 *
Jim Fitch.................................... 1,000 * 210 790 *
David Oberto................................. 666 * 75 591 *
Todd Kridel.................................. 216 * 151 65 *
</TABLE>
- ------------
* Less than 1%
(1) Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to the shares of Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable. Beneficial ownership as reported in the above table has
been determined in accordance with Rule 13d-3 under the Exchange Act, based
on information furnished by the persons listed, and represents the number
of shares of Common Stock for which a person, directly or indirectly,
through any contract, management, understanding, relationship or otherwise,
has or shares voting power, including the power to vote or direct the
voting of such shares, or investment power, including the power to dispose
or to direct the disposition of such shares, and includes shares which may
be acquired upon the exercise of options within 60 days following April 30,
1998. However, shares that may be acquired upon the exercise of options are
not deemed outstanding for the purposes of computing the percentage
ownership of any other person. The address for Messrs. Heinrichs, Sims,
Hill, Williams and Kronfeld and Ms. Hamilton is c/o SCC Communications
Corp., 6285 Lookout Road, Boulder, Colorado 80301. This table assumes no
exercise of the Underwriters' over-allotment option. Percentage of
ownership is based on 8,342,007 shares of Common Stock, pro forma
outstanding on March 31, 1998, and 10,442,853 shares of Common Stock to be
outstanding after completion of this offering.
(2) The general partner of the Hill Partnership III, L.P., is Hill Carman
Ventures, L.P. John G. Hill, a Director of the Company, and Carl D. Carman
are the general partners of Hill Carman Ventures, L.P., and have joint
voting and investment control over the shares held by the Hill Partnership
III, L.P. Mr. Hill and Mr. Carman disclaim beneficial ownership of such
shares except to the extent of their pecuniary interest in Hill Carman
Ventures, L.P.
(3) Includes 314,818 shares held by Boston Capital Ventures, Limited
Partnership, 314,818 shares held by Boston Capital Ventures II, Limited
Partnership and 1,454,309 shares held by Boston Capital Ventures III
Limited Partnership. The general partner of Boston Capital Ventures Limited
Partnership is BC&V Limited Partnership. The general partner of Boston
Capital Ventures II Limited Partnership is Boston Capital Partners II. The
general partner of Boston Capital Ventures III Limited Partnership is BD
Partners Limited Partnership. David Kronfeld, a Director of the Company, is
a general partner of certain of the entities associated with the Boston
Capital Ventures entities. Mr. Kronfeld disclaims beneficial ownership of
any of the shares owned by Boston Capital Ventures Limited Partnership,
Boston Capital Ventures II Limited Partnership and Boston Capital Ventures
III Limited Partnership, except to the extent of his pecuniary interest in
certain Boston Capital Ventures entities.
(4) Ameritech Development Corporation is a wholly-owned subsidiary of Ameritech
Corporation, a publicly traded company. Darrell A. Williams, a Director of
the Company, is a Vice President of Ameritech Development Corporation, the
board of directors of which has voting and investment control over the
shares held by Ameritech Development Corporation. Mr. Williams disclaims
beneficial ownership of such shares.
(5) Includes options to purchase 234,063 shares of Common Stock, all of which
were immediately exercisable or exercisable within 60 days of April 30,
1998. Includes 4,618 shares held by Mr. Heinrichs' minor daughter and 4,618
shares held by Mr. Heinrichs' minor son. Mr. Heinrichs disclaims beneficial
ownership of his children's shares. Excludes options to purchase 102,236
shares of Common Stock, none of which were exercisable within 60 days of
April 30, 1998.
(6) Includes options to purchase 109,634 shares of Common Stock, all of which
were immediately exercisable or exercisable within 60 days of April 30,
1998. Excludes options to purchase 65,516 shares of Common Stock, none of
which were exercisable within 60 days of April 30, 1998.
(7) Includes options to purchase 87,432 shares of Common Stock, all of which
were immediately exercisable or exercisable within 60 days of April 30,
1998. Excludes options to purchase 142,627 shares of Common Stock, none of
which were exercisable within 60 days of April 30, 1998.
(8) See Notes (2) through (7). Includes options to purchase 431,129 shares of
Common Stock, all of which were immediately exercisable or exercisable
within 60 days of April 30, 1998. Excludes options to purchase 310,379
shares of Common Stock, none of which were exercisable within 60 days of
April 30, 1998.
(9) Includes options to purchase 67,148 shares of Common Stock, all of which
were immediately exercisable or exercisable within 60 days of April 30,
1998. Excludes options to purchase 23,334 shares of Common Stock, none of
which were exercisable within 60 days of April 30, 1998.
49
<PAGE> 52
(10) Consists of a warrant to purchase Common Stock.
(11) If the underwriters' option is exercised in full, each of the following
Selling Stockholders will sell the following number of additional shares
and, thereafter, will own beneficially the number and percent of shares
indicated parenthetically: The Hill Partnership III, 32,595 shares
(1,794,932 shares, 16.7%); John G. Hill, 32,595 shares (1,794,932 shares,
16.7%); Boston Capital Ventures Limited Partnership, 31,810 shares
(1,747,658 shares, 16.2%); David Kronfeld, 31,810 shares (1,747,658 shares,
16.2%); Ameritech Development Corporation, 29,876 shares (1,645,213 shares,
15.3%); Darrell A. Williams, 29,876 shares (1,645,213 shares, 15.3%);
George K. Heinrichs, 13,789 shares (411,433 shares, 3.7%); Nancy K.
Hamilton, 4,500 shares (94,634 shares, less than one percent); John
Quinlan, 21,134 shares (319,528 shares, 3.0%); Stephen Meer, 18,164 shares
(243,508 shares, 2.2%); R. Chris Roark, 9,325 shares (245,000 shares,
2.3%); Donald Van Wie, 6,000 shares (192,227 shares, 1.8%); Jesse Simmons,
2,250 shares (67,500 shares, less than one percent); David Paulson, 3,501
shares (59,999 shares, less than one percent); Ronald J. Carroll, 1,890
shares (56,700 shares, less than one percent); Steve Lowe, 1,131 shares
(33,899 shares, less than one percent); Michael Radicella, 300 shares
(19,000 shares, less than one percent); Mark Flolid, 580 shares (17,400
shares, less than one percent); Frances Esterbrook, 388 shares (11,624
shares, less than one percent); David Hose, 260 shares (10,000 shares, less
than one percent); Kriston Chapman, 900 shares (6,260 shares, less than one
percent); Patrick Sloter, 243 shares (7,234 shares, less than one percent);
Robert Umbreit, 610 shares (3,569 shares, less than one percent); Gary
Ellis, 255 shares (2,523 shares, less than one percent); Thomas Barlow, 180
shares (1,933 shares, less than one percent); Paul Brill, 72 shares (2,160
shares, less than one percent); Robert G. Heil, 59 shares (1,005 shares,
less than one percent); Jim Fitch, 90 shares (700 shares, less than one
percent); David Oberto, 33 shares (558 shares, less than one percent); and
Todd Kridel, 65 shares (0 shares, 0%).
50
<PAGE> 53
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 30,000,000 shares of Common Stock, $.001
par value, and 15,000,000 shares of undesignated preferred stock, $.001 par
value (the "Preferred Stock").
COMMON STOCK
As of April 30, 1998, there were 8,342,853 shares of Common Stock
outstanding held of record by 124 stockholders. As of April 30, 1998, options to
purchase an aggregate of 1,114,046 shares of Common Stock were also outstanding.
See "Management -- Stock Plans."
The holders of Common Stock are entitled to one vote per share on all
matters to be voted on by shareholders and have cumulative voting rights with
respect to the election of directors. Subject to the prior rights of holders of
Preferred Stock, if any, the holders of Common Stock are entitled to receive
such dividends, if any, as may be declared from time to time by the Board of
Directors in its discretion from funds legally available therefor. Upon
liquidation or dissolution of the Company, the remainder of the assets of the
Company will be distributed ratably among the holders of Common Stock after
payment of liabilities and the liquidation preferences of any outstanding shares
of Preferred Stock. The Common Stock has no preemptive or other subscription
rights and there are no conversion rights or redemption or sinking fund
provisions with respect to such shares. All of the outstanding shares of Common
Stock are, and the shares to be sold in this offering will be, fully paid and
nonassessable.
PREFERRED STOCK
The Company is authorized to issue 15,000,000 shares of undesignated
Preferred Stock. The Board of Directors has the authority to issue the Preferred
Stock in one or more series and to fix the price, rights, preferences,
privileges and restrictions thereof, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting a series or the
designation of such series, without any further vote or action by the Company's
stockholders. The issuance of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of delaying, deferring or preventing a change in
control of the Company without further action by the stockholders and may
adversely affect the market price of, and the voting and other rights of, the
holders of Common Stock. The Company has no current plans to issue any shares of
Preferred Stock.
REGISTRATION RIGHTS
Under the Registration Rights Agreement, the holders of approximately
6,188,575 shares of Common Stock and their permitted transferees (the "Holders")
are entitled to certain rights with respect to the registration of such shares
("Registrable Securities") under the Securities Act. Under the terms of the
Registration Rights Agreement, the holders of at least 50% of the Registrable
Securities may require, on two occasions after six months from the effective
date of this offering, that the Company use its best efforts to register the
Registrable Securities for public resale. In addition, if the Company proposes
to register any of its securities under the Securities Act, either for its own
account or for the account of other security holders exercising registration
rights, the Holders are entitled to notice of such registration and are entitled
to include shares of such Common Stock therein. The Holders may also require the
Company on an unlimited number of occasions to register all or a portion of
their Registrable Securities on Form S-3 under the Securities Act when use of
such form becomes available to the Company. All such registration rights are
subject to certain conditions and limitations, including the right of the
underwriters of an offering to limit the number of shares to be included in such
registration. In addition, the Company need not effect a registration within six
months following a previous registration, or after such time as all Holders may
sell under Rule 144(k) all shares of Common Stock to which such registration
rights apply. See "Certain Transactions."
Additionally, the holder of a warrant to purchase 195,148 shares of Common
Stock is entitled to request registration of such shares pursuant to a separate
registration rights agreement. In addition, if the Company proposes to register
any of its securities under the Securities Act, either for its own account or
for the account
51
<PAGE> 54
or for other security holders exercising registration rights, the warrant holder
is entitled to notice of such registration and is entitled to include shares of
such Common Stock therein. The warrant will be exercised in full upon the
closing of this offering.
POSSIBLE ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS
Amended and Restated Certificate of Incorporation and Restated Bylaws
The Company's Amended and Restated Certificate of Incorporation authorizes
the Board to establish one or more series of undesignated Preferred Stock, the
terms of which can be determined by the Board at the time of issuance. See
"-- Preferred Stock." The Amended and Restated Certificate of Incorporation also
provides that all stockholder actions must be effected at a duly called meeting
of stockholders and not by a consent in writing. In addition, effective upon the
closing of this offering, the Company's Restated Bylaws will not permit
stockholders of the Company to call a special meeting of stockholders; only the
Company's Chief Executive Officer, President or Chairperson of the Board or a
majority of the Board will be permitted to call a special meeting of
stockholders. The Restated Bylaws also will require that stockholders give
advance notice to the Company's Secretary of any nominations for Director or
other business to be brought by stockholders at any stockholders' meeting and
require a vote of 66 2/3% of the stockholders or a majority of the members of
the Board to amend the Restated Bylaws. These provisions of the Amended and
Restated Certificate of Incorporation and the Restated Bylaws could discourage
potential acquisition proposals and could delay or prevent a change in control
of the Company. Such provisions also may have the effect of preventing changes
in the management of the Company.
Delaware Anti-Takeover Statute
The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203"), which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder (defined as any person or entity that is the beneficial owner of at
least 15% of a corporation's voting stock) for a period of three years following
the time that such stockholder became an interested stockholder, unless: (i)
prior to such time, the board of directors of the corporation approved either
the business combination or the transaction that resulted in the stockholder's
becoming an interested stockholder; (ii) upon consummation of the transaction
that resulted in the stockholder's becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding, for purposes of
determining the number of shares outstanding, those shares owned (x) by persons
who are directors and also officers and (y) by employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer;
or (iii) at or subsequent to such time, the business combination is approved by
the Board and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least two-thirds of the
outstanding voting stock that is not owned by the interested stockholder.
Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, lease, exchange, mortgage, transfer, pledge or other disposition involving
the interested stockholder and 10% or more of the assets of the corporation;
(iii) subject to certain exceptions, any transaction which results in the
issuance or transfer by the corporation of any stock of the corporation to the
interested stockholder; (iv) any transaction involving the corporation that has
the effect of increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested stockholder; or
(v) the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or through
the corporation.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Norwest Bank
Minnesota, N.A.
52
<PAGE> 55
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, there will be 10,442,007 shares of Common
Stock of the Company outstanding, based on shares outstanding as of April 9,
1998. There were also approximately 637,270 shares covered by vested options
outstanding, which are not considered to be outstanding shares. Of the
outstanding shares, 3,361,469 shares, including the 3,300,000 shares of Common
Stock sold in this offering, will be immediately eligible for resale in the
public market without restriction under the Securities Act, except that any
shares purchased in this offering by affiliates of the Company ("Affiliates"),
as that term is defined in Rule 144 under the Securities Act ("Rule 144"), may
generally only be resold in compliance with applicable provisions of Rule 144.
Beginning approximately 90 days after the date of this Prospectus, approximately
16,665 additional shares of Common Stock will become eligible for immediate
resale in the public market, subject to compliances to certain of such shares
with applicable provisions of Rules 144 and 701 under the Securities Act ("Rule
701").
The Company, the executive officers and Directors of the Company, and
certain security holders of the Company have agreed pursuant to lock-up
agreements that they will not, without the prior written consent of BancAmerica
Robertson Stephens, offer, sell or otherwise dispose of the shares of Common
Stock beneficially owned by them for a period of 180 days from the date of this
Prospectus. Each holder who signed a lock-up agreement has agreed, subject to
certain limited exceptions, not to sell or otherwise dispose of any of the
shares held by them as of the date of this Prospectus for a period of 180 days
after the date of this Prospectus without the prior written consent of
BancAmerica Robertson Stephens. At the end of such 180-day period, approximately
8,706,944 shares of Common Stock (including approximately 671,040 shares
issuable upon exercise of vested options) will be eligible for immediate resale,
subject to compliance with Rule 144 and Rule 701. The remainder of the
approximately 110,068 shares of Common Stock outstanding will become eligible
for sale at various times over a period of less than two years and could be sold
earlier if the holders exercise any available registration rights or upon
vesting pursuant to the Company's standard four year vesting schedule.
Approximately an additional 442,573 shares issuable upon exercise of existing
options will become eligible for sale at various times over a period of less
than four years.
In general, under Rule 144 beginning approximately 90 days after the
effective date of the Registration Statement of which this Prospectus is a part,
a stockholder, including an Affiliate, who has beneficially owned his or her
restricted securities (as that term is defined in Rule 144) for at least one
year from the later of the date such securities were acquired from the Company
or (if applicable) the date they were acquired from an Affiliate is entitled to
sell, within any three-month period, a number of such shares that does not
exceed the greater of one percent of the then outstanding shares of Common Stock
(approximately 104,420 shares immediately after the offering) or the average
weekly trading volume in the Common Stock during the four calendar weeks
preceding the date on which notice of such sale was filed under Rule 144,
provided certain requirements concerning availability of public information,
manner of sale and notice of sale are satisfied. In addition, under Rule 144(k),
if a period of at least two years has elapsed between the later of the date
restricted securities were acquired from the Company or (if applicable) the date
they were acquired from an Affiliate of the Company, a stockholder who is not an
Affiliate of the Company at the time of sale and has not been an Affiliate of
the Company for at least three months prior to the sale is entitled to sell the
shares immediately without compliance with the foregoing requirements under Rule
144.
Securities issued in reliance on Rule 701 (such as shares of Common Stock
that may be acquired pursuant to the exercise of certain options granted prior
to this offering) are also restricted securities and, beginning 90 days after
the date of this Prospectus, may be sold by stockholders other than an Affiliate
of the Company subject only to the manner of sale provisions of Rule 144 and by
an Affiliate under Rule 144 without compliance with its one-year holding period
requirement.
Prior to this offering, there has been no public market for the Common
Stock. No prediction can be made as to the effect, if any, that market sales of
shares or the availability of shares for sale will have on the market price of
the Common Stock prevailing from time to time. The Company is unable to estimate
the number of shares that may be sold in the public market pursuant to Rule 144,
since this will depend on the market price of the Common Stock, the personal
circumstances of the sellers and other factors. Nevertheless, sales of
53
<PAGE> 56
significant amounts of the Common Stock of the Company in the public market
could adversely affect the market price of the Common Stock and could impair the
Company's ability to raise capital through an offering of its equity securities.
In addition, the Company intends to register approximately 90 days after
the date of this Prospectus a total of 1,901,055 shares of Common Stock subject
to outstanding options or reserved for issuance under the Company's 1998 Plan or
outstanding shares that are subject to repurchase by the Company plus 200,000
shares of Common Stock reserved for issuance under the Purchase Plan.
Furthermore, upon expiration of lock-up agreements described above, holders of
approximately 6,383,723 shares of Common Stock will be entitled to certain
registration rights with respect to such shares. If such holders, by exercising
their registration rights, cause a large number of shares to be registered and
sold in the public market, such sales could have a material adverse effect on
the market price of the Common Stock.
54
<PAGE> 57
UNDERWRITING
The Underwriters named below (the "Underwriters"), acting through their
representatives, BancAmerica Robertson Stephens and Hambrecht & Quist LLC (the
"Representatives"), have severally agreed with the Company and the Selling
Stockholders, subject to the terms and conditions of the Underwriting Agreement,
to purchase from the Company and the Selling Stockholders the number of shares
of Common Stock set forth opposite their names below. The Underwriters are
committed to purchase and pay for all such shares if any are purchased.
<TABLE>
<CAPTION>
NUMBER
OF
UNDERWRITER SHARES
- ----------- ---------
<S> <C>
BancAmerica Robertson Stephens..............................
Hambrecht & Quist LLC.......................................
---------
Total............................................. 3,300,000
=========
</TABLE>
The Company and the Selling Stockholders have been advised by the
Representatives that the Underwriters propose to offer the shares of Common
Stock to the public at the initial public offering price set forth on the cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of $ per share, of which $ may be reallowed to
other dealers. After the initial public offering, the public offering price,
concession and reallowance to dealers may be reduced by the Representatives. No
such reduction shall change the amount of proceeds to be received by the Company
and the Selling Stockholders as set forth on the cover page of this Prospectus.
The Company and certain Selling Stockholders have granted to the
Underwriters an option, exercisable during the 30-day period after the date of
this Prospectus, to purchase up to and additional shares of
Common Stock, respectively, at the same price per share as the Company and the
Selling Stockholders will receive for the 3,300,000 shares that the Underwriters
have agreed to purchase. To the extent that the Underwriters exercise such
option, each of the Underwriters will have a firm commitment to purchase
approximately the same percentage of such additional shares that the number of
shares of Common Stock to be purchased by it shown in the above table represents
as a percentage of the 3,300,000 shares offered hereby. If purchased, such
additional shares will be sold by the Underwriters on the same terms as those on
which the 3,300,000 shares are being sold. The Company and such Selling
Stockholders will be obligated, pursuant to the option, to sell shares to the
extent the option is exercised. The Underwriters may exercise such option only
to cover over-allotments made in connection with the sale of shares of Common
Stock offered hereby.
The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company and the Selling Stockholders against certain civil
liabilities, including liabilities under the Securities Act and liabilities
arising from breaches of representations and warranties contained in the
Underwriting Agreement.
Each officer and director and certain holders of shares of the Company's
Common Stock have agreed with the Representatives, for a period of 180 days
after the date of this Prospectus (the "Lock-Up Period"), subject to certain
exceptions, not to offer to sell, contract to sell, or otherwise sell, dispose
of, loan, pledge or grant any rights with respect to any shares of Common Stock,
any options or warrants to purchase any shares of Common Stock, or any
securities convertible into or exchangeable for shares of Common Stock owned as
of
55
<PAGE> 58
the date of this Prospectus or thereafter acquired directly by such holders or
with respect to which they have or hereafter acquire the power of disposition,
without the prior written consent of BancAmerica Robertson Stephens. However,
BancAmerica Robertson Stephens may, in its sole discretion and at any time
without notice, release all or any portion of the securities subject to lock-up
agreements. There are no agreements between the Representatives and any of the
Company's stockholders providing consent by the Representatives to the sale of
shares prior to the expiration of the Lock-Up Period. The Company has agreed
that during the Lock-Up Period, the Company will not, subject to certain
exceptions, without the prior written consent of BancAmerica Robertson Stephens,
(i) consent to the disposition of any shares held by stockholders prior to the
expiration of the Lock-Up Period or (ii) issue, sell, contract to sell or
otherwise dispose of, any shares of Common Stock, any options or warrants to
purchase any shares of Common Stock or any securities convertible into,
exercisable for or exchangeable for shares of Common Stock, other than the
Company's sale of shares in this offering, the issuance of Common Stock upon the
exercise of outstanding options and warrants and the Company's issuance of
options and stock under the existing stock option and stock purchase plans. See
"Shares Eligible for Future Sale."
The Underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.
Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock offered hereby will be determined through negotiations between the
Company and the Representatives. Among the factors to be considered in such
negotiations are prevailing market conditions, certain financial information of
the Company, market valuations of other companies that the Company and the
Representatives believe to be comparable to the Company, estimates of the
business potential of the Company, the present state of the Company's
development and other factors deemed relevant.
The Representatives have advised the Company that, pursuant to Regulation M
under the Securities Act, certain persons participating in the offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, that may have the effect of
stabilizing or maintaining the market price of the Common Stock at a level above
that which might otherwise prevail in the open market. A "stabilizing bid" is a
bid for or the purchase of the Common Stock on behalf of the Underwriters for
the purpose of fixing or maintaining the price of the Common Stock. A "syndicate
covering transaction" is the bid for or the purchase of the Common Stock on
behalf of the Underwriters to reduce a short position incurred by the
Underwriters in connection with the offering. A "penalty bid" is an arrangement
permitting the Representatives to reclaim the selling concession otherwise
accruing to an Underwriter or syndicate member in connection with the offering
if the Common Stock originally sold by such Underwriter or syndicate member is
purchased by the Representatives in a syndicate covering transaction and has
therefore not been effectively placed by such Underwriter or syndicate member.
The Representatives have advised the Company that such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
56
<PAGE> 59
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, Denver, Colorado. Certain legal
matters in connection with the offering will be passed upon for the Underwriters
by Foley, Hoag & Eliot LLP, Boston, Massachusetts.
EXPERTS
The Financial Statements of the Company as of December 31, 1996 and 1997,
and for each of the three years in the period ended December 31, 1997, included
in this Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated by their report with respect thereto, and are included
in reliance upon the authority of said firm as experts in giving said reports.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act,
with respect to the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto. For further information with respect to the
Company and such Common Stock, reference is made to the Registration Statement
and the exhibits and schedules filed as a part thereof. Statements contained in
this Prospectus as to the contents of any contract or any other document
referred to are not necessarily complete. In each instance, reference is made to
the copy of such contract or document filed as an exhibit to the Registration
Statement, and each such statement is qualified in all respects by such
reference. Copies of the Registration Statement, including exhibits and
schedules thereto, may be inspected without charge at the Commission's principal
office in Washington, D.C., or obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a World Wide Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the site is
http://www.sec.gov.
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
located at 7 World Trade Center, Suite 1300, New York, New York 10048 and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also makes electronic filings publicly available on the
Internet within 24 hours of acceptance. The Commission's Web site is located at
http://www.sec.gov. The Commission's Web site also contains reports, proxy and
information statements, and other information regarding registrants that file
electronically with the Commission.
57
<PAGE> 60
GLOSSARY OF TERMS
"AIN" -- Advanced Intelligent Network. A system of interconnected telephone
switches and specialized computers that provides advanced telephone
functionality based on computer software rather than software in the telephone
switch.
"ALI" -- Automatic Location Information. The location information
associated with the number of the telephone used to dial 9-1-1. ALI Data may
include address information, subaddress information (such as office number) and
information about the appropriate emergency response organization for the
jurisdiction.
"ANI" -- Automatic Number Identification. The number associated with the
telephone from which a 9-1-1 call is placed.
"cellular" -- Cellular Mobile Telephone System (or CMTS). A wireless
telephone system based on a grid of cell sites. Each cell site serves a limited
geographic area and contains transmitters, receivers and antennae. Each cell
site is connected to centrally-located switching gear and control equipment.
Each cellular telephone has a unique identification number which allows the
central switch to track and coordinate all mobile phones in the service area,
including the hand-offs from one cell site to another.
"CLECs" -- Competitive Local Exchange Carriers. A company that provides its
customers with an alternative to an ILEC for local transport of private line,
special access and interstate and local transport of switched access
telecommunications services.
"E9-1-1" -- Enhanced 9-1-1 service. An emergency telephone response service
that provides ANI and ALI to the PSAP responsible for dispatching police, fire
and other emergency services.
"FCC" -- Federal Communications Commission.
"ILECs" -- Incumbent Local Exchange Carriers. A company that provides its
customers with local transport of private line, special access and interstate
and local transport of switched access telecommunications services. These
companies typically are RBOCS or independent companies that were the only
suppliers before competition.
"LNP" -- Local Number Portability. LNP, which enables customers to retain
their local phone number when changing service providers, was mandated by the
Telecommunications Act of 1996 and regulations promulgated thereunder in order
to facilitate a level playing field for local telephone service competition. The
implementation of LNP utilizes a new ten-digit telephone number, known as the
Location Routing Number, or LRN. The LRN is used by the originating carrier to
determine the identity and location of the terminating carrier's switch.
"NDSC" -- The Company's National Data Services Center. Through the NDSC,
the Company offers comprehensive and cost-effective data management services to
ILECs, CLECs and wireless carriers, including system activation, routine data
administration, transaction processing and performance management with a high
level of security and survivability.
"1996 Act" -- The Telecommunications Act of 1996, which imposed, among
other things, new duties on local exchange carriers in order to open local
telephone markets to competition.
"Order" -- Report & Order 94-102 issued by the FCC on June 12, 1996, which
mandated the adoption of 9-1-1 technology by wireless carriers in Phase I and
Phase II.
"OSS" -- Operational Support Systems. The systems and procedures that
directly support the daily operation of the telecommunications infrastructure.
The average local exchange carrier has hundreds of OSS, which may be categorized
into service provisioning, operations, customer care and billing, and planning
and engineering.
"PBX" -- Private Branch Exchange. Privately owned switch systems typically
used in office buildings, college campuses and apartment complexes that connect
calls to a phone company.
58
<PAGE> 61
"Phase I" -- Mandate pursuant to the Order that required wireless carriers
to provide to requesting PSAP's, at the time of a 9-1-1 call, the caller's
telephone number and location of the receiving cell site. Wireless carriers had
to comply with Phase I mandates by the later of April 1, 1998, or six months
after the PSAP request.
"Phase II" -- Mandate pursuant to the Order requiring wireless carriers to
locate a 9-1-1 caller to within 125 meters, subject to FCC guidelines. Wireless
carriers must comply with Phase II mandates for requesting PSAPs by October 1,
2001.
"PSAP" -- Public Safety Answering Point. A public agency responsible for
receiving 9-1-1 calls in a jurisdiction.
"RBOCs" -- Regional Bell Operating Companies. The seven local exchange
carriers that were created in 1984 as a result of the breakup of AT&T.
"switch" -- A central facility capable of establishing, routing and
releasing connections on a per call basis between two or more circuits, services
or systems. Switches are used for both wireline and wireless communications
networks.
"VSAT" -- Very Small Aperture Terminal. A data communication system that
utilizes high power geosynchronous satellites and small diameter antenna earth
stations for communications.
59
<PAGE> 62
SCC COMMUNICATIONS CORP.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-2
Balance Sheets as of December 31, 1996 and 1997 and March
31, 1998 (unaudited)...................................... F-3
Statements of Operations for the years ended December 31,
1995, 1996 and 1997 and the three months ended March 31,
1997 and 1998 (unaudited)................................. F-5
Statements of Stockholders' Equity (Deficit) for the years
ended December 31, 1995, 1996 and 1997 and the three
months ended March 31, 1998 (unaudited)................... F-6
Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997 and the three months ended March 31,
1997 and 1998 (unaudited)................................. F-7
Notes to Financial Statements............................... F-8
</TABLE>
F-1
<PAGE> 63
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of SCC Communications Corp.:
We have audited the accompanying balance sheets of SCC Communications Corp.
(a Delaware corporation) as of December 31, 1996 and 1997, and the related
statements of operations, stockholders' equity (deficit) and cash flows for each
of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SCC Communications Corp. as
of December 31, 1996 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Denver, Colorado,
February 20, 1998 (except with
respect to the matters in
Notes 2 and 4 as to which the
dates are March 18, 1998 and
April 8, 1998)
F-2
<PAGE> 64
SCC COMMUNICATIONS CORP.
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
----------------- MARCH 31, MARCH 31,
1996 1997 1998 1998
------- ------- --------- ---------
(UNAUDITED)
(NOTE 2)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................... $ 32 $ 2,503 $ 1,177
Accounts receivable, net of allowance for doubtful
accounts of approximately $25, $50 and $32 in
1996, 1997 and 1998, respectively............... 1,376 2,328 2,939
Unbilled project revenue........................... 806 996 968
Prepaids and other................................. 46 224 461
Deferred income taxes -- current portion........... -- 1,300 1,300
Current assets from discontinued operations (Note
3).............................................. 4,778 -- --
------- ------- -------
Total current assets....................... 7,038 7,351 6,845
------- ------- -------
PROPERTY AND EQUIPMENT, at cost:
Computer hardware and equipment.................... 13,377 18,844 22,468
Furniture and fixtures............................. 581 709 736
Leasehold improvements............................. 552 621 662
Property and equipment from discontinued operations
(Note 3)........................................ 384 -- --
------- ------- -------
14,894 20,174 23,866
Less -- Accumulated depreciation................... (4,613) (8,136) (9,092)
Less -- Accumulated depreciation from discontinued
operations (Note 3)............................. (163) -- --
------- ------- -------
Total property and equipment............... 10,118 12,038 14,774
------- ------- -------
OTHER ASSETS......................................... 62 86 53
DEFERRED INCOME TAXES -- NONCURRENT.................. -- 1,200 1,200
SOFTWARE DEVELOPMENT COSTS:
From continuing operations, net of accumulated
amortization of $97, $201 and $232 in 1996, 1997
and 1998, respectively.......................... 397 431 456
From discontinued operations (Note 3), net of
accumulated amortization of $968 in 1996........ 867 -- --
------- ------- -------
Total software development costs........... 1,264 431 456
------- ------- -------
$18,482 $21,106 $23,328
======= ======= =======
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-3
<PAGE> 65
SCC COMMUNICATIONS CORP.
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
----------------- MARCH 31, MARCH 31,
1996 1997 1998 1998
------- ------- --------- ---------
(UNAUDITED)
(NOTE 2)
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable....................................... $ 729 $ 965 $ 748
Payroll-related accruals............................... 324 780 629
Other accrued liabilities.............................. 1,410 3,039 3,151
Current portion of notes payable (Note 6).............. 2,005 986 450
Current portion of capital lease obligations (Note
6).................................................. 3,346 1,638 1,817
Deferred contract revenue.............................. 2,310 2,613 2,081
Current liabilities from discontinued operations (Note
3).................................................. 4,259 -- --
------- ------- --------
Total current liabilities...................... 14,383 10,021 8,876
LONG-TERM DEBT:
Notes payable, net of current portion (Note 6)......... 145 4,000 4,000
Discount on long-term note payable (Note 4)............ -- (1,430) (1,356)
Capital lease obligations, net of current portion (Note
6).................................................. 3,173 4,321 6,998
------- ------- --------
Total liabilities.............................. 17,701 16,912 18,518
------- ------- --------
COMMITMENTS AND CONTINGENCIES (Notes 1, 8 and 12)
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK (Note
4)
(Series A, B, C, D, E and F) $.001 par value; 6,188,575
shares authorized; 6,188,575 and 6,188,575 shares
issued and outstanding; entitled to $13,849 and
$14,589 in 1996 and 1997, respectively, in
liquidation or upon redemption if requested by the
holders after September 1, 1998, stated at
redemption value (none outstanding pro forma)....... 13,849 14,589 14,774 --
PUTABLE COMMON STOCK WARRANT (Note 4).................... -- 1,472 1,521 --
STOCKHOLDERS' EQUITY (DEFICIT) (Note 5):
Preferred stock, $.001 par value; 15,000,000 shares
authorized; none issued or outstanding (Note 2)..... -- -- -- --
Common stock, $.001 par value; 30,000,000 shares
authorized; 1,840,899, 1,994,281 and 1,994,534
shares issued in 1996, 1997 and 1998, respectively,
and 8,378,257 shares issued pro forma............... 2 2 2 8
Additional paid-in capital............................. 298 452 453 16,742
Treasury stock, 36,250 shares, at cost................. (3) (3) (3) (3)
Stock subscriptions receivable......................... (19) (99) (99) (99)
Accumulated deficit.................................... (13,346) (12,219) (11,838) (11,838)
------- ------- -------- --------
Total stockholders' equity (deficit)........... (13,068) (11,867) (11,485) $ 4,810
------- ------- -------- ========
$18,482 $21,106 $ 23,328
======= ======= ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-4
<PAGE> 66
SCC COMMUNICATIONS CORP.
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------ -----------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE:
Data management services...................... $ 3,531 $ 13,165 $ 24,005 $ 4,861 $ 7,533
Licenses and implementation services.......... 3,882 1,637 3,067 271 369
---------- ---------- ---------- ---------- ----------
Total revenue.......................... 7,413 14,802 27,072 5,132 7,902
COSTS AND EXPENSES:
Cost of data management services.............. 2,840 7,996 15,378 3,123 4,798
Cost of licenses and implementation
services.................................... 1,041 596 1,283 98 153
Sales and marketing........................... 2,016 3,204 3,850 933 843
General and administrative.................... 830 1,533 3,227 485 1,146
---------- ---------- ---------- ---------- ----------
Total costs and expenses............... 6,727 13,329 23,738 4,639 6,940
---------- ---------- ---------- ---------- ----------
INCOME FROM OPERATIONS.......................... 686 1,473 3,334 493 962
OTHER INCOME (EXPENSE):
Interest and other income..................... 41 34 88 60 30
Interest and other expense.................... (409) (561) (967) (210) (331)
---------- ---------- ---------- ---------- ----------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES......................................... 318 946 2,455 343 661
PROVISION (BENEFIT) FOR INCOME TAXES (Note 7)... 16 9 (2,328) 24 46
---------- ---------- ---------- ---------- ----------
NET INCOME FROM CONTINUING OPERATIONS........... 302 937 4,783 319 615
DISCONTINUED OPERATIONS (Note 3):
Loss from operations of discontinued division,
net of tax.................................. (1,746) (562) (876) (253) --
Loss from disposal of discontinued division... -- -- (2,032) -- --
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS)............................... (1,444) 375 1,875 66 615
========== ========== ========== ========== ==========
Dividends accrued on Series D, E and F
mandatorily redeemable convertible preferred
stock......................................... (329) (673) (740) (185) (185)
Common stock warrant put price adjustment....... -- -- (8) -- (49)
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK.... $ (1,773) $ (298) $ 1,127 $ (119) $ 381
========== ========== ========== ========== ==========
NET INCOME (LOSS) FROM CONTINUING OPERATIONS PER
SHARE (Note 2):
Basic......................................... $ (0.02) $ 0.15 $ 2.17 $ 0.07 $ 0.20
========== ========== ========== ========== ==========
Diluted....................................... $ (0.02) $ 0.11 $ 0.54 $ 0.04 $ 0.07
========== ========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE
Basic......................................... $ (1.07) $ (0.17) $ 0.61 $ (0.07) $ 0.20
========== ========== ========== ========== ==========
Diluted....................................... $ (1.07) $ 0.05 $ 0.21 $ 0.01 $ 0.07
========== ========== ========== ========== ==========
SHARES USED IN COMPUTING NET INCOME (LOSS) FROM
CONTINUING OPERATIONS PER SHARE AND NET INCOME
(LOSS) PER SHARE (Note 2):
Basic......................................... 1,652,379 1,790,230 1,857,413 1,808,015 1,958,143
========== ========== ========== ========== ==========
Diluted....................................... 1,652,379 8,299,362 8,788,816 8,659,789 9,143,534
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-5
<PAGE> 67
SCC COMMUNICATIONS CORP.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TOTAL
COMMON STOCK ADDITIONAL STOCK TREASURY STOCK STOCKHOLDERS
------------------ PAID-IN SUBSCRIPTIONS ---------------- ACCUMULATED EQUITY
SHARES AMOUNT CAPITAL RECEIVABLE SHARES AMOUNT DEFICIT (DEFICIT)
--------- ------ ---------- ------------- ------- ------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, at December 31,
1994...................... 1,296,260 $ 1 $231 $(14) (36,250) $(3) $(11,276) $(11,061)
Series E mandatorily
redeemable convertible
preferred stock
("Convertible Preferred
Stock") issued at $2.55
per share in exchange
for notes payable and
cancellation of
warrants................ -- -- (28) -- -- -- -- (28)
Dividends accrued on
Series D, E and F
Convertible Preferred
Stock................... -- -- -- -- -- -- (329) (329)
Exercise of stock options,
at various prices per
share ranging from $0.12
to $0.30................ 525,188 1 75 (5) -- -- -- 71
Net loss.................. -- -- -- -- -- -- (1,444) (1,444)
--------- --- ---- ---- ------- --- -------- --------
BALANCES, at December 31,
1995...................... 1,821,448 2 278 (19) (36,250) (3) (13,049) (12,791)
Dividends accrued on
Series D, E and F
Convertible Preferred
Stock................... -- -- -- -- -- -- (672) (672)
Exercise of stock options,
at various prices per
share ranging from $0.12
to $1.50................ 19,451 -- 20 -- -- -- -- 20
Net income................ -- -- -- -- -- -- 375 375
--------- --- ---- ---- ------- --- -------- --------
BALANCES, at December 31,
1996...................... 1,840,899 2 298 (19) (36,250) (3) (13,346) (13,068)
Dividends accrued on
Series D, E and F
Convertible Preferred
Stock................... -- -- -- -- -- -- (740) (740)
Exercise of stock options,
including stock issued
at $0.12 and $3.00 per
share in exchange for
notes receivable........ 153,382 -- 154 (80) -- -- -- 74
Common stock warrant put
price adjustment
(Note 4)................ -- -- -- -- -- -- (8) (8)
Net income................ -- -- -- -- -- -- 1,875 1,875
--------- --- ---- ---- ------- --- -------- --------
BALANCES, at December 31,
1997...................... 1,994,281 2 452 (99) (36,250) (3) (12,219) (11,867)
Dividends accrued on
Series D, E and F
Convertible Preferred
Stock (unaudited)....... -- -- -- -- -- -- (185) (185)
Exercise of stock options
at $3.00 per share
(unaudited)............. 253 -- 1 -- -- -- -- 1
Common stock warrant put
price adjustment
(unaudited)............. -- -- -- -- -- -- (49) (49)
Net income (unaudited).... -- -- -- -- -- -- 615 615
--------- --- ---- ---- ------- --- -------- --------
Balances, at March 31, 1998
(unaudited)............... 1,994,534 $ 2 $453 $(99) (36,250) $(3) $(11,838) $(11,485)
========= === ==== ==== ======= === ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-6
<PAGE> 68
SCC COMMUNICATIONS CORP.
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------- ----------------
1995 1996 1997 1997 1998
------- ------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $(1,444) $ 375 $ 1,875 $ 66 $ 615
Adjustments to reconcile net income (loss) to net cash
provided by operating activities --
Amortization and depreciation........................... 1,062 2,242 3,534 765 985
Amortization of note payable discount................... 5 -- 33 -- 74
Gain on disposal of assets.............................. (7) -- (40) -- --
Loss on disposal of discontinued division............... -- -- 2,032 -- --
Provision for estimated losses on contracts............. 82 (321) (196) (10) (25)
Provision (recovery) of doubtful accounts............... (16) -- 25 -- (18)
Deferred income tax benefit............................. -- -- (2,500) -- --
Change in --
Accounts receivable................................... (1,370) 102 (977) 262 (593)
Unbilled project revenue.............................. 235 (778) (190) 321 28
Prepaids and other.................................... (116) 327 (202) (180) (204)
Accounts payable...................................... (108) 309 236 1,040 (217)
Accrued liabilities................................... (46) 477 1,337 325 (14)
Deferred contract revenue............................. 1,916 (1,932) 303 (123) (532)
Decrease in current assets and liabilities from
discontinued operations............................... (162) (1,257) 110 (809) --
------- ------- ------- ------ -------
Net cash provided by (used in) operating
activities........................................ 31 (456) 5,380 1,657 99
------- ------- ------- ------ -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment..................... (455) (2,361) (2,646) (548) (399)
Proceeds from sale of net assets.......................... 14 -- 603 -- --
Software development costs................................ (159) (226) (142) (27) (56)
------- ------- ------- ------ -------
Net cash used in investing activities............... (600) (2,587) (2,185) (575) (455)
------- ------- ------- ------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable................... 800 2,150 4,275 -- --
Proceeds from issuance of convertible notes payable....... 1,000 -- -- -- --
Principal payments on notes payable....................... (552) (1,527) (1,439) (329) (536)
Principal payments on capital lease obligations........... (467) (2,528) (3,634) (479) (435)
Exercise of stock options................................. 71 20 74 4 1
Proceeds from issuance of Series F Convertible Preferred
Stock................................................... -- 3,956 -- -- --
------- ------- ------- ------ -------
Net cash provided by (used in) financing
activities........................................ 852 2,071 (724) (804) (970)
------- ------- ------- ------ -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 283 (972) 2,471 278 (1,326)
CASH AND CASH EQUIVALENTS, beginning of period.............. 721 1,004 32 32 2,503
------- ------- ------- ------ -------
CASH AND CASH EQUIVALENTS, end of period.................... $ 1,004 $ 32 $ 2,503 $ 310 $ 1,177
======= ======= ======= ====== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest.................. $ 400 $ 611 $ 942 $ 181 $ 367
======= ======= ======= ====== =======
Cash paid during the period for taxes..................... $ 17 $ 4 $ 18 $ 11 $ 71
======= ======= ======= ====== =======
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING
ACTIVITIES:
Conversion of debt and accrued interest thereon to Series
E Convertible Preferred Stock........................... $ 2,633 $ -- $ -- $ -- $ --
======= ======= ======= ====== =======
Dividends accrued on Series D, E and F Convertible
Preferred Stock......................................... $ 329 $ 673 $ 740 $ 185 $ 185
======= ======= ======= ====== =======
Common stock issued to employees in exchange for employee
notes receivable........................................ $ 5 $ -- $ 80 $ -- $ --
======= ======= ======= ====== =======
Property acquired with capital leases..................... $ 3,735 $ 5,327 $ 3,074 $ 462 $ 3,291
======= ======= ======= ====== =======
Cancellation of common stock warrants..................... $ 101 $ -- $ -- $ -- $ --
======= ======= ======= ====== =======
Conversion of debt and accrued interest thereon to Series
F Convertible Preferred Stock........................... $ -- $ 1,044 $ -- $ -- $ --
======= ======= ======= ====== =======
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-7
<PAGE> 69
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
(1) ORGANIZATION, BUSINESS AND LIQUIDITY
SCC Communications Corp., doing business as SCC (the "Company"), is a
Delaware corporation. The Company is the leading provider of 9-1-1 operations
support systems services to incumbent local exchange carriers, competitive local
exchange carriers and wireless carriers in the United States. The Company
manages the data which enables 9-1-1 calls to be routed to the appropriate
public safety agency with accurate and timely information about the caller's
identification and location. In addition, the Company licenses its 9-1-1
software to carriers that wish to manage the delivery of 9-1-1 data management
services in-house.
LIQUIDITY
Although the Company had a working capital deficit at December 31, 1997,
the Company generated net income from continuing operations before income taxes
of approximately $2,455,000 while also generating positive operating cash flows
of approximately $5,400,000 in 1997. The Company believes that its operating
cash and its line of credit, which has been renewed through April 15, 1999, will
be adequate to meet its cash requirements for operations for the next twelve
months.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATING CYCLE
Assets and liabilities related to contracts are included in current assets
and liabilities in the accompanying balance sheets since they will be liquidated
in the normal course of contract completion, although this may require more than
one year.
PROPERTY AND EQUIPMENT
Depreciation of property and equipment is computed using the straight-line
method over estimated useful lives of three to five years for computer hardware
and equipment, five years for furniture and fixtures and the life of the lease
for leasehold improvements. The costs of repairs and maintenance are expensed
while enhancements to existing assets are capitalized.
SOFTWARE DEVELOPMENT COSTS
The Company expenses the costs of developing computer software until
technological feasibility is established and capitalizes all costs incurred from
that time until the software is available for general customer release.
Technological feasibility for the Company's computer software products is based
upon the earlier of the achievement of (a) a detail program design free of
high-risk development issues or (b) completion of a working model. Costs of
major enhancements to existing products with a wide market are capitalized while
routine maintenance of existing products is charged to expense as incurred. The
establishment of technological feasibility and the ongoing assessment of the
recoverability of capitalized computer software development costs requires
considerable judgment by management with respect to certain external factors,
including, but not limited to, technological feasibility, anticipated future
gross revenues, estimated economic life and changes in software and hardware
technology.
Capitalized software costs are amortized on a product-by-product basis. The
annual amortization is the greater of the amount computed using (a) the ratio
that current gross revenues for a product bear to the total of current and
anticipated future gross revenues for that product, or (b) the straight-line
method over the remaining estimated economic life of the product which is
typically five years. Accumulated amortization of capitalized software costs
from continuing operations totaled $38,000, $97,000 and $201,000, respectively,
for the years ended December 31, 1995, 1996 and 1997, and is included in cost of
data management services and licenses and implementation services in the
statements of operations.
F-8
<PAGE> 70
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
REVENUE RECOGNITION
The Company's revenue is derived from 9-1-1 data management services and
certain license fees and related implementation services that the Company
provides to telephone companies. Revenue from data management services generally
consists of a non-recurring initial fee and monthly recurring revenue. The non-
recurring initial fee is recognized using the percentage-of-completion method
over the period required to convert the customer's data to the Company's system
and otherwise prepare for implementation. Revenue from recurring monthly
services is recognized in the period the services are rendered. Related expenses
are recognized as they are incurred and are included in cost of data management
services in the accompanying statements of operations.
Because the Company's software requires significant modification for each
customer, revenue related to software license fees and implementation of the
Company's 9-1-1 systems at customer sites is recognized using the
percentage-of-completion method. Such contracts include a license fee for the
use of the Company's software and service fees for the installation and
customization of the system. The Company's costs to install its systems include
direct labor and expenses. Such costs are included in cost of licenses and
implementation services.
In applying the percentage-of-completion method, revenue and related costs
are recognized based on the percentage that labor hours incurred to date bear to
total estimated labor hours. Revenue recognized in excess of amounts billed is
reflected as unbilled project revenue and amounts billed in excess of revenue
recognized are reflected as deferred contract revenue in the accompanying
balance sheets. The Company recognizes any known or anticipated loss on
contracts in process when such losses are determined to exist.
Revenue from licenses and implementation services includes customer support
revenue which is recognized ratably over the related contract period on a
straight-line basis. Costs related to customer support revenue are included in
cost of licenses and implementation services in the accompanying statements of
operations.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk are primarily accounts receivable. The Company's
customers are generally telecommunications service providers; accordingly, the
Company's accounts receivable are concentrated in the telecommunications
industry. The Company's principal customers (Note 11) accounted for 86% and 40%
of the Company's accounts receivable as of December 31, 1996 and 1997,
respectively. The Company has no significant financial instruments with
off-balance sheet risk of accounting loss, such as foreign exchange contracts,
option contracts or other foreign currency hedging arrangements.
RESEARCH AND DEVELOPMENT
Research and development efforts consist of salaries, supplies and other
related costs. These costs are expensed as incurred and totaled approximately
$388,000, $230,000 and $738,000 for the years ended December 31, 1995, 1996 and
1997, respectively. These costs are included in cost of data management services
and licenses and implementation services in the accompanying statements of
operations and do not include development costs incurred as part of the efforts
performed under licenses and implementation services contracts with the
Company's customers.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents include
highly liquid investments with original maturities of 90 days or less.
F-9
<PAGE> 71
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
FAIR MARKET VALUE OF FINANCIAL INSTRUMENTS
Financial instruments include cash and cash equivalents, accounts
receivable and debt obligations. The carrying amounts for cash and cash
equivalents and accounts receivable approximate fair market value because of the
short maturity of these instruments. The fair value of notes and capital lease
obligations are estimated based on current rates available for similar debt with
maturities and securities, and at December 31, 1996 and 1997, approximates the
carrying value.
INCOME TAXES
The Company follows Statement of Financial Accounting Standards No. 109
("SFAS 109"), which requires recognition of deferred income tax assets and
liabilities for the expected future income tax consequences, based on enacted
tax laws, of temporary differences between the financial reporting and tax bases
of assets and liabilities. SFAS 109 also requires recognition of deferred tax
assets for the expected future tax effects of loss carryforwards and tax credit
carryforwards. Deferred tax assets are then reduced, if deemed necessary, by a
valuation allowance for the amount of any tax benefits which, on a more likely
than not basis, are not expected to be realized (Note 7).
STOCK BASED COMPENSATION PLANS
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees," in accounting for its stock option and other stock-based
compensation plans for employees and directors. The Company has adopted the
disclosure provisions of Statement of Financial Accounting Standards No. 123
("SFAS 123"), "Accounting for Stock-Based Compensation," for such options and
stock-based plans for employees and directors (Note 5).
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable from future undiscounted cash flows. Impairment losses are
recorded for the excess, if any, of the carrying value over the fair value of
the long-lived assets.
EARNINGS PER SHARE
The Company has adopted Statement of Financial Accounting Standards No.
128, "Earnings Per Share," by retroactively restating loss per share amounts for
all periods presented. "Basic income (loss) per share" is determined by dividing
net income (loss) available to common shareholders by the weighted average
number of common shares outstanding during each period. "Diluted income (loss)
per share" includes the effects of potentially issuable common stock, but only
if dilutive (i.e., a loss per share is never reduced). The treasury stock
method, using the average price of the Company's common stock for the period, is
applied to determine dilution from options and warrants. The if-converted method
is used for convertible securities. Potentially dilutive common stock options
that were excluded from the calculation of diluted income per share
F-10
<PAGE> 72
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
because their effect is antidilutive totaled 230,316 and 298,017 in 1996 and
1997, respectively, and 46,801 for the three months ended March 31, 1997.
Because of the reported net loss available to common shareholders in 1995,
4,920,954 shares of mandatorily redeemable convertible preferred stock
("Convertible Preferred Stock") and 497,078 common stock options were excluded
from the calculation of diluted net loss per share because their effect is
antidilutive.
A reconciliation of the numerators and denominators used in computing per
share net income (loss) from continuing operations is as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------ -----------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Numerator:
Net income from continuing
operations (numerator for
diluted loss per share for
1996 and 1997).............. $ 302,000 $ 937,000 $4,783,000 $ 319,000 $ 615,000
Dividends on Convertible
Preferred Stock............. (329,000) (673,000) (740,000) (185,000) (185,000)
Common stock warrant put price
adjustment.................. -- -- (8,000) -- (49,000)
---------- ---------- ---------- ---------- ----------
Numerator for basic
income (loss) per
share from continuing
operations (and, for
1995, diluted loss
per share)........... $ (27,000) $ 264,000 $4,035,000 $ 134,000 $ 381,000
========== ========== ========== ========== ==========
Denominator for basic income
(loss) per share:
Weighted average common shares
outstanding................. 1,652,379 1,790,230 1,857,413 1,808,015 1,958,143
========== ========== ========== ========== ==========
Denominator for diluted income
(loss) per share:
Convertible Preferred Stock.... -- 5,970,710 6,188,575 6,188,575 6,188,575
Weighted average common shares
outstanding................. 1,652,379 1,790,230 1,857,413 1,808,015 1,958,143
Options issued to employees.... -- 538,422 720,605 663,199 801,668
Putable common stock warrant... -- -- 22,223 -- 195,148
---------- ---------- ---------- ---------- ----------
Denominator for diluted
income (loss) per
share................ 1,652,379 8,299,362 8,788,816 8,659,789 9,143,534
========== ========== ========== ========== ==========
</TABLE>
F-11
<PAGE> 73
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
Income (loss) per common share was computed as follows:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------ ---------------
1995 1996 1997 1997 1998
------ ------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Basic income (loss) per share:
Income (loss) per share from continuing
operations........................... $(0.02) $ 0.15 $ 2.17 $ 0.07 $ 0.20
Net loss per share from discontinued
operations........................... (1.05) (0.32) (1.56) (0.14) --
------ ------ ------ ------ ------
Basic income (loss) per share... $(1.07) $(0.17) $ 0.61 $(0.07) $ 0.20
====== ====== ====== ====== ======
Diluted income (loss) per share:
Income (loss) per share from continuing
operations........................... $(0.02) $ 0.11 $ 0.54 $ 0.04 $ 0.07
Net loss per share from discontinued
operations........................... (1.05) (0.06) (0.33) (0.03) --
------ ------ ------ ------ ------
Diluted income (loss) per
share......................... $(1.07) $ 0.05 $ 0.21 $ 0.01 $ 0.07
====== ====== ====== ====== ======
</TABLE>
REVERSE STOCK SPLIT AND INCREASE IN AUTHORIZED SHARES
On March 18, 1998, the Company's Board of Directors authorized a
one-for-three reverse stock split to be effective upon the effective date of a
Registration Statement on Form S-1 filed by the Company with the Securities and
Exchange Commission. All share amounts, equivalent share amounts and per share
amounts have been adjusted retroactively to reflect the reverse stock split. The
Company's Board of Directors also authorized an increase in authorized common
stock to 30,000,000 shares and authorized 15,000,000 shares of undesignated
preferred stock.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income." This statement, effective for fiscal years beginning
after December 15, 1997, would require the Company to report components of
comprehensive income in a financial statement that is displayed with the same
prominence as other financial statements. Comprehensive income is defined by
Concepts Statement No. 6, "Elements of Financial Statements," as the change in
equity of a business enterprise during a period from transactions and other
events and circumstances from nonowner sources. It includes all changes in
equity during a period except those resulting from investments by owners and
distributions to owners. The Company adopted SFAS 130 in the first quarter of
1998, however, the Company did not have any transactions which would require
additional disclosure under SFAS 130.
Also in June 1997, the FASB issued Statement of Financial Accounting
Standards No. 131 ("SFAS 131"), "Disclosures about Segments of an Enterprise and
Related Information." This statement, effective for financial statements for
periods beginning after December 15, 1997, requires that a public business
enterprise report financial and descriptive information about its reportable
operating segments. Generally, financial information is required to be reported
on the basis that it is used internally for evaluation of segment performance
and deciding how to allocate resources to segments. The adoption of SFAS 131 is
not expected to have a material impact on the Company's financial statements.
F-12
<PAGE> 74
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
UNAUDITED PRO FORMA INFORMATION
The Company is contemplating a public offering of its common stock. If such
an offering is consummated, all of the Convertible Preferred Stock (Note 4)
outstanding as of the closing date will be converted into shares of common
stock. In addition, the put option related to common stock warrants will expire
upon completion of the offering and the common stock warrants will be exercised
for $100 into shares of common stock. The pro forma stockholders' equity in the
balance sheet as of December 31, 1997 reflects the conversion of all outstanding
Convertible Preferred Stock and the exercise of the common stock warrant to
stockholders' equity (deficit). Had the conversion of the Convertible Preferred
Stock occurred on January 1, 1997, basic and diluted net income per share from
continuing operations would have been $0.59 and $0.54, respectively for the year
ended December 31, 1997.
INTERIM RESULTS (UNAUDITED)
The accompanying balance sheet as of March 31, 1998, the statements of
operations and of cash flows for the three months ended March 31, 1997 and 1998,
and the statement of stockholders' equity (deficit) for the three months ended
March 31, 1998 are unaudited. In the opinion of management, the statements have
been prepared on the same basis as the audited financial statements and include
all adjustments, consisting only of normal recurring adjustments, necessary for
the fair statement of the results of the interim periods. Operating results for
the three months ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998.
RECLASSIFICATIONS
Certain reclassifications have been made to prior year balances to conform
to the current year presentation.
(3) DISCONTINUED OPERATIONS
On June 30, 1997, the Company sold the net assets of its Premise Products
Division. The sale resulted in a net loss of $2,032,000. The net losses of this
division are included in the statements of operations as loss from operations of
discontinued division. Revenue from the division for the years ended December
31, 1995 and 1996 and the six months ended June 30, 1997, were $8,798,000,
$12,274,000 and $5,785,000, respectively.
F-13
<PAGE> 75
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
(4) MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND PUTABLE COMMON STOCK
WARRANT
MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK
The Company has the following Convertible Preferred Stock authorized,
issued and outstanding at March 31, 1998, with the following liquidation or
redemption prices:
<TABLE>
<CAPTION>
SHARES
AUTHORIZED, LIQUIDATION OR ORIGINAL
ISSUED AND REDEMPTION PURCHASE
OUTSTANDING PRICE PRICE
----------- -------------- -----------
<S> <C> <C> <C>
Series A................................... 1,515,152 $ 1,500,000 $ 1,500,000
Series B................................... 1,010,101 1,000,000 1,000,000
Series C................................... 442,328 730,000 730,000
Series D................................... 912,123 2,403,000 1,614,458
Series E................................... 1,083,381 3,308,000 2,632,617
Series F................................... 1,225,490 5,833,000 5,000,000
--------- ----------- -----------
6,188,575 $14,774,000 $12,477,075
========= =========== ===========
</TABLE>
The activity of Series A through Series F Convertible Preferred Stock
issued and outstanding for the periods ended December 31, 1995, 1996 and 1997
and March 31, 1998, is as follows:
<TABLE>
<CAPTION>
SHARES ISSUED AND OUTSTANDING
-------------------------------------------------------------------------------
SERIES A SERIES B SERIES C SERIES D SERIES E SERIES F TOTAL
--------- --------- -------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, at December 31,
1994....................... 1,515,152 1,010,101 442,328 912,123 -- -- 3,879,704
Series E Convertible
Preferred Stock issued at
$2.43 per share in
exchange for notes
payable and cancellation
of warrants.............. -- -- -- -- 1,083,381 -- 1,083,381
--------- --------- ------- ------- --------- --------- ---------
BALANCES, at December 31,
1995....................... 1,515,152 1,010,101 442,328 912,123 1,083,381 -- 4,963,085
Series F Convertible
Preferred Stock issued at
$4.08 per share in
exchange for cash and
notes payable............ -- -- -- -- -- 1,225,490 1,225,490
--------- --------- ------- ------- --------- --------- ---------
BALANCES, at December 31,
1996 and 1997 and March 31,
1998 (unaudited)........... 1,515,152 1,010,101 442,328 912,123 1,083,381 1,225,490 6,188,575
========= ========= ======= ======= ========= ========= =========
</TABLE>
F-14
<PAGE> 76
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
The activity related to the liquidation or redemption value of Series A
through Series F Convertible Preferred Stock for the periods ended December 31,
1995, 1996 and 1997 and March 31, 1998 is as follows:
<TABLE>
<CAPTION>
LIQUIDATION OR REDEMPTION VALUE
---------------------------------------------------------------------------------------
SERIES A SERIES B SERIES C SERIES D SERIES E SERIES F TOTAL
---------- ---------- -------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, at December 31,
1994................... $1,500,000 $1,000,000 $730,000 $1,984,000 $ -- $ -- $ 5,214,000
Series E Convertible
Preferred Stock
issued at $2.43 per
share in exchange for
notes payable and
cancellation of
warrants............. -- -- -- -- 2,633,000 -- 2,633,000
Dividends accrued on
Series D and E
Convertible Preferred
Stock................ -- -- -- 129,000 200,000 -- 329,000
---------- ---------- -------- ---------- ---------- ---------- -----------
BALANCES, at December 31,
1995................... 1,500,000 1,000,000 730,000 2,113,000 2,833,000 -- 8,176,000
Series F Convertible
Preferred Stock
issued at $4.08 per
share in exchange for
cash and notes
payable.............. -- -- -- -- -- 5,000,000 5,000,000
Dividends accrued on
Series D, E and F
Convertible Preferred
Stock................ -- -- -- 129,000 211,000 333,000 673,000
---------- ---------- -------- ---------- ---------- ---------- -----------
BALANCES, at December 31,
1996................... 1,500,000 1,000,000 730,000 2,242,000 3,044,000 5,333,000 13,849,000
Dividends accrued on
Series D, E and F
Convertible Preferred
Stock................ -- -- -- 129,000 211,000 400,000 740,000
---------- ---------- -------- ---------- ---------- ---------- -----------
BALANCES, at December 31,
1997................... 1,500,000 1,000,000 730,000 2,371,000 3,255,000 5,733,000 14,589,000
Dividends accrued on
Series D, E and F
Convertible Preferred
Stock (unaudited).... -- -- -- 32,000 53,000 100,000 185,000
---------- ---------- -------- ---------- ---------- ---------- -----------
BALANCES, at March 31,
1998 (unaudited)....... $1,500,000 $1,000,000 $730,000 $2,403,000 $3,308,000 $5,833,000 $14,774,000
========== ========== ======== ========== ========== ========== ===========
</TABLE>
In March 1996, the Company authorized and issued 1,225,490 shares of Series
F Convertible Preferred Stock, with a liquidation or redemption price of
$5,000,000. The Company received cash proceeds of $3,956,000 and converted its
$1,000,000 note payable and accrued interest thereon of $44,000 to a stockholder
of the Company to Series F Convertible Preferred Stock in this offering.
In the event of any liquidation, holders of Convertible Preferred Stock
would be entitled to preference in the amounts stated above. Any remaining
assets would be distributed to common and convertible preferred stockholders as
defined. At the request of the convertible preferred stockholders on any date
after March 1, 1998 (on March 18, 1998, the Convertible Preferred Stockholders
agreed to extend the date to September 1, 1998), the Convertible Preferred Stock
is redeemable at the above amounts. Such redemption, if requested, will be paid
in three installments as follows: first, the Company will redeem 50% of the
then-outstanding
F-15
<PAGE> 77
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
Convertible Preferred Stock ten days subsequent to the redemption request (the
"Optional Redemption Date"); then 25% on the first anniversary of the Optional
Redemption Date; and finally, 25% on the second anniversary of the Optional
Redemption Date.
Annual dividends of 8% accrue on Series A, B, C, D, E and F Convertible
Preferred Stock when and if declared by the Board of Directors. Upon redemption
or liquidation, a dividend of 8% per annum will accrue from the original
issuance date of the Series D, E and F Convertible Preferred Stock. Accordingly,
the Series D, E and F Convertible Preferred Stock in the accompanying balance
sheets include the accrual of such dividends through December 31, 1997. No
distributions may be made to common stockholders until declared and accrued
preferred stock dividends have been distributed. Common stock dividends may not
be made at a rate higher than the Convertible Preferred Stock dividends.
Each share of Series A, B, C, D, E and F is convertible at the option of
the holder into one share of common stock. The conversion rate is subject to
adjustment if sales of common stock, or equivalent options, excluding sales to
employees under provisions of the stock option plan (see below), are made at a
price lower than the original issue price of the Convertible Preferred Stock.
Each share of Convertible Preferred Stock will be automatically converted into
common stock upon completion of a $10 million firmly underwritten public
offering at a minimum price of at least $6.00 per share or immediately upon
conversion of 75% of the Convertible Preferred Stock into common stock.
During 1994, the Company issued notes payable to three of its existing
investors totaling $2,558,000. The notes were convertible into Series E at $3.00
per share and were interest bearing at 4% per annum. The investors received
warrants to purchase 200,000 shares of the Company's common stock for $600. The
warrants, exercisable for $.03 per share, were recorded at their estimated fair
market value of $100,000 and this amount was reflected as additional paid-in
capital. The notes payable were discounted by this amount and the discount was
being amortized as interest expense over the term of the debt. The notes were
due upon a public offering of the Company's common stock with a per share price
of at least $6.00 and aggregate proceeds of at least $10 million. Absent a
public offering prior to maturity, the notes were due or convertible into Series
E Convertible Preferred Stock, at the Company's option, on May 1, 1995. The
warrants had an expiration date of May 1, 1995. In January 1995, the debt and
accrued interest was replaced with new debt of $2,633,000 with similar terms,
convertible into 1,083,381 shares of Series E Convertible Preferred Stock (at
$2.43 per share). The warrants were canceled. The new debt was immediately
converted into 1,083,381 shares of Series E Convertible Preferred Stock, with a
liquidation or redemption price at that date of $2,633,000.
PUTABLE COMMON STOCK WARRANT
In November 1997, the Company borrowed $4,000,000 from Banc One Capital
Partners II, LLC (the "Lender") (Note 6). In connection with the loan, the
Lender received a warrant to purchase 195,148 shares of the Company's common
stock for $100. Under the warrant, if the Company does not complete a qualified
public offering as defined in the related agreement within twelve months of the
date of the agreement, the number of shares under the warrant is increased by an
additional 97,574 shares of the Company's common stock. If the Company does not
complete a qualified public offering as defined in the related agreement within
eighteen months of the date of the agreement, the number of shares under the
warrant is increased by another 97,574 shares of the Company's common stock. The
Company recorded $1,464,000 for the estimated value of the shares exercisable
under the warrant as a discount on long-term note payable in the accompanying
balance sheets and is amortizing the discount into interest expense over the
six-year term of the note. The warrant expires on the date which is the earliest
of (i) the date on which a qualified initial public offering is completed, (ii)
the date on which a disposition or non-surviving combination is consummated,
(iii) the date on which the Lender exercises its rights under a co-sale
agreement to sell all of its warrant shares or (iv) 90 days after the maturity
date of the related note.
F-16
<PAGE> 78
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
In addition, at any time after the occurrence of a put trigger event and
prior to a qualified public offering, as defined, the Lender may require the
Company to purchase all, but not less than all, of the common shares underlying
the warrant. A put trigger event is defined as the first to occur of any of the
following events: (1) the sixth anniversary date of the agreement; (2) a
disposition as defined in the agreement; (3) a non-surviving combination as
defined in the agreement; (4) the date upon which the Company prepays in full
the outstanding principal, interest and assessments, if any, on the note; or (5)
an acceleration event caused by a default of the note. The put price is
calculated as the greater of the market determined value amount as defined in
the agreement or an amount equal to six times earnings before interest, taxes,
depreciation and amortization for the preceding twelve months, reduced by
current outstanding indebtedness, increased by the fair market value of all
marketable securities, and divided by the number of fully diluted common shares
outstanding. On December 31, 1997, the Company recorded an amount equal to the
number of shares under the warrant times the difference between the current
market value, as defined, and the market value of the shares at the time the
warrant was issued. This amount of $8,000 was recorded as an increase in the
value of the putable common stock warrant and charged to accumulated deficit in
the accompanying financial statements.
The Lender is entitled to request registration of such shares pursuant to a
registration rights agreement. In addition, if the Company proposes to register
any of its securities under the Securities Act, either for its own account or
for the account or for other security holders exercising registration rights,
the warrant holder is entitled to notice of such registration and is entitled to
include shares of such common stock therein.
Pursuant to an agreement with the Lender, dated April 8, 1998, the warrant
will be exercised automatically just before or contemporaneously with the
effectiveness of a qualified initial public offering.
(5) STOCKHOLDERS' EQUITY (DEFICIT)
STOCK SUBSCRIPTIONS RECEIVABLE
In September 1997, in connection with the sale of the Company's Premise
Products Division, several former employees of the Company signed full recourse
promissory notes to the Company to exercise their vested stock options. The
notes accrue interest at 6.07% per annum. The principal and accrued interest
thereon are due the earlier of September 28, 2000 or ninety days after the
Company becomes subject to the reporting requirements under Section 13 of the
Securities Exchange Act of 1934, as amended.
STOCK OPTION PLAN
The Company's 1990 Stock Option Plan (the "1990 Option Plan"), as amended
by the Company's Board of Directors, provides officers and employees options to
purchase up to 2,262,205 shares of common stock of the Company. Under the terms
of the 1990 Option Plan, the Board of Directors may grant officers and employees
either nonqualified or incentive stock options, as defined by the Internal
Revenue Service. The purchase price of the shares subject to incentive stock
options will be the fair market value of the common stock on the date the option
is granted. Options granted under the 1990 Option Plan are exercisable up to ten
years from the date of the grant and are contingent upon continued employment
with the Company.
In October 1995, the Company granted an option to purchase 66,666 shares of
common stock to an officer of the Company. The option is exercisable at $6.00
per share and was issuable contingent on the attainment of certain objectives.
During 1997, the Company's Board of Directors determined that the officer had
met the objectives required under the agreement, causing the options to be
issued. No compensation expense was recorded on this option because the exercise
price exceeded the fair market value of the shares.
F-17
<PAGE> 79
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 123 ("SFAS 123")
SFAS 123, "Accounting for Stock-Based Compensation," defines a fair value
based method of accounting for employee stock options or similar equity
instruments. However, SFAS 123 allows the continued measurement of compensation
cost for such plans using the intrinsic value based method prescribed by APB
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), provided
that pro forma disclosures are made of net income or loss assuming the fair
value based method of SFAS 123 had been applied. The Company has elected to
account for its stock-based compensation plans under APB 25; accordingly, for
purposes of the pro forma disclosures presented below, the Company has computed
the fair values of all options granted under the 1990 Option Plan during 1995,
1996 and 1997, using the Black-Scholes pricing model and the following weighted
average assumptions:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Risk-free interest rate............................ 5.85% 6.16% 6.41%
Expected dividend yield............................ 0.00% 0.00% 0.00%
Expected lives outstanding......................... 5.0 years 5.0 years 5.0 years
Expected volatility................................ 0.001% 0.001% 0.001%
</TABLE>
To estimate lives of options for this valuation, it was assumed options
will be exercised upon becoming fully vested. All options are initially assumed
to vest. Cumulative compensation costs recognized in pro forma net income or
loss with respect to options that are forfeited prior to vesting is adjusted as
a reduction of pro forma compensation expense in the period of forfeiture.
Because the Company's common stock is not yet publicly traded, the expected
market volatility was assumed to be zero. Actual volatility of the Company's
common stock may vary. Fair value computations are highly sensitive to the
volatility factor assumed; the greater the volatility, the higher the computed
fair value of options granted.
The total fair value of options granted under the 1990 Option Plan was
computed to be approximately $260,000, $187,000 and $499,000 for the years ended
December 31, 1995, 1996 and 1997, respectively. These amounts are amortized
ratably over the vesting periods of the options or recognized at date of grant
if no vesting period is required. Pro forma stock-based compensation, net of the
effect of forfeitures, was $26,000, $80,000 and $232,000 for 1995, 1996 and
1997, respectively.
A summary of stock options under the 1990 Option Plan as of December 31,
1995, 1996 and 1997 and changes during the years then ended are presented below:
<TABLE>
<CAPTION>
1995 1996 1997
-------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year............... 1,470,386 $0.81 919,958 $1.35 1,073,908 $1.68
Granted............... 403,666 2.34 231,983 3.12 270,016 6.93
Exercised............. (525,188) 0.15 (19,450) 0.99 (153,382) 1.00
Canceled.............. (428,906) 1.35 (58,583) 1.92 (83,932) 2.46
--------- --------- ---------
Outstanding at end of
year.................. 919,958 $1.35 1,073,908 $1.68 1,106,610 $3.03
========= ========= =========
Weighted average fair
value of options
granted............... $ 0.63 $ 0.81 $ 1.80
========= ========= =========
</TABLE>
F-18
<PAGE> 80
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
The following table summarizes information about the options outstanding at
December 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------ ----------------------
WEIGHTED
AVERAGE WEIGHTED NUMBER WEIGHTED
NUMBER REMAINING AVERAGE EXERCISABLE AVERAGE
RANGE OF OUTSTANDING CONTRACTUAL EXERCISE AT EXERCISE
EXERCISE PRICES AT 12/31/97 LIFE PRICE 12/31/97 PRICE
- --------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
$0.12 -- 0.30........................ 239,325 3.2 years $0.18 239,325 $0.18
$0.75 -- 1.80........................ 365,000 7.0 years 1.47 260,540 1.41
$3.00 -- 6.00........................ 287,018 8.7 years 4.02 71,501 3.03
$7.50 -- 9.00........................ 215,267 9.8 years 7.53 -- --
--------- -------
1,106,610 7.2 years $3.03 571,366 $1.11
========= =======
</TABLE>
If the Company had accounted for its stock-based compensation plan in
accordance with SFAS 123, the Company's net income from continuing operations
would have been reported as follows:
<TABLE>
<CAPTION>
1995 1996 1997
-------- -------- ----------
<S> <C> <C> <C>
Net income from continuing operations:
As reported...................................... $302,000 $937,000 $4,783,000
Pro forma........................................ $276,000 $857,000 $4,551,000
Basic income (loss) from continuing operations per
share:
As reported...................................... $ (0.02) $ 0.15 $ 2.17
Pro forma........................................ $ (0.03) $ 0.10 $ 2.05
Diluted net income (loss) from continuing
operations per share:
As reported...................................... $ (0.02) $ 0.11 $ 0.54
Pro forma........................................ $ (0.03) $ 0.10 $ 0.52
</TABLE>
(6) LONG-TERM DEBT
At December 31, 1996 and 1997 and March 31, 1998, notes payable and
long-term debt consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- MARCH 31,
1996 1997 1998
----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Borrowings on revolving line of credit
bearing interest at prime plus 1.0% (9.50%
at March 31, 1998), due April 15, 1999.
Collateralized by certain assets of the
Company. Maximum borrowing amount of 75%
of qualified accounts receivable up to
$2,000,000................................ $ 1,950,000 $ 950,000 $ 450,000
</TABLE>
F-19
<PAGE> 81
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- MARCH 31,
1996 1997 1998
----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Secured promissory note to a bank, bearing
interest at prime plus 1% (9.50% at
December 31, 1997), minimum monthly
payments in varying amounts, currently
$16,000, including imputed interest of
9.50% per annum due February 1998 with a
final payment of $20,000, collateralized
by certain assets of the Company.......... 200,000 36,000 --
Note payable to Banc One Capital Partners
II, LLC, bearing interest at 11% through
May 31, 1999, and 12% thereafter, interest
is payable the last day of each month.
Quarterly principal payments of $250,000
from March 31, 2001 through December 31,
2002, then $500,000 per quarter due at
each subsequent quarter, thereafter. The
final payment is due November 30, 2003.
(Note 4).................................. -- 4,000,000 4,000,000
Capitalized lease obligations for equipment
due on various dates through October 1,
2002, minimum monthly payments in varying
amounts, currently $397,000 including
imputed interest ranging from 3.75% to
10.25% per annum, collateralized by the
related assets with a net book value of
$7,366,000 $8,101,000 and $7,495,000,
respectively.............................. 6,519,000 5,959,000 8,815,000
----------- ----------- ------------
8,669,000 10,945,000 13,265,000
Less -- Current portion..................... (5,351,000) (2,624,000) (2,267,000)
----------- ----------- ------------
$ 3,318,000 $ 8,321,000 $ 10,998,000
=========== =========== ============
</TABLE>
The Company may prepay the $4,000,000 note payable with Banc One Capital
Partners II, LLC after June 30, 1998, however, a prepayment premium will be due
equal to 4% of the amount outstanding if prepaid between June 30, 1998 and
November 30, 1998, 3% if prepaid between December 1, 1998 and November 30, 1999
and 2% if prepaid between December 1, 1999 and November 30, 2000.
F-20
<PAGE> 82
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
Debt maturities of notes payable and long-term debt as of March 31, 1998,
are as follows:
<TABLE>
<CAPTION>
CAPITAL NOTES
LEASES PAYABLE TOTAL
----------- ---------- -----------
<S> <C> <C> <C>
1998, nine months............................. $ 1,812,000 $ 450,000 $ 2,262,000
1999.......................................... 2,893,000 -- 2,893,000
2000.......................................... 2,631,000 -- 2,631,000
2001.......................................... 2,040,000 1,000,000 3,040,000
2002.......................................... 1,285,000 1,250,000 2,535,000
Thereafter.................................... -- 1,750,000 1,750,000
----------- ---------- -----------
10,661,000 4,450,000 15,111,000
Less -- Amount related to interest............ (1,846,000) -- (1,846,000)
----------- ---------- -----------
Principal portion of future obligations....... 8,815,000 4,450,000 13,265,000
Less -- Current portion....................... (1,817,000) (450,000) (2,267,000)
----------- ---------- -----------
$ 6,998,000 $4,000,000 $10,998,000
=========== ========== ===========
</TABLE>
(7) INCOME TAXES
The Company has operated in three countries, the United States, Canada and
Australia. For income tax return reporting purposes, the Company has
approximately $9,600,000 of net operating loss carryforwards; approximately
$364,000 of research and development tax credit carryforwards and $39,000 of
alternative minimum tax credit carryforwards available to offset future federal
taxable income or federal tax liabilities in the United States. The research and
development credit and net operating loss carryforwards expire at various dates
through 2011. The Company also has $208,000 of foreign tax credit carryforwards.
The Tax Reform Act of 1986 contains provisions which may limit the net
operating loss and credit carryforwards available to be used in any given year
upon the occurrence of certain events including significant changes in ownership
of the Company. In accordance with certain provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), a greater than 50% change in ownership of
a company within a three year period results in an annual limitation on the
Company's ability to utilize its net operating loss carryforwards from tax
periods prior to the ownership change.
Deferred income tax assets and liabilities at December 31, 1996 and 1997,
were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
Depreciation differences.................................. $ (377,000) $ (630,000)
Accrued liabilities and other............................. 374,000 656,000
Deferred revenue.......................................... 596,000 438,000
Net operating loss carryforwards.......................... 3,312,000 3,564,000
Tax credit carryforwards.................................. 647,000 611,000
Less -- Valuation allowance............................... (4,552,000) (2,139,000)
----------- -----------
$ -- $ 2,500,000
=========== ===========
</TABLE>
As of December 31, 1997, the Company reversed $2,500,000 of the valuation
allowance on part of its deferred tax assets, as the Company believes it is more
likely than not that such tax benefits will be realized.
Management believes the entire tax benefit of $4,552,000 as of December 31,
1996 and the remaining tax benefit of $2,139,000 as of December 31, 1997, do not
satisfy the realization criteria set forth in SFAS No. 109 and has recorded a
valuation allowance for such net tax asset.
F-21
<PAGE> 83
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
The components of the provision (benefit) for income taxes attributable to
income from operations as of December 31, 1995, 1996 and 1997, were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1995 1996 1997
------- -------- -----------
<S> <C> <C> <C>
Current provision (benefit) --
State........................................... $ 2,000 $ 69,000 $ 172,000
Foreign......................................... 14,000 (60,000) --
------- -------- -----------
$16,000 $ 9,000 $ 172,000
Deferred benefit, federal and state............... -- -- (2,500,000)
------- -------- -----------
Income tax provision (benefit).................... $16,000 $ 9,000 $(2,328,000)
======= ======== ===========
</TABLE>
The income tax provision for the three months ended March 31, 1997 and 1998
is comprised of current provision in states where the Company did not have net
operating loss carryforwards available to offset net income.
The components of the provision for income taxes attributable to income
from discontinued operations as of December 31, 1995, 1996 and 1997, were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1996 1997
------- -------- --------
<S> <C> <C> <C>
Current provision --
Foreign........................................... $ -- $146,000 $100,000
======= ======== ========
</TABLE>
A reconciliation of income tax provision computed by applying the federal
income tax rate of 34% to income from continuing operations before income taxes
as of December 31, 1995, 1996 and 1997, is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
1995 1996 1997
--------- --------- -----------
<S> <C> <C> <C>
Computed normal tax provision.................. $ 108,000 $ 322,000 $ 835,000
Tax effect of permanent differences............ 11,000 21,000 34,000
State tax, net of federal tax impact........... 15,000 44,000 113,000
Canada tax..................................... 14,000 -- --
Change in valuation allowance attributable to
continuing operations........................ (132,000) (378,000) (3,310,000)
--------- --------- -----------
Income tax provision (benefit)................. $ 16,000 $ 9,000 $(2,328,000)
========= ========= ===========
</TABLE>
The provision for income taxes is attributable to continuing operations and
discontinued operations as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
1995 1996 1997
--------- --------- -----------
<S> <C> <C> <C>
Provision attributable to continuing
operations................................... $ 148,000 $ 387,000 $ 982,000
Change in valuation allowance attributable to
continuing operations........................ (132,000) (378,000) (3,310,000)
--------- --------- -----------
Net provision (benefit) attributable to
continuing operations........................ 16,000 9,000 (2,328,000)
--------- --------- -----------
Benefit attributable to discontinued
operations................................... (705,000) (432,000) (797,000)
Change in valuation allowance attributable to
discontinued operations...................... 705,000 578,000 897,000
--------- --------- -----------
Net provision attributable to discontinued
operations................................... -- 146,000 100,000
--------- --------- -----------
Total income tax provision
(benefit).......................... $ 16,000 $ 155,000 $(2,228,000)
========= ========= ===========
</TABLE>
F-22
<PAGE> 84
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
(8) COMMITMENTS
The Company leases its office and research facilities and certain equipment
under operating lease agreements which expire through December 2002. Rent
expense for the years ended December 31, 1995, 1996 and 1997 was approximately
$505,000, $621,000 and $718,000, respectively. Future minimum lease obligations
under these agreements are as follows:
<TABLE>
<S> <C>
1998..................................................... $1,716,000
1999..................................................... 1,662,000
2000..................................................... 1,388,000
2001..................................................... 1,385,000
2002..................................................... 1,407,000
----------
Total.......................................... $7,558,000
==========
</TABLE>
(9) EMPLOYEE BENEFIT PLAN
The Company has a 401(k) plan under which eligible employees may defer up
to 15% of their compensation. The Company may make matching contributions and
discretionary contributions if approved by the Board of Directors. For 1995,
1996 and 1997, no employer matching or discretionary contributions were made to
the 401(k) plan.
(10) RELATED PARTY TRANSACTION
The Company provides data management and certain consulting services to and
leases equipment from entities in which a stockholder of the Company has an
ownership interest. A representative of the stockholder is a member of the
Company's Board of Directors. The Company received net proceeds of approximately
$3,226,000, $6,606,000 and $6,959,000 in 1995, 1996 and 1997, respectively,
pursuant to these agreements. Amounts due to the stockholder under the lease
agreements net of amounts due to the Company for services rendered as of
December 31, 1996 and 1997 were $3,158,000 and $5,148,000, respectively. The
leases have interest rates ranging from 9.25% to 9.50%, require monthly payments
and have expiration dates varying through October 2002.
(11) MAJOR CUSTOMERS
Revenue from certain customers exceeded 10% of total revenue for the
respective year as follows: 44%, 20% and 24% in 1995; 47% and 35% in 1996; and
30%, 29% and 22% in 1997. Contracts with certain of these customers have a
ten-year duration and provide for fixed monthly fees based upon the number of
subscriber records managed and upon the services selected by the customer.
(12) LEGAL MATTERS
The Company is subject to various claims and business disputes in the
ordinary course of business. While the outcome of these matters cannot be
predicted with certainty, management anticipates that the ultimate outcome of
the issues will not have a material impact on the financial statements.
(13) SUBSEQUENT EVENTS (UNAUDITED)
On March 18, 1998, the Company's Board of Directors authorized the filing
of a Registration Statement with the Securities and Exchange Commission covering
the proposed sale of shares of its common stock to the public.
F-23
<PAGE> 85
SCC COMMUNICATIONS CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING INFORMATION RELATED TO UNAUDITED PERIODS)
On March 18, 1998, the Company adopted an employee stock purchase plan
("ESPP") under which eligible employees may contribute up to 10% of their
salaries through payroll deductions to purchase shares of the Company's common
stock. The first offering period of the ESPP began March 1, 1998 and will end
December 31, 1998. Thereafter, offering periods will be successive six month
periods. At the end of each offering period, amounts contributed by employees
will be used to purchase shares of the Company's common stock at a price equal
to 85% of the lower of the closing price of the common stock on the first day or
last day of the offering period. The Company's Board of Directors has authorized
the issuance of up to 200,000 shares under the ESPP and may terminate the ESPP
at any time. At January 1 of each year, the shares available under the ESPP will
be restored to 200,000, although the Company's Board of Directors may elect to
restore a lesser number of shares.
On April 7, 1998, the Company adopted the 1998 Stock Incentive Plan ("1998
Plan"), which is a successor to the 1990 Option Plan, to become effective upon a
qualified initial public offering. A total of 1,901,055 shares have been
authorized for issuance under the 1998 Plan, including shares authorized under
the 1990 Option Plan. The shares reserved for issuance will increase
automatically on the first trading day of each calendar year, beginning with the
1999 calendar year, by 3% of the number of shares of common stock outstanding on
the last trading day of the immediately preceding calendar year. The 1998 Plan
allows for issuances of options to officers, non-employee Board members and
consultants, as provided for under the terms of the 1998 Plan.
F-24
<PAGE> 86
[SCC LOGO]
[BECAUSE EVERY CALL IS IMPORTANT.]
<PAGE> 87
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates,
except for the registration fee, the Nasdaq National Market filing fee and the
NASD fee.
<TABLE>
<CAPTION>
<S> <C>
Registration fee............................................ $ 16,793
Nasdaq National Market fee.................................. 78,875
NASD fee.................................................... 6,193
Blue Sky fees and expenses.................................. 7,500
Printing and engraving expenses............................. 125,000
Legal fees and expenses..................................... 300,000
Accounting fees and expenses................................ 126,000
Transfer Agent and Registrar fees........................... 2,500
Miscellaneous expenses...................................... 137,139
--------
TOTAL............................................. $800,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law permits indemnification
of officers and directors of the Company under certain conditions and subject to
certain limitations. Section 145 of the Delaware General Corporation Law also
provides that a corporation has the power to purchase and maintain insurance on
behalf of its officers and directors against any liability asserted against such
person and incurred by him or her in such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to indemnify
him or her against such liability under the provisions of Section 145 of the
Delaware General Corporation Law.
Effective as of the closing of this offering, Article VII, Section 1 of the
Restated Bylaws of the Company will provide that the Company shall indemnify its
Directors and executive officers to the fullest extent not prohibited by the
Delaware General Corporation Law. The rights to indemnity thereunder will
continue as to a person who has ceased to be a Director, officer, employee or
agent and inure to the benefit of the heirs, executors and administrators of the
person. In addition, expenses incurred by a Director or executive officer in
defending any civil, criminal, administrative or investigative action, suit or
proceeding by reason of the fact that he or she is or was a Director or officer
of the Company (or was serving at the Company's request as a Director or officer
of another corporation) will be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
Company as authorized by the relevant section of the Delaware General
Corporation Law.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law,
effective as of the closing of this offering, Article V, Section (A) of the
Company's Amended and Restated Certificate of Incorporation will provide that a
Director of the Company shall not be personally liable for monetary damages for
breach of fiduciary duty as a Director, except for liability (i) for any breach
of the Director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or acts or omissions that involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law or (iv) for any transaction from which the
Director derived any improper personal benefit.
The Company intends to enter into indemnification agreements with each of
its Directors and executive officers, effective upon the effectiveness of this
Registration Statement. Generally, the indemnification agreements will attempt
to provide the maximum protection permitted by Delaware law as it may be amended
from time to time. Moreover, the indemnification agreements will provide for
certain additional indemnification. Under such additional indemnification
provisions, however, an individual will not receive indemnification
II-1
<PAGE> 88
for judgments, settlements or expenses if he or she is found liable to the
Company (except to the extent the court determines he or she is fairly and
reasonably entitled to indemnity for expenses), for settlements not approved by
the Company, or for settlements and expenses if the settlement is not approved
by the court. The indemnification agreements will provide for the Company to
advance to the individual any and all reasonable expenses (including legal fees
and expenses) incurred in investigating or defending any such action, suit or
proceeding. In order to receive an advance of expenses, the individual must
submit to the Company copies of invoices presented to him or her for such
expenses. Also, the individual must repay such advances upon a final judicial
decision that he or she is not entitled to indemnification.
The Company has purchased directors' and officers' liability insurance.
The Underwriting Agreement (Exhibit 1.1 hereto) contains provisions by
which the Underwriters have agreed to indemnify the Company, each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, each Director of the Company, and each officer of the Company who signs
this Registration Statement, with respect to information furnished in writing by
or on behalf of the Underwriters for use in this Registration Statement.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since March 31, 1995, the Company has sold and issued the following
unregistered securities.
(1) From March 31, 1995 to May 18, 1998, the Company issued an
aggregate of 749,078 options to purchase Common Stock with exercise prices
ranging from $0.30 to $12.75 per share under the 1990 Option Plan and an
aggregate of 235,912 shares of Common Stock were issued through the
exercise of options granted under the 1990 Option Plan for an aggregate
exercise price of $159,908. For additional information concerning these
transactions, reference is made to the information contained under the
caption "Management -- Benefit Plans" in the form of the Prospectus
included herein.
(2) On March 5, 1996, the Company issued an aggregate of 1,225,490
shares of Series F Preferred Stock to three investors for an aggregate
consideration of $5,000,000.
(3) On November 20, 1997, the Company issued a warrant to purchase
that number of Common Shares of the Company representing between two
percent and four percent of the fully diluted Common Stock of the Company,
depending upon certain circumstances, to Banc One Capital Partners II, LLC
in connection with a loan agreement.
The sales and issuances of securities in the above transactions were deemed
to be exempt under the Act by virtue of Section 4(2) thereof and/or Regulation D
and Rule 701 promulgated thereunder as transactions not involving any public
offering. The purchasers in each case represented their intention to acquire the
securities for investment only and not with a view to the distribution thereof.
Appropriate legends were affixed to the stock certificates issued in such
transactions. Similar representations of investment intent were obtained and
similar legends imposed in connection with any subsequent transfers of any such
securities. The Company believes that all recipients had adequate access,
through employment or other relationships, to information about the Company to
make an informed investment decision.
II-2
<PAGE> 89
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1* -- Form of Underwriting Agreement.
3.1* -- Form of Amended and Restated Certificate of Incorporation
of the Company to become effective immediately prior to
the closing of the offering.
3.2* -- Form of Restated Bylaws of the Company to be effective
upon the closing of the offering.
4.1* -- Form of Certificate for Common Stock.
4.2* -- Reference is made to Exhibits 3.1 and 3.2.
5.1* -- Opinion of Brobeck, Phleger & Harrison LLP with respect
to the Common Stock being registered.
10.1* -- Fourth Amended and Restated Registration Rights
Agreement, dated March 5, 1996.
10.2* -- 1990 Stock Option Plan.
10.3* -- 1998 Stock Incentive Plan.
10.4 -- 1998 Employee Stock Purchase Plan, as amended.
10.5* -- Form of Directors' and Officers' Indemnification
Agreement.
10.6+ -- 9-1-1 Services Agreement between Ameritech Information
Systems, Inc. and SCC Communications Corp., signed August
31, 1994.
10.7+ -- Agreement for Services between SCC Communications Corp.
and U S West Communications, Inc. dated December 28,
1995.
10.8+ -- Services Agreement No. PR-9026-L between SCC
Communications Corp. and BellSouth Telecommunications,
Inc. dated October 13, 1995.
10.9+ -- Wireless E9-1-1 Agreement between SCC Communications
Corp. and Ameritech Mobile Communications, Inc. dated
April 1998.
10.10+ -- Asset Purchase Agreement between SCC Communications Corp.
and Printrak International, Inc., dated July 18, 1997.
10.11* -- Amendment One to Asset Purchase Agreement between SCC
Communications Corp. and Printrak International, Inc.
10.12* -- Bank One Loan Agreement dated April 15, 1997, effective
as of July 1, 1996.
10.13* -- Banc One Capital Partners and SCC Communications Corp.
Senior Subordinated Note and Warrant Purchase Agreement,
dated November 20, 1997.
10.14* -- Banc One Senior Subordinated Note due November 30, 2003.
10.15* -- Banc One Warrant Certificate.
10.16* -- Banc One and SCC Communications Corp. Option Agreement,
dated November 20, 1997.
10.17* -- Banc One and SCC Communications Corp. Registration Rights
Agreement, dated November 20, 1997.
10.18* -- Co-Sale Agreement, dated November 20, 1997, between SCC
Communications Corp., George Heinrichs, John Sims, Nancy
Hamilton, The Hill Partnership III, Ameritech Development
Corporation and Boston Capital Ventures Limited
Partnership and Banc One Capital Partners.
10.19* -- Preemptive Rights Agreement between Banc One Capital
Partners and SCC Communications Corp.
</TABLE>
II-3
<PAGE> 90
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.20* -- Master Lease Agreement Between Ameritech Credit
Corporation and SCC Communications Corp., dated March 11,
1996.
10.21+ -- Consulting Agreement Between SCC Communications Corp. and
Ameritech Mobile Communications, Inc. dated October 27,
1997
10.22* -- Bank One Loan Change in Terms Agreement effective as of
April 15, 1998.
23.1* -- Consent of Brobeck, Phleger & Harrison LLP (contained in
their opinion filed as Exhibit 5.1).
23.2 -- Consent of Arthur Andersen LLP, Independent Public
Accountants.
24.1* -- Power of Attorney.
27.1 -- Financial Data Schedule (for the year ended December 31,
1997).
27.2 -- Financial Data Schedule (for the three months ended March
31, 1998).
</TABLE>
- ------------
* Previously filed.
+ Confidential treatment has been requested for a portion of these exhibits.
(b) Financial Statement Schedules included separately in the Registration
Statement.
All financial statement schedules have been omitted because they are not
required, are not applicable or the information is included in the Financial
Statements or Notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to Directors, officers and controlling persons of the Company
pursuant to the provisions described in Item 14, or otherwise, the Company 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 Company of expenses
incurred or paid by a Director, officer or controlling person of the Company 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 Company 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.
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 purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 91
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, County of Denver, State of
Colorado, on June 23, 1998.
SCC COMMUNICATIONS CORP.
By: /s/ NANCY K. HAMILTON
----------------------------------
Nancy K. Hamilton
Chief Financial Officer
and Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities indicated on
June 23, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* President, Chief Executive Officer and
- ----------------------------------------------------- Director (Principal Executive Officer)
George K. Heinrichs
/s/ NANCY K. HAMILTON Chief Financial Officer and Senior Vice
- ----------------------------------------------------- President (Principal Financial and
Nancy K. Hamilton Accounting Officer)
* Chief Operating Officer
- -----------------------------------------------------
John J. Sims
* Director
- -----------------------------------------------------
John G. Hill
* Director
- -----------------------------------------------------
Darrell A. Williams
* Director
- -----------------------------------------------------
David Kronfeld
*By: /s/ NANCY K. HAMILTON
------------------------------------------------
Nancy K. Hamilton
As Attorney-in-fact
</TABLE>
II-5
<PAGE> 92
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1* -- Form of Underwriting Agreement.
3.1* -- Form of Amended and Restated Certificate of Incorporation
of the Company to become effective immediately prior to
the closing of the offering.
3.2* -- Form of Restated Bylaws of the Company to be effective
upon the closing of the offering.
4.1* -- Form of Certificate for Common Stock.
4.2* -- Reference is made to Exhibits 3.1 and 3.2.
5.1* -- Opinion of Brobeck, Phleger & Harrison LLP with respect
to the Common Stock being registered.
10.1* -- Fourth Amended and Restated Registration Rights
Agreement, dated March 5, 1996.
10.2* -- 1990 Stock Option Plan.
10.3* -- 1998 Stock Incentive Plan.
10.4 -- 1998 Employee Stock Purchase Plan, as amended.
10.5* -- Form of Directors' and Officers' Indemnification
Agreement.
10.6+ -- 9-1-1 Services Agreement between Ameritech Information
Systems, Inc. and SCC Communications Corp., signed August
31, 1994.
10.7+ -- Agreement for Services between SCC Communications Corp.
and U S West Communications, Inc. dated December 28,
1995.
10.8+ -- Services Agreement No. PR-9026-L between SCC
Communications Corp. and BellSouth Telecommunications,
Inc. dated October 13, 1995.
10.9+ -- Wireless E9-1-1 Agreement between SCC Communications
Corp. and Ameritech Mobile Communications, Inc. dated
April 1998
10.10+ -- Asset Purchase Agreement between SCC Communications Corp.
and Printrak International, Inc., dated July 18, 1997.
10.11* -- Amendment One to Asset Purchase Agreement between SCC
Communications Corp. and Printrak International, Inc.
10.12* -- Bank One Loan Agreement dated April 15, 1997, effective
as of July 1, 1996.
10.13* -- Banc One Capital Partners and SCC Communications Corp.
Senior Subordinated Note and Warrant Purchase Agreement,
dated November 20, 1997.
10.14* -- Banc One Senior Subordinated Note due November 30, 2003.
10.15* -- Banc One Warrant Certificate.
10.16* -- Banc One and SCC Communications Corp. Option Agreement,
dated November 20, 1997.
10.17* -- Banc One and SCC Communications Corp. Registration Rights
Agreement, dated November 20, 1997.
10.18* -- Co-Sale Agreement, dated November 20, 1997, between SCC
Communications Corp., George Heinrichs, John Sims, Nancy
Hamilton, The Hill Partnership III, Ameritech Development
Corporation and Boston Capital Ventures Limited
Partnership and Banc One Capital Partners.
10.19* -- Preemptive Rights Agreement between Banc One Capital
Partners and SCC Communications Corp.
</TABLE>
<PAGE> 93
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.20* -- Master Lease Agreement Between Ameritech Credit
Corporation and SCC Communications Corp., dated March 11,
1996.
10.21+ -- Consulting Agreement Between SCC Communications Corp. and
Ameritech Mobile Communications, Inc. dated October 27,
1997.
10.22* -- Bank One Loan Change in Terms Agreement effective as of
April 15, 1998.
23.1* -- Consent of Brobeck, Phleger & Harrison LLP (contained in
their opinion filed as Exhibit 5.1).
23.2 -- Consent of Arthur Andersen LLP, Independent Public
Accountants.
24.1* -- Power of Attorney.
27.1 -- Financial Data Schedule (for the year ended December 31,
1997).
27.2 -- Financial Data Schedule (for the three months ended March
31, 1998).
</TABLE>
- ------------
* Previously filed.
+ Confidential treatment has been requested for a portion of these Exhibits.
<PAGE> 1
SCC COMMUNICATIONS CORP.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I - PURPOSE
I.1. PURPOSE. The SCC Communications Corp. Employee Stock Purchase Plan
is intended to provide a method whereby employees of SCC Communications Corp.
and its subsidiary corporations (hereinafter referred to, unless the context
otherwise requires, as the "Company") will have an opportunity to acquire a
proprietary interest in the Company through the purchase of shares of the Common
Stock of the Company. It is the intention of the Company to have the Plan
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"). The provisions of the Plan shall
be construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
ARTICLE II - DEFINITIONS
II.1. BASE PAY. "Base Pay" shall mean regular straight-time earnings,
including shift premiums, but excluding payments for overtime, bonuses and other
special payments, commissions and other marketing incentive payments.
II.2. COMMITTEE. "Committee" shall mean the individuals described in
Article XI.
II.3. EMPLOYEE. "Employee" means any person who is customarily employed
on a regular full-time or part-time basis by the Company and is regularly
scheduled to work more than 20 hours per week.
II.4. SUBSIDIARY CORPORATION. "Subsidiary Corporation" shall mean any
present or future corporation which (i) would be a "subsidiary corporation" of
SCC Communications Corporation as that term is defined in Section 424 of the
Code and (ii) is designated as a participant in the Plan by the Committee.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
III.1. INITIAL ELIGIBILITY. Any employee who is employed by the Company
on the Offering Commencement Date (as defined below) shall be eligible to
participate in such Offering.
III.2. LEAVE OF ABSENCE. For purposes of participation in the Plan, a
person on leave of absence shall be deemed to be an employee for the first 90
days of such leave of absence and such employee's employment shall be deemed to
have terminated (for purposes of this Plan only) at the close of business on the
90th day of such leave of absence unless such employee shall have returned to
regular full-time or part-time employment (as the case may be) prior to
<PAGE> 2
the close of business on such 90th day. Termination by the Company of any
employee's leave of absence, other than termination of such leave of absence on
return to full-time or part-time employment, shall terminate an employee's
employment for all purposes of the Plan and shall terminate such employee's
participation in the Plan and right to exercise any option.
III.3. RESTRICTIONS ON PARTICIPATION. Notwithstanding any provisions of
the Plan to the contrary, no employee shall be granted an option to participate
in the Plan:
(a) If, immediately after the grant, such employee would own
stock, and/or hold outstanding options to purchase stock, possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Company (for purposes of this paragraph, the rules of ss. 424(d) of the Code
shall apply in determining stock ownership of any employee); or
(b) Which permits his rights to purchase stock under all
employee stock purchase plans of the Company to accrue at a rate which exceeds
$25,000 in fair market value of the Common Stock (determined at the time such
option is granted) for each calendar year in which such option is outstanding.
III.4. COMMENCEMENT OF PARTICIPATION. An eligible employee may become a
participant by completing an authorization for a payroll deduction on the form
provided by the Company and filing it with the office of the Treasurer of the
Company on or before the date set therefor by the Committee, which date shall be
prior to the Offering Commencement Date for the Offering (as such terms are
defined below). Payroll deductions for a participant shall commence on the
applicable Offering Commencement Date when his authorization for a payroll
deduction becomes effective and shall end on the Offering Termination Date of
the Offering to which such authorization is applicable unless sooner terminated
by the participant as provided in Article VIII.
ARTICLE IV - OFFERINGS
IV.1. ANNUAL OFFERINGS. The Plan will be implemented by semiannual
offerings of the Company's Common Stock (the "Offerings") beginning on the 1st
day of January and the 1st day of July in each year, and terminating on June 30
and December 31 of the same year, respectively. Notwithstanding the above, the
first Offering shall begin on March 1, 1998 and terminate on December 31, 1998,
with no Offering beginning on June 1, 1998.
As used in the Plan, "Offering Commencement Date" means the March 1,
1998, or the January 1 or July 1 date, as the case may be, on which the
particular Offering begins and "Offering Termination Date" means the June 30 or
December 31 date, as the case may be, on which the particular Offering
terminates. If an Offering period begins or terminates on a Saturday, Sunday or
legal holiday, then the first or last day of the Offering, as applicable, shall
-2-
<PAGE> 3
be the first business day after that date (for Offering period commencements) or
the last business day prior to that date (for Offering period terminations).
ARTICLE V - PAYROLL DEDUCTIONS
V.1. AMOUNT OF DEDUCTION. At the time a participant files his
authorization for payroll deduction, he shall elect to have deductions made from
his pay on each payday during the time he is a participant in an Offering at the
rate of 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10% of his base pay in effect at the
Offering Commencement Date of such Offering. In the case of a part-time hourly
employee, such employee's Base Pay during an Offering shall be determined by
multiplying such employee's hourly rate of pay in effect on the Offering
Commencement Date by the number of regularly scheduled hours of work for such
employee during such Offering.
V.2. PARTICIPANT'S ACCOUNT. All payroll deductions made for a
participant shall be credited to his account under the Plan. A participant may
not make any separate cash payment into such account except for the period of
March 1, 1998 until the next payday or when on leave of absence (and then only
as provided in Section 5.4, below).
V.3. CHANGES IN PAYROLL DEDUCTIONS. A participant may discontinue his
participation in the Plan as provided in Article VIII, but no other change can
be made during an Offering, except that a participant may decrease the amount of
his payroll deductions for that Offering one (1) time during any Offering.
V.4. LEAVE OF ABSENCE. If a participant goes on a leave of absence,
such participant shall have the right to elect: (a) to withdraw the balance in
his account pursuant to Section 7.2, (b) to discontinue contributions to the
Plan but remain a participant in the Plan, or remain a participant in the Plan
during such leave of absence, authorizing deductions to be made from payments by
the Company to the participant during such leave of absence and undertaking to
make cash payments to the Plan at the end of each payroll period to the extent
that amounts payable by the Company to such participant are insufficient to meet
such participant's authorized Plan deductions.
-3-
<PAGE> 4
ARTICLE VI - GRANTING OF OPTION
VI.1. NUMBER OF OPTION SHARES. On each Offering Commencement Date, a
participating employee shall be deemed to have been granted an option to
purchase a maximum number of shares of the Common Stock of the Company equal to
an amount determined as follows: an amount equal to (i) that percentage of the
employee's Base Pay which he has elected to have withheld (but not in any case
in excess of 10%) multiplied by (ii) the employee's Base Pay on the Offering
Commencement Date divided by (iii) 85% of the market value of the Common Stock
of the Company on the Offering Commencement Date or Offering Termination Date
(as determined pursuant to Section 6.2, below). The market value of the
Company's stock shall be determined as provided in paragraphs (a) and (b) of
Section 6.2 below. An employee's Base Pay during the period of an offering shall
be determined by multiplying his normal monthly rate of pay (as in effect on the
Offering Commencement Date) by 6, or the hourly rate by 1040, as the case may
be, provided that, in the case of a part time hourly employee, the employee's
Base Pay during the period of an Offering shall be determined by multiplying
such employee's hourly rate by the number of regularly scheduled hours of work
for such employee during such Offering. An employee's Base Pay during the
Offering with the Offering Commencement Date of March 1, 1998 shall be
determined by multiplying his normal monthly rate of pay (as determined on the
Offering Commencement Date) by 10, or the hourly rate by 1760.
VI.2. OPTION PRICE. The option price of Common Stock purchased with
payroll deductions made during an Offering for a participant therein shall be
the lower of:
(a) 85% of the closing price of the Common Stock on the
Offering Commencement Date or the nearest prior business day on which trading
occurred on the NASDAQ National Market System; or
(b) 85% of the closing price of the Common Stock on the
Offering Termination Date or the nearest prior business day on which trading
occurred on the NASDAQ National Market System. If the Common Stock of the
Company is not admitted to trading on any of the aforesaid dates for which
closing prices of the Common Stock are to be determined, then reference shall be
made to the fair market value of the Common Stock on that date, as determined on
such basis as shall be established or specified for the purpose by the
Committee.
-4-
<PAGE> 5
ARTICLE VII - EXERCISE OF OPTION
VII.1. AUTOMATIC EXERCISE. Unless a participant gives written notice to
the Company as hereinafter provided, his option for the purchase of Common Stock
with payroll deductions made during any Offering will be deemed to have been
exercised automatically on the Offering Termination Date applicable to such
Offering, for the purchase of the number of full shares of Common Stock which
the accumulated payroll deductions in his account at that time will purchase at
the applicable option price (but not in excess of the number of shares for which
options have been granted to the employee pursuant to Section 6.1), and any
excess in his account at that time will be returned to him.
VII.2. WITHDRAWAL OF ACCOUNT. By written notice to the Plan
Administrator, at any time prior to the Offering Termination Date applicable to
any Offering, a participant may elect to withdraw all the accumulated payroll
deductions in his account at such time.
VII.3. FRACTIONAL SHARES. Fractional shares will not be issued under
the Plan and any accumulated payroll deductions which would have been used to
purchase fractional shares will be returned to any employee promptly following
the termination of an Offering, without interest.
VII.4. TRANSFERABILITY OF OPTION. During a participant's lifetime,
options held by such participant shall be exercisable only by that participant.
VII.5. DELIVERY OF STOCK. As promptly as practicable after the Offering
Termination Date of each Offering, the Company will deliver to each participant,
as appropriate, a certificate representing the shares of Common Stock purchased
upon exercise of his option.
ARTICLE VIII - WITHDRAWAL
VIII.1. IN GENERAL. As indicated in Section 7.2, a participant may
withdraw payroll deductions credited to his account under the Plan at any time
by giving written notice to the Plan Administrator. All of the participant's
payroll deductions credited to his account will be paid to him promptly after
receipt of his notice of withdrawal, and no further payroll deductions will be
made from his pay during such Offering. The Company may, at its option, treat
any attempt to borrow by an employee on the security of his accumulated payroll
deductions as an election, under Section 3.2, to withdraw such deductions.
VIII.2. EFFECT ON SUBSEQUENT PARTICIPATION. A participant's withdrawal
from any Offering will not have any effect upon his eligibility to participate
in any succeeding Offering or in any similar plan which may hereafter be adopted
by the Company.
-5-
<PAGE> 6
VIII.3. TERMINATION OF EMPLOYMENT. Upon termination of the
participant's employment for any reason (but excluding retirement or death while
in the employ of the Company or during continuation of a leave of absence for a
period beyond 90 days), the payroll deductions credited to his account will be
returned to him, or, in the case of his death subsequent to the termination of
his employment, to the person or persons entitled thereto under Section 12.1.
VIII.4. TERMINATION OF EMPLOYMENT DUE TO DEATH. Upon termination of the
partici pant's employment because of his death, his beneficiary (as defined in
Section 12.1) shall have the right to elect, by written notice given to the Plan
Administrator prior to the earlier of the Offering Termination Date or the
expiration of a period of sixty (60) days commencing with the date of the death
of the participant, either:
(a) To withdraw all of the payroll deductions credited to the
participant's account under the Plan, or
(b) To exercise the participant's option for the purchase of
stock on the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full shares of stock which
the accumulated payroll deductions in the participant's account at the date of
the participant's death will purchase at the applicable option price, and any
excess in such account will be returned to said beneficiary, without interest.
In the event that no such written notice of election shall be duly
received by the Plan Administrator, the beneficiary shall automatically be
deemed to have elected, pursuant to paragraph (b), to exercise the participant's
option.
VIII.5. TERMINATION OF EMPLOYMENT DUE TO RETIREMENT. Upon termination
of the participant's employment because of his retirement, the participant shall
have the right to elect, by written notice given to the Plan Administrator prior
to the earlier of the Offering Termination Date or the expiration of a period of
sixty (60) days commencing with the date of the retirement of the participant,
either:
(a) To withdraw all of the payroll deductions credited to the
participant's account under the Plan, or
(b) To exercise the participant's option for the purchase of
stock on the Offering Termination Date next following the date of the
participant's retirement for the purchase of the number of full shares of stock
which the accumulated payroll deductions in the participant's account at the
date of the participant's retirement will purchase at the applicable option
price, and any excess in such account will be returned to the participant,
without interest.
In the event that no such written notice of election shall be duly received by
the Plan
-6-
<PAGE> 7
Administrator, the participant shall automatically be deemed to have elected to
withdraw all payroll deductions pursuant to paragraph (a), above.
VIII.6. LEAVE OF ABSENCE. A participant on leave of absence shall,
subject to the election made by such participant pursuant to Section 5.4,
continue to be a participant in the Plan so long as such participant is on
continuous leave of absence. A participant who has been on leave of absence for
more than 90 days and who therefore is not an employee for the purpose of the
Plan shall not be entitled to participate in any offering commencing after the
90th day of such leave of absence. Notwithstanding any other provisions of the
Plan, unless a participant on leave of absence returns to regular full time or
part time employment with the Company at the earlier of: (a) the termination of
such leave of absence, or (b) three months from the 90th day of such leave of
absence, such participant's participation in the Plan shall terminate on
whichever of such dates first occurs.
ARTICLE IX - INTEREST
IX.1. NO PAYMENT OF INTEREST. No interest will be paid or allowed on
any money paid into the Plan or credited to the account of any participant
employee.
ARTICLE X - STOCK
X.1. MAXIMUM SHARES. The maximum number of shares which shall be issued
under the Plan, subject to adjustment upon changes in capitalization of the
Company as provided in Section 12.4 shall be 200,000 shares, plus an annual
increase to be added on each anniversary date of the adoption of the Plan equal
to the lesser of (i) the number of shares needed to restore the maximum
aggregate number of shares available for sale under the Plan to 200,000, or (ii)
a lesser amount determined by the Board. If the total number of shares for which
options are exercised in any Offering Termination Date in accordance with
Article VI exceeds the maximum number of shares for the Plan, the Company shall
make a pro rata allocation of the shares available for delivery and distribution
in as nearly a uniform manner as shall be practicable and as it shall determine
to be equitable, and the balance of payroll deductions credited to the account
of each participant under the Plan shall be returned to him as promptly as
possible.
X.2. PARTICIPANT'S INTEREST IN OPTION STOCK. The participant will have
no interest in the shares of Common Stock covered by his option until such
option has been exercised.
X.3. REGISTRATION OF STOCK. Stock to be delivered to a participant
under the Plan will be registered in the name of the participant, or, if the
participant so directs by written notice to the Plan Administrator prior to the
Offering Termination Date applicable thereto, in the names of the participant
and one such other person as may be designated by the participant, as joint
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<PAGE> 8
tenants with rights of survivorship or as tenants by the entireties, to the
extent permitted by applicable law.
X.4. RESTRICTIONS ON EXERCISE. The Board of Directors may, in its
discretion, require as conditions to the exercise of any option that the shares
of Common Stock reserved for issuance upon the exercise of the option shall have
been duly listed, upon official notice of issuance, upon a stock exchange, and
that either:
(a) A Registration Statement under the Securities Act of 1933,
as amended, with respect to said shares shall be effective, or
(b) The participant shall have represented at the time of
purchase, in form and substance satisfactory to the Company, that it is his
intention to purchase the shares for investment and not for resale or
distribution.
ARTICLE XI - ADMINISTRATION
XI.1. APPOINTMENT OF COMMITTEE. The Board of Directors shall appoint a
committee (the "Committee") to administer the Plan, which shall consist of no
fewer than two members of the Board of Directors, none of whom are employees of
the Company. No member of the Committee shall be eligible to purchase shares of
Common Stock under the Plan. Each member of the Committee shall be a
"disinterested person" as that term is defined in Rule 16b-3 of the Securities
Exchange Act of 1934, as such rule may be amended from time to time.
XI.2. AUTHORITY OF COMMITTEE. Subject to the express provisions of the
Plan, the Committee shall have plenary authority in its discretion to interpret
and construe any and all provisions of the Plan, to adopt rules and regulations
for administering the Plan, and to make all other determinations deemed
necessary or advisable for administering the Plan. The Committee's determination
on the foregoing matters shall be conclusive.
XI.3. RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE. The Board of
Directors may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed and may fill vacancies,
however caused, in the Committee. The Committee may select one of its members as
its Chairman and shall hold its meetings at such times and places as it shall
deem advisable and may hold telephonic meetings. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. The Committee may correct any defect or omission or
reconcile any inconsistency in the Plan, in the manner and to the extent it
shall deem desirable. Any decision or determination reduced to writing and
signed by a majority of the members of the Committee shall be as fully effective
as if it had been made by a majority vote at a meeting duly called and held. The
Committee may appoint a secretary and shall make such rules and regulations for
the conduct of its business as it shall deem advisable.
-8-
<PAGE> 9
XI.4. ADMINISTRATION OF PLAN. The day to day functions of the Plan
shall be administered by a Plan Administrator who shall be appointed by the
Committee. All notices and authorizations under the Plan shall be directed to
the attention of the Plan Administrator.
ARTICLE XII - MISCELLANEOUS
XII.1. DESIGNATION OF BENEFICIARY. A participant may file a written
designation of a beneficiary who is to receive any shares of Common Stock and/or
cash distributed under the Plan. Such designation of beneficiary may be changed
by the participant at any time by written notice to the Plan Administrator. Upon
the death of a participant and upon receipt by the Company of proof of identity
and existence at the participant's death of a beneficiary validly designated by
him under the Plan, the Company shall deliver such shares of Common Stock and/or
cash to such beneficiary. In the event of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such participant's death, the company shall deliver such stock and/or
cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such stock and/or cash to
the spouse or to any one or more dependents of the participant as the Company
may designate. No beneficiary shall, prior to the death of the participant by
whom he has been designated, acquire any interest in the shares of Common Stock
or cash credited to the participant under the Plan.
XII.2. TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds in accordance with Section 7.2.
XII.3. USE OF FUNDS. All payroll deductions received or held by the
Company under this Plan may be used by the Company for any corporate purpose and
the Company shall not be obligated to segregate such payroll deductions.
XII.4. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) If, while any options are outstanding, the outstanding
shares of Common Stock of the Company have increased, decreased, changed into,
or been exchanged for a different number or kind of shares or securities of the
Company through reorganization, recapitalization, reclassification, stock split,
reverse stock split or similar transaction, appropriate and proportionate
adjustments may be made by the Committee in the number and/or kind of shares
which are subject to purchase under outstanding options and on the
-9-
<PAGE> 10
option exercise price or prices applicable to such outstanding options. In
addition, in any such event, the number and/or kind of shares which may be
offered in the Offerings described in Article IV hereof shall also be
proportionately adjusted. No adjustments shall be made for stock dividends. For
the purposes of this paragraph, any distribution of shares to shareholders in an
amount aggregating 20% or more of the outstanding shares shall be deemed a stock
split and any distributions of shares aggregating less than 20% of the
outstanding shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or
upon a reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a reorganization, merger or consolidation of the Company with one or
more corporations as a result of which the holders of the Corporation's capital
stock prior to such transaction hold less than 50% of the capital stock of the
entity surviving such transaction, or upon a sale of all or substantially all of
the property or stock of the Company to another corporation, the holder of each
option then outstanding (and for which payroll deductions have been made) under
the Plan will thereafter be entitled to receive at the next Offering Termination
Date upon the exercise of such option for each share as to which such option
shall be exercised, as nearly as reasonably may be determined, the cash,
securities and/or property which a holder of one share of the Common Stock was
entitled to receive upon and at the time of such transaction. The Board of
Directors shall take such steps in connection with such transactions as the
Board shall deem necessary to assure that the provisions of this Section 12.4
shall thereafter be applicable, as nearly as reasonably may be determined, in
relation to the said cash, securities and/or property as to which such holder of
such option might thereafter be entitled to receive.
XII.5. AMENDMENT AND TERMINATION. The Board of Directors shall have
complete power and authority to terminate or amend the Plan; provided, however,
that the Board of Directors shall not, without the approval of the shareholders
of the Corporation (i) increase the maximum number of shares which may be issued
under any Offering (except pursuant to Section 12.4); (ii) amend the
requirements as to the class of employees eligible to purchase stock under the
Plan or (iii) permit the members of the Committee to purchase stock under the
Plan. No termination, modification, or amendment of the Plan may, without the
consent of an employee then having an option under the Plan to purchase stock,
adversely affect the rights of such employee under such option; provided that
the Plan may be terminated at any time by the Company's Board of Directors. Upon
any termination of the Plan, all payroll deductions not used to purchase shares
of Common Stock shall be refunded.
XII.6. EFFECTIVE DATE. The Plan shall become effective as of March 1,
1998, subject to approval by the holders of the majority of the Common Stock
present and represented at a special or annual meeting of the shareholders or by
consent held or executed on or before December 31, 1998. If the Plan is not so
approved, the Plan shall not become effective.
XII.7. NO EMPLOYMENT RIGHTS. The Plan does not, directly or indirectly,
create any
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<PAGE> 11
right for the benefit of any employee or class of employees to purchase any
shares under the Plan, or create in any employee or class of employees any right
with respect to continuation of employment by the Company, and it shall not be
deemed to interfere in any way with the Company's right to terminate, or
otherwise modify, an employee's employment at any time.
XII.8. EFFECT OF PLAN. The provisions of the Plan shall, in accordance
with its terms, be binding upon, and inure to the benefit of, all successors of
each employee participating in the Plan, including, without limitation, such
employee's estate and the executors, administrators or trustees thereof, heirs
and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such employee.
XII.9. GOVERNING LAW. The law of the State of Colorado will govern all
matters relating to this Plan except to the extent it is superseded by the laws
of the United States.
As approved by the shareholders on April 1, 1998
-11-
<PAGE> 1
Confidential Treatment Request
EXHIBIT 10.6
[ ] Material indicated by this mark
has been deleted pursuant to a request
for confidential treatment, and has been filed
separately.
9-1-1 SERVICES AGREEMENT
BETWEEN
AMERICTECH INFORMATION SYSTEMS, INC.
AND
SCC COMMUNICATIONS CORPORATION
<PAGE> 2
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. DESCRIPTION OF SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2. PROJECT IMPLEMENTATION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.3. PROJECT MANAGEMENT AND OTHER PERSONNEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4. TRAINING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5. NETWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6. SUPPORT SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.7. SYSTEM EFFICIENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.8. REGIONAL UNIFORMITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. JOINT RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1. INTERNSHIP EXCHANGE PROGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2. ELECTRONIC EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. AMERITECH RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7. PRICE AND PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
8. PURCHASE OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. EXCLUSIVITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.1. AMERITECH'S EXCLUSIVE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.2. SCC'S RIGHT OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9.3. EXCLUSIVE DISTRIBUTORSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
10. OWNERSHIP/NO LICENSES GRANTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
11. CONFIDENTIALITY AND NONDISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
11.1. NONDISCLOSURE AND SYSTEM SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
11.2. CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
12. ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
13. WARRANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13.1. WARRANTIES, RELATED REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13.2. SOFTWARE "VIRUSES" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14.1. GENERAL INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14.2. INTELLECTUAL PROPERTY INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
15. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
16. LIABILITY AND LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 3
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
17. ADD-ON ORDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
18. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
19. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
19.1. TERMINATION BY AMERITECH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
19.2. TERMINATION BY SCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
19.3. CANCELLATION BY AMERITECH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
20. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
21. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
21.1. INDEPENDENT CONTRACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
21.2 MOST FAVORED CUSTOMER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
21.3. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
21.4. UNBUNDLING OF SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
21.5. ESCALATION PROCEDURES AND NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
21.6. FAIR MARKET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
21.7. RECORDS AND AUDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
21.8. EQUAL OPPORTUNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21.9. COMPANY RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21.10. ADVERTISING OR PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21.11. NON-WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21.13. LAWS AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21.14. TIME OF THE ESSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21.15. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21.16. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21.17. JOINT WORK PRODUCT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21.18. AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
22. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
EXHIBIT A: SCOPE OF WORK
EXHIBIT B: FEES, DISCOUNTS AND PAYMENT SCHEDULE
EXHIBIT C: PURCHASE OPTION
EXHIBIT D: ADD-ON ORDERS
</TABLE>
PAGE ii
<PAGE> 4
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
9-1-1 SERVICES AGREEMENT
THIS AGREEMENT is made as of ___________________, ("Effective Date")
between Ameritech Information Systems, Inc., a corporation having its principal
office at 225 West Randolph Street, Chicago, Illinois 60606 ("Ameritech") and
SCC Communications Corporation, having its principal office at 6285 Lookout
Road, Boulder, Colorado 80301-3343 ("SCC").
1. RECITALS
WHEREAS, this 9-1-1 Services Agreement contains all the terms,
conditions, and understandings between SCC and Ameritech for the establishment
of an Agreement between the parties; and
WHEREAS, Ameritech desires to enter into an Agreement with SCC for the
purpose of procuring 9-1-1 call handling data services (the "9-1-1 Services")
on a per record basis; and
WHEREAS, Ameritech requires the flexibility to acquire the 9-1-1
Services either throughout the entire "Ameritech Region" (as defined below) or
only within certain states therein; and
WHEREAS, Ameritech further requires the flexibility to be able to
acquire software and related services from SCC if such are required by
Ameritech either throughout the entire Ameritech Region or only within certain
states in the Ameritech Region if Ameritech does not outsource the 9-1-1
calling handling data services to SCC through the acquisition of 9-1-1 Services
under this Agreement; and
WHEREAS, SCC desires to enter into the Agreement in order to provide
such services and is qualified to provide 9-1-1 Services;.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, SCC and Ameritech, the "Parties",
agree as follows:
2. DEFINITIONS
The following definitions apply to this Agreement:
A. "9-1-1 Services" means the "Base Services" plus "New
Services", both of which are defined below and further described in Exhibit A
of this Agreement
B. "Add-on Order" means the document, signed by authorized
representatives of both Parties, that adds New Services to this Agreement. The
Add-on Order will specify the applicable fees and payments and other pertinent
information. A sample Add-on Order is set forth in Exhibit D. Article 17,
"Add-on Orders" describes the Add-on Order process.
C. "Ameritech Region" means the five state geographic region of
Illinois, Wisconsin, Michigan, Ohio, and Indiana, including both Ameritech
franchised and non-franchised territories.
D. "Base Record" means the database record which includes the
name, address or address equivalent, and telephone number of subscribers.
E. "Base Services" means the Management Systems (MS) and
Selective Routing (SR)/Automatic Location Identification (ALI) services both of
which are further defined in Exhibit A.
AGREEMENT PAGE 1
<PAGE> 5
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
F. "Agreement" shall mean and include this document, completed
and executed by Ameritech and SCC, and all Exhibits attached hereto and
incorporated herein.
G. "New Services" means enhancements to the Base Services that
incorporate significant additional functionality, or which Ameritech's
customers are willing to pay for on a stand-alone basis, or separate
out-of-scope 9-1-1 Services. New Services will be periodically offered to
Ameritech by SCC hereunder, based on additional products SCC develops, and
added to this Agreement via an "Add-on Order" should Ameritech elect to
purchase New Services from SCC. New Services does not include periodic
improvements and updates to the Base Services or adaptations to the Base
Services due to changes in technology or the operating environment that do not
incorporate significant additional functionality.
H. "MSAG" means the Master Street Address Guide.
I. "SIP Interface" means the Service Order Input Process
subsystem which accepts and parses on-line updates from the host service order
system.
J. "Project" means all the work efforts included in the
"Implementation Plan", which plan is set forth in Exhibit A, up through and
including "Acceptance" (described in Article 12). The Project does not include
the ongoing provisioning by SCC of 9-1-1 Services following Acceptance, the
scope of which are described separately in this Agreement and Exhibit A.
K. "Network" means the transport facilities from the tandem
office to the SR/ALI and the SR/ALI to MS as provided by SCC.
3. DESCRIPTION OF SERVICES
3.1. GENERAL
The Parties agree to jointly develop and in good faith negotiate, by September
1, 1994, a detailed Exhibit A, "Scope of Work" (SOW), to replace the SOW
outline presently included as Exhibit A. The SOW will be a complete and
detailed description of all the work SCC will perform for Ameritech hereunder
for the fees specified herein. The SOW will include all those "Parts" listed
on the Table of Contents page of Exhibit A, "Scope of Work". The SOW outline
and content presently set forth in Exhibit A will be followed by the Parties
unless they later mutually agree not to. During the development of the SOW,
both Parties recognize that through the process, and in light of the experience
gained in the process, there may be changes or modifications requested to be
made to this Agreement by either Party. Such requests shall be considered and
negotiated in good faith by both Parties and incorporated, if mutually agreed
to, in writing into this Agreement.
3.2. PROJECT IMPLEMENTATION PLAN
An Implementation Plan shall be mutually developed and agreed to by both
Parties by September 1, 1994 and incorporated into this Agreement as part of
Exhibit A. The fully detailed Implementation Plan shall define the process for
conversion of data handling services to SCC under the terms of this Agreement,
the specific tasks, responsibilities, and performance dates of each party, the
specific services to be provided, and the performance requirements and
objectives for the provisioning of the 9-1-1 Services, and remedies and
consequences for non-performance according to the Performance Metrics to be
contained in Exhibit A. SCC is responsible for demonstrating that the 9-1-1
Services meet the acceptance criteria set forth in Exhibit A, the Scope of
Work.
Exhibit A shall also contain the Ameritech performance requirements and
objectives for the SIP Interface data. If these requirements are not met,
incremental charges as set forth in Exhibit B, "Fees and Payment Schedule", may
be assessed by SCC.
Any changes or modifications of the Scope of Work shall be mutually agreed to
in writing.
AGREEMENT PAGE 2
<PAGE> 6
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
3.3. PROJECT MANAGEMENT AND OTHER PERSONNEL
SCC and Ameritech shall each designate an individual, the "Project Manager",
who shall act as the primary interface between the Parties. The Project
Managers shall be responsible for insuring the continuity of communications
between the Parties as the Project proceeds.
SCC will provide office facilities and working space for an Ameritech employee,
the "Database Manager", designated to be on site at SCC's corporate offices in
Boulder, Colorado to assist with the Project. All Database Manager expenses,
except for the associated facilities and administrative costs, shall be paid by
Ameritech. The Ameritech Database Manager shall remain on site as long as it
is mutually determined to be necessary.
On a mutually agreed to periodic basis the Project Managers shall meet in order
for SCC and Ameritech to inform each other of the status of the Project and its
respective tasks and responsibilities. Such meetings shall include each
Party's Project Manager as well as appropriate additional personnel such as
Ameritech's Database Manager, and each Party shall provide a written status
report on the work being performed by it. Alternatively, Ameritech may elect
to forego all or some of such meetings and may direct SCC to provide it with
periodic written reports on the status of the Scope of Work being undertaken by
SCC under this Agreement. The specific Project responsibilities of SCC and
Ameritech are set forth in Exhibit A.
SCC and Ameritech recognize the need to provide and maintain qualified
personnel involved in all aspects of the 9-1-1 Services described in this
Agreement. In order to achieve continued high quality services through its
personnel, SCC shall establish and implement a mutually agreed to plan to
certify its personnel. SCC is responsible for the costs associated with the
certification of its employees.
All requests for additional services, conversion of additional records,
training, enhancements, and New Services shall be coordinated through the
Project Managers and handled in accordance with Article 17, "Add-on Orders".
SCC and Ameritech shall mutually develop, as part of the SOW, a policy
statement describing a Code of Conduct to be endorsed in writing by all SCC
personnel involved in providing 9-1-1 Services under this Agreement.
3.4. TRAINING
Any training required as part of the SOW shall be indicated in the SOW.
In addition to the training set forth in the SOW, from time to time, at
Ameritech's request, SCC shall provide training classes at sites and at times
agreed upon by the Parties. Such additional training classes shall be billed
to Ameritech at SCC's published rates as shown in Exhibit B, Personnel Rates
minus any discounts to which Ameritech is entitled under this Agreement or
otherwise. In addition, Ameritech shall be responsible for all reasonable
expenses incurred by SCC for travel, meals, and lodging in connection with
rendering training services in accordance with this Section. Airplane fares
shall not exceed the coach rates then prevailing, and SCC shall use its best
efforts to plan its travel in advance in order to maximize its use of air
travel discounts. SCC also shall use its best efforts to obtain lodging and
other travel-related discounts. SCC shall provide Ameritech with invoices
detailing any such expenses.
All training provided by SCC shall include written course materials that may be
kept, reproduced, and distributed by Ameritech so that Ameritech can
subsequently train its own personnel, provided that any reproductions of such
materials shall include any copyright or similar proprietary notices contained
in the materials.
Ameritech may cancel a training course scheduled by SCC upon fourteen (14) days
prior written notice to SCC. For cancellations with less than fourteen (14)
days prior written notice, Ameritech shall be liable to SCC for all reasonable
expenses incurred by SCC in preparation for the course that are not otherwise
recoverable by SCC.
AGREEMENT PAGE 3
<PAGE> 7
SCC/AMERITECH SERVICES AGREEMENT
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3.5. NETWORK
SCC shall design, develop, purchase, own or lease, implement, manage, maintain
and monitor all the Network hardware and software components further defined in
Exhibit A so the Network can be demonstrated to meet the performance
requirements as mutually established in Exhibit A. SCC acknowledges and agrees
that the participation of Ameritech personnel in all phases of the Network
implementation is necessary to the ongoing success of the provision of 9-1-1
Services.
3.6. SUPPORT SERVICES
SCC shall provide "Support Services" as described in Exhibit A to maintain the
Performance Metrics mutually agreed to and contained in Exhibit A.
3.7. SYSTEM EFFICIENCY
SCC is committed to improving and exceeding the standards and requirements of
this Agreement in the provision of 9-1-1 Services. This includes improvements
in the automation procedures, software products, hardware products, personnel
training and qualifications, and all other services. Therefore, performance
and efficiency of the "System" will be maintained and periodically improved by
SCC without charge to Ameritech. Such changes in the provision of Base
Services shall be considered usual and customary and not New Services. The
System is described in Exhibit A.
3.8. REGIONAL UNIFORMITY
The 9-1-1 Services and Support Services shall be provided under regionally
consistent terms and shall not be state- specific unless it is legally mandated
by the state or other legally governing body.
4. JOINT RESPONSIBILITIES
4.1. INTERNSHIP EXCHANGE PROGRAM
Ameritech and SCC agree that the success of this Agreement is dependent upon
the knowledge of the organization and operations of the other Party. To
optimize the provisioning of 9-1-1 Services, the Parties shall develop a
program designed to strengthen the ability to create, acquire, and transfer
knowledge, the "Internship Exchange Program". An individual (the "Intern")
shall be selected from each Party to relocate and participate in the other
Party's organization for a period of time to be mutually determined. During
such time, the Intern shall participate in the organization's positioning,
structure, systems, management practices, culture, mission and strategy. Each
Party shall be responsible for its own costs associated with this program.
4.2. ELECTRONIC EXCHANGE
To the extent possible, and as it becomes available, both Parties will use and
implement automation procedures to facilitate communication, coordination,
maintenance, and management of the 9-1-1 Services.
5. AMERITECH RESPONSIBILITIES
Ameritech's responsibilities are those stated in this Agreement and the
Exhibits hereto. As the mutually agreed to SOW is completed, specific
responsibilities shall be further defined.
AGREEMENT PAGE 4
<PAGE> 8
SCC/AMERITECH SERVICES AGREEMENT
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6. TERM
Unless earlier terminated or cancelled in accordance with Section 19,
"Termination/Cancellation", the term of this Agreement shall begin upon the
Effective Date as first stated herein and continue for ten (10) years following
expiration of the "Option Period" set forth in Section 8 below. If either
Party terminates this Agreement, or Ameritech cancels this Agreement, according
to the provisions of Section 19, then both Parties agree to participate in the
orderly shutdown and transition of products and services as provided for in
Exhibit A, the De-Implementation Plan. Following this initial ten (10) year
term, the Agreement shall automatically renew for continuous one year terms
unless terminated at the end of a renewal term upon no less than 180 days
advance written notification by the terminating Party.
7. PRICE AND PAYMENT
9-1-1 Service charges shall consist of an initial non-recurring engineering set
up charge ("NRE") followed by monthly invoices for recurring charges based on
per record fees. The NRE charge of [ ] shall be paid upon the date of
execution by Ameritech of this Agreement. All 9-1-1 Service charges, volume
commitments, and regularly scheduled audit procedures are outlined in Exhibit
B. Recurring charges for the 9-1-1 Services provided by SCC shall be on a per
record basis in committed to incremental blocks ("Thresholds") as outlined in
Exhibit B. Invoices for the recurring 9-1-1 Services will be submitted to
Ameritech monthly, on or about the first of the month (for the month being
billed for) and will be paid by Ameritech within 30 days of their receipt.
Other than for mutually agreed to exceptions and the addition of New Services
to expand Base Services, there will be no other initial NRE charges associated
with the addition of records.
The Monthly Base Service Charge per Base Record outlined in Exhibit B is based
on a ten (10) year Agreement term.
Services that are provided on a time-and-materials or other non-fixed-fee basis
shall be billed in arrears, after provision of the services, and Ameritech
shall pay any such charges within thirty (30) days of receipt of an invoice
that describes such charges. SCC's current published rates are shown in
Exhibit B, Personnel Rates, with the applicable discounts Ameritech is entitled
to hereunder.
If services are provided on a time-and-materials basis, SCC shall specify a
not-to-exceed billable amount. Billings for services shall not exceed this
amount without Ameritech's prior written approval.
8. PURCHASE OPTION
For a period commencing upon the Effective Date and continuing for ninety (90)
days after Ameritech's Acceptance of 9-1- 1 Services in Ohio ("Option Period"),
Ameritech shall have the option, at no additional fee, of not buying 9-1-1
Services from SCC and, instead, purchasing software licenses, developed
software and software maintenance services from SCC in accordance with the
prices and other terms and conditions set forth in Exhibit C, the "Purchase
Option" (except that the acquisition timeframes set forth in Exhibit C shall be
modified as appropriate). Ameritech may also purchase equipment from SCC at
prices, and other terms and conditions mutually agreed upon by the Parties at
such time. Notwithstanding anything to the contrary in Exhibit C, or elsewhere
in this Agreement, Ameritech shall have the right to exercise this Purchase
Option on a state-by-state basis or for the entire Ameritech Region. The
state-by-state purchase price during the Option Period will be determined on a
pro-rated basis. If Ameritech elects to exercise its Purchase Option for the
entire Ameritech Region, it shall be entitled to a full credit from SCC of all
unexpended NRE amounts which shall be used, as directed by Ameritech, to credit
subsequent SCC invoices to Ameritech for Ameritech's purchase of said software
licenses, developed software and software maintenance services. If Ameritech
elects to exercise its Purchase Option on a state-by-state basis, it shall be
entitled to a partial refund of the NRE as set forth in Exhibit B, associated
with each particular state the Purchase Option is exercised for, which shall be
used, as directed by Ameritech, to credit subsequent SCC invoices to
AGREEMENT PAGE 5
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Ameritech for Ameritech's purchase of said software licenses, developed
software and software maintenance services. If Ameritech elects to exercise its
Purchase Option, it shall have no liability for paying SCC any further "Monthly
Base Service Charges per Base Record", as specified in Exhibit B, following the
last date 9-1-1 Services are purchased from SCC.
If the Purchase Option is not exercised, Ameritech may amend this Agreement and
purchase 9-1-1 Services from SCC for the City of Chicago/State of Illinois
9-1-1 project under the terms, conditions set forth in this Agreement.
Tangible and intangible assets (excluding software license rights) may be
transferred to SCC upon mutual agreement based upon the Fair Market Value,
defined below, as of the date of exchange. Software license rights previously
purchased by Ameritech from SCC, and unexpended services already paid for by
Ameritech, shall be repurchased by SCC from Ameritech based upon the Fair
Market Value of such as of the date the City of Chicago/State of Illinois 9-1-1
project is added to this Agreement. Any amounts owing to Ameritech for such
asset transfer and prepaid maintenance fees for unused portions may be credited
against future billings to Ameritech, or refunded to Ameritech, at Ameritech's
option.
9. EXCLUSIVITY
9.1. AMERITECH'S EXCLUSIVE RIGHTS
SCC hereby agrees to grant Ameritech the exclusive right of distribution for
9-1-1 Services for the state(s) in which Amertiech is paying Monthly Base
Service Charges, and SCC further agrees not to distribute services directly in
these states. SCC further agrees to grant to Ameritech non-exclusive rights
for the distribution of 9-1-1 Services world-wide for the term of this
Agreement. If during the term of this Agreement, Ameritech elects to purchase
SCC products per Section 8 or Section 19, exhibit B8 of Exhibit C will be in
effect.
9.2. SCC'S RIGHT OF FIRST REFUSAL
Ameritech hereby grants SCC the right of first refusal as Ameritech's sole
provider of 9-1-1 Services world-wide (with the exception of provision of such
services by Ameritech itself) for the term of this Agreement. SCC shall
provide Ameritech notice in writing of its intent to exercise this right within
a reasonable period, but in no event more than forty-five (45) days of receipt
of notification of an opportunity from Ameritech.
9.3. EXCLUSIVE DISTRIBUTORSHIP
SCC and Ameritech may expand their present business relationship in the future
and amend this Agreement to incorporate the expanded business relationship or
execute a separate agreement as mutually agreed to in writing. to provide for
the exclusive distributorship by Ameritech of all SCC products in the Ameritech
Region.
10. OWNERSHIP/NO LICENSES GRANTED
Nothing in this Agreement shall be construed to grant any ownership or license
to Ameritech, except as provided for in Section 8 above.
Nothing in this Agreement shall be construed to grant to SCC any ownership of
any data provided to it for use in the provision of 9-1-1 Services to
Ameritech.
AGREEMENT PAGE 6
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11. CONFIDENTIALITY AND NONDISCLOSURE
11.1. NONDISCLOSURE AND SYSTEM SECURITY
SCC and Ameritech acknowledge the importance of maintaining the security and
integrity of the Network and the Ameritech Network (together, the "Networks")
and data of each Party as a result of their access to them. In order to
protect the data and Networks, each Party shall strictly adhere to the
nondisclosure and System security policies in the performance of its own tasks
and the services related to this Agreement. SCC understands and acknowledges
the confidential nature of Ameritech's telephone subscriber information: it
shall not disclose data to which it has access under this Agreement to any
person or entity without the prior written consent of Ameritech, and shall
require each SCC employee to acknowledge in writing the confidential nature of
the data and agree to abide by the terms and conditions of this Section 11.
11.2. CONFIDENTIAL INFORMATION
During the course of this Agreement, either Party may receive or have access to
confidential information of the other. "Confidential Information" means any
information or data disclosed by a Party (the "Disclosing Party") to the other
Party (the "Recipient") under or in contemplation of this Agreement which (i)
if in tangible form or other media that can be converted to readable form is
clearly marked as proprietary, confidential or private when disclosed, or (b)
if oral or visual, is identified as proprietary, confidential or private on
disclosure.
The terms "Disclosing Party" and "Recipient" include each Party's corporate
affiliates that disclose or receive Confidential Information. The rights and
obligations of the Parties shall therefore also inure to such affiliates and
may be directly enforced by or against such affiliates.
The Recipient acknowledges the economic value of the Disclosing Party's
Confidential Information. The Recipient shall:
(i) use the Confidential Information only in connection with the
Recipient's performance of its obligations or exercise of its rights under this
Agreement;
(ii) restrict disclosure of the Confidential Information to employees
of the Recipient and its affiliates with a "need to know" and not disclose it
to any other person or entity without the prior written consent of the
Disclosing Party;
(iii) advise those employees who access the Confidential Information
of their obligations with respect thereto; and
(iv) copy the Confidential Information only as necessary for those
employees who are entitled to receive it, and ensure that all confidentiality
notices are reproduced in full on such copies.
For the purposes of this Agreement only, "employees" includes third parties
retained by the Parties for temporary administrative or clerical or programming
support. A "need to know" means that the employee requires the Confidential
Information to perform his or her responsibilities in connection with this
Agreement.
The obligations of this Section shall not apply to any Confidential Information
which the Recipient can demonstrate:
(i) is or becomes available to the public through no breach of
this or any other agreements;
(ii) was previously known by the Recipient without any obligation
to hold it in confidence;
(iii) is received from a third party free to disclose such
information without restriction;
(iv) is independently developed by the Recipient without the use of
Confidential Information of the Disclosing Party;
(v) is approved for release by written authorization of the
Disclosing Party, but only to the extent of such authorization and without any
disassembly, reverse engineering, or similar undertaking by Recipient;
AGREEMENT PAGE 7
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(vi) is required by law or regulation to be disclosed, but only to
the extent and for the purposes of such required disclosure, and only if the
Recipient first notifies the Disclosing Party of the order and permits the
Disclosing Party to seek an appropriate protective order; or
(vii) is disclosed in response to a valid order of a court or other
governmental body of the United States or any political subdivisions thereof,
but only to the extent of and for the purposes of such order, and only if the
Recipient first notifies the Disclosing Party of the order and permits the
Disclosing Party to seek an appropriate protective order.
Confidential Information, including permitted copies, shall be deemed the
property of the Disclosing Party. The Recipient shall, within twenty (20) days
of a written request by the Disclosing Party, return all Confidential
Information (or any designated portion thereof), including all copies thereof,
to the Disclosing Party or, if so directed by the Disclosing Party, destroy
such Confidential Information. The Recipient shall also, within ten (10) days
of a written request by the Disclosing Party, certify in writing that it has
satisfied its obligations under this Section.
If the Recipient fails to abide by its obligations under this Section, the
Disclosing Party shall be entitled to immediate injunctive relief, in addition
to any other rights and remedies available to it at law or in equity.
12. ACCEPTANCE
Prior to the phased conversion (per the Project milestone schedule set forth in
Exhibit A) of 9-1-1 Services that will be performed by SCC, SCC shall conduct
the acceptance tests, described in Exhibit A, that reasonably demonstrate that
the 9-1-1 Services will be performed by SCC in accordance with the Performance
Metrics and the Acceptance Test Plan, both of which are also included in
Exhibit A. Ameritech customer specific requirements, that are different than
the Base Services, will be communicated by Ameritech to SCC, with the
Acceptance Test Plan modified accordingly on a customer-by-customer basis. New
Services, if added to this Agreement, shall be similarly tested prior to
Ameritech's acceptance of such in accordance with the New Services acceptance
criteria mutually agreed upon at such time by the Parties. In the event SCC is
unable to demonstrate, within thirty (30) days of commencing the Acceptance
Test Plan, that the 9-1-1 Services will perform in accordance with the
Performance Metrics and that the Acceptance Test Plan criteria have been
successfully met, Ameritech shall have the option of extending the acceptance
testing period or of terminating this Agreement in accordance with Section
19.1. In the event Ameritech elects to terminate this Agreement due to
non-acceptance of the 9-1-1 Services for Ohio, Ameritech shall be entitled to a
full and immediate refund of the NRE.
AGREEMENT PAGE 8
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13. WARRANTY
13.1. WARRANTIES, RELATED REMEDIES
SCC warrants and represents to Ameritech that: any support and services that
SCC provides to Ameritech under this Agreement shall be provided by personnel
who are trained and skilled in the provision of such services and shall be
provided in a professional, effective and efficient manner that equals or
exceeds the then-current industry standard for such services. SCC further
warrants that the 9-1-1 Services provided hereunder shall equal or exceed the
Performance Metrics criteria set forth in Exhibit A.
EXCEPT AS PROVIDED, INCORPORATED INTO, OR REFERRED TO IN THIS AGREEMENT, THERE
ARE NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, REGARDING THE SERVICES
PROVIDED BY SCC HEREUNDER.
13.2. SOFTWARE "VIRUSES"
SCC warrants that it has no knowledge of any existing software viruses. If SCC
becomes aware of any viruses in its products used in the performance of the
9-1-1 Services ordered by Ameritech, it shall so advise Ameritech in writing
immediately. SCC shall be responsible for the consequences of its failure to
notify Ameritech in a timely fashion of a software virus of which SCC has
notice. Upon learning of a virus in its software, SCC shall use its best
efforts to remedy it as soon as possible.
14. INDEMNIFICATION
14.1. GENERAL INDEMNIFICATION
Each Party shall defend, indemnify and hold harmless the other and the other's
corporate affiliates and their officers, directors, employees, and agents and
their successors and assigns against and from any and all losses, damages,
expenses, (including, without limitation, attorneys' fees and costs), claims,
suits and liabilities, whether based in contract or tort (including strict
liability), to the extent that such losses, damages, expenses, demands, claims,
suits and liabilities arise out of or in connection with (a) the indemnifying
Party's negligent or intentional acts or omissions, or those of persons
furnished by it, (b) the failure of the indemnifying Party to fully comply with
the terms and conditions of this Agreement, (c) assertions under Worker's
Compensation or similar laws made by persons furnished by the indemnifying
Party, or (d) the performance or nonperformance of the 9-1-1 Services under
this Agreement by the indemnifying Party. The indemnified Party shall promptly
notify the indemnifying Party of any written claim, loss, or demand for which
the indemnifying Party is responsible under this Section.
14.2. INTELLECTUAL PROPERTY INDEMNIFICATION
SCC shall defend, at its sole cost and expense, any claim or action of any kind
against Ameritech for alleged violation, infringement or misappropriation of
any patent, copyright, trade secret or other intellectual property right based
on the use of SCC products or services under this Agreement. SCC shall have the
right to conduct the defense of any such claim or action and all negotiations
for settlement or compromise, unless otherwise mutually agreed to in writing by
the Parties hereto. However, Ameritech, at its own expense, shall have the
right to participate in the defense of any such suit or proceeding through
counsel of its choosing. SCC shall indemnify and hold harmless Ameritech and
its officers, directors, employees, and agents and their successors and assigns
against and from any and all losses, liabilities, damages, claims, demands and
expenses (including, without limitation, reasonable attorneys' fees) arising
out of or related to any such claim or action.
AGREEMENT PAGE 9
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If any SCC product used to provide the 9-1-1 Services under this Agreement
becomes involved in any claim or action described above, or is held to
constitute a violation, infringement or misappropriation of a third party's
intellectual property rights and the use thereof is enjoined, then SCC shall,
at SCC's expense and option:
(i) procure the right to continue using said product so that its use
by SCC for Ameritech is lawful;
(ii) modify such product so that its use by SCC for Ameritech is
lawful (provided that such modification does not adversely affect the 9-1-1
Services provided); or
(iii) replace such product, at no charge to Ameritech, with equally
suitable, compatible and functionally equivalent products that lawfully may be
used by SCC for Ameritech.
15. INSURANCE
SCC must maintain: (a) Worker's Compensation insurance as prescribed by the law
of the applicable state, (b) employer's liability insurance with limits of at
least $[ ] each occurrence, (c) commercial general liability insurance
(including contractual liability and products liability coverage) with combined
single limits of at least $[ ] per occurrence for bodily injury and
property damage, and (d) if the use of motor vehicles is required,
comprehensive automobile liability insurance with combined single limits of at
least $[ ] per occurrence for bodily injury and property damage. Neither
SCC nor SCC's insurer(s) shall have a claim, right of action or right of
subrogation against Ameritech based on any loss or liability insured against
under the foregoing insurance. SCC's policy must be endorsed to name Ameritech
Information Systems, Inc. and its corporate affiliates as additional insureds
and state: "Ameritech Information Systems, Inc. is to be notified in writing
at least ten (10) days prior to cancellation of or any material change in this
policy". Also, SCC must furnish certificates evidencing the foregoing
insurance coverage prior to commencement of performance.
If SCC fails to maintain the insurance required by this Section, Ameritech may
procure such insurance. In such event, SCC shall promptly reimburse Ameritech
for any premiums and other charges paid by Ameritech for such coverage.
16. LIABILITY AND LIMITATION OF LIABILITY
SCC shall be responsible for any loss of or damage to property owned or used by
Ameritech caused by the grossly negligent acts or omissions of SCC or its
agents and subcontractors during the course of performing the 9-1-1 Services
rendered under this Agreement.
Neither Party shall require waivers or releases of any personal rights from
representatives of the other in connection with visits to its premises and both
Parties agree that no such releases or waivers shall be pleaded by them or
third persons in any action or proceeding.
EXCEPT FOR EACH PARTY'S INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL,
CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES, WHETHER BASED UPON LOST
GOODWILL, LOST PROFITS, LOSS OF USE OR PERFORMANCE OF ANY PRODUCTS OR SERVICES
OR OTHER PROPERTY, LOSS OR IMPAIRMENT OF DATA OR SOFTWARE, OR OTHERWISE, AND
WHETHER ARISING OUT OF BREACH OF EXPRESS OR IMPLIED WARRANTY, CONTRACT
(INCLUDING THE FURNISHING, PERFORMANCE OR USE OF ANY SOFTWARE OR OTHER
PRODUCTS, MATERIALS OR SERVICES PROVIDED PURSUANT TO THIS AGREEMENT OR THE
PERFORMANCE OR NONPERFORMANCE OF OBLIGATIONS UNDERTAKEN IN THIS AGREEMENT),
TORT (INCLUDING NEGLIGENCE), STRICT PRODUCT LIABILITY OR OTHERWISE, REGARDLESS
OF WHETHER SUCH PARTY HAS BEEN NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES OR
IF SUCH DAMAGES COULD HAVE BEEN REASONABLY FORESEEN.
AGREEMENT PAGE 10
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EXCEPT FOR PERSONAL INJURY AND PROPERTY DAMAGE AND FOR ITS INDEMNIFICATION
OBLIGATIONS UNDER THIS AGREEMENT, SCC'S ENTIRE LIABILITY FOR ANY CLAIM
CONCERNING ITS PERFORMANCE IN CONNECTION WITH THIS AGREEMENT, INCLUDING ANY
NEGLIGENCE, BREACH OF CONTRACT, WARRANTY OR OTHER CLAIM, SHALL BE LIMITED TO
[ ].
17. ADD-ON ORDERS
Ameritech may request in writing specific modifications or improvements to the
Base Services at any time. SCC shall consider each in good faith and provide
to Ameritech a quotation to include at a minimum the description of the new
service, date of availability, proposed implementation schedule, and initial
charges and/or additional recurring charges, other fees as are reasonably
required. Ameritech and SCC shall negotiate final terms which shall be
attached to this Agreement as a written Add-on Order signed by both parties
before it becomes effective and any associated work shall begin.
18. FORCE MAJEURE
Neither Party shall be liable to the other for any delay or failure to perform
under this Agreement if the delay or failure to perform is without the fault or
negligence of the Party claiming excusable delay and is due to causes beyond
the control of said Party, including, but not limited to: acts of God, war,
acts of the government, fires, floods, epidemics, quarantine restrictions,
strikes, labor disputes (including collective bargaining issues), work
stoppages, and freight embargoes.
19. TERMINATION/CANCELLATION
19.1. TERMINATION BY AMERITECH
This Agreement (including the Purchase Option set forth as Exhibit C) may be
terminated by Ameritech in whole or part for any of the following reasons:
(1) if SCC defaults in its performance of any material obligation
required to be performed by SCC under this Agreement (including, but not
limited to, a failure by SCC to meet the specific acceptance or performance
requirements set forth in Exhibit A, or the warranties set forth in Section
13), and such default is not cured (or, in Ameritech's opinion, satisfactory
progress has not been made) within a thirty (30) day "cure period" following
receipt of Ameritech's written notice which describes the default; or
(2) in the event of any acquisition, or takeover of a controlling
interest in SCC by another entity, or a merger or other consolidation of SCC
into or with another entity, if the other or surviving entity, at Ameritech's
discretion is or could be deemed a competitor of Ameritech, or if the entity in
Ameritech's reasonable discretion is not financially or operationally capable
of assuming the services being provided hereunder; or
(3) if prior to the acceptance of 9-1-1 Services in Ohio Ameritech
is unable to reach appropriate accommodations with its union-represented
employees, on terms that are satisfactory to it, as determined at Ameritech's
sole discretion, in order to be able to undertake the commitments set forth in
this Agreement; or
(4) in the event continued performance under this Agreement would
cause Ameritech to be in violation of any court order or regulatory agency
having jurisdiction, or of any law, statute, ordinance or regulation; or
(5) in the event a mutually acceptable SOW, including all the
"Parts" listed on the Table of Contents of the SOW (Page A-1), is not developed
by September 1, 1994.
AGREEMENT PAGE 11
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In the event this Agreement is terminated by Ameritech in whole or part for any
of the reasons set forth above in this Section 19.1, SCC agrees, at Ameritech's
option, to sell Ameritech those SCC products and services desired by Ameritech,
under prices and terms consistent with the "Most Favored Customer" provisions
set forth in Section 21.2 below and those included in sections 1 to 41 of
Exhibit C, excluding the exhibits thereto. The exhibits thereto will be
replaced with then current exhibits as mutually agreed upon by the Parties at
that time.In the event of an Ameritech termination as described above, SCC
further agrees to ensure an orderly transition of 9-1-1 Services back to
Ameritech, with minimal disruption to Ameritech's customers, in accordance with
the De-Implementation Plan set forth in Exhibit A. SCC agrees to refund
Ameritech all unexpended NRE funds as of the effective termination date. If
Ameritech partially (less than all five states) terminates this Agreement, it
shall be entitled to a partial refund of the NRE as set forth in Exhbit B
associated with each particular state for which this Agreement is terminated.
In the event of an Ameritech termination as described above, Ameritech will
have no payment obligations to SCC beyond the effective termination date and
will not be obligated to pay SCC, and will be entitled to a refund if already
paid, for any 9-1-1 Services, or other services, which fail to meet the
acceptance criteria, Performance Metrics or the warranties set forth in this
Agreement. In the event of a conflict between this Section and Section 12,
Section 12 shall govern.
A termination of this Agreement by Ameritech does not in any way obligate
Ameritech to purchase any other SCC products and services following such
termination. Only an exercise by Ameritech of its "Purchase Option", as
described in Section 8 above, obligates Ameritech to purchase SCC products and
services if 9-1-1 Services are not acquired from SCC hereunder.
Even if any of the above reasons (that allow Ameritech to terminate) may be
isolated to a particular state(s), Ameritech retains its right to terminate the
entire Agreement if it so chooses.
19.2. TERMINATION BY SCC
This Agreement may be terminated by SCC if Ameritech defaults in its
performance of any material obligation required to be performed by Ameritech
under this Agreement (including, but not limited to, a failure by Ameritech to
pay SCC's undisputed invoices for services performed), and such default is not
cured (or, in SCC's opinion, satisfactory progress has not been made) within a
thirty (30) day "cure period" following receipt by Ameritech of SCC's written
notice which describes the default.
19.3. CANCELLATION BY AMERITECH
In the event the regulatory, legal, labor or business conditions, ("business
conditions" being defined as market share, profitability, ability to grow
revenue, and the allocation of internal resources) under which this Agreement
is based upon change so that it would no longer be in Ameritech's best
interests to continue with the full term as stated herein, Ameritech shall have
the ability to cancel this Agreement in its entirety, or on a state-by-state
basis, at any time upon providing SCC prior written notice of its intention to
cancel, and the scope (i.e., # of states) of the cancellation, at least 180
days in advance of the Ameritech designated cancellation date. Exhibit B, Part
3, "Cancellation Fee Schedule", sets forth Ameritech's cancellation fee payment
obligations to SCC in the event of such cancellation. Payment by Ameritech of
the cancellation fee shall be the extent of Ameritech's liability to SCC in the
event of a cancellation hereunder.
In the event this Agreement is cancelled by Ameritech in whole or part in
accordance with this Section 19.3, SCC agrees, at Ameritech's option, to sell
Ameritech those SCC products and services desired by Ameritech, under prices
and terms consistent with the "Most Favored Customer" provisions set forth in
Section 21.2 below and those included in sections 1 to 41of Exhibit C,
excluding the exhibits thereto. The exhibits thereto will be replaced with
then current exhibits as mutually agreed upon by the Parties at that time. In
the event of an Ameritech cancellation, SCC further agrees to ensure an orderly
transition of 9-1-1 Services back to Ameritech, with minimal disruption to
AGREEMENT PAGE 12
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Ameritech's customers, in accordance with the De-Implementation Plan set forth
in Exhibit A. SCC agrees to refund Ameritech all unexpended NRE funds as of
the effective cancellation date. If Ameritech partially (less than all five
states) cancels this Agreement, it shall be entitled to a partial refund of the
NRE as set forth in Exhibit B associated with each particular state this
Agreement is cancelled for. In the event of an Ameritech cancellation,
Ameritech will have no payment obligations to SCC beyond the effective
cancellation date for that portion of the Agreement cancelled.
A cancellation of this Agreement by Ameritech does not in any way obligate
Ameritech to purchase any other SCC products and services following such
cancellation. Only an exercise by Ameritech of its "Purchase Option", as
described in Section 8 above, obligates Ameritech to purchase SCC products and
services if 9-1-1 Services are not acquired from SCC hereunder.
20. TAXES
The fees and charges under this Agreement do not include any sales, use,
excise, transaction or other similar taxes levied against or upon the
furnishing or receipt of services pursuant to this Agreement. If such taxes
are applicable, they shall be separately stated on the invoice to Ameritech and
Ameritech shall pay them. Ameritech shall have no obligation to pay any taxes
or fees:
(a) that are based upon SCC's net or gross income or gross
receipts;
(b) that are franchise taxes or other taxes based on SCC's
corporate existence or status;
(c) that are personal property taxes on licensed software; and
(d) that are due in whole or in part because of any failure by SCC
or its agents to file any return or information required by law, rule or
regulation.
Ameritech shall reimburse SCC for any penalties or interest actually
levied upon SCC only if Ameritech's acts or omissions solely caused such
interest or penalty to be levied.
21. GENERAL PROVISIONS
21.1. INDEPENDENT CONTRACTORS
The Parties are performing pursuant to this Agreement only as independent
contractors. Each Party has the sole obligation to supervise, manage,
contract, direct, procure, perform, or cause to be performed its obligations
set forth in this Agreement, except as otherwise provided herein or agreed upon
by the Parties. Except as specified in this Agreement, nothing set forth in
this Agreement shall be construed to create the relationship of principal and
agent between SCC and Ameritech. Neither Party shall act or attempt to act or
represent itself, directly or by implication, as an agent of the other Party or
its affiliates or in any manner assume or create, or attempt to assume or
create, any obligations on behalf of, or in the name of the other Party unless
so instructed by the other Party in writing or allowed under this Agreement.
Nothing herein is intended or shall be construed to create any partnership,
agency, or joint venture relationship between the Parties. Neither Party or a
Party's subcontractor, or the employees of any of them, shall be deemed for any
purpose to be employees of the other Party. Each Party shall be solely
responsible for the withholding or payment of all applicable federal, state,
and local personal income taxes, social security taxes, unemployment and
sickness disability insurance, and other payroll taxes with respect to its own
employees.
AGREEMENT PAGE 13
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21.2. MOST FAVORED CUSTOMER
[
]
21.3. ASSIGNMENT
Except as provided otherwise in this Section, neither Party shall assign,
subcontract, out-source, or otherwise transfer any rights or obligations under
this Agreement without the other Party's prior written consent, which consent
shall not be unreasonably withheld.
Notwithstanding the above, Ameritech may, at no charge and without SCC's prior
written consent, assign its rights and delegate its duties under this
Agreement, either in whole or part, to any Ameritech's Affiliate. For purposes
of this Agreement, "Ameritech Affiliate" shall mean any affiliate of the
Ameritech Corporation, or any company which is greater than fifty percent (50%)
directly or indirectly owned by the Ameritech Corporation. Upon the acceptance
of such rights and the assumption of such duties by the assignee, the assignor
shall be released and discharged, to the extent of the assignment, from all
further duties and liability under this Agreement, except for Ameritech's
obligations under Section 11, entitled "Confidentiality and Nondisclosure".
This Agreement shall be binding upon the Parties' respective successors and
assigns.
21.4. UNBUNDLING OF SERVICES
Both Parties will commit to ensuring the integrity of 9-1-1 Services throughout
the term of this Agreement and will work to minimize the impacts to customers
as telecommunications networks are further disaggregated through unbundling and
the introduction of numerous competitive access providers. The focus of the
Parties shall be on working cooperatively with each other and with all
alternative providers to facilitate the saving of lives and property.
21.5. ESCALATION PROCEDURES AND NOTICES
Any dispute between the Parties under the terms of this Agreement shall attempt
to be resolved first by the Project Managers. It is the understanding of both
Parties that in the event a dispute cannot be resolved by the Project Managers,
then it shall be escalated up the levels of management as shown in Exhibit A.
All notices or other communications required or permitted to be given under
this Agreement shall be in writing (unless otherwise specifically provided
herein) and delivered or addressed as follows:
AGREEMENT PAGE 14
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If to Ameritech:
Ameritech Information Systems, Inc.
225 West Randolph Street
Floor 25B
Chicago, Illinois 60606
Attention: Director - Contracts
If to SCC:
SCC Communications Corporation
6285 Lookout Road
Boulder, Colorado 80301-3343
Attention: CFO
All notices or other communications shall be deemed effectively given: (i)
when delivered, if personally delivered (except that notices received after
3:00 p.m. local time will be deemed received on the following business day);
(ii) on the date of delivery (or, if refused, the refusal date shown on the
return receipt) if mailed certified or registered mail, return receipt
requested; (iii) four (4) days after mailing if mailed first class; or (iv)
when received by the Party for which notice is intended if given in any other
manner (except that notices received after 3:00 p.m. local time will be deemed
received on the following business day).
21.6. FAIR MARKET VALUE
The price for the purchase of the tangible and intangible assets referred to in
this Agreement shall be the Fair Market Value as agreed upon by Ameritech and
SCC. If Ameritech and SCC are unable to agree upon a price, each shall select
an appraiser knowledgeable in the valuation of those types of assets and the
two appraisers shall attempt to reach agreement on the Fair Market Value. If
the two appraisers are unable to reach agreement, they shall select a third
appraiser who also shall be knowledgeable in the valuation of such assets. The
three appraisers shall then determine the Fair Market Value, but if they are
unable to agree, the Fair Market Value shall be set by the third appraiser.
Each Party shall bear the expense of the appraiser selected by it, and the
Parties shall split the expense of the third appraiser.
21.7. RECORDS AND AUDITS
With five days prior written notice, Ameritech shall have the right to perform
on-site audits and reviews of the Project records used for providing the 9-1-1
Services including the billings of Monthly Base Record charges, the data
protection and security measures, etc.
21.8. EQUAL OPPORTUNITY
To the extent Ameritech is required by law to extend any Equal Opportunity
Employment requirements to suppliers or vendors, and such is required to
include SCC as a provider of 9-1-1 Services, SCC shall comply with all
applicable portions of such requirements and the nondiscrimination compliance
provisions. Ameritech shall inform SCC of such requirements in writing as soon
as it becomes known to Ameritech.
21.9. COMPANY RULES
SCC's employees and agents shall comply with all of Ameritech's, governmental
security, and plant requirements, rules and regulations provided to SCC while
on Ameritech's premises and Ameritech's employees shall comply with all of
SCC's, governmental security, and plan requirements, rules and regulations
provided to Ameritech while on SCC's premises.
AGREEMENT PAGE 15
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21.10 ADVERTISING OR PUBLICITY
SCC shall not disclose, use or refer to this Agreement or any of its terms, or
the names, trademarks or service marks of Ameritech or its Affiliates, in any
advertising, publicity releases or materials distributed to prospective
customers, without the prior written consent of Ameritech.
21.11. NON-WAIVER
No course of dealing or failure of either Party to enforce strictly any term,
right, obligation or provision of this Agreement or to exercise any option
provided hereunder or thereunder shall be construed as a waiver of such
provision.
21.12. GOVERNING LAW
The validity of this Agreement, the construction and enforcement of their
terms, and the interpretation of the rights and duties of the parties shall be
governed by the domestic laws of the State of Illinois.
21.13. LAWS AND REGULATIONS
Each Party shall comply, at its own expense, with all applicable federal,
state, county, and local laws, ordinances, regulations, and codes in the
performance of its obligations under this Agreement (including procurement of
required permits and certificates), including the Fair Labor Standards Act and
the Occupational Safety and Health Act.
21.14 TIME OF THE ESSENCE
Time is of the essence in performance under this Agreement.
21.15. REMEDIES
The rights and remedies provided herein shall be cumulative and, except as
limited herein, in addition to any other remedies available at law or in
equity.
21.16. SEVERABILITY
If any provision of this Agreement shall be held invalid or unenforceable, such
provision shall be deemed deleted from the Agreement and replaced by a valid
and enforceable provision which so far as possible achieves the Parties' intent
in agreeing to the original provision. The remaining provisions of the
Agreement shall continue in full force and effect.
21.17. JOINT WORK PRODUCT
This Agreement is the joint work product of representatives of Ameritech and
SCC; accordingly, in the event of ambiguities, no inferences will be drawn
against either Party, including the Party that drafted the Agreement in its
final form.
21.18. AUTHORITY
Each Party represents to the other that it has full authority to enter into and
secure performance of this Agreement and that the person signing this Agreement
on behalf of the Party has been properly authorized to enter into this
Agreement. Each Party further acknowledges that it has read this Agreement,
understands it, and agrees to be bound by all of its terms, conditions and
provisions.
AGREEMENT PAGE 16
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22. ENTIRE AGREEMENT
This Agreement, when fully executed, together with any exhibits or other
attachments appended hereto, constitutes the entire agreement between the
parties and supersedes all previous agreements, (including the License
Agreement dated March 31, 1994 except to the extent it allows Ameritech to
provide for services to the City of Chicago/State of Illinois), promises and
representations, whether written or oral, between the Parties with respect to
the subject matter hereof. No modification, amendment, supplement to or waiver
of this Agreement or any of its provisions shall be binding upon the Parties
unless made in writing and duly signed by authorized representatives of both
Parties.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
AMERITECH INFORMATION SYSTEMS, INC. SCC COMMUNICATIONS CORP.
/s/ RICHARD H. BROWN /s/ ROBERT B. LOUTHAN
- ----------------------------------- -----------------------------------
Signature Signature
RICHARD H. BROWN
VICE CHAIRMAN ROBERT B. LOUTHAN/CEO
- ----------------------------------- -----------------------------------
Printed Name/Title Printed Name/Title
AUGUST 31, 1994 AUGUST 31, 1994
- ----------------------------------- -----------------------------------
Date Date
AGREEMENT PAGE 17
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EXHIBIT A - SCOPE OF WORK
TABLE OF CONTENTS
Ameritech and SCC will develop a complete mutually agreed to Scope of Work by
September 1, 1994. The Scope of Work will include, but is not limited to the
following:
<TABLE>
<S> <C> <C>
PART 1 TECHNICAL PROJECT REVIEW----------------------------------------------PAGE A1-2 TO A1-26
A. Description of Services and the System--------------------------------Page A1-2
B. Responsibilities of the Parties---------------------------------------Page A1-4
C. Customer Affecting Requirements--------------------------------------Page A1-15
D. Performance Metrics--------------------------------------------------Page A1-19
E. Data Transfer Interfaces Input/Output--------------------------------Page A1-24
PART 2 DEVELOPMENT OF OPERATION PROCEDURES--------------------------------------------PAGE A2-1
PART 3 DEVELOPMENT OF SUPPORT PLAN (INCLUDING SUPPORT SERVICES)---------------PAGE A3-1 TO A3-8
PART 4 IMPLEMENTATION PLAN---------------------------------------------------PAGE A4-1 TO A4-25
A. Database Conversion Plan---------------------------------------------Page A4-13
B. Network Plan---------------------------------------------------------Page A4-14
C. Training-------------------------------------------------------------Page A4-16
D. Customer Conversion Plan--------------------------------------------Page A17-25
PART 5 IMPLEMENTATION SCHEDULE--------------------------------------------------------PAGE A5-1
A. Initial Conversion
B. Region Conversion by State
PART 6 SERVICE ACCEPTANCE TEST PLAN AND CERTIFICATE--------------------------PAGE A6-1 TO A6-38
PART 7 DE-IMPLEMENTATION PLAN---------------------------------------------------------PAGE A7-1
A. Escrow of SCC Software Source Code
PART 8 DISASTER RECOVERY AND NETWORK SURVIVABILITY PLAN-------------------------------PAGE A8-1
PART 9 CODE OF CONDUCT--------------------------------------------------------PAGE A9-1 TO A9-3
PART 10 INTERNSHIP EXCHANGE PROGRAM------------------------------------------PAGE A10-1 TO A10-3
PART 11 ESCALATION PROCEDURES------------------------------------------------PAGE A11-1 TO A11-4
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EXHIBIT B - FEES, DISCOUNTS, AND PAYMENT SCHEDULE
PART 1: FEES
The price for 9-1-1 Services is made up of two elements: a Non-Recurring
Engineering (NRE) charge, and a per month per Base Record charge for each Base
Record for which SCC provides the Base Service. The NRE is a one time charge
for the establishment of Base Services. Even though the full NRE charge will
be payable to SCC by Ameritech upon full contract signing by the Parties, SCC
and Ameritech acknowledge that the Services associated with the NRE payment
will be performed over several months following contract signing.
Consequently, SCC agrees to provide Ameritech a statement each month showing
the percentage of NRE funds expended for that month and on a cumulative "to-
date" basis. No costs shall be accumulated by SCC against the NRE prior to the
July 1, 1994, and the only costs to be accumulated against the NRE, from July
1, 1994 to the date a mutually acceptable SOW is developed and incorporated
into this Agreement, are those SCC costs associated with developing the SOW
which SCC agrees to properly substantiate. The Monthly Base Service Charge per
Base Record is calculated on a ten (10) year Agreement term.
<TABLE>
<S> <C>
Non Recurring Engineering ("NRE") Charge [ ]
The NRE breakdown is as follows:
Establishment of Base Services [ ]
Database conversion refundable by state, on a [ ]
pro-rated basis (based on the relative number of
Base Records), under the terms of this Agreement.
Monthly Base Services Charge per Base Record [ ] Per Base
(Ten Year Pricing) -------------- Record per
Month
</TABLE>
The above prices and rates are fixed prices valid for ten (10) years following
expiration of the "Option Period" set forth in Section 8.
- --------------------------------------------------------------------------------
EXHIBIT B - Fees and Payment Schedule PAGE B - 1
<PAGE> 133
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
EXHIBIT B - FEES, DISCOUNTS, AND PAYMENT SCHEDULE
PART 2: PAYMENT SCHEDULE
[ ] NRE due at contract signing
[ ] Monthly Base Services charge per Base Record due monthly,
applicable at the acceptance date for each Record for the
term of the Agreement, or at threshold levels if
conversions are not complete due to Ameritech's negligence
or delay. This per record per month charge will be
discounted for total Base Records in excess of [ ]
records in accordance with the following table:
<TABLE>
<S> <C>
- First [ ] Base Records: [ ]/record/month
- For those Records in excess of [ ], but less than
22M Base Records [ ]/record/month
- For those Records in excess of [ ], but less than
[ ] Base Records [ ]/record/month
- For Records in excess of [ ] [ ]/record/month
</TABLE>
All Records which Ameritech requests be serviced by SCC
will apply toward the total number of Records for the
purpose of calculating the above discount(s).
III. Thresholds: During the term of this Agreement, Ameritech agrees to
minimum thresholds for provisioning of Base Services as
follows:
THRESHOLD TABLE
<TABLE>
<S> <C> <C>
-------------------------------------------------------------------------
(Est.) January 1, 1995 (Ohio) [ ] Base Records
1st Threshold Acceptance - [ ]
Beginning 1/1/95, or 120 days -----
following acceptance of Scope of
Work, if later
(Est.) July 1, 1995 (Michigan) [ ] Base Records
2nd Threshold Acceptance - [ ]
Beginning 7/1/95, or 180 days -----
following 1st Threshold
acceptance, if later
(Est.) October 1, 1995 (Indiana) [ ] Base Records
3rd Threshold Acceptance - [ ]
Beginning 10/1/95, or 270 days -----
following 1st Threshold
acceptance, if later
(Est.) January 1, 1996 (Illinois) [ ] Base Records
4th Threshold Acceptance - [ ]
Beginning 1/1/96, or 365 days -----
following 1st Threshold
acceptance, if later
(Est.) January 1, 1996 (Wisconsin) [ ]
5th Threshold Acceptance - [ ]
Beginning 1/1/96, or 365 days -----
following 1st Threshold
acceptance, if later
TOTAL [ ] Base Records
-------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
EXHIBIT B - Fees and Payment Schedule PAGE B - 2
<PAGE> 134
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
Ameritech will be invoiced at the threshold levels on the dates shown above if
minimum levels have not been met, if the cause of the Records not being ready
for SCC provisioning is due to Ameritech's negligence or delay. Accordingly,
this monthly billing to Ameritech by SCC will be based on the actual number of
Base Records for which Base Services are being provided, or on the "threshold
level" number of records as stated in the above Threshold Table, whichever is
greater. If the Records are not ready at the above threshold dates because of
the fault of SCC, Ameritech also shall receive a credit to be applied against
subsequent SCC invoices in the amount of 1/30 of the monthly charge for the
Records being added at the threshold for each day of delay until the Records
are ready for SCC provisioning.
IV. Regularly Scheduled Audit Procedures
(Procedures will be due as part of the Operations Plan to be completed by
January 1, 1995.)
- --------------------------------------------------------------------------------
EXHIBIT B - Fees and Payment Schedule PAGE B - 3
<PAGE> 135
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
EXHIBIT B - FEES, DISCOUNTS AND PAYMENT SCHEDULE
PART 3: CANCELLATION FEE SCHEDULE
AMERITECH CANCELLATION FEES
In the event Ameritech elects to cancel the Agreement in accordance with
Section 19.3, Ameritech shall pay SCC a Cancellation Fee. The Cancellation Fee
shall be calculated, as of the effective cancellation date, as follows:
1) Take the total number of months which SCC has been providing and
billing Ameritech for 9-1-1 Services as of the effective
cancellation date.
2) Multiply the number of months in #1 above by the # of Base
Records serviced and invoiced by SCC each month.
3) Multiply the result in #2 above by the applicable "Cancellation
Rate" as set forth in the following table:
<TABLE>
<CAPTION>
Cancellation Period Cancellation Rate to be Applied
<S> <C> <C>
Year 1 (beginning of Month 1 thru end of Month 12) [ ]
Est. 4/1/95-3/31/96
Year 2 (beginning of Month 13 thru end of Month 24) [ ]
Est. 4/1/96 - 3/31/97
Year 3 (beginning of Month 25 thru end of Month 36) [ ]
Est. 4/1/97 - 3/31/98
Year 4 (beginning of Month 37 thru end of Month 48) [ ]
Est. 4/1/98 - 3/31/99
Year 5 (beginning of Month 49 thru end of Month 60) [ ]
Est. 4/1/99 - 3/31/00
Year 6 (beginning of Month 61 thru end of Month 72) [ ]
Est. 4/1/00 - 3/31/01
Year 7 (beginning of Month 73 thru end of Month 84) [ ]
Est. 4/1/01 - 3/31/02
Year 8 (beginning of Month 85 thru end of Month 96) [ ]
Est. 4/1/02 - 3/31/03
Year 9 (beginning of Month 97 thru end of Month 108) [ ]
Est. 4/1/03 - 3/31/04
Year 10 (beginning of Month 109 thru end of Month 120) [ ]
Est. 4/1/04 - 3/31/05
</TABLE>
- --------------------------------------------------------------------------------
EXHIBIT B - Fees and Payment Schedule PAGE B - 4
<PAGE> 136
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
* Year 1 of the above "Cancellation Period" begins immediately following
expiration of the "Purchase Option" period. Expiration of the Purchase
Option period is scheduled for 4/1/95, based upon having a mutually
acceptable SOW by 9/1/94 and 1/1/95 Ohio 9-1-1 Service implementation
and acceptance date. The Year 1, Year 2, Year 3, etc. periods will be
extended should any of these key milestone dates slip, thus causing the
Purchase Option period expiration date to occur later than expected.
* In the event the Ameritech cancellation is for less than all five (5)
states within the Ameritech Region, the same formula is used, but the
number Base Records serviced and invoiced by SCC each month, only for
the canceled states, applies.
EXAMPLES:
The following examples assume that the planned implementation and acceptance
dates are met, that the actual # of Base Records serviced and billed by SCC
equals the Base Record volume and timing commitments as set forth in the
"Threshold Table" in Part 2 of this Exhibit B and that there is no Base Records
growth. Specifically:
<TABLE>
<CAPTION>
State Acceptance/Service Start # of Records
<S> <C> <C>
Ohio 1/1/95 [ ]
Michigan 7/1/95 [ ]
[ ]
Indiana 10/1/95 [ ]
[ ]
Illinois 1/1/96 [ ]
[ ]
Wisconsin 1/1/96 [ ]
[ ]
</TABLE>
Example 1:
Ameritech cancels the Agreement in its entirety (all 5 states) with an
effective cancellation date of 9/1/95. Thus, the Year 1 Cancellation Rate
[ ] applies.
<TABLE>
<S> <C> <C> <C>
1/1/95 - 6/30/95 6 months x [ ]
7/1/95 - 8/31/95 2 months x [ ]
Cancellation Fee = [ ]
</TABLE>
Example 2:
Ameritech cancels the Agreement for Indiana and Wisconsin with an effective
cancellation date of 12/1/99. Thus, the Year 5 Cancellation Rate [ ]
applies.
<TABLE>
<S> <C> <C> <C>
10/1/95 - 12/31/95 3 months x [ ]
1/1/96 - 11/30/99 47 months x [ ]
Cancellation Fee = [ ]
</TABLE>
Example 3:
Ameritech cancels the Agreement in its entirety (all 5 states) with an
effective cancellation date of 4/1/01. Thus, the Year 7 Cancellation Rate
[ ] applies.
<TABLE>
<S> <C> <C> <C>
1/1/95 - 6/30/95 6 months x [ ]
7/1/95 - 9/30/95 3 months x [ ]
10/1/95 - 12/31/95 3 months x [ ]
1/1/96 - 3/31/01 63 months x [ ]
Cancellation Fee = [ ]
</TABLE>
- --------------------------------------------------------------------------------
EXHIBIT B - Fees and Payment Schedule PAGE B - 5
<PAGE> 137
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
EXHIBIT B - FEES, DISCOUNTS, AND PAYMENT SCHEDULE
PART 4: THRESHOLD ERROR IDENTIFICATION FEES
For data errors identified by SCC which are in excess of 95% of Ameritech's
historical error rate, as measured by Ameritech's actual average for the three
months immediately preceding SCC's 9-1-1 Services implementation, SCC will
assess a "Threshold Error Identification Fee", (TEIF) of [ ] for each data
error identified. The Parties agree that this TEIF is subject to modification
as experience is gained during the implementation phases of this Agreement.
The TEIF will be assessed beginning ninety (90) days after acceptance of each
Threshold.
- --------------------------------------------------------------------------------
EXHIBIT B - Fees and Payment Schedule PAGE B - 6
<PAGE> 138
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
EXHIBIT B - FEES, DISCOUNTS AND PAYMENT SCHEDULE
PART 5: PERSONNEL RATES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
RESOURCE TYPE CONSULTING CONSULTING DISCOUNTED DISCOUNTED
RATE RATE RATE RATE
DAILY HOURLY DAILY HOURLY
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRESIDENT, VP [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
DIRECTOR [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
PROJECT MANAGER [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
SR. SOFTWARE ENGINEER [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
SOFTWARE ENGINEER [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
APPLICATION ENGINEER [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
GIS APPLICATION [ ] [ ] [ ] [ ]
ENGINEER
- -----------------------------------------------------------------------------------------------------------
GIS TECHNICIAN [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
TECHNICIAN [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
TRAINER [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
CLERK [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
QA ENGINEER [ ] [ ] [ ] [ ]
- -----------------------------------------------------------------------------------------------------------
DOCUMENTATION [ ] [ ] [ ] [ ]
SPECIALIST
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Under the terms of this Agreement, Ameritech will be charged the Discounted
Rates. These prices are effective as of July, 1994 and are subject to change
on an annual basis, effective January 1st of each year, upon no less than sixty
(60) days prior written notice from SCC to Ameritech.
- --------------------------------------------------------------------------------
EXHIBIT B - Fees and Payment Schedule PAGE B - 7
<PAGE> 139
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
EXHIBIT C: PURCHASE OPTION
Exhibit C is attached hereto following this page.
- --------------------------------------------------------------------------------
EXHIBIT C - Purchase Option PAGE C-1
<PAGE> 140
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
EXHIBIT D: ADD-ON ORDERS
SCC intends to develop new products and offer new services to Ameritech, which
may, at Ameritech's discretion, be offered as new products to Ameritech
customers and prospects. These New Services will be add-on features or
functions to the Base Services.
The description of the new services, non-recurring and recurring prices, an
implementation plan, and an implementation schedule will be included in any
Add-On Order and attached to this Agreement as an addendum. The Addendum(s)
will also include a mutually agreed to Sales and Marketing Plan to introduce
these new products or services to the Ameritech client base.
These new services include, but are not limited to:
<TABLE>
<CAPTION>
==============================================================================================================
NAME CUSTOMER FUNCTION OR BENEFIT
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Private Switch (PS)/ALI Provides location of phones behind a private switch.
- --------------------------------------------------------------------------------------------------------------
2. MAP/ALI Provides X,Y - coordinate based caller identification
- --------------------------------------------------------------------------------------------------------------
3. CELL/ALI Provides cell location of a cellular call
- --------------------------------------------------------------------------------------------------------------
4. PSAP/ALI Provides ability for PSAP to enter data into a Base Record
- --------------------------------------------------------------------------------------------------------------
5. Subscriber/ALI Provides ability for subscriber to enter subscriber specific
data into a Base Record
- --------------------------------------------------------------------------------------------------------------
6. Coordinate Based MSAG Build(s) Provides ability to generate x, y coordinates related to street
addresses for application-specific product offerings - e.g. Call
Centers, Commercial Dispatch, etc.
- --------------------------------------------------------------------------------------------------------------
7. Net CAD Enables offering of Computer Aided Dispatch (CAD) application
solutions over the network
- --------------------------------------------------------------------------------------------------------------
8. NetRMS Provides ability to offer law, fire, and EMS Records Management
and Analysis Services over the Network
- --------------------------------------------------------------------------------------------------------------
9. Location Services (Market Specific) Provides generalized geographic caller I.D. and dynamic call
routing
==============================================================================================================
</TABLE>
Ameritech may also request the development of other New Services or products to
meet its customer requirements. SCC will work with Ameritech to determine the
viability of these new services and whether or not these new services are
specific to the Ameritech Region or have general customer marketability. These
services will be priced accordingly and added to this 9-1-1 Services Agreement
in the manner of incremental Addendum's as described above.
- --------------------------------------------------------------------------------
EXHIBIT D - Add-on Orders PAGE D - 1
<PAGE> 141
SCC/AMERITECH SERVICES AGREEMENT
- --------------------------------------------------------------------------------
EXHIBIT D - ADD ON ORDERS
SAMPLE ADD-ON ORDER
NEW SERVICES - PRODUCT NAME:
- --------------------------------------------------
PRODUCT DESCRIPTION:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
IMPLEMENTATION PLAN (Attached to this Add-On Order)
- ---------------------------------------------------
ANTICIPATED DATE OF SERVICE START:
- ----------------------------------
NON-RECURRING CHARGES - DESCRIPTION AND AMOUNT:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
RECURRING CHARGES AND EFFECTIVE DATE:
- --------------------------------------------------
This Add-On Order shall be included as Addendum #______ to the 9-1-1 Services
Agreement.
AMERITECH INFORMATION SYSTEMS INC. SCC COMMUNICATIONS CORP.
- ----------------------------------- -----------------------------------
Signature Signature
- ----------------------------------- -----------------------------------
Printed Name/Title Printed Name/Title
- ----------------------------------- -----------------------------------
Date Date
- --------------------------------------------------------------------------------
EXHIBIT D - Add-on Orders PAGE D - 2
<PAGE> 1
Confidential Treatment Request
EXHIBIT 10.7
[ ] Material indicated by this mark has been
deleted pursuant to a request for confidential
treatment and has been filed separately.
AGREEMENT FOR SERVICES
BETWEEN
SCC COMMUNICATIONS CORP. (SCC)
AND
U S WEST COMMUNICATIONS, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS:..........................................................1
2. TERM:.................................................................1
3. TERMINATION:..........................................................2
4. SCOPE OF SERVICES:....................................................2
5. SERVICES FEE(S):......................................................2
6. INVOICES AND PAYMENTS:................................................2
7. ORDER(S):.............................................................2
8. SERVICE SPECIFICATIONS; WARRANTIES:...................................3
9. INSPECTION AND ACCEPTANCE:............................................3
10. FURNISHING OF LABOR, TOOLS, EQUIPMENT, AND MATERIAL:.................3
11. HAZARDOUS MATERIALS AND SAFETY:......................................3
12. OCCUPATIONAL SAFETY AND HEALTH ACT:..................................4
13. CONFIDENTIAL INFORMATION:............................................4
14. RECORDS:.............................................................5
15. INDEPENDENT CONTRACTOR:..............................................7
16. INDEMNITY:...........................................................7
17. PATENT, TRADEMARK, COPYRIGHT OR TRADE SECRET INDEMNIFICATION:........7
18. INSURANCE:...........................................................8
19. SUBCONTRACTORS:......................................................9
20. ADVERTISING; PUBLICITY:..............................................9
21. PLANT AND WORK RULES:................................................9
22. SETOFF:..............................................................9
23. TIME IS OF ESSENCE:..................................................9
24. ASSIGNMENT:..........................................................9
25. FORCE MAJEURE:.......................................................9
26. WAIVER:.............................................................11
27. COMPLIANCE WITH LAWS:...............................................11
28. SEVERABILITY:.......................................................11
29. ESCALATION:.........................................................12
30. DISPUTE RESOLUTION:.................................................12
31. SEVERAL LIABILITY:..................................................12
32. NONEXCLUSIVE AGREEMENT:.............................................12
33. REMEDIES CUMULATIVE:................................................13
34. AMENDMENTS:.........................................................13
35. LIMITATION OF LIABILITY.............................................13
36. SURVIVAL:...........................................................13
37. BUSINESS CONDUCT:...................................................13
38. NOTICES:............................................................13
39. OWNERSHIP AND LICENSE OF SOFTWARE:..................................14
40. M/WBE SUBCONTRACTING PLAN:..........................................14
41. OTHER PROVISIONS:...................................................14
42. ENTIRE AGREEMENT:...................................................14
</TABLE>
Confidential. Disclose and distribute solely to those
individuals who have a need to know.
<PAGE> 3
EXHIBIT A - Scope of Work
EXHIBIT B - Pricing and Payment
EXHIBIT C - Nondiscrimination and Compliance Agreement
EXHIBIT D - M/WBE Subcontracting Plan
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 4
AGREEMENT FOR SERVICES
This Agreement is made by and between U S WEST COMMUNICATIONS, INC.
("Customer"), with offices for transaction of business located at 150 South
Fifth Street, Suite 700 Minneapolis, Minnesota 55402, and SCC COMMUNICATIONS
CORP., ("SCC") a Delaware Corporation, having its corporation offices located at
6285 Lookout Road, Boulder, Colorado 80301. This Agreement may be extended to
any Customer "Affiliate" as that term is defined herein.
In consideration of the promises, mutual covenants and agreements contained
herein, the receipt and sufficiency of which are hereby acknowledged, Customer
and SCC agree as follows:
1. DEFINITIONS:
The terms defined in this Article shall have the meanings set forth below
whenever they appear in this Agreement, unless (a) the context in which they are
used clearly requires a different meaning; or (b) a different definition is
described for a particular Article or provision: This list is not inclusive.
Exhibits attached to this Agreement may also contain additional defined terms.
1.1. "Affiliate" means any entity within North America directly providing
communications services which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with Customer. For the purposes of this subsection, "control" means (i) in
the case of corporate entities, direct or indirect ownership of twenty
percent (20%) or more of the stock or shares entitled to vote for the
election of the board of directors or other governing body of the entity;
and (ii) in the case of non-corporate entities, direct or indirect
ownership of twenty percent (20%) or greater of the equity interest.
1.2. "Agreement" means this written contract between Customer and SCC
covering the purchase of Services (defined herein) together with the Scope
of Work(s) (defined herein), attached exhibits, any Order(s) (defined
herein), any addenda, and amendments to this Agreement issued in accordance
with the Article entitled "Amendments".
1.3. "Customer" means U S WEST Communications, Inc. and shall also include
any Affiliate that places any Order(s) or obtains any Services under this
Agreement.
1.4. "New Service(s)" means an enhancement or enhancements to the Services
that incorporates significant additional functionality or separate out of
scope Services.
1.5. "Order(s)" means a written or electronic request by Customer for
Services which shall be deemed to incorporate all provisions of this
Agreement.
1.6. "Services" means the work to be performed by SCC under this Agreement,
as more fully described and set forth in Exhibit A to this Agreement.
1.7. "Scope of Work(s)" means the description and definition of the
Services to be performed by SCC, the task and responsibilities of Customer,
and the fees for the Services provided under this Agreement, all as more
fully described and set forth in Exhibit A and B to this Agreement.
2. TERM:
This Agreement shall commence on DECEMBER 28, 1995, and expire on [
], unless earlier terminated under the terms of this Agreement. Following
this initial term, the Agreement shall be extended for continuous five year
terms, unless terminated at the end of the initial or any renewal term upon no
less than one hundred and eighty (180) days prior written notice. The parties
may extend the
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 5
initial term or any subsequent term by executing a separate written agreement of
extension prior to the expiration of the term.
3. TERMINATION:
3.1. If either party shall at any time commit any breach of any material
covenant or warranty contained herein or otherwise materially default of
its or their respective obligations under this Agreement, and the defaulted
party gives written notice thereof, and if such material breach or default
is not cured or remedied within sixty (60) days from said notice of breach
or default, or if a failure to commence cure or remedy has not occurred
within such sixty (60) days of said notice, the defaulted party, upon
written notification and at its discretion may extend the 60 day cure
period to the party in default, provided the party in default submits to
the defaulted party a satisfactory plan to remedy the default. If such
default is not curable, the defaulted party may, at its option, and in
addition to any other remedies that it may be entitled to, terminate this
Agreement by notice in writing to such effect. The failure of the defaulted
party to exercise such right for any one default shall not be deemed a
waiver of said right if the party in default persists in such default or
commits any other default.
3.2. If for any reason, this Agreement is to be terminated, the Parties
agree to follow the procedures outlined in the De-Implementation Plan to be
incorporated into Exhibit A to this Agreement.
4. SCOPE OF SERVICES:
The description of the Services, together with the location(s), time(s) of
performance, and service specifications are described in this Agreement,
including the attached Exhibit A, Scope of Work. The Services shall be performed
upon such terms as set forth in the Scope of Work and this Agreement.
5. SERVICES FEE(S):
As consideration for SCC's satisfactory performance of the Services, Customer
agrees to pay SCC the Services Fee(s) set forth in Exhibit B, the Price and
Payment Schedule attached to this Agreement.
6. INVOICES AND PAYMENTS:
6.1. SCC shall issue invoices in the format required by Customer within
thirty (30) days following the completion of the Services to the address
stated on any Order(s).
6.2. Invoices for completed Services shall be payable upon receipt of a
correct invoice. Customer is not required to pay invoiced amounts in
dispute until such dispute is resolved. Once the dispute is resolved the
invoice shall be paid within thirty days following such resolution.
6.3. Customer reserves the right, before making payments, to require SCC to
furnish sufficient evidence that all claims, liens and causes of action, if
any, for the payment of wages or salaries or the payment of charges for
materials, tools, machinery or supplies have been satisfied, released or
settled. If satisfactory evidence is not furnished, the amount of such
claims, liens and causes of action may be withheld from any monies
otherwise payable to SCC hereunder until such evidence of payment or a bond
to indemnify Customer against any such claims, liens, and causes of action
has been furnished.
7. ORDER(S):
Any attempted acknowledgment of any Order(s) by SCC containing terms and
conditions inconsistent with or in addition to the terms and conditions of this
Agreement or any Order(s) are hereby objected to by Customer and shall not be
binding upon Customer. This Article shall not be waived, modified or amended
except by a writing in accordance with the Article entitled "Amendments". 8.
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 6
8. SERVICE SPECIFICATIONS; WARRANTIES:
8.1. SCC warrants and agrees that the Services shall be performed according
to the specifications contained in the Scope of Work and they shall be
performed in a professional manner consistent with reasonable industry
standards. SCC shall, at no expense to Customer, correct any failure to
fulfill the above warranty which may appear at any time during the term of
this Agreement.
8.2. When a need arises for Services to be covered under this warranty,
Customer shall follow the Support Procedures described in Exhibit A.
8.3. SCC further warrants that it has no knowledge of any existing software
viruses, worms, trap doors, etc., ("disorder"). If SCC becomes aware of any
such disorder in its products used in the performance of Services ordered
by Customer, it shall so advise Customer in writing immediately. Upon
learning of such disorder in its products or software, SCC shall use its
best efforts to remedy it as soon as possible.
8.4. Customer shall also warrant that it has no knowledge of any existing
software viruses, worms trap doors, etc. ("disorder"). If Customer becomes
aware of such disorder in its products or data provided to SCC, it shall so
advise SCC in writing immediately. Upon learning of a disorder in its
products or data, Customer shall use its best efforts to remedy it as soon
as possible and reimburse SCC for efforts expended by SCC in order to
restore other SCC customer's data if it has been affected by any such
disorder. Customer shall not be liable for any indirect, special,
consequential, incidental or punitive damages due to such disorder to SCC
or any of SCC's customers or other third parties.
9. INSPECTION AND ACCEPTANCE:
Customer shall be provided regular performance statistics, the Performance
Metrics, as defined and described in Exhibit A as a means to determine if the
Services provided by SCC conform to the specifications contained in Exhibit A.
SCC shall correct such nonconforming Services in an expeditious manner at its
own expense.
10. FURNISHING OF LABOR, TOOLS, EQUIPMENT, AND MATERIAL:
SCC shall furnish, at its own cost and expense, all labor, supervision,
machinery, tools, equipment, fuel, power, materials, expendable supplies,
transportation, licenses, permits, bonds, and all other items that may be
required or appropriate in the performance of the Services except items which
Customer specifically agrees to furnish. All materials, supplies, and other
items purchased by SCC shall be in SCC's own name and account. SCC shall be
responsible for all freight and delivery, costs of materials, supplies,
equipment, and other items on the work site and shall be responsible for
in-transit loss or damage.
11. HAZARDOUS MATERIALS AND SAFETY:
11.1. "Hazardous Materials" means any hazardous, radioactive, or toxic
substance, material, or waste defined or regulated as such in or under any
environmental, health or safety law including without limitation asbestos,
and those hazardous materials, substances, and wastes defined by the United
States Department of Transportation ("DOT"), Occupational Safety and Health
Administration ("OSHA"), Environmental Protection Agency ("EPA") or the
Nuclear Regulatory Commission ("NRC") through their enabling statutes, or
regulations, orders or rules.
11.2. In connection with its activities under this Agreement and all
Services under this Agreement, SCC shall comply with all applicable
provisions of The Hazardous Materials Transportation Act (49 USC 1801, et
seq.), the Resource Conservation and Recovery Act (42 USC 6901, et seq.),
the Toxic Substances Control Act of 1976 (15 USC 2601, et seq.), the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (42 USC 9601
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 7
et seq.), the Occupational Safety and Health Act of 1970 and any other
applicable federal, state, and local laws and regulations governing
Hazardous Materials or safety, including but not limited to state and
federal motor carrier safety regulations, the DOT Hazardous Materials
regulations and any regulations governing conveyance, packaging, marking,
identification, storage, handling and/or disposition of Hazardous
Materials, or governing any accidents or incidents in connection with such
activities involving Hazardous Materials, all as they may be amended or
supplemented from time to time.
11.3. To the extent applicable, SCC shall furnish Customer with Material
Safety Data Sheets that comply with the requirements of the OSHA Hazard
Communication Standard (29 CFR 1910.1200), as the same may be amended or
supplemented from time to time.
11.4. SCC shall indemnify and hold Customer harmless in accordance with the
Article entitled "Indemnity" for any claims, liabilities and damages,
including but not limited to reasonable attorneys' fees, costs of defense,
clean-up costs, response costs, costs of corrective action, costs of
financial assurance, and/or natural resource damages, that may arise, be
imposed on, be incurred by, be asserted against or be sustained by Customer
by reason of SCC's failure to comply with the terms of this Article.
12. OCCUPATIONAL SAFETY AND HEALTH ACT:
12.1. SCC shall be responsible for its safety, the safety of its employees,
its subcontractors, and the worksite in general, and shall comply with all
applicable provisions of local, state, and federal laws, regulations and
orders affecting safety and health, including but not limited to the
Occupational Safety and Health Act of 1970 (hereinafter collectively
referred to as ("the OSH Act"). All Services and related deliverables under
this Agreement shall be such that when received and/or used by Customer,
they are in compliance with the OSH Act and other laws, regulations, rules
and standards relating to safety. SCC shall be solely responsible for any
violation of the OSH Act by it or its subcontractors, shall immediately
remedy any conditions giving rise to such violations, and shall defend and
hold Customer harmless from any penalty, fine, or liability in connection
therewith. SCC is expressly authorized to correct any violations of the OSH
Act that come to its attention where said violations are within the scope
of SCC's work. Upon request of Customer, SCC shall provide Customer with
written assurances that SCC and its subcontractors have a written safety
plan in effect and the OSH Act training appropriate for the work has been
conducted for SCC and its subcontractors. SCC shall be responsible for
coordinating its safety plan with its subcontractors, other independent
contractors and Customer, where appropriate. This clause shall appear in
all of SCC's subcontracts.
12.2. While working on Customer's premises, SCC agrees that it and its
subcontractors shall give access to the authorized representatives of the
Secretary of Labor or any state or local official for the purpose of
inspecting, investigating, or carrying out any duties under the OSH Act at
Customer's premises or facilities and SCC shall immediately notify Customer
prior to allowing access to Customer premises or facilities.
13. CONFIDENTIAL INFORMATION:
13.1. As used herein, "Confidential Information" shall mean any and all
technical or business information, including third party information,
furnished, in whatever tangible form or medium, or disclosed by one party
to the other (including, but not limited to, product/service
specifications, prototypes, computer programs, models, drawings, marketing
plans, financial data and personnel statistics), which is marked as
confidential or proprietary; or for information which is orally disclosed,
the disclosing party indicates to the other at the time of disclosure the
confidential or proprietary nature of the information and reduces orally
disclosed Confidential Information to
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 8
writing and provides it to the receiving party within twenty days after
such disclosure which is also marked as confidential.
13.2. Customer does not wish to receive the Confidential Information of
SCC, and SCC agrees that it will first provide or disclose information
which is not confidential. Only to the extent that Customer requests
Confidential Information from SCC will SCC furnish or disclose Confidential
Information.
13.3. Notwithstanding the termination, expiration or cancellation of this
Agreement, each party agrees to treat such Confidential Information as
confidential for a period of three years from the date of receipt of same
unless otherwise agreed to in writing by both parties, and that during such
period each party will use same solely for the purposes of this Agreement
unless otherwise allowed herein or by written permission of the disclosing
party. In handling the Confidential Information, each party agrees: (1) not
to copy such Confidential Information of the other unless specifically
authorized; (2) not to make disclosure of any such Confidential Information
to anyone except employees and independent contractors and subcontractors
of such party to whom disclosure is necessary for the purposes set forth
above; (3) to appropriately notify such employees and independent
contractors and subcontractors that the disclosure is made in confidence
and shall be kept in confidence in accordance with this Agreement; and (4)
to make requests for Confidential Information of the other only if
necessary to accomplish the purposes set forth in this Agreement. The
obligations set forth herein shall be satisfied by each party through the
exercise of at least the same degree of care used to restrict disclosure of
its own information of like importance but not less than a reasonable
degree of care. Notwithstanding any other provisions of this Article,
Confidential Information may be disclosed as may be required by law,
regulation or court or agency order or demand, after prompt prior
notification to the other party of such required disclosure.
13.4. Each party agrees that in the event permission is granted by the
other to copy Confidential Information, or that copying is otherwise
permitted hereunder, each such copy shall contain and state the same
confidential or proprietary notices or legends, if any, which appear on the
original. Nothing herein shall be construed as granting to either party any
right or license under any copyrights, inventions, or patents now or
hereafter owned or controlled by the other party. Upon termination,
cancellation or expiration of this Agreement for any reason or upon request
of the disclosing party, all Confidential Information, together with any
copies of same as may be authorized herein, shall be returned to the
disclosing party or certified destroyed by the receiving party.
13.5. The obligations imposed in this Article shall not apply to any
information that: (1) is already in the possession of, is known to, or is
independently developed by the receiving party; or (2) is or becomes
publicly available through no fault of the receiving party; or (3) is
obtained by the receiving party from a third person without breach by such
third person of an obligation of confidence with respect to the
Confidential Information disclosed; or (4) is disclosed without restriction
by the disclosing party; or (5) is required to be disclosed pursuant to the
lawful order of a government agency or disclosure is required by operation
of the law.
13.6. The requirements of use and confidentiality set forth herein shall
survive the expiration, termination or cancellation of this Agreement.
14. RECORDS:
14.1. SCC shall maintain complete and accurate records of all amounts
billable to and payments made by Customer hereunder in accordance with
recognized accounting practices. SCC shall retain such records for a period
of four years from the date of final payment for Services covered hereby.
SCC agrees to provide reasonable supporting documentation concerning any
disputed amount of an invoice to Customer within thirty days after Customer
provides written notification of the dispute to SCC. 14.2.
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 9
14.2. During the term of this Agreement and the respective periods in which
SCC is required to maintain such records, Customer and its authorized
agents and representatives shall have access to such records for purposes
of audit during SCC's normal business hours, and upon prior written notice.
15. INDEPENDENT CONTRACTOR:
SCC HEREBY DECLARES AND AGREES THAT IT IS ENGAGED IN AN INDEPENDENT BUSINESS AND
WILL PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT AS AN INDEPENDENT CONTRACTOR
AND NOT AS THE AGENT OR EMPLOYEE OF CUSTOMER; THAT THE PERSONS PERFORMING
SERVICES HEREUNDER ARE NOT AGENTS OR EMPLOYEES OF CUSTOMER; THAT SCC HAS AND
HEREBY RETAINS THE RIGHT TO EXERCISE FULL CONTROL OF AND SUPERVISION OVER THE
PERFORMANCE OF SCC'S OBLIGATIONS HEREUNDER AND FULL CONTROL OVER THE EMPLOYMENT,
DIRECTION, COMPENSATION AND DISCHARGE OF ALL EMPLOYEES ASSISTING IN THE
PERFORMANCE OF SUCH OBLIGATIONS; THAT SCC WILL BE SOLELY RESPONSIBLE FOR ALL
MATTERS RELATING TO PAYMENT OF SUCH EMPLOYEES, INCLUDING COMPLIANCE WITH
WORKERS' COMPENSATION, UNEMPLOYMENT, DISABILITY INSURANCE, SOCIAL SECURITY
WITHHOLDING, AND ALL OTHER FEDERAL, STATE AND LOCAL LAWS, RULES AND REGULATIONS
GOVERNING SUCH MATTERS; AND THAT SCC WILL BE RESPONSIBLE FOR SCC'S OWN ACTS AND
THOSE OF SCC'S AGENTS, EMPLOYEES AND SUBCONTRACTORS DURING THE PERFORMANCE OF
SCC'S OBLIGATIONS UNDER THIS AGREEMENT. SCC AND ITS EMPLOYEES ARE NOT ENTITLED
TO UNEMPLOYMENT INSURANCE BENEFITS AS A RESULT OF PERFORMING UNDER THIS
AGREEMENT. SCC IS RESPONSIBLE FOR AND SHALL PAY ALL ASSESSABLE FEDERAL AND STATE
INCOME TAX ON AMOUNTS PAID UNDER THIS AGREEMENT.
16. INDEMNITY:
Each Party shall defend, indemnify and hold harmless the other and the other's
corporate owners, parents, affiliates, subsidiaries, agents, directors
employees, their successors and assigns against and from any and all losses,
damages, expenses (including but not limited to, court costs and reasonable
attorneys' fees), claims, suits, judgments, orders,, awards, and "liabilities",
whether based in contract or tort, including strict liability, to the extent
that such losses, damages, expenses, demands, claims, suits, and liabilities
arise out of or in connection with (a) the indemnifying Party's gross
negligence, negligent acts, omissions, or willfulness , or those persons
furnished by it, (b) the failure of the indemnifying Party to fully comply with
the terms and conditions of this Agreement, or (c) assertions under Worker's
Compensation or similar laws or employee benefit acts made by persons furnished
by the indemnifying Party. "Liabilities" as provided in this Section, shall
include only direct liabilities, but not be limited to those which are
attributable to personal injury, sickness, disease or death; and/or result from
injury to or destruction of real or personal property including loss of use
thereof, theft, misuse or misappropriation. The indemnified Party shall promptly
notify the indemnifying Party of any written claim, loss or demand for which the
indemnifying Party is responsible for under this Section.
16.1. Neither party shall be liable for any incidental and consequential
damages, loss, anticipated profit, or unabsorbed indirect costs or
overheads or any other losses or claims whatsoever on account of or arising
out of this Agreement.
17. PATENT, TRADEMARK, COPYRIGHT OR TRADE SECRET INDEMNIFICATION:
17.1. SCC shall indemnify and hold harmless Customer, its owners, parents,
affiliates, subsidiaries, agents, directors and employees from and against
all Liabilities that may result by reason of any infringement or claim of
infringement of any patent, trademark, copyright, trade secret or other
proprietary right relating to Services and/or deliverables or materials
used in or arising from provision of Services ("Deliverables or Materials")
and/or the use thereof. SCC will defend and/or settle at its own expense
any action brought against Customer to the extent that it is based on a
claim that Services, Deliverables or Materials and/or the use thereof,
infringe any patent, trademark, copyright, trade secret or other
proprietary right.
17.2. If a preliminary or final judgment shall be obtained against
Customer's use of any Services, Deliverables or Materials or any part
thereof by reason of alleged infringement or if in SCC's opinion, such
Services, Deliverables or Materials and/or the use thereof are likely to
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 10
become subject to a claim for infringement, SCC shall, at its expense and
option, either: (1) procure for Customer the right to continue using such
Services, Deliverables or Materials; or (2) replace or modify the Services,
Deliverables or Materials so that they become non-infringing but only if
the modification or replacement does not adversely affect Customer's rights
or ability to use same as specified herein. If neither of those options is
reasonably possible, SCC and Customer shall negotiate in good faith a new
price for Services which reflects any reduction in the extent of the
Services being provided or, if SCC cannot provide any of the Services
previously provided, SCC shall pay related direct expenses incurred by
Customer for the De-Implementation of Services.
18. INSURANCE:
SCC shall at all times during the term of this Agreement, at its own cost and
expense, carry and maintain the insurance coverage listed below with insurers
having a "Best's" rating of B+XIII.
18.1. Workers' Compensation and/or (when exposure exists) United States
Longshoremen and Harbor workers insurance with (1) statutory limits as
required in the state(s) of operation; and (2) although not required by
statute, coverage for any SCC employee entering onto Customer premises.
18.2. Employers' Liability or "Stop Gap" insurance with limits of not less
than $[ ] each accident.
18.3. Commercial General Liability insurance covering claims for bodily
injury, death, personal injury or property damage occurring or arising out
of the performance of this Agreement, including coverage for independent
contractor's protection (required if any work will be subcontracted),
premises-operations, products/completed operations and contractual
liability with respect to the liability assumed by SCC hereunder. The
limits of insurance shall not be less than:
Each Occurrence $[ ]
General Aggregate Limit $[ ]
Products-Completed Operations Limit $[ ]
Personal and Advertising Injury Limit $[ ]
18.4. Should performance of this Agreement involve any use of automobiles,
comprehensive automobile liability insurance covering the ownership,
operation and maintenance of all owned, non-owned and hired motor vehicles
with limits of not less than $[ ] per occurrence for bodily injury
and property damage.
18.5. Errors and Omissions/Professional Liability insurance covering errors
and omissions of SCC with limits of not less than $[ ] per
occurrence, with an aggregate of $[ ], and endorsed to provide
coverage for contractual liability with respect to liability assumed by SCC
hereunder. Such insurance shall provide a retroactive date prior to the
date of this agreement and an extended claims reporting period of not less
than 3 years after the termination of this agreement.
18.6. Blanket Employee Dishonesty Insurance covering losses due to SCC
employee's dishonest acts in an amount not less than $[ ] per
occurrence. Such insurance shall be endorsed to provide coverage to
Customer for losses arising from dishonest acts of SCC's employees while
providing services hereunder.
18.7. The insurance limits required in this Section 18 may be obtained
through any combination of primary and excess or umbrella liability
insurance. SCC shall forward to Customer certificates of such insurance
upon execution of this Agreement and upon any renewal of such insurance
during the term of this Agreement. The certificate(s) shall provide that
(1) the Customer (and its
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 11
participating subsidiaries) be named as an additional insured(s) as their
interest may appear with respect to this Agreement under insurance required
in Section 18.3; (2) thirty (30) days prior written notice of cancellation
of, material change or exclusions in the policy to which certificate(s)
relate shall be given to the Customer; (3) coverage is primary and not
excess of, or contributory with, any other valid and collectible insurance
purchased or maintained by the Customer. SCC shall not commence any work
hereunder until the obligations of the SCC with respect to insurance have
been fulfilled. The fulfillment of such obligations, however, shall not
otherwise relieve the SCC of any liability assumed hereunder or in any way
modify the SCC's obligations to indemnify the Customer.
18.8. SCC shall require its subcontractors who may enter upon Customer's
premises to maintain insurance as described above.
19. SUBCONTRACTORS:
SCC shall obtain Customer's written consent prior to subcontracting any
obligations hereunder. Such requirement shall not apply to purchases of
incidental, standard commercial supplies or raw materials.
20. ADVERTISING; PUBLICITY:
No references to Customer or any party affiliated with Customer or references to
Customer's names, marks, codes, drawings or specifications will be used in any
of SCC's advertising, promotional efforts or any publicity of any kind without
Customer's prior written permission.
21. PLANT AND WORK RULES:
SCC and Customer, while on the premises of the other, shall comply with all
plant rules and regulations including, where required by governmental
regulation, submission of satisfactory clearance from the appropriate
governmental authorities.
22. SETOFF:
All claims for money due or to become due from Customer shall be subject to
deduction or setoff by Customer by reason of any amounts due as the result of
Escalation or Arbitration Procedures pursuant to this Agreement, or other money
due by mutual agreement arising out of this or any other transaction with SCC.
23. TIME IS OF ESSENCE:
Time of performance is of the essence in this Agreement and a substantial and
material term hereof.
24. ASSIGNMENT:
No rights or interests in this Agreement shall be assigned by either Party
without the written permission of the other, which permission shall not be
unreasonably withheld or delayed. No delegation for the performance of Services
or other obligations of SCC shall be made without written permission of
Customer, including the hiring of subcontractors to perform any part of the
Services. Customer reserves the right to assign this Agreement without SCC's
permission to any Affiliate or successor company of Customer, and SCC may assign
the Agreement, with the prior consent of Customer which consent shall not be
unreasonably withheld, to a third party acquiring all or substantially all of
SCC's assets or stock, or by a merger of SCC and a third party.
25. FORCE MAJEURE:
Neither party shall be liable for failure to perform when such failure is caused
by unforeseeable force majeure circumstances. If such circumstances occur, the
party injured by the other's inability to perform may elect to (1) terminate
this Agreement and/or any Order(s) immediately; and/or (2) suspend this
Agreement and/or any Order(s) for the duration of the force majeure
circumstances, and then resume performance under this Agreement and/or any
Order(s). The party experiencing the force majeure circumstances shall cooperate
with and assist the injured party in all reasonable ways to minimize the impact
of such circumstances on the injured party, including assisting in locating and
arranging for substitute performance of the Services.
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 12
26. WAIVER:
Either party's failure to insist on performance of any of the terms or
conditions herein or to exercise any right or privilege, or either party's
waiver of any breach hereunder shall not be construed to be a waiver, or waive
any other terms, conditions, or privileges, whether of the same or similar type.
27. COMPLIANCE WITH LAWS:
27.1. This Agreement and the parties' actions under this Agreement shall
comply with all applicable federal, state, and local laws, rules,
regulations, court orders, and governmental or regulatory agency orders
including the Modification of Final Judgment ("MFJ"), as issued in United
States v. Western Electric Co., et al., Civil Action No. 82-0192, U.S.
District Court for the District of Columbia, and all subsequent orders
issued in or related to that proceeding. Customer is also subject to a
Civil Enforcement Consent Order (CECO).
27.2. Customer's E9-1-1 service is regulated by local Public Service
Commissions ("PUC"). These commissions can change service requirements that
may impact the way E9-1-1 Services are delivered. SCC acknowledges this and
agrees to be responsive to PUC inquiries, hearings, and demands for
information and testimony, and will support Customer in its dealings with
PUCs as it pertains to any aspect of the E9-1-1 Services provided under
this Agreement.
27.3. Unless exempt under the rules and regulations of the Secretary of
Labor or other proper authority, this Agreement is subject to applicable
laws and orders relating to equal opportunity and nondiscrimination in
employment as shown in the attached Exhibit C, entitled "Nondiscrimination
and Compliance Agreement."
27.4. SCC shall obtain and maintain at its own expense all permits and
licenses required by law with respect to any portion of the Services, and
shall give all notices, pay all fees and comply with all laws, ordinances,
rules and regulations relating to its performance obligations specified
herein.
27.5. SCC shall be solely responsible for the payment of all payroll and
other taxes applicable to it. Customer will pay only applicable sales or
use taxes on Services and personal property furnished in accordance with
this Agreement. All such taxes shall be separately stated on SCC's invoice.
27.6. Both parties shall adhere to the U.S. Export Administration Laws and
Regulations and shall not export or re-export any Confidential Information,
technical data, products or software received from the other party, or any
direct product of such Confidential Information, technical data, products
or software; to any person or company who is a legal resident of or is
controlled by a legal resident of any proscribed country listed in Section
779.4(f) of the U.S. Export Administration Regulations (as the same may be
amended from time to time), unless properly authorized by the U.S.
Government. This requirement shall survive the expiration, termination or
cancellation of this Agreement.
28. SEVERABILITY:
In the event that a court or a governmental or regulatory agency with proper
jurisdiction determines that this Agreement or a provision of this Agreement is
unlawful respectively, this Agreement, or that provision of this Agreement, to
the extent it is unlawful, shall terminate. Further, if Customer determines that
this Agreement or a provision of this Agreement is inconsistent with the MFJ or
CECO, this Agreement or that provision shall terminate upon written notice to
SCC to that effect. If a provision of this Agreement is terminated but the
parties can continue legally, commercially and practicably without the
terminated provision, the remainder of this Agreement shall continue in effect.
No additional liability shall attach to either party as a result of any such
termination. 29.
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 13
29. ESCALATION:
Any dispute between the parties under the terms of this Agreement shall attempt
to be resolved first by the Project Managers as defined in Exhibit A to the
Agreement. It is the understanding of both parties that in the event of a
dispute that cannot be resolved by the Project Managers, then it shall be
escalated up the levels of management for each party. If the senior management
of both parties cannot resolve the dispute, then Section 30 of this Agreement
shall become effective.
30. DISPUTE RESOLUTION:
30.1. If any claim, controversy or dispute of any kind or nature whatsoever
arises between the parties, their agents, employees, officers, directors or
affiliated agents ("Dispute") and such Dispute cannot be settled through
negotiation as required by Section 29, Escalation, the parties agree to
attempt to settle the Dispute through nonbinding mediation under the
Commercial Mediation Rules of the American Arbitration Association ("AAA").
If the parties cannot settle the matter through mediation, then any Dispute
shall be resolved by arbitration as provided in this Article. Federal law
shall govern the arbitrability of all claims. Notwithstanding the
foregoing, the parties may cancel or terminate this Agreement in accordance
with its terms and conditions without being required to follow the
procedures set forth in this Article.
30.2. A single arbitrator engaged in the practice of law, who is
knowledgeable about the subject matter of this Agreement and the matter in
Dispute, shall conduct the arbitration under the then current rules of the
AAA, unless otherwise provided herein. The arbitrator shall be selected in
accordance with AAA procedures from a list of qualified people maintained
by the AAA. The arbitration shall be conducted at Denver, Colorado and all
expedited procedures prescribed by the AAA rules shall apply. The laws of
Colorado shall govern the construction and interpretation of this
Agreement.
30.3. Either party may request from the arbitrator injunctive relief to
maintain the status quo until such time as the arbitration award is
rendered or the Dispute is otherwise resolved. The arbitrator shall not
have authority to award punitive damages.
30.4. Each party shall bear its own costs and attorneys' fees, and the
parties shall share equally the fees and expenses of the arbitrator. The
arbitrator's decision and award shall be final and binding, and judgment
upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
30.5. If any party files a judicial or administrative action asserting
claims subject to arbitration, as prescribed herein, and another party
successfully stays such action and/or compels arbitration of said claims,
the party filing said action shall pay the other party's costs and expenses
incurred in seeking such stay and/or compelling arbitration, including
reasonable attorneys' fees.
31. SEVERAL LIABILITY:
The term Customer as used herein may be applicable to one or more parties and
the singular shall include the plural. If more than one party is referred to as
Customer herein, then their obligations and liabilities shall be joint and
several. Notwithstanding the foregoing, any and all applicable discounts and/or
credits shall be based upon the combined forecasts and/or purchases made by all
Customers under this Agreement.
32. NONEXCLUSIVE AGREEMENT:
It is expressly understood and agreed that this Agreement does not grant to SCC
any exclusive privileges or rights and Customer may contract with other
suppliers for the procurement of comparable services.
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 14
33. REMEDIES CUMULATIVE:
The remedies provided herein shall be cumulative and in addition to any other
remedies provided by law or equity.
34. AMENDMENTS:
No change or modifications of any terms or conditions herein shall be valid or
binding on either party unless made in writing and signed by U S WEST Business
Resources, Inc., as agent for Customer and an authorized representative of SCC.
35. LIMITATION OF LIABILITY
35.1. U S WEST Business Resources, Inc. is acting as agent in the
negotiation, execution and administration of this Agreement, but U S WEST
Business Resources, Inc. shall not in any event be liable for the
performance or nonperformance of this Agreement or any Order(s) by
Customer, except to the extent that U S WEST Business Resources, Inc. is
Customer.
35.2. SCC's liability on any claim for damages arising out of SCC's
performance or non-performance under this Agreement, except as provided in
Section 17, Patent, Trademark, Copyright or Trade Secrets Indemnification,
shall be limited to direct damages and shall not exceed $[ ]
36. SURVIVAL:
The provisions of this Agreement that, by their sense and context, are intended
to survive performance by either or both parties shall also survive the
completion, expiration, termination or cancellation of this Agreement or any
Order(s).
37. BUSINESS CONDUCT:
Customer has adopted and follows a Code of Business Ethics and Conduct which
imposes on itself and its employees an obligation to deal with all suppliers and
contractors in a fair and open manner in accordance with the highest standards
of integrity. SCC and Customer each represents and warrants that it shall
perform to the highest level of business and professional ethics, and that it
has not made or received and shall not make or receive any payments, gifts,
favors, entertainment, secret commissions or hidden gratuities for the purpose
of securing preferential treatment or action from or to any party in connection
with this Agreement or the Services. Any breach or failure with respect to this
representation and warranty by either party shall constitute a material breach
of this Agreement.
38. NOTICES:
Where written notices, demands, or other communications are required under this
Agreement to be made in writing, they shall be deemed duly given when made in
writing and delivered in hand, or upon receipt when properly addressed
return-receipt-requested and delivered by United States Postal Service or other
delivery service to the following addresses:
Customer: U S WEST Communications, Inc.
Director Public Safety Group
150 South Fifth Street, Suite 700
Minneapolis, Minnesota 55402
with a copy to:
[ ]
U S WEST Communications, Inc.
7800 E. Orchard, Suite 390
Englewood, Colorado 80111
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 15
SCC: SCC COMMUNICATIONS CORP.
6285 Lookout Road
Boulder, Colorado 80301-3343
Attn: Chief Financial Officer
FAX: 303-581-0900
Addresses may be changed by written notice to the parties.
39. OWNERSHIP AND LICENSE OF SOFTWARE:
39.1. Nothing in this Agreement shall be construed to grant any ownership
or license to Customer of the SCC provided hardware and software products
used in providing the Services under this Agreement. Nothing in this
Agreement shall be construed to grant to SCC any ownership or rights to any
Customer provided data provided to SCC for use in the provision of Services
to Customer.
39.2. Any programs, processes, or technical information which is developed
by SCC as a result of providing Services to Customer, shall be owned by
SCC. Nothing in this Agreement shall be construed to grant to Customer any
ownership of such information, unless otherwise agreed to in writing,
signed by both parties, and made a part of this Agreement.
40. M/WBE SUBCONTRACTING PLAN:
40.1. Support of Minority and Women Businesses is part of Customer's
ongoing business strategy. To effectively carry out policy objectives in
this area, Customer has instituted the Minority and Women Business
Enterprise (M/WBE) Subcontracting Plan.
40.2. In compliance with such plan, SCC agrees and commits to subcontract
in accordance with the subcontracting plan components and requirements
attached to and made part of this Agreement as Exhibit D. SCC's specific
subcontracting plan shall be attached to and made part of this Agreement as
an attachment to the same Exhibit D identified above.
41. OTHER PROVISIONS:
Both parties agree that any additional negotiations with regard to New Services,
Orders, etc., not explicitly covered under this Agreement, including the
attached Exhibits, will be conducted with fairness and to the mutual benefit of
both parties.
42. ENTIRE AGREEMENT:
42.1. This Agreement, together with all referenced attachments and Exhibits
shall constitute the entire Agreement between the parties with respect to
the subject matter of this Agreement. This Agreement supersedes all prior
oral and written communications, agreements and understandings of the
parties with respect to the subject of this Agreement.
42.2. The final Scope of Work shall include a detailed project plan,
detailed service plan with Service thresholds and penalties, a detailed
network design, a detailed data security plan, and other documented
agreements between the parties. In the event such final Scope of Work is
not completed and mutually agreed to by January 31, 1996, or another
mutually agreed extension, then either party may terminate this Agreement.
In the event of a termination pursuant to this Section 42, SCC shall refund
to Customer the NRE Fee paid pursuant to Exhibit B, less reasonable direct
costs incurred by SCC to the date of termination. Upon completion, the
final Scope of Work shall be attached to and made a part of this Agreement
as an attachment to Exhibit A.
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 16
The parties intending to be legally bound have caused this Agreement to be
executed by their duly authorized representatives.
U S WEST COMMUNICATIONS, INC. SCC COMMUNICATIONS CORP.
/s/ S. D. TRUJILLO /s/ GEORGE HEINRICHS
- --------------------------------- ---------------------------------
(Authorized Signature) (Authorized Signature)
S. D. TRUJILLO George Heinrichs
- --------------------------------- ---------------------------------
(Print or Type Name of Signatory) (Print or Type Name of Signatory)
PRESIDENT AND CEO President and CEO
- --------------------------------- ---------------------------------
(Title) (Title)
DECEMBER 29, 1995 December 28, 1995
- --------------------------------- ---------------------------------
(Execution Date) (Execution Date)
Confidential. Disclose and distribute solely to
those individuals who have a need to know.
<PAGE> 17
SCC/U S WEST AGREEMENT NO. 9500050239
- --------------------------------------------------------------------------------
EXHIBIT A - SCOPE OF WORK
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. INTRODUCTION AND DESCRIPTION OF SERVICES.................................1
1.1. MS SYSTEM..............................................................1
1.2. SELECTIVE ROUTING/ALI SYSTEM...........................................2
1.3. NETWORK PROVISIONING AND MONITORING....................................3
1.4. PERFORMANCE METRICS....................................................3
2. IMPLEMENTATION/PROJECT PLAN..............................................6
2.1. ADDRESS ISSUES/SAG.....................................................6
2.2. ESZ CREATION...........................................................6
2.3. ESN TABLE MAINTENANCE..................................................6
2.4. WIRE CENTER OVERLAP ISSUES.............................................6
2.5. MSAG CREATION..........................................................6
2.6. INITIAL DATABASE CREATION..............................................6
2.7. INTERFACE WITH OTHER LECS..............................................7
2.8. DATA ANALYSIS..........................................................7
2.9. DATABASE MAINTENANCE...................................................7
2.10. ERROR CORRECTION......................................................7
2.11. MSAG PRINT/TAPE DISTRIBUTION..........................................7
2.12. PBX INTERFACES........................................................7
2.13. NO RECORD FOUND MISROUTE INVESTIGATION................................8
2.14. DATABASE DISCREPANCY INVESTIGATION....................................8
2.15. DATABASE RECONCILIATION...............................................8
2.16. SWITCH CONSOLIDATIONS.................................................8
2.17. NPA SPLITS/OVERLAYS...................................................8
2.18. NETWORK PLANNING......................................................8
2.19. DATABASE MAINTENANCE.................................................10
2.20. OVERALL NDSC DATA ANALYST COORDINATION...............................10
2.21. METHODS AND PROCEDURES...............................................10
2.22. TEST SOFTWARE CHANGES................................................10
2.23. PSAP PROBLEM INVESTIGATION...........................................10
2.24. SCHEDULE DATABASE RECONCILIATION.....................................10
2.25. DATABASE PROBLEM INVESTIGATION (2ND TIER)............................10
2.26. TECHNICAL SUPPORT....................................................11
2.27. APPLICATION SUPPORT..................................................11
2.28. SOFTWARE DEVELOPMENT.................................................11
2.29. PROBLEM INVESTIGATION/RESOLUTION.....................................11
2.30. APPLICATION SECURITY.................................................12
2.31. TABLE MAINTENANCE....................................................12
2.32. OPERATIONS...........................................................12
2.33. COMPUTER OPERATIONS..................................................12
2.34. SUPPORT DATA CENTER ISSUES...........................................12
2.35. CENTRALIZED MONITORING - SYSTEMS.....................................12
2.36. CENTRALIZED MONITORING - FACILITIES..................................12
2.37. MONITOR 9-1-1 AFFECTING DATA CIRCUIT ALARMS..........................13
2.38. PSAP TO ALI NODE CIRCUIT TESTING.....................................13
2.39. ALI NODE TO ALI NODE CIRCUIT TESTING.................................13
2.40. TROUBLE TRACKING/ESCALATION..........................................13
2.41. INTERFACE WITH APPLICATION SUPPORT...................................13
</TABLE>
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<TABLE>
<S> <C>
2.42. INTERFACE WITH DATA CENTERS..........................................13
2.43. START/STOP ALI PROCESSES.............................................14
2.44. PERFORM EMERGENCY DATABASE QUERIES...................................14
2.45. SPECIAL SERVICE ARRANGEMENTS.........................................14
2.46. RESOLUTION OF 9-1-1 INTERFACE ISSUES.................................14
2.47. RELATED TASKS AND RESPONSIBILITIES...................................14
3. SUPPORT PLAN AND ESCALATION PROCEDURES..................................17
4. DE-IMPLEMENTATION PLAN..................................................17
</TABLE>
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EXHIBIT B - PRICE AND PAYMENT SCHEDULE
1. NON-RECURRING ENGINEERING FEE
A one time Non-Recurring Engineering ("NRE") Fee is due and payable within
fifteen (15) days of contract signing.
<TABLE>
<S> <C>
NRE ............................................[ ]
</TABLE>
2. MONTHLY RECURRING RECORD CHARGES
Monthly Recurring Charges ("MRC") are billed in arrears per record as shown
below. Billing to Customer shall begin upon Trial TN (Subscriber Name, Address,
and Telephone Number record) Load pursuant to an agreed to detailed project plan
included in Exhibit A. The MRC includes Base Services and those Additional
Services listed below.
<TABLE>
<S> <C>
Base Services - MRC..............................................[ ]
Additional Services included:
NDSC to ALI Network provisioning.........................[ ]
PSAP Circuit Monitoring..................................[ ]
ALI to ALI Circuit Monitoring............................[ ]
ALI to 5ESS Circuit Monitoring...........................[ ]
NOSC to ALI Circuit Monitoring...........................[ ]
Elink Services...........................................[ ]
One Additional Primary Metric:
ALI to PSAP Circuit Availability.........................[ ]
One Additional Report:
Mis-routed Calls.........................................[ ]
Interface to Wireless Device Interface (WDI)..................[ ]
Total per database record...................................[ ]
1995 Contract Signing Discount............................[ ]
Monthly Record Charge (1995 Price)..........................[ ]
PSIALI Workstation Software
NRE per site up to 110 sites.............................[ ]
NRE per site after 110 sites.............................[ ]
PS/ALI Database Record Maintenance
Monthly per database record.................................[ ]
Inbound correctable SOI database updates..................[ ]
o up to 10% errors.........................................[ ]
o 10 - 11% errors, trued annually, per record...................[ ]
o greater than 11% errors, trued annually, per record...........[ ]
</TABLE>
No charges for the above error rates will be incurred until twelve (12) months
from full implementation. SCC is exempt from Performance Metrics' affected by
inbound correctable error's exceeding [ ].
<TABLE>
<S> <C>
Existing US WEST PS/ALI
customer data conversion.................................[ ]
Inbound correctable PSIALI database errors....................[ ]
Geocoding Services:
New MSAG creation, per segment.................................[ ]
Geocoding of existing records, per segment.....................[ ]
</TABLE>
U S WEST reserves the fight to determine if a new MSAG will be created
with geocodes or as a flat file. Due to variables tied to availability
of data and population density, price will be negotiated on a case by
case basis at a later date.
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CONFIDENTIAL - SCCAIS WEST
<PAGE> 36
U S WEST/SCC AGREEMENT NO. 9500050239
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EXHIBIT C - NONDISCRIMINATION AND COMPLIANCE AGREEMENT
This Exhibit C is attached to and made part of that certain Agreement for
Services No.________ dated December _____, 1995, (the "Agreement") by and
between the U S WEST Company(ies) defined in the Agreement ("Customer"), and SCC
COMMUNICATIONS CORP., ("SCC").
During the performance of this Agreement SCC shall comply, to the extent that
this Agreement is subject to applicable provisions, with the following:
Executive Order No. 11246, Executive Order No. 11625, Executive Order No. 12138,
Executive Order No. 11701, Executive Order No. 11758, Section 503 of the
Rehabilitation Act of 1973 as amended by P193516, Vietnam Era Veteran's
Readjustment Assistance Act of 1974 and the rules, regulations and relevant
Orders of the Secretary of Labor pertaining to the Executive Orders and Statutes
listed above.
Monetary amounts of contractual or purchasing relationships and the number of
SCC's employees determine which Executive Order provisions are applicable. The
following clauses shall be considered a part of this Agreement and all Orders
expected to exceed $2,500 only. The following table lists these clauses:
CLAUSES*
<TABLE>
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ANNUAL Contract Value 1 2 3 4 5 6 7 8 9 10 11
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$2,500 - $ 10,000 x
$10,000 - $ 50,000 x x x x x x x x
$50,000 - $ 500,000 x x x(2) x x x x x x x(3)
$500,000 - $ 1,000,000 x x x(1) x(2) x x x x x x x(3)
$1,000,000 or More x x x(1) x(2) x x x x x x x(3)
</TABLE>
(1) Applies only for businesses with 50 or more employees and
federal contract of $500,000.
(2) Applies only for business with 100 or more employees and this
Agreement or an Order of $50,000 or more.
(3) Applies only if this Agreement or an Order exceeds $100,000 or
a facility to be used has been the subject of a conviction
under the Clean Air Act of the Federal Water Pollution Control
Act and is listed by EPA.
*CLAUSES
1. EQUAL EMPLOYMENT OPPORTUNITY PROVISIONS (TO BE INCLUDED IN BOTH THE
AGREEMENT AND ORDERS).
In accordance with Executive Order 11246 dated September 24, 1965 as
amended and Part 60 1 of Title 41 of the Code of Federal Regulations
(Public Contracts and Property Management, Office of Federal Contract
Compliance, Obligations of SCCs and Subcontractors), as amended, the
parties incorporate herein by this reference the regulations and
contract clauses required by those provisions to be made a part of
government contracts and subcontracts.
2. CERTIFICATION OF NON-SEGREGATED FACILITIES.
SCC certifies that it does not and will not maintain any facilities it
provides for its employees in a segregated manner or permit its
employees to perform their services at any location under its control,
where segregated facilities are maintained, and that it will obtain a
similar certification prior to the award of any nonexempt subcontract.
3. CERTIFICATION OF AFFIRMATIVE ACTION PROGRAM.
SCC certifies that it has developed and is maintaining an Affirmative
Action Plan as required by Part 60 2 of Title 41 of the Code of Federal
Regulations.
4. CERTIFICATION OF FILING OF EMPLOYERS INFORMATION REPORTS.
SCC shall file annually on or before the 31st day of March complete and
accurate reports on Standard Form 100 (EEO 1) or such forms as may be
promulgated in its place.
5. UTILIZATION OF MINORITY AND WOMEN'S BUSINESS ENTERPRISES.
a) It is the policy of the government that minority and women's
business enterprises shall have the maximum practicable
opportunity to participate in the performance of government
contracts.
b) SCC shall use its best efforts to carry out this policy in the
award of its subcontracts to the fullest extent consistent
with the efficient performance of this Agreement. As used in
this Agreement "minority business enterprise" means a business
at least 50% of which is owned, controlled and operated by
minority group members, or in the case of publicly owned
business at least 51% of the stock of which is owned by
minority group members. A women's business enterprise means a
business which is 51% owned, controlled and operated by women.
For the purpose of this definition, minority group members are
Blacks, Hispanics, Asian Pacific Islanders, American Indians
and Alaskan Natives. SCC may rely on written representation by
subcontractors regarding their status as minority or women's
business enterprises in lieu of an independent investigation.
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CONFIDENTIAL - SCC/U S WEST
<PAGE> 37
U S WEST/SCC AGREEMENT NO. 9500050239
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6. UTILIZATION OF LABOR SURPLUS AREA CONCERNS.
a) It is the policy of the government to award contracts to labor
surplus area concerns that agree to perform substantially in
labor surplus areas where this can be done consistent with the
efficient performance of the Agreement and at prices no higher
than are obtainable elsewhere. SCC shall use its best efforts
to place its subcontracts in accordance with this policy.
b) In complying with paragraph a) of this clause and with
paragraph b) of Clause 10, "UTILIZATION OF SMALL BUSINESS
CONCERNS" SCC in placing its subcontracts shall observe the
following order of preference:
(1) small business concerns that are labor surplus area
concerns;
(2) other small business concerns; or
(3) other labor surplus area concerns.
"Labor surplus area" means a geographical area identified by the
Department of Labor as an area of concentrated unemployment,
underemployment or an area of labor surplus. "Labor surplus area
concern" means a concern that SCC together with its first-tier
subcontractors will perform substantially in labor surplus areas.
"Perform substantially in labor surplus area" means that the costs
incurred on account of manufacturing, production, or appropriate
services in labor surplus areas exceed 50% of the Agreement price.
7. MINORITY AND WOMEN'S BUSINESS ENTERPRISES AND LABOR SURPLUS AREA
SUBCONTRACTING PROGRAM.
a) SCC shall establish and conduct a program which will enable
minority and women's business enterprises, as defined in
Clause 5, "UTILIZATION OF MINORITY AND WOMEN'S BUSINESS
ENTERPRISES", to be considered fairly as subcontractors and
suppliers under the Agreement and which will encourage labor
surplus area concerns, as defined in clause 6, "UTILIZATION OF
LABOR SURPLUS AREA CONCERNS" to compete for subcontracts
within their capabilities. In this connection SCC shall:
(1) designate a liaison officer who will: (i) maintain
liaison with duly authorized representative of the
government of labor surplus area matters; (ii)
supervise compliance with the Utilization of Labor
Surplus Area Concerns clause; and (iii) administer
SCC minority and women's business enterprises and
labor surplus area programs.
(2) provide adequate and timely consideration of the
potentialities of known minority and women's business
enterprises and of known labor surplus area concerns
in all "make or buy" decisions.
(3) assure that known minority and women's business
enterprises and known labor surplus area concerns
will have an equitable opportunity to compete for
subcontracts, particularly by arranging
solicitations, time for preparation of bids,
quantities, specifications and delivery schedules so
as to facilitate the participation of minority and
women's business enterprises and labor surplus area
concerns.
(4) maintain records showing: (i) procedures which have
been adopted to comply with the policies set forth in
this clause including the establishment of a source
list of minority and women's business enterprises and
reports of subcontract awards to labor surplus area
concerns; (ii) awards to minority and women's
business enterprises on the source list (awards to
women's firms listed by minority and non-minority);
and (iii) specific efforts to identify and award
contracts to minority and women's business
enterprises.
(5) include the utilization of Minority and Women's
Business Enterprises and the Labor Surplus Area
Concerns clauses in subcontracts which offer
substantial minority and women's business enterprises
and labor surplus area subcontracting opportunities.
(6) cooperate with the government's contracting officer
in any studies and surveys of SCC's minority and
women's business enterprises procedures and practices
that the contracting officer may from time to time
conduct.
(7) submit periodic reports of subcontracting to known
minority and women's business enterprises with
respect to the records referred to in subparagraph
(4) above, in such a form and manner and at such time
(not more often than quarterly) as the contracting
officer may prescribe.
b) SCC shall insert in any subcontract hereunder which may exceed
$500,000 (or with regard to WBE, $1,000,000 in the case of
contracts for the construction of any public facility and
which offer substantial subcontracting possibilities)
provisions which shall conform substantially to the language
of this arrangement, including this paragraph b).
8. SPECIAL DISABLED VETERANS AND VETERANS OF THE VIETNAM ERA AFFIRMATIVE
ACTION AND LIST OF EMPLOYMENT OPENINGS FOR VETERANS.
In accordance with Executive Order 11701, dated January 24, 1973, 38
U.S.C. Section 2012 and Part 60 250 of Title 41 of the Code of Federal
Regulations, as may be amended from time to time, the parties
incorporate herein by this reference the regulations and contract
clauses required by those provisions to be made a part of government
contracts and subcontracts.
9. EMPLOYMENT OF THE HANDICAPPED.
In accordance with Executive Order 11758, dated January 15, 1974, and
Part 60 741 of Title 41 of the Code of Federal Regulations as may be
amended from time to time, the parties incorporate herein by this
reference the regulations and contract clauses required by those
provisions to be made a part of government contracts and subcontracts.
10. UTILIZATION OF SMALL BUSINESS CONCERNS AND SMALL BUSINESS CONCERNS
OWNED AND CONTROLLED BY SOCIALLY AND ECONOMICALLY DISADVANTAGED
INDIVIDUALS.
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Exhibit C Page C - 2
CONFIDENTIAL - SCC/U S WEST
<PAGE> 38
U S WEST/SCC AGREEMENT NO. 9500050239
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a) It is the policy of the United States that small business
concerns and small business concerns owned and controlled by
socially and economically disadvantaged individuals shall have
the maximum practicable opportunity to participate in the
performance of contracts let by the Federal agency.
b) SCC hereby agrees to carry out this policy in the awarding of
subcontracts to the fullest extent consistent with the
efficient performance of this Agreement. SCC further agrees to
cooperate in any studies or surveys as may be conducted by the
Small Business Administration or the contracting agency which
may be necessary to determine the extent of SCC's compliance
with this clause.
c) (1) As used in this Agreement the term "small business
concern" shall mean a small business as defined
pursuant to Section 3 of the Small Business Act and
relevant regulations promulgated pursuant thereto.
(2) The term "small business concern owned and controlled
by social and economically disadvantaged individuals"
means a small business concern: (i) which is at least
51% owned by one or more socially and economically
disadvantaged individuals, or in the case of any
publicly owned business, at least 51% of the stock of
which is owned by one or more socially and
economically disadvantaged individuals; and (ii)
whose management and daily business operations are
controlled by one or more of such individuals. SCC
shall presume that socially and economically
disadvantaged individuals include Black Americans,
Hispanic Americans, Native Americans, Asian Pacific
Americans, and other minorities or any other
individual found to be disadvantaged by the Small
Business Administration pursuant to section 8(a) of
the Small Business Act.
d) SCC acting in good faith may rely on written representation by
their subcontractors regarding their status as a small
business concern or a small business concern owned and
controlled by socially and economically disadvantaged
individuals.
11. CLEAN AIR AND WATER. SCC agrees as follows:
a) SCC shall comply with all the requirements of Section 114 of
the Clean Air Act as amended (42 U.S.C. 1857, et seq., as
amended by Pub L 91 604) and Section 308 of the Federal Water
Pollution Control Act (33 U.S.C. 1251, et seq., as amended by
Pub L 92 500), respectively, relating to inspections,
monitoring, entry reports, information, as well as other
requirements specified in Section 114 and Section 30 of the
Air Act and the Water Act, respectively, and all regulations
and guidelines issued thereunder before the execution of the
Agreement.
b) SCC agrees that no portion of the work required by this
Agreement will be performed at a facility listed on the
Environmental Protection Agency List of Violating Facilities
on the date when the Agreement was executed unless and until
the EPA eliminates the name of such facility or facilities
from such listing.
c) SCC shall use its best efforts to comply with clean air
standards and clean water standards at the facility in which
the Agreement is being performed.
d) SCC agrees to insert the substance of the provisions of this
clause into any nonexempt subcontract, including this
paragraph.
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Exhibit C Page C - 3
CONFIDENTIAL - SCC/U S WEST
<PAGE> 39
U S WEST/SCC AGREEMENT NO. 9500050239
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EXHIBIT D - M/WBE SUBCONTRACTING PLAN
This Exhibit ___ is attached to and made part of that certain Agreement for
Services No. ______, dated _______ 199___ ("Agreement") by and between the U S
WEST Company(ies) defined in the Agreement ("Customer") and
______________________________________________________________________ ("SCC").
The parties hereto agree that SCC's M/WBE Subcontracting Plan, dated , (the
"Subcontracting Plan") is attached hereto and incorporated herein. SCC agrees to
follow the Subcontracting Plan and the requirements of this Exhibit and to
provide the information to Customer as detailed in this Exhibit.
A. REQUIREMENTS
Note: Definitions and assumptions for M/WBE firms shall be as described in
subsequent pages of this Exhibit.
SCC agrees to meet the following minimum requirements, and shall provide at
least the following reports to Customer:
1. SCC shall render written quarterly Subcontracting Plan reports (the
"Subcontracting Reports") within ten days after the end of each
calendar quarter, to Customer's address designated for giving official
notices under the Agreement.
SCC's quarterly Subcontracting Reports shall detail SCC's actual
results under the Subcontracting Plan and this Exhibit during that
quarter. The quarterly subcontracting reports shall contain all the
following information:
1.1 Total amount invoiced to each U S WEST subsidiary under this
Agreement and the total invoiced to Customer under this
Agreement, for the quarter;
1.2 The portion of the total amount invoiced to Customer which was
subcontracted to M/WBE firms during the quarter being
reported, stated both in total dollars and as a percent of
total; and
1.3 The name and M/WBE status and type of each M/WBE firm under
subcontract with SCC during the quarter, along with the
invoiced dollar amount subcontracted to each M/WBE firm during
the quarter. The invoiced dollar amount subcontracted to each
M/WBE firm during the quarter shall be determined by taking
the total amount invoiced to Customer under this Agreement for
the quarter, and identifying those invoiced amounts which will
be paid to each M/WBE firm under subcontract.
2. SCC commits to subcontract to M/WBE firms at least ______ percent of
the total amounts invoiced to Customer under this Agreement.
3. SCC will subcontract to M/WBE firms the following types of products
and/or Services:
3.1
3.2
4. SCC will use the following methods to identify potential M/WBE
subcontractors:
4.1
4.2
5. The name, title and duties of the administrator(s) of SCC's M/WBE
certification and M/WBE subcontracting program(s) are as follows:
5.1
5.2
6. SCC agrees that it will ensure that all M/WBE subcontractors meet bona
fide criteria to qualify as M/WBE firms, through SCC's documented
certification process.
7. SCC shall provide Customer with a description of SCC's certification
process and criteria to authenticate the M/WBE status of its
subcontractors. SCC's certification process and criteria must be
acceptable to Customer. Existing certification by certain agencies
recognized by Customer (list available upon request) will be
acceptable.
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Exhibit D Page D - 1
EXHIBIT D - M/WBE SUBCONTRACTING PLAN
<PAGE> 40
U S WEST/SCC AGREEMENT NO. 9500050239
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8. SCC agrees to make available to Customer all M/WBE data and any other
information required by Customer relating to M/WBE certification.
8.1 SCC agrees to allow Customer to audit SCC's certification
process.
8.2 SCC shall retain all records pertaining to M/WBE certification
for a period of four years from the date of termination of
this Agreement. Such records shall include at least:
8.2.1 Source lists for M/WBE's;
8.2.2 Organizations contacted;
8.2.3 Complete records relating to the certification
process and its application;
8.2.4 All criteria used in the decision to select/not
select an M/WBE; and
8.2.5 Records to support all subcontract awards and
describing the criteria used.
B. DEFINITIONS AND ASSUMPTIONS
1. Definition of Minority
1.1 "Black Americans" includes persons having origins in any of
the black racial groups of Africa.
1.2 "Hispanic Americans" includes persons of Mexican, Puerto
Rican, Cuban, Central or South American, or other Spanish
culture of origin, regardless of race.
1.3 "Native Americans" includes persons who are American Indians,
Eskimos, Aleuts, or Native Hawaiians.
1.4 "Asian & Asian Subcontinent-Pacific Americans" includes
persons whose origins are from Japan, China, Taiwan, Korea,
Vietnam, Laos, Cambodia, the Philippines, Samoa, Guam, the
U.S. Trust Territories of the Pacific and the Northern
Marianas.
1.5 "Other Minority or Ethnic Groups" includes persons recognized
by the Small Business Administration pursuant to section 8(a)
of the Small Business Act.
2. Definition of Minority Owned Business Enterprise
A Minority Owned Business Enterprise is any business which is 51% owned
by one or more minorities who meet the following criteria:
2.1 have ultimate fiscal and legal responsibility for the
business;
2.2 manage the daily operations of the business; and
2.3 were either the original majority owner(s) of the existing
business or verified purchaser(s) of the existing business.
Note: Transfer of ownership or purchase of the existing
business by a minority from a non-minority, who remains
actively involved in the operation of the business, does not
qualify as a Minority Owned Business Enterprise.
3. Definition of Woman Owned Business Enterprise
A Woman Owned Business Enterprise is any business which is 51% owned by
one or more women who meet the following criteria:
3.1 have ultimate fiscal and legal responsibility for the
business;
3.2 manage the daily operations of the business; and
3.3 were either the original majority owner(s) of the existing
business or verified purchaser(s) of the existing business.
Note: Transfer of ownership or purchase of the existing
business by a woman or minority woman from a non-minority
male, who remains actively involved in the operation of the
business, does not qualify as a Woman Owned Business
Enterprise.
- --------------------------------------------------------------------------------
Exhibit D Page D - 2
EXHIBIT D - M/WBE SUBCONTRACTING PLAN
<PAGE> 41
U S WEST/SCC AGREEMENT NO. 9500050239
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4. An eligible minority/woman owned business must be an independent
business. A business is not independent if another business controls or
has the power to control the business, or directs or influences the
operation of the business.
5. The minority/woman owners' contributions of capital or expertise to
acquire interests in the firm shall be real and substantial. The
following shall not be considered valid examples of capital
contributions:
5.1 A promise to contribute capital;
5.2 A note payable to the firm or its owners who are not minority
or woman; or
5.3 The mere participation as an employee.
6. A firm engaged in the procurement of material and supplies shall be
significantly and substantially involved in the production or have
evidence of movement of inventory on hand in and out of his/her own
facility (leased, owned, or rented) to effectively meet contractual
obligations.
- --------------------------------------------------------------------------------
Exhibit D Page D - 3
EXHIBIT D - M/WBE SUBCONTRACTING PLAN
<PAGE> 1
Confidential Treatment Request
EXHIBIT 10.8
[ ] Material indicated by this mark has been
deleted pursuant to a request for confidential
treatment, and has been filed separately.
SERVICES AGREEMENT NO. PR-9026-L
BETWEEN
SCC COMMUNICATIONS CORP.
AND
BELLSOUTH TELECOMMUNICATIONS, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION NAME PAGE NUMBER
------------ -----------
<S> <C> <C> <C>
SECTION 1. AFFILIATED COMPANIES 1
SECTION 2. TERM OF AGREEMENT 1
SECTION 3. EMERGENCY SERVICES 4
SECTION 4. TERMS OF PAYMENT 4
SECTION 5. PAYMENT AND RECORDS 4
SECTION 6. INVOICING 5
SECTION 7. REPRESENTATIVES 5
SECTION 8. REPORTS 5
SECTION 9. RECORDS AND AUDITS 6
SECTION 10. BUYER'S INFORMATION 6
SECTION 11. SELLER'S INFORMATION 7
SECTION 12. PATENT AND OTHER PROPRIETARY
RIGHTS INFRINGEMENT 7
SECTION 13. TAX 7
SECTION 14. ASSIGNMENT BY SELLER 8
SECTION 15. ASSIGNMENT BY BUYER 9
SECTION 16. LICENSES 9
SECTION 17. SUPPLIER OVERDEPENDENCY 9
SECTION 18. WARRANTY FOR EMERGENCY SERVICES 10
SECTION 19. NON-EXCLUSIVE RIGHTS 10
SECTION 20. PUBLICITY 10
SECTION 21. PERFORMANCE OF WORK 10
SECTION 22. INDEPENDENT CONTRACTOR 11
SECTION 23. SECURITY 11
SECTION 24. NONDISCRIMINATION COMPLIANCE 12
SECTION 25. CONFLICT OF INTEREST 12
SECTION 26. CHOICE OF LAW/VENUE 13
SECTION 27. FACILITY RULES AND GOVERNMENT CLEARANCE 14
SECTION 28. RIGHT OF ACCESS 14
SECTION 29. DEFAULT 14
SECTION 30. COMPLIANCE WITH LAWS 14
SECTION 31. RELEASES VOID 15
SECTION 32. NON-WAIVER 15
SECTION 33. SEVERABILITY 15
SECTION 34. CONTINGENCY 15
SECTION 35. INSURANCE 16
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION NAME PAGE NUMBER
------------ -----------
<S> <C> <C>
SECTION 36. INDEMNITY 16
SECTION 37. SURVIVAL OF OBLIGATIONS 18
SECTION 38. NOTICES 18
SECTION 39. SECTION HEADINGS 19
SECTION 40. INCORPORATION BY REFERENCE 20
SECTION 41. ENTIRE AGREEMENT 20
</TABLE>
<PAGE> 4
This agreement (hereinafter "Agreement") is made by and between
BELLSOUTH TELECOMMUNICATIONS, INC., a Georgia corporation,
(hereinafter "Buyer"), and SCC COMMUNICATIONS CORP., a Delaware
corporation, (hereinafter "Seller").
Whereas desirous of obtaining advice and assistance for
E9-1-1 associated consultant, professional, or database management
services (the "Emergency Services") to be provided by Seller which has
sufficient expertise and experience in rendering such Emergency
Services to meet the particular needs of Buyer. The scope of this
agreement does not include software and/or software products
acquisition or software development.
NOW, THEREFORE, Buyer and Seller enter into this Agreement on the
following terms and conditions.
SECTION 1. AFFILIATED COMPANIES
1.01 An Affiliated Company is defined herein as BellSouth corporation
or any company that is owned in whole or in part by BellSouth
Corporation or by one or more of its direct or indirect
subsidiaries. Any Affiliated Company may place orders under
this Agreement to buy Emergency Services as hereinafter defined.
All references to "Buyer" in this Agreement shall be deemed to
include the Affiliated Company placing the order. Such orders
are subject to the terms and conditions of this Agreement and as
to such orders, the Affiliated Company becomes "Buyer"
hereunder. Each order shall constitute a separate, distinct and
independent contract between Seller and the Buyer placing the
order and each Buyer shall be the sole obligor with regard to
meeting the obligations of any order placed by such Buyer.
SECTION 2. TERM OF AGREEMENT
2.01 The term of this Agreement shall commence on August 1, 1995, and
shall, except as otherwise provided herein, continue in effect
thereafter through July 31, 2005, inclusive.
2.02 This Agreement contemplates the future execution by Buyer and
Seller of one or more written Letter Purchase Orders. Each
Letter Purchase Order shall be executed by both parties and
shall contain at a minimum the information specified in this
Agreement. All transactions between Buyer and Seller during the
term of this Agreement shall be covered by this Agreement and
any applicable Letter Purchase Order unless the parties agree
otherwise in writing.
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<PAGE> 5
2.03 Each properly executed Letter Purchase Order shall be deemed,
upon its execution, to be incorporated into this Agreement. If
the Letter Purchase Order conflicts with the terms and
conditions of this Agreement, the terms and conditions of this
Agreement shall control unless otherwise agreed to under a
"Special Considerations" section of the Letter Purchase Order.
2.04 Seller will furnish Emergency Services to Buyer as specified in
Letter Purchase Orders. Said Orders, at a minimum, shall
specify the information outlined below:
2.04.1 A reference to this Agreement.
2.04.2 A detailed description of the Emergency Services to be performed
by Seller.
2.04.3 A statement defining all deliverables and their associated due
dates.
2.04.4 For each project identified in a Letter Purchase Order, Buyer
and Seller shall each designate an individual, (the "Project
Manager"), who will act as the primary interface between the
parties. The Project Managers shall be responsible for
insuring the continuity of communications between the parties
as the project proceeds. Each Letter Purchase order shall
include the address and telephone number of each Project
Manager.
2.04.5 An enumeration of any items of expense authorized for
reimbursement to Seller, as well as the basis for such
reimbursement.
2.04.6 If for consultant and/or professional services only, the Letter
Purchase Order should state the maximum total expenditure
authorized, which is understood to mean (1) a dollar amount or
time limit beyond which Seller may not invoice for consultant
and/or professional services under the specific Letter Purchase
Order, and (2) a dollar amount or time limit beyond which Seller
is not required to expend effort or provide consultant and/or
professional services under a specific Letter Purchase Order
without prior written agreement to a revised amount. When this
specification of a maximum total expenditure is not
2
<PAGE> 6
feasible, at the Buyer's option, the hourly, daily or unit rate
of Seller may be substituted.
2.04.7 A statement defining the commencement and completion dates for
Emergency Services to be performed.
2.04.8 Invoicing instructions.
2.04.9 Signatures of representatives authorized by Buyer and Seller to
execute the Letter Purchase Order.
2.04.10 Specifications for the Emergency Services to be provided as it
applies to Section 18. "WARRANTY FOR EMERGENCY SERVICES".
2.05 The terms by which either party may terminate an individual
Letter Purchase order shall be stated in the Letter Purchase
Order. The completion of Emergency Services identified in each
Letter Purchase Order which is being terminated shall also be
stated in the Letter Purchase Order.
2.06 The specifications for the Emergency Services to be provided.
2.07 Buyer, without prejudice to any right or remedy on account of
any failure of Seller to perform its obligations under this
Agreement, may at any time terminate the performance of the work
under any Letter Purchase Order, in whole or in part, by written
notice to Seller specifying the extent to which the performance
of the work is terminated and the date upon which such
termination becomes effective. In the event of such
termination, other than for the failure of Seller to perform its
obligations under this Agreement, Seller shall be entitled to
payment for Emergency Services rendered prior to the effective
date of termination and for expenses properly reimbursable under
this Agreement; provided, however, that payment of any such
amounts by Buyer shall be subject to any provision for the limit
of expenditures set forth in the Letter Purchase Order. The
payment of such amounts by Buyer shall be in full settlement of
any and all claims of Seller of every description, including
profit.
2.08 In the event of termination of this Agreement or any Letter
Purchase Order issued hereunder, affected Buyer property and
work in Seller's possession shall be forwarded promptly to
Buyer. Any transfer of ownership of property acquired by Seller
to perform the requirements identified in a Letter Purchase
Order will be addressed in the Letter Purchase Order.
3
<PAGE> 7
SECTION 3. EMERGENCY SERVICES
3.01 "Emergency Services" as used herein shall mean Seller's
consultant and or professional services as described in properly
executed Letter Purchase Orders. Such Emergency Services may
include the furnishing by Seller of tangible goods as a part of
Seller's deliverable hereunder.
SECTION 4. TERMS OF PAYMENT
4.01 Net 30 days
SECTION 5. PAYMENT AND RECORDS
5.01 Buyer shall pay Seller for Emergency Services under this
Agreement in accordance with prices and/or rates, whichever is
applicable, to be specified in Letter Purchase Orders issued
hereunder. If work is performed on Buyer's premises, Seller's
working hours when working on Buyer's premises, in conjunction
with any Letter Purchase Order, shall coincide with the Buyer's
working hours as they may be established from time to time
unless otherwise defined in the Letter Purchase Order.
5.02 When required, Buyer shall furnish Seller with information
relative to Buyer's applicable standards and specifications, all
of which is subject to Section 10 entitled " BUYER'S INFORMATION"
and is to be returned to Buyer at the expiration, cancellation
or termination of the Agreement or Letter Purchase Order, as the
case may be. All information furnished by Buyer to Seller, or
obtained by Seller hereunder or in contemplation hereof, shall
remain Buyer's property. Should Buyer desire to alter such
standards or specifications with respect to any Letter Purchase
Order after such Letter Purchase Order has been issued and
accepted, Seller shall advise Buyer in the event adjustment of
the payment rate or time schedule referred to in the original
Letter Purchase Order
4
<PAGE> 8
is necessitated by such alterations. In the event such
adjustment is acceptable to Buyer, Buyer shall issue a new or
revised Letter Purchase Order.
5.03 If computer machine time is required in the performance of any
Emergency Services and a charge for such use will be billed to
Buyer, prior written approval of such arrangements shall be
obtained from Buyer.
SECTION 6. INVOICING
6.01 Invoices shall reference Letter Purchase order number and this
Agreement number, PR-9026-A.
SECTION 7. REPRESENTATIVES
7.01 Emergency Services performed under this Agreement are subject to
contract administration activities by Buyer's Representative(s).
Such activities include, but are not limited to, monitoring
supplier performance, Agreement interpretation and amendment,
maintenance of Agreement information in Buyer's database,
inspecting and accepting work performed, verifying work
completion, and validating charges rendered on Seller's
invoices. All Emergency Services provided by Seller under this
Agreement are subject to such activities. In addition to or in
lieu of Buyer's Representative, contract administration
activities may be performed by the individual(s) designated as
Buyer's Delegate, or others as may be delegated by Buyer in
writing.
7.02 Buyer's Representative and Alternate shall be the Contract
Administrator and Buyer's Project Manager listed in Item 3 of
each individual Letter Purchase Order.
SECTION 8. REPORTS
8.01 Seller shall render annual reports detailing Buyer's total
expenditures under this Agreement on or before the tenth (10)
working day after the anniversary of the effective date of this
Agreement. Annual reports shall be submitted to the following:
BellSouth Telecommunications, Inc.
Senior Contracting Manager
Procurement Services
38P40 Southern Bell Center
675 West Peachtree Street, N.E.
Atlanta, Georgia 30375
5
<PAGE> 9
SECTION 9. RECORDS AND AUDITS
9.01 Seller shall maintain complete and accurate records of all
amounts billable to and payments made by Buyer under each Letter
Purchase Order in accordance with generally accepted accounting
practices. Seller shall retain such records for a period of
three (3) years from the date of final payment for Emergency
Services covered by each Letter Purchase Order. Seller agrees
to provide reasonable supporting documentation concerning any
disputed amount of invoice to Buyer within thirty (30) days
after Buyer provides written notification of the dispute to
Seller.
9.02 Buyer and its authorized agents and representatives shall have
the right to audit such records of Seller during the respective
periods in which Seller is required to maintain such records,
including, without limitation, the right of access to such
records on Seller's premises, rights to inspect and photocopy
same, and the right to retain copies of such records outside of
Seller's premises with appropriate safeguards, if such retention
is deemed necessary by Buyer, in its sole discretion. The
correctness of Seller's billing shall be determined from the
result of such audits. Buyer shall also have such above
described auditing rights with respect to Seller's agents,
contractors, or subcontractors.
10. BUYER'S INFORMATION
10.01 All Buyer's Specifications, drawings, sketches, schematics,
models, samples, tools, computer or other apparatus programs,
technical or business information or data, written, oral, or
otherwise (all hereinafter designated "Buyer's Information")
obtained by Seller hereunder or in contemplation hereof shall
remain Buyer's property. All copies of such Buyer's Information
in written, graphic, or other tangible form shall be returned to
Buyer upon request. Unless such Buyer's Information was
previously known to Seller free of any obligation to keep it
confidential or has been or is subsequently made public by Buyer
or, lawfully, a third party, it shall be kept confidential by
Seller, shall be used only in the filling of Letter Purchase
Orders or in performing under this Agreement, and may not be
used for other purposes except upon such terms as may be agreed
upon between Buyer and Seller in writing.
6
<PAGE> 10
SECTION 11. SELLER'S INFORMATION
11.01 Unless marked as such, no Seller's Specifications, drawings,
sketches, schematics, models, samples, tools, computer programs,
technical or business information or data, written, oral or
otherwise (hereinafter "Seller's Information"), furnished by
Seller to Buyer under this Agreement, or in contemplation of
this Agreement, shall be considered by Seller to be confidential
or proprietary.
SECTION 12. PATENT AND OTHER PROPRIETARY RIGHTS INFRINGEMENT
12.01 Seller shall indemnify Buyer for any loss, damage, expense or
liability including reasonable costs and attorneys' fees that
may result by reason of any infringement, or claim of
infringement, of any patent, trademark, copyright, trade
secret or other proprietary interest based upon the
manufacture, use or resale of any material, Emergency Services
furnished to Buyer under this Agreement or in contemplation of
this Agreement. Seller shall defend or settle, at its own
expense, any action or suit against Buyer for which it is
responsible under this Section. Buyer shall notify Seller
promptly of any claim of infringement for which Seller is
responsible, and shall cooperate with Seller in every
reasonable way to facilitate the defense of any such claim.
SECTION 13. TAX
13.01 There shall be added to the purchase price set forth herein an
amount equal to any applicable taxes, local, state or federal,
however designated, which may be validly levied or based upon
this Agreement or upon the Emergency Services furnished
hereunder, excluding, however, ad valorem personal property
taxes, state and local privilege and excise taxes based on
gross revenue, taxes based on or measured by Seller's net
income, and any taxes or amounts in lieu thereof paid or
payable by Seller in respect of the foregoing excluded items.
Taxes payable by Buyer shall be billed as separate items on
Seller's invoices and shall not be included in Seller's
prices. Buyer shall have the right to have Seller contest
with the imposing jurisdiction, at Buyer's expense, any such
taxes that Buyer deems are improperly levied.
7
<PAGE> 11
13.02 Buyer shall not be required to pay or otherwise be liable or
responsible for, and Seller hereby indemnities, defends and
holds Buyer harmless against, any penalty, additional tax,
costs or interest that may be assessed or levied by any taxing
authority as a result of the failure of the Seller to file any
return, form, or information statement that may be required by
such taxing authority.
SECTION 14. ASSIGNMENT BY SELLER
14.01 Except for Seller's assignment to a third party acquiring all or
substantially all of Seller's assets or stock, or by merger of
Seller and a third party, Seller shall not assign or otherwise
delegate any work to be performed by it under this Agreement, in
whole or in part, or any of its right, interest or obligation
hereunder without first obtaining Buyer's prior written consent,
which consent shall not be unreasonably withheld. Seller shall
deliver to Buyer written notice of Seller's intent to assign, at
least thirty (30) days prior to assignment. Any assignment not
consented to by Buyer shall be deemed void; except that Seller
may assign its rights to receive monies pursuant to this
Agreement upon delivering the required notice to Buyer, without
Buyer's prior consent. No assignment of monies due or to become
due to Seller shall be made by Seller if such assignment
attempts to transfer to the assignee any other rights or
obligations of Seller hereunder or attempts to prevent Buyer
from dealing solely and directly with Seller on all matters
pertaining to this Agreement, including the negotiation of
amendments to this Agreement or the settlement of amounts due
either party by the other hereunder.
14.02 Seller agrees not to subcontract the Emergency Services to be
performed, in whole or in part, without written request to and
the prior written consent of Buyer's Project Manager designated
in individual Letter Purchase Orders. Seller shall remain
primarily liable to Buyer for the performance of all
subcontracted Emergency Services provided pursuant to this
Agreement.
8
<PAGE> 12
SECTION 15. ASSIGNMENT BY BUYER
15.01 Buyer shall have the right to assign this Agreement and to
assign its rights and delegate its duties under this Agreement
either in whole or in part, at any time and without Seller's
consent, to any present or future Affiliated Company or
successor company of Buyer. Buyer shall give Seller written
notice of such assignment or delegation. The assignment shall
neither affect nor diminish any rights or duties that Seller or
Buyer may then or thereafter have as to Emergency Services
ordered by Buyer prior to the effective date of the assignment.
Upon the written notice to the Seller, Buyer shall be released
and discharged, to the extent of the assignment, from all
further duties under this Agreement, except with respect to
Emergency Services ordered by Buyer prior to the effective date
of the assignment.
SECTION 16. LICENSES
16.01 Except as otherwise provided in this Agreement, no licenses
under any patents, copyrights, trademarks, trade secrets or any
other intellectual property, express or implied, are granted by
Buyer to Seller under this Agreement.
SECTION 17. SUPPLIER OVERDEPENDENCY
17.01 Because Buyer has no way of ascertaining Seller's dependency
on Buyer for revenues from sales in proportion to revenues
from Seller's other customers and in order to protect Buyer
from a situation in which Seller is over-dependent on Buyer
for said sales, Seller agrees to release and hold harmless
Buyer from any and all claims relating to Seller's financial
stability, which may result from Buyer's termination of this
Agreement for any reason whatsoever.
9
<PAGE> 13
SECTION 18. WARRANTY FOR EMERGENCY SERVICES
18.01 Seller warrants to Buyer that the Emergency Services provided
under this Agreement shall be in accordance with the
specifications set forth in each Letter Purchase order, and be
performed in a fully professional, effective, and efficient
manner that equals or exceeds the then-current industry
standard for such services. Buyer's Project Manager
designated in any Letter Purchase Order shall in his/her sole
discretion determine the quality and acceptability of the
Emergency Services performed pursuant to this Agreement.
SECTION 19. NON-EXCLUSIVE RIGHTS
19.01 It is expressly understood and agreed that this Agreement does
not grant Seller an exclusive privilege to sell to Buyer any
or all Emergency Services of the type described in Section 3
entitled "EMERGENCY SERVICES" which Buyer may require. Buyer
reserves the right to contract with other suppliers for the
procurement of comparable services. In addition, Buyer shall
determine, at Buyer's sole discretion, the extent to which
Buyer will market, advertise, promote, support, or otherwise
assist in further offerings of the Emergency Services.
SECTION 20. PUBLICITY
20.01 Seller agrees to submit to Buyer all advertising, sales
promotion, press releases, and other publicity matters
relating to this Agreement or mentioning or implying the trade
names, logos, trademarks or service marks (hereinafter
"Marks") of BellSouth Corporation and/or any of its Affiliated
Companies or language from which the connection of said Marks
therewith may be inferred or implied, or mentioning or
implying the names of any personnel of BellSouth Corporation
and/or any of its Affiliated Companies, and Seller further
agrees not to publish or use such advertising, sales
promotions, press releases, or publicity matters without
Buyer's prior written consent.
SECTION 21. PERFORMANCE OF WORK
21.01 All work performed by Seller under any Letter Purchase Order
may be monitored through the use of status reports. Contents
of such status reports,
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<PAGE> 14
frequency and the Seller's employees required to submit such
status reports shall be specified in the Letter Purchase
Order.
21.02 Seller shall supply the appropriate personnel to investigate
any reported deficiencies found by Buyer during the duration
of the Letter Purchase Order. Deficiencies found to be of
Seller's causing shall be corrected by Seller at its expense.
Such correcting activities shall commence immediately and be
completed as quickly as is reasonably possible.
21.03 If the deficiencies are found to be not of Seller's causing,
Buyer shall reimburse Seller for the time and material charges
of (1) its investigation, and (2) such correcting activities
Seller performs, if requested by Buyer.
SECTION 22. INDEPENDENT CONTRACTOR
22.01 All work performed by Seller in connection with the Emergency
Services described in the Agreement shall be performed by
Seller as an independent contractor and not as the agent or
employee of Buyer. All persons furnished by Seller shall be
for all purposes solely the Seller's employees or agents and
shall not be deemed to be employees of Buyer for any purpose
whatsoever. Seller shall furnish, employ, and have exclusive
control of all persons to be engaged in performing Emergency
Services under this Agreement and shall prescribe and control
the means and methods of performing such Emergency Services by
providing adequate and proper supervision. Seller shall be
solely responsible for compliance with all rules, laws, and
regulations relating to employment of labor, hours of labor,
working conditions, payment of wages, and payment of taxes,
such as employment, Social Security, and other payroll taxes,
including applicable contributions from such person when
required by law. Seller shall not subcontract work to be
performed without Buyer's written permission.
SECTION 23. SECURITY
23.01 Buyer reserves the right to conduct, for security reasons, a
background investigation on the Seller and its principal
parties or personnel, and Seller agrees to cooperate with the
Buyer in this endeavor and to provide any necessary
information. Seller acknowledges that under no
obligation to provide a copy of the background investigation
to Seller, and Seller waives any and all rights it may have in
any information it provides to Buyer.
11
<PAGE> 15
23.02 Seller shall conduct, at Seller's expense, background
investigations on Seller's personnel performing work on
Buyer's premises prior to supplying such personnel to Buyer.
At Buyer's request, Seller shall provide copies of the
background investigations to Buyer.
23.03 Seller shall not assign any personnel with records of criminal
conviction(s) to Buyer's premises without advising Buyer of
the nature and gravity of the offense.
23.04 In fulfilling the obligations under this Section, both parties
shall comply with all laws, rules, and regulations relating to
the making of investigative reports and the disclosure of the
information contained therein. Each party shall indemnify,
defend, and hold the other party harmless against any wrongful
disclosure by the offending party, its employees, and/or agents
of said reports and the information contained therein.
23.05 At Buyer's request, Seller shall promptly remove from Buyer's
premises any employee of Seller to whom Buyer does not wish to
grant access to its premises, or who, in Buyer's opinion, has
been unacceptable, negligent, dishonest, or otherwise
unsatisfactory in performing his/her duties hereunder. Such a
request for removal from Buyer's premises shall in no way be
interpreted as a request by Buyer for Seller to discipline the
employee in any way.
SECTION 24. NONDISCRIMINATION COMPLIANCE
24.01 Seller agrees to comply with the applicable provisions of the
"NONDISCRIMINATION COMPLIANCE AGREEMENT" set forth in Appendix
A.
SECTION 25. CONFLICT OF INTEREST
25.01 Buyer and its affiliated companies do business with many
contractors and suppliers. It is a fundamental policy of
Buyer that such dealings shall be conducted on a fair and
non-discriminatory basis, free from improper influences, so
all participating contractors and suppliers may be considered
on the basis of the quality and overall cost of their product
or service.
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<PAGE> 16
25.02 Buyer's policy is to seek out and obtain technically suitable
products and services at the lowest overall cost. Accordingly,
Buyer will not recognize any oral agreement; any conversations
with Buyer's employees or representatives shall not be construed
to imply a commitment or obligation on behalf of Buyer. Any
information disclosed or made known to Buyer shall be deemed as
public and nonproprietary. Information shall not be received in
confidence, unless a prior written agreement authorizing such
exchange of information has been executed by an authorized
representative of Buyer.
25.03 Buyer is committed to doing business with contractors and
suppliers in an atmosphere in keeping with the highest standards
of business ethics. Therefore, it is Buyer's policy that our
employees shall not accept from customers; from suppliers of
property, goods, or services; or from other persons any gifts,
benefits, or unusual hospitality that may in any way tend to
influence or have the appearance of influencing them in the
performance of their jobs.
25.04 Those employees of Buyer authorized to make purchases or
negotiate contracts are aware of this policy, and your
cooperation is solicited in order to forestall any embarrassing
situations.
SECTION 26. CHOICE OF LAW/VENUE
26.01 The validity, construction, interpretation, and performance of
this Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Georgia.
26.02 The jurisdictional venue for any legal proceedings involving
this Agreement shall be held in any applicable state or
federal court located in Fulton County, State of Georgia.
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<PAGE> 17
SECTION 27. FACILITY RULES AND GOVERNMENT CLEARANCE
27.01 Seller's employees and representatives and those of Buyer shall,
while on the premises of the other, comply with all internal
rules and regulations, including where required by Government
Regulations, submission of satisfactory clearance from the U. S.
Department of Defense and other federal authorities concerned.
SECTION 28. RIGHT OF ACCESS
28.01 Both Seller and Buyer shall permit reasonable access to the
other's facilities in connection with work hereunder. No
charge shall be made for such visits. It is agreed that prior
notification will be given when access is required. Seller
agrees to remove any of its employees at Buyer's request.
SECTION 29. DEFAULT
29.01 In the event Seller shall be in breach or default of any of the
terms, conditions, or covenants of this Agreement or any Letter
Purchase Orders, and such breach or default shall continue for a
period of thirty (30) days after the giving of written notice to
Seller thereof by Buyer, then in addition to all other rights
and remedies of law or equity or otherwise, Buyer shall have the
right to cancel this Agreement or any such Letter Purchase
Orders placed by Buyer without any charge, obligation, or
liability whatsoever, except as to the payment for Emergency
Services already received and accepted by Buyer.
SECTION 30. COMPLIANCE WITH LAWS
30.01 Seller shall comply with the provisions of all applicable
federal, state, county and local laws, ordinances,
regulations, and codes, including, but not limited to,
Seller's obligations as an employer with regard to the health,
safety and payment of its employees, and identification and
procurement of required permits, certificates, approvals, and
inspections of Seller's performance of this Agreement.
Notwithstanding of whether a specification is furnished, if
Emergency Services furnished are required to be registered in
a prescribed manner, Seller shall comply with federal law and
applicable state or local law. Seller shall indemnify Buyer
for, and defend Buyer against, any loss or damage sustained
because of Seller's noncompliance.
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<PAGE> 18
SECTION 31. RELEASES VOID
31.01 Neither party shall require waivers or releases of any personal
rights from representatives of the other in connection with
visits to Seller's and Buyer's respective premises. Neither
party shall require any representative of the other party to
sign a personal "nondisclosure agreement." No such releases or
waivers shall be pleaded by Seller or Buyer or third persons in
any action or proceeding.
SECTION 32. NON-WAIVER
32.01 No waiver or failure to exercise any option, right or privilege
under the terms of this Agreement on any occasion or occasions
shall be construed to be a waiver of the same or any other
option, right, or privilege on any other occasion.
SECTION 33. SEVERABILITY
33.01 If any of the provisions of this Agreement shall be invalid or
unenforceable under the laws of the jurisdiction applicable to
the entire Agreement, such invalidity or unenforceability
shall not invalidate or render unenforceable the entire
Agreement but rather the entire Agreement shall be construed
as if not containing the particular invalid or unenforceable
provision or provisions, and the rights and obligations of
Seller and Buyer shall be construed and enforced accordingly.
SECTION 34. CONTINGENCY
34.01 Neither Seller nor Buyer shall be held responsible for any delay
or failure in performance of any part of this Agreement to the
extent that such delay or failure is caused by fire, flood,
explosion, war, strike, embargo, government requirement, civil
or military authority, act of God, or other similar causes
beyond Seller's or Buyer's control (hereinafter "Condition(s)").
If any such Condition occurs, the party delayed or unable to
perform shall give immediate notice to the other party, and the
party affected by the other's delay or inability to perform may
elect to: (1) terminate this Agreement or part thereof as to
Emergency Services not already received; (2) suspend this
Agreement for the duration of the Condition, buy or sell
elsewhere material or services comparable to those to be
obtained under this Agreement, and deduct from any commitment
the quantity bought or for which commitments with other
suppliers have been made; or (3) resume performance of this
Agreement once the Condition ceases with an option in the
affected party to extend the period of this Agreement up to the
length of time the Condition endured. Unless written notice is
given within thirty (30) days after the affected party is
notified of the Condition, option 11(2)" shall be deemed
selected.
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SECTION 35. INSURANCE
35. 01 Seller, at Seller's expense, shall maintain during the term of
this Agreement, all insurance and/or bonds required by law or
this Agreement, including, but not limited to: (1) adequate
Worker's Compensation and related insurance as required by
Buyer and prescribed by the law of any state in which the work
is to be performed; (2) employer's liability insurance with
limits of at least $[ ] each occurrence; and (3)
commercial general liability insurance, including contractual
liability, products liability and completed operations
coverage, (4) professional liability insurance covering the
acts, errors and omissions of Seller, its employees, agents and
subcontractors, in an amount not less than $[ ] per
claim/$[ ] aggregate, and, if the use of motor vehicles
is required, comprehensive motor vehicle liability insurance,
each with limits of at least $[ ] for bodily injury,
including death, to any one person, and $[ ] on account
of any one occurrence and $[ ] for each occurrence of
property damage. Seller shall, prior to the start of work and
upon the renewal of each coverage required herein, furnish
certificates of insurance or adequate proof of the foregoing
insurance to the Buyer.
35.02 Seller shall also require its agents or subcontractors, if any,
who may enter upon Buyer's premises to maintain the insurance
coverage required herein, and to furnish Buyer certificates of
insurance or adequate proof of such insurance. All insurance
policies required of Seller and Seller's agents and
subcontractors shall contain a clause stating the name and
address of Buyer and that to be notified in writing by
the insurer at least thirty (30) days prior to cancellation, or
any material change in, of the policy.
35.03 All liability policies required herein shall name the Buyer as
an additional insured with respect to work performed under this
Agreement.
35.04 All policies required herein shall be maintained with insurers
acceptable to the Buyer. Buyer retains the right to disallow
coverage from any insurer that does not maintain a rating from
A. M. Best Company of B+ X or higher.
SECTION 36. INDEMNITY
36.01 Seller agrees to indemnify and hold Buyer harmless from any
and all liabilities, causes of action, lawsuits, penalties,
claims or demands (including the costs, expenses and
reasonable attorneys' fees on account thereof) that may
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be made: (1) by anyone for injuries of any kind, including but
not limited to personal injury, death, property damage and
theft, resulting from Seller's negligent or willful acts or
omissions under this Agreement, or those of persons furnished
by Seller, its agents or subcontractors; (2) by any of either
Seller's, its agent's or subcontractor's employees or former
employees for which the Seller's, its agents' or
subcontractors' liability to such employee or former employee
would otherwise be subject to payments under the state
Worker's Compensation laws, premises liability principles or
any other law or form of legal duty or obligation; or (3) by
either Seller's, its agent's or subcontractor's employees or
former employees, including applicants at Buyer's job site for
any and all claims arising out of the employment relationship
with respect to performing under this Agreement, including but
not limited to, employment discrimination charges and actions
arising under Title VII of The Civil Rights Act of 1964, as
amended; The Equal Pay Act; The Age Discrimination Act, as
amended; The Rehabilitation Act; The Americans with
Disabilities Act; The Fair Labor Standards Act; The National
Labor Relations Act; and any other applicable law. Seller, at
its own expense, agrees to defend Buyer, at Buyer's request,
against any such liability, cause of action, penalty, claim,
demand, administrative proceeding or lawsuit, including any in
which named as an "employer" or "joint employer" with
Seller. Buyer agrees to notify Seller promptly of any written
claims or demands against Buyer for which Seller is
responsible hereunder.
36.02 The foregoing indemnity shall be in addition to any other
indemnity obligations of Seller set forth in this Agreement.
36.03 SELLER SHALL NOT BE LIABLE TO BUYER FOR ANY INDIRECT, SPECIAL,
PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES RELATED TO THIS
AGREEMENT, WHETHER FORESEEABLE OR NOT, INCLUDING BUT NOT LIMITED
TO LOST PROFITS, LOSS OF DATA, OR RESULTING FROM BUYER'S OR
BUYER'S CUSTOMER'S USE OR INABILITY TO USE SELLER'S EMERGENCY
SERVICES, ARISING FROM ANY CAUSE OF ACTION WHATSOEVER, INCLUDING
CONTRACT, WARRANTY, STRICT LIABILITY OR NEGLIGENCE.
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36.04 Except as provided for in Section 12 "PATENT AND OTHER
PROPRIETARY RIGHTS INFRINGEMENT" or as otherwise required by
governing law, Seller's aggregate and entire liability with
respect to any single claim arising from performance or
nonperformance of obligations set forth under this Agreement, an
executed Letter Purchase Order, or any subject matter of this
Agreement, in tort, including any negligence, in contract or
otherwise, shall be limited to $[ ]
SECTION 37. SURVIVAL OF OBLIGATIONS
37.01 Any respective obligations of Buyer and Seller hereunder which
by their nature would continue beyond the termination,
cancellation or expiration of this Agreement or any Letter
Purchase Order, including, by way of example but not limited to,
the obligations provided in the Sections " BUYER'S INFORMATION";
INDEMNITY"; "PATENT AND OTHER PROPRIETARY RIGHTS INFRINGEMENT";
"PUBLICITY"; and "WARRANTY FOR EMERGENCY SERVICES" shall survive
such termination, cancellation or expiration.
SECTION 38. NOTICES
38. 01 Except as otherwise provided herein, any notices or demands
which are required by law or under the terms of this Agreement
shall be given or made by Seller or Buyer in writing and shall
be given by hand delivery, telegram or similar communications,
or by certified or registered mail, and addressed to the
respective parties set forth below. Such notices shall be
deemed to have been given in the case of telegrams or similar
communications when sent, and in the case of certified or
registered mail when deposited in the United States mail with
postage prepaid.
To Buyer: BellSouth Telecommunications, Inc.
Director - Procurement Services
38P40 Southern Bell Center
675 West Peachtree Street, N.E.
Atlanta, Georgia 30375
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To Seller: SCC Communications Corp.
6285 Lookout Road
Boulder, Colorado 80301
Attn: Chief Financial Officer
38. 02 The above addresses may be changed at any time by giving thirty
(30) days prior written notice as above provided.
38.03 In addition to the foregoing, any notices of a legal nature
shall be copied to:
Legal Department
BellSouth Telecommunications, Inc.
4300 Southern Bell Center
675 West Peachtree Street, N.E.
Atlanta, Georgia 30375
Attention: General Attorney -
Contracting
SECTION 39. SECTION HEADINGS
39.01 The headings of the Sections included in this Agreement are
inserted for convenience only and are not intended to affect the
meaning or interpretation of this Agreement.
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SECTION 40. INCORPORATION BY REFERENCE
40.01 The terms and conditions contained in Appendix A, referred to
in this Agreement and attached hereto, is an integral part of
this Agreement and is fully incorporated herein by this
reference.
SECTION 41. ENTIRE AGREEMENT
41.01 This Agreement, and any Letter Purchase order placed
hereunder, shall constitute the entire agreement between Buyer
and Seller relating to this Agreement or a particular Letter
Purchase Order and may not be modified or amended other than
by a written instrument executed by both parties. With the
exception of those pre-printed provisions included as a part
of this Agreement, any other pre-printed provisions on
Seller's and Buyer's forms shall be deemed deleted. A Letter
Purchase Order placed by Buyer hereunder shall incorporate the
typed, stamped, or written provisions or data found thereon
and in subordinated documents (such as shipping releases) so
long as the typed, stamped, or written provisions or data
merely supplement but do not vary the provisions of this
Agreement. Whenever typed, stamped, or written provisions of
an accepted Letter Purchase Order conflict with this
Agreement, this Agreement shall control unless otherwise
agreed to under a "Special Considerations" section of the
Letter Purchase Order.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives in one or more counterparts, each of which shall
constitute an original, on the dates set forth below.
SCC COMMUNICATIONS CORP. BELLSOUTH TELECOMMUNICATIONS, INC.
By /s/ NANCY K. HAMILTON By /s/ STEPHANIE COLEMAN
----------------------------------- -----------------------------------
(Authorized Signature) (Authorized Signature)
Name NANCY K. HAMILTON Name STEPHANIE COLEMAN
--------------------------------- ---------------------------------
(Print or Type) (Print or Type)
Title CFO Title DIRECTOR-PROCUREMENT SERVICES
-------------------------------- --------------------------------
Date OCTOBER 17, 1995 Date OCTOBER 13, 1995
--------------------------------- ---------------------------------
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Confidential Treatment Request
EXHIBIT 10.9
[ ] Material indicated by this mark
has been deleted pursuant to a request
for confidential treatment, and has been filed
separately.
WIRELESS E9-1-1 AGREEMENT
CONTENTS
<TABLE>
<S> <C> <C>
1. DEFINITIONS..................................................... 3
1.1 SCP......................................................... 3
1.2 Services.................................................... 3
1.3 Initial Market Area Survey.................................. 3
1.4 New Services................................................ 3
1.5 Add-On Service.............................................. 3
1.6 Modification Order.......................................... 4
1.7 Project..................................................... 4
1.8 PSAP........................................................ 4
1.9 Qualified PSAP.............................................. 4
1.10 AMCI's Region............................................... 4
1.11 Ameritech Wireline Regions.................................. 4
1.12 AMCI Affiliate.............................................. 4
1.13 Subscriber.................................................. 5
2. PROJECT......................................................... 5
2.1 Scope Of Work............................................... 5
2.2 Cancellation Fee Schedule................................... 6
2.3 Modification Orders......................................... 6
2.4 Letter of Agency............................................ 6
2.5 Orderly Transition.......................................... 6
3. TERM AND TERMINATION............................................ 8
3.1 Term........................................................ 8
3.2 Termination................................................. 8
4. FEES AND PAYMENT................................................ 11
4.1 Fees For Service............................................ 11
4.2 Other Charges............................................... 14
4.3 Disputed Invoices........................................... 14
4.4 Taxes....................................................... 15
5. LICENSES AND DEVELOPED INFORMATION.............................. 15
5.1 Licenses.................................................... 15
5.2 Developed Information-Definitions........................... 16
5.3 Developed Information-Rights................................ 17
6. CONFIDENTIALITY................................................. 18
6.1 Confidential Information.................................... 18
6.2 Exceptions.................................................. 19
6.3 Ownership of Confidential Information....................... 19
7. WARRANTIES...................................................... 19
7.1 Warranty By SCC............................................. 19
7.2 Warranty By AMCI............................................ 20
8. INDEMNIFICATION................................................. 21
8.1 General Indemnification..................................... 21
8.2 Intellectual Property Indemnification....................... 21
9. LIMITATION OF LIABILITY......................................... 22
10. INSURANCE...................................................... 22
</TABLE>
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<TABLE>
<S> <C> <C>
11. GENERAL PROVISIONS............................................. 23
11.1 Exhibits.................................................... 23
11.2 Electronic Exchange......................................... 23
11.3 Staffing Level.............................................. 23
11.4 Advertising and Publicity................................... 23
11.5 Assignment and Delegation................................... 24
11.6 Company Rules............................................... 24
11.7 Escalation Procedures....................................... 24
11.8 Force Majeure............................................... 24
11.9 Governing Law............................................... 25
11.10 Independent Contractors..................................... 25
11.11 Subcontracting.............................................. 25
11.12 Joint Work Product.......................................... 25
11.13 Laws, Regulations, Permits.................................. 25
11.14 Notices..................................................... 25
11.15 Non-Waiver.................................................. 26
11.16 Severability................................................ 26
11.17 Binding Effect.............................................. 26
11.18 Time Is Of The Essence...................................... 27
11.19 Equal Opportunity........................................... 27
11.20 Remedies.................................................... 27
11.21 Authority................................................... 27
11.22 Entire Agreement............................................ 27
EXHIBIT A SCOPE OF WORK
EXHIBIT B CANCELLATION FEE SCHEDULE
EXHIBIT C SAMPLE MODIFICATION ORDER
EXHIBIT D LETTER OF AGENCY
EXHIBIT E AMCI/SIGNALSOFT LICENSE
</TABLE>
ii
<PAGE> 3
WIRELESS E9-1-1 SERVICES AGREEMENT
THIS AGREEMENT ("this Agreement") is made this day of ,
1998, (the "Effective Date") between SCC COMMUNICATIONS CORPORATION, ("SCC") a
Delaware Corporation, having its corporate offices located at 6285 Lookout Road,
Boulder, Colorado 80301, and AMERITECH MOBILE COMMUNICATIONS, INC. ("AMCI") a
Delaware corporation having its corporate offices located at 2000 West Ameritech
Center Drive, Hoffman Estates, Illinois 60195, who are collectively referred to
herein as "the Parties" or individually as "Party."
In consideration of the promises and covenants set forth herein, and for
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Parties agree as follows:
1. DEFINITIONS
1.1 SCP.
"SCP" means Service Control Point.
1.2 SERVICES.
"Services" or "Wireless E9-1-1 Services" means the basic wireless enhanced
9-1-1 services described in the "Scope Of Work" ("SOW"), attached hereto and
marked as Exhibit A (which Services do not include provision of "SCP" equipment)
which Services are intended to enable AMCI to implement and maintain a wireless
E9-1-1 system, in AMCI's Region (as defined herein below) in its entirety and
for all of AMCI's Subscribers (as defined herein below), in compliance with FCC
Docket Number 94-102 for Phase I service.
1.3 INITIAL MARKET SURVEY
"Initial Market Area Survey" or "Initial Market Survey", "IMAS" or "Market
Area Survey" means the report prepared by SCC, and associated tasks performed by
SCC, as described in Exhibit A, which identifies certain information that is
specific to AMCI's E9-1-1 networks and infrastructures and such other
information as is expressly stated in Exhibit A.
1.4 NEW SERVICES.
"New Service" means those services developed by SCC in its sole discretion
which modify, improve or add functionality, of any level, kind or version, to
the Services and which are offered to and accepted by AMCI pursuant to
subsequent agreement of the Parties.
1.5 ADD-ON SERVICES.
"Add-On Service" means services that are customized to AMCI's particular
needs and that are not New Services or Services initially contemplated herein,
but which are developed by SCC as a result of AMCI's explicit request for
specific modifications, improvements or additional functionality to the Services
or New Services and which are added to same pursuant to subsequent agreement of
the Parties.
1.6 MODIFICATION ORDER.
"Modification Order" means a document which, by its formal execution,
obligates the Parties with respect to the addition, or modification, of New
Services or Add-On Services described in such document. Such Modification Order
shall be subject to the terms and conditions hereof, shall be prepared in
substantially the same form as that set forth in Exhibit C and shall become
effective only when fully executed by the authorized representatives of each
Party as evidenced thereon.
1.7 PROJECT.
"Project" means the undertaking of the tasks and duties set forth in
Section 2 hereof.
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1.8 PSAP.
"PSAP" means Public Safety Answering Point as that phrase is commonly known
in the telecommunications industry.
1.9 QUALIFIED PSAP.
"Qualified PSAP" means a PSAP which, in connection with the FCC's Order in
Docket Number 94-102, has requested E9-1-1 service from AMCI, has put in place a
cost recovery plan and is technologically capable of providing E9-1-1 service .
1.10 AMCI'S REGION.
"AMCI's Region" means the geographic region in which AMCI or one of its
Affiliates, as defined herein, is licensed to provide personal wireless
communications services.
1.11 AMERITECH WIRELINE REGIONS.
"Ameritech Wireline Region" means the geographic region in which Ameritech
is licensed to offer wireline telecommunications service.
1.12 AMCI AFFILIATE.
"AMCI Affiliate" means any entity that directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common control
with AMCI, as well as any successor to AMCI, whether by change of name,
dissolution, merger, consolidation, reorganization or otherwise.
1.13 SUBSCRIBER.
"Subscriber" means each AMCI wireless customer having an assigned Mobile
Directory Number (MDN) whose address falls within the municipal, county or other
jurisdictional boundary served by a Qualified PSAP in AMCI's Region which
Qualified PSAP has requested and is being provided wireless E9-1-1 Services by
SCC on behalf of AMCI. Such wireless customers shall include wireless customers
whose service is delivered by AMCI via so-called "analog" or "digital"
technology.
2. PROJECT
2.1 SCOPE OF WORK (EXHIBIT A).
The Scope of Work set forth in Exhibit A constitutes a complete and
detailed description of SCC's obligations to perform the Services to be
performed in connection with the Project, which shall be performed exclusively
by SCC in Ameritech's Wireline Regions, and non-exclusively in all other AMCI
Regions, subject to AMCI's rights expressly stated herein, and which shall apply
to the entire AMCI Region, to all Qualified PSAPs therein, and to all of AMCI's
Subscribers. SCC acknowledges that its Services represent a portion of combined
effort on the part of other critical third party vendors who themselves, along
with SCC, are participating in an integrated effort to deploy AMCI's Phase I
E9-1-1 wireless service; and in this regard, SCC will reasonably cooperate with
such other vendors as set forth in Exhibit A. AMCI will timely perform its
obligations as set forth in Exhibit A.
2.1.1 MARKET AREA SURVEY.
SCC shall not be responsible for providing a Market Area Survey under the
terms and conditions of this Agreement. The Parties have already executed a
"Consulting Agreement" dated October 27, 1997, which is hereby ratified, which
agreement will govern the terms and conditions under which SCC will perform a
"Market Area Survey And Analysis". SCC will ensure that its work related to said
Market Area Survey And
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<PAGE> 5
Analysis will be performed in a manner consistent with the terms and conditions
of this Agreement and Exhibit A.
2.1.2 SYSTEM EFFICIENCY.
SCC is devoted to improving and exceeding the standards and requirements of
this Agreement in the provision of Services. This includes improvement in the
automation procedures, software products, hardware products, personnel training
and qualifications, and all other services. Therefore, performance and
efficiency of the system for delivery of the Services will be maintained and
periodically improved by SCC without charge to AMCI. Such changes in the
provision of Services shall be considered usual and customary and not New
Services. The system for delivery of the Services is described in Exhibit A.
2.1.3 REGIONAL UNIFORMITY.
Except as may otherwise be described herein, the Services will be provided
under regionally consistent terms and shall not be state-specific unless it is
legally mandated by the state or other legally governing body.
2.2 CANCELLATION FEE SCHEDULE (EXHIBIT B).
The Cancellation Fee Schedule, attached hereto and marked as Exhibit B and
incorporated herein, sets forth the cancellation fee, if any, that would be
payable by AMCI to SCC in the event AMCI exercises its right to cancel this
Agreement pursuant to section 3.2.3 hereunder.
2.3 MODIFICATION ORDER (EXHIBIT C).
If AMCI elects to purchase from SCC New Services or Add-On Services, AMCI
will deliver to SCC a completed form substantially similar to that which is set
forth in Section 1.7 of Exhibit A. The parties will negotiate in good faith the
terms and conditions relating to the provision of such services, which shall
include at a minimum: (a) a description of the requested service; (b) a
projected date of its availability; (c) a proposed implementation schedule; (d)
the initial non-recurring charges and/or additional recurring charges associated
with the service; and (e) any other information deemed appropriate by the
Parties. Modification Orders will not be effective or binding upon the parties
unless signed by an authorized individual from AMCI who occupies a position at
AMCI of director level or above.
2.4 LETTER OF AGENCY (EXHIBIT D).
AMCI shall provide SCC with a Letter of Agency ("LOA") similar in form and
substance to that which is set forth in Exhibit D, which letter will enable SCC
to perform the Services as a limited agent for AMCI. The LOA shall: (a) not be
released by SCC or used except as authorized by this Agreement; (b) be deemed
revoked upon termination of this Agreement or delivery to SCC of written notice
of AMCI's election in this regard; and (c) be returned to AMCI upon AMCI's
request, or destroyed by SCC upon termination of this Agreement or the
revocation notice described herein.
2.5 ORDERLY TRANSITION.
2.5.1 TRANSITIONED SERVICES -- SUBSTITUTION FOR SCC.
In AMCI's sole discretion, AMCI may elect to perform, or have its agents
perform, the Services (described below in subparagraphs 2.5.1(a) and 2.5.1(b)
which are more fully described in Exhibit A) in whole or in part, in each or any
of AMCI's Regions ("Transitioned Services"). AMCI may not exercise said option
earlier than one (1) year after the date on which a particular Qualified PSAP,
which has requested Phase I E9-1-1 Service, is turned-up and Services are
deployed by SCC. In the event AMCI properly makes such an election, and to the
extent determined by AMCI in its sole discretion, AMCI shall substitute its
performance for that of SCC. Thereafter AMCI shall be responsible for the
Transitioned Services in lieu of SCC, and except as otherwise expressly provided
herein, SCC shall be relieved of its obligations therefore.
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<PAGE> 6
The pricing discounts related to AMCI's exercise of this option are described in
section 4 hereunder. Transitioned Services include:
(a) network engineering, design and pANI Translations, including
identification of specific network interconnections required from AMCI to
specific E9-1-1 networks, Qualified PSAPs, appropriate engineering of
connections for traffic capacity and coordination of pANI translations into
the required AMCI network elements;
(b) LEC/CLEC and pANI coordination and pANI assignment, including
coordination of network ordering, installation testing and turn-up as well
as coordination of all pANI assignments and confirmation with all LEC/CLEC
interconnect requirements and pANI assignments;
2.5.2 ORDERLY TRANSITION.
In the event AMCI properly exercises its options related to sections 2.5.1
or 2.5.2, then to the extent it is relevant and applicable thereto, SCC will
cooperate in the orderly transition of the Transitioned Services to AMCI or its
agent and will make reasonable efforts to minimize any disruption of AMCI's
wireless 9-1-1 service. At such time that AMCI exercises any option in this
regard, and with respect to the AMCI-relevant data and databases that SCC
legally controls hereunder, SCC will deliver to AMCI such data contained in such
databases, and other information, that is necessary to allow SCC to be
substituted in this regard; provided, however that SCC shall not be obligated to
do so if such delivery or other performance would violate the provisions of the
confidentiality provisions contained herein, result in a breach of contract to
which SCC is a party as of the date hereof, violate any other law or private
right, would convey to AMCI any intellectual property or other right to which
AMCI is otherwise unentitled hereunder, or would otherwise unreasonably subject
SCC to civil or criminal prosecution. Such data and information shall include
but not be limited to "AMCI Results", as defined herein below, along with the
data needed to perform said Services in a readable file that is convertible with
commercially available software which data is current as of the date of such
substitution. Upon AMCI's request, and subject to the above limitations, SCC
will provide to AMCI whatever explanatory information or functional tools in
SCC's possession or legitimate control which are reasonably necessary for AMCI
to fully exploit the database contents.
Unless otherwise agreed by the Parties, after such time as AMCI becomes
responsible for the Transitioned Services as contemplated herein, SCC would
continue to upload to AMCI's SCP(s) on AMCI's behalf the mapping files which
operate in connection with the location-based application software being
utilized by the Parties as of that date, or a reasonable substitute therefore,
which SCC is capable of and willing to support.
Following termination, cancellation or expiration of this Agreement, or in
connection with an Orderly Transition, if AMCI requests that SCC continue to
provide any portion or all of the Services, for which SCC would not otherwise be
contractually obligated to provide under the terms and conditions of this
Agreement, AMCI shall compensate SCC for such Services at the same rate as that
set forth herein for such Services.
3. TERM AND TERMINATION
3.1 TERM.
Unless earlier terminated or canceled in accordance with this section, the
term of this Agreement shall begin upon the Effective Date as first stated
herein and continue until December 31, 2000. If either Party terminates this
Agreement according to the provisions of this section, then both Parties agree
to participate in the orderly shutdown and transition of products and services
as provided herein. Following this initial term, the Agreement shall
automatically renew for continuous twelve (12) month terms unless terminated at
the end of a renewal term upon no less than sixty (60) days advance written
notification by the terminating Party.
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3.2 TERMINATION AND CANCELLATION.
3.2.1 TERMINATION BY AMCI.
This Agreement may be terminated by AMCI in whole or part for any of the
following reasons:
(1) if SCC defaults in its performance of any material obligation
required to be performed by SCC under this Agreement (including, but not
limited to, a failure by SCC to meet the specific acceptance or performance
requirements set forth in Exhibit A, or the warranties set forth herein),
and such default is not cured (or, in AMCI's reasonable opinion,
satisfactory progress has not been made as part of the escalation
procedures described in Exhibit A) within a thirty (30) day "cure period"
following receipt of AMCI's written notice which describes the default; or
(2) in the event of any acquisition, or takeover of a controlling
interest in SCC by another entity, or a merger or other consolidation of
SCC into or with another entity, if the other or surviving entity, at
AMCI's discretion is or could be deemed a competitor of AMCI or its
Affiliates in the telecommunications industry, or if the entity in AMCI's
reasonable discretion is not financially or operationally capable of
assuming the services being provided hereunder; or
(3) in the event continued performance under this Agreement would
cause AMCI to be in violation of any court order or regulatory agency
having jurisdiction, or of any law, statute, ordinance or regulation,
except that any failure of the Tandem, Signal Soft, SCC solution
contemplated herein shall not be deemed such a cause which circumstance is
addressed in and controlled by section 3.2.2 herein below.
In the event of an AMCI termination as described above, AMCI will have no
payment obligations to SCC beyond the effective termination date and will not be
obligated to pay SCC.
In the event of an AMCI termination as described above, SCC will cooperate
in the orderly transition of such terminated services in accordance with the
applicable provisions of section 2.5.2 herein.
A termination of this Agreement by AMCI does not in any way obligate AMCI
to purchase any other SCC products and services following such termination.
Even if any of the above reasons (that allow AMCI to terminate) may be
isolated to a particular state(s), AMCI retains its right to terminate the
entire Agreement if it so chooses.
3.2.2 TERMINATION BY AMCI -- NON-INTEGRATION WITH SCP NETWORK.
SCC understands that AMCI's E9-1-1 network must operate in combination with
equipment, hardware and software provided by Tandem, Signal Soft and Lucent to
AMCI. SCC agrees to cooperate fully with such other suppliers to the extent
necessary to assure that AMCI's E9-1-1 network will function in accordance with
the specifications and requirements of this Agreement, any applicable TIA or
Bellcore standards and specifications, and any standards for E9-1-1, Phase I
services mandated by federal, state or local laws, ordinances, rules and
regulations. In the event that the SCC, Tandem, Signal Soft and Lucent solution
cannot perform in an integrated manner in the AMCI network and thereby process
E9-1-1 calls per the applicable standards for Phase I E9-1-1, AMCI shall provide
SCC with written notice of said non-integration. Immediately after SCC's receipt
of such notice, the Parties will, in good faith, jointly explore an alternative,
compliant solution for processing E9-1-1 calls which solution would, to the
extent practical, designate SCC as the provider of the database management
services defined in the SOW, subject to the terms and conditions described below
in this subsection. AMCI will give due consideration to the opinions and
recommendations of SCC in connection with the selection of an alternative,
compliant solution, but AMCI will have sole discretion as to its final choice.
If said alternative solution contemplates an E9-1-1 call processing
platform whereby said database management services, as defined in the SOW, can
be performed as a "stand alone" functionality and not bundled with other
services, then SCC will have the right to provide those database services at the
same costs and under terms and conditions that are no less favorable to AMCI
than those set forth in this Agreement.
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If such alternative solution is provided by a third party and involves a
platform whereby the third party vendor providing such solution uses database
management services as a bundled offering with SCP(s) and location-based
software to accomplish E9-1-1 call processing functionality, then SCC would only
have the right to provide such database management services if: (a) SCC and AMCI
jointly obtain consent from said third party vendor to un-bundle said database
management services; (b) using SCC would not deprive AMCI of its options for
selecting an alternative, compliant solution as described herein; (c) SCC would
agree to provide such services under terms and conditions that are no less
favorable to AMCI than that set forth herein; (d) SCC would agree to provide
such services at a cost that, when added to the third party vendor's total cost
to provide the bundled service, minus the price at which said third party would
otherwise provide database management services, would not exceed the third party
vendor's total original cost for the bundled services; and (e) SCC would agree
to provide such services in a manner that equals or exceeds the quality of
database management services offered as part of the bundled service.
If SCC and AMCI cannot provide or mutually agree to a plan to provide an
alternate, compliant functionality within a thirty (30) day period, measured
from the date on which SCC receives said notice of non-integration, which period
may be extended by mutual agreement of the Parties, then AMCI may terminate the
portion of this Agreement affected by such non-integration upon written notice
of AMCI's desire to terminate, which notice shall state the effective date of
such termination and the reasons supporting such termination. Such a termination
shall not be deemed a default by SCC. AMCI may exercise its termination rights
hereunder for a period up to one hundred twenty (120) days after successful
completion of the First Office Application (FOA). For the purposes of this
clause, successful completion of the FOA means successful completion of the
testing based upon the Signal Soft Acceptance test document "W911-TP-Acceptance
Test" dated December 16, 1997 and the commercial deployment of the SCC, Tandem,
Signal Soft and Lucent solution with a Qualified PSAP and live AMCI customer
traffic on a duplex SCP configuration. In the event AMCI exercises its right of
termination in this regard, AMCI shall be responsible for paying SCC all the
fees otherwise payable in accordance with the provisions of section 4 herein for
Services rendered as of the date of said termination.
Appendix A-1 is an E9-1-1 System Supplier Responsibility Matrix that lists
the start-up and ongoing system responsibilities as between the various parties
involved in the SCC, Tandem, Signal Soft, Lucent and AMCI solution. For purposes
of this Agreement, said matrix shall govern any disputes regarding E9-1-1
supplier responsibility as between SCC, Tandem, Signal Soft, Lucent and AMCI. In
the event of a dispute not involving any one or more of such third parties but
which is solely between SCC and AMCI over SCC's and AMCI's respective
responsibilities as set forth in said matrix as opposed to that which is set
forth in Exhibit A, that which is set forth in Exhibit A will control said
dispute. SCC shall provide for those responsibilities described in Exhibit A at
no additional charge beyond the contracted Non-recurring and Recurring fees
listed in section 4 herein below.
3.2.3 CANCELLATION BY AMCI.
In the event the regulatory, legal, labor or business conditions,
("business conditions" being defined as market share, profitability, ability to
grow revenue, and the allocation of internal resources) under which this
Agreement is based upon change so that it would no longer be in AMCI's best
interests to continue with the full term as stated herein, AMCI shall have the
ability to cancel this Agreement in its entirety, or on a state-by-state basis,
at any time upon providing SCC prior written notice of its intention to cancel,
and the scope (i.e., # of states) of the cancellation, at least 180 days in
advance of the AMCI designated cancellation date. Exhibit B, "Cancellation Fee
Schedule", sets forth AMCI's cancellation fee payment obligations to SCC in the
event of such cancellation. Payment by AMCI of the cancellation fee shall be the
extent of AMCI's liability to SCC in the event of a cancellation hereunder.
The Parties acknowledge and agree that the cancellation fee is not a
penalty and is, and shall be deemed, liquidated damages which damages are
reasonably based on the Parties' best estimate of what SCC's damages would be as
a result of AMCI's cancellation for Business Conditions.
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In the event this Agreement is cancelled by AMCI in whole or part in
accordance with this Section, SCC agrees, at AMCI's option, to sell AMCI those
SCC products and services, to which SCC has the ability and legal capacity to
sell, and which are desired by AMCI, under prices and terms consistent with the
"Most Favored Customer" provisions set forth herein. Except as may otherwise be
provided hereunder, in the event of an AMCI cancellation, AMCI will have no
payment obligations to SCC beyond the effective cancellation date for that
portion of the Agreement cancelled.
A cancellation of this Agreement by AMCI does not in any way obligate AMCI
to purchase any other SCC products and services following such cancellation.
3.2.4 TERMINATION BY SCC.
This Agreement may be terminated by SCC if AMCI defaults in its performance
of any material obligation required to be performed by AMCI under this Agreement
(including, but not limited to, a failure by AMCI to pay SCC's undisputed
invoices for services performed), and such default is not cured (or, in SCC's
reasonable opinion, satisfactory progress has not been made) within a thirty
(30) day "cure period" following receipt by AMCI of SCC's written notice which
describes the default.
4. FEES AND PAYMENT
4.1 FEES FOR SERVICES.
4.1.1
AMCI will pay SCC the fees and charges in the amounts and in the manner set
forth below:
A. NON-RECURRING ENGINEERING FEE ("NRE") FOR EACH MOBILE SWITCHING CENTER
("MSC") MARKET
The Mobile Switching Center ("MSC") market Non-Recurring Engineering
("NRE") Fee, of [ ] dollars ($[ ]) per Mobile Switching
Center ("MSC"), is a one time charge per MSC which will cover the work
associated with MSC network interconnection analysis and coordination,
market-specific Cell/ Face coverage mapping, selective router assignment and
location description assignment; initial pANI data build & validation with
Qualified PSAPs in each market area served by the MSC; delivery of validated
pANIs to appropriate ALI databases; MSC market wireless 9-1-1 test coordination,
as described in Exhibit A. Said NREs will be due upon execution of a
Modification Order, Request Form or such other documentation that accompanies
AMCI's request that SCC initiate the work related to turning up an MSC with the
Services.
B. MONTHLY RECURRING FEES ("MRF") FOR SERVICES
The Monthly Recurring Fees ("MRF") for Services are itemized below and are
each charged on a per Subscriber per month basis. MRF shall commence at such
time as Service is deployed to the Qualified PSAP in AMCI's Region which
Qualified PSAP is the first in time to be deployed by AMCI.
The MRF for Services, provided on an exclusive basis by SCC during the term
of this Agreement in the Ameritech Wireline Region, and on a non-exclusive basis
in all other AMCI Regions, and will be billed at a rate of $[ ] per
Subscriber per month. This rate shall be fixed for the term of this Agreement
unless modified pursuant to this Agreement and the following adjustments:
Any time after 12 months from the date on which a particular Qualified
PSAP, which has requested Phase I E9-1-1 Service, is turned-up and Services
are deployed by SCC in accordance with the terms of this Agreement, if AMCI
elects to exercise its option to perform all of the "Transitioned Services"
described in subparagraph 2.5.1(a) of the Agreement, then only as to those
particular Qualified PSAPs in those market(s) in which AMCI performs such
Transitioned Services, the above MRF of $[ ] will be discounted by
$[ ]; and
Any time after 12 months from the date on which a particular Qualified
PSAP, which has requested Phase I E9-1-1 Service, is turned-up and Services
deployed by SCC in accordance with the terms of this
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Agreement, if AMCI elects to exercise its option to perform all of the
"Transitioned Services" described in subparagraph 2.5.1(b) of the
Agreement, then only as to those Qualified PSAPs in those market(s) in
which AMCI performs such Transitioned Services, another discount in the
amount of $[ ] will be applied to further reduce said MRF.
For those markets in which AMCI does not perform all of the applicable
Transitioned Services, no discount will apply. AMCI may exercise either or both
of such options in any order, regardless of whether done consecutively,
non-consecutively or concurrently.
Unless otherwise mutually agreed by the parties in writing, an increase in
the fees, rates and prices referenced herein, if any, which occur beyond the
initial term of this Agreement will not exceed [ ] of the relevant
fee, rate or price in effect during the immediately-preceding twelve (12) month
period.
C. REPORTING
The Parties will cooperate monthly as follows in calculating the number of
Subscribers as follows:
1. Not later than the 15th day of each month, commencing the first
month that Services have been deployed, and continuing for the duration of
this Agreement, SCC will provide to AMCI, in an agreed-upon electronic
format, a list of zip codes falling with a given Qualified PSAP boundary
for which such Qualified PSAP has deployed Services. Unless otherwise
modified in connection with a mutually agreed-upon "true-up" process, as
described in paragraph 3 herein below, said list will only include those
zip codes in which at least fifty percent (50%) of a given zip code area
falls within a Qualified PSAP boundary.
2. No later than seven (7) business days after AMCI's receipt of such
list of zip codes, AMCI will provide to SCC, in an agreed-upon electronic
format, with the number of Subscribers in each zip code, broken down by
Qualified PSAP.
3. Recognizing that this method of calculating Subscribers leaves open
the possibility that AMCI could be under-charged or over-charged in any
given month and that another method may be appropriate, the Parties will
work together and will mutually agree upon an acceptable method to
"true-up" the number of Subscribers and related MRFs on a calendar quarter
basis. Until such time, the above calculation shall govern the number of
Subscribers.
D. BILLING & PAYMENT
MRF for Services performed in a given month will be invoiced in arrears on
or about the first day of each month commencing the first month following the
date on which Services are first provided. MRF invoices will be payable by AMCI
without interest or penalty not later than thirty (30) days after AMCI's receipt
of said invoice. SCC will prepare invoices broken out by AMCI Market (which may
be modified from time to time by AMCI with reasonable advance written notice to
SCC).
SCC shall not be entitled to reimbursement by AMCI for SCC's costs of
travel or any expense directly related to any non-recurring engineering fees
(NRE).
4.1.2 FAIR MARKET VALUE.
The Parties agree that the price of tangible and intangible assets referred
to in this Agreement fair market value for same. With respect to any other fees,
charges, payments or purchases prospectively negotiated or determined by the
Parties which related to the Project, the same will likewise reflect fair market
value. If the Parties are unable to agree upon a price for same, each shall
select an appraiser knowledgeable in the valuation of the types of items at
issue, and the two appraisers shall attempt to reach agreement on the fair
market value. If the two appraisers are unable to reach agreement, they shall
select a third appraiser who also shall be knowledgeable in the valuation of
such matters. The three appraisers shall then determine the fair market value,
but if they are unable to agree, the fair market value shall be set by the third
appraiser. Each Party shall bear the expense of the appraiser selected by it,
and the Parties shall split the expense of the third appraiser.
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4.1.3 MOST FAVORED CUSTOMER.
[
]
4.1.4 AUDITS.
At its sole expense, SCC shall maintain complete and accurate books and
records with respect to the Project, and said books and records shall be
maintained in accordance with generally accepted accounting principles. Each
Party shall have the right to audit the books and records of the other which
books and records relate specifically to the calculation of the number of
Subscribers and related Monthly Recurring Fees (referred to as "MRF" in Exhibit
B). In addition, AMCI shall have the right to audit the books and records of SCC
which relate to prices charged to AMCI hereunder in connection with AMCI's "Most
Favored Customer" status, or which relate to billing for Fees and Charges
described in this section 4 as well as that which is relevant to SCC's
data-protection and security obligations hereunder. Such audits may be performed
at the premises of the other Party, shall be limited to once per calendar year
and shall only be allowed with not less than fifteen (15) days advance written
notice to the audited Party. Each Party will be responsible for its own costs
related to such audits. "Undisputed" invoices, as defined herein, which are not
adjusted within 12 months of the date of such invoice shall be deemed accepted
by the Parties, regardless of whether such invoice was included in a prior or
subsequent audit.
4.2 OTHER CHARGES.
Charges for miscellaneous services not contemplated in Exhibit A or section
4 hereunder, which services do not include Services, SCP Services, Add-On
Services or New Services ("Other Charges"), will be offered to AMCI on a
time-and-materials basis using SCC's then-current rates for same, less AMCI
discounts, if any, that may be applicable. In the event AMCI requests that SCC
provide such services, SCC shall first furnish AMCI with an estimate of the
amount of the Other Charges, which, upon written agreement of the Parties, may
include travel and other related expenses, and specify a reasonable
"not-to-exceed" billable amount. Billings of Other Charges for the requested
services shall not exceed the specified amount without AMCI's prior written
approval. Other Charges shall be billed in arrears, after provision of the
relevant services, and AMCI shall pay Other Charges within thirty (30) days of
the date of invoices related to such services.
4.3 DISPUTED INVOICES.
In the event of a disputed invoice, AMCI shall notify SCC within sixty (60)
days of the receipt of any such invoice and identify the nature of the dispute
or inaccuracy. AMCI shall pay any undisputed amounts set forth in said invoice
in accordance with the provisions hereof pertaining to normal payment of
invoices, and both parties shall in good faith investigate and attempt to
resolve the outstanding disputed amount.
4.4 TAXES.
Fees and charges payable hereunder shall not include any sales, use,
excise, transaction or other similar taxes levied against or upon the furnishing
or receipt of Service or SCP Services. Further, the amounts payable by AMCI
hereunder are exclusive of all federal, state and local taxes, taxes that are
based on SCC's net or
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gross receipts, franchise taxes or other taxes based on SCC's corporate
existence or status, personal property taxes on licensed software and taxes that
may be due in whole or in part because of any failure by SCC or its agents to
file any return or information required by law, rule or regulation. If any sales
or other taxes related to SCC's provision of Services are payable or mandated by
current or prospective application of law, they shall be separately stated on
the monthly invoice to AMCI, and AMCI shall be responsible for paying same in
accordance with the terms and conditions set forth in this section 4 for payment
of invoices. AMCI shall reimburse SCC for any penalties or interest actually
levied upon SCC only if AMCI's acts or omissions solely caused such penalty or
interest to be levied.
5. LICENSES AND DEVELOPED INFORMATION
5.1 LICENSES.
Notwithstanding any conflicting provision herein, nothing in this Agreement
shall be construed to grant AMCI any right, title or interest in or license to
any SCC Furnished Technology, as defined herein below, SCC hardware or software
products used in the provision of Services, New Services, Add-On Services, any
other SCC proprietary information or intellectual property or SCC-owned
Proprietary Rights (defined herein below). Nothing in this Agreement shall be
construed to grant SCC any right, title or interest in AMCI Furnished
Technology, as defined herein below, AMCI proprietary information, intellectual
property, any data being provided to SCC by AMCI for use in the provision of
Services, New Services, Add-On Services or AMCI-owned Proprietary Rights.
Notwithstanding the above, AMCI shall be entitled to quiet enjoyment of the
benefits of the software made available to AMCI hereunder during the Initial
Term and any Renewal Terms.
5.1.1 SOURCE CODE -- ESCROW.
With respect only to that SCC-owned software utilized by SCC in connection
with the provision of the Services, SCC shall arrange to place a copy of the
most recent version of such software, and the related source code and any
documentation, in escrow with an escrow agent selected by SCC. Said source code
shall be in the form of magnetic medium compatible with equipment the same or
similar to that which provides the Services. Pursuant to a written agreement
between SCC and said escrow agent, said agent will be under a duty to release
the Source Code to AMCI only after sufficient evidence has been demonstrated to
said agent that: (a) SCC makes an assignment for the benefit of creditors,
admits in writing its inability to pay debts as they mature, has a trustee or
receiver appointed to manage all or a substantial part of its assets, or
commences or has commenced against it a proceeding under the United States
Bankruptcy Code and such proceeding is acquiesced in or not dismissed within
sixty (60) days; or (b) SCC ceases, for any reason, to do business or to provide
maintenance and support for such software and or Services.
Such software, source code and documentation shall only be released after
said agent has provided SCC not less than thirty (30) days written notice of the
escrow agent's intent to release same to AMCI.
If the software is modified during the term of this Agreement, SCC shall be
responsible for ensuring that an updated copy thereof, and updated source code
and documentation, is deposited with said escrow agent not less than ten (10)
days after SCC's receipt of such modification, or fifteen (15) days after such
modification occurs, whichever is later. The costs related to said escrow
agreement and any release of the source code shall be borne by SCC and AMCI
equally.
5.1.2 LOCATION-BASED SOFTWARE.
SCC agrees to utilize the software of Signal Soft in connection with SCC's
provision of Services and will maintain said software in its most current form
and will provide AMCI with support of the mapping functionality for the
location-based software as described in Exhibit A. At no cost to SCC, AMCI shall
provide SCC with a copy of MAPs Software ("Licensed Software") which AMCI has
licensed from SignalSoft Corp. ("SignalSoft") for use by SCC in its provision of
database management services for AMCI pursuant to the terms of this Agreement.
SCC agrees to abide by the restrictions on disclosure and copying of
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the Licensed Software contained in Section 4 of AMCI's agreement with
SignalSoft, a copy of which Section is attached hereto as Exhibit E, and agrees
to return such copy of the Licensed Software retaining no copies, to AMCI upon
termination of SCC's Agreement with AMCI. SCC agrees that SignalSoft shall be a
third party beneficiary of the agreements contained in this paragraph and that
SignalSoft may enforce them directly against SCC.
5.2 DEVELOPED INFORMATION -- DEFINITIONS.
5.2.1 PROPRIETARY RIGHT.
"Proprietary Right" means any patent, copyright, trade secret, trademark or
other intellectual property right that is protected or protectable under the
laws of any governmental authority having jurisdiction.
5.2.2 AMCI FURNISHED TECHNOLOGY.
"AMCI Furnished Technology" means any design, specification, know-how,
computer program, computer software, computer hardware, device, technique,
algorithm, method, procedure, discovery or invention, whether or not reduced to
practice, or enhancement, improvement or derivative works thereof that (a) is
protected or protectable under any Proprietary Right, (b) is owned or controlled
(by license or otherwise) by AMCI or any of its affiliates, and (c) is furnished
or to be furnished by AMCI or any of its affiliates to SCC under this Agreement.
AMCI represents that any of its employees or agents who have or may have a right
of interest in or to AMCI Furnished Technology have executed proper waivers
granting all right, title and interest in same to AMCI.
5.2.3 SCC FURNISHED TECHNOLOGY.
"SCC Furnished Technology" means any design, specification, know-how,
computer program, computer software, computer hardware, device, technique,
algorithm, method, procedure, discovery or invention, whether or not reduced to
practice, or enhancements, improvements or derivative works thereof that (a) is
protected or protectable under any Proprietary Right, (b) is owned or controlled
(by license or otherwise) by SCC or any of its affiliates, and (c) is furnished
or to be furnished by SCC or any of its affiliates to AMCI under this Agreement.
SCC represents that any of its employees or agents who have or may have a right
of interest in or to SCC Furnished Technology, or those who are performing
Services hereunder, have executed appropriate waivers granting all right, title
and interest in same to SCC.
5.2.4 AMCI RESULTS.
"AMCI Results" means any information or data that (a) does not fall within
the definition herein of Services or New Services, and (b) is not public
information, and (c) is not SCC Furnished Technology or the property of any
third party, and (d) is protected or protectable as a Proprietary Right, and (e)
is created, compiled, conceived, developed, discovered, invented, or made by SCC
specifically for the benefit of AMCI. Results shall include all AMCI-specific
network data, including MSC, cell site, routing information and data, the most
recent data and map files which use the relevant location-based application
software.
5.3 DEVELOPED INFORMATION -- RIGHTS.
5.3.1 AMCI RESERVATION OF RIGHTS.
AMCI reserves all of its right, title and interest in all AMCI Furnished
Technology and all Proprietary Rights in same.
5.3.2 SCC RESERVATION OF RIGHTS.
SCC reserves all of its right, title and interest in all SCC Furnished
Technology and all Proprietary Rights in same.
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5.3.3 OWNERSHIP OF AMCI RESULTS.
AMCI will be the exclusive owner of all right, title and interest in the
AMCI Results and all Proprietary Rights in same. To the extent permitted under
the United States Copyright Act (17 U.S.C. sec. 101 et seq. and any successor
statutes thereto), the AMCI Results will constitute "works made for hire" and
the ownership of such AMCI Results will vest in AMCI at the time they are
created. In any event, SCC hereby assigns and transfers, and promises to assign
and transfer, to AMCI all SCC's right, title and interest in the AMCI Results
and Proprietary Rights thereto.
6. CONFIDENTIALITY AND NONDISCLOSURE
6.1 NON-DISCLOSURE AND SYSTEM SECURITY.
The Parties each recognize and acknowledge the importance of maintaining
the security and integrity of the other Party's systems and data as well as the
confidential and proprietary nature of same, including such items as AMCI's
operating information and RF coverage areas, AMCI Results, AMCI Furnished
Technology and AMCI's network and data. To protect such data and systems, , each
Party shall strictly adhere to the confidentiality provisions contained herein
during the performance of the Parties' respective obligations hereunder. SCC
understands and acknowledges the confidential nature of AMCI's telephone
subscriber information: it shall not disclose data to which it has access under
this Agreement to any person or entity without the prior written consent of
AMCI, and shall require each SCC employee to acknowledge in writing the
confidential nature of the data and agree to abide by the terms and conditions
of this section.
During the course of this Agreement, either party may receive or have
access to confidential information of the other. "Confidential Information"
means any confidential, private, or proprietary information or data disclosed by
a Party (the "Disclosing Party") to the other Party (the "Recipient") under or
in contemplation of this Agreement which: (a) if in tangible form or other media
that can be converted to readable form is clearly marked as confidential,
proprietary or private when disclosed; or (b) if oral or visual, is identified
as confidential or proprietary upon its disclosure. The terms "Disclosing Party"
and "Recipient" include each Party's corporate affiliates that disclose or
receive Confidential Information. The rights and obligations of the Parties
shall therefore also inure to such affiliates and may be directly enforced by or
against such affiliates. The Recipient acknowledges the economic value of the
Disclosing Party's Confidential Information.
Except as otherwise provided herein or agreed in writing by the Parties,
the Recipient acknowledges the economic value of the Disclosing Party's
Confidential Information and shall:
(a) use the Confidential Information only in connection with the
Recipient's performance of its obligations or in exercising its rights
under this Agreement;
(b) restrict disclosure of the Confidential Information to employees
of the Recipient and its affiliates with a "need to know" and not disclose
it to any other person or entity without the prior written consent of the
Disclosing Party;
(c) advise those employees who access the Confidential Information of
their obligations with respect thereto; and
(d) copy the Confidential Information only as necessary for those
employees who are entitled to receive it and ensure that all
confidentiality notices are reproduced in full on such copies.
6.2 EXCEPTIONS.
The obligations of this section shall not apply to any Confidential
Information which the Recipient can demonstrate:
(a) is or becomes available to the public through no breach of this
Agreement or any other agreement;
(b) was previously known by the Recipient without any obligation to
hold it in confidence;
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(c) is received from a third party free to disclose such information
without restriction;
(d) is independently developed by the Recipient without the use of
Confidential Information of the Disclosing Party;
(e) is approved for release by written authorization of the Disclosing
Party but only to the extent of such authorization and without any
disassembly, reverse engineering, or similar undertaking by Recipient; or
(f) is required by law or regulation to be disclosed, but only to the
extent and for the purposes of such required disclosure, and only if the
Recipient first notifies the Disclosing Party of the order which permits
the Disclosing Party a reasonable opportunity to seek an appropriate
protective order;
(g) is disclosed in response to a valid order of court or other
governmental body of the United States or any political subdivisions
thereof, but only to the extent of and for the purpose of such order, and
only if the Recipient first notifies the Disclosing Party of the order and
permits the Disclosing Party to seek an appropriate protective order.
6.3 OWNERSHIP OF CONFIDENTIAL INFORMATION.
Confidential Information, including permitted copies, shall remain vested
in, and be deemed the property of the Disclosing Party. The Recipient shall,
within twenty (20) days of a written request by the Disclosing Party, return all
Confidential Information (or any designated portion thereof), including all
copies thereof, to the Disclosing Party or if so directed by the Disclosing
Party, destroy such Confidential Information. The Recipient shall also, within
thirty (30) days of receipt of a written request by the Disclosing Party,
certify in writing that it has satisfied its obligations under this section. If
the Recipient fails to abide by its obligations under this section, the
Disclosing Party shall be entitled to immediate injunctive relief in addition to
any other rights and remedies available to it at law or in equity.
7. WARRANTIES
7.1 WARRANTY BY SCC.
SCC warrants and represents to AMCI that: any support and services that SCC
provides to AMCI under this Agreement shall be provided by personnel who are
trained and skilled in the provision of such services and shall be provided in a
professional, effective and efficient manner that equals or exceeds the
then-current industry standard for such services. SCC further warrants that the
Services provided hereunder shall equal or exceed the Performance Metrics
criteria set forth in Exhibit A.
EXCEPT AS PROVIDED, INCORPORATED INTO, OR REFERRED TO IN THIS AGREEMENT,
THERE ARE NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, REGARDING THE SERVICES
PROVIDED BY SCC HEREUNDER.
If AMCI fails to meet its obligations hereunder, or if AMCI is negligent in
its performance hereunder or willfully commits an act or omission with regard to
the provisions hereof, and such failure, negligence or willful conduct
proximately causes a circumstance where SCC is unable to meet one or more of its
warranty obligations hereunder, then performance by SCC under such warranties
shall be suspended as of the date of such failure, negligence or willful
conduct, as the case may be until cured by AMCI. If the nature of the affected
warranty is such that it can not be cured, then such warranty shall be void.
SCC has all requisite power and authority and all material licenses,
permits and other authorization necessary to own an operate its business and to
perform the obligations imposed upon it hereunder and to provide the Services
and SCP Services;
Any computer software or routing services supplied or delivered hereunder
by or for SCC will: (1) accept date information before, during and after January
1, 2000, including but not limited to accepting date input,
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providing date output and performing calculations on dates or portions of dates;
(2) function accurately, without disruption or abnormal ending-scenario or with
any change in the operation of such software or routing services associated with
the advent of the new century, (3) respond to two-digit year and date input in a
way that resolves the ambiguity as to century in a disclosed, defined and
predetermined manner, and (iv) store and provide output of date information in a
way that is unambiguous as to the twentieth or twenty-first century;
SCC warrants that it has no knowledge of any existing software viruses that
would materially impact SCC's performance hereunder. If SCC becomes aware of any
such viruses in its products used in the performance of the Services ordered by
AMCI, it will advise AMCI in writing immediately. If AMCI's performance
hereunder is negatively impacted by SCC's failure to notify AMCI in a timely
fashion of a software virus of which SCC has notice, SCC shall be responsible
for such consequences. Upon learning of a virus in its software, SCC shall use
its best efforts to remedy it as soon as possible.
In the event of any breach of the above warranties, SCC will, at its sole
expense, take appropriate corrective action, including repair or replacement of
the system component not meeting such warranty with respect to hardware or
software and with respect to personnel and business operations, re-performance
of Services or SCP Services or such remedial action as will bring such warranty
into compliance
7.2 WARRANTY BY AMCI.
(a) AMCI warrants that it has all requisite power and authority and all
material licenses, permits and other authorization necessary to own and operate
its business and to perform the obligations imposed upon it hereunder;
(b) AMCI has no knowledge of any existing software viruses that would
materially impact AMCI's performance hereunder. If AMCI becomes aware of any
such viruses in its software used in connection with its performance hereunder,
it will advise SCC in writing immediately. If SCC's performance hereunder is
negatively impacted by AMCI's failure to notify SCC in a reasonably timely
fashion of its knowledge of such viruses, AMCI shall be responsible for such
consequences. Upon learning of such a virus, AMCI shall use its best efforts to
remedy same as soon as possible, at no cost to SCC.
8. INDEMNIFICATION
8.1 GENERAL INDEMNIFICATION.
Each Party shall indemnify and hold harmless the other and the other's
corporate affiliates and their officers, directors, employees, and agents and
their successors and assigns against and from any and all losses, damages,
expenses (including, without limitation, attorneys' fees and costs), claims,
suits and liabilities, whether based in contract or tort (including strict
liability), to the extent that such losses, damages, expenses, demands, claims,
suits and liabilities arise out of or in connection with (a) the indemnifying
Party's negligent or intentional acts or omissions, or those of persons
furnished by it, (b) the failure of the indemnifying Party to fully comply with
the terms and conditions of this Agreement, (c) assertions under Worker's
Compensation or similar laws made by persons furnished by the indemnifying
Party, or (d) the performance or nonperformance of the Services under this
Agreement by the indemnifying Party. The indemnified Party shall promptly notify
the indemnifying Party of any written claim, loss or demand for which the
indemnifying Party is responsible under this Section
8.2 INTELLECTUAL PROPERTY INDEMNIFICATION.
SCC shall defend, at its sole cost and expense, any claim or action of any
kind against AMCI for alleged violation, infringement or misappropriation of any
patent, copyright, trade secret or other intellectual property right based on
the use of SCC products or services under this Agreement. SCC shall have the
right to conduct the defense of any such claim or action and all negotiations
for settlement or compromise, unless otherwise mutually agreed to in writing by
the Parties hereto. However, AMCI, at its own expense, shall have the right
14
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to participate in the defense of any such suit or proceeding through counsel of
its choosing. SCC shall indemnify and hold harmless AMCI and its officers,
directors, employees, and agents and their successors and assigns against and
from any and all losses, liabilities, damages, claims, demands and expenses
(including, without limitation, reasonable attorneys' fees) arising out of or
related to any such claim or action.
If any SCC product used to provide the Services under this Agreement
becomes involved in any claim or action described above, or is held to
constitute a violation, infringement or misappropriation of a third party's
intellectual property rights and the use thereof is enjoined, then SCC shall, at
SCC's expense and option:
(i) procure the right to continue using said product so that its use
by SCC for AMCI is lawful;
(ii) modify such product so that its use by SCC for AMCI is lawful
(provided that such modification does not adversely affect the Services
provided); or
(iii) replace such product, at no charge to AMCI, with equally
suitable, compatible and functionally equivalent products that lawfully may
be used by SCC for AMCI.
9. LIMITATION OF LIABILITY
EXCEPT WITH RESPECT TO SCC'S OBLIGATION TO INDEMNIFY AMCI IN CONNECTION
WITH THIRD PARTY CLAIMS AND IN CONNECTION WITH INTELLECTUAL PROPERTY
INFRINGEMENT AS SET FORTH IN SECTION 8 HEREIN ABOVE, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR
PUNITIVE DAMAGES, WHETHER BASED UPON LOST GOODWILL, LOST PROFITS, LOSS OF USE OR
PERFORMANCE OF ANY PRODUCTS, SERVICES, OR OTHER PROPERTY, LOSS OR IMPAIRMENT OF
DATA OR SOFTWARE, OR OTHERWISE, AND WHETHER ARISING OUT OF BREACH OF EXPRESS OR
IMPLIED WARRANTY, CONTRACT (INCLUDING THE FURNISHING, PERFORMANCE, OR USE OF ANY
HARDWARE, SOFTWARE OR OTHER PRODUCTS, MATERIALS, OR SERVICES PROVIDED PURSUANT
TO THIS AGREEMENT OR THE PERFORMANCE OR NONPERFORMANCE OF OBLIGATIONS UNDERTAKEN
IN THIS AGREEMENT), TORT, (INCLUDING NEGLIGENCE), STRICT PRODUCT LIABILITY OR
OTHERWISE, REGARDLESS OF WHETHER SUCH PARTY HAS BEEN NOTIFIED OF THE POSSIBILITY
OF SUCH DAMAGES OR IF SUCH DAMAGES COULD HAVE BEEN REASONABLY FORESEEN.
To the extent not otherwise governed by federal, state or local law, and
except with respect to SCC's obligation to indemnify AMCI in connection with
third party claims and in connection with intellectual property infringement set
forth in section 8 herein above, SCC's entire liability to AMCI shall be limited
to that which is directly related to its alleged negligent performance or
non-performance of its obligations hereunder, and in any event shall be limited
to the payment of a sum not to exceed [ ].
10. INSURANCE
During the Term hereof, including any extensions, SCC must maintain not
less than the same insurance coverages as that described in SCC's agreement with
Ameritech Information Systems, Inc. dated August 31, 1994. Neither SCC nor SCC's
insurer(s) shall have a claim, right of action or right of subrogation against
AMCI based on any loss or liability insured against under the foregoing
insurance. SCC's policy must be endorsed to name AMCI and its corporate
affiliates as additional insureds and state: "AMCI is to be notified in writing
at least ten (10) days prior to cancellation of or any material change in this
policy". Also, SCC must furnish certificates evidencing the foregoing insurance
coverage prior to commencement of performance.
If SCC fails to maintain the insurance required by this Section, AMCI may
procure such insurance. In such event, SCC shall promptly reimburse AMCI for any
premiums and other charges paid by AMCI for such coverage.
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11. GENERAL PROVISIONS
11.1 EXHIBITS.
Exhibits A, B, C and D shall be deemed incorporated herein and an integral
part of this Agreement. Any AMCI requests for proposal, SCC's responses thereto,
marketing or sales material or any other similar documentation, as well as any
written or verbal representations concerning the Services, SCP Services, New
Services or Add-On Services are specifically excluded from this Agreement and
shall have no relevance, value or binding effect hereon.
11.2 ELECTRONIC EXCHANGE.
To the extent possible, as determined by subsequent, mutual agreement of
the Parties, the Parties will endeavor to use and implement automation
procedures, such as electronic data interchange (EDI), electronic mail and "Web
pages", to facilitate communication, coordination, maintenance, and management
of the Services. If implemented, each Party will be responsible for its
respective costs associated with such exchange.
11.3 STAFFING LEVEL.
SCC will, at all times relevant hereto, maintain a sufficient number of
employees in its discretion to adequately perform the Services, and if
applicable, New Services and Add-On Services.
11.4 ADVERTISING AND PUBLICITY.
SCC shall not prepare or distribute any news releases, articles, brochures,
speeches, Advertisements or other informational releases concerning this
Agreement and the activities performed hereunder without the prior written
consent of AMCI. In addition, SCC shall not use the "Ameritech" or AMCI name or
mark (or any variation thereof) without the prior written consent of AMCI, which
shall not be unreasonably withheld.
11.5 ASSIGNMENT AND DELEGATION.
Neither party shall assign any right or obligation under this Agreement
without the other party's prior written consent. Any attempted assignment shall
be void, except that either party may assign monies due or to become due to it,
provided that (a) the assigning party gives the other party at least ten (10)
days prior written notice of such assignment and (b) such assignment does not
impose upon the other party obligations to the assignee other than the payment
of such monies.
Notwithstanding the foregoing, AMCI may assign this Agreement, in whole or
in part, to any of its Affiliates. SCC may assign this Agreement, in whole or in
part, to any of its Affiliates; provided, however, that SCC may not assign this
Agreement to any entity that directly or indirectly through that entity itself
or one of its Affiliates provides two-way cellular voice communication services
or other wireless communication or data services. With respect to assignments by
either Party, any purported assignment may be rejected by the non-assigning
Party, and therefore deemed void, if such Party determines that the assignee is
incapable of substantially performing the assigning Party's obligations
hereunder. Upon such permitted assignment and written assumption of liability
thereto by the assignee, the assignor shall be discharged of any liability under
this Agreement.
11.6 COMPANY RULES.
SCC's employees and agents shall comply with all of AMCI's, governmental
security and plan requirements, rules and regulations provide to SCC while on
AMCI's premises, and AMCI's employees shall comply with all of SCC's,
governmental security and plan requirements, rules and regulations provided to
AMCI while on SCC's premises.
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11.7 ESCALATION PROCEDURES.
The Parties shall attempt to resolve any dispute between them that may
arise under this Agreement through their respective Project Managers as
described in Exhibit A. If after attempting to do so, either Party determines
that the dispute is irresolvable and so notifies the other Party, no further
obligation to escalate the matter shall exist by either Party, in which case,
the Parties are free to pursue any and all remedies available at law or in
equity.
11.8 FORCE MAJEURE.
Neither Party shall be liable to the other for any delay or failure to
perform under this Agreement if the delay or failure to perform is without the
fault or negligence of the Party claiming excusable delay and is due to causes
beyond the control of said Party, including, but not limited to acts of God,
war, acts of the government (where neither Party is itself a governmental body),
fires, floods, epidemics, quarantine restrictions, civil disobedience, criminal
acts by a third party, strikes, labor disputes (including collective bargaining
disputes), work stoppages, and freight embargoes.
11.9 GOVERNING LAW.
The validity of this Agreement, the construction and enforcement of its
terms and the interpretation of the rights and duties of the Parties shall be
governed by the domestic laws of the State of Illinois.
11.10 INDEPENDENT CONTRACTORS.
The Parties are performing pursuant to this Agreement only as independent
contractors. Each Party has the sole obligation to supervise, manage, contract,
direct, procure, perform, or cause to be performed its obligations set forth in
this Agreement, except as otherwise provided herein or agreed upon by the
Parties. Except as specified in this Agreement, nothing set forth in this
Agreement shall be construed to create the relationship of principal and agent
between SCC and AMCI. Neither Party shall act or attempt to act or represent
itself, directly or by implication, as an agent of the other Party or its
affiliates or in any manner assume or create, or attempt to assume or create,
any obligations on behalf of, or in the name of the other Party unless so
instructed by the other Party in writing or allowed under this Agreement.
Nothing herein is intended or shall be construed to create any partnership,
agency, or joint venture relationship between the Parties. Neither Party or a
Party's subcontractor, or the employees of any of them, shall be deemed for any
purpose to be employees of the other Party. Each Party shall be solely
responsible for the withholding or payment of all applicable federal, state, and
local personal income taxes, social security taxes, unemployment and sickness
disability insurance, and other payroll taxes with respect to its own employees.
11.11 SUBCONTRACTING.
SCC shall not subcontract any portion of the work required to be performed
as part of the Project without the prior written consent of AMCI.
11.12 JOINT WORK PRODUCT.
This Agreement is the joint work product of representatives of AMCI and
SCC. Accordingly, in the event of ambiguities, no inferences will be drawn
against either party, including the Party that drafted the Agreement in its
final form
11.13 LAWS, REGULATIONS AND PERMITS.
Each Party shall comply, at its own expense, with all applicable federal,
state, county, and local ordinances, regulations and codes in the performance of
its obligations hereunder, including procurement of required permits and
certificates, the Fair Labor Standards Act, and the Occupational Safety and
Health Act.
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11.14 NOTICES.
All notices or other communications required or permitted to be given under
this Agreement shall be in writing (unless otherwise specifically provided
herein) and delivered or addressed as follows:
To AMCI: Ameritech Mobile Communications, Inc.
2000 West Ameritech Center Drive
Hoffman Estates, IL 60195
Attn: Manager Network Planning, LOC. 3F25D
with a copy to:
Ameritech Mobile Communications, Inc.
2000 West Ameritech Center Drive
LOC. 3H78
Hoffman Estates, IL 60195
Attn: Vice President, General Counsel
To SCC: SCC Communications Corp.
Attn: General Counsel
6285 Lookout Road
Boulder, Colorado 80301
with a copy to:
SCC Communications Corp.
Attn: Chief Financial Officer
6285 Lookout Road
Boulder, Colorado 80301
All notices or other communications shall be deemed effectively given: (i)
when delivered, if personally delivered (except that notices received after 3:00
p.m. local time will be deemed received on the following business day); (ii) on
the date of delivery (or, if refused, the refusal date shown on the return
receipt) if mailed certified or registered mail, return receipt requested; (iii)
four (4) days after mailing if mailed first class; or (iv) when received by the
Party for which notice is intended if given in any other manner (except that
notices received after 3:00 p.m. local time will be deemed on the following
business day).
11.15 NON-WAIVER.
No course of dealing or failure of either Party to strictly enforce any
term, right, obligation, or provisions of this Agreement or to exercise any
option provided hereunder shall be construed as a waiver of such or any other
provision.
11.16 SEVERABILITY.
If any provision of this Agreement shall be held invalid or unenforceable,
such provision shall be deemed deleted from this Agreement and replaced by a
valid and enforceable provision which, so far as possible, achieves the Parties'
intent in agreeing to the original provision. The remaining provisions of the
Agreement shall continue in full force and effect.
11.17 BINDING EFFECT.
This Agreement shall be binding on, and inure to the benefit of, the
Parties and their respective successors and permitted assigns.
11.18 TIME IS OF THE ESSENCE.
Time is of the essence the performance under this Agreement.
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11.19 EQUAL OPPORTUNITY.
To the extent AMCI is required by law to extend any Equal Opportunity
Employment requirements to suppliers or vendors, and such is required to include
SCC, as a provider of Services or SCP Services, SCC shall comply with all
applicable portions of such requirements including any applicable
non-discrimination compliance provisions. AMCI shall inform SCC of such
requirements in writing as soon as same become known to AMCI.
11.20 REMEDIES.
The rights and remedies provided herein shall be cumulative and, except as
limited herein, in addition to any other remedies available at law or in equity.
11.21 AUTHORITY.
Each Party represents to the other that it has full authority to enter into
and secure performance of this Agreement and that the person signing this
Agreement on behalf of the Party has been properly authorized to enter into this
Agreement. Each Party further acknowledges that it has read this Agreement,
understands it, and agrees to be bound by all of its terms, conditions and
provisions.
11.22 ENTIRE AGREEMENT.
This Agreement, when fully executed, together with any Exhibits or other
attachments appended hereto, constitutes the entire agreement between the
parties and supersedes all promises and representations, if any, whether written
or oral between the Parties with respect to the subject matter hereof. No
modification, amendment, supplement or waiver of this Agreement or any of its
provisions shall be binding upon the Parties unless made in writing and duly
signed by an authorized representative of each Party.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
<TABLE>
<CAPTION>
<S> <C>
SCC COMMUNICATIONS CORPORATION AMERITECH MOBILE COMMUNICATIONS, INC.
/s/ John Sims /s/
- ----------------------------------------------------- -----------------------------------------------------
Signature Signature
Chief Operating Officer President
- ----------------------------------------------------- -----------------------------------------------------
Title Title
April 8, 1998 March 16, 1998
- ----------------------------------------------------- -----------------------------------------------------
Date Date
</TABLE>
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<TABLE>
Exhibit A 9-1-1CONNECT(TM) STATEMENT OF WORK
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TABLE OF CONTENTS
FOR 9-1-1Connect(TM) STATEMENT OF WORK
<S> <C>
1. OVERVIEW OF STATEMENT OF WORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. IMPLEMENTATION SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Project Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Microsoft Project Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Roles and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Initial Market Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5 System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.6 Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.7 Database Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.8 The Communication Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.9 First Office Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.10 Development of Methods and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3. OPERATIONS AND SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.1 Operations and Support Management Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.2 Network Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.3 Trouble Ticket Tracking and Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.4 Trouble Escalation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4. DATABASE MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.1 Data Record Creation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2 Data Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 Ongoing pANI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.4 Error Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.5 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.6 Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.7 Boundaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.8 Event/Transaction Data Base Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.9 Escalation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5. DISASTER MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6. CHANGE CONTROL PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.1 Change Request Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7. OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1 Professional Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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Exhibit A 9-1-1CONNECT(TM) STATEMENT OF WORK
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[
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Page 38 FINAL AMCI/SCC 9-1-1Connect(TM) SOW
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VERSION 1.0
1/28/98
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Version 1.0 1/28/98
[
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[
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Version 1.0 1/28/98
[
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E911 SYSTEM SUPPLIER RESPONSIBILITY MATRIX APPENDIX 1
[
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AMERITECH CELLULAR SERVICES CONFIDENTIAL 1/28/98 PAGE 1
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SCC-AMCI E9-1-1 Agreement
EXHIBIT B
CANCELLATION FEE SCHEDULE
In the event AMCI elects to cancel the Agreement in accordance with
Section 3.2.3, AMCI shall pay SCC a Cancellation Fee as described below:
<TABLE>
<CAPTION>
MONTH OF CONTRACT IN
WHICH CANCELLATION
OCCURS CANCELLATION FEE
- -------------------- ----------------
<S> <C>
1 [ ]
2 [ ]
3 [ ]
4 [ ]
5 [ ]
6 [ ]
7 [ ]
8 [ ]
9 [ ]
10 [ ]
11 [ ]
12 [ ]
13 [ ]
14 [ ]
15 [ ]
16 [ ]
17 [ ]
18 [ ]
19 [ ]
20 [ ]
21 [ ]
22 [ ]
23 [ ]
24 [ ]
25 [ ]
26 [ ]
27 [ ]
28 [ ]
29 [ ]
30 [ ]
31 [ ]
32 [ ]
33 [ ]
34 [ ]
35 [ ]
36 [ ]
</TABLE>
EXHIBIT B 1 06/19/98
<PAGE> 66
EXHIBIT C
SCC PROPRIETARY - USE PURSUANT TO INSTRUCTIONS
MODIFICATION ORDER
ADDENDUM NUMBER _____ TO AGREEMENT BETWEEN
SCC COMMUNICATIONS CORPORATION AND AMERITECH MOBILE COMMUNICATIONS, INC.
PRODUCT NAME (for NEW SERVICES - or ADD-ON SERVICES):
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PRODUCT DESCRIPTION:
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IMPLEMENTATION PLAN (See Attachment to this Modification Order)
ANTICIPATED SERVICE START DATE:
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NON-RECURRING CHARGES - DESCRIPTION AND AMOUNT:
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MONTHLY RECURRING CHARGES:
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- --------------------------------------------------------------------------------
PAYABLE AS OF THE EFFECTIVE DATE: _____________________________________ and
for each month thereafter during the applicable contract Term.
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This Modification Order shall be included in the Parties' Contract dated
___________ as if executed concurrently therewith.
AMERITECH MOBILE COMMUNICATIONS, INC. SCC COMMUNICATIONS CORP.
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Signature Signature
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Printed Name/Title Printed Name/Title
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Date Date
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Modification Order, Ameritech Mobile 1 06/18/98
<PAGE> 67
EXHIBIT D
SCC PROPRIETARY - USE PURSUANT TO INSTRUCTIONS
LETTER OF AGENCY
This Letter Of Agency made and this day ___of ________ , 19___, for the
appointment of SCC Communications Corp. a Delaware Corporation having its
principal offices located at 6285 Lookout Road, Boulder, Colorado 80301 as
limited agent for Ameritech Mobile Communications, Inc. (AMCI), as set forth
below.
AMCI hereby authorizes SCC Communications Corp. to act on its behalf for its use
and benefit according to the following instructions:
1. SCC Communications Corp. has agreed to provide certain 911 database
coordination services ("Services or the Services") for AMCI. In order for SCC
Communications Corp. to perform such Services, AMCI grants to SCC Communications
Corp. the authority to ask for and request maintaining AMCI's rights to the
Mobile Directory Number Subscriber Information, and daily telephone company
service order update activity used for the purpose of AMCI responding to
requests for emergency services for the Local Exchange Provider (LEC) and Basic
Emergency Service Provider. Subscriber information includes, but is not limited
to, the collection of names, addresses, and mobile directory telephone numbers (
whether published, non-published, listed, or non-listed) for customers of the
LEC and Basic Emergency Provider, and any other information associated with
and/or supporting the data for AMCI's customers.
2. SCC Communications Corp. has the authority to procure, receive and collect
from the LEC, the Subscriber Information, information available by law to AMCI
for the purpose of providing the E9-1-1 Services. SCC Communications Corp. is
responsible for all costs associated with such procurement.
3. SCC Communications Corp. has the authority to acquire on AMCI's behalf,
maintain, and manage the Subscriber Information available by law to AMCI for the
purpose of performing the Services pursuant to and limited by the provisions of
the Contract to which this letter of agency relates.
4. SCC Communications Corp. hereby agrees to perform its duties hereunder in a
diligent manner, and it is understood by SCC Communications Corp. that AMCI may
revoke this letter of agency at any time upon the providing written notice. This
authorization shall remain in force and effect until written notice of
revocation is executed by AMCI or by termination of the Contract to which this
letter of agency relates.
AMCI:
- -----------------------------
- -----------------------------
- -----------------------------
<PAGE> 68
EXHIBIT E
AMCI/SignalSoft(TM).MAPS SOFTWARE NON-DISCLOSURE PROVISIONS
4. Non Disclosure and Copies
A. Ameritech shall not disclose, furnish, transfer or otherwise make
available the Licensed Software or any portion thereof to any
third party or duplicate any portion of the Licensed Software,
except as provided in this Agreement or with the prior written
consent of Supplier. Ameritech may disclose and otherwise make
available the Licensed Software to any Affiliate that provides
services to Ameritech in connection with Ameritech's use of the
Licensed Software, and has a need to know in connection with such
services, and such Affiliate shall be subject to the
nondisclosure provisions of this Agreement. Ameritech also may
disclose and otherwise make available the Licensed Software to
third parties retained by Ameritech for temporary administrative,
clerical, technical or programming support, and such third
parties shall be subject to the nondisclosure provisions of this
Agreement.
B. Ameritech shall have the right to make archival and backup copies
of the Licensed Software, at no additional charge. Ameritech may
also reproduce, at no additional charge, the documentation for
Ameritech's own internal use and for the use of Affiliates. Any
such backup copies or reproductions shall include any copyright
or similar proprietary notices contained in the materials being
copied or reproduced.
C. Ameritech shall not reverse engineer, decompile, disassemble or
derive source code from the Licensed Software.
D. If Ameritech fails to abide by its obligations under this
Section, Supplier shall be entitled to immediate injunctive
relief, in addition to any other rights and remedies available to
it under this Agreement.
E. The provisions of this Section shall survive the expiration or
termination of this Agreement and the pertinent Supplement.
<PAGE> 1
EXHIBIT 10.10
Confidential Treatment Request
[ ] Material indicated by this mark
has been deleted pursuant to a request
for confidential treatment, and has been filed
separately.
ASSET PURCHASE AGREEMENT
SELLER
SCC Communications Corp.
BUYER
Printrak International Inc.
<PAGE> 2
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made as of July 18,
1997, by and between Printrak International Inc., a Delaware corporation
("Buyer"), and SCC Communications Corp., a Delaware corporation ("SCC" or
"Seller").
R E C I T A L S
A. Seller owns and operates the Computer-Aided Dispatch and Records
Management Division (the "CAD/RMS Division") of SCC and its foreign subsidiary,
Public Safety Technologies of Australia (Pty), Ltd., which develop and market a
computer-aided dispatch and records management software product line (the
"Business").
B. Buyer desires to purchase, and Seller desires to sell and transfer to
Buyer, substantially all of the assets of the CAD/RMS Division and all of the
stock of the Foreign Subsidiary all upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the foregoing premises, the terms,
covenants, and conditions hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. ASSETS AND LIABILITIES BEING PURCHASED AND ASSUMED.
1.1 PURCHASED ASSETS. Buyer hereby agrees to purchase from Seller,
and Seller hereby agrees to sell, transfer and assign to Buyer, free and clear
of any and all mortgages, liens, security interests, encumbrances, pledges,
leases, equities, claims, charges, restrictions, conditions, conditional sale
contracts and any other adverse interests of any kind whatsoever (other than
those securing any Assumed Obligations), all of the assets, wherever located,
which are owned by Seller, or in which Seller has any right, title or interest,
and used in connection with the Business (collectively referred to herein as the
"Purchased Assets"). The Purchased Assets shall include, but shall not be
limited to, the following:
(a) The tangible personal property, machinery, equipment, hones,
tools, machine and electric parts, supplies and computers, wherever located,
owned or used by Seller solely or primarily in connection with the Business
(collectively, the "Tangible Assets"), all the items of which are identified in
Schedule 1.1(a) attached hereto;
(b) All of the rights, tangible and intangible, and leasehold
interests in personal property, of Seller existing under any contracts,
agreements, leases, licenses, instruments or commitments, all of which are
listed on Schedule 4.6 attached hereto, and under any contracts, agreements,
leases, licenses, instruments and commitments which are entered into by Seller
in connection with the Business after the date hereof and prior to the "Closing"
(as defined below) with the prior written consent of Buyer (collectively, the
"Assumed Contracts");
(c) All rights in and to any governmental and private permits,
licenses, franchises and authorizations, to the extent assignable, used in
connection with the Business;
<PAGE> 3
(d) All rights in and to any requirements, processes,
formulations, methods, technology, know-how, formulae, trade secrets, trade
dress, designs, inventions and other proprietary rights and all documentation
embodying, representing or otherwise describing any of the foregoing, owned or
held by Seller in connection with the Business (the assets described in Sections
1.1(d) through 1.1(g) are referred to as the "Intangible Property Rights");
(e) All patents, copyrights, tradenames, trademarks and service
marks of Seller used in the Business (other than "SCC" or "SCC Communications
Corp."), all of which are set forth on Schedule 1.1(e), and all applications
therefor, and all documentation embodying, representing or otherwise describing
any of the foregoing;
(f) All rights in and to the customer lists, promotion lists,
marketing data and other compilations of names and data developed in connection
with the Business, and which shall be delivered by or on behalf of Seller to
Buyer at or prior to the Closing;
(g) All of Seller's rights in and to the computer software
programs (including software licensed to Seller) used in connection with the
Business or developed or under development by, or on behalf of, Seller in
connection with the Business, all of which are identified on Schedule 4.15,
including the source code, object code and documentation for such software, in
each case to the extent that Seller possesses and has a right to possess and
transfer the same;
(h) All accounts and notes receivable and unbilled project
revenues generated in connection with the Business from and after July 1, 1997
(other than the account receivable from Ramsey County, which is excluded), and
all cash received upon the billing and collection thereof, whether on hand, in
banks or other depository accounts, or transit, and all negotiable instruments
of or made payable to Seller, advanced payments, claims for refunds and deposits
and other prepaid items of Seller;
(i) All accounts receivable schedules, lists, files, books,
publications, and other records and data used in connection with the Business;
and
(j) All causes of action, claims, suits, proceedings, judgments
or demands, of whatsoever nature, of or held by Seller against any third parties
with respect to the Business.
1.2 ASSUMED OBLIGATIONS. Buyer hereby agrees to assume, honor and
discharge when due only: (a) those liabilities, obligations and commitments
(including bonding obligations) specifically set forth on Schedule 1.2 (the
"Assumed Liabilities"); and (b) those liabilities and obligations arising after
the "Closing Date" (as defined below) under the Assumed Contracts (which,
together with the Assumed Liabilities, shall sometimes be referred to herein
collectively as the "Assumed Obligations"). The Assumed Obligations shall not
include, and Seller covenants that Buyer shall not be liable or responsible for,
any obligations or liabilities to the extent arising out of any act or omission
of Seller under any Assumed Contract, regardless of when such liability or
obligation is asserted. Seller represents and warrants that, except as set forth
on Schedule 1.2, Seller is not in default under any Assumed Obligation, and
Buyer shall not be obligated to assume any Assumed Obligation which is in
default as of the Closing Date, or any obligation relating to periods prior to
the Closing Date.
2
<PAGE> 4
1.3 OPTION TO PURCHASE STOCK OF SUBSIDIARY. Seller hereby grants to
Buyer an option to purchase all of the issued and outstanding stock of
Subsidiary (the "Subsidiary Stock") for a purchase price of One Hundred Dollars
($100.00). Such option shall be exercisable by written notice to Seller within
thirty (30) days following the Closing Date, and Seller shall deliver to Buyer
certificates representing the Subsidiary Stock, duly endorsed for transfer, as
well as all corporate records of Subsidiary, within ten (10) days following
receipt of such notice (the "Option Closing Date"). In the event that such
option is exercised, the representations and warranties contained in this
Agreement with respect to Subsidiary shall be deemed to have been made again as
of the Option Closing Date, and Seller shall deliver to Buyer a certificate of
an officer of Seller, certifying as to the accuracy thereof. The Subsidiary
Stock shall be transferred to Buyer, free and clear of any and all mortgages,
liens, securing interests, encumbrances, pledges, claims and any other adverse
interests of any kind whatsoever.
2. LIABILITIES NOT ASSUMED.
Except for the Assumed Obligations, Seller agrees that Buyer will not
assume or perform, and Seller shall remain responsible for and shall indemnify,
hold harmless and defend Buyer from and against, any and all liabilities and
obligations of Seller, whether known or unknown, and regardless of when such
liabilities or obligations arise or are asserted, including, without limitation,
any obligations or liabilities of Seller with respect to the following:
(a) Any compensation or benefits payable to employees of Seller,
including, but not limited to, any liabilities arising under any employee
pension or profit sharing plan or other employee benefit plan, any severance pay
or other termination costs due to employees of Seller as a result of the
transactions contemplated by this Agreement or any of Seller's obligations to
its employees for salaries and vacation and holiday pay accrued and unpaid as of
the Closing Date;
(b) All federal, state, local, foreign or other taxes applicable
to Seller for periods prior to the Closing Date;
(c) Injuries to or the death of any person, or any employee of
Seller, that has occurred or may occur, prior to Closing, in connection with the
Business or any other operations engaged in by Seller, even if not discovered
until after the Closing Date;
(d) All liens, claims and encumbrances on any of the Purchased
Assets and all obligations and liabilities secured thereby;
(e) All obligations of Seller for borrowed money, or incurred in
connection with the purchase, lease or acquisition of any assets, and any
obligations of a similar nature incurred by Seller;
(f) Any accounts or notes payable or similar indebtedness
incurred by Seller;
(g) Any claims, demands, actions, suits, legal proceedings,
obligations or liabilities arising from Seller's operation of the Business prior
to the Closing, or arising from any other business or operations of Seller
conducted prior to the Closing, whether such claims, demands,
3
<PAGE> 5
actions, suits, legal proceedings, obligations or liabilities are presently
pending or threatened or are threatened or asserted at any time after the date
hereof and whether before or after the Closing; and
(h) Any liabilities arising out of the termination by Seller of
any of its employees in anticipation or as a consequence of, or following,
consummation of the transactions contemplated hereby.
3. PURCHASE PRICE AND TERMS OF PAYMENT.
3.1 PURCHASE PRICE. As consideration for the sale to Buyer of the
Purchased Assets, Buyer agrees to pay to Seller the aggregate sum of [ ],
representing the net book value of the Purchased Assets as of June 30, 1997,
(calculated in accordance with GAAP, provided that the reserve for anticipated
project losses has been increased to [ ] and all capitalized software has
been written off), and to assume the Assumed Obligations in Section 1.2 (the
"Purchase Price"). The Purchase Price shall be paid by wire transfer of
immediately available funds to Seller's bank account per written instructions of
Seller.
3.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets as determined by Buyer in its sole
discretion. The parties hereto shall report consistent with Buyer's allocation
on all income tax returns, and will comply with, and furnish the information
required by Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code"), and any regulations thereunder.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. Except as disclosed in
the Schedules delivered concurrently herewith by reference to the specific
Section or Sections hereof to which the disclosure pertains, Seller hereby
represents and warrants to Buyer, as of the date hereof and as of the Closing
Date, as follows:
4.1 AUTHORITY AND BINDING EFFECT. Seller has the full corporate power
and authority to execute and deliver this Agreement and each agreement
referenced herein (the "Related Agreements") to which it is a party and to
consummate the transactions contemplated by, and comply with its obligations
under, such agreements. This Agreement and the Related Agreements to which
Seller is a party, and the consummation by Seller of its obligations herein and
therein, have been duly authorized by all necessary corporate action of Seller,
including, without limitation, the approval of its shareholders in accordance
with applicable law. This Agreement and the Related Agreements have been duly
executed and delivered by the Seller and upon their execution and delivery will
be, the binding and valid agreements of the Seller. This Agreement and the
Related Agreements shall be enforceable against the Seller, in each such case in
accordance with their respective terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally and (ii) general principles of equity
relating to the availability of equitable remedies. No further action is
required to be taken by the Seller, nor is it necessary for the Seller to obtain
any action, approval or consent by or from any third persons, governmental or
other, to enable the Seller to enter into or perform its obligations under this
Agreement and the Related Agreements to which it is a party, except for the
consents of third parties to the assignment and assumption of the Assumed
Contracts which Seller shall use its best efforts to obtain following the
Closing (unless waived in writing by Buyer). Such consents are set forth in
Schedule 4.6 hereto.
4
<PAGE> 6
4.2 ORGANIZATION AND GOOD STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Subsidiary is a company duly organized, validly existing and in good
standing under the laws of Australia. Each of Seller and Subsidiary is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which such qualification is necessary under applicable law
as a result of the conduct of its business or the ownership or leasing of its
assets and the failure to be so qualified would have a material adverse effect
on such entity or the Business. Seller has the legal right, corporate power and
authority, and all licenses and other permits, required to operate the Business
as now conducted and to own, use and sell the Purchased Assets. Seller has
delivered to, or made available for inspection by, Buyer or its counsel true,
correct and complete copies of (i) Seller's and Subsidiary's charter documents
and all amendments thereto; (ii) Seller's and Subsidiary's Bylaws and all
amendments thereto, duly certified by its corporate secretary; and (iii)
Seller's and Subsidiary's minute and stock books. No actions, proceedings or
transactions have been commenced or undertaken by the Seller which give or would
give rights to any person, other than Buyer, in any of the Purchased Assets or
Purchased Stock or interfere with the consummation of the transactions
contemplated by this Agreement.
4.3 FINANCIAL STATEMENTS. Seller has delivered to Buyer unaudited
financial statements of Seller and Subsidiary relating to the Business
consisting of (i) an unaudited balance sheet as of June 30, 1997 (the "June
Balance Sheet"), and (ii) an unaudited balance sheet, and a related statement of
operating expenses, as of and for the period ended December 31, 1996, (the
"December 31, 1996 Financial Statements") (the June Balance Sheet and the
December 31, 1996 Financial Statements are collectively referred to herein as
the "Financial Statements"). True, correct and complete copies of the Financial
Statements are attached as Schedule 4.3A hereto. The Financial Statements fairly
present the financial condition of the Business and the results of its
operations as of the relevant dates thereof and for the respective periods
covered thereby, and have been prepared in accordance with generally accepted
accounting principles. Except as set forth in Schedule 4.3B, Schedule 1.2 and
Schedule 4.6 neither Seller nor Subsidiary has any debts, obligations,
liabilities or commitments of any nature relating to the Business, whether due
or to become due, absolute, contingent or otherwise, that, in accordance with
GAAP, are required to be disclosed in a balance sheet or the footnotes thereto,
and are not shown on the June Balance Sheet delivered pursuant hereto, other
than liabilities incurred after June 30, 1997 in the ordinary course of business
and consistent with past practice. Such post-June 30, 1997 liabilities have not
had, and are not expected to have, individually or in the aggregate, a material
adverse effect on the financial condition or results of operations or prospects
of Subsidiary or the Business. As to each liability, debt, obligation or
commitment, fixed or contingent, that is set forth on Schedule 4.3B and is
included in the Assumed Obligations, Seller shall provide the following
information, in writing as an attachment to such Schedule: (i) a summary
description of the liability, debt, obligation or commitment, together with
copies of all relevant documentation relating thereto, the amounts claimed and
any other action or relief sought and, if in connection with a claim, suit or
proceeding, the name of the claimant and all other parties involved therewith
and the identity of the court or agency in which such claim, suit or proceeding
is being prosecuted, and (ii) the best estimate of Seller of the maximum amount,
if any, which is likely to become payable with respect to any contingent
liability. For purposes hereof, if no written estimate is provided, such best
estimate shall be deemed to be zero.
4.4 ABSENCE OF CERTAIN CHANGES. During the period from June 30, 1997
to the date hereof, there has not been with respect to or affecting Seller,
Subsidiary or the Business: (i) any
5
<PAGE> 7
amendment, termination or revocation, or any threat known to the Seller of any
amendment, termination, or revocation, of any material contract or agreement to
which Seller or Subsidiary is, or was, a party which relates to Subsidiary or
the Business, or of any license, permit or franchise required for the continued
operation of the Business in substantially the same manner as it has been
conducted since its incorporation; (ii) except for the transactions contemplated
hereby, any sale, transfer, mortgage, pledge or subjection to lien, charge or
encumbrance of any kind, of, on or affecting any of the Purchased Assets, except
sales that have been made in the ordinary course of the Business and consistent
with past practices, and liens for current taxes not yet due and payable; (iii)
other than as contemplated in connection with the transactions contemplated
hereby, any increase in the compensation paid or payable or in the fringe
benefits provided to any employees of the CAD/RMS Division or Subsidiary; (iv)
any damage, destruction or loss, whether or not covered by insurance, of any of
the Purchased Assets; (v) the incurrence of any indebtedness, either for
borrowed money or in connection with any purchase of assets, or otherwise on
behalf of the Business, that is not reflected in the June 30, 1997 balance sheet
and individually or in the aggregate involves more than $5,000; (vi) any
purchase or lease, or commitment for the purchase or lease, of equipment,
machinery, leasehold improvements or other capital items for use in the Business
not disclosed in the June 30, 1997 Financial Statements which involves amounts
exceeding $5,000 individually or $10,000 in the aggregate or which is in excess
of or represents a departure from the normal, ordinary and usual requirements of
the Business; (vii) the execution by Seller or Subsidiary of any agreement or
contract relating to the Business that obligates Seller or Subsidiary to pay
more than $10,000 per year or which is materially disadvantageous to Seller,
Subsidiary or the Business; or (viii) the occurrence subsequent to June 30, 1997
of any other event or circumstance which, could reasonably be expected to
materially and adversely affect the Subsidiary, any of the Purchased Assets, the
Business, or the ability of the Seller to consummate the transactions
contemplated hereby.
4.5 THE PURCHASED ASSETS.
(a) TITLE TO AND ADEQUACY OF PURCHASED ASSETS. Except as
disclosed on Schedule 4.5 hereto, Seller has, and at the Closing Seller will
convey and transfer to Buyer, good, complete and marketable title to all of the
Purchased Assets, free and clear of all mortgages, liens, security interests,
encumbrances, pledges, leases, equities, claims, charges, restrictions,
conditions, conditional sale contracts and any other adverse interests. Except
as set forth on Schedule 4.5, all of the Purchased Assets are in the exclusive
possession and control of Seller and Seller has the unencumbered right to use
and sell to Buyer all of the Purchased Assets without interference from others.
The Purchased Assets constitute all the assets, properties, rights, privileges
and interests necessary for Buyer to own and operate the Business substantially
in the same manner as it has been conducted by Seller during the period
immediately preceding the execution of this Agreement.
(b) TANGIBLE ASSETS. Schedule 1.1(b) is a list of all of the
Tangible Assets used in the Business, other than any Tangible Asset the
replacement cost of which would be less than $1,000.00 and which is not of
material importance to Seller's operations. The Tangible Assets are in good
working order and condition, ordinary wear and tear excepted, have been
maintained in accordance with generally accepted industry standards, are
suitable for the uses for which they are being utilized in the Business and
comply with all requirements under applicable laws, regulations and licenses
which govern the use and operation thereof.
6
<PAGE> 8
(c) INTANGIBLE PROPERTY RIGHTS. The Intangible Property Rights
are the only material intangible property used by Seller in the Business, and
from and after the Closing Date, Buyer shall have the right to use all of the
Intangible Property Rights in the Business consistent with Seller's use of the
Intangible Property Rights in the Business. Seller owns, or holds adequate
licenses, or other rights to use, all of the Intangible Property Rights, such
use does not conflict with, infringe on or otherwise violate any rights of any
other person. Except as disclosed in Schedule 4.5, all of such licenses and
rights are transferable to Buyer without cost or liability to Buyer and will be
included in the Purchased Assets being sold to Buyer hereunder. Except as set
forth on Schedule 4.5, Seller has not granted, transferred or assigned any
right, license or interest in any of its Intangible Property Rights. In no
instance has the eligibility of any copyright to any material property included
in the Intangible Property Rights been forfeited to the public domain by
omission of any required notice or any other action. All personnel, including
employees, agents, consultants and contractors, who have contributed to or
participated in the conception and development of any of the Intangible Property
Rights on behalf of Seller either (i) in the case of any copyright, have been
party to a "work-for-hire" arrangement or agreement with Seller, in accordance
with applicable federal and state law, that has accorded Seller full, effective,
exclusive and original ownership of all United States copyrights thereby arising
or (ii) shall, prior to the Closing, have executed appropriate instruments of
assignment in favor of Seller as assignee that convey to Seller full, effective
and exclusive ownership of all Intangible Property Rights thereby arising.
Except as set forth in Schedule 4.5, Seller has not infringed, is not now
infringing and has not received notice of any infringement, on any patent, trade
name, trademark, service mark, copyright, trade secret, trade dress, design,
invention, technology, know-how, process or other proprietary right belonging to
any other person, firm or corporation, which infringement would have an adverse
effect on any of the Purchased Assets or the Business. To the best of Seller's
knowledge, there is no infringement by any other person of any Intangible
Property Right.
(d) LEASES. Schedule 4.5(d) is a list of each of the facilities
or real properties used in the Business. Schedule 4.5(d) also contains a list of
all leases under which Seller possesses or uses personal property in connection
with the conduct or operation of the Business. The personal property leases set
forth in Schedule 4.5(d) are sometimes collectively referred to as the "Personal
Property Leases." True, correct and complete copies of the real property leases
set forth in Schedule 4.5(d), the Real Property Leases and Personal Property
Leases (collectively, the "Leases") have been delivered to Buyer. Seller is not,
and as of the Closing Date will not be, in default, and no facts or
circumstances have occurred, or on or prior to the Closing will occur, which
through the passage of time or the giving of notice, or both, would constitute a
default, under any of the Leases. Subject to any consents required therefor, the
assignment of any of the Real Property Leases and the personal property leases
set forth in Schedule 4.5(d) shall not adversely affect Buyer's quiet enjoyment
and use, without disturbance, of all real and personal properties and assets
that are the subject of such leases. None of the Leases contains any provisions
which, after the Closing Date, would (i) hinder or prevent Buyer from continuing
to use any of the properties or assets which are the subject of the personal
property leases set forth in Schedule 4.5(d) in the manner in which they are
currently used or (ii) impose any additional costs (other than scheduled rental
increases) or additional burdensome requirements as a condition to their
continued use. Except as otherwise set forth in Schedule 4.5(d) hereto, none of
the Purchased Assets are held under, or used by Seller in connection with the
Business pursuant to, any lease or conditional sales contract.
(e) ACCOUNTS RECEIVABLE. Attached hereto as Schedule 4.5(e) are
(i) an accurate list of all accounts and notes
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receivable of Seller, including any accounts or notes receivable not reflected
in the June 30, 1997 balance sheet, and (ii) an aging of all such accounts and
notes receivable showing amounts due in 30-day aging categories. All such
accounts and notes receivable on such listing arose from, and all accounts and
notes receivable of Seller created between June 30, 1997 and the Closing will
have arisen from, the sale of Seller's products or the provision of services by
Seller in the ordinary course of business. The Seller has not received any
notice or knows of any counterclaim or set-off with respect to any such accounts
or notes receivable, or any facts or circumstances that would be the basis for
any such counterclaim or set-off, which is not reflected or taken into account
in the contractual allowance or bad debt reserves set forth in the June 30, 1997
balance sheet.
4.6 CONTRACTS, AGREEMENTS AND COMMITMENTS. Schedule 4.6 hereto
contains an accurate and complete list of all contracts, agreements, leases,
licenses and instruments to which Seller or Subsidiary is a party or is bound or
which relate to or affect any of the Purchased Assets or the Business. Schedule
4.6 includes, without limitation, all contracts and agreements and all leases,
licenses and instruments, which (i) grant a security interest or permit or
provide for the imposition of any lien, mortgage, security interest or other
encumbrance on, or provide for the disposition of, any of the Purchased Assets;
(ii) require the consent of any third party to the consummation by Seller of the
transactions contemplated by this Agreement, as noted on such schedule; (iii)
would restrict the use or disposition by Buyer after the Closing of any of the
Purchased Assets; or (iv) pertain to the sale or lease of CAD/RMS Products to
third parties (including the status of the contract, the contract price, the
amount collected to date and whether the CAD/RMS Product has been accepted.
True, correct and complete copies of all items so listed in Schedule 4.6 have
been furnished to Buyer. Each of such contracts, agreements, leases, licenses
and instruments so listed, or required to be so listed, in Schedule 4.6 is a
valid and binding obligation of Seller and/or Subsidiary and the other parties
thereto, enforceable in accordance with its terms, except as may be affected by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally and general principles of equity relating to the availability of
equitable remedies. Except as otherwise set forth in Schedule 4.6 hereto, there
have not been any defaults by Seller or Subsidiary or, to the best knowledge of
the Seller, defaults or any claims of default or claims of nonenforceability by
the other party or parties which, individually or in the aggregate, would have a
material adverse effect on Subsidiary, the Business or any of the Purchased
Assets, and there are no facts or conditions that have occurred or that are
anticipated to occur which, through the passage of time or the giving of notice,
or both, would constitute a default by Seller, or to the best knowledge of the
Seller, by the other party or parties, under any of such contracts, agreements,
leases, licenses and instruments or would cause a creation of a lien, security
interest or encumbrance upon any of the Purchased Assets or otherwise materially
and adversely affect Subsidiary, any of the Purchased Assets or the Business.
4.7 LABOR AND EMPLOYMENT AGREEMENTS; FRINGE BENEFIT PLANS.
(a) Schedule 4.7 sets forth the name of each director and officer
of Subsidiary and of each employee of Seller or Subsidiary who is engaged in the
Business, together with a description of all compensation and benefits that are
payable to such individuals as a result of their employment by or association
with Seller or Subsidiary. Schedule 4.7 includes a description of all employment
or personnel policies of Seller relating to vacation or other employee benefits.
(b) Schedule 4.7 hereto contains a list of any collective
bargaining or other labor, employment, deferred compensation, bonus, retainer,
consulting, or incentive agreement, plan or contract, and all written or other
personnel policies, of Seller or Subsidiary or to
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which Seller or Subsidiary is subject or bound. True, correct and complete
copies of any such agreements, plans, contracts and policies listed in Schedule
4.7 hereto have been furnished to Buyer. Except to the extent set forth in
Schedule 4.7, (i) there has been no strike or other work stoppage by, nor to the
best knowledge of Seller has there been any union organizing activity among, any
of the employees of Seller or Subsidiary; (ii) Seller and Subsidiary are in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor practice; and (iii)
there is no unfair labor practice complaint pending or, to the best knowledge of
the Seller, threatened against Seller or Subsidiary, nor, to the best knowledge
of the Seller, is there any factual basis for any such complaint.
(c) Schedule 4.7 hereto also contains a complete list of Seller's
and Subsidiary's Employee Plans. True, correct and complete copies or
descriptions of such Employee Plans have been delivered to Buyer. For purposes
of this Section 4.7, the term "Employee Plan" includes all past or present
plans, programs, agreements, arrangements, and methods of contribution or
compensation (including all amendments to and components of the same, such as a
trust with respect to a plan) maintained by Seller or Subsidiary or to which
Seller or Subsidiary has an obligation to contribute which provide any
remuneration or benefits, other than current cash compensation, to any current
or former employee of Seller or Subsidiary or to any other person who provides
services to Seller or Subsidiary. The term Employee Plan includes, but is not
limited to, pension, retirement, profit sharing, stock option, stock bonus, and
nonqualified deferred compensation plans and includes any Employee Plan that is
a multiemployer plan as defined in Section 3(37) of ERISA. The term Employee
Plan also includes, but is not limited to, disability, medical, dental, health
insurance, life insurance, incentive plans, vacation benefits, and fringe
benefits. Except as set forth on Schedule 4.7, none of the Employee Plans are
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or are qualified under the Code. Except as set forth in Schedule 4.7,
all Employee Plans are now, and have always been, established, maintained and
operated in all material respect in accordance with all applicable laws
(including, but not limited to, ERISA and the Code) and all regulations and
governing guidelines promulgated thereunder and in accordance with their plan
documents. Each funded Employee Plan providing for payment of deferred
compensation (a "Qualified Plan") is and always has been qualified under Section
401 of the Code. The Internal Revenue Service has issued one or more
determination letters with respect to each Qualified Plan stating that each such
Qualified Plan is qualified under Section 401 of the Code and each trust
maintained in connection with each such Qualified Plan has been and is exempt
under Section 501 of the Code. Except as set forth in Schedule 4.7, there is no
unfunded liability for vested or nonvested benefits under any funded Employee
Plan, and all contributions required to be made to or with respect to each
Employee Plan have been completely and timely paid. All reports, forms and other
documents required to be filed with any governmental entity with respect to any
Employee Plan have been timely filed and, to the best knowledge of the Seller,
are accurate. There have been no filings with respect to any Employee Plan with
the Pension Benefit Guaranty Corporation ("PBGC"). No liability to the PBGC has
been incurred or is expected with respect to any Employee Plan except for
insurance premiums, and all insurance premiums incurred or accrued up to and
including the Closing Date have been or will be timely paid by Seller. No amount
is, and as of the Closing Date no amount will be, due or owing from Seller or
Subsidiary to any "multiemployer plan" (as defined in Section 3(37) of ERISA) on
account of any withdrawal therefrom. There has been no event or condition, nor
is any event or condition expected, that would present a risk of termination of
any Employee Plan, or which would constitute a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations and
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interpretations thereunder. There has been no merger, consolidation, or transfer
of assets or liabilities (including, but not limited to, a split-up or
split-off) with respect to any Employee Plan. There is and there has been no
actual or, to the best knowledge of the Seller, anticipated, threatened or
expected litigation or arbitration concerning or involving any Employee Plan. No
complaints to or by any governmental entity have been filed or, to the best
knowledge of the Seller, have been threatened or are expected with respect to
any Employee Plan. No Employee Plan or any other person has any liability to any
plan participant, beneficiary or other person under any provision of ERISA, the
Code or any other applicable law by reason of any action or failure to act in
connection with any Employee Plan. There has been no prohibited transaction as
described in Section 406 of ERISA and Section 4975 of the Code with respect to
any Employee Plan. No Employee Plan provides medical benefits to one or more
former employees (including retirees), other than benefits required to be
provided under Section 4980B of the Code. There is no contract, agreement or
benefit arrangement covering any employee of Seller or Subsidiary, the payments
under which, individually or collectively, would constitute an "excess parachute
payment" under Section 280G of the Code.
4.8 CONFLICTS. Except as described on Schedule 4.6 hereto, neither
the execution and delivery of, nor the consummation of the transactions
contemplated by, this Agreement or the Related Agreements to which Seller is a
party will or could result in any of the following: (i) a default or an event
that, with notice or lapse of time, or both, would be a default, breach or
violation of the respective charter, bylaws or other governing instruments of
Seller or Subsidiary, or any contract, lease, license, franchise, promissory
note, conditional sales contract, commitment, indenture, mortgage, deed of
trust, security or pledge agreement, or other agreement, instrument or
arrangement to which the Seller or Subsidiary is a party or is bound which
relates to the Business or which affects any of the Purchased Assets; (ii) the
termination of any contract, lease, agreement, or commitment, or the
acceleration of the maturity of any indebtedness or other obligation of the
Seller or Subsidiary; (iii) the creation or imposition of any lien, charge or
encumbrance on any of the respective assets or properties of the Seller or
Subsidiary, including any of the Purchased Assets; (iv) a violation or breach of
any writ, injunction or decree of any court or governmental instrumentality to
which the Seller or Subsidiary is a party or is bound or which affects any of
their respective properties or any of the Purchased Assets or the Business; (v)
a loss or adverse modification of any license, franchise, permit, other
authorization or right (contractual or other) to operate, granted to or
otherwise held by Seller or Subsidiary or used in the Business, which would have
a material adverse effect on the Business or Buyer; or (vi) the cessation or
termination of any other business relationship or arrangement between Seller or
Subsidiary and any third party that is material to the Business, or its
operating results, condition (financial or other) or prospects or any of the
Purchased Assets. Except as set forth in Schedule 4.6 hereto, the Seller does
not know of any business relationship or arrangement between it or Subsidiary
and any third party (governmental or other) that is material to the Business,
its operating results, condition or prospects and that will cease or is likely
to be terminated as a result of the consummation of the transactions
contemplated by this Agreement.
4.9 INSURANCE. Schedule 4.9 contains an accurate list (including
liability limits, deductibles and coverage exclusions) of all policies of
insurance maintained by or on behalf of Seller or Subsidiary in connection with
the Business as protection for the Purchased Assets and the Business. Except as
set forth in Schedule 4.9 hereto, all of such policies are now in full force and
effect and policies covering the same risks and in substantially the same
amounts have been in full force and effect continuously since inception. Neither
Seller nor Subsidiary has received any notice
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of cancellation or material amendment of any such policies; no coverage
thereunder is being disputed; and all material claims thereunder have been filed
in a timely fashion.
4.10 TAXES AND TAX RETURNS. Each of Seller and Subsidiary has duly
filed all tax reports and returns which are required by law to be filed by it
and has duly paid all foreign, federal, state and local taxes due or claimed to
be due from such authorities, and there are no assessments or claims for payment
of taxes now pending or, to the best knowledge of the Seller, threatened, nor is
any audit of Seller's or Subsidiary's records presently being made by any taxing
authority. Each of Seller and Subsidiary has properly withheld and paid, or
accrued for payment when due, to appropriate state and/or federal authorities,
all amounts required to be withheld from its employees' wages, salaries and
other compensation and has also paid all employment taxes as required under
applicable laws.
4.11 COMPLIANCE WITH LAW/PERMITS.
(a) Seller and Subsidiary are in compliance with all, and are not
in violation of any, law, ordinance, order, decree, rule or regulation of any
governmental agency or authority, the violation of or noncompliance with which
could reasonably be expected to have a material adverse effect on the Business
or any of the Purchased Assets. Without limiting the generality of this Section
4.11(a), there are no unresolved (i) proceedings or investigations instituted
or, to the best knowledge of the Seller, threatened, by any such governmental
authorities against Seller or Subsidiary relating to the Business, or (ii)
citations issued or, to the best knowledge of the Seller, threatened against
Seller, Subsidiary or the Business by any governmental authorities, or (iii)
other notices of deficiency or charges of violation brought or, to the best
knowledge of the Seller, threatened against Seller, Subsidiary or the Business,
including under any federal or state regulation or otherwise, which could
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the Business or any of the Purchased Assets, or interfere with
the maintenance, or the transfer or reissuance to Buyer, of the permits,
licenses, franchises, certificates, authorizations or any right to operate held
by Seller or Subsidiary; and, to the best knowledge of Seller, there are no
facts or circumstances upon which any such proceedings, investigations,
citations, notices, disallowances or charges may be instituted, issued or
brought hereafter.
(b) Schedule 4.11(b) contains a true, correct and complete list
of all governmental licenses, permits, authorizations, franchises, or
certificates or rights (contractual or other) to operate the Business, that are
held by Seller or Subsidiary (collectively, "Licenses and Permits"). Such
Licenses and Permits are the only licenses, permits, authorizations, franchises,
certificates and rights to operate required for operation of the Business, as it
has been conducted since its inception, and all of such Licenses and Permits are
in full force and effect at the date hereof and will be as of the Closing. The
Seller has provided Buyer with true, correct and complete copies of each License
and Permit listed in Schedule 4.11(b). Seller and Subsidiary are in compliance
in all material respects with all conditions or requirements imposed by or in
connection with such Licenses and Permits and with respect to its use of the
Purchased Assets and operation of the Business, and neither Seller nor
Subsidiary has received any notice, nor does Seller have any knowledge or reason
to believe, that any governmental authority intends to cancel, terminate or
materially modify any of such Licenses or Permits or that valid grounds for any
such cancellation, termination or material modification currently exist, except
that, by reason of change of ownership of the Business, certain
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of the Licenses and Permits listed in Schedule 9.1 will have to be transferred
or reissued to Buyer, and certain of such Licenses and Permits will have to be
reapplied for by Buyer.
4.12 LITIGATION AND PROCEEDINGS. There is neither (a) any action,
suit, proceeding or investigation, nor (b) any counter or cross-claim in an
action brought by or on behalf of the Seller or Subsidiary, whether at law or in
equity, or before or by any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind, that is pending or, to the best knowledge of the Seller, threatened,
against Seller or Subsidiary, which (i) could reasonably be expected to affect
adversely Seller's ability to perform its obligations under this Agreement or
the Related Agreements or complete any of the transactions contemplated hereby
or thereby, or (ii) involves the reasonable possibility of any judgment or
liability, or which may become a claim, against Buyer, the Business, the
Purchased Stock or any of the Purchased Assets prior to or subsequent to the
Closing Date. Neither Seller nor Subsidiary is subject to any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over Seller, any of its assets, Subsidiary or the Business, which
may reasonably be expected to affect the Business.
4.13 CERTAIN TRANSACTIONS. Except as set forth in Schedule 4.13 ,
there are no existing or pending transactions, nor are there any agreements or
understandings, with any shareholders, officers, directors, or employees of
Seller or Subsidiary, or any person or entity affiliated with any of them
(collectively, "Affiliates"), relating to, arising from or affecting the
Business, or any of the Purchased Assets, including, without limitation, any
transactions, arrangements or understandings relating to the purchase or sale of
goods or services, the lending of monies, or the sale, lease or use of any of
the Purchased Assets, with or without adequate compensation, in any amount
whatsoever. Except as set forth in Schedule 4.13 , no existing or former
shareholder, director, officer or employee of Seller or Subsidiary has any
claims against or disputes with Seller which could result in the imposition of
any liability or judgment against the Business or any of the Purchased Assets.
4.14 ENVIRONMENTAL AND SAFETY MATTERS. Seller and Subsidiary have
complied with, and the operation of the Business and the use of the Purchased
Assets are in compliance with, in all material respects, all federal, state,
local and regional statutes, laws, ordinances, rules, regulations and orders
relating to the protection of human health and safety, natural resources or the
environment, including, but not limited to, air pollution, water pollution,
noise control, on-site or off-site hazardous substance discharge, disposal or
recovery, toxic or hazardous substances, training, information and warning
provisions relating to toxic or hazardous substances, and employee safety
relating to or adversely affecting any of the Purchased Assets (collectively the
"Environmental Laws"); and no notice of violation of any Environmental Laws or
of any permit, license or other authorization relating thereto has been
received, nor is any such notice pending or, to the best knowledge of the
Seller, threatened.
4.15 INTELLECTUAL PROPERTY.
(a) Attached hereto as Schedule 4.15 is an accurate list and
description of all patents, patent applications, patent licenses, copyrights,
copyright licenses, trademarks, trademark applications and trademark licenses,
and other trade secrets, know-how or intellectual property rights (the
"Intellectual Property") owned, held, utilized or applied for by Seller in
connection with the
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Business, other than the "SCC" and "SCC Communications" trademarks, and other
than as set forth on Schedule 1.1(e). Except as set forth on Schedule 4.15
hereto:
(i) Seller owns all right, title and interest in and to all
Intellectual Property used in or necessary for, and as to Third Party Technology
(as defined below) has sufficient rights necessary for, the conduct of the
Business as presently conducted, or as planned to be conducted, including,
without limitation, all Intellectual Property developed or discovered in
connection with or contained in or related to the CAD/RMS Products (as defined
below), free and clear of all liens, mortgages, charges, pledges, claims and
encumbrances (including without limitation any distribution rights and royalty
rights) (including Third Party Technology, the "Seller Rights").
(ii) Solely as to Third Party Technology (as defined below),
the representations in Section 4.15 are limited to Seller's interest pursuant to
the Third Party Licenses (as defined below), all of which are valid and
enforceable and in full force and effect. "Third Party Licenses" means all
licenses and other agreements with third parties relating to any Intellectual
Property or products that Seller is licensed or otherwise authorized by such
third parties to use, market, distribute or incorporate into products marketed
and distributed by Seller in connection with the Business. "Third Party
Technology" means all Intellectual Property and products owned by third parties
and licensed pursuant to Third Party Licenses. Notwithstanding the foregoing,
Third Party Technology shall not include any "off-the-shelf" software program if
the use of such program by Seller is in accordance with any applicable shrink
wrap license and no portion of such program is distributed or licensed by Seller
to third parties or incorporated into products distributed by Seller or licensed
to third parties.
(iii) For purposes of this Agreement, the term "CAD/RMS
Products" shall mean the computer assisted dispatch and records management
systems and related products developed by the business, including any
Intellectual Property related thereto.
(iv) All of the Intellectual Property which is in the public
domain and is used in or necessary for the conduct of Seller's business as
presently conducted or contemplated is listed on Schedule 4.15, attached hereto.
(b) Except as set forth in Schedule 4.15, Seller has the
exclusive right to use, sell, license and dispose of, and has the right to bring
actions for infringement of, all Seller Rights, other than Third Party
Technology.
(c) Schedule 4.15 contains an accurate and complete description
of: (i) all patents, trademarks, servicemarks (with separate listings of
registered and unregistered trademarks and servicemarks), tradenames, and
registered copyrights in or related to the Seller Rights, all applications and
registration statements therefor, and a list of all licenses and other
agreements relating thereto.
(d) All of Seller's copyright registrations related to any and
all of Seller's copyrights are valid and in full force and effect. If the
copyright has not been registered, then it is not part of the foregoing
representation. Seller has valid copyrights in all material copyrightable
material whether or not registered with the U.S. copyright office, including all
copyrights in all
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CAD/RMS Products containing material copyrightable material. Consummation of the
transactions contemplated hereby will not alter or impair the validity of any
copyrights or copyright registrations.
(e) No claims have been asserted against Seller by any person
challenging Seller's use or distribution (including manufacture, marketing
license, or sale) of any Seller Right or products utilized by Seller (including,
without limitation, the CAD/RMS Products and Third Party Technology) or
challenging or questioning the validity or effectiveness of any license or
agreement relating thereto (including, without limitation, the Third Party
Licenses). There is no valid basis for any claim of the type specified in this
Section 4.15(e).
(f) The execution, delivery and performance of this Agreement and
the consummation of the Merger and the transactions contemplated hereby and by
the other Transaction Documents will not (i) breach, violate or conflict with
any instrument, agreement or other right governing any Seller Right or portion
thereof, (ii) cause the forfeiture or termination, or give rise to a right of
forfeiture or termination, of any Seller Right or portion thereof, (iii) in any
way impair the right of Seller to use (including distribute, manufacture,
marketing, license, sale or other disposition) of any Seller Right or portion
thereof, or (iv) give rise to any right to bring any action for infringement of,
any Seller Right or any portion thereof.
(g) Except as set forth on Schedule 4.15, there are no royalties,
honoraria, fees or other payments that would be payable by Seller to any person
by reason of the ownership, use, license, sale, distribution, or disposition of
any Seller Right, other than sales commissions that would be payable in the
ordinary course of business
(h) No Seller Right and no use by Seller of any Seller Right in
its prior, current or contemplated business (including distribution,
manufacture, marketing, license or sale), violates any rights of any third
party, including (i) infringement of or misappropriation of Intellectual
Property, (ii) unfair competition, (iii) defamation, (iv) contractual rights, or
(v) rights of privacy or publicity. Solely with respect to claims of
infringement of a third party patent or unregistered trademark or infringement
of Third Party Technology, the foregoing representations in this Section are
made to the best knowledge of Seller.
(i) To the best knowledge of Seller, no third party is violating,
infringing, or misappropriating any Seller Right or contract of Seller.
(j) Seller is not in default under or in breach or violation of,
nor, is there, to the best of Seller's knowledge, any valid basis for any claim
of default by Seller under, or breach or violation by Seller of, any contract,
commitment or restriction relating to any Seller Right, including any Third
Party License (each, an "Intellectual Property Contract"). No other party is in
default under or in breach or violation of, nor, to the best of Seller's
knowledge, is there any valid basis for any claim of default by any other party
under or any breach or violation by any other party of, any Intellectual
Property Contract. Each Intellectual Property Contract is valid, binding, in
full force and effect, and enforceable by Seller in accordance with its terms.
To the best knowledge of Seller, no party to any Intellectual Property Contract
intends to cancel, withdraw, modify or amend such contract.
(k) No shareholder or employee of Seller, nor any of their
respective affiliates, has any right, title or interest in or to any Seller
Right, other than rights pertaining to Third
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Party Technology obtained from the third party licensor, and other than a
nonexclusive right to use CAD/RMS Products pursuant to Seller's standard
end-user license terms.
(l) Except as set forth in Schedule 4.15: (i) no third party
(including any OEM or site license customer) has any right to manufacture,
reproduce, distribute, sell, sublicense, market or exploit any of the Seller
Rights or any adaptations, translations, or derivative works based on the Seller
Rights, or any portion thereof, other than rights pertaining to Third Party
Technology obtained from the third party licensor; (ii) Seller has no
agreements, contracts or commitments that provide for the manufacture,
reproduction, distribution, sale, sublicensing, marketing, development,
exploitation, or supply by Seller of any Seller Right or any adaptation,
translation, or derivative work based on the Seller Rights, or any portion
thereof or otherwise material to the continued business of Seller; (iii) Seller
has not granted to any third party any exclusive rights of any kind with respect
to any of the Seller Rights, including territorial exclusivity or exclusivity
with respect to particular versions, implementations or translations of any of
the Seller Rights; and (iv) Seller has not granted any third party any right to
market any product utilizing any Seller Right under any "private label"
arrangements pursuant to which Seller is not identified as the source of such
goods. Each document or instrument identified pursuant to this Section is listed
in Schedule 4.15 and true and correct copies of such documents or instruments
have been furnished to Buyer. Except with respect to the rights of third parties
to the Third Party Technology, no third party has any right to manufacture,
reproduce, distribute, sublicense, market or exploit any works or materials of
which any of the Seller Rights are a derivative work.
(m) Each CAD/RMS Product: (i) substantially complies with all
specifications set forth therefor in any contract, agreement, advertisement or
other promotional material for such products and with all other warranty
requirements, other than bugs or fixes required or expected in the ordinary
course of business as historically experienced in the Business; (ii) has been
created in a professional manner considering its present stage of development;
and (iii) can be recreated from its associated source code without undue burden.
(n) All designs, drawings, specifications, source code, object
code, documentation, flow charts and diagrams incorporating, embodying or
reflecting any Seller Rights, other than Third Party Technology, at any stage of
their development were written, developed and created solely and exclusively by
employees of Seller without the assistance of any third party or entity.
(o) Seller has not knowingly altered its data, or any Seller
Rights, in a manner that may damage data, whether stored in electronic, optical,
or magnetic or other form.
(p) Seller has furnished Buyer with true and accurate copies of
all end user documentation relating to the use, maintenance or operation of each
CAD/RMS Product.
(q) Seller has not disclosed or otherwise dealt with any aspect
of any Seller Rights, other than Third Party Technology, that would constitute a
trade secret if not injected into the public domain or if treated as secret, in
such a manner as to cause such aspect not to constitute a trade secret.
(r) No employee of Seller is in violation of any term of any
employment contract, patent disclosure agreement or any other contract or
agreement relating to the relationship
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of any such employee with Seller or, to Seller's best knowledge, any other party
because of the nature of the business conducted by Seller or proposed to be
conducted by Seller. Neither the execution or delivery of any of the foregoing
agreements, nor the carrying on of Seller's business as employees by such
persons, nor the conduct of Seller's business as currently anticipated, will
conflict with or result in a breach of the terms, conditions or provisions of or
constitute a default under any contract, covenant or instrument under which any
of such persons is obligated; provided that, solely as the foregoing
representation relates to any agreement between an employee and any party other
than Seller, such representation is limited to Seller's best knowledge.
(s) No product liability or warranty claims have been
communicated to or threatened against Seller nor, to the best of Seller's
knowledge, is there any specific situation, set of facts or occurrence that
provides a basis for such claim.
(t) Each employee or contractor of Seller at any time engaged in
the Business has executed and delivered to the Seller a proprietary information
and invention assignment agreement in the form provided to the Buyer.
4.16 OPERATIONAL RESTRICTIONS. Neither the Seller nor Subsidiary is a
party to any undisclosed agreement or instrument or subject to any undisclosed
charter or other corporate restriction or any undisclosed judgment, order, writ,
injunction, decree, or order, which materially adversely affects, or in the
future could adversely affect, the Business, or any of the Purchased Assets or
the ability of Seller to transfer the Purchased Assets to Buyer pursuant to the
terms of this Agreement. The Seller does not know knows of any facts,
circumstances or events which result, or with the passage of time may result, in
any material adverse change in the condition (financial or other), operating
results, business or prospects of the Business or which might adversely affect
any of the Purchased Assets.
4.17 ILLEGAL OR IMPROPER PAYMENTS. To the best knowledge of the
Seller, neither Seller, Subsidiary nor any of their respective directors,
officers or employees have, in connection with the operation of the Business:
(i) made any illegal political contribution from assets; (ii) been involved in
the disbursement or receipt of corporate funds outside normal internal control
systems of accountability; (iii) made or received payments, whether direct or
indirect, to or from government officials, employees or agents for purposes
other than the satisfaction of lawful obligations, or been involved in any
transaction that has or had as its intended effect the transfer of funds or
assets of Seller or Subsidiary other than for the satisfaction of lawful
obligations of Seller or Subsidiary; or (iv) been involved in the willfully
inaccurate recording of payments and receipts on the books of Seller or
Subsidiary or any other matter of a similar nature involving disbursements of
funds or assets, and they are not aware of any material inaccurate recording of
any payment or receipt on the books of Seller or Subsidiary.
4.18 TITLE TO PURCHASED STOCK. Seller has, and at the Closing Seller
will convey and transfer to Buyer, good, complete and marketable title to all of
the Purchased Stock, free and clear of all mortgages, liens, security interests,
encumbrances, pledges, leases, equities, claims, charges, restrictions,
conditions, conditional sale contracts and any other adverse interests. There
are no outstanding options or warrants to purchase, nor any securities
convertible or exercisable into, shares of capital stock of Subsidiary, nor are
there any agreements, commitments or understandings, oral or written, providing
for the grant of, subscriptions, options or other rights to purchase or
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receive, or obligating Subsidiary to issue, sell or otherwise transfer or to
repurchase or redeem, any shares of capital stock of Subsidiary.
4.19 BULK SALE NOTICES. Seller represents and warrants that the
Purchased Assets will bet transferred to the Buyer free and clear of any
encumbrances or transferee liability that may be imposed by the Bulk Sales Law
or such similar laws.
4.20 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Seller contained herein and the materials contained in the
Schedules attached hereto do not contain any statement of a material fact that
was untrue when made nor, to the best knowledge of Seller, do they omit any
material fact necessary to make the information contained therein not
misleading. For purposes of this Section 4, wherever there is a reference to
"knowledge" or "best knowledge" of Seller, Seller will be charged with knowledge
of facts, circumstances, conditions, occurrences and events known to any of the
individuals named on Schedule 4.20 attached hereto. Information in any one
Schedule delivered pursuant hereto need not be repeated in any other Schedule;
provided, that an appropriate specific cross-reference is made in the other
Schedule to such information contained elsewhere in the Schedules.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to the Seller, as of the date hereof and again as of the Closing Date,
as follows:
5.1 ORGANIZATION AND RELATED MATTERS. a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has the requisite corporate power and authority to carry on its
business as now being conducted and to execute and deliver Agreement and the
Related Agreements and each of the agreements referenced herein to which Buyer
is a party.
5.2 NECESSARY ACTIONS; BINDING EFFECT. Prior to the Closing Date,
Buyer will have taken all corporate action necessary to authorize the execution
and delivery of, and the performance of its obligations under, this Agreement
and the Related Agreements to which a party. This Agreement and the
Related Agreements constitutes, and upon their execution and delivery each of
the Related Agreements will constitute, valid obligations of Buyer that are
legally binding on and enforceable against Buyer in accordance with their
respective terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights, and (ii) general principles of equity relating to the availability of
equitable remedies.
5.3 NO CONFLICTS. Neither the execution and delivery, nor the
performance of, this Agreement or the Related Agreements by Buyer will result in
any of the following: (i) a default or an event that, with notice or lapse of
time, or both, would constitute a default, breach or violation of the Articles
of Incorporation or Bylaws of Buyer; or (ii) a violation or breach of any writ,
injunction or decree of any court or governmental instrumentality to which Buyer
is a party or by which any of its properties are bound or a violation of any
laws or regulations applicable to Buyer, where the violation would have a
material adverse effect on Buyer.
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6. CONDUCT OF BUSINESS PENDING THE CLOSING. Between the date hereof and
the Closing, and except as otherwise consented to by Buyer in writing, or
permitted pursuant to Section 7 below, Seller covenants as follows:
6.1 FULL ACCESS. Subject to the provisions of Section 14 below,
Seller shall afford to Buyer, its counsel, accountants, lenders and investors
(and their respective accounting and legal and other authorized
representatives), upon reasonable prior notice by Buyer of the identity of such
representatives, full access during normal business hours to all properties,
personnel and information of Seller involved with the Business, including,
without limitation, financial statements and records, leases and agreements and
tax returns of Seller, to determine that the purchase of the Purchased Assets
can be consummated in accordance with applicable statutes and regulations, to
verify the accuracy of the representations and warranties made herein and to
fully investigate the affairs of the Business as fully as Buyer may desire.
Seller shall furnish to Buyer and its representatives such information and data
concerning the Purchased Assets and the operation of Business as Buyer or any
such representative shall reasonably request.
6.2 CONDUCT OF SELLER'S BUSINESS. Unless Buyer gives its prior
written consent for actions to be taken to the contrary, from the date of
execution of this Agreement and until the Closing or termination of this
Agreement, whichever first occurs, Seller shall:
(a) OPERATION OF BUSINESS. Operate and conduct the Business
diligently and only in the ordinary course of business consistent with past
practices. Seller shall not: (i) incur any new indebtedness on behalf of the
Business; (ii) increase the compensation or benefits of any employee,
independent contractor or agent of the Business, or adopt or amend any
commission plan or arrangement or any employee benefit plan or arrangement of
any type, affecting any employee, independent contractor or agent of the
Business, which results or may result in an increase in costs or liabilities
thereunder above those existing on the date hereof; or (iii) lend or advance any
sum or extend credit to any employee, director or shareholder of the Business or
any of their respective affiliates;
(b) VENDORS. Use commercially reasonable efforts to retain the
services of all vendors, suppliers, manufacturers, agents and consultants used
in the Business, commensurate with the requirements of the Business;
(c) INSURANCE. Maintain all insurance polices set forth in
Schedule 4.9, consistent with past practices and, unless comparable insurance is
substituted therefor, not take any action to terminate or modify, nor permit the
lapse or termination of, the present insurance policies and coverages of Seller
as set forth in Schedule 4.9 hereto;
(d) LAWSUITS, CLAIMS. Promptly notify Buyer of, and diligently
defend against, all lawsuits, claims, proceedings or investigations that are, or
which any officers of the Seller, as a result of events or circumstances
actually known to them, has reason to believe may be, threatened, brought,
asserted or commenced against Seller or any of its shareholders, officers or
directors, involving or affecting in any way the Business, any of the Purchased
Assets or the transactions contemplated hereby; and not settle any action or
proceeding which would materially adversely affect the Business or any of the
Purchased Assets or the consummation of the transactions contemplated hereby;
and not release, settle, compromise or relinquish any claims, causes of action
or rights of the Business involving more than $5,000 individually or $15,000 in
the aggregate which
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Seller may have against any other persons;
(e) CERTAIN CHANGES. Not sell or otherwise dispose, or enter into
any agreement for the sale, of any of the Purchased Assets, except for sales of
inventory and obsolete equipment in the ordinary course of business and
consistent with past practices, and not permit or allow, or enter into any
agreements providing for or permitting, any of the Purchased Assets to be
subjected to any mortgage, security interest, pledge, option, lien, charge or
encumbrance ;
(f) CONDITION OF ASSETS. Maintain in good working order and
condition, ordinary wear and tear excepted, and in compliance in all material
respects with all applicable laws and regulations, all of the Purchased Assets;
(g) AGREEMENTS AND COMMITMENTS. Observe and perform, in all
material respects, all terms, conditions, covenants and obligations contained in
all existing agreements between Seller and third parties the violation of which
would have, individually or in the aggregate, a material adverse effect on the
Business or any of the Purchased Assets; not take any action which would cause a
breach or violation of or default under any material agreement, lease, contract,
or other written instrument, commitment or arrangement, or under any License or
Permit, judgment, writ or order, applicable to or affecting the Business or any
of the Purchased Assets, and promptly notify Buyer in writing of the occurrence
of any such breach or default; and not enter into any transaction with any
shareholder, director or officer or any person or entity related to or
affiliated with any Selling Party;
(h) CONSENTS; COMPLIANCE WITH LAWS. Use its best efforts to
obtain and maintain all consents, assignments or approvals of, and Licenses and
Permits granted by, governmental authorities and agencies and other third
parties, in form and substance reasonably satisfactory to Buyer, the absence or
loss of which would have a material adverse effect on the Business or any of the
Purchased Assets either prior to or following the Closing; and not take any
action which would result in a violation of or the noncompliance with any laws,
regulations, consents or approvals applicable to the Business or any of the
Purchased Assets, where such violation or noncompliance could have a material
adverse effect on the Business or any of the Purchased Assets, or result in the
incurrence of any material liability against the Business or any of the
Purchased Assets or in the revocation, modification or loss of any License or
Permit or other right needed for the operation of the Business as presently
conducted by Seller;
(i) TAXES. Pay all federal, state, local and foreign taxes
assessed against Seller, the Business or any of the Purchased Assets, when due,
and in any event prior to the imposition or assessment of any liens against the
Business or any of the Purchased Assets, unless Seller is contesting such taxes
or the imposition of any such liens in good faith, it being understood that
not assuming any liability for such taxes and that Seller shall cause
any such liens to be removed prior to the Closing;
(j) CORPORATE MATTERS. No change or amendment shall be made in
the Articles of Incorporation, Bylaws or other governing instruments of Seller
or in the ownership of the outstanding capital stock or other equity interests
of Seller in a manner which could interfere with the consummation of the
transactions contemplated by this Agreement, nor shall Seller terminate or
modify, or take any actions which it has reason to believe would result in
termination or
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modification of, any of the material agreements, contracts, leases, licenses or
rights included in the Purchased Assets;
(k) LIABILITIES AND EXPENSES. Not create or incur (whether as
principal, surety or otherwise) any actual or contingent liabilities or expenses
of the Business other than liabilities and expenses incurred in the ordinary
course of business consistent with past practices.
6.3 FURNISHING OF CERTAIN INFORMATION. If requested by Buyer, Seller
(i) shall make, or cause to be made, available to Buyer true, correct and
complete copies of the historical financial statements of the Business for any
periods prior to the Closing Date and such other information concerning Seller
or the Business as Buyer may request; (ii) shall permit Buyer's independent
public accountants to have access to the books and records of the Business so
that any unaudited historical financial statements and other financial
information of the Business and Subsidiary, if any, can be reviewed or audited;
and (iii) shall permit such financial statements and other information
concerning the Business to be disclosed in any public filing by Buyer under or
pursuant to the Securities Act or the Securities Exchange Act of 1934, as
amended ("Securities Filings"). In addition, the Seller shall use commercially
reasonable efforts to cause Seller's independent public accountants to provide
such information and assistance, including the execution and delivery of
opinions and consents with respect to the historical financial statements of the
Business, as may be required by Buyer for inclusion in any such Securities
Filings, and the reasonable out-of-pocket expenses of the Seller and such
accountants in connection therewith shall be paid by Buyer, provided the
incurring of such expenses has been approved in advance and in writing by Buyer.
Disclosure of such financial statements and information furnished hereunder in
any Securities Filing shall not constitute a breach or violation of the
confidentiality provisions of Section 14 of this Agreement.
7. OBLIGATIONS PENDING AND FOLLOWING THE CLOSING.
7.1 TERMINATION OF SECURITY INTERESTS AND LIENS. At no cost or
expense to Buyer, Seller shall cause, as of the Closing Date, all security
interests, liens, claims, encumbrances and adverse interests to which any of the
Purchased Assets are subject (other than those securing any of the Assumed
Obligations) to be terminated and all indebtedness or obligations secured
thereby (other than the Assumed Obligations) to be paid.
7.2 CONSENTS. Except as may otherwise be agreed by the parties, each
party to this Agreement shall use commercially reasonable efforts to obtain or
cause to be obtained at the earliest practicable date, all consents, approvals
and Licenses and Permits, if any, which such party requires to permit it to
consummate the transactions contemplated hereby without violating any agreement,
contract, instrument or applicable law or regulation or any License or Permit to
which it is a party or to which it or its assets are subject. The parties hereto
shall cooperate with each other in their efforts to obtain all such consents,
approvals and Licenses and Permits.
7.3 FURTHER ASSURANCES. Each party hereto shall execute and deliver,
both before and after the Closing, such instruments and take such other actions
as the other party or parties, as the case may be, may reasonably request in
order to carry out the intent of this Agreement or to better evidence or
effectuate the transactions contemplated herein.
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7.4 NOTICE OF BREACH. Each party to this Agreement will notify the
other parties of the occurrence of any event, or the failure of any event to
occur, that results in or constitutes a breach by it of any representation or
warranty or a failure by it to comply with or fulfill any covenant, condition or
agreement contained herein, within two (2) business days after learning of such
breach or failure.
7.5 EXCLUSIVITY/OTHER OFFERS. Unless and until this Agreement has
been terminated in accordance with Section 12 below, the Seller or its
respective representatives, agents, officers, directors, shareholders, partners
or employees, will not solicit or accept offers from, provide information or
assistance to, or negotiate or enter into any agreement or understanding
(written or oral) with, any other person or entity regarding (i) the sale,
merger or reorganization of Seller, where such transaction does not contemplate
the earlier consummation of the transactions set forth in this Agreement; (ii)
the sale or other disposition of, or the granting of any security interest, lien
or encumbrance on, any of the Purchased Assets; or (iii) any other transaction
which would cause or result in any change, other than of an immaterial nature,
in or adversely affect the Business or any of the Purchased Assets or otherwise
interfere with the consummation of the transactions contemplated herein.
7.6 EMPLOYEES.
(a) Seller hereby authorizes Buyer to offer employment to any or
all of its employees associated with the Business, conditioned on the
consummation of the sale of the Purchased Assets pursuant hereto; and waives any
rights Seller may have to prohibit such employees from being employed by Buyer;
(b) Seller will use its best efforts to retain all current
employees of the CAD/RMS division during the transition period, including
resolution of stock option issues;
(c) Seller will not solicit any current employees of the CAD/RMS
division who are offered employment by Buyer for a period of one year after the
Closing Date, without the prior written consent of Buyer; and
(d) Buyer shall offer employment to each of the employees of the
Business listed on Schedule 7.6 hereto.
7.7 TAXES. Seller shall pay all taxes (other than income taxes of
Buyer) of any kind or nature arising from (i) the conduct of Seller's business
or operations, whether prior to or after the Closing Date, and (ii) the
consummation of the transactions contemplated hereby, including, without
limitation, all sales, use or similar taxes, if any, that may arise from or be
assessed by reason of the sale of the Purchased Assets by Seller to Buyer. If
any taxes required under this Section 7.7 to be borne by Seller are assessed
against Buyer, Buyer shall notify Seller in writing promptly thereafter and
Seller shall be entitled to contest, in good faith, such assessment or charge.
Notwithstanding the foregoing, Buyer may, but shall not be obligated to, pay any
such taxes assessed against it but payable by Seller pursuant hereto, if Buyer's
failure to do so, in the reasonable judgment of Buyer, could result in the
imposition of a lien or attachment on any of the Purchased Assets or any other
assets of Buyer or would constitute a violation of any agreement to which Buyer
is subject, or if Seller fails to contest such assessment or charge in good
faith. In the event Buyer
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pays any taxes which pursuant hereto are required to be borne by Seller, Buyer
shall be entitled to reimbursement thereof from Seller, on demand.
7.8 SCHEDULE OF ACCOUNTS RECEIVABLE. At the Closing, Seller shall
deliver or cause to be delivered to Buyer a detailed schedule of all unpaid
accounts receivable of Seller as of the close of business on June 30, 1997. This
schedule shall set forth all of the accounts receivable of Seller outstanding as
of the end of such day, together with an aging thereof setting forth the amounts
due in respect of such receivables in 30-day aging categories up to 180 days.
The Seller represents and warrants that the schedule to be delivered pursuant to
this Section 7.8 shall be a true, correct and accurate representation of the
facts set forth in such schedule.
7.9 ACCOUNTS AND NOTES RECEIVABLE COLLECTIONS. In the event the
Seller receives any payment after the Closing of or in respect of any accounts
or notes receivable included in the Purchased Assets, such Selling Party shall
promptly deliver such payment to Buyer, after subtracting from the amount of
such payment any amounts paid by Seller on behalf of Buyer in payment of
accounts payable of the Business following July 1, 1997. The Seller further
agrees to cooperate with Buyer in notifying account obligors of the transfer of
such accounts and notes receivable and instructing them to make all payments in
respect thereof following the Closing to Buyer.
7.10 SUBLEASE OF SCC FACILITY. SCC will permit the Buyer to conduct
the Business from the existing premises occupied by the Business (the "Business
Premises") through October 31, 1997 at a rental rate not to exceed $20,000 per
month (prorated for partial months), plus expenses such as phone charges and
other similar items, which shall be billed separately by Seller, without
mark-up. Buyer may cause employees to vacate all or any portion of the Business
Premises at any time and in one or more stages, and its rental obligation shall
cease upon its full vacation of the Business premises.
7.11 MAPPING SERVICES AND SOFTWARE LICENSE AGREEMENT. As soon as
practicable following the Closing, Buyer and Seller shall negotiate in good
faith and shall enter into a Mapping Services and Software License Agreement,
which shall reflect the terms set forth in EXHIBIT D, among others (the "Service
Agreement").
7.12 9-1-1/CAD INTEGRATION AGREEMENT. As soon as practicable
following the Closing, Buyer and Seller shall negotiate in good faith and shall
enter into a 9-1-1 XA/CAD Integration Agreement, which shall reflect the terms
set forth in EXHIBIT E, among others (the "Integration Agreement").
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All of the
representations and warranties set forth in this Agreement or in any
certificates delivered pursuant hereto, as the same have been modified by the
information contained in the Schedules to this Agreement delivered on the date
hereof by Seller to Buyer, or by Buyer to Seller, and all covenants which by
their terms require performance or compliance following the Closing, shall
remain in full force and effect and shall survive the Closing until (i) in the
case of the representations and warranties, the expiration of the periods
following the Closing Date applicable to such representations and warranties as
set forth in Section 13(d) hereof, regardless of any investigation or
verification by any party hereto or by anyone or on behalf of any party hereto,
and (ii) in the case of any such covenants, until they have been fully performed
and no further performance is required
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with respect thereto pursuant to this Agreement, unless the party for whose
benefit such covenant, representation or warranty was made waives the same in
writing.
9. CONDITIONS TO OBLIGATIONS OF BUYER. The obligation of Buyer to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction, or the waiver in writing by Buyer, at or before the Closing,
of all the conditions set out below in this Section 9.
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES/COMPLIANCE WITH
COVENANTS. All of the representations and warranties of Seller contained in this
Agreement and the Schedules hereto, were true and correct when made and remain
true and correct as of the Closing Date. The Seller shall, in all material
respects, have performed, satisfied and complied with all covenants, agreements
and conditions required by this Agreement to have been performed or complied
with by any or all of them on or before the Closing Date.
9.2 NO MATERIAL ADVERSE CHANGES. Subsequent to June 30, 1997 there
shall not have occurred nor shall there exist (i) any material adverse change in
the financial condition, properties, assets, business or operating results or
prospects of the Business from that reflected in the June 30, 1997 Balance
Sheet, except for changes disclosed in this Agreement or in the Schedules hereto
delivered with this Agreement on the date hereof; (ii) any material breach or
default by any party thereto of any of the Assumed Contracts or Assumed
Liabilities or any other material contracts or agreements relating to or
affecting any of the Purchased Assets or the Business, the existence of which
breach or default is not disclosed in this Agreement or in the Schedules
delivered with this Agreement on the date hereof; (iii) any damage or loss,
whether or not insured, to any of the Purchased Assets; or (iv) any other event
or condition or state of facts of any character which could reasonably be
expected to materially adversely affect the Business or any of the Purchased
Assets.
9.3 ABSENCE OF LITIGATION. No action, suit, investigation or other
proceeding before any court or by any governmental body or other authority,
whether brought against the Seller or Buyer, shall have been instituted or
threatened, seeking to prevent the consummation of the transactions contemplated
by this Agreement, and no such litigation shall have been threatened nor shall
there be in effect any order restraining or prohibiting the consummation of the
transactions contemplated by this Agreement nor any proceedings pending with
respect thereto. There shall be no pending or threatened litigation, or asserted
or unasserted claims, assessments, or other loss contingencies, materially and
adversely affecting the Business or any of the Purchased Assets, other than as
disclosed in the Schedules delivered pursuant hereto as of the date of this
Agreement.
9.4 CERTIFICATES. Buyer shall have received the following:
(a) Certificates of Good Standing, as of a recent date, from the
Delaware and Colorado Secretaries of State , indicating that Seller is not
delinquent in the payment of income, franchise, sales or other state taxes or
the filing of any tax returns;
(b) A certificate signed by Seller, dated as of the Closing Date,
certifying that (i) all representations and warranties of the Seller were true
and correct in all material respects when made and remain true and correct in
all material respects as of the Closing Date; (ii) all of the respective
covenants, agreements, obligations and conditions of the Seller required to have
been performed as of or prior to the Closing have been fully performed and
complied with; and (iii) all of
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the conditions to Buyer's obligations under this Agreement required to be
satisfied by the Seller by the Closing Date have been satisfied and fulfilled;
and
(c) A certificate signed by the Secretary of Seller, and dated as
of the Closing Date, as to the incumbency of each officer of Seller executing
this Agreement and the other agreements being delivered pursuant hereto, and
certifying the effectiveness, accuracy and completeness of the copies attached
to such certificate of resolutions duly adopted by Seller's Board of Directors
and all of its shareholders, as the case may be, authorizing the execution and
delivery of this Agreement by Seller, and the performance by Seller of its
obligations hereunder and the consummation of the transactions contemplated
hereby.
9.5 UCC TERMINATION STATEMENTS. Seller shall have delivered or caused
to be delivered to Buyer, at or before the Closing, UCC Termination Statements
and such other releases as Buyer may reasonably request, duly completed and
executed by each person having any security interest, lien, claim or other
encumbrances or adverse interests in or on any of the Purchased Assets which are
required to be terminated pursuant to Section 7.1 above, in order to evidence
the termination thereof.
9.6 LEGAL OPINION. On the Closing Date, Seller shall have delivered
or caused to be delivered to Buyer a legal opinion of Ireland, Stapleton, Pryor
& Pascoe, P.C., counsel to Seller, in the form of EXHIBIT F hereto.
9.7 OTHER CONSENTS AND APPROVALS. Receipt of all consents and
approvals required for the consummation of the transactions contemplated by this
Agreement and to permit Buyer in writing to acquire all of the Purchased Assets
pursuant hereto, without thereby violating any laws, government regulations or
agreements to which subject or is a party, in form and substance
acceptable to Buyer.
9.8 BILL OF SALE. Seller shall have executed and delivered to Buyer a
Bill of Sale, in the form attached hereto as EXHIBIT A, transferring title to
the Purchased Assets to Buyer.
9.9 ASSIGNMENT AND ASSUMPTION AGREEMENT. Seller shall have executed
and delivered to Buyer an Assignment and Assumption Agreement in the form of
EXHIBIT B hereto with Buyer (the "Assignment Agreement"), pursuant to which
Seller shall assign, and Buyer shall assume, all of the Assumed Obligations.
9.10 OTHER DOCUMENTS. Seller shall have delivered to Buyer all
instruments, consents, deeds, assignments and other documents called for in this
Agreement, including, without limitation, assignments and certificates of title
for any and all vehicles included in the Purchased Assets, properly executed and
acknowledged for transfer, and such other documents and instruments as Buyer or
its counsel reasonably requests to better evidence or effectuate the
transactions contemplated hereby.
9.11 NON-COMPETITION AGREEMENT. The Seller shall have executed and
delivered to the Buyer a Non-Competition Agreement substantially in the form
attached hereto as EXHIBIT C.
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10. CONDITIONS TO THE OBLIGATIONS OF SELLER. The obligations of Seller
to consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction, or the waiver by Seller, at or before the Closing, of each
of the following conditions:
10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES/COMPLIANCE WITH
COVENANTS. All of the representations and warranties of Buyer contained in this
Agreement and in the Schedules hereto were true and correct when made and remain
true and correct as of the Closing Date. Buyer shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by them
on or prior to the Closing.
10.2 ABSENCE OF LITIGATION. No action, suit, investigation or other
proceeding before any court or by any governmental body or other authority,
whether brought against the Seller or Buyer, shall have been instituted or
threatened, seeking to prevent the consummation of the transactions contemplated
by this Agreement, and no such litigation shall have been threatened nor shall
there be in effect any order restraining or prohibiting the consummation of the
transactions contemplated by this Agreement nor any proceedings pending with
respect thereto.
10.3 CERTIFICATES. Seller shall have received the following:
(a) Good Standing Certificates of Buyer, as of a recent date,
from the Delaware and California Secretaries of State;
(b) A certificate signed by the President or Chief Financial
Officer of Buyer, dated as of the Closing Date, certifying that (i) all
representations and warranties of Buyer were true and correct when made and
remain, in all material respects, true and correct as of the Closing; (ii) all
of the respective covenants, agreements, obligations and conditions of Buyer
required to have been performed by Buyer as of or prior to the Closing have been
fully performed and complied with; and (iii) all of the conditions to Seller's
obligations under this Agreement and the Related Agreements required to be
satisfied by the Closing Date by Buyer have been satisfied and fulfilled; and
(c) A certificate signed by the Secretary of Buyer, dated as of
the Closing Date, as to the incumbency of each officer of Buyer that has
executed this Agreement or the Related Agreements being delivered pursuant
hereto, and certifying the effectiveness, accuracy and completeness of the
copies attached to such certificate of resolutions duly adopted by the Board of
Directors of Buyer authorizing the execution and delivery of this Agreement and
the performance by Buyer of its obligations hereunder and the consummation of
the transactions contemplated hereby.
10.4 OTHER DOCUMENTS. Buyer shall have delivered to Seller all
instruments, consents, deeds, assignments and other documents called for in this
Agreement and the Related Agreements.
10.5 ASSIGNMENT AND ASSUMPTION AGREEMENT. Buyer shall have executed
and delivered to Seller an Assignment and Assumption Agreement in the form of
EXHIBIT B hereto with Buyer (the "Assignment Agreement"), pursuant to which
Seller shall assign, and Buyer shall assume, all of the Assumed Obligations.
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<PAGE> 27
11. CLOSING.
11.1 TIME, DATE AND PLACE OF CLOSING. The closing of the sale and
purchase of the Purchased Assets contemplated by this Agreement (the "Closing")
shall take place at the offices of Stradling, Yocca, Carlson & Rauth, in Newport
Beach, California at 1:00 P.M., on July 18, 1997, or at such other location or
time or on such other date as the parties may agree to in writing (the "Closing
Date").
11.2 SELLER'S OBLIGATIONS AT CLOSING. Subject to the satisfaction, or
Seller's waiver, of the conditions precedent contained in Section 9 hereof, at
the Closing, the Seller shall deliver, or cause to be delivered to Buyer, the
following documents and instruments, in form and substance satisfactory to Buyer
and its counsel:
(a) Each of the certificates, opinions and other documents and
instruments required to be delivered by the Seller to satisfy the conditions set
forth in Section 10 above;
(b) The UCC Termination Statements, and such instruments and
other documents as Buyer may request, from all persons holding security
interests, liens, claims or encumbrances or any other adverse interests on any
of the Purchased Assets, terminating and discharging all of such security
interests, liens, claims, encumbrances and adverse interests;
(c) All checks and other negotiable instruments in the possession
of Seller evidencing or constituting payment of any accounts or notes receivable
included in the Purchased Assets, endorsed for payment to Buyer; and
(d) Such other documents and instruments as Buyer or Buyer's
counsel may reasonably request to better evidence or effectuate the transactions
contemplated hereby.
11.3 OBLIGATIONS OF BUYER AT THE CLOSING. Subject to the
satisfaction, or Buyer's written waiver, of the conditions precedent contained
in Section 9 hereof, at the Closing, Buyer shall do the following:
(a) Buyer shall deliver each of the certificates and other
documents and instruments required to be delivered by Buyer to Seller pursuant
to Section 10 above; and
(b) Buyer shall deliver such other documents and instruments as
Seller or Seller's counsel may reasonably request to better evidence or
effectuate the transactions contemplated hereby.
12. TERMINATION.
12.1 METHODS OF TERMINATION. This Agreement may be terminated and the
transactions herein contemplated may be abandoned at any time, without liability
to the terminating party:
(a) By mutual written consent of Buyer and Seller; or
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<PAGE> 28
(b) By either Buyer or Seller, if the Closing has not occurred by
August ___, 1997; provided, that the party so terminating is not in breach of
any of its material obligations under this Agreement.
12.2 PROCEDURE UPON TERMINATION. In the event of termination of this
Agreement by Buyer or Seller or by both Buyer and Seller pursuant to Section
12.1 hereof, written notice thereof shall forthwith be given to the other party
or parties hereto and the transactions contemplated herein shall be abandoned
without further action by Buyer or the Seller. In addition, if this Agreement is
terminated as provided herein:
(a) Each party will redeliver all documents, workpapers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) The confidentiality of all information of a confidential
nature received by any party hereto with respect to the business of any other
party (other than information which is a matter of public knowledge or which has
heretofore been or is hereafter published in any publication for public
distribution or filed as public information with any governmental authority)
shall be maintained in accordance with Section 14 hereof which shall survive
termination of this Agreement; and
(c) Except as hereinabove provided in this Section 12.2, the
respective obligations of the parties hereto under this Agreement shall
terminate; provided, that if any party hereto has breached any of its material
obligations or representations or warranties under this Agreement prior to the
termination of this Agreement, termination of this Agreement shall not release
such party from liability therefor to the other party. For purposes this
Section, the Seller shall be deemed to be a single and the same party.
13. INDEMNIFICATION.
(a) Seller (in the case of indemnification obligations of the
Seller, Seller shall hereinafter be referred to in this Section 13 as the
"Indemnifying Party") hereby agrees that it will indemnify, hold harmless and
defend Buyer and its directors, officers, shareholders, employees, agents and
successors and assigns (in the case of indemnification obligations of Seller,
such persons shall hereinafter be referred to collectively in this Section 13 as
the "Indemnified Parties") from and against any and all Liabilities (as
hereinafter defined) that arise from or are in connection with: (i) any facts,
circumstances or events, the existence or happening of which constitutes a
breach of or inaccuracy in any of the representations or warranties of Seller
contained in this Agreement or in any Exhibits or Schedules hereto or any
certificates or other documents delivered hereunder by or on behalf of Seller;
(ii) any breach or default by Seller of any of its covenants or agreements
contained in this Agreement; and (iii) any legal actions or proceedings that
have arisen or may hereafter arise out of the business or operations of Seller,
whether before or after the Closing, including, without limitation, any of the
pending or threatened legal actions described in Schedule 4.13 hereto; and (iv)
any and all liabilities of Seller which may be asserted by third parties against
Buyer as a result of non-compliance with the Bulk Sales laws of any
jurisdiction. The liability of the Seller to the Indemnified Parties pursuant to
this Section 13(a) shall be limited, in the aggregate, to the Purchase Price.
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<PAGE> 29
(b) Buyer (in the case of indemnification obligations of Buyer,
Buyer shall hereinafter be referred to in this Section 13 as the "Indemnifying
Party") hereby agrees that it will indemnify, hold harmless and defend the
Seller and its directors, officers, shareholders, employees, agents and
successors and assigns (in the case of indemnification obligations of Buyer,
such persons shall hereinafter be referred to collectively in this Section 13 as
the "Indemnified Parties") from and against any and all Liabilities that arise
from or are in connection with: (i) any facts, circumstances or events, the
existence or happening of which constitutes a breach of or inaccuracy in any of
the representations or warranties of Buyer contained in this Agreement or in any
Exhibits or Schedules hereto or any certificates or other documents delivered
hereunder by or on behalf of Buyer; or (ii) any breach or default by Buyer of
any of its covenants or agreements contained in this Agreement, including its
agreement to assume and perform the Assumed Obligations. The liability of the
Buyer to the Indemnified Parties pursuant to this Section 13(b), other than
liability arising out of Buyer's failure to perform the Assumed Obligations
(which shall be limited to the amounts set forth on Schedule 1.3 plus any legal
fees and expenses payable pursuant to subsection (d) below) shall be limited, in
the aggregate, to $100,000.
(c) "Liabilities," as used in this Agreement, shall mean: (i)
demands, claims, actions, suits, and legal or other proceedings brought against
any "Indemnified Party" (as hereinafter defined), and any judgments rendered
therein or settlements thereof, and (ii) all liabilities, damages, losses,
taxes, costs and expenses, including, without limitation, reasonable attorneys'
fees, incurred by any Indemnified Party, whether or not they have arisen from or
were incurred in or as a result of any demand, claim, action, suit, assessment
or other proceeding or any settlement or judgment, and whether sustained before
or after the Closing Date.
(d) No claim for indemnification under this Section 13 may be
made by an Indemnified Party (i) until the aggregate amount of such claims
exceeds $25,000, or (ii) more than eighteen (18) months after the Closing Date;
provided, that any claim by an Indemnified Party for indemnification relating to
any taxes or tax returns or reports may be made at any time within the statute
of limitations relating to such taxes or tax returns or reports. To be
effective, any claim for indemnification under this Section 13 by an Indemnified
Party must be made by a written notice (a "Notice of Claim") to the Indemnifying
Party, given in accordance with the provisions of Section 16 hereof, accompanied
by documentation supporting the claim; provided, however, that if the
Indemnified Party has made such claim prior to such expiration date, such
Indemnified Party shall be entitled to recover the full amount of the
Liabilities incurred by it even if that amount is not finally determined until
after such expiration date. In the event of the assertion, in writing, of a
third-party claim or dispute which, if adversely determined would entitle an
Indemnified Party to indemnification hereunder, the Indemnified Party shall
promptly notify the Indemnifying Party thereof in writing. The Indemnifying
Party may elect, by written notice to the Indemnified Party, to assume and
direct, at their sole expense, the defense of any such third-party claim, and
may, at their sole expense, retain counsel in connection therewith, provided
that such counsel is reasonably acceptable to the Indemnified Party. After the
assumption of such defense by the Indemnifying Party with counsel reasonably
acceptable to the Indemnified Party, and for so long as the Indemnifying Party
conduct such defense on a diligent and timely basis, the Indemnifying Party
shall not be responsible for the payment of legal fees incurred thereafter by
the Indemnified Party (who may, however, continue to participate in the defense
thereof with separate counsel); provided, that, the Indemnifying Party shall be
responsible for paying the fees and expenses of one separate counsel for the
Indemnified Party if the Indemnifying Party and the Indemnified Party have
conflicting positions with respect to such third-party claim or dispute or if
the Indemnifying Party, on the one hand, or the
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<PAGE> 30
Indemnified Party, on the other hand, have defenses not available to the other.
If the Indemnifying Party fail to and until the Indemnifying Party undertake the
defense of any such third-party claim or dispute, or if the Indemnifying Party
discontinue the diligent and timely conduct thereof, the Indemnified Party may
undertake such defense and the Indemnifying Party shall be responsible for
reimbursing the Indemnified Party for its legal fees and expenses as and when
incurred by the Indemnified Party. No Indemnifying Party hereto may settle or
compromise any such third-party claim or dispute without the prior written
consent of the Indemnified Parties hereto, which consent shall not be
unreasonably withheld.
(e) Upon receipt of a Notice of Claim, the Indemnifying Party
shall have fifteen (15) calendar days to contest their indemnification
obligation with respect to such claim, or the amount thereof, by written notice
to the Indemnified Party (a "Contest Notice"); provided, however, that if, at
the time a Notice of Claim is submitted to the Indemnifying Party the amount of
the Liability in respect thereof has not yet been determined, such fifteen (15)
day period shall not commence until a further written notice (a "Notice of
Liability") has been sent or delivered by the Indemnified Party to the
Indemnifying Party setting forth the amount of the Liability incurred by the
Indemnified Party that was the subject of the earlier Notice of Claim. Such
Contest Notice shall specify the reasons or bases for the objection of the
Indemnifying Party to the claim, and if the objection relates to the amount of
the Liability asserted, the amount, if any, which the Indemnifying Party believe
is due the Indemnified Party. If no such Contest Notice is given with such
15-day period, the obligation of the Indemnifying Party to pay to the
Indemnified Party the amount of the Liability set forth in the Notice of Claim,
or subsequent Notice of Liability, shall be deemed established and accepted by
the Indemnifying Party. If, on the other hand, the Indemnifying Party contest a
Notice of Claim or Notice of Liability (as the case may be) within such 15-day
period, the Indemnified Party and the Indemnifying Party shall thereafter
attempt in good faith to resolve their dispute by agreement. If they are unable
to so resolve their dispute within the immediately succeeding thirty (30) days,
such dispute shall be resolved by binding arbitration in Los Angeles County,
California, as provided in Section 17(i) below. The award of the arbitrator
shall be final and binding on the parties and may be enforced in any court of
competent jurisdiction. Upon final determination of the amount of the Liability
that is the subject of an indemnification claim (whether such determination is
the result of the Indemnifying Party's acceptance of, or failure to contest, a
Notice of Claim or Notice of Liability, or of a resolution of any dispute with
respect thereto by agreement of the parties or binding arbitration), such amount
shall be payable, in cash by the Indemnifying Party to the Indemnified Party who
have been determined to be entitled thereto within five (5) days of such final
determination of the amount of the Liability due by the Indemnifying Party. Any
amount that becomes due hereunder and is not paid when due shall bear interest
at the maximum legal rate per annum from the date due until paid.
14. CONFIDENTIALITY. Each party acknowledges that it may have access to
various items of proprietary and confidential information of the other in the
course of investigations and negotiations prior to Closing. Except as otherwise
provided in Section 6.3 above, each party agrees that any such confidential
information received from the other party shall be kept confidential and shall
not be used for any purpose other than to facilitate the arrangement of
financing for and the consummation of the transactions contemplated herein.
Confidential information shall include any business or other information which
is specifically marked by the party claiming confidentiality as being
confidential, unless such information (i) is already public knowledge, (ii)
becomes public knowledge through no fault, action or inaction of the receiving
party, or (iii) was known by the receiving party, or any of its directors,
officers, employees, representatives, agents or advisors prior to
29
<PAGE> 31
the disclosure of such information by the disclosing party to the receiving
party. No party hereto, nor its respective officers, directors, employees,
accountants, attorneys, or agents shall intentionally disclose the existence or
nature of, or any of the terms and conditions relating to, the transaction
referred to herein, to any third person; provided, however, that such
information may be disclosed in applications or requests required to be made to
obtain any Licenses and Permits, approvals or consents needed to consummate the
transactions contemplated herein or in any Securities Filings.
15. EXPENSES AND BROKER'S FEES.
15.1 EXPENSES/PRORATIONS. Each of the parties shall pay all costs and
expenses incurred or to be incurred by it in connection with the negotiation,
preparation, execution, delivery and performance of its respective obligations
under this Agreement and the Related Agreements.
15.2 BROKER'S FEES. Each party represents and warrants that it has
not utilized the services of, and that it does not and will not have any
liability to, any broker or finder in connection with this Agreement or the
transactions contemplated hereby. The Seller jointly and severally agree to
indemnify and hold harmless Buyer, and Buyer agrees to hold harmless Seller,
against any loss, liability, damage, cost, claim or expense incurred by reason
of any brokerage commission or finder's fee alleged to be payable as a result
of, or in connection with, this Agreement or the transactions contemplated
hereby by reason of any act, omission or statement of the indemnifying party.
16. NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered in person or by a nationally recognized courier service, if sent by
facsimile machine ("fax") or mailed, certified, return-receipt requested,
postage prepaid:
If to Printrak to:
Printrak International Inc.
1250 North Tustin Avenue
Anaheim, CA 92807
Attention: Mr. Kevin P. McDonnell
With a copy to:
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Bruce Feuchter, Esq.
If to SCC to:
SCC Communications Corp.
6285 Lookout Road
Boulder, Colorado 80301-3343
Attention: Ms. Nancy Hamilton
With a copy to:
Ireland, Stapleton, Pryor & Pascoe
1675 Broadway, Suite 2600
Denver, Colorado 80202
Attention: Jack Lewis, Esq.
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<PAGE> 32
Any party hereto may from time to time, by written notice to the other parties,
designate a different address, which shall be substituted for the one specified
above for such party. If any notice or other document is sent by certified or
registered mail, return receipt requested, postage prepaid, properly addressed
as aforementioned, the same shall be deemed served or delivered seventy-two (72)
hours after mailing thereof. If any notice is sent by fax to a party, it will be
deemed to have been delivered on the date the fax thereof is actually received,
provided the original thereof is sent by certified or registered mail, in the
manner set forth above, within twenty-four (24) hours after the fax is sent. If
the notice is delivered in person or is sent by a nationally recognized courier
service, it shall be deemed to have been delivered on the date received by the
recipient of such notice.
17. MISCELLANEOUS.
17.1 BINDING EFFECT. Subject to the terms of Section 17.2 below, this
Agreement shall be binding upon the heirs, executors, representatives,
successors and assigns of the respective parties hereto.
17.2 ASSIGNMENT. No party may assign this Agreement, or assign their
respective rights or delegate their respective duties hereunder, without the
prior written consent of the other party.
17.3 COUNTERPARTS. This Agreement may be executed in facsimile and in
any number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
17.4 HEADINGS. The subject headings of the sections and subsections
of this Agreement are included for purposes of convenience only and shall not
affect the construction or interpretation of any of its provisions.
17.5 WAIVERS. Any party to this Agreement may waive any right, breach
or default which it has the right to waive; provided, that such waiver will not
be effective against the waiving party unless it is in writing and specifically
refers to this Agreement and notice thereof is promptly given to all parties in
the manner provided in Section 16 of this Agreement. No waiver will be deemed to
be a waiver of any other matter, whenever occurring and whether identical,
similar or dissimilar to the matter waived.
17.6 ENTIRE AGREEMENT. This Agreement, including the Schedules,
Exhibits and other documents referred to herein which form a part hereof,
embodies the entire agreement and understanding of the parties hereto, and
supersedes all prior or contemporaneous agreements or understandings (whether
written or oral) among the parties, in respect to the subject matter contained
herein, including, without limitation, the Letter Agreement.
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17.7 GOVERNING LAW. This Agreement is deemed to have been made in the
State of California, and its interpretation, its construction and the remedies
for its enforcement or breach are to be applied pursuant to, and in accordance
with, the laws of California for contracts made and to be performed in that
state.
17.8 ARBITRATION. All disputes between the parties hereto shall be
determined solely and exclusively by arbitration under, and in accordance with
the rules then in effect of, the American Arbitration Association, or any
successors thereto ("AAA"), in Los Angeles, California, unless the parties
otherwise agree in writing. The parties shall, in connection with such
arbitration, in addition to any discovery permitted under AAA rules, be
permitted to conduct discovery in accordance with Section 1283.05 of the
California Code of Civil Procedure, the provisions of which are incorporated
herein by this reference. The parties shall jointly select an arbitrator. In the
event the parties fail to agree upon an arbitrator within ten (10) days, then
each party shall select an arbitrator and such arbitrators shall then select a
third arbitrator to serve as the sole arbitrator; provided, that if either
party, in such event, fails to select an arbitrator within seven (7) days, such
arbitrator shall be selected by the AAA upon application of either party.
Judgment upon the award of the agreed upon arbitrator or the so chosen third
arbitrator, as the case may be, shall be binding and shall be entered into by a
court of competent jurisdiction.
17.9 SEVERABILITY. Any provision of this Agreement which is illegal,
invalid or unenforceable shall be ineffective to the extent of such illegality,
invalidity or unenforceability, without affecting in any way the remaining
provisions hereof.
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IN WITNESS WHEREOF, the undersigned corporations have caused this
Agreement to be executed by officers thereunto duly authorized, on the date
first above stated.
SELLER:
SCC COMMUNICATIONS CORP.,
a Delaware corporation
By: /s/ NANCY K. HAMILTON
-------------------------------------
Its: CFO
-------------------------------------
BUYER:
PRINTRAK INTERNATIONAL INC., a Delaware
corporation
By: /s/
-------------------------------------
Its: PRESIDENT AND CEO
-------------------------------------
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<PAGE> 35
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Bill of Sale
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C Form of Non-Competition Agreement
Exhibit D Form of Mapping Services and Software License Agreement
Exhibit E Form of Demonstration Site Agreement
Exhibit F Form of Opinion of Counsel for the Seller
Exhibit G Form of Opinion of Counsel for Buyer
SCHEDULES
Schedule 1.1(a) Tangible Assets
Schedule 1.1(b) Personal Property Contracts
Schedule 1.1(d) Intangible Property Rights
Schedule 1.1(g) Computer Software Programs
Schedule 1.2 Assumed Liabilities
Schedule 4.3A Financial Statements
Schedule 4.3B Financial Statement Exceptions
Schedule 4.4 Certain Changes
Schedule 4.5 Exceptions to Title
Schedule 4.5(d) Leases
Schedule 4.6 Contracts and Commitments
Schedule 4.7 Labor and Employment Matters
Schedule 4.8 Conflicts
Schedule 4.9 Insurance Policies
Schedule 4.11(a) Compliance With Laws
Schedule 4.11(b) Permits and Licenses
Schedule 4.12 Litigation
Schedule 4.13 Certain Transactions
Schedule 4.14 Environmental and Safety Matters
Schedule 4.15 Intellectual Property Rights
Schedule 4.16 Operational Restrictions
Schedule 4.18 Individuals with Knowledge of Seller's Operations
Schedule 5.3 Conflicts of Buyer
</TABLE>
<PAGE> 36
EXHIBIT A
FORM OF BILL OF SALE
This BELL OF SALE (this "Bill of Sale") is made as of July 18, 1997 by
SCC COMMUNICATIONS CORP., a Delaware corporation ("Seller"), and PRINTRAK
INTERNATIONAL INC., a Delaware corporation ("Buyer").
WHEREAS, Seller and Buyer are parties to that certain Asset Purchase
Agreement dated as of July 18, 1997 (the "Asset Purchase Agreement"), pursuant
to which Seller has agreed to sell, convey, transfer and assign to Buyer all of
Seller's right, title and interest in and to the Purchased Assets (as such term
is defined in the Asset Purchase Agreement).
WHEREAS, unless otherwise defined herein, capitalized terms used in
this Bill of Sale shall have the meanings ascribed to them in the Asset Purchase
Agreement.
NOW, THEREFORE, BE IT KNOWN THAT:
1. In consideration for the payments to be made by Buyer to Seller as
set forth in Section 3 of the Asset Purchase Agreement, all of which has been
received by Seller on the date hereof, Seller does hereby sell, transfer, assign
and deliver to Buyer the Purchased Assets, free and clear of all mortgages ,
liens, security interests, encumbrances, pledges, leases, equities, claims,
charges, restrictions, conditions, conditional sale contracts and any other
adverse interests of any kind whatsoever, except as expressly set forth in the
Asset Purchase Agreement.
2. The representations and warranties of Seller contained in Section
4.5 of the Asset Purchase Agreement with respect to the Purchased Assets,
together with all limitations on such representations and warranties expressly
set forth in the Asset Purchase Agreement, are incorporated herein by this
reference and made a part of this Bill of Sale.
3. Seller hereby agrees to execute and deliver such other instruments
and documents as Buyer may from time to time hereafter reasonably request to
further effectuate the sale, transfer, conveyance and assignment to Buyer of the
Purchased Assets.
IN WITNESS WHEREOF, each of the parties hereto have caused this Bill of
Sale to be executed by its duly authorized representative as of the day and year
set forth above.
"SELLER"
SCC COMMUNICATIONS CORP.,
a Delaware corporation
By:
----------------------------
Its:
---------------------------
`BUYER"
PRINTRAK INTERNATIONAL INC.,
a Delaware corporation
By:
----------------------------
ITS:
---------------------------
<PAGE> 37
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement"), is made as
of July 18, 1997, by and between SCC COMMUNICATIONS CORP., a Delaware
corporation (the 'Seller") and PRINTRAK INTERNATIONAL INC., a Delaware
corporation (the 'Buyer").
Seller and Buyer are parties to an Asset Purchase Agreement, dated July
18, 1997 (the "Purchase Agreement'). Capitalized terms used herein have the
respective meanings ascribed thereto in the Purchase Agreement unless otherwise
defined herein.
1. Assignment and Assumption. For good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, on the terms and
subject to the conditions of the Purchase Agreement, Seller hereby assigns,
transfers and conveys to Buyer and Buyer hereby assumes and agrees to pay,
perform and discharge the Assumed Obligations of Seller, to the extent not paid,
performed or discharged on or before the date hereof. The Assumed Obligations
consist of the following obligations and liabilities of Seller:
(a) those liabilities, obligations and commitments specifically set
forth in Schedule 1.2 of the Purchase Agreement (collectively, the "Assumed
Liabilities"); and
(b) those rights, liabilities and obligations arising from and after
the Closing Date under the Assumed Contracts.
EXCEPT FOR THE OBLIGATIONS SET FORTH ABOVE, BUYER SHALL NOT ASSUME OR
DISCHARGE ANY DEBTS, OBLIGATIONS, LIABILITIES OR COMMITMENTS OF SELLER WHETHER
ACCRUED NOW OR HEREAFTER, WHETHER FIXED OR CONTINGENT, AND WHETHER KNOWN OR
UNKNOWN, INCLUDING BUT NOT LIMITED TO ANY SEVERANCE, VACATION PAY OR ANY OTHER
OBLIGATIONS TO EMPLOYEES OF SELLER UNLESS SUCH OBLIGATIONS ARISE EXCLUSIVELY AS
A RESULT OF EMPLOYMENT OF SUCH PERSONS BY BUYER. THE ASSIGNED OBLIGATIONS SHALL
NOT INCLUDE, AND SELLER COVENANTS THAT BUYER SHALL NOT BE LIABLE OR RESPONSIBLE
FOR, ANY OBLIGATIONS OR LIABILITIES ARISING OUT OF ANY ACT OR OMISSION OF SELLER
UNDER ANY ASSIGNED CONTRACT, REGARDLESS OF WHEN SUCH LIABILITY OR OBLIGATION IS
ASSERTED. SELLER SHALL INDEMNIFY AND HOLD HARMLESS BUYER FOR AND WITH RESPECT TO
ALL EXCLUDED LIABILITIES, PURSUANT TO SECTION 2 OF THE PURCHASE AGREEMENT. BUYER
SHALL INDEMNIFY AND HOLD HARMLESS SELLER FOR AND WITH RESPECT TO ALL ASSUMED
OBLIGATIONS, PURSUANT TO SECTION 13 OF THE PURCHASE AGREEMENT.
<PAGE> 38
2. General. This Agreement constitutes an agreement solely among the
parties hereto, and is not intended to and shall not confer any rights,
remedies, obligations or liabilities, legal or equitable, including any right of
employment, on any person other than the parties hereto and their respective
successors, assigns and legal representatives, or otherwise constitute any
person a third party beneficiary under or by reason hereof. This agreement may
be executed in one or more counterparts, each of which shall be deemed an
original agreement, but all of which together shall constitute one and the same
instrument, and shall be governed by and construed in accordance with the
internal laws of the State of California without reference to choice of law
principles thereof.
This Agreement may only be amended or modified in writing signed by the party
against whom enforcement of such amendment or modification is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Assumption Agreement to be duly executed on their behalf by the undersigned,
thereunto duly authorized as of the day and year first above written.
SCC COMMUNICATIONS CORP.,
a Delaware corporation
By:
-----------------------------------
Its:
-----------------------------------
"BUYER"
PRINTRAK INTERNATIONAL INC.,
a Delaware corporation
By:
-----------------------------------
Its:
-----------------------------------
<PAGE> 39
EXHIBIT C
NON-COMPETITION AGREEMENT
THIS NON-COMPETITION AGREEMENT (the "Agreement") is made this 18th day
of July, 1997, by and between SCC COMMUNICATIONS CORP., a Delaware corporation
(the "Seller'), and PRINTRAK INTERNATIONAL INC., a Delaware corporation (the
'Buyer"), with reference to the following:
A. The Seller develops and markets computer-aided dispatch and records
management software and related software directly to public safety agencies
within all of the states of the United States of America and the District of
Columbia (the "Business").
B. Buyer and Seller have entered into an Asset Purchase Agreement dated
as of July 18, 1997 (the "Agreement"), pursuant to which Seller will sell to
Buyer all of the assets of the Business.
C. It is a condition precedent to the obligations of Buyer under the
Agreement that Seller enter into a Non-Competition Agreement in the form of this
Agreement with the Buyer, including the covenant not to compete contained
herein; and Seller understands and acknowledges that this Agreement is a
material inducement to Buyer upon which it is relying in consummating the
transactions contemplated by the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, warranties
and representations contained herein, the parties hereby agree as follows:
1. The Seller covenants, that for a period of three (3) consecutive
years commencing on the date hereof, the Seller shall not directly, or
indirectly through one or more other persons or entities, engage in, or have any
financial or other interests in or provide assistance to any person, firm,
corporation or business that engages in, any activity which is the same as or
competitive with the Business, in, from, at or into (a) any of the states of the
United States of America or the District of Columbia or (b) any of the
countries, territories or areas of the world. Notwithstanding the foregoing,
nothing contained in this Agreement shall prevent or otherwise limit the Seller
from holding, for investment purposes only, no more than one percent (1%) of any
class of equity securities of a company engaged in activities that are
competitive with the Business if such class of equity securities is traded on a
national securities exchange or on the NASDAQ National Market System.
2. The Seller agrees not to solicit any of the employees of the Buyer
at any time during the Seller's employment with the Buyer, and for a period of
one (1) year following the termination thereof.
3. The Seller covenants that neither the Seller, nor any employee,
officer, director or agent of the Seller, shall use for his, her or their
benefit, or disclose, communicate or divulge to, or use for the direct or
indirect benefit of any person, firm, association or company, other than the
<PAGE> 40
Buyer, any confidential information regarding the business methods, business
policies, procedures, techniques, trade secrets, software, products, customer
lists or other knowledge or processes used or developed, prior to the Closing,
by the Seller, or other information concerning the Business of which the Buyer
or the Seller became aware prior to the Closing. The foregoing restrictions
shall not apply to (i) information which is or becomes, other than as a result
of a breach of this Agreement, generally available to the public, or (ii) the
disclosure of information required pursuant to a subpoena or other legal
process; provided that the party required to disclose such information shall
notify the Buyer, in writing, of the receipt of any such subpoena or other legal
process requiring such disclosure immediately after receipt thereof and the
Buyer shall have a reasonable opportunity to quash such subpoena or other legal
process prior to any disclosure by the Seller, or (iii) information used in
Seller's NDSC business so long as such business does not compete with the
Business.
4. The Seller acknowledges that the restrictions contained in
Paragraphs 1, 2 and 3, in view of the nature of the Business and the involvement
of such Seller in the Business, are reasonable and necessary in order to protect
the legitimate interests of the Buyer, and that any violation thereof would
result in irreparable injuries to the Buyer. Therefore, the Seller acknowledges
and agrees that, in the event of a violation by the Seller, of any of the
restrictions contained in Paragraphs 1, 2 or 3 above, the Buyer shall be
entitled to seek and obtain from any court of competent jurisdiction (and
without having to join any other party in such action) temporary, preliminary
and permanent injunctive relief, in addition to any other rights or remedies to
which it or they may be entitled and Seller hereby consents to the issuance of
such injunction or grant of such specific performance. In any action or
proceeding to enforce the provisions of this Agreement, Seller expressly waives
the defense that a remedy of damages will be adequate for a breach of Seller's
duties under this Agreement.
5. It is expressly agreed by the Seller that if, in any judicial
proceeding, the geographic coverage of the covenant contained in Paragraph I
hereof or either of the respective periods of time specified in Paragraphs I and
2 hereof should be adjudged unreasonable, then such geographic coverage or such
period or periods of time, as the case may be, shall be reduced to the extent
necessary to enable the court to enforce the restrictions in Paragraph 1 and 2
to the fullest extent permitted under applicable law.
6. The rights of Buyer and the Buyer hereunder shall inure to, and the
obligations of the Seller hereunder shall be binding on, their respective heirs,
representatives, successors and assigns.
7. In the event of a controversy, claim or dispute between any of the
parties hereto arising out of or relating to this Agreement, or the breach
thereof, the prevailing party shall be entitled to recover its reasonable
attorneys' fees, expenses and costs.
8. This Agreement shall be covered by and construed in accordance with
the laws of the State of California. This Agreement may be executed by facsimile
and in counterparts, each of which shall be deemed an original and all of which
when taken together shall constitute on and the same instrument.
<PAGE> 41
9. Neither this Agreement, nor any of the terms or conditions of this
Agreement, may be waived, amended or modified except by means of a written
instrument duly executed by the parties to be charged therewith. No waiver of
any provision, performance or default hereunder in any instance shall be
construed as a continuing waiver of such provision, performance or default or a
waiver of any other provision, performance or default or a waiver of any future
performance or default.
10. This Agreement, together with the provisions of Section 9.12 of the
Agreement, contain all of the agreements of the parties with respect to, and
supersede all other agreements, written or oral, between the parties relating
to, the subject matter of this Agreement.
11. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them as set forth in the Agreement.
THIS NON-COMPETITION AGREEMENT has been executed by the parties hereto
as of the date and year first above written.
"SELLER"
SCC COMMUNICATIONS CORP.,
a Delaware corporation
By:
----------------------------------------
Its:
----------------------------------------
"BUYER"
PRINTRAK INTERNATIONAL INC.,
a Delaware corporation
By:
----------------------------------------
Its:
----------------------------------------
<PAGE> 42
EXHIBIT D.,MAPPING SERVICES
ASSET PURCHASE, AGREEMENT BETWEEN.V SCC/PRINTRAK
EXHIBIT D - MAPPING SERVICES
SCC hereby agrees to grant to Printrak a perpetual. Non-transferable.
non-exclusive right to sublicense SCC's Graphic Geofile Management, ("GGM")
software to Printrak customers. The right to sublicense is restricted to
Printrak customers for use with the Computer Aided Dispatch or Record Management
products only and not for purposes which are competitive with SCC. Other GGM
sublicense usage is subject to prior written approval from SCC. SCC also grants
to Printrak a perpetual. non-transferable. non-exclusive GGM license for
personal business use only, and allows Printrak to make one back-up copy for
emergency usage only. These licensing rights shall be granted to Printrak on a
no-cost basis.
SCC agrees to continue to offer on a subcontract basis to Printrak the following
GGM services:
1. Complete Geofile Builds
2. Proposals for GGM Services
3. GGM Training
4. GGM Installation Services
5. Pin Mapping
6. GGM Database Updating
7. Geofile Maintenance Services
8. Federation Transfer
SCC shall provide these GGM services on a time and materials basis using SCC's
current published labor rates effective July 1. 1997 plus or minus 5 percent not
to exceed a 10 percent increase per year. SCC and Printrak reserve the option to
subcontract SCC GGM Services on a mutually acceptable. firm fixed price basis.
SCC proposals shall be provided on a no-cost basis to Printrak.
SCC and Printrak agree that this is a non-exclusive arrangement for GGM
licensing and subcontract services. Printrak may elect to terminate this
arrangement, or any part thereof, by providing 60 days prior written notice to
SCC.
<PAGE> 43
EXHIBIT E 9-1-IIC.4D Interface
ASSET PURCHASE,AGREEMENT BETWEEN SCC/PRINTRAK
EXHIBIT E-9-1-1/CAD INTEGRATION
SCC is developing, in cooperation with a number of vendors. a new set of
messaging APIs called 9-1-1 XA(TM). SCC agrees to give Printrak the opportunity
to provide the first trial or demonstration CAD sites for the 9-1-IXA API for
"ANI/ALI" reports in each of the SCC National Data Service Center service
regions. In each region. SCC must also secure the concurrence of the supporting
telephone company. SCC will obtain the local telephone company ("telco") support
for initial trials with Printrak.
The period for support of preferential CAD 9-1 -I XA API for "ANI/ALI" trials
for Printrak will terminate on March 31, 1998. Thereafter, SCC will allow other
CAD vendors to use the API.
This approach will give Printrak approximately a six month market lead in the
deployment of the first CAD integration with the new 9-1-IXA API. SCC reserves
the right to support the 9-11 XA API for "ANI/ALI" reports concurrently with
traditional CPE vendors.
<PAGE> 44
EXHIBIT F
FORM OF OPINION OF COUNSEL TO THE SELLER
Matters to be covered in the Legal Opinion to be delivered by Counsel to the
Seller:
1. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Seller is not required to be
qualified as a foreign corporation in any other state in which the failure to be
so qualified would have a material adverse effect on Seller. Seller has the
corporate power and authority to own and sell its properties and assets, to
carry on its business as presently conducted, and to enter into the Agreement
and perform its obligations thereunder.
2. The Agreement, and the other agreements contemplated thereby to
which Seller is a party (the "Seller Related Agreements"), have been duly
authorized by all necessary corporate action on the part of Seller and have been
duly executed and delivered by Seller. The Agreement and the Seller Related
Agreements constitute the legal, valid and binding obligations of Seller
enforceable against it in accordance with their terms, except as the
enforceability thereof may be subject to or limited by (a) bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors and (b) general equitable
principles, regardless of whether the issue of enforceability is considered in a
proceeding in equity or at law.
3. The execution and delivery of the Agreement and the Seller Related
Agreements, and the performance by Seller of its obligations thereunder, (a)
will not breach or result in a violation of Seller's Articles of Incorporation
or Bylaws, or any judgment, order or decree of any court or arbitrator, known to
us, to which Seller is a party or is subject, and (b) will not constitute a
material breach of the terms, conditions or provisions of, or constitute a
default under, any contract set forth in the Schedules to the Agreement.
4. To our knowledge, no consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority is required
in connection with the valid execution, delivery and performance by Seller of
the Agreement and the Seller Related Agreements, other than such consents,
approvals, authorizations, designations, declarations or filings as have been
made or obtained on or before the date hereof.
5. Except as disclosed in the Agreement and the Seller Related
Agreements, there is, to our current actual knowledge, no action, suit or
proceeding pending against any of the Selling Parties in any court or before any
governmental authority or agency, or arbitration board or tribunal (a) which
seeks to restrain, enjoin, prevent the consummation of, or otherwise challenge
the Agreement or any of the Seller Related Agreements, or any of the
transactions contemplated thereby, or (b) which, if adversely determined, could
have a material adverse effect on Seller or its business or properties.
6. Such other matters as counsel for Buyer may reasonably request.
<PAGE> 45
SCHEDULE 1.1(a)
<PAGE> 46
SUMMARY SHEET
<TABLE>
Fixed Asset Summary
Cost Accumulated Net Book
Depreciation Value
<S> <C> <C> <C>
Preliminary List 477,122 103,292 373,829
Add'l cost info to original list 17,771 5,821 11,950
Preliminary value of add'l
equipment list 57,252 15,969 41,283
Current Estimate Net Book Value 552,145 125,083 427,063
Add'l Adjustments (30843) (13639) (17204)
Subtotal 521,302 111,444 409,859
</TABLE>
<PAGE> 47
SUMMARY SHEET
<TABLE>
Fixed Asset Summary
Cost Accumulated Net Book
Depreciation Value
<S> <C> <C> <C>
Preliminary List 477,122 103,292 373,829
Add'l cost info to original list 17,771 5,821 11,950
Preliminary value of add'l
equipment list 57,252 15,969 41,283
Current Estimate Net Book Value 552,145 125,083 427,063
Add'l Adjustments (30843) (13639) (17204)
Subtotal 521,302 111,444 409,859
</TABLE>
<PAGE> 48
<TABLE>
<CAPTION>
CAD PRELIMINARY INVENTORY LISTING
---------------------------------
FINAL GIVEN TO B WHITE as of 6/21/97
- ---------------------- -------------
purchase purchase dep net
asset description dep# tag# asset description a a date cost taken book
- ----------------- ---- ---- ----------------- -------- -------- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6521 TANDEM + MONITO TERMINAL 365 6521 TANDEM + MONITO TERMINAL 0.00
6521 TANDEM + MONITO TERMINAL 365 1787 6521 TANDEM + MONITO TERMINAL 0.00
6521 TANDEM + MONITO TERMINAL 1107 6521 TANDEM + MONITO TERMINAL 0.00
6521 TANDEM + MONITO TERMINAL 333 6521 TANDEM + MONITO TERMINAL 0.00
A OPEN 333 2062 HAL Jun-96 1,401.76 256.89 1,144.77
A OPEN 333 2160 ZENA Jun-96 1,401.76 256.89 1,144.77
A OPEN 333 2158 XAVIER Jun-96 1,401.76 256.89 1,144.77
A OPEN 333 2159 WALTER Jun-96 1,401.76 256.89 1,144.77
A OPEN 333 2110 A OPEN Jul-96 1,401.76 256.89 1,144.77
A OPEN 333 2376 A OPEN Jul-96 1,401.76 256.89 1,144.77
A OPEN 340 2350 A OPEN Jul-96 1,401.76 256.89 1,144.77
A OPEN 355 2168 A OPEN Jul-96 1,401.76 256.89 1,144.77
ABTRION AMP METER 333
ACCURA 288 V.34 + FAX 315 ACCURA 288 V.34 +FAX Oct-96 143.16 31.61 111.35
ACCURA 288 V.34 + FAX 315 ACCURA 288 V.34 + FAX Oct-96 143.16 31.61 111.35
ALR SOL SERVER 315 ALR SOL SERVER 0.00
ALR TOWER WITH DISC 333 ALR TOWER WITH DISC 0.00
ASCENTIA 9ION LAPTOP AST 400 ASCENTIA 9ION LAPTOP AST Mar-94 6,530.00 4,135.67 2,394.33
AST 4/66D COMPUTER 365 2229 AST 4/66D COMPUTER Jan-95 2,269.00 1,096.68 1,172.32
AST BRAVO COMPUTER 333 1897 AST BRAVO COMPUTER Jan-95 2,269.00 1,096.68 1,172.32
AST BRAVO COMPUTER 360 2074 AST BRAVO COMPUTER Jan-95 2,269.00 1,096.68 1,172.32
AST PREMIER 100 COMPUTER 2113 AST PREMIER 100 COMPUTER 0.00
AST VISION 20 MONITO 360 2073 AST VISION 20 MONITO 0.00
AST VISION 7L MONITO 315 2088 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 315 2021 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 315 2033 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 315 2035 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 318 2321 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 318 2334 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 318 2114 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 318 2366 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 335 1916 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 340 2116 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 340 2030 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 356 2105 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 360 2075 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 360 2078 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 365 1961 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 365 2231 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 830 AST VISION 7L-MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 333 2306 GEORGINE 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 333 2025 QUINCY 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 333 2313 FRED 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 333 2314 IRENE 1/1/95 738.00 365.70 372.30
</TABLE>
Page 1
<PAGE> 49
INVENTORY LIST
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
AST VISION 7L MONITO 340 2117 AST VISION 7L MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 350 2029 AST VISION 7L MONITO 1/1/95 738.00 356.70 381.30
AST VISION 7L MONITO 350 2227 AST VISION 7L MONITO 1/1/95 738.00 356.70 381.30
400 best buy computer monitor solberg Sep-96 420.79 95.29 333.50
400 best buy fax/copier/scanner solberg 7/1/96 732.48 203.47 529.01
400 best buy printer solberg Jul-96 443.49 123.19 320.30
400 best buy zip drive & ink cart solberg Sep-96 382.48 85.00 297.48
CANNON BUBBLE JET PRINTER BJ30 318 CANNON BUBBLE JET PRINTER BJ30 0.00
CODEX MOTOROLA 3260 318 CODEX MOTOROLA 3260 0.00
COLOR DISPLAY MONITO (92) 365 1495 COLOR DISPLAY MONITO (92) 0.00
COLOR DISPLAY MONITO (92) 365 1807 COLOR DISPLAY MONITO (92) 0.00
COMPACT DISC STAND ALONE 321 COMPACT DISC STAND ALONE 0.00
DATA STORAGE 386-SX 360 1408 DATA STORAGE 386-SX 0.00
DATA STORAGE 486/66 365 1654 DATA STORAGE 486/66 Mar-94 840.00 840.00 0.00
DATA STORAGE MONITO OLD 333 1619 DATA STORAGE MONITO OLD 0.00
DATA STORAGE P575 NEC 316 DATA STORAGE P575 NEC Sep-96 1,004.00 223.11 760.89
DATA STORAGE P575 NEC 318 DATA STORAGE P575 NEC Sep-96 1,004.00 223.11 780.89
DATA STORAGE P575 NEC 333 1678 DATA STORAGE P575 NEC Sep-96 1,004.00 223.11 780.89
335 2586 DELL LATITUDE LAPTOP May-97 4,153.67 115.38 4,038.29
400 DELL LATITUDE LAPTOP May-97 4,153.67 115.38 4,038.29
DELL LATITUDE LAPTOP 400 2567 DELL LATITUDE LAPTOP May-97 4,153.67 115.38 4,038.29
400 DELL LATITUDE LAPTOP May-97 3,608.00 100.17 3,505.83
335 2550 DELL XPI LAPTOP Apr-96 4,624.04 1,001.88 3,622.16
335 DELL XPI LAPTOP Apr-96 4,624.04 1,001.88 3,622.16
335 DELL XPI LAPTOP Apr-96 4,624.04 1,001.88 3,622.16
335 DELL XPI LAPTOP Apr-96 4,624.04 1,001.88 3,622.16
365 2132 DELL XPI LAPTOP Apr-96 4,624.04 1,001.88 3,622.16
400 DELL XPI LAPTOP Apr-96 4,624.04 1,001.88 3,622.16
400 DELL XPI LAPTOP Apr-96 4,624.04 1,001.88 3,622.16
DELL XPI LAPTOP Apr-96 4,624.04 1,001.88 3,622.16
315 DELL XPI LAPTOP PLUS CD 4,624.04 1,001.88 3,622.16
DEVELOPING PARTITION 315 Apr-96 2,000.00 466.67 1,533.33
ECA MDTS 333
ENTERPRISE ANNUAL SOFTWARE 315 Nov-95 4,000.00 2,111.11 1,886.89
GATEWAY 2000 G6-150 315 GATEWAY 2000 G6-150 Mar-98 8,532.36 2,133.09 6,399.27
GENERAL DATACOMM 500 G/UXR 318 GENERAL DATACOMM 500 G/UXR 0.00
GENERAL DATACOMM 500 G/UXR 318 GENERAL DATACOMM 500 G/UXR 0.00
H.P PRINTER USING GREENLINE PAPER 333
H.P. DELUXE DESKTOP PRINTER 690C 365 H.P. DELUXE DESKTOP PRINTER 690C May-97 866.00 24.61 861.39
H.P. VECTRA SERIES 333 GOERGINE Feb-97 1,657.27 110.48 1,546.79
H.P. VECTRA SERIES 4 5/133 333 CRAIG May-97 1,657.27 27.62 1,629.65
H.P. VECTRA SERIES 4 5/133 333 IRENE May-97 1,657.27 27.62 1,629.65
H.P. VECTRA SERIES 4 5/133 333 PAT May-97 1,657.27 27.62 1,629.65
H.P. VECTRA SERIES 4 5/133 333 QUINCY May-97 1,657.27 27.62 1,629.65
H.P. VECTRA SERIES 4 5/133 333 2414 H.P. VECTRA SERIES 4 5/133 May-97 1,657.27 27.62 1,629.65
H.P. VECTRA SERIES 4 5/133 333 2396 H.P. VECTRA SERIES 4 5/133 May-97 1,657.27 82.86 1,574.41
H.P. VECTRA SERIES 4 5/133 350 2440 H.P. VECTRA SERIES 4 5/133 Feb-97 1,626.96 108.47 1,518.51
H.P. VECTRA SERIES 4 5/133 350 2476 H.P. VECTRA SERIES 4 5/133 Feb-97 1,626.96 108.47 1,518.51
H.P. VECTRA SERIES 4 5/133 350 2423 H.P. VECTRA SERIES 4 5/133 Feb-97 1,410.53 94.04 1,316.49
</TABLE>
Page 2
<PAGE> 50
INVENTORY LIST
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
H.P. VECTRA SERIES 4 5/133 360 2408 H.P. VECTRA SERIES 4 5/133 Feb-97 1,410.53 94.04 1,316.49
H.P. VECTRA SERIES 4 5/133 365 2481 H.P. VECTRA SERIES 4 5/133 Feb-97 1,410.53 94.04 1,316.49
H.P. VECTRA SERIES 4 5/133 365 2482 H.P. VECTRA SERIES 4 5/133 Mar-97 1,088.00 54.40 1,033.60
H.P. VECTRA SERIES 4 5/133 365 2479 H.P. VECTRA SERIES 4 5/133 Mar-97 1,088.00 54.40 1,033.60
H.P. VECTRA SERIES 4 5/133 365 2477 H.P. VECTRA SERIES 4 5/133 Mar-97 1,088.00 54.40 1,033.60
H.P. VECTRA SERIES 4 5/133 365 2478 H.P. VECTRA SERIES 4 5/133 Mar-97 1,088.00 54.40 1,033.60
H.P. VECTRA SERIES 4 5/133 365 2480 H.P. VECTRA SERIES 4 5/133 Mar-97 1,088.00 54.40 1,033.60
H.P. VECTRA SERIES 4 5/133 512 2397 H.P. VECTRA SERIES 4 5/133 May-97 1,657.27 27.62 1,629.65
H.P. VECTRA SERIES 4 5/133 333 H.P. VECTRA SERIES 4 5/133 May-97 1,657.27 82.86 1,574.41
H.P. VECTRA SERIES 4 5/133 W CD 365 H.P. VECTRA SERIES 4 5/133 W CD 1,657.27 82.86 1,574.41
H.P. VECTRA SERIES 4 5/133 W CD ROM 830 H/P VECTRA SERIES 4 5/133 W CD ROM 1,657.27 82.86 1,574.41
HITACHI 17 MONITO 333 HITACHI 17 MONITO May-97 485.00 13.47 471.53
310 Mar-97 6,031.00 502.58 5,528.42
318 Mar-97 6,031.00 502.58 5,528.42
IMB THINKPAD 560 400 2451 IBM THINKPAD 560 Sep-96 4,008.53 1,002.13 3,006.40
400 2406 IBM THINKPAD 560 Sep-96 4,008.53 1,002.13 3,006.40
2390 IBM THINKPAD 560 Sep-96 4,008.53 1,002.13 3,006.40
KENWOOD DC MDT KPS-10 333
KENWOOD DC MDT KPS-10 333
KENWOOD DC MDT KPS-10 333
LANTRONIX PROTOCOL PRINT SENSOR 318 LANTRONIX PROTOCAL PRINT SENSOR Jul-96 495.00 110.00 385.00
MAGNAVOX MONITO 360 1721 MAGNAVOX MONITO 0.00
MAGNAVOX MONITO 365 1339 MAGNAVOX MONITO 0.00
MASTERING DATA WINDOWS 315 May-96 1,350.00 315.00 1,035.00
MDI COMM CONTROLLER 333
MONITO DATA STORAGE 333 2275 MONITO DATA STORAGE 0.00
NANAO 5501 w MONITO 400 2329 NANAO 5501 w MONITO Nov-96 772.56 90.13 682.43
NANAO FLEX MONITO 356 1860 NANAO FLEX MONITO 0.00
NANAO FLEX MONITO 400 2328 NANAO FLEX MONITO 0.00
NDI BASE STATION CONTROLLER 333
OKIDATA MICRODRIVE 320 9 PIN PRINTER 333
OMNIS 7/3 DVLPR-WINDOWS 315 Oct-94 11,805.85 10,494.09 1,311.76
OPIQUEST 17690DC MONITO 315 2099 OPIQUEST 17690DC MONITO 0.00
OPIQUEST 17690DC MONITO 333 OPIQUEST 17690DC MONITO 0.00
PANASONIC CF 25 PORTABLE COMPUTER PANASONIC CF 25 PORTABLE COMPUTER 0.00
400 PC AT HOME 0.00
PHILIPS FAST REFRESH MONITO 365 1656 PHILIPS FAST REFRESH MONITO 0.00
POWER BUILDER FOR WINDOWS 315 Oct-95 8,873.00 4,929.52 3,943.48
POWERBUILDER ENTERPRISE SOFT 315 Apr-96 3,322.24 1,291.96 2,030.26
POWERBUILDERS FOR WIN 315 Jun-96 4,460.45 1,466.62 2,973.63
PRACTICAL PERIPHERAL PM 144 MT II MODEM 318 PRACTICAL PERIPHERA PM 144 MT II MODE 0.00
PVCS FOR WINDOWS 315 Nov-95 1,647.68 869.61 778.07
358 q smp 5166 in 1 R5/166 2bm cache Sep-96 6,851.00 1,712.75 5,138.25
RARITAN COMPUSWITCH 315 RARITAN COMPUSWITCH 0.00
S ADAM VISION 2011 MONITO 315 2012 S ADAM VISION 2011 MONITO Jan-95 1,732.00 1,347.11 384.89
SAMPO 14 MONITO 830 SAMPO MONITO 0.00
SAMPO MONITO 333 1896 SAMPO MONITO Jan-94 875.00 875.00 0.00
SAMPO MONITO 365 1842 SAMPO MONITO Jan-94 875.00 875.00 0.00
SAMPO MONITO 365 1847 SAMPO MONITO Jan-94 875.00 875.00 0.00
</TABLE>
Page 3
<PAGE> 51
INVENTORY LIST
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
SAMPO MONITO 365 1844 SAMPO MONITO Jun-94 875.00 875.00 0.00
SCSI EXPRESS HD 4000 MDI 318 SCSI EXPRESS HD 4000 MDI May-97 864.00 24.00 840.00
SMART UP POWER UP APC 315 SMART UP POWER UP APC Sep-96 1,005.00 223.33 781.67
SOFTWARE
SONY 17 MONITO 315 SONY 17 MONITO 0.00
Sep-98 4,774.00 1,060.89 3,713.11
SQA TEAM EDITION 315 May-98 802.58 289.82 512.76
SQL SERVER WIN NT SOFTWARE 315 Dec-95 1,920.00 578.00 1,344.00
SSTAR NX-1000 MULTI FONT PRINTER 333
STAND ALONE C D STAND ALONE C D 0.00
TANDEM 100A PWR +MONOTOR 365 1719 TANDEM 100A PWR +MONOTOR 0.00
TANDEM BLACK BOX 315 TANDEM BLACK BOX owned by tandem 7 0.00
TANDEM GX 5100 COMPUTER 315 2087 TANDEM GX 5100 COMPUTER Nov-95 4,333.00 1,299.90 3,033.10
TANDEM GX 5100 COMPUTER 315 2022 TANDEM GX 5100 COMPUTER Nov-95 4,333.00 1,299.90 3,033.10
TANDEM GX 5100 COMPUTER 315 2080 TANDEM GX 5100 COMPUTER Nov-95 4,333.00 1,299.90 3,033.10
TANDEM GX 5100 COMPUTER 333 2308 SARAR Nov-95 4,333.00 1,299.90 3,033.10
TANDEM GX590 COMPUTER 315 2036 TANDEM GX590 COMPUTER Nov-95 4,333.00 1,299.90 3,033.10
TANDEM GX590 COMPUTER 315 2000 TANDEM GX590 COMPUTER Nov-95 4,333.00 1,299.90 3,033.10
TANDEM K200 (DEMO BOX) 400 TANDEM K200 (DEMO BOX) 0.00
TANDEM MS 466D 333 1915 TANDEM MS 466D Jan-95 2,269.00 1,096.68 1,172.32
TANDEM MS 466D 340 1867 TANDEM MS 466D Jan-95 2,269.00 1,096.68 1,172.32
TANDEM MS 466D 350 TANDEM MS 466D Jan-95 2,269.00 1,096.68 1,172.32
TANDEM MS 466D 365 1875 TANDEM MS 466D Jan-95 2,269.00 1,096.68 1,172.32
TANDEM MS 466D 365 1868 TANDEM MS 466D Jan-95 2,269.00 1,096.68 1,172.32
TANDEM MS 575 COMPUTER 830 TANDEM MS 575 COMPUTER 0.00
TANDEM MS 466D 318 2320 TANDEM MS 466D Jan-95 2,269.00 1,096.68 1,172.32
TANDEM MS 466D 321 1866 TANDEM MS 466D Jan-95 2,269.00 1,096.68 1,172.32
TANDEM MS 466D 335 1091 TANDEM MS 466D Jan-95 2,269.00 1,096.68 1,172.32
TANDEM MS 466D 340 TANDEM MS 466D Jan-95 2,269.00 1,096.68 1,172.32
TANDEM MS 466D 400 2324 TANDEM MS 466D Jan-95 2,269.00 1,096.68 1,172.32
TANDEM MS 466D W MONITO 400 2330 TANDEM MS 466D W MONITO Jan-95 2,521.00 1,218.48 1,302.52
TANDEM MS 466D W MONITO 400 1832 TANDEM MS 466D W MONITO Jan-95 2,521.00 1,218.48 1,302.52
TANDEM NDX STP60 315 0.00
TANDEM STATION GX 5100 315 Nov-95 4,333.00 1,299.90 3,033.10
TANDEM STATION GX 5100 356 2032 TANDEM STATION GX 5100 Nov-95 4,333.00 1,299.90 3,033.10
TANDEM STATION GX 5100 356 2031 TANDEM STATION GX 5100 Nov-95 4,333.00 1,299.90 3,033.10
TANDEM STATION GX 590 315 Nov-95 4,333.00 1,299.90 3,033.10
TANDEM STATION GX 590 340 2118 TANDEM STATION GX 590 Nov-95 4,333.00 1,299.90 3,033.10
TEXAS INSTRUMENTS DMD 2000 333
TRANS CD BOX 315 TRANS CD BOX 0.00
UNIVERSAL MOBIL COMMUN TERM 333
UPS 365 UPS 0.00
400 VIEW DIGITAL PROJECTOR Jan-97 8,569.00 2,142.25 8,426.75
VIEWSONIC 17GS MONITO 321 2273 VIEWSONIC 17GS MONITO Aug-96 575.00 143.75 431.25
VIEWSONIC 17GS MONITO 333 2112 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 333 2377 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 333 2398 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 333 2301 VICTOR Aug-96 575.00 143.75 431.25
VIEWSONIC 17GS MONITO 333 2061 HRAI. Aug-96 575.00 143.75 431.25
</TABLE>
Page 4
<PAGE> 52
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
VIEWSONIC 17GS MONITO 333 2311 FRED Aug-96 575.00 143.75 431.25
VIEWSONIC 17GS MONITO 335 2068 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 335 2325 VIEWSONIC 17GS MONITO Aug-96 575.00 143.75 431.25
VIEWSONIC 17GS MONITO 335 2366 VIEWSONIC 17GS MONITO Aug-96 575.00 143.75 431.25
VIEWSONIC 17GS MONITO 340 2418 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 340 2349 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 350 2225 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 355 2093 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 365 2127 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 365 2224 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 365 2296 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 365 2422 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 365 2450 VIEWSONIC 17GS MONITO Oct-96 571.00 126.89 444.11
VIEWSONIC 17GS MONITO 512 2401 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VIEWSONIC 17GS MONITO 2163 VIEWSONIC 17GS MONITO Jul-96 610.00 169.44 440.56
VOYAGER SOFTWARE 315 Oct-95 3,014.00 1,674.44 1,339.56
WIN NT SERVER SOFTWARE 315 Dec-95 1,188.99 356.69 832.30
ZENITH DATA LAPTOP 1672 ZENITH DATA LAPTOP 0.00
ZENITH DATA LAPTOP 1093 ZENITH DATA LAPTOP 0.00
ZENITH DATA MONITO 365 1549 ZENITH DATA MONITO 0.00
ZENITH DATA SYSTEM
386SX 350 1140 ZENITH DATA SYSTEM 386SX 0.00
ZENITH MONITO 333 1614 ZENITH MONITO 0.00
0.00
TANDEM SCC O 145,000.00 0.00 145,000.00
ESTIMATED PRELIMINARY
NET BOOK VALUE 477,121.83 103,202.47 373,829.36
</TABLE>
Page 5
<PAGE> 53
<TABLE>
<CAPTION>
CAD PRELIMINARY INVENTORY LISTING
---------------------------------
FINAL GIVEN TO B WHITE as of 6/21/97
- ---------------------- -------------
purchase purchase dep net
asset description dep# tag# asset description a a date cost taken book
- ----------------- ---- ---- ----------------- -------- -------- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6521 TANDEM + MONITO TERMINAL 365 6521 TANDEM + MONITO TERMINAL 0.00
6521 TANDEM + MONITO TERMINAL 365 1787 6521 TANDEM + MONITO TERMINAL 0.00
6521 TANDEM + MONITO TERMINAL 1107 6521 TANDEM + MONITO TERMINAL 0.00
6521 TANDEM + MONITO TERMINAL 333 1096 6521 TANDEM + MONITO TERMINAL 0.00
ABTRION AMP METER 333
ALR SOL SERVER 315 ALR SOL SERVER Sep-86 9,751.08 1,462,68 8,288.42
ALR TOWER WITH DISC 333 ALR TOWER WITH DISC May-86 4,776.04 1,114.41 3,661.63
AST PREMIER 100 COMPUTER 2113 AST PREMIER 100 COMPUTER 0.00
AST VISION 20 MONITO 360 2073 AST VISION 20 MONITO 0.00
CANNON BUBBLE JET PRINTER BJ30 318 CANNON BUBBLE JET PRINTER BJ30 0.00
CODEX MOTOROLA 3260 318 CODEX MOTOROLA 3260 0.00
COLOR DISPLAY MONITO (92) 365 1495 COLOR DISPLAY MONITO (92) 0.00
COLOR DISPLAY MONITO (92) 365 1807 COLOR DISPLAY MONITO (92) 0.00
COMPACT DISC STAND ALONE 321 COMPACT DISC STAND ALONE 0.00
DATA STORAGE 386-SX 360 1408 DATA STORAGE 386-SX 100.00 100.00 0.00
DATA STORAGE 486/66 365 1654 DATA STORAGE 486/66 Mar-83 2,644.00 2,644.00 0.00
DATA STORAGE MONITO OLD 333 1619 DATA STORAGE MONITO OLD 100.00 100.00 0.00
ECA MDTS 333
GENERAL DATACOMM 500 G/UXR 318 GENERAL DATACOMM 500 G/UXR 0.00
GENERAL DATACOMM 500 G/UXR 318 GENERAL DATACOMM 500 G/UXR 0.00
H.P. PRINTER USING
GREENLINE PAPER 333
KENWOOD DC MDT KPS-10
POWER SUPPLY 333
KENWOOD DC MDT KPS-10
POWER SUPPLY 333
KENWOOD DC MDT KPS-10
POWER SUPPLY 333
MAGNAVOX MONITO 360 1721 MAGNAVOX MONITO 0.00
MAGNAVOX MONITO 365 1330 MAGNAVOX MONITO 0.00
MDI COMM CONTROLLER 333
MONITO DATA STORAGE 333 2275 MONITO DATA STORAGE 0.00
NANAO FLEX MONITO 358 1880 NANAO FLEX MONITO 0.00
NANAO FLEX MONITO 400 2328 NANAO FLEX MONITO 0.00
NDI BASE STATION CONTROLLER 333
OKIDATA MICRODRIVE 320 9 PIN
PRINTER 333
OPIQUEST 17690DC MONITO 315 2099 OPIQUEST 17690DC MONITO 0.00
OPIQUEST 17690DC MONITO 333 OPIQUEST 17690DC MONITO 0.00
PANASONIC CF 25 PORTABLE PANASONIC CF 25 PORTABLE 0.00
COMPUTER COMPUTER
400 PC AT HOME 0.00
PHILIPS FAST REFRESH MONITO 365 1650 PHILIPS FAST REFRESH MONITO 0.00
PRACTICAL PERIPHERAL PM 144 PRACTICAL PERIPHERA PM 144
MT II MODEM 318 MT II MODE 0.00
RARITAN COMPUSWITCH 315 RARITAN COMPUSWITCH 0.00
SAMPO 14 MONITO 830 SAMPO 14 MONITO 0.00
SOFTWARE
SONY 17 MONITO 315 SONY 17 MONITO 0.00
SSTAR NX-1000 MULTI FONT
PRINTER 333
STAND ALONE CD STAND ALONE CD 0.00
</TABLE>
Page 1
<PAGE> 54
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
TANDEM 100A PWR + MONOTOR 365 1719 TANDEM 100A PWR + MONOTOR 0.00
- ---------------------------------------------------------------------------------------------------------------------------
TANDEM BLACK BOX 315 TANDEM BLACK BOX owned by tandem? 0.00
- ---------------------------------------------------------------------------------------------------------------------------
TANDEM K200 (DEMO BOX) 400 TANDEM K200 (DEMO BOX) 0.00
- ---------------------------------------------------------------------------------------------------------------------------
TANDEM MS 575 COMPUTER 830 TANDEM MS 575 COMPUTER 0.00
- ---------------------------------------------------------------------------------------------------------------------------
TANDEM NDX STP60 315 0.00
- ---------------------------------------------------------------------------------------------------------------------------
TEXAS INSTRUMENTS DMD 2000 333
- ---------------------------------------------------------------------------------------------------------------------------
TRANS CD BOX 315 TRANS CD BOX 0.00
- ---------------------------------------------------------------------------------------------------------------------------
UNIVERSAL MOBIL COMMUN TERM 333
- ---------------------------------------------------------------------------------------------------------------------------
UPS 365 UPS 0.00
- ---------------------------------------------------------------------------------------------------------------------------
ZENITH DATA LAPTOP 1872 ZENITH DATA LAPTOP b/fore 93 100.00 100.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
ZENITH DATA LAPTOP 1093 ZENITH DATA LAPTOP 100.00 100.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
ZENITH DATA MONITO 365 1549 ZENIT DATA MONITO 100.00 100.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
ZENITH DATA SYSTEM 386SX 350 1140 ZENIT DATA SYSTEM 386SX 100.00 100.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
ZENITH MONITO 333 1614 ZENITH MONITO 0.00
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
0.00
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
ESTIMATED PRELIMINARY NET BOOK VALUE 17,771.12 5,821.07 11,950.05
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 2
<PAGE> 55
CAD PRELIMINARY INVENTORY LISTING
Additional Equipment as of 6/21/97
<TABLE>
<CAPTION>
a asset
serial p purchase dep net
asset description dep # tag # asset description number cost taken book
- ----------------- ----- ----- ----------------- ------ -------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C>
US Robotics 28.8 modem 315 General 0.00
Panasonic KX - 8520 printable white board 315 General 0.00
3Com Hub BTPC 315 General 0.00
TransDisk Hard Drive 315 General 0.00
APC Backup UPS 600 315 General 0.00
Viewsonic 17" Monitor 315 General 0.00
AST Vision 41 14" Monitor 315 General 0.00
Gateway Vivitron 15" monitor 315 General 0.00
HP Surestore 12000E tape backup 315 General 0.00
4 mm tapes (30) 315 General 0.00
Tandem 31000 Server 315 On loan from Tandem 0.00
Tandem 17" monitor 315 On loan from Tandem 0.00
Optiquest 17" monitor 315 For Kevin Repp 0.00
Software 315 0.00
Arcada Backup Exec 315 General 0.00
NT Server OS (3llc.) 315 General 0.00
MS SQL Server 6.5 (3 llc.) 315 General 1,328.04 419.91 906.13
MS Office '97 (2 copies) 315 given to SCC by Microsoft 0.00
MS Visual Studio '97 (2 copies) 315 given to SCC by Microsoft 0.00
MS NT 4.0 WS (10 copies) 315 Bola Agreement w/Greenbriar & Russell 0.00
Powerbuilder Ent 5.0 (6 copies) 315 General 0.00
Delphi 2.0 Professional (1 copy) 315 General 0.00
MS Access Retail (1 copy) 315 General 0.00
MS Office '97 (6 copies) 315 General 0.00
Antivirus software (11 copies) 315 General 0.00
Lotus notes (8 user llc.) 315 General 0.00
ABC flowcharter (1 copy) 315 General 563,82 281.91 281.91
Installshield (1 llc.) 315 General 0.00
Powerlock (1 llc.) 315 General 4,002.00 1,000.50 3,001.50
Mapping software 315 Mark Adams 0.00
XVT 315 Mark Adams 0.00
Crescent PDQ/COM 315 Walt Tovar 0.00
Distinct IP 315 Walt Tovar 0.00
Visual Day Suite 315 Walt Tovar 0.00
Andyne GQL Dev Kit 4.11 315 Lawless 0.00
Lotus Organizer 2.1 315 Lawless 0.00
Color display monitor 350 0.00
Color display monitor 350 0.00
Viewsonic 17GS monitor 340 2349 0.00
Dell Latitude XPI 340 No. # 0.00
AST Brave 340 1881 0.00
DataStor 486-66 340 1655 0.00
Sampo KDM - 1768 340 1903 0.00
Software 340 0.00
</TABLE>
Page 1
<PAGE> 56
<TABLE>
<CAPTION>
[ADD'L EQUIP]
<S> <C> <C> <C> <C> <C> <C> <C>
Lotus Notes V3.33 (5 copies) 340 0.00
MS Office Windows 95 (5 copies) 340 0.00
MS Access (5 Copies) 340 0.00
MS Project (1 Copy) 340
Norman Anti Virus Control (5 Copies) 340
Outside view (5 Copies) 340
Calendar Creator (1 Copy) 340
PKZIP (5 Copies) 340
MacAfee Virus Scan (1 Copy) 340
Premier Aww version 2.2K (5 Copies) 340
A-Open 336 2299 Pate
Superscan Pro 620 hitachi 17" Monitor 336 2583 Pate
A-Open, Pentium, 120 16MB RAM 336 2384 McKee
Nokia 44-7L 17" Monitor 336 2526 McKee
Dell Laptop - Latitude 336 2466 Backs
Viewsonics 17GS 336 Backs J955308157
INSTALLATION EQUIPMENT
Microtest cable tester 318
2 Brother Labelers 318
1 Brady cable labelers 318
1 set Kenwood radios 318
3 shipping cases 318
3 toolboxes compleate with tools 318
1 fiber fish tape 318
1 metal fish tape 318
1 heat gun 318
2 external CD rom drives 318
Customer spare equipment
4 lantronbr print servers 318
1 3Comm ECS 10 with cards 318
2 Hitachi monitors 318
2 Nelbuilder remote offices 318
Software
3 Microsoft office 318
2 Visio technical version 4 318
Procomm 318
Misc
1 call phone 318
3 pagers 318
Dept. 312
AST P100 Computer 312 2113 Marcus Snyder Computer
AST Monitor 312 2114
8 Port Hub 312
Adaptec CD Drive 312
5,891.88 1,702.32 4,189.54
</TABLE>
Page 2
<PAGE> 57
<TABLE>
<CAPTION>
[ADD'L ADJUSTMENTS]
CAD PRELIMINARY INVENTORY LISTING
Additional Equipment as of 6/21/97
dep net
asset description dep# tag# asset description a asset serial number p purchase cost taken book
- ----------------------------- ---- ---- ----------------- - ------------------- - ------------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
US Robotics 28.8 modem 315 General 0.00
Panasonic KX - B520 printable
white board 315 General 0.00
3Cam Hub 8TPC 315 General 0.00
TransDisk Hard Drive 315 General 0.00
APC Backup UPS 600 315 General 0.00
Viewsonic 17" Monitor 315 General 0.00
AST Vision 41 14" Monitor 315 General 0.00
Gateway Vivitron 15" monitor 315 General 0.00
HP Surestore 12000E tape
backup 315 General 0.00
4 mm tapes (30) 315 General 0.00
Tandem S1000 Server 315 On loan from Tandem 0.00
Tandem 17" monitor 315 On loan form Tandem 0.00
Optiquest 17" monitor 315 For Kevin Hopp 0.00
Software 315 0.00
Arcada Backup Exec 315 General 0.00
NT Server OS (3tic) 315 General 0.00
MS Office '97 (2 copies) 315 given to SCC by 0.00
Microsoft
MS Visual Studio '97 (2 copies) 315 given to SCC by 0.00
Microsoft
MS NT 4.0 WS (10 copies) 315 Data Agreement 0.00
w/Greenbriar & Russel
Powerbuilder Ent 5.0 (6 copies) 315 General 0.00
Delphi 2.0 Professional(1 copy) 315 General 0.00
MS Access Retail (1 copy) 315 General 0.00
MS Office '97 (8 copies) 315 General 0.00
Antivirus software (11 copies) 315 General 0.00
Lotus notes (8 user lic.) 315 General 0.00
Installshield (1 lic.) 315 General 0.00
Mapping software 315 Mark Adams 0.00
XVT 315 Mark Adams 0.00
Crescent PDQ/COM 315 Walt Tovar 0.00
Distinct IP 315 Walt Tovar 0.00
Visual Dev Suite 315 Walt Tovar 0.00
Andyne GQL Dev Kit 4.11 315 Lawless 0.00
Lotus Organizer 2.1 315 Lawless 0.00
Color display monitor 350 0.00
Color display monitor 350 0.00
Viewsonic 17GS monitor 340 2349 0.00
Dell Latitude XPi 340 No# 0.00
AST Bravo 340 1881 0.00
DataStar 488-68 340 1655 0.00
Sampo KDM - 1768 340 1803 0.00
Software 340 0.00
Lotus Notes V3.33 (5 copies) 340 0.00
MS Office Windows 95 (5 Copies) 340 0.00
MS Access (5 Copies) 340 0.00
</TABLE>
Page 1
<PAGE> 58
ADD'L ADJUSTMENTS
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
MS Project (1 Copy) 340
Norman Anti Virus Control (5 Copies) 340
Outside View (5 Copies) 340
Scopus V3.6 (10 Copies) 340 10 licenses, -51360.50 -14,266.76 -37.093.74
Calender Creator (1 Copy) 340
PKZIP (5 Copies) 340
MacAfee Virus Scan (1 Copy) 340
Premier Aww version 2.2K (5 Copies) 340
A-Open 336 2299 Pate 1,401.76 256.99 1,144.77
Superscan Pro 620 hitachi 17" Monitor 336 2583 Pate 469.00 13.58 475.42
A-Open, Pentium 120 16MB RAM 336 2384 McKee 1,401.76 256.99 1,144.77
Nokia 44-7L 17" Monitor 336 2526 McKee
Dell Laptop - Latitude 336 2466 Backs 3,608.00 100.17 3,505.83
Viewsonics 17GS 336 Backs J955308157
INSTALLATION EQUIPMENT
Microtest cable tester 318
2 Brother labelers 318
1 Brady cable labelers 318
1 set Kenwood radios 318
3 shipping cases 318
3 toolboxes compleate with tools 318
1 fiber fish tape 318
1 mietal fish tape 318
1 heat gun 318
2 external CD rom drives 318
CUSTOMER SPARE EQUIPMENT
4 lantronix print servers 318
1 3Comm ECS 10 with cards 318
2 Hitachi monitors 318
2 Netbuilder remote offices 318
SOFTWARE
3 Microsoft office 318
2 Visio technical version 4 318
Procomm 318
MISC
1 cell phone 318
3 pagers 318
DEPT. 312
AST P100 Computer 312 2113 Marcus Snyder Computer
AST Monitor 312 2114
8 Port Hub 312
Adaptec CD Drive 312
Add'l memory for SCC 0 13,616.80 0.00 13,616.80
-30,843.18 -13,639.03 -17,204.15
</TABLE>
Page 2
<PAGE> 59
Schedule 1. le Trademarks
ASSET PURCHASE AGREEMENT BETWEEN SCC/PRINTRAK
- --------------------------------------------------------------------------------
SCHEDULE 1.LE TRADEMARKS
R.O.D.E.O. - see attached
<PAGE> 60
UNITED STATES DEPARTMENT OF COMMERCE
Patent and Trademark Office
<TABLE>
<CAPTION>
SERIAL NO. APPLICANT PAPER NO.
MARK ADDRESS:
<S> <C> <C>
ADDRESS ACTION NO. 2900 Crystal Drive
Arlington, Virginia 22202-3513
MAILING DATE If no fees are enclosed, the
address should
include the words "Box 5"
Please provide in all
correspondence:
REF. NO.
1. Filing Date, serial number,
mark and Applicant's name.
FORM PTO-1525 (5-90) U.S. DEPT. OF COMM. PAT. & TM OFFICE. 2. Mailing date of this action.
3. Examining Attorney's name and
Law Office number
4. Your telephone number and ZIP code
TELEPHONE NUMBER
303 / 581-5600
ATTORNEY
PERSONAL PREVIEW April 8, 1997 APPLICANT
</TABLE>
<PAGE> 61
CALL RECORD/NOTES
OFFICE SEARCH: The examining attorney has searched the Office records and has
found no similar registered or pending mark which would bar registration under
Trademark Act Section 2(d), 15 U.S.C. Section 1052(d). TMEP Section 1105.01.
RE: Serial Number 75/16'3 8 1 0
- -----------------------------------
This case will be given priority as an amended case if Applicant or applicant's
attorney responds to the requirements stated below within two months of the
above mailing date. In any event a proper response to this Priority Action must
be received within SIX MONTHS from the mailing date stated above in order to
avoid ABANDONMENT.
Applicant will amend the method of use statement to indicate that the
mark- is intended to be used on labels attached to the goods and on
instructional manuals for the goods.
The applicant must indicate whether the person who signed the
application is an officer of the applicant. TMEP Section 803.09. If
not, the applicant should note the following.
If the application was not signed by the applicant or by a person
having color of authority to sign, the application is void. 37 C.F.R.
Section 2.21(a)(6). To be properly signed, an application must be
signed by the applicant, a member of the applicant firm (e.g., a
general or active partner of an applicant partnership), or the officer
of the applicant corporation or association. Trademark Act Section 1.
15 U-S-C Section 105 1.
If the application was not signed by the appropriate person as
described above but the applicant asserts that the person who signed
had color of authority to do so, the applicant must submit evidence
that the person who signed:
(1) had firsthand knowledge of the truth of the statements in
the verification or declaration and
-2-
<PAGE> 62
(2) had actual or implied authority to act on behalf of the
applicant.
If the examining attorney determines that the person who signed the application
had color of authority, the application will not be deemed void as filed.
However, a substitute verification or declaration under -'17 C.F.R. Section
2.20, signed by the proper person, must be submitted. 37 C.F.R. Section 2.71(c).
The following is a properly worded declaration under '37 C.F.R. Section 2.20. At
the end of the response, the applicant should insert the declaration signed by
an officer of applicant.
The undersigned, being hereby warned that willful false statements and the like
so made are punishable by fine or imprisonment, or both, under 18 ' U.S.C. 1001,
and that such willful false statements may jeopardize the validity of the
application or any resulting registration, declares that he/she is properly
authorized to execute this application on behalf of the applicant; he/she
believes the applicant to be the owner of the trademark/service mark sought to
be registered, or, if the application is being filed under 15 U.S.C. 1051(b),
he/she believes applicant to be entitled to use such mark in commerce; to the
best of his/her knowledge and belief no other person, firm, corporation, or
association has the right to use the mark in commerce, either in the identical
form thereof or in such near resemblance thereto as to be likely, when used on
or in connection with the goods/services of such other person, to cause
confusion, or to cause mistake, or to deceive; and that all statements made of
his/her own knowledge are true and all statements made on information and belief
are believed to be true.
/s/ NANCY K. HAMILTON
--------------------------------------
(Signature)
NANCY K. HAMILTON
--------------------------------------
Print or type Name and Position)
April 23, 1997
--------------------------------------
(Date)
/s/ PETER CATALDO
--------------------------------------
Peter Cataldo, Examining Attorney
Law Office 103, (703) 308-9103 ex 127
<PAGE> 63
SCHEDULE 1.2
PERFORMANCE AND BID BONDS
[PAGES 1-44 DELETED]
<PAGE> 64
SCHEDULE 4.3A
[PAGES 1-10 DELETED]
<PAGE> 65
SCHEDULE 4.3B
<PAGE> 66
SCHEDULE 4.5(d)
<PAGE> 67
TANDEM COMPUTERS CREDIT CORPORATION
DELIVERY AND
ACCEPTANCE CERTIFICATE
("Acceptance Certificate")
LEASE AGREEMENT NO. 8000020
DATED AS OF MARCH 21, 1994
BETWEEN
TANDEM COMPUTERS CREDIT CORPORATION, Lessor, and
SCC COMMUNICATIONS CORP., Lessee
Acceptance Date: JANUARY 1, 1997
This Acceptance Certificate is issued pursuant to the Lease Agreement
designated above.
Lessee acknowledges that all of the Equipment specified on Schedule No. 029 (i)
has been delivered to, inspected by, and accepted as of this date for lease by
Lessee, (ii) is of a size, design, capacity and manufacture acceptable to
Lessee and suitable for Lessee's purposes, (iii) is in good working order,
repair and condition, and (iv) has been installed to Lessee's satisfaction or
located, as the case may be, at the location specified on the Schedule.
Lessee confirms and agrees that no Event of Default under the Lease Agreement
has occurred and is continuing.
The person signing this Acceptance Certificate on behalf of Lessee hereby
certifies that such person has read and acknowledges all terms and conditions
of the Lease Agreement, and is duly authorized to execute this Acceptance
Certificate on behalf of the Lessee.
The terms used in this Acceptance Certificate shall have the same meanings
defined in the Lease Agreement designated above.
SCC COMMUNICATIONS CORP.,
Lessee
By: /s/ Nancy K. Hamilton
----------------------
Title: CFO
Date: 12/13/96
<PAGE> 68
Counterpart No. 2 of 2 Possession and transfer of counterpart No. 1 only is
effective to transfer ownership or create a security interest in this Schedule.
TANDEM COMPUTERS CREDIT CORPORATION
SCHEDULE
Lease Agreement No. 8000020
Schedule No. 029 ("Schedule"),
Dated as of 9-30, 1996, to
Lease Agreement,
Dated as of March 21, 1994, between
TANDEM COMPUTERS CREDIT CORPORATION, Lessor
19333 Vallco Parkway
Cupertino, CA 95014
-and-
SCC COMMUNICATIONS CORP., Lessee
6285 Lookout Road
Boulder, CO 80301-3343
1. EQUIPMENT DESCRIPTION:
Unit Total
Quantity Description Model Acquisition Cost
- -------- ----------- ----- ----------------
See Exhibit A, System #18639/31
Installation, if any, and freight charges to be billed separately.
Aggregate Acquisition Cost $315,973.80
2. EQUIPMENT LOCATION: Board of County Commissioners, Broward County
115 S. Andrews, Room 325
Ft. Lauderdale, FL 33301
County: ------------------------------------
3. INVOICING INFORMATION:
Street Address 6285 Lookout Road
-------------------
City, State & Zip Code Boulder, CO 80301-3343
---------------------------
Department Accounts Payable
---------------------------------------
Person to Contact
Regarding Invoice Accounts Payable Clerk
--------------------------------
Phone Number (303) 581-5600
-------------------------------------
Lessee Reference Number
to be Reflected on Invoice N/A
-----------------------
<PAGE> 69
4. LEASE TERM: Thirty-six (36) months commencing January 1, 1997.
5. RENT: The Rent during the Lease Term shall be payable in that number of
consecutive payments indicated below, in advance on the first day of each
month commencing January 1, 1997, and each Rent payment shall be in an
amount equal to the indicated percentage of Aggregate Acquisition Cost.
Equipment
Description Payments Rent
----------- -------- ----
See Exhibit A 1 - 36 $6,522.00
attached
At the expiration of the Lease Term, provided no Event of Default has
occurred and is continuing, Lessee may either (i) exercise the purchase
option set forth in Section 9 of this Schedule, or (ii) with ninety (90)
days' prior written notice to Lessor, return the Equipment in accordance
with Section 9 of the Lease Agreement. If Lessee does not exercise the
purchase option or provide Lessor with said ninety (90) days' notice, the
Lease Term shall automatically extend on a month-to-month basis, at the Rent
in effect at the expiration of the original Lease Term.
6. LATE CHARGE: Lessee shall pay a late charge of two percent (2%) each month
on any past due Rent or other amounts due and payable hereunder.
7. INSURANCE: In compliance with Section 13 of the Lease Agreement, Lessor
shall be included as an additional insured under the Lessee's comprehensive
general liability policy for bodily injury and property damage, and as loss
payee under the Lessee's all-risk property insurance policy, which policies
shall not be cancelled nor any reduction or restriction of coverage be
effected without thirty (30) days prior written notice to Lessor by
Certified Mail, Return Receipt Requested.
Bodily injury and property damage coverage shall provide for a minimum
requirement of $1,000,000 and physical damage for a minimum requirement
equal to the Casualty Value, subject to a deductible not in excess of
__________.
Insurance Company________________________
Contact & Telephone______________________
Address__________________________________
8. CASUALTY VALUE: The casualty value, as calculated from time to time by
Lessor, shall be equal to one hundred and two percent (102%) of the
Aggregate Acquisition Cost reduced over time by applying Rent payments first
to interest calculated at a rate per annum equal to the Prime Rate in effect
on the commencement date as published by the Wall Street Journal plus two
percent (2%), and second to reduce the unamortized principal ("Casualty
Value"). In the event that the Lessor does not receive the Casualty Value as
provided for in the Lease Agreement on or before the Rent payment date next
following an Event of Loss, the Lessee shall pay the Lessor for the period
of time beginning with the
<PAGE> 70
Rent payment date next following an Event of Loss and ending on the date the
Lessor receives the Casualty Value, interest, on a monthly basis, for the
Casualty Value due under this Schedule, calculated at an annual interest
rate equal to the lesser of a) the then current prime interest rate as
published by The Wall Street Journal plus two percent (2%); or b) the
maximum rate permitted by law, but in no event shall the Lessee unreasonably
delay payment of such Casualty Value.
9. PURCHASE OPTION: At the expiration of the Lease Term, provided no Event of
Default has occurred and is continuing, and provided that the Lease
Agreement has not otherwise been terminated, the Lessee, having complied
with all of the terms and conditions of the Lease Agreement, at its option
and with ninety (90) days' prior written notice may elect to return the
Equipment to the Lessor. If the Lessee does not elect this option, the
Lessee may purchase the Hardware for its Fair Market Value.
10. SCHEDULE INTENT: This Schedule has been entered into on the basis that it
shall be construed as a lease for the purposes of all federal, state, and
local taxes on, based on, or measured by income and that Lessor shall be
entitled to such deductions, credits and other benefits as are provided to
an owner of tangible personal property.
11. DEFINITIONS: The terms used in this Schedule which are not otherwise defined
herein shall have the meanings set forth in the Lease Agreement identified
above.
12. TERMS OF SCHEDULE: Lessor and Lessee agree that this Schedule shall
constitute a lease of the Equipment described in Section 1 of this Schedule,
upon the execution and delivery to Lessor by Lessee of an Acceptance
Certificate with respect to such Equipment, subject to the terms and
conditions of this Schedule and of the Lease Agreement, the terms and
conditions of which are hereby incorporated by reference in this Schedule
and made a part of this Schedule to the same extent as if such terms and
conditions were set forth in full in this Schedule.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Schedule to be duly
executed by their authorized representative as of the date first above written.
TANDEM COMPUTERS CREDIT CORPORATION, SCC COMMUNICATIONS CORP.,
Lessor Lessee
By /s/ Linda Nelson By /s/ Nancy K. Hamilton
--------------------------------- -------------------------
Title Ass't Vice President Title CFO
------------------------------ ----------------------
Date 9/30/96 Date 9/30/96
------------------------------- -----------------------
<PAGE> 71
EXHIBIT A
LEASE AGREEMENT #8000020
SCHEDULE #029
<TABLE>
<CAPTION>
SYSTEM/ PRODUCT EXTENDED
ADDON NUMBER DESCRIPTION QTY TOTAL
- ------- ------- ----------- --- -----------
<S> <C> <C> <C> <C>
18639/31 SOFTWARE LICENSE FEES (36 months) $142,668.00
SOFTWARE MAINTENANCE FEES (1-36) $ 41,724.00
-----------
SUBTOTAL $184,392.00
<CAPTION>
SYSTEM/ PRODUCT EXTENDED
ADDON NUMBER DESCRIPTION QTY TOTAL
- ------- ------- ----------- --- -----------
<S> <C> <C> <C> <C>
18639/31 T16/K232-UP UPGR CLX 6/7/8. CYC/R.K1000 TO K2000 1 $98,000.00
T16/K232-UPE UPGR CLX 6/7/8. CYC/R.K1K TO K2000EXP 1 $98,000.00
T16/KR1032E RETURN CREDIT K1000 32MB PROC PR.EXP 1 ($25,000.00)
T16/KR1032B RETURN CREDIT K1000 32MB PROC.PR.BAS 1 ($25,000.00)
T16/7272-UP K1000/CLX TO K2000 UP I/O CAB BLK/BG 1 $2,500.00
T16/SA73MC NONSTOP KERNEL (PER SYSTEM) 1 $0.00
T16/SA57MC EXPAND 1 $0.00
T16/SA58MC NONSTOP TS/MP 1 $0.00
T16/SA59MC PATHWAY/TS 1 $0.00
T16/SA01MC BASIC OPERATIONS MANAGEMENT PACKAGE 1 $0.00
T16/SD20MC TANDEM TCP/IP 1 $0.00
T16/SD70MC TCP/IP LAN PRINT SPOOLER 1 $0.00
T16/SE08MC NONSTOP VHS - VIRTUAL HOME TERMINAL 1 $0.00
T16/3615-0 CNTRLR.HI-PERF.E-NET.W/O TRANS 3 $17,550.00
T16/3613C 3613 TRADE-IN CREDIT FOR 3615 3 ($7,650.00)
T16/4250 DISK DRIVE. 2GB 8 $31,960.00
-----------
SUBTOTAL $190,360.00
DISCOUNT ($58,778.20)
-----------
SUBTOTAL $131,581.80
$315,973.80
AGGREGATE ACQUISITION COST:
CLX PLUS UPGRADE RENT ($184,393.00/36) $5,122.00
ADD-ON RENT ($44,360.00 x .03156) 1,400.00
---------
TOTAL RENT $6,522.00
</TABLE>
FREIGHT TO BE INVOICED AND REMITTED SEPARATELY.
EQUIPMENT LOCATION:
BOARD OF COUNTY COMMISSIONERS
BROWARD COUNTY
115 S. ANDREWS AVENUE, ROOM 325
FT. LAUDERDALE, FL 33301
scc. list 29
<PAGE> 72
Schedule 4.5d Leases
ASSET PURCHASE AGREEMENT BETWEEN SCC/PRINTRAK
________________________________________________________________________________
Schedule 4.5d Leases
Tandem Lease Agreement No. 8000020 Schedule No. 28 - see attached
Tandem Lease Agreement No. 8000020 Schedule No. 29 - see attached
Sycamore Building & Investment Corporation - see attached
<PAGE> 73
THIS INDENTURE, Made this 1st day of June 1996, by and between Sycamore
Building & Investment Corporation, lesser, of the Town of Summit, County of
Waukesha, State of Wisconsin, and S.C.C. Communications Corporation, lessee, of
the City of Boulder, County of Boulder, State of Colorado.
WITNESSETH. That the said lessor does hereby lease, demise and let unto
the said lessee the following described premises, in the Village of Dousman,
County of Waukesha, State of Wisconsin, known as No. 128 Elm Street, Dousman,
Wis. Street, to-wit: Suite A, the above described premises to be used as
Office.
To hold for the term of One (1) Year, beginning on the 1st day of July,
1996, and ending on the 30th day of June, 1997, the said lessee yielding and
paying therefor the total rent of $3,600.00 Dollars, for the term, payable as
follows: Beginning on the 1st day of July in the amount of $300.00 and
continuing each month until the end of the term.
The acceptance by the lessor of one month's rent for the first month after
the expiration date of this lease shall constitute a renewal for a period of
one month only and each subsequent acceptance of a month's rent shall
constitute a further renewal for a like period.
And the said lessee promises to pay the said rent at the times and in the
manner aforesaid, during the continuance of said term, and not to underlease the
said premises or any part thereof, nor assign this lease without the consent of
the lessor in writing, and to quit and deliver up the same to the lessor or
_________________ attorney, peaceably and quietly at end of said term, and also
to keep the same in as good repair as the same are in at the commencement of
said term, reasonable use and wearing thereof and damage by accidental fire or
other accidents not happening through the neglect of the lessee,
__________________ agents or servants only excepted.
And the said lessee, further covenants and agrees that will
during the term of this lease, pay all water rates levied and assessed against
the premises hereby leased, for water used or to be used therein, at the time
they become due and payable.
The lessee further agrees to obey all ordinances of the Village of Dousman
in regard to cleaning of the street, alleys and sidewalks in front of the
premises hereby leased and any and all lawful orders, rules and regulations of
the proper health officers of said Village of Dousman.
And that the said lessee will, during the last six weeks of said term,
allow to be put up and will safely keep in such conspicuous part of said
premises as lessor shall designate, a sign or card, showing that said premises
are "To Let" or "For Rent" and the place of inquiry, such card or sign to be
furnished for that purpose by said lessor.
And the said lessor may enter to view the premises hereby leased for the
purpose of examining or exhibiting the same or making whatever repairs or
alterations on said premises the lessor may deem necessary; and may expel the
lessee if they shall fail to pay the rent and assessments, or refuse to obey
the said ordinances and rules and regulations as aforesaid, or shall underlease
the premises or any part thereof or assign this lease without the consent of
the lessor, in writing.
Lessee shall indemnify Lessor and hold Lessor harmless from and against
any and all claims, actions, liability and expense arising out of the loss of
life, personal injury and/or damage to property by reason of the use or
occupancy of the leased premises by Lessee. Lessee shall carry own content
insurance and liability insurance for the leased area, naming Sycamore Building
as the additional insured.
Lessee, at their expense, will be responsible for updating their space for
their own business purposes.
Included in the rental is the carpet and window blinds. Lessee is
responsible for electric which is metered separately for the space. Parking
will be on a first come first serve basis. Lessee will share washroom
facilities with adjacent unit. It will be up to the tenants to keep entry hall
and washroom clean.
<PAGE> 74
beginning the day of
July, 1996, and ending on the 30th day of June, 1997, the said lessee yielding
and paying therefor the total rent of $3,600.00 Dollars, for the term, payable
as follows: Beginning on the 1st day of July in the amount of $300.00 and
continuing each month until the end of the term.
The acceptance by the lesser of one month's rent for the first month after
the expiration date of this lease shall constitute a renewal for a period of
one month only and each subsequent acceptance of a month's rent shall
constitute a further renewal for a like period.
And the said lessee promises to pay the said rent at the times and in the
manner aforesaid, during the continuance of said term, and not to underlease
the said premises or any part thereof, nor assign this lease without the consent
of the lessor in writing, and to quit and deliver up the same to the lessor
or attorney, peaceably and quietly at end of said term, and also to
keep the same in as good repair as the same are in at the commencement of said
term, reasonable use and wearing thereof and damage by accidental fire or other
accidents not happening through the neglect of the lessee, agents or
servants only excepted.
The lessee further agrees to obey all ordinances of the Village of Dousman
in regard to and any and all lawful orders, rules and regulations of the proper
health officers of said Village of Dousman.
And that the said lessee will, during the last six weeks of said term,
allow to be put up and will solely keep in such conspicuous part of said
premises as lessor shall designate, a sign or card, showing that said premises
are "To Let" or "For Rent" and the piece of inquiry, such card or sign to be
furnished for that purpose by said lessor.
And the said lessor may enter to view the premises hereby leased for the
purpose of examining or exhibiting the same or making whatever repairs or
alterations on said premises the lessor may deem necessary; and may expel the
lessee if they shall fail or pay the rent and assessments, or refuse to obey the
said ordinances and rules and regulations as aforesaid, or shall underlease the
premises or any part thereof, or assign this lease without the consent of the
lessor, in writing.
Lessee shall indemnify Lessor and hold Lessor harmless from and against any and
all claims, actions, liability and expense arising out of the loss of life,
personal injury and/or damage to property by reason of the use or occupancy of
the leased premises by Lessee. Lessee shall carry own content insurance and
liability insurance for the leased area, naming Sycamore Building as the
additional insured.
Lessee, at their expense, will be responsible for updating their space for their
own business purposes.
Included in the rental is the carpet and window blinds. Lessee is responsible
for electric which is metered separately for the space. Parking will be on a
first come first serve basis. Lessee will share washroom facilities with
adjacent unit. It will be up to the tenants to keep entry hall and washroom
clean.
Lessee, at their expense, will provide container for trash and recycleables.
Rent checks will be payable to: Sycamore Building & Investment. Checks are due
between the 1st and 3rd of each month. If a check is received after the 3rd it
is subject to a 10% (of the amount of the check) late fee. If a check is
returned non-sufficient funds a 10% (of the amount of the check) late fee is
due. Checks can be mailed to: 35056 W. Old Woods, Oconomowoc, Wisconsin 53066,
in which case I will take the post-marked date on the envelope as the date paid.
Lessee to tender last months rent to be held in the general operating account
of Sycamore Building & Investment until the end of the lease or any extension.
This sum can be applied to outstanding rent or other expense owed Lessor.
<PAGE> 75
And the said leasee further covenants and agrees to pay and discharge all
reasonable costs, attorney's fees and expenses that shall be made and incurred
by the said lessor in enforcing the covenants and agreements of this lease.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The words "lessor" and "lessee" when used herein shall be taken to mean
either the singular or the plural, as the case may be, and the provisions of
this instrument shall extend and apply to the heirs, executors, administrators,
legal representatives, successors and assigns of the respective parties.
In Witness Whereof, the said parties have hereunto set their hands and
seals the day and year first above written.
SIGNED AND SEALED IN PRESENCE OF NANCY K. HAMILTON (SEAL)
----------------------------
(SEAL)
----------------------------
/S/ Illegible (SEAL)
----------------------------
PRESIDENT (SEAL)
----------------------------
STATE OF COLORADO | (Illegible)
| ss.
Boulder County. |
Personally came before me, this 14th day of June, A.D., 1996, the above
named Nancy K. Hamilton to me known to be the _________, who executed the
foregoing instrument and acknowledged the same.
NOTARY PUBLIC Eve Childress
EVE CHILDRESS ---------------------------------
STATE OF COLORADO Notary Public, Boulder County, CO
My Commission expires 3/21/99,
A.D., 19 __
GUARANTEE
For value received ______________ hereby guarantee the payment of the Rent
and the performance of the covenants and agreements of the part _____ of the
second part in the within Lease in the manner and form as in said lease
provided.
Witness ____________ hand ___ and seal ___ this _________________ day of
_________________, 19__.
<PAGE> 76
Rent payment date next following an Event of Loss and ending on the date
the Lessor receives the Casualty Value, interest, on a monthly basis, for
the Casualty Value due under this Schedule, calculated at an annual
interest rate equal to the lesser of a) the then current prime interest
rate as published by The Wall Street Journal plus two percent (2%); or b)
the maximum rate permitted by law, but in no event shall the Lessee
unreasonably delay payment of such Casualty Value.
9. PURCHASE OPTION: At the expiration of the Lease Term, provided no Event
of Default has occurred and is continuing, and provided that the Lease
Agreement has not otherwise been terminated, the Lessee, having complied
with all of the terms and conditions of the Lease Agreement, at its option
and with ninety (90) days' prior written notice may elect to return the
Equipment to the Lessor. If the Lessee does not elect this option, the
Lessee may purchase the Hardware for its Fair Market Value.
10. SCHEDULE INTENT: This Schedule has been entered into on the basis that it
shall be construed as a lease for the purchase of all federal, state, and
local taxes on, based on, or measured by income and that Lessor shall be
entitled to such deductions, credits or other benefits as are provided to
an owner of tangible personal property.
11. DEFINITIONS: The terms used in this Schedule which are not otherwise
defined herein shall have the meanings set forth in the Lease Agreement
identified above.
12. TERMS OF SCHEDULE: Lessor and Lessee agree that this Schedule shall
constitute a lease of the Equipment described in Section 1 of this
Schedule, upon the execution and delivery to Lessor by Lessee of an
Acceptance Certificate with respect to such Equipment, subject to the terms
and conditions of this Schedule and of the Lease Agreement, the terms and
conditions of which are hereby incorporated by reference in this Schedule
and made a part of this Schedule to the same extent as if such terms and
conditions were set forth in full in this Schedule.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Schedule to be duly
executed by their authorized representative as of the date first above written.
TANDEM COMPUTERS CREDIT CORPORATION, SCC COMMUNICATIONS CORP.,
Lessor Lessee
By /s/ Linda Nelson By /s/ Nancy K. Hamilton
---------------------------------- --------------------------------
Linda Nelson
Title Ass't Vice President Title CFO
------------------------------- -----------------------------
Date 9/30/96 Date 9/27/96
-------------------------------- -------------------------------
(Rev.d 3/95)
<PAGE> 77
EXHIBIT A
LEASE AGREEMENT #8000020
SCHEDULE #028
<TABLE>
<CAPTION>
SYSTEM/ PRODUCT EXTENDED
ADDON NUMBER DESCRIPTION QTY TOTAL
- -------- -------- ------------------------------------------------ ------- --------------
<S> <C> <C> <C> <C>
14556/24 SOFTWARE LICENSE FEES (36 months) $160,956.00
SOFTWARE MAINTENANCE FEES (1-36) $ 46,296.00
--------------
SUBTOTAL $207,252.00
<CAPTION>
SYSTEM/ PRODUCT EXTENDED
ADDON NUMBER DESCRIPTION QTY TOTAL
- -------- -------- ------------------------------------------------ ------- --------------
<S> <C> <C> <C> <C>
14556/24 T16/K232-UP UPGR CLX 6/7/8, CYC/R.K1000 TO K2000 1 $ 98,000.00
T16/K232-UPE UPGR CLX 6/7/8, CYC/R.K1K TO K2000EXP 1 $ 98,000.00
T16/RC02-232 UPG CREDIT. CLX 6/7/8 TO K232UP, UPE 2 $(74,000.00)
T16/SA01MC BASIC OPERATIONS MANAGEMENT PACKAGE 1 $0.00
T16/SA57MC EXPAND 1 $0.00
T16/SA58MC NONSTOP TS/MP 1 $0.00
T16/SA73MC NONSTOP KERNEL (PER SYSTEM) 1 $0.00
T16/9060MC X25AM X25 ACCESS METHOD 1 $0.00
T16/9064MC SNAX/XF 1 $0.00
T16/9076MC 6100 BSC POINT-TO-POINT 1 $0.00
T16/9088MC ENVOYACP/XF 1 $0.00
T16/9089MC SNAX/HIGH LEVEL SUPPORT 1 $0.00
T16/RC800-16 RETURN 800 16MB PROCESSOR PAIR 2 $0.00
T16/SA59MC PATHWAY/TS 1 $0.00
--------------
SUBTOTAL $122,000.00
DISCOUNT $(27,890.60)
--------------
SUBTOTAL $ 94,109.40
AGGREGATE ACQUISITION COST: $301,361.40
--------------
CLX PLUS UPGRADE RENT ($207,252.00/36) $ 5,757.00
--------------
TOTAL RENT $ 5,757.00
</TABLE>
FREIGHT TO BE INVOICED AND REMITTED SEPARATELY.
EQUIPMENT LOCATION:
LAS VEGAS METROPOLITAN POLICE DEPARTMENT
4850 Las Vegas Blvd. South
Las Vegas, NV 89119
<PAGE> 78
TANDEM COMPUTERS CREDIT CORPORATION
DELIVERY AND
ACCEPTANCE CERTIFICATE
("Acceptance Certificate")
LEASE AGREEMENT NO. 8000020
DATED AS OF MARCH 21, 1994
BETWEEN
TANDEM COMPUTERS CREDIT CORPORATION, Lessor, and
SCC COMMUNICATIONS CORP., Lessee
Acceptance Date: NOVEMBER 1, 1995
This Acceptance Certificate is issued pursuant to the Lease Agreement designated
above.
Lessee acknowledges that all of the Equipment specified on Schedule No. 028 (i)
has been delivered to, inspected by, and accepted as of this date for lease by
Lessee, (ii) is of a size, design, capacity and manufacture acceptable to Lessee
and suitable for Lessee's purposes, (iii) is in good working order, repair and
condition, and (iv) has been installed to Lessee's satisfaction or located, as
the case may be, at the location specified on the Schedule.
Lessee confirms and agrees that no Event of Default under the Lease Agreement
has occurred and is continuing.
The person signing this Acceptance Certificate on behalf of Lessee hereby
certifies that such person has read and acknowledges all terms and conditions
of the Lease Agreement, and is duly authorized to execute this Acceptance
Certificate on behalf of the Lessee.
The terms used in this Acceptance Certificate shall have the same meanings
defined in the Lease Agreement designated above.
SCC COMMUNICATIONS CORP.,
Lessee
By: /s/ Nancy K. Hamilton
----------------------
Title: CFO
----------------------
Date: 12/13/96
----------------------
(Rev 12/89)
<PAGE> 79
Counterpart No. 2 of 2 Possession and transfer of counterpart No. 1 only is
effective to transfer ownership or create a security interest in this Schedule.
TANDEM COMPUTERS CREDIT CORPORATION
SCHEDULE
Lease Agreement No. 8000020
Schedule No. 028 ("Schedule"),
Dated as of September 19, 1996, to
Lease Agreement,
Dated as of March 21, 1994, between
TANDEM COMPUTERS CREDIT CORPORATION, Lessor
19333 Vallco Parkway
Cupertino, CA 95014
-and-
SCC COMMUNICATIONS CORP., Lessee
6285 Lookout Road
Boulder, CO 80301-3343
1. EQUIPMENT DESCRIPTION:
<TABLE>
<CAPTION>
Unit Total
Quantity Description Model Acquisition Cost
- -------- ----------- ----- ----------------
<S> <C> <C> <C>
See Exhibit A, System #14556/24
Installation, if any, and freight charges to be billed separately.
Aggregate Acquisition Cost $301,361.40
</TABLE>
2. EQUIPMENT LOCATION: LAS VEGAS METROPOLITAN POLICE DEPARTMENT
4850 Las Vegas Blvd South
Las Vegas, NV 89119
County: Clark County
----------------------------------------
3. INVOICING INFORMATION:
Street Address 6285 Lookout Road
---------------------------------------------------------
City, State & Zip Code Boulder, CO 80301-3343
-------------------------------------------------
Department Accounts Payable
-------------------------------------------------------------
Person to Contact
Regarding Invoice Accounts Payable Clerk
------------------------------------------------------
Phone Number (303) 581-5600
-----------------------------------------------------------
Lessee Reference Number
to be Reflected on Invoice N/A
---------------------------------------------
<PAGE> 80
4. LEASE TERM Thirty-six (36) months commencing November 1, 1996
5. RENT: The Rent during the Lease Term shall be payable in that number of
consecutive payments indicated below, in advance on the first day of each
month commencing November 1, 1996, and each Rent payment shall be in an
amount equal to the indicated percentage of Aggregate Acquisition Cost.
Equipment Payments Rent
--------- -------- ----
See
Exhibit A 1 - 36 $5,757.00
attached
At the expiration of the Lease Term, provided no Event of Default has
occurred and is continuing, Lessee may either (i) exercise the purchase
option set forth in Section 9 of this Schedule, or (ii) with ninety (90)
days' prior written notice to Lessor, return the Equipment in accordance
with Section 9 of the Lease Agreement. If Lessee does not exercise the
purchase option or provide Lessor with said ninety (90) days' notice, the
Lease Term shall automatically extend on a month-to-month basis, at the
Rent in effect at the expiration of the original Lease Term.
6. LATE CHARGE: Lessee shall pay a late charge of two percent (2%) each month
on any past due Rent or other amounts due and payable hereunder.
7. INSURANCE: In compliance with Section 13 of the Lease Agreement, Lessor
shall be included as an additional insured under the Lessee's comprehensive
general liability policy for bodily injury and property damage, and as loss
payee under the Lessee's all-risk property insurance policy, which policies
shall not be cancelled nor any reduction or restriction of coverage be
effected without thirty (30) days prior written notice to Lessor by
Certified Mail, Return Receipt Requested.
Bodily injury and property damage coverage shall provide for a minimum
requirement of $1,000,000 and physical damage for a minimum requirement
equal to the Casualty Value, subject to a deductible not in excess of
_____________.
Insurance Company _________________________
Contact & Telephone _______________________
Address ___________________________________
8. CASUALTY VALUE: The casualty value, as calculated from time to time by
Lessor, shall be equal to one hundred and two percent (102%) of the
Aggregate Acquisition Cost reduced over time by applying Rent payments
first to interest calculated at a rate per annum equal to the Prime Rate in
effect on the commencement date as published by the Wall Street Journal
plus two percent (2%), and second to reduce the unamortized principal
("Casualty Value"). In the event that the Lessor does not receive the
Casualty Value as provided for in the Lease Agreement on or before the Rent
payment date next following an Event of Loss, the Lessee shall pay the
Lessor for the period of time beginning with the
(Rev d 3/95)
<PAGE> 81
SCHEDULE 4.5(e)
[PAGES 1-46 DELETED]
<PAGE> 82
SCHEDULE 4.6
[PAGES 1-3 DELETED]
<PAGE> 83
SCHEDULE 4.7
[PAGES 1-4 DELETED]
<PAGE> 84
SCHEDULE 4.9
Schedule 4.9
COMMERCIAL PACKAGE
INSURER: Federal Insurance Company
A.M. Best Rating: A++ XIV
COMMERCIAL PROPERTY
PURPOSE:
Protection for your Business Property, including buildings, furniture, fixtures,
equipment (including stock) and improvements and betterments, subject to all
policy terms, conditions and exclusions.
<TABLE>
<CAPTION>
INSURED LOCATION: LIMITS
- ----------------- ------
<S> <C>
Business Personal Property Blanket Limit [ ]
LOC #1 - 6285 Lookout Road
Boulder, CO 80301
Business Personal Property Value [ ]
Business Income with Extra Expense - [ ]
Personal Property of Others [ ]
Electronic Data Processing - Hardware [ ]
- Media [ ]
Boiler & Machinery [ ]
LOC #2 - 34 Boston Court Unit C
Longmont, CO 80501
Business Personal Property [ ]
LOC #3 - Symphony Suites, 89 Headquarters Plaza
Morristown, NJ 07960
Business Personal Property [ ]
Any Job Site/Warehouse Installation [ ]
Personal Property In Transit [ ]
Personal Property - Any Other Location [ ]
Newly Acquired Premises or Newly Acquired or Constructed Property - 180 days reporting
Building [ ]
Personal Property [ ]
EDP Media [ ]
EDP Equipment [ ]
EDP Media Duplicates [ ]
Fine Arts [ ]
</TABLE>
<PAGE> 85
Schedule 4.9
COMMERCIAL PROPERTY
<TABLE>
<CAPTION>
COVERAGE ENHANCEMENTS
DIRECT DAMAGE
<S> <C>
Blanket Limit including: [ ]
Accounts Receivable
Electronic Data Processing Property Fine Arts
Consequential Loss
Extra Expense
Fire Department Service Charges Improvements & Betterments
Personal Property of Employees Outdoor Trees, Shrubs, Plants, Lawns
Accounts Receivable In Transit [ ]
Debris Removal [ ]
Deferred Payments [ ]
Electronic Data Processing In Transit [ ]
Fine Arts In Transit [ ]
Installation-Any Job Site [ ]
Inventory or Appraisals [ ]
Monies & Securities - On Premises [ ]
- Off Premises [ ]
Personal Property Off Premises [ ]
Pollutant Clean-up & Removal [ ]
Valuable Papers - In Transit [ ]
BUSINESS INCOME
Any Other Location [ ]
Auditors Fees [ ]
Contractual Penalties [ ]
Dependent Business Premises [ ]
Loss of Utilities [ ]
Pollution Clean Up & Removal [ ]
Newly Acquired Premises [ ]
</TABLE>
<PAGE> 86
SCHEDULE 4.9
COMMERCIAL PROPERTY
COVERAGE:
Special Causes of Loss (All Risks), subject to policy exclusions; Replacement
Cost Valuation; Agreed Amount Personal Property and Business Income; Business
Income includes Ordinary Payroll, no limitation on Extended Period of Indemnity
DEDUCTIBLE:
Physical Damage Per loss [ ]
Business Income [ ]
Expiring Waiting period for Business Income is 24-hrs.
LOSS PAYEES: Bank One Colorado
<PAGE> 87
SCHEDULE 4.9
CRIME
PURPOSE:
Protection for direct physical loss of money, securities and other property
caused by any fraudulent or dishonest act or acts committed by any employee
acting alone or in collusion with others, subject to all policy terms,
conditions and exclusions.
I
Includes E.R.I.S.A. Compliance
COVERAGE: LIMITS
Employee Dishonesty - Any One Occurrence [ ]
DEDUCTIBLE:
Maximum any one loss [ ]
<PAGE> 88
Schedule 4.9
COMMERCIAL GENERAL LIABILITY
PURPOSE:
Protection for your legal liability to third parties arising from your premises
or operations, subject to all policy terms, exclusions and conditions.
COVERAGE: LIMITS
Per Occurrence Bodily Injury and
Property Damage Combined [ ]
Subject to Aggregate Limits (total policy limit):
General Policy Aggregate Limit (other than
Products & Completed Operations) [ ]
Products/Completed Operations Aggregate [ ]
Medical Expense (Any One Person) [ ]
Property Damage to Rented Real Property [ ]
Employee Benefits Errors Or Omissions (Claims Made)
$1,000 Deductible; 5/1/95 Retroactive Date
INCLUDING:
Broad Form Vendors as Additional Insureds
Lessors of Premises as Additional Insureds
Lessors of Leased Equipment as Additional Insureds
Blanket Contractual Liability
Broad Form Property Damage
Incidental Malpractice Liability
New Entity Coverage
Employees as Insureds
Premises/Operations Liability
Explosion, Collapse & Underground Liability
Independent Contractors Liability
Host Liquor Liability
Non-Owned Watercraft Liability under 551
Limited Worldwide Liability
<PAGE> 89
SCHEDULE 4.9
COMMERCIAL GENERAL LIABILITY
NOTABLE CONDITIONS:
Extended Bodily Injury
Defense Costs In Addition to Limits
Broad Form Property Damage
Automatic Newly Acquired Organizations - 90-days
No Exclusion for Punitive Damages
Volunteer Workers as Insureds
Unintentional Errors & Omissions Wording
Discrimination - other than Employment Related Suits
NOTABLE-EXCLUSIONS:
Absolute Pollution & Contamination Liability
Asbestos and Nuclear Energy Liability
Care, Custody & Control Liability
ADDITIONAL INSUREDS:
Broward County Board of County Commissioners
City of Albuquerque
Bernalillo County, Albuquerque, NM
Fourth Roc-Jersey Associates & Chartwel Consulting
Group Inc. (New Jersey office)
<PAGE> 90
RATING BASIS: RATE:
Gross Receipts:
Premises/Operations [ ] [ ]
Products [ ] [ ]
Employee Benefits [ ]
REMARKS:
l. Final premium is subject to audit of actual gross sales during the policy
period.
<PAGE> 91
SCHEDULE 4.9
PROPOSAL
ELECTRONICS ERRORS & OMISSIONS LIABILITY
PURPOSE:
Protection against damages you may become legally obligated to pay as a result
of a claim arising out of a negligent act, error or omission or due to failure
of your electronic products to perform the function or serve the purpose
intended after installation and testing, subject to all policy terms, conditions
and exclusions.
LIMITS OF LIABILITY:
Per Claim [ ]
Annual Aggregate [ ]
DEDUCTIBLE:
Each Wrongful Act [ ]
NOTABLE CONDITIONS:
Claims Made Policy Form Retro Date 8/8/91
Claims Expense within Policy Limits
Includes Infringement of Copyright
NOTABLE EXCLUSIONS:
Bodily Injury, Personal Injury, Advertising Injury
Cost Guarantees
Infringement of Copyright, Trademark or Patent
Performance Delay
Dishonest, fraudulent, criminal acts
Product Recall
Property Damage
Security Breach
Theft of Intellectual Property
Unfair Competition or Piracy
Wear and Tear
Pollution
Professional Services other than those described
RATING BASIS: RATE:
Gross Receipts [ ] [ ]
REMARKS:
1. Final premium subject to audit of gross receipts
<PAGE> 92
SCHEDULE 4.9
NON-OWNED & HIRED AUTOMOBILE
PURPOSE:
Protection for your legal liability to third parties arising from your use of
"any" NON-OWNED AND HIRED vehicle, subject to all policy terms, conditions and
exclusions.
COVERAGE: LIMITS
Per Occurrence Bodily Injury and Property Damage
Liability Combined Single Limit Each Accident [ ]
Hired Car Physical Damage [ ]
Comprehensive/Collision Deductible [ ]
<PAGE> 93
SCHEDULE 4.9
WORKERS' COMPENSATION/EMPLOYER'S LIABILITY
INSURER: Federal Insurance Company
PURPOSE:
Coverage A - Workers Compensation agrees to pay the benefits required under the
Workers Compensation Law in States of Hire: CA,CO,IL,MD,TX,WI,NJ
Coverage B - Employers Liability provides coverage for your legal liability to
employees not covered by the act.
Coverage C - All States except those shown under Coverage A and Monopolistic
States NV, ND, OH, WA, WV, WY
COVERAGE: LIMITS:
Workers Compensation Statutory
Employers Liability -
Accident-each accident [ ]
Disease-policy limit [ ]
Disease-each employee [ ]
<TABLE>
<CAPTION>
PREM SCH
CLASSIFICATION RATE DISC CR. EST. PAYROLL
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COLORADO
8810-Clerical [ ] [ ] [ ] [ ]
8742-Sales [ ] [ ]
5191-Installers [ ] [ ]
CALIFORNIA
8810-Clerical [ ] [ ] [ ]
8742-Sales [ ] [ ]
ILLINOIS
8742-Sales [ ] [ ] [ ]
MARYLAND
8742-Sales [ ] [ ] [ ]
NEW JERSEY
8742-Sales [ ] [ ]
TEXAS
8742-Sales [ ] [ ] [ ]
WISCONSIN
8742-Sales [ ] [ ] [ ]
</TABLE>
Experience Modification: [ ]
<PAGE> 94
SCHEDULE 4.9
UMBRELLA LIABILITY
INSURER: Federal Insurance Company
A.M. Best Rating: A++ XIV
NAMED INSTIRED:
SCC Communications Corporation
Public Safety Technology of Australia LTD
PURPOSE:
Provides liability protection for the catastrophe excess of the primary General
Liability, including Errors & Omissions, Automobile Liability and Employers
Liability limits, subject to all policy terms, conditions and exclusions.
COVERAGE: LIMIT:
Any one accident or occurrence and in the
aggregate, where applicable, Bodily Injury
and Property Damage Combined [ ]
SELF-INSURED RETENTION:
Applies to insured claims not covered by the primary NIL
policies
NOTABLE CONDITIONS:
Coverage is Following Form of underlying General
Liability, Automobile Liability and Employers Liability
policies
Policy is silent as regards Punitive Damages
Defense in Addition to Limits
NOTABLE EXCLUSIONS:
Property Damage Liability to Rented Property
Care, Custody or Control Liability
Fire, Explosion or Water Damage Legal Liability
Directors and Officers Liability
Employment Related Practices Liability
Uninsured Motorists Liability
ERISA Liability
Absolute Pollution Liability
<PAGE> 95
SCHEDULE 4.9
FIDUCIARY LIABILITY
PURPOSE:
Protection from loss you become legally obligated to pay because of any claim
first made against you during the policy period, or extended reporting period,
for a WRONGFUL ACT committed or attempted, or allegedly committed or attempted,
before or during the policy period by you or any person for whose WRONGFUL ACT
you are legally responsible, subject to all policy terms, conditions and
exclusions. Wrongful Acts include liability arising form the administration,
interpretation, handling records or effecting enrollment, termination or
cancellation of employees under Benefit Programs.
LIABILITY: LIMITS:
Each loss and aggregate, including
Defense Costs [ ]
DEDUCTIBLE:
Claims against insured individuals not
covered by Sponsor Organization Indemnification None
Claims against insured individuals covered by
Sponsor Organization Indemnification, or
claims against Sponsor Organization [ ]
CONDITIONS:
"CLAIMS MADE"
Retrospective Date: 8/12/92
Extended Reporting Period: [ ]
<PAGE> 96
SCHEDULE 4.9
PROPOSAL
FOREIGN COVERAGES
INSURED: Public Safety Technology of Australia LTD
PURPOSE:
Protection for your legal liability to third parties arising from your
International operations--premises or operations, use of hired and non-owned
vehicles and voluntary foreign workers compensation and employers liability
benefits, subject to all, policy terms, conditions and exclusions.
COVERAGE TERRITORY:
Worldwide excluding occurrences in the U.S.A., its
Territories, Possessions, Puerto Rico, Canada, Cuba,
Libya, North Korea, and Iraq.
COMMERCIAL GENERAL LIABILITY
<TABLE>
<CAPTION>
COVERAGE LIMITS
- -------- ------
<S> <C>
Bodily Injury & Property Damage Liability
Combined Single Limit [ ]
Annual Aggregate [ ]
Hired and Non Owned Automobile [ ]
Fire Legal Liability . [ ]
Medical Payments [ ]
</TABLE>
<TABLE>
<CAPTION>
COVERAGE EXPOSURE RATE
<S> <C> <C>
Premises Ops [ ] [ ]
Products - Sales [ ] [ ]
Hired/
Non-owned Auto [ ] [ ]
</TABLE>
ERRORS & OMISSIONS
<TABLE>
<CAPTION>
COVERAGE LIMITS
- -------- ------
<S> <C>
Per Claim [ ]
Annual Aggregate [ ]
Deductible [ ]
Retroactive Date [ ]
</TABLE>
EXPOSURE RATE
[ ] [ ]
<PAGE> 97
SCHEDULE 4.9
FOREIGN COVEPAGE (CON'T)
WORKERS' COMPENSATION/EMPLOYER'S LIABILITY
COVERAGE LIMITS
Voluntary Workers Compensation Colorado
Benefits
Hires: U.S. Hires or U.S. Citizens
Employers Liability
Bodily Injury by Accident-each accident [ ]
Bodily Injury by Disease-including by
"endemic disease"-each employee [ ]
Bodily Injury by Disease-including by
"endemic disease,'-policy limit [ ]
Repatriation Expenses [ ]
EXPOSURE RATE
[ ] [ ] per person/trip
REMARKS:
No coverage for Third Country Nationals.
INTERNATIONAL PROPERTY
PURPOSE:
Protection for your Business Property, including buildings, furniture, fixtures,
equipment (including stock) and improvements and betterments, subject to al.1
policy terms, conditions and exclusions.
INSURED LOCATION: LIMITS
Queensland, Australia
Business Personal Property (EDP Equipment) [ ]
REMARKS:
Foreign exposures are subject to final audit
<PAGE> 98
SCHEDULE 4.11(b)
SCHEDULE 4.11b COMPLIANCE WITH LAW/PERMITS
ASSET PURCHASE AGREEMENT BETWEEN SCC/PRINTRAK
SCHEDULE 4.11b COMPLIANCE WITH LAW/PERMITS
States in which SCC has a sales tax license:
California
Colorado
Florida
Illinois
Indiana
Louisiana
Michigan
Minnesota
Nebraska
Nevada
New Mexico
South Carolina - waiting for certificate (recently applied)
Tennessee
Texas
Utah
Wisconsin
<PAGE> 99
SCHEDULE 4.13
SCHEDULE 4.11b COMPLIANCE WITH LAW/PERMITS
ASSET PURCHASE AGREEMENT BETWEEN SCC/PRINTRAK
SCHEDULE 4.13 CERTAIN TRANSACTIONS
SIGNALSOFT
ERG
STOKER GROUP
<PAGE> 100
SCHEDULE 4.15
SCHEDULE 4.11b COMPLIANCE WITH LAW/PERMITS
ASSET PURCHASE AGREEMENT BETWEEN SCC/PRINTRAK
SCHEDULE 4.15 INTELLECTUAL PROPERTY
LRM 2.0
FRMS 2.0
FRMS 3.0
UDT
Open Query 1. 0
Premier CAD 5.6x
(working source and object)
CAD/RMS Documentation
CAD - Miscellaneous
L:\LIBRARY\WS\AWII
L:\LIBRARY\WS\S6S30
L:\LIBRAR'Y\WS\COMMCARD
L.\LIBRARY\WS\LIB
L:\LIBRARY\WS\PCCAD
L-\LEBRARY-\WS\QAT
L:\LIBRARY\WS\S6530
L-\LIBRARY\WS\TDD
L.-\LIBRARY\WS\TMD
SignalSoft - GGM
Pinpoint Technologies
Total Consulting Group - Interface
Stoker Group - CAD developer
<PAGE> 101
SCHEDULE 4.20
SCHEDULE 4.20 REPRESENTATIONS AND WARRANTIES
ASSET PURCHASE AGREEMENT BETWEEN SCC/PRINTRAK
SCHEDULE 4.20 REPRESENTATION AND WARRANTIES
George Heinrichs
Nancy Hamilton
John Sims
Stephen Meer
<PAGE> 102
Appendix A
NonDiscrimination Compliance Agreement
Contractors shall comply with the applicable provisions of the following:
Exec. Order No. 12138, P.L. 95-507, Exec. Order No. 11246, Exec. Order No.
11625. Section 8 of the Small Business Act as amended, Railroad Revitalization
and Regulatory Reform Act of 1976. Exec. Order No. 11701, Exec. Order No. 11758.
Exec. Order No. 12138, Section 503 of the Rehabilitation Act of 1973 as amended
by PL93-516, Vietnam Era Veteran's Readjustment Assistance Act of 1974 and the
rules, regulations and relevant Orders of the Secretary of Labor pertaining to
the Executive Orders and Statutes listed above.
For contracts of or which aggregate to $2,500 or more annually, the following
table describes the clauses which are included in the contract:
1. Inclusion of the Equal Employment clause in all contracts and orders;
2. Certification of non-segregated facilities;
3. Certification that an affirmative action program has been developed and
is being filed;
4. Certification that an annual Employers Information Report (EEO-1
Standard Form 100) is being filed;
5. Inclusion of the "Utilization of Minority and Women's Business
Enterprises" clause in all contracts and orders;
6. Inclusion of the "Minority and Women's Business Enterprise
Subcontracting Program" clause in all contracts and orders;
7. Inclusion of the "Listing of Employment Openings" clause in all
contracts and orders;
8. Inclusion of the "Employment of the Handicapped" clause in all
contracts and orders;
Contract Value Clause(s) Required
$2,500 to $10,000 8
$10,000 to $50,000 1,2,5,6,7,8
$50,000 or more 1,2,3*,4*,5,6,7,8
*Applies only for businesses with 50 or mor employees
1. Equal Employment Opportunity Provisions
In accordance with Exec. Order No. 11246, dated September 24, 1965 and Part 60-1
of Title 41 of the codes of Federal Regulations (Public Contracts and Property
Management, Office of Federal Contract Compliance, Obligations of Contractors
and Subcontractors), as may be amended from time to time, the parties
incorporate herein by this reference the regulations and contract clauses
required by those provisions to be made a part of Government contracts and
subcontracts.
2. Certification of Non-segregated Facilities
The contractor certifies that it does not and will not maintain any facilities
it provides for its employees in a segregated manner, or permit its employees to
perform their services at any location under its control where segregated
facilities are maintained and that it will obtain a similar certification prior
to the award of any non-exempt subcontract.
3. Certification of Affirmative Action Program
The contractor affirms that it has developed and is maintaining an affirmative
action plan as required by Part 60-2 of Title 41 of the Code of Federal
Regulations.
4. Certification of Filing of Employers Information Reports
The contractor agrees to file annually, on or before the 31st day of March,
complete and accurate reports on Standard Form 100 (EEO-1) or such forms as may
be promulgated in its place.
5. Utilization of Minority and Women's Business Enterprises
(a) It is the policy of the Government and BellSouth Corporation and its
affiliates as a Government contractor, that minority and women's business
enterprises shall have the maximum practicable opportunity to participate in the
performance of contracts.
(b) The contractor agrees to use his or her best efforts to carry out this
policy in the award of his or her fullest extent consistent with the efficient
performance of his contract. As used in this contract, the term "minority or
women's business enterprise" means a business with at least 51 percent of which
is owned by minority or women group members or in case of publicly owned
business, at least 51 percent of the stock of which is owned by minority or
women group members. For purposes of this definition, minority group members are
Blacks, Hispanics, Asians, Pacific Islanders, American Indian and Alaskan
Natives. Contractors may rely on written representation by subcontractors
regarding their status as minority or women's business enterprises in lieu of an
independent investigation.
6. Minority and Women's Business Enterprise Program
(a) The contractor agrees to establish and conduct a program which will enable
minority and women's business enterprises (as defined in paragraph 5 above) to
be considered fairly as subcontracts and suppliers under the contract. In this
connection, the Contractor shall:
(1) Designate a Liaison officer who will administer the contractor's minority
and women's business enterprises program;
(2) Provide adequate and timely consideration of the potentialities of known
minority and women's business enterprises in all "make-or-buy" decisions;
(3) Assure that known minority and women's business enterprises will have an
equitable opportunity to compete for subcontracts, particularly by arranging
solicitations, time for the preparation of bids, quantities, specifications, and
delivery schedules so as to facilitate the participation of minority and women's
business enterprises;
(4) Maintain records showing (i) procedures which have been adopted to comply
with the policies set forth in this clause, including the establishment of a
source list of minority and women's business enterprises, (ii) awards to
minority and women's business enterprises on the source list, and (iii) specific
efforts to identify and award contracts to minority and women's business
enterprises;
(5) Include the Utilization of Minority and Women's Business Enterprises clause
in subcontracts which offer substantial minority and women's business
enterprises subcontracting opportunities;
(6) Cooperate with the Government's Contracting Officer for BellSouth
Corporation or its affiliate in any studies and surveys of the contractor's
minority and women's business enterprise procedure and practices that the
Government's Contracting Officer may from time to time conduct;
(7) Submit periodic reports of subcontracting to known minority and women's
business enterprises with respect to the records referred to in sub-paragraph
(4) above, in such form and manner and at such time (not more often than
quarterly) on the Government's Contracting Officer for BellSouth Corporation or
its affiliate may prescribe.
(b) The contractor further agrees to insert, in any subcontract hereunder which
may exceed $500,000 (or in the case of WBE $1,000,000 in the case of contracts
for the construction of any public facility and which offer substantial
subcontracting possibilities) provisions which shall conform substantially to
the language of this Agreement, including this paragraph (b) and to notify the
Contracting Officer of the names of such subcontractors.
7. List of Employment Openings for Veterans
In accordance with Exec. Order 11701, dated January 24, 1973, and Part 60-250 of
Title 41 of the Code of Federal Regulations, as it may be amended from time to
time, the parties incorporate herein by this reference the regulations and
contract clauses required by those provisions to be made a part of Government
contracts and subcontracts.
8. Employment of the Handicapped
In accordance with Exec. Order 11758, dated January 15, 1974, and Part 60-741 of
Title 41 of the Code of Federal Regulations, as may be amended from time to
time, the parties incorporate herein by this reference the regulations and
contract clauses required by those provisions to be made a part of Government
contracts and subcontracts.
PRIVATE/PROPRIETARY/LOCK
CONTAINS PRIVATE AND/OR PROPRIETARY INFORMATION.
MAY NOT BE USED OR DISCLOSED OUTSIDE THE BELLSOUTH COMPANIES
EXCEPT PURSUANT TO A WRITTEN AGREEMENT.
<PAGE> 1
CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 10.21
[ ] Material indicated by this mark
has been deleted pursuant to a request
for confidential treatment, and has been filed
separately.
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made as of the 27th day
of October, 1997 (the "Effective Date"), by and between Ameritech Mobile
Communications, Inc., a Delaware corporation ("Ameritech"), and SCC
Communications, Corp., a Delaware corporation (the "Consultant," and with
Ameritech, sometimes referred to collectively herein as the "parties" or
individually as a "party").
WITNESSETH
WHEREAS, Ameritech has retained the services of Consultant in connection
with Ameritech's plan to provide 911 emergency service to its cellular telephone
customers to conduct an initial market survey, including among other things, a
market analysis, network inventory and network design recommendations as further
described in Exhibit A to this Agreement (the "Initial Market Survey") and
Consultant desires to perform such services for Ameritech;
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein and for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties hereby agree as FOLLOWS:
1. APPOINTMENT OF CONSULTANT.
Ameritech hereby retains Consultant to conduct the Initial Market Survey
described in Exhibit A to this Agreement for Ameritech (the "Project").
Consultant hereby accepts such appointment subject to the terms and conditions
set forth herein.
2. PERFORMANCE AND DUTIES.
a) Consultant agrees to perform the services required hereunder
in a diligent and professional manner no later than forty-five
(45) days from the Effective Date, provided, however, that
information that is requested by Consultant in connection with
the Project is provided to Consultant by Ameritech within a
reasonable amount of time. Consultant further agrees to devote
such time, energy and attention to the performance of such
services as are reasonably necessary to complete them in the
manner contemplated hereby. In addition to the foregoing,
Consultant shall perform the services under this Agreement in
compliance with all applicable laws, rules and regulations and
further agrees to observe the business
<PAGE> 2
policies, procedures and security requirements of Ameritech
(as defined herein). While on the premises of Ameritech,
Consultant will be responsible for any personal injury or
property damage caused by the negligent or intentional acts of
Consultant, its employees, agents or representatives.
b) Consultant acknowledges and agrees that Ameritech may, from time to
time, expand the scope of services required from Consultant under this
Agreement. To the extent that such changes affect the time of
performance or the cost of services to be performed by Consultant,
Ameritech and Consultant shall amend the provisions hereof upon mutually
agreeable terms.
3. CONSULTANT'S FEE AND INVOICING
As a Non-Recurring Engineering fee ("NRE"), Ameritech agrees to pay to
Consultant an aggregate amount of [ ], which
shall be paid within forty-five (45) days receipt of an invoice which shall be
provided by Consultant to Ameritech upon the completion of the Project in a
manner satisfactory to Ameritech or January 9, 1998, whichever is later. Payment
of the NRE fee shall be considered payment in full for the Initial Market
Survey. In the event that Ameritech requests, in its sole discretion, that
Consultant provide SCP services at a later date, an additional NRE fee in the
amount of [ ] will be charged by Consultant to
Ameritech for additional market survey services related to such SCP services.
Ameritech shall not reimburse Consultant for travel or any other expenses
incurred by Consultant.
4. TERMINATION.
Subject to the provisions hereof, this Agreement shall commence on the Effective
Date set forth above and shall terminate upon completion of the Project.
Notwithstanding the foregoing, this Agreement may be terminated for cause, if
one party breaches this Agreement and fails to cure such breach within ten (1 0)
calendar days after delivery of written notice of such breach in which case, the
injured party may then terminate this Agreement immediately upon delivery to the
other party of an additional written termination notice.
<PAGE> 3
5. STATUS OF CONSULTANT.
a) It is expressly understood and agreed by the parties to this
Agreement that Consultant is acting as an independent
contractor under the Agreement and shall have no right or
authority to make any contracts or commitments for or on
behalf of Ameritech, to sign or endorse on behalf of Ameritech
any contracts, advertisements or instruments of any nature or
to enter into any obligation binding upon Ameritech.
b) The parties further acknowledge and agree that as an
independent contractor, Consultant shall not be entitled to
any of the benefits, fringe or otherwise, available to
Ameritech employees. In addition to the foregoing, the parties
agree that no taxes will be withheld from the fees remitted to
Consultant and no Internal Revenue Service Forms W2 or
comparable federal, state or local tax returns shall be issued
by Ameritech with respect to the arrangements contemplated by
this Agreement (except for such returns and tax forms as may
be required pursuant to federal, state and local tax laws
applicable to consultants and independent contractors).
6. PERSONNEL.
a) Robert Tyler and such other person or party as Ameritech may
from time to time designate in writing, shall be available to
consult with and assist Consultant in the performance of the
Project. Notwithstanding anything herein to the contrary, no
representative from Ameritech shall exercise any control or
direction over Consultant or Consultant's employees, if any,
in the performance of the services required under this
Agreement.
b) Consultant agrees that Beth Ozanich shall act as Consultant's
project manager with respect to the Project. Any changes to
Ms. Ozanich's Project staff will be subject to the prior
review of Ameritech.
7. AFFILIATES.
a) With respect to Ameritech, an "Affiliate" shall mean any
entity that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under
common control with Ameritech. "Affiliate" also means any
successor to
<PAGE> 4
Ameritech, whether by change of name, dissolution, merger,
consolidation, reorganization or otherwise.
b) With respect to Consultant, an "Affiliate" shall mean any
entity that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under
common control with Consultant. "Affiliate" also means any
successor to Consultant, whether by change of name,
dissolution, merger, consolidation, reorganization or
otherwise.
c) With respect to an entity other than Ameritech or Consultant,
an "Affiliate" shall mean any entity that directly or
indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such entity.
"Affiliate" also means any successor to such entity, whether
by change of name, dissolution, merger, consolidation,
reorganization or otherwise.
8. CONFIDENTIAL INFORMATION.
a) Any information, including but not limited to, specifications,
drawings, computer programs, technical or business information
or other data in whatever form (hereinafter "Information"),
which is proprietary to Ameritech and furnished by Ameritech
to Consultant, whether in writing, orally or visually, under
or in contemplation of this Agreement or to which Consultant
has access from Ameritech through its performance hereunder
shall be considered confidential and shall be subject to the
following:
i) Consultant shall restrict disclosure of the Information to Consultant's
employees with a "need to know" (i.e., employees that require the
Information to perform their responsibilities in connection with this
Agreement) and shall not disclose it to any other person or entity
without the prior written consent of Ameritech;
ii) Consultant shall use the Information only for purposes of performing
under this Agreement;
iii) Consultant shall advise those employees who access the Information of
their obligations with respect thereto;
<PAGE> 5
iv) Consultant shall copy the Information only as necessary for those
employees who are entitled to receive it and shall ensure that all
confidentiality notices are reproduced in full on such copies; and
v) Unless the parties agree otherwise in writing, Consultant shall return
all copies of such Information to Ameritech at Ameritech's request.
b) Consultant recognizes and agrees that the unauthorized use or
disclosure of the Information would cause irreparable harm to
Ameritech for which it would have no adequate remedy at law, and
that an actual or contemplated breach of this Clause shall
entitle Ameritech to obtain immediate injunctive relief
prohibiting such breach, in addition to any other rights
available to it. This Agreement shall be deemed confidential
Information. The obligations herein contained shall expressly
survive the termination or expiration of this Agreement.
c) The Information shall not be considered confidential and shall
not be subject to the foregoing if Consultant can demonstrate
that the Information:
i) is or becomes available to the public through no breach of this
Agreement;
ii) was previously known by Consultant without any obligation to hold it in
confidence;
iii) is received from a third party free to disclose such Information without
restriction;
iv) is independently developed by Consultant without the use of Ameritech's
Information;
<PAGE> 6
v) is APPROVED FOR RELEASE BY written authorization OF Ameritech, BUT ONLY
TO THE EXTENT of such authorization;
vi) is required by law or regulation to be disclosed, but only to the
extent and for purposes of such required disclosure; or
vii) IS disclosed in response to a valid order of a court or lawful request
of a governmental agency, but only to the extent of and for the
purposes of such order or request, provided that Consultant first
notifies Ameritech of the order or request ten (1 0) days prior to
disclosure and permits Ameritech to seek an appropriate protective
order.
d) No Information furnished by Consultant to Ameritech hereunder
or in contemplation hereof shall be treated as confidential by
Ameritech unless specifically labeled as such by Consultant in
advance of its disclosure to Ameritech. In such event,
Ameritech shall safeguard and protect Consultant's
confidential Information in accordance with the provisions
above, except Ameritech may disclose such Information to its
employees and its Affiliates with a need to know.
9. RIGHT IN MATERIALS AND INDEMNITY.
a) The Initial Market Survey prepared by or for Consultant in the
course of performing services under this Agreement shall be
promptly furnished to Ameritech upon completion of the
Project. The Initial Market Survey shall be the exclusive
property of Ameritech, including title to copyright in all
copyrightable material (to the extent derived from employees
and subcontractors of Consultant), and may be used by
Ameritech in any manner whatsoever so long as such use is not
in violation of this Agreement; shall be considered a "work
made for hire" consistent with U.S. copyright laws; and shall
be deemed and treated by Consultant as Ameritech's
confidential Information as described in Section 7 of this
Agreement. If any such materials were previously copyrighted
by Consultant and not originally prepared hereunder,
Consultant hereby grants to Ameritech an unrestricted
royalty-free license to copy such materials and the rights to
sublicense such materials to its Affiliates. Such materials do
not include Consultant's own proprietary and confidential
Information and property including but not limited to source
code, databases and software systems not originally designed,
created or implemented for Ameritech. Consultant warrants that
all
<PAGE> 7
persons performing services hereunder are employees of
Consultant and the services performed and work product thereof
have been prepared by such employees within the scope of their
employment; or if not employees, Consultant has received from
such persons an assignment of copyright covering all services
performed hereunder. To the extent such materials shall not be
considered a "work made for hire," Consultant hereby assigns
all right, title, and interest in such materials to Ameritech.
Consultant agrees to cooperate with Ameritech and to execute
all documents reasonably necessary for the transfer,
maintenance and protection of these rights for the benefit of
Ameritech.
b) Consultant agrees to indemnify, defend and hold Ameritech
harmless against any claim, demand, cause of action, suit
liability, damage, loss, judgment, award, cost and expense
(including reasonable attorneys' fees and expenses) relating
to or arising out of a claim or assertion that any materials
produced or used by Consultant for Ameritech or otherwise
produced or used by Consultant in performing services
hereunder infringe or violate any patent, copyright or other
proprietary right (including, but not limited to,
misappropriation of trade secrets) of any third party.
Consultant shall defend and settle at its sole expense all
suits and proceedings arising out of the foregoing. No
settlement which prevents Ameritech from continuing to use
materials related to the services provided hereunder, shall be
made without Ameritech's prior written consent.
10. INSURANCE.
Consultant shall purchase and maintain general liability insurance as is
reasonable under the circumstances to protect the Consultant and Ameritech from
claims which may arise out of the Consultant's performance of services
hereunder. All such insurance shall be purchased from and issued by insurance
companies reasonably satisfactory to Ameritech. All such insurance shall name
Ameritech as an additional named insured. Certificates of Insurance, evidencing
such coverage, shall be provided to Ameritech upon request. The minimum coverage
and limits to be maintained by Consultant shall be written for not less than the
limits of liability specified by further agreement of the parties, or as
required by law, whichever is greater.
<PAGE> 8
11. PUBLICITY.
Consultant shall not prepare or distribute any news releases, articles,
brochures, advertisements, speeches or other information releases concerning
this Agreement and the activities performed hereunder without the prior written
consent of Ameritech. In addition, Consultant shall not use the "Ameritech" or
"Bell" name or mark (or any variation thereof) or refer to the Project, without
the prior written consent of Ameritech.
12. SUBCONTRACTING.
Consultant shall not, without the prior written consent of Ameritech,
subcontract any portion of the work required to be performed under this
Agreement.
13. INDEMNIFICATION.
a) Ameritech agrees that it will indemnify, defend and hold harmless
Consultant from and against claims, liabilities, obligations,
suits, judgments, damages, expenses or costs (including
reasonable attorneys' fees) (collectively, "Consultant's
Damages") which may be asserted against or incurred by Consultant
which arise out of Ameritech's performance or failure to perform
its obligations under this Agreement; provided, however, that the
foregoing indemnity shall not apply to Consultant's Damages
resulting from or relating to Consultant's negligence or
misconduct.
b) Consultant agrees that it will indemnify, defend and hold
harmless Ameritech from and against any and all claims,
liabilities, obligations, suits, judgments, damages, expenses or
costs (including reasonable attorneys' fees) (collectively,
"Ameritech's Damages") which may be asserted against or incurred
by Ameritech and which arise out of Consultant's performance or
failure to perform its obligations under this Agreement;
provided, however, that the foregoing indemnity shall not apply
to Ameritech's Damages resulting from or relating to Ameritech's
negligence or misconduct.
14. INCORPORATION OF EXHIBITS.
Each of the exhibits attached to this Agreement is by this reference
incorporated herein and made a part of this Agreement.
<PAGE> 9
15. HEADINGS.
The headings set forth herein are for convenience only and shall not be used in
interpreting the text of the sections in which they appear.
16. NOTICES.
Any notice or other communication required, permitted or desirable under this
Agreement, shall be sufficiently given if sent by United States mail, postage
prepaid, addressed as follows:
To Ameritech: Ameritech Mobile Communications, Inc. 2000 West
Ameritech Center Drive Hoffman Estates, IL 60196
Attn: Robert Tyler Manager, Network Planning
with a copy to:
Ameritech Mobile Communications, Inc.
2000 West Ameritech Center Drive
LOC. 3H890
Hoffman Estates, IL 60196
Attn: Legal Department
To Consultant: SCC Communications Corp.
6285 Lookout Road
Boulder, Colorado 80301
Attn: Chief Financial Officer
with a copy to:
SCC Communications Corp.
6285 Lookout Road
Boulder, Colorado 80301
Attn: Contracts Manager
<PAGE> 10
or such other address as shall be furnished in writing by either party
to the other party. Any such notice or communication shall be deemed to have
been given as of the date so mailed.
17. ASSIGNMENT.
a) Neither party shall assign any right or obligation under this
Agreement without the other party's prior written consent. Any
attempted assignment shall be void, except that either party
may assign monies due or to become due to it, provided that
(a) the assigning party gives the other party at least ten
(10) days prior written notice of such assignment and (b) such
assignment does not impose upon the other party obligations to
the assignee other than the payment of such monies.
b) Notwithstanding the foregoing, Ameritech may assign this
Agreement, in whole or in part, to any of its Affiliates.
Consultant may assign this Agreement, in whole or in part, to
any of its Affiliates; provided, however, that Consultant may
not assign this Agreement to any entity that directly or
indirectly through that entity itself or one of its Affiliates
provides two-way cellular voice communication services or
other wireless communication or data services. Upon such
permitted assignment and assumption of liability thereto by
the assignee, the assignor shall be discharged of any
liability under this Agreement.
18. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement and understanding of the parties,
and there are no other prior or contemporaneous written or oral agreements,
undertakings, promises, warranties or covenants not specifically referred to,
attached to this Agreement or contained in this Agreement. This Agreement may be
amended, modified or terminated only by a written instrument signed by the
parties hereto.
19. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one Agreement.
20. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Illinois.
<PAGE> 11
21. BINDING EFFECT.
Except as otherwise stated herein, this Agreement shall be binding upon and
shall inure to the benefit of the parties' respective successors in interest and
assigns.
22. SURVIVAL.
Sections 8, 9, 11, 13 and 21 shall survive the termination of this Agreement.
IN WITNESS WHEREOF, each of the parties has executed this Agreement.
AMERITECH:
CONSULTANT:
Ameritech Mobile
Communications, Inc.
SCC Communications Corp.
<TABLE>
<S> <C>
By: /s/ RICHARD D. GOVE By: /s/ NANCY K. HAMILTON
----------------------------------------- ----------------------------------------------
Its: Director - Network Planning Its: CFO
---------------------------------------- ---------------------------------------------
Date: 10/27/97 Date: 10/30/97
--------------------------------------- --------------------------------------------
</TABLE>
<PAGE> 12
Exhibit A
9-1-1CONNECT(TM) STATEMENT OF WORK
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[
]
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(~Rev. SOW DOC) 06/25/97 Page 1 ACS/SCC 9-1-1Connect(TM) SOW
<PAGE> 13
Exhibit A
9-1-1CONNECT(TM) STATEMENT OF WORK
- --------------------------------------------------------------------------------
[
]
- --------------------------------------------------------------------------------
(~Rev. SOW DOC) 06/25/97 Page 2 ACS/SCC 9-1-1Connect(TM) SOW
<PAGE> 14
Exhibit A
9-1-1CONNECT(TM) STATEMENT OF WORK
- --------------------------------------------------------------------------------
[
]
- --------------------------------------------------------------------------------
(~Rev. SOW DOC) 06/25/97 Page 3 ACS/SCC 9-1-1Connect(TM) SOW
<PAGE> 15
Exhibit A
9-1-1CONNECT(TM) STATEMENT OF WORK
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[
]
- --------------------------------------------------------------------------------
(~Rev. SOW DOC) 06/25/97 Page 4 ACS/SCC 9-1-1Connect(TM) SOW
<PAGE> 1
EXHIBIT 23.2
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and all references to our Firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Denver, Colorado,
June 22, 1998.
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<PERIOD-END> DEC-31-1997
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<SECURITIES> 0
<RECEIVABLES> 2,378,000
<ALLOWANCES> 50,000
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<CURRENT-ASSETS> 7,351,000
<PP&E> 20,174,000
<DEPRECIATION> 8,136,000
<TOTAL-ASSETS> 21,106,000
<CURRENT-LIABILITIES> 10,021,000
<BONDS> 6,891,000
14,589,000
0
<COMMON> 2,000
<OTHER-SE> (11,869,000)
<TOTAL-LIABILITY-AND-EQUITY> 21,106,000
<SALES> 0
<TOTAL-REVENUES> 27,072,000
<CGS> 0
<TOTAL-COSTS> 16,661,000
<OTHER-EXPENSES> 7,077,000
<LOSS-PROVISION> 25,000
<INTEREST-EXPENSE> 967,000
<INCOME-PRETAX> 2,455,000
<INCOME-TAX> (2,328,000)
<INCOME-CONTINUING> 4,783,000
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<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
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<TOTAL-LIABILITY-AND-EQUITY> 23,328,000
<SALES> 0
<TOTAL-REVENUES> 7,902,000
<CGS> 0
<TOTAL-COSTS> 4,951,000
<OTHER-EXPENSES> 1,989,000
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<INTEREST-EXPENSE> 331,000
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