<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from -------------------- to ---------------------
Commission File Number: 0-26592
THE VANTIVE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0266662
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2455 AUGUSTINE DRIVE
SANTA CLARA, CALIFORNIA 95054
(408) 982-5700
(Address and telephone number of principal executive offices)
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------- -------
The number of shares of the Registrant's $0.001 par value Common Stock
outstanding on November 4, 1996, was 24,122,851.
This report consists of 18 pages.
<PAGE>
THE VANTIVE CORPORATION
FORM 10-Q
TABLE OF CONTENTS
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of 3
September 30, 1996 and December 31, 1995
Condensed Consolidated Statements of Operations 4
for the Quarters Ended September 30, 1996 and 1995
and the Nine Months Ended September 30, 1996 and 1995
Condensed Consolidated Statements of Cash Flows 5
for the Nine Months Ended September 30, 1996 and 1995
Notes to Condensed Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
PART II: OTHER INFORMATION
Item 1: Legal Proceedings 15
Item 2: Changes in Securities 15
Item 3: Defaults upon Senior Securities 15
Item 4: Submissions of Matters to a Vote of Security Holders 15
Item 5: Other Information 15
Item 6: Exhibits and Reports on Form 8-K 16
Signatures 17
2
<PAGE>
Part I: Financial Information
Item 1: Financial Statements
THE VANTIVE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
September 30, December 31,
1996 1995
------------- ------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . $ 19,424 $ 17,614
Short-term investment . . . . . . . . . . . 12,694 8,815
Accounts receivable, net. . . . . . . . . . 11,439 4,049
Prepaid expenses and other current assets.. 1,770 1,265
--------- ---------
Total current assets. . . . . . . . . . . 45,327 31,743
Property and equipment, net . . . . . . . . 5,243 2,628
Other assets. . . . . . . . . . . . . . . . 281 216
--------- ---------
TOTAL ASSETS . . . . . . . . . . . . . . . . $ 50,851 $ 34,587
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities. . $ 8,278 $ 4,328
Deferred revenues . . . . . . . . . . . . . 6,997 2,952
--------- ---------
Total current liabilities . . . . . . . . 15,275 7,280
--------- ---------
Long-term liabilities . . . . . . . . . . . 527 650
--------- ---------
STOCKHOLDERS' EQUITY
Common stock. . . . . . . . . . . . . . . . 24 24
Additional paid-in-capital. . . . . . . . . 32,065 31,538
Retained earnings/(accumulated deficit) . . 2,960 (4,905)
--------- ---------
Total stockholders' equity. . . . . . . . 35,049 26,657
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . $ 50,851 $ 34,587
--------- ---------
--------- ---------
See accompanying notes
3
<PAGE>
THE VANTIVE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------------
1996 1995 1996 1995
---------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES:
License fees . . . . . . . . . . . . . . . $ 11,102 $ 4,289 $ 28,104 $ 10,976
Services. . . . . . . . . . . . . . . . . . 6,147 2,320 15,159 5,337
--------- --------- --------- ---------
Total revenues. . . . . . . . . . . . . . 17,249 6,609 43,263 16,313
COST OF REVENUES:
Licenses. . . . . . . . . . . . . . . . . . 113 51 266 133
Services. . . . . . . . . . . . . . . . . . 3,316 1,510 8,407 4,040
--------- --------- --------- ---------
Total cost of revenues. . . . . . . . . . 3,429 1,561 8,673 4,173
--------- --------- --------- ---------
GROSS MARGIN . . . . . . . . . . . . . . . . 13,820 5,048 34,590 12,140
OPERATING EXPENSES:
Sales and marketing . . . . . . . . . . . . 6,462 2,946 16,389 7,212
Research and development. . . . . . . . . . 1,694 890 4,199 2,358
General and administrative. . . . . . . . . 1,511 641 3,726 1,514
--------- --------- --------- ---------
Total operating expenses. . . . . . . . . 9,667 4,477 24,314 11,084
--------- --------- --------- ---------
OPERATING INCOME . . . . . . . . . . . . . . 4,153 571 10,276 1,056
OTHER INCOME . . . . . . . . . . . . . . . . 370 131 930 136
--------- --------- --------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES . . 4,523 702 11,206 1,192
PROVISION FOR INCOME TAXES . . . . . . . . . 1,357 70 3,362 119
--------- --------- --------- ---------
NET INCOME . . . . . . . . . . . . . . . . . $ 3,166 $ 632 $ 7,844 $ 1,073
--------- --------- --------- ---------
--------- --------- --------- ---------
NET INCOME PER SHARE . . . . . . . . . . . . $ 0.12 $ 0.03 $ 0.31 $ 0.05
--------- --------- --------- ---------
--------- --------- --------- ---------
SHARES USED IN PER SHARE COMPUTATION . . . . 26,046 23,324 25,713 22,200
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
NOTE: NET INCOME PER SHARE AND SHARES USED IN PER SHARE COMPUTATION REFLECT A
2-FOR-1 STOCK SPLIT IN THE FORM OF A 100 PERCENT STOCK DIVIDEND TO
STOCKHOLDERS OF RECORD ON SEPTEMBER 30, 1996.
See accompanying notes
4
<PAGE>
THE VANTIVE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Nine Months Ended
September 30,
-------------------------
1996 1995
----------- -----------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . $ 7,844 $ 1,073
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization. . . . . . . . 874 426
Provision for sales allowances . . . . . . . 365 225
Changes in net assets and liabilities -
Increase in accounts receivable . . . . . . (7,755) (2,623)
Increase in prepaid expenses and other
current assets . . . . . . . . . . . . . . (506) (140)
Increase in other assets. . . . . . . . . . (64) (66)
Increase in accounts payable/accrued
liabilities. . . . . . . . . . . . . . . . 4,010 984
Increase in deferred revenues . . . . . . . 4,044 1,754
Increase in deferred rent . . . . . . . . . 73 45
--------- ---------
Net cash provided by operating activities. 8,885 1,678
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investments. . . . . . (3,878) (8,847)
Purchase of property and equipment. . . . . . (3,489) (1,038)
--------- ---------
Net cash used in investing activities. . . (7,367) (9,885)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock. . . . 565 20,668
Repurchase of common stock. . . . . . . . . . (15) --
Payments on capital lease obligations . . . . (256) --
--------- ---------
Net cash provided by financing activities. 294 20,668
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS. . . 1,812 12,461
EFFECT OF EXCHANGE RATE CHANGES ON CASH. . . . (2) 6
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 17,614 3,154
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . $ 19,424 $ 15,621
--------- ---------
--------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITY
Cash paid for interest. . . . . . . . . . . . $ 122 $ 70
--------- ---------
--------- ---------
Cash paid for income taxes. . . . . . . . . . $ 2,624 $ 120
--------- ---------
--------- ---------
See accompanying notes
5
<PAGE>
THE VANTIVE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not misleading.
These condensed consolidated financial statements should be read in conjunction
with the financial statements and the notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995.
The unaudited information 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. Operating results for any quarter are
not necessarily indicative of the results for any future periods.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. Intercompany accounts and
transactions have been eliminated.
REVENUES
The Company generates revenues from licensing the rights to use its
software products directly to end-users and indirectly through sublicense fees
from resellers. The Company also generates revenues from sales of post-contract
support, consulting and training services performed for customers who license
its products.
Revenues from perpetual software license agreements are recognized upon
shipment of the software if there are no significant post-delivery obligations,
if collection is probable and if payment is due within one year. If an
acceptance period is required, revenues are recognized upon the earlier of
customer acceptance or the expiration of the acceptance period. The Company
enters into reseller arrangements that typically provide for sublicense fees
payable to the Company based on a percent of the Company's list price.
Sublicense fees are generally recognized as reported by the reseller in
relicensing the Company's products to end-users.
Revenues from post-contract support services are recognized ratably over
the term of the support period. If post-contract support services are included
free or at a discount in a license agreement, such amounts are allocated out of
the license fee at their fair market value based on the value established by
independent sale of such post-contract support services to customers.
Consulting revenues are primarily related to implementation services performed
on a time and materials basis under separate service arrangements related to the
installation of the Company's software products. Revenues from consulting and
training services are recognized as services are performed. If a transaction
includes both license and service elements, license fee revenue is recognized
upon shipment of the software, provided services do not include significant
customization or modification of the base product and the payment term for
licenses are not subject to acceptance criteria. In cases where license fee
payments are contingent upon the acceptance of services, revenues from both the
license and the service elements are deferred until the acceptance criteria are
met.
6
<PAGE>
NET INCOME PER SHARE
On September 23, 1996, the Company announced a two-for-one stock split in
the form of a 100 percent stock dividend to be distributed on October 14, 1996
to stockholders of record on September 30, 1996. All share and per share data
have been retroactively adjusted to reflect the stock split.
Except as noted below, net income per share is computed using the weighted
average number of outstanding shares of common and common equivalents from
outstanding stock options (when dilutive using the treasury stock method).
Common equivalent shares were excluded from the computation if their effect was
antidilutive except that, pursuant to the Securities and Exchange Commission
Staff Accounting Bulletins and staff policy, the computations for net income per
share in 1995 include all common and common stock equivalent shares issued
within 12 months preceding the filing date of the Company's initial public
offering as if they were outstanding for all periods presented (using the
treasury stock method assuming the public offering price). Mandatorily
redeemable convertible preferred stock and warrants outstanding during that
period were included (using the if converted method) in the 1995 computations as
common equivalent shares even though the effect was antidilutive. Primary and
fully diluted earnings per common share were substantially the same in all
periods presented.
SOFTWARE DEVELOPMENT COSTS
The Company capitalizes eligible computer software development costs upon
the establishment of technological feasibility, which the Company has defined as
completion of a working model. For the periods presented, costs eligible for
capitalization were insignificant and, thus, the Company charged all software
development costs to research and development expense.
INVESTMENTS
Investments have been accounted for in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115. The Company classifies its
investments as held to maturity investments as defined under the provisions of
SFAS 115 and carries such investments at amortized cost in its balance sheet.
7
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE VANTIVE CORPORATION
The Company was founded in October 1990 to develop software to enable
businesses to improve their customer service. The Company was engaged
principally in research and development from inception through December 31,
1992. The Company introduced its first product, VANTIVE SUPPORT, in July 1992,
and introduced VANTIVE QUALITY and the Oracle version of VANTIVE SUPPORT in the
fall of 1993. The Company introduced VANTIVE HELPDESK in August 1994, VANTIVE
SALES in early 1995, and VANTIVE FIELDSERVICE in early 1996. License fees for
the Company's software products consist of (i) a per server fee based on the
specific VANTIVE ENTERPRISE application(s) licensed and (ii) a fee based on the
maximum number of concurrent or named users allowed to access those
applications. Most of the Company's revenues to date have resulted from
non-recurring license fees based on sales of concurrent user licenses. The
remaining revenues are primarily attributable to service revenues, which include
post-contract support, consulting and training revenue. Of these service
revenues, only post-contract support revenues are expected to be recurring.
Post-contract support revenues accounted for approximately 12% of total
revenues, in the quarter and nine months ended September 30, 1996. Because
concurrent user fees are not application specific, the breakdown of revenues
attributable to specific applications for customers that have purchased more
than one application cannot be precisely determined by the Company. However,
the Company believes that most of its revenues have been derived from fees
associated with VANTIVE SUPPORT and, to a lesser degree, VANTIVE HELPDESK. In
any period, a significant portion of the Company's revenues may be derived from
significant sales to a limited number of customers. During the quarter ended
September 30, 1995 and September 30, 1996 and the first nine months of 1995 and
1996, no customer accounted for over 10% of total revenues. As significant
sales to a particular customer are typically non-recurring, the Company does not
believe its future results are dependent on recurring revenues from any
particular customer.
The Company's revenues are derived from software license fees and fees for
its services. License revenues consist of license fees for the Company's
products as well as fees from sublicensing third party software products. The
Company generally recognizes license fees upon shipment of software products if
there are no significant post-delivery obligations, if collection is probable
and if the license agreement requires payment within one year. If significant
post-delivery obligations exist or if a product is subject to customer
acceptance, revenues are deferred until no significant obligations remain or
acceptance has occurred. Revenues from services have to date consisted
primarily of consulting revenues, post-contract support revenues and, to a
lesser extent, training revenues. Consulting and training revenues generally
are recognized as services are performed. Post-contract support revenues are
recognized ratably over the term of the support period, which is typically one
year. See Note 2 of Notes to Condensed Consolidated Financial Statements.
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS INCLUDES A NUMBER OF FORWARD-LOOKING STATEMENTS WHICH
REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL
PERFORMANCE. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES, INCLUDING THOSE DISCUSSED BELOW THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR THOSE ANTICIPATED. IN THIS
REPORT, THE WORDS "ANTICIPATES," "BELIEVES," "EXPECTS," "FUTURE," "INTENDS,"
AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE HEREOF.
8
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth the percentages that income statement items
are to total revenues for the quarter and nine months ended September 30, 1995
and 1996.
THE VANTIVE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES:
License fees . . . . . . . . . . . . . . . 64.4% 64.9% 65.0% 67.3%
Services . . . . . . . . . . . . . . . . . 35.6 35.1 35.0 32.7
-------- -------- -------- --------
Total revenues. . . . . . . . . . . . . . 100.0 100.0 100.0 100.0
COST OF REVENUES:
Licenses . . . . . . . . . . . . . . . . . 0.7 0.8 0.6 0.8
Services . . . . . . . . . . . . . . . . . 19.2 22.8 19.4 24.8
-------- -------- -------- --------
Total cost of revenues. . . . . . . . . . 19.9 23.6 20.0 25.6
-------- -------- -------- --------
GROSS MARGIN . . . . . . . . . . . . . . . . 80.1 76.4 80.0 74.4
OPERATING EXPENSES:
Sales and marketing. . . . . . . . . . . . 37.4 44.6 37.9 44.2
Research and development . . . . . . . . . 9.8 13.5 9.7 14.4
General and administrative . . . . . . . . 8.8 9.7 8.6 9.3
-------- -------- -------- --------
Total operating expenses. . . . . . . . . 56.0 67.8 56.2 67.9
OPERATING INCOME . . . . . . . . . . . . . . 24.1 8.6 23.8 6.5
OTHER INCOME . . . . . . . . . . . . . . . . 2.1 2.0 2.1 0.8
-------- -------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES . . 26.2 10.6 25.9 7.3
PROVISION FOR INCOME TAXES . . . . . . . . . 7.8 1.0 7.8 0.7
-------- -------- -------- --------
NET INCOME . . . . . . . . . . . . . . . . . 18.4% 9.6% 18.1% 6.6%
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
REVENUES
LICENSE. License revenues increased by 159% from $4.3 million to $11.1
million, in the quarters ended September 30, 1995 and 1996, respectively, and by
156% from $11.0 million in the first nine months of 1995 to $28.1 million in the
first nine months of 1996. The increase in license revenues was primarily due
to the market's growing acceptance of the Company's products, the introduction
of the Company's products using the Microsoft SQL server relational database
management system and the Microsoft NT operating system, and increased sales as
a result of the expansion of the Company's direct sales force. The Company does
not believe that the historical growth rates of license revenues will be
sustainable or are indicative of future results.
9
<PAGE>
SERVICE. Service revenues are primarily comprised of fees from consulting,
post-contract support and, to a lesser extent, training services. Service
revenues increased by 165% from $2.3 million to $6.1 million, in the quarters
ended September 30, 1995 and 1996, respectively, and by 184% from $5.3 million
in the first nine months of 1995 to $15.2 million in the first nine months of
1996. The increase in service revenues was primarily due to the increase in
consulting, post-contract support and, to a lesser extent, training services
associated with increased sales of the Company's applications. As the Company
implements its strategy of encouraging third party organizations such as systems
integrators to become proficient in implementing the Company's products,
consulting revenues as a percentage of total revenues may decrease.
COST OF REVENUE
LICENSE. Cost of license revenues includes the cost of product media,
sublicensing fees for third-party software when bundled with the Company's
products, product duplication and manuals. Cost of license revenues was
approximately $51,000, or 1.2% of the related license revenues, and $113,000,
or 1.0% of the related license revenues, in the quarters ended September 30,
1995 and 1996, respectively, and was approximately $133,000 in the first nine
months of 1995 and approximately $266,000 in the first nine months of 1996,
or 1.2% and 0.9% of the related license revenues, respectively. The increase
in cost of license revenues was primarily due to the increases in volume
shipments of the Company's software applications and the cost of sublicensing
third-party software. The decrease in cost of license revenues as a
percentage of the related license revenues from September 30, 1995 to the
comparable 1996 period was primarily due to economies of scale realized as a
result of shipping greater quantities of product during the quarter ended
September 30, 1996.
SERVICE. Cost of service revenues is primarily comprised of
employee-related costs and fees for third-party consultants incurred in
providing consulting, post-contract support and training services. Cost of
service revenues was $1.5 million, or 65.1% of the related service revenues, and
$3.3 million, or 53.9% of the related service revenues, in the quarters ended
September 30, 1995 and 1996, respectively, and was $4.0 million, in the first
nine months of 1995 and $8.4 million, in the first nine months of 1996, or 75.7%
and 55.5% of the related services revenues for these periods, respectively. The
increase in absolute dollars was due primarily to increases in consulting,
support, training personnel, and third-party service providers during these
periods. The cost of service revenues may vary between periods due to the mix
of services provided by the Company and the resources used to provide these
services.
OPERATING EXPENSES
SALES AND MARKETING. Sales and marketing expenses increased from $2.9
million, or 44.6% of revenues to $6.5 million, or 37.5% of revenues, in the
quarters ended September 30, 1995 and 1996, respectively. Sales and marketing
expenses increased by 127% from $7.2 million, or 44.2% of revenues, in the first
nine months of 1995 to $16.4 million, or 37.9% of revenues, in the first nine
months of 1996. The increase in absolute dollars was primarily related to the
expansion of the Company's sales and marketing resources, increased commissions
expense as a result of higher sales levels and increased marketing activities,
including direct mail, trade shows and promotional expenses. The Company plans
to continue to invest heavily in expanding its sales and marketing activities.
Accordingly, sales and marketing expenses are anticipated to increase both in
absolute dollars and as a percent of revenues over the coming quarters.
RESEARCH AND DEVELOPMENT. Research and development expenses increased from
$0.9 million, or 13.5% of revenues to $1.7 million, or 9.8% of revenues, in the
quarters ended September 30, 1995 and 1996, respectively. Research and
development expenses increased by 78% from $2.4 million, or 14.4% of revenues,
in the first nine months of 1995 to $4.2 million, or 9.7% of revenues, in the
first nine months of 1996. Research and development expenses increased in
absolute dollars primarily as a result of an increase in personnel and outside
contractors to support the Company's product development activities. Over the
coming quarters, the Company plans to continue to invest heavily in research and
development. As a result, research and development expenses are anticipated to
increase both in absolute dollars and as a percent of revenues.
10
<PAGE>
Research and development expenses are generally charged to operations as
incurred. In accordance with Statement of Financial Accounting Standards
No. 86, costs which were eligible for capitalization for these periods were
insignificant, and the Company charged all software development costs to
research and development expense.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
from $0.6 million, or 9.7% of revenues to $1.5 million, or 8.8% of revenues, in
the quarters ended September 30, 1995 and 1996, respectively. General and
administrative expenses increased 146% from $1.5 million, or 9.3% of revenues,
in the first nine months of 1995 to $3.7 million, or 8.6% of revenues, in the
first nine months of 1996. General and administrative expenses increased in
absolute dollars during these periods primarily due to the addition of staff and
information system investments to support the growth of the Company's business
during these periods.
PROVISION FOR INCOME TAXES. The Company's provision for state, federal and
foreign income taxes for the three months ended September 30, 1996, was $1.4
million, based upon an estimated effective tax rate of approximately 30%. As of
December 31, 1995, the Company had net operating loss carryforwards for Federal
tax reporting purposes of approximately $2.5 million. The Company had other tax
credit carryforwards of approximately $0.5 million. The net operating loss and
research and development tax credit carryforwards expire in 2005 through 2009 if
not utilized.
BUSINESS RISKS
THIS REPORT INCLUDES A NUMBER OF FORWARD-LOOKING STATEMENTS WHICH REFLECT
THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL
PERFORMANCE. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES, INCLUDING THOSE DISCUSSED BELOW THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR THOSE ANTICIPATED. IN THIS
REPORT, THE WORDS "ANTICIPATES," "BELIEVES," "INTENDS," "FUTURE," AND SIMILAR
EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF
THE DATE HEREOF.
FUTURE OPERATING RESULTS UNCERTAIN. The Company has experienced
significant growth in revenues in recent periods. The Company does not believe
that the historical growth rates of revenues, or the corresponding declines of
operating expenses as a percentage of revenues, will be sustainable or are
indicative of future results. In addition, the Company's limited operating
history makes the prediction of future operating results difficult or
impossible. The Company's future operating results will depend on many factors,
including demand for the Company's products, the level of product and price
competition, the ability of the Company to rapidly develop and market new and
existing products and to control the associated costs, the ability of the
Company to expand its direct sales force and indirect distribution channels and
the ability to attract and retain key personnel. In particular, the ability of
the Company to achieve significant revenue growth in the future will depend on
its success in adding a substantial number of direct sales personnel in future
periods. Competition for such personnel is intense, and there can be no
assurance that the Company can retain its existing sales personnel or that it
can attract, assimilate or retain additional highly qualified sales personnel in
the future. Further, the Company believes, based on interactions with its
customers and potential customers, that the purchase of its products is
relatively discretionary and generally involves a significant commitment of
capital. As a result, in the event of any downturn in any potential customer's
business or the economy in general, purchases of the Company's products may be
deferred or canceled, which could have a material adverse effect on the
Company's business, results of operations and financial condition.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. The Company's quarterly
operating results have in the past varied and may in the future vary
significantly depending on factors such as the size, timing and recognition of
revenue from significant orders, increased competition, the timing of new
product releases by the Company and its competitors, market acceptance of the
Company's products, changes in the Company's and its competitors' pricing
policies, the mix of license and service revenue, budgeting cycles of its
customers, seasonality, the mix of direct and indirect sales, changes in
operating expenses, changes in Company strategy, personnel changes, foreign
currency exchange rates and general economic factors. Further, the Company
believes, based on interactions with its customers and potential customers, that
the purchase of its products is relatively discretionary and generally involves
a significant commitment of capital. As a result, in the event of any downturn
in any potential customer's business or the economy in general, purchases of the
Company's products may be deferred or canceled.
11
<PAGE>
A significant portion of the Company's revenues in any quarter are
typically derived from non-recurring sales to a limited number of customers.
Accordingly, revenues in any one quarter are not indicative of revenues in any
future period. In addition, like many software applications companies, the
Company has generally recognized a substantial portion of its revenues in the
last month of each quarter, with these revenues concentrated in the last weeks
of the quarter. Any significant deferral of purchases of the Company's products
could have a material adverse effect on the Company's business, results of
operations and financial condition in any particular quarter, and to the extent
that significant sales occur earlier than expected, operating results for
subsequent quarters may be adversely affected. Product revenues are also
difficult to forecast because the market for customer asset management software
products is rapidly evolving. The Company's sales cycle is typically six to
nine months and varies substantially from customer to customer. In addition,
the Company expects that sales derived through indirect channels, which are
harder to predict and may have lower margins than direct sales, will increase as
a percentage of total revenues. As a result of these factors, quarterly
revenues for any future quarter are not predictable with any significant degree
of certainty. The Company's expense levels are based, in part, on its
expectations as to future revenues. If revenues are below expectations,
operating results are likely to be adversely affected. Net income may be
disproportionately affected by a reduction in revenues, because a significant
portion of the Company's expenses do not vary with revenues. The Company may
also choose to reduce prices or increase spending in response to competition or
to pursue new market opportunities. In particular, if new competitors,
technological advances by existing competitors, or other competitive factors
require the Company to invest significantly greater resources in research and
development efforts, the Company's operating margins in the future may be
adversely affected. THE FOREGOING STATEMENTS REGARDING THE COMPANY'S FUTURE
REVENUES, OPERATING MARGINS AND NET INCOME ARE FORWARD-LOOKING STATEMENTS, AND
ACTUAL RESULTS MAY VARY SUBSTANTIALLY DEPENDING UPON A VARIETY OF FACTORS
DESCRIBED IN THIS PARAGRAPH AND ELSEWHERE IN THIS REPORT.
Because of these factors, the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful and that
such comparisons should not be relied upon as indications of future performance.
Due to all of the foregoing factors, it is likely that in some future quarter
the Company's operating results will be below the expectations of public market
analysts and investors. In such event, the price of the Company's Common Stock
would likely be materially adversely affected.
RAPID TECHNOLOGICAL CHANGE AND PRODUCT DEVELOPMENT RISKS. The
client/server applications software market is subject to rapid technological
change, changing customer needs, frequent new product introductions and evolving
industry standards that may render existing products and services obsolete. As
a result, the Company's position in its existing markets or other markets that
it may enter could be eroded rapidly by product advances. The life cycles of
the Company's products are difficult to estimate. The Company's growth and
future financial performance will depend in part upon its ability to attract and
retain highly qualified technical personal to enhance existing applications,
develop and introduce new applications that keep pace with technological
advances, meet changing customer requirements, respond to competitive products
and achieve market acceptance.
The Company's product development efforts are expected to require, from
time to time, substantial investments by the Company in product development and
testing. There can be no assurance that the Company will have sufficient
resources to make the necessary investments. The Company has in the past
experienced development delays, and there can be no assurance that the Company
will not experience such delays in the future. There can be no assurance that
the Company will not experience difficulties that could delay or prevent the
successful development, introduction or marketing of new or enhanced products.
In addition, there can be no assurance that such products will meet the
requirements of the marketplace and achieve market acceptance, or that the
Company's current or future products will conform to industry requirements. If
the Company is unable, for technological reasons, to develop and introduce new
and enhanced products in a timely manner, the Company's business, results of
operations and financial condition could be materially adversely affected.
12
<PAGE>
Software products as complex as those offered by the Company may contain
errors that may be detected at any point in the products' life cycles. The
Company has in the past discovered software errors in certain of its products
and has experienced delays in shipment of products during the period required to
correct these errors. There can be no assurance that, despite testing by the
Company and by current and potential customers, errors will not be found,
resulting in loss of, or delay in, 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, results of operations and financial condition.
INTERNATIONAL OPERATIONS. The Company believes that its continued growth
and profitability will require expansion of its international operations. To
successfully expand international sales, the Company must establish additional
foreign operations, hire additional personnel and recruit additional
international resellers. To the extent that the Company is unable to do so in a
timely manner, the Company's growth in international sales, if any, will be
limited, and the Company's business, results of operations and financial
condition could be materially adversely affected. As the Company continues to
expand its international operations, significant costs may be incurred ahead of
any anticipated international revenues, which could have a material adverse
effect on the Company's business, results of operations and financial condition.
COMPETITION. The client/server applications software market, including the
market for customer asset management software, is intensely competitive, highly
fragmented and subject to rapid change. Because the Company offers multiple
applications which can be purchased separately or integrated as part of VANTIVE
ENTERPRISE, the Company competes with a variety of other companies depending on
the market for their applications software products. These competitors include
companies targeting the customer support market, the help desk market, the sales
and marketing automation market, and the field service market. In addition, the
Company believes that existing competitors and new market entrants will attempt
to develop fully integrated customer information systems. The Company also
competes with third party professional service organizations that develop custom
software and with internal information technology departments of customers which
develop customer information systems. Among the Company's current and potential
competitors are also a number of large hardware and software companies that may
develop or acquire products that compete with the Company's products. The
Company also expects that competition will increase as a result of software
industry consolidations. Current and potential competitors have established or
may establish cooperative relationships among themselves or with third parties
to increase the ability of their products to address the needs of the Company's
prospective customers. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. Increased competition is likely to result in price reductions, reduced
operating margins and loss of market share, any of which could materially
adversely affect the Company's business, results of operations and financial
condition. Many of the Company's current and potential competitors have
significantly greater financial, technical, marketing and other resources than
the Company. As a result, they may be able to respond more quickly to new or
emerging technologies and changes in customer requirements, or to devote greater
resources to the development, promotion and sale of products than can the
Company. There can be no assurance that the Company will be able to compete
successfully against current and future competitors or that competitive
pressures faced by the Company will not materially adversely affect its
business, results of operations and financial condition.
INCREASED USE OF THIRD PARTY DEVELOPMENT TOOLS. The Company currently
markets a proprietary application development environment for its customers to
tailor its applications. This application development environment is also used
by the Company to build and modify its applications products. While the Company
believes based on interactions with its customers and potential customers, that
it currently derives significant competitive advantage from this proprietary
application development environment, it believes that competitive pressures,
technological changes demanded by customers, and significant advances in the
sophistication of third party application development tools such as VISUAL BASIC
FOR APPLICATIONS will require the Company to make greater use of third party
tools in the future.
13
<PAGE>
This could require the Company to invest significant resources in rewriting
some or all of its applications products utilizing these third party tools
and/or to enter into license arrangements with third parties which could result
in higher royalty payments and a loss of product differentiation. There can be
no assurance that the Company would be able to successfully rewrite its
applications or enter into commercially reasonable licenses, and the costs of,
or inability or delays in, doing so could have a material adverse effect on the
Company's business, results of operations and financial condition.
In addition to the "BUSINESS RISKS" mentioned above, the Company's business
entails a variety of additional risks, which are set forth in the "BUSINESS
RISKS" section of the Company's 1995 Report on Form 10-K filed with the
Securities and Exchange Commission.
FINANCIAL CONDITION
Total assets as of September 30, 1996, increased $16.3 million from
December 31, 1995. The increase was primarily due to increases in cash from
operations, short-term investments, accounts receivable and property and
equipment. The combined balance of cash and short-term investments increased by
$5.7 million, primarily due to increased net income. Net accounts receivable
increased $7.4 million primarily due to increased sales activity. Net property
and equipment increased $2.6 million, primarily due to equipment purchases
associated with supporting the growth of the Company's business during this
period.
Total liabilities as of September 30, 1996, increased $7.9 million from
December 31, 1995. The increase was primarily due to increases in accounts
payable and accrued liabilities and deferred revenues of $3.9 million and $4.0
million, respectively. These increases were primarily due to increased expense
levels and accruals associated with a higher transaction volume and associated
deferrals of revenues related to post-contract support.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities provided cash of $8.9 million, in the nine months
ended September 30, 1996. The primary source of these funds was net income and
increases in deferred revenues and accounts payable and accrued liabilities,
partially offset by an increase in accounts receivable. Operating activities
provided cash of $1.7 million in the nine months ended September 30, 1995. The
primarily source of these funds was net income and increases in deferred
revenues and in accounts payable and accrued liabilities, partially offset by an
increase in accounts receivable.
Investing activities used cash of $7.4 million, in the nine months ended
September 30, 1996, primarily for the purchase of short-term, interest-bearing,
investment-grade securities and, to a lesser extent, purchase of capital
equipment. Investing activities used cash of $9.9 million, in the nine months
ended September 30, 1995, primarily for the purchase of short-term,
interest-bearing, investment-grade securities. The Company does not currently
have any material commitments for capital equipment acquisitions.
Financing activities provided cash of $294,000 in the nine months ended
September 30, 1996. The primary source of these funds was proceeds from the
issuance of common stock pursuant to the exercise of outstanding stock options,
partially offset by payments on capital lease obligations. Financing activities
provided cash of $20.7 million in the nine months ended September 30, 1995,
primarily due to proceeds from the Company's initial public offering completed
in August 1995.
At September 30, 1996, the Company's principal sources of liquidity was its
cash, cash equivalents and short-term investments of $32.1 million. The Company
believes that existing cash and short-term investment balances and potential
cash flow from operations will be sufficient to meet its cash requirements for
the next twelve months. While operating activities may provide cash in certain
periods to the extent the Company experiences growth in the future, operating
and investing activities may use cash, and consequently, such growth may require
the Company to obtain additional sources of financing.
14
<PAGE>
PART II: OTHER INFORMATION
Item 1: Legal Proceedings:
Not Applicable.
Item 2: Changes in Securities:
Not Applicable.
Item 3: Defaults upon Senior Securities:
Not Applicable.
Item 4: Submission of Matters to a Vote of Security Holders:
Not Applicable.
Item 5: Other Information:
Not Applicable.
15
<PAGE>
Item 6: Exhibits and Reports on Form 8-K:
A. Exhibits
* 3.1 Form of Agreement and Plan of Merger between The Vantive
Corporation, a California corporation, and The Vantive
Corporation, a Delaware corporation.
* 3.2 Bylaws.
* 10.1 Form of Indemnity Agreement for officers and directors.
* 10.2 1991 Stock Option Plan, as amended.
* 10.3 1995 Outside Directors Stock Option Plan.
* 10.4 1995 Employee Stock Purchase Plan.
* 10.5 Offer Letter dated May 21, 1993 between the Company and John
R. Luongo.
* 10.6 Offer Letter dated April 6, 1995 between the Company and
John M. Jack.
*+ 10.7 Value Added Reseller License Agreement dated October 5, 1993
by and between Inference Corporation and the Company.
*+ 10.8 Basicscript License Agreement dated October 4, 1994 by and
between Henneberry Hill Technologies Corporation doing
business as Summit Software Company and the Company.
*+ 10.9 International VAR Agreement dated March 26, 1992 between
Oracle Corporation and the Company, as amended.
10.9.1 International VAR Agreement dated June 28, 1996 between
Oracle Corporation and the Company, as amended.
*+ 10.10 Value Added Remarketer Agreement dated December 20, 1991
between Sybase, Inc. and the Company, as amended.
* 10.11 Security and Loan Agreement dated May 12, 1995 between the
Company and Imperial Bank.
*+ 10.12 Application Bridge API VAR License Agreement dated
January 22, 1993 between the Company and Prospect Software,
Inc.
*+ 10.13 Compensation Letter dated May 10, 1995 between the Company
and John R. Luongo.
*+ 10.14 Compensation Letter dated May 10, 1995 between the Company
and Steven M. Goldsworthy.
* 10.15 Lease Agreement dated January 13, 1995 between John
Arrillaga, Trustee, or his Successor Trustee, UTA dated
July 20, 1977 (John Arrillaga Separate Property Trust) as
amended, and Richard T. Peery, Trustee, or his Successor
Trustee, UTA dated July 20, 1977 (Richard T. Peery Separate
Property Trust) as amended, and the Company.
27.1 Financial Summary Table
- -------------------------
* Incorporated by reference from the Company's Registration Statement
(No. 33-94244), declared effective on August 14, 1995.
+ Confidential Treatment has been granted for portions of this exhibit.
B. Reports of Form 8-K
No report of Form 8-K was filed by the Company during the three
month period ended September 30, 1996.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE VANTIVE CORPORATION
Dated: November 11, 1996 By: /s/ Kathleen Murphy
------------------------------
Kathleen Murphy
Chief Financial Officer
(Principal Financial Officer)
Dated: November 11, 1996 By: /s/ Michael M. Loo
------------------------------
Michael M. Loo
Vice President, Finance
(Principal Accounting Officer)
17
<PAGE>
ORACLE
FULL USE AND DEPLOYMENT SUBLICENSE ADDENDUM
This document (the "Addendum") is between Oracle Corporation ("Oracle") and
Vantive Corporation (the "Alliance Member") and shall be governed by the
terms of the Business Alliance Program Agreement between the Alliance Member
and Oracle effective 28-Jun, 1996 (the "Agreement") and the terms set forth
below.
1. PROGRAM DISTRIBUTION
1.1 SUBLICENSE OF PROGRAMS AND TERMS
The Alliance Member shall have the right to market and grant
Sublicenses of Full Use Programs or Deployment Programs which are
available in production release and listed on Oracle's Price List in
effect at the time the Programs are ordered from Oracle to Sublicense
to a Sublicensee: provided, however, the Alliance Member shall have no
right to Sublicense any Programs designated as Oracle Applications
Programs, Oracle Express Programs, Limited Production Programs, or
other Programs specified by Oracle from time-to-time without the prior
written consent of Oracle. The Alliance Members shall have the right
to market and grant Sublicenses of Full Use or Deployment Programs for
use on Designated Systems in conjunction with the Intergrated System to
Sublicensees. Each copy of the Full Use or Deployment Programs
distributed shall be for the Sublicensee's own internal use in the
Territory only on a single Designated System limited to a maximum
number of Users.
To acquire Programs for Sublicensing to Sublicensees, the Alliance
Member shall order such Programs from Oracle. Each order shall specify
the applicable Programs, maximum number of Users, computer/operating
system configuration, fees, shipping location, and any other information
required by Oracle for processing the order. Orders for Trial
Sublicenses shall be clearly marked on the face of the Order Form.
1.2 DISTRIBUTION UNDER ORACLE AGREEMENT
In addition to the Sublicense rights specified in Section 2.3.A of
the Agreement and notwithstanding the terms of such Section and Section
2.3.B of the Agreement, the Alliance Member shall have the right to
market and grant Sublicenses of Full Use Programs and Deployment Programs
in conjunction with the Integrated System to Sublicensees under a standard
Oracle Software License and Services Agreement in lieu of Sublicensing the
Programs under a written Sublicense agreement.
The Alliance Member may submit orders for Sublicenses to Oracle for
its acceptance.
With each such order, the Alliance Member shall submit a standard
Oracle Software License and Services Agreement executed by the applicable
Sublicensee, or shall reference on such order that the Programs will be
licensed to the Sublicensee subject to an existing license agreement
effective between the Sublicensee and Oracle (the "Oracle Agreement").
In addition, as part of the Oracle Agreement, the Alliance Member shall
obtain the Sublicensee's written agreement that the ordered Programs and
services are subject to the terms and conditions of the Oracle Agreement.
If the Sublicensee is a federal agency, the Alliance Member shall
submit with each such order a written document executed by an authorized
Sublicensee contracting officer which contains the following provision:
"This is an open market order placed pursuant to terms identical to the
terms and conditions of Oracle's General Services Administration (GSA)
Schedule A Contract for Oracle Programs current as of the order date,
with the exception of the maximum order limitations, discounts,
maintenance, training units and other discounts specific to the
applicable Oracle GSA Schedule. No other pre-printed or reference terms
and conditions shall apply." This written document shall be deemed the
applicable Oracle Agreement.
For orders which include only shrinkwrapped Oracle Programs, the
Oracle Agreement may consist of a written obligation by the Sublicensee
to use the Programs under the terms of the shrinkwrap license agreement.
The Alliance Member shall indemnify Oracle for any claims, damages,
or losses arising from failure to obtain any Oracle Agreement.
If the order specifies that the Programs are to be delivered to the
Alliance Member, the Alliance Member shall have the right to re-deliver
the Programs with their original package to the applicable Sublicensee.
1.3 FULL USE AND DEPLOYMENT PROGRAMS
For the purposes of this Addendum, "Full Use Programs" shall mean
unaltered versions of the Programs with all functions intact.
"Deployment Programs" shall mean Programs which are limited to use
solely for the purpose of running applications and may not be used to
create or alter tables or reports except as necessary for operating the
applications.
1.4 VALUE-ADDED PACKAGE
For the purposes of this Addendum, "Integrated System" shall mean
the hardware and software products having Value-Added which are developed,
sold, and/or licensed with the Programs to a Sublicensee by the Alliance
Member to satisfy such Sublicensee's internal business requirements and
objectives. For purposes of the Agreement, the Integrated System will be
regarded as the Alliance
<PAGE>
Member's Value-Added Package which is described in the attached Value-
Added Attachment. The Integrated System shall be regarded as "Value-
Added" if the following materials are provided as part of the Integrated
System by the Alliance Member: (a) non-Oracle developed software: (b)
customized programming or customized consulting; and (c) other computer
products or components.
1.5 TRIAL SUBLICENSES
The Alliance Member shall be entitled to grant, at no charge, up to
(10) temporary Trial Sublicenses of the Programs at any one time. Such
Sublicenses shall be for evaluation purposes only and shall be for a
period not to exceed thirty (30) days. The Alliance Member shall pay
Oracle Sublicense fees for any Trial Sublicenses in excess of thirty (30)
days. Each such Trial Sublicense shall be Sublicensed under a Sublicense
agreement which provides for such trial use or under an Oracle Trial
License Agreement, as the applicable Oracle Agreement.
1.6 NO DISTRIBUTORS
The Alliance Member's right to market and grant Sublicenses of Full
Use Programs or Deployment Programs hereunder shall be limited to the
Alliance Member only. The Alliance Member shall not appoint any third
party to distribute the Programs without Oracle's prior written consent.
1.7 DOCUMENTATION
Oracle shall deliver one copy of the applicable Documentation with
each order of Programs for Sublicensing to Sublicensees.
2. SUBLICENSE FEES
2.1 SUBLICENSE FEES AND RATE
For each copy of the Programs Sublicensed by the Alliance Member,
the Alliance Member agrees to pay Oracle a Sublicense fee equal to
seventy percent (70%) of the applicable license fee for each such Program,
as specified in the applicable Price List and Alliance Member Price List
supplement to such Price List in effect at the time the applicable
Programs are Sublicensed to a Sublicensee. The Sublicense fee shall be
calculated effective on the date of the Sublicense, which shall be the
date the Programs are shipped by Oracle or the effective date of the
order to Oracle for such Programs, if no shipment is required.
Fees for Sublicense of Programs shall be due and payable on the date
that Oracle ships the applicable Programs and shall be deemed overdue if
not paid within thirty-one (31) days of the due date. The Alliance
Member shall not be relieved of its obligation to pay Sublicense fees
owed to Oracle by the nonpayment of such fees by the Sublicensee.
2.2 PRICE LIST
As set forth in the Agreement, the applicable Price List for
determining Sublicense fees shall be the standard Price List in effect
at the time the Program is Sublicensed to a Sublicensee. However,
pricing for any federal agency, pursuant to terms and conditions identical
to the terms and conditions of Oracle's GSA Schedule A Contract for Oracle
Programs current as of the order date, shall be based on Oracle's
published GSA Price List.
Notwithstanding any other provision of this Agreement, if the
Alliance Member issues a written Sublicense quote and such quote is
accepted by the applicable Sublicensee, for a period of ninety (90) days
after the date of submission of the quote to the Sublicensee, the fee
applicable to the Programs identified in the quote shall be based on
the Price List in effect on such date.
2.3 USERS
The fees for Sublicense of a Program shall be based and priced on the
applicable User Level for the maximum number of Users for such Program, as
specified in the Price List. The Alliance Member shall have the right to
Sublicense on any User basis specified in the Price List in effect at
the time the applicable Program is Sublicensed to a Sublicensee.
3. TERM
This Addendum shall become effective on the Effective Date of this
Addendum and shall be valid for one (1) year (the "Term"), unless
terminated as provided in the Agreement. Any renewal of this Addendum
shall be subject to renegotiation of terms and fees.
4. TERRITORY
The Alliance Member shall have the right to market and grant
Sublicenses of Full Use Programs or Deployment Programs in the United
States only (the "Territory").
5. TECHNICAL SUPPORT
5.1 TECHNICAL SUPPORT FOR SUBLICENSEES
A Sublicensee may acquire Technical Support services for Full Use
Programs or Deployment Programs Sublicensed under this Addendum from
Oracle at Oracle's standard rates and fee in effect at the time such
Technical Support services are ordered under an Oracle Technical Support
Services Agreement or Oracle Agreement, as applicable.
5.2 TECHNICAL SUPPORT FEES
Oracle agrees that the Alliance Member shall have the right to offer
Oracle annual Technical Support services to Sublicensees in the United
States that are currently acquiring full Use Programs or Deployment
Programs. The Alliance Member shall only offer Oracle Technical Support
services with respect to the initial first year of Technical Support for
a Sublicensed Program. The Alliance Member shall only offer Oracle annual
Technical Support services to a Sublicensee provided that:
A. Oracle receives from the Sublicensee an executed, standard Oracle
Technical Support Services Agreement, Oracle Agreement, or other terms to
govern the Technical Support services as agreed to in writing by Oracle
and the Sublicensee;
B. The Full-Use or Deployment Programs are currently Sublicensed by the
Alliance Member;
C. The Alliance Member pays Oracle its required Sublicense fee for the
applicable Sublicensed Programs as provided under the Agreement, and the
Alliance Member pays Oracle the applicable
2
<PAGE>
Technical Support services fees as set forth herein in advance;
D. The Alliance Member's Sublicense of the Full Use Programs or
Deployment Programs coincides with the agreement to provide Technical
Support Services for such Programs; and
E. The net Technical Support services fees represent new Technical
Support revenue to Oracle.
The Technical Support services fees payable by Alliance Member as
provided above shall be Oracle's standard rates for such services as
provided under the Price List in effect at the time the Technical Support
services are ordered, discounted by ten percent (10%).
6. SUBLICENSE REPORTS
With each order for Programs for Sublicense to a Sublicensee, the
Alliance Member shall send Oracle a report detailing for each Sublicensed
Full Use Program or Deployment Program: Sublicensee name, address,
make/model and operating system of the Designated System. Full Use or
Deployment Programs, maximum number of licensed Users, whether the
Sublicense is a Trial Sublicense, total Program fees and Technical Support
Fees due to Oracle, and specific descriptions of the Integrated System
and Value-Added.
7. ADDITIONAL LICENSES
During the Term, the Alliance Member may order production release
versions of Oracle off-the-shelf Programs available as production release
as of the Effective Date of this Addendum and listed on the Price List in
effect as of such date. The license fee for Development Licenses shall be
equal to Oracle's standard list license fees in effect when an order is
placed. The Alliance Member shall have the right to order Programs for
use as Marketing Support Licenses at no further charge to the Alliance
Member. The Alliance Member may obtain Technical Support services from
Oracle for such Programs under Oracle's applicable Technical Support fees
and policies in effect when such services are ordered.
The effective Date of this Addendum shall be 28-Jun-96.
EXECUTED BY VANTIVE CORPORATION: EXECUTED BY ORACLE CORPORATION:
Authorized Signature: /s/ Mike Loo Authorized Signature: /s/ Lloyd Alexander
--------------- --------------------
Name: Mike Loo Name: Lloyd Alexander
------------------------------- ------------------------------------
Title: V.P. Finance Title: Manager - Western Region
------------------------------ Channels Sales Support
-----------------------------------
ORACLE
Oracle Corporation
500 Oracle Parkway
Redwood Shores, CA 94065
(415) 506-7000
Oracle is a registered trademark of Oracle Corporation.
8-95
3
<PAGE>
VALUE-ADDED ATTACHMENT
Description of Integrated System:
Hardware components:
Software products other than Programs:
Services to be provided by the Alliance Member:
<PAGE>
AMENDMENT ONE
to the
FULL USE AND DEPLOYMENT SUBLICENSE ADDENDUM
between
VANTIVE CORPORATION
and
ORACLE CORPORATION
This document ("Amendment One") shall serve to amend the Full Use and
Deployment Sublicense Addendum and any amendments thereto between Vantive
Corporation (the "Alliance Member") and Oracle Corporation ("Oracle") dated
28-Jun-96 (the "Addendum").
The Addendum is hereby amended as follows:
1. In Section 1.2, delete the sixth paragraph of such Section and replace it
with the following:
"The Alliance Member shall indemnify Oracle for any claims, damages, or
losses arising from failure by the Alliance Member to obtain any Oracle
Agreement."
2. In Section 2.2, at the end of the first paragraph of such Section add the
following:
"All Sublicense fees for Sublicenses installed outside the United States
shall be based on the Oracle Global Price List in effect at the time the
Application Package is Sublicensed."
3. In Section 4, delete the body of such Section in its entirety and replace
it with the following:
"4. TERRITORY
The Alliance Member shall have the right to market and grant
Sublicenses of Programs in the Application Package in all countries
worldwide (the "Territory") subject to the terms of this Section.
Oracle may from time to time deny the Alliance Member the right to
Sublicense in certain countries in the Territory in order to protect
Oracle's interests if, in the reasonable opinion of Oracle's counsel,
such countries (i) do not provide adequate protection for Oracle's
proprietary rights through copyright, trade secret, patent or other laws;
or (ii) have laws or regulations or the government has committed acts which
in the opinion of Oracle's counsel, are injurious to Oracle's interests in
the Programs.
The Alliance Member acknowledges that the Programs are subject to
export controls imposed on Oracle and the Alliance Member by the U.S. Export
Administration Act, United States Departments of Commerce, Treasury, and
State regulations and directives, and other United States law ("Export
laws"). The Alliance Member certifies that neither the Programs nor any
direct product thereof are (i) exported, directly or indirectly, in
violation of Export laws; or (ii) are intended to be used for any purposes
prohibited by the Export laws, including, without limitation, nuclear,
chemical or biological weapons proliferation. Furthermore, the Alliance
Member shall not transfer
<PAGE>
the Programs outside of the territory for which the Alliance Member has
Sublicense rights under this Agreement.
The Alliance Member warrants that it will not grant Sublicenses in or
ship any Programs to a country until it has completed all necessary
government formalities in such country and upon reasonable request by
Oracle, the Alliance Member provides evidence of completion of such
formalities to Oracle. The Alliance Member will indemnify Oracle for any
losses, costs, liability, and damages incurred by Oracle as a result of a
failure by the Alliance Member to comply with the necessary government
requirements in any country. The obligations under this Section shall
survive the expiration or termination of this Addendum. Upon Oracle's
reasonable request, the Alliance Member shall make records available to
Oracle to allow to confirm the Alliance Member's compliance with this
Section."
4. In Section 5.2, delete the words "ten percent (10%)" with and replace it
with the words "fifteen percent (15%)".
Other than the addition of the foregoing, the terms of the Addendum remain
unchanged and in full force and effect.
The Effective Date of this Amendment One is 28-Jun, 1996.
VANTIVE CORPORATION ORACLE CORPORATION
By: /s/ Mike Loo By: /s/ Lloyd Alexander
----------------------- -----------------------------
Name: Mike Loo Name: Lloyd Alexander
--------------------- -----------------------------
Title: Title: Manager-Western Region
VP Finance Channels Sales Support
-------------------- ---------------------------
<PAGE>
ORACLE
APPLICATION SPECIFIC SUBLICENSE ADDENDUM
This document (the "Addendum") is between Oracle Corporation ("Oracle") and
VANTIVE CORPORATION (the "Alliance Member") and shall be governed by the
terms of the Business Alliance Program Agreement between the Alliance Member
and Oracle effective 28-Jun, 1996 (the "Agreement") and the terms set forth
below.
1. SUBLICENSES
1.1 SUBLICENSE PROGRAMS AND TERMS
The Alliance Member may only Sublicense Application Specific Full Use
Programs for which the Alliance Member has previously acquired a
Supported Development License for the applicable Designated System.
Notwithstanding any other provision of this Agreement, the Alliance
Member shall have no right to Sublicense Programs designated as
Oracle Applications Programs. Oracle Express Programs, Limited
Production Programs, or other Programs specified by Oracle from
time-to-time without the prior written consent of Oracle.
The Alliance Member shall have the right to market and grant
Sublicenses of Application Specific Full Use Programs under the
conditions set forth in the Agreement and under the following
restrictions:
A. Sublicense Application Specific Full Use Programs with the
Application Program in the Application Package for use on Designated
Systems to Sublicensees. Each copy of the Application Specific Full
Use Programs distributed shall be for the Sublicensee's own internal
use in the Territory only on a single Designated System limited to a
maximum number of Users; and
B. Make and deliver to the Sublicensee a single copy of the
Application Specific Full Use Programs in the Application Package for
each Sublicense granted.
The Alliance Member shall use all practical means available, both
contractual and technical, to control the restricted use of each
Application Specific Full Use Program Sublicense. If a Sublicensee
uses the Application Specific Full Use Program beyond the limited
functionality described in Section 1.2 hereof, the Alliance Member or
Distributor shall immediately notify the Sublicensee of such
unauthorized use and if the Sublicensee fails to discontinue such
unauthorized use following notification either terminate the
Sublicense or forward to Oracle one hundred percent (100%) of the
applicable Full Use standard Program license fees in effect at the
time the payment is made to Oracle together with a written request by
the Sublicensee for a Full Use Program license from Oracle. Oracle
must approve, in writing, the Sublicensee's request before continued
use of the Programs by the Sublicensee shall be deemed authorized.
1.2 APPLICATION SPECIFIC FULL USE PROGRAMS
For the purposes of this Addendum, "Application Specific Full Use
Program(s)" shall mean Programs which shall be limited to using and
developing in conjunction with the Alliance Member's Application
Program. Each Application Specific Full Use Program licensed under
this Addendum may only be used with the Application Program and may
not be used with other application programs. The Sublicensee may not
use the Application Specific Full Use Programs to create any
additional applications, or for any purpose other than implementation
and support of the Application Program. "Full Use Programs" shall
mean unaltered versions of the Programs with all functions intact.
1.3 VALUE-ADDED PACKAGE
For the purposes of this Addendum, "Application Program(s)" shall
mean the Alliance Member's value-added application software,
described in the attached Application Package Attachment with which
the Application Specific Full Use Programs are to be coupled.
"Application Package(s)" shall mean the Application Specific Full Use
Programs coupled with the Application Programs. For purposes of the
Agreement, the Application Program shall be regarded as the Alliance
Member's Value-Added Package.
1.4 TRIAL SUBLICENSES
The Alliance Member and its Distributors shall be entitled to grant,
at no charge, up to a maximum combined total of ten (10) temporary
Trial Sublicenses of the Application Package at any one time. Such
Sublicenses shall be for evaluation purposes only and shall be for a
period not to exceed thirty (30) days. The Alliance Member shall pay
Oracle Sublicense fees for any Trial Sublicenses in excess of thirty
(30) days. Each such Trial Sublicense shall be Sublicensed under a
Sublicense agreement which provides for such trial use.
1.5 DISTRIBUTORS
Oracle grants the Alliance Member the right to appoint third parties
("Distributors") to market and Sublicense the Application Specific
Full Use Programs in the Territory, under the terms of the Agreement
and this Addendum. However, Distributors shall have no right to make
copies of the Programs for Sublicensing and shall obtain all such
Programs from the Alliance Member. Each Distributor shall execute a
written agreement with the Alliance Member binding the Distributor to
provisions substantially similar to those contained in Sections 2.3,
2.5, 2.6, 5.1, 5.2, 6.1, 6.3, 6.4, 6.5, 7.2.D, 7.5, 8.1, 8.2, 8.3,
8.5, 8.7, 8.9 and 8.11 of the Agreement and to those contained in
Sections 1 (except 1.5), 3, 4, 5, and 6 of this Addendum. Each
obligation of the Alliance Member under such provisions shall also be
applicable to each Distributor. Each Distributor agreement shall also
contain any other provisions necessary for the Alliance Member to
satisfy its commitments under the Agreement. The Alliance
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Member shall notify Oracle promptly in writing of the appointment of
each such Distributor.
In addition, the Alliance Member shall keep executed Distributor
agreements and records of the Distributor information required under
the Alliance Member's Sublicense reports, and shall allow Oracle to
inspect such information as specified under the Agreement. The
Alliance Member will defend and indemnify Oracle against all damages
to Oracle caused by (i) the Distributors' failure to include the
required contractual terms set forth in Section 2.3.B of the
Agreement in each Sublicense agreement, and (ii) the Distributors'
breach of any of the applicable provisions required in its
Distributor agreement.
1.6 DOCUMENTATION
The Alliance Member shall be responsible for providing documentation
for Sublicensees. The Alliance Member shall have the right to
incorporate portions of the Documentation into the Alliance Member's
documentation, subject to the provisions of Section 8.2 of the
Agreement.
2. SUBLICENSE FEES
2.1 SUBLICENSE FEES AND RATE
For each copy of the Programs Sublicensed by the Alliance Member or
its Distributor in the Application Package, the Alliance Member
agrees to pay Oracle a Sublicense fee equal to fifty percent (50%) of
the applicable license fee for each such Program, as specified in the
applicable Price List and Alliance Member Price List supplement to
such Price List in effect at the time the applicable Programs are
Sublicensed.
As further specified in Section 6 of this Addendum, Sublicense fees
shall be due and payable within twenty (20) days of the last day of
each month. The Alliance Member shall not be relieved of its
obligation to pay Sublicense fees owed to Oracle by the nonpayment of
such fees by the Sublicensee.
On or after each anniversary during the Term of this Addendum, Oracle
may amend the Sublicense fee percentage rate set forth above based on
Oracle's then-current standard Sublicense fee percentage rate
schedule and the actual amount of Sublicense fees received by Oracle
hereunder.
2.2 PRICE LIST FOR SUBLICENSES
Notwithstanding any other provision of the Agreement, the applicable
Price List for determining Sublicense fees shall be the standard
Price List in effect at the time the Application Package is
Sublicensed.
Notwithstanding any other provision of this Agreement, if the
Alliance Member issues a written Sublicense quote and such quote is
accepted by the applicable Sublicensee, for a period of ninety (90)
days after the date of submission of the quote to the Sublicensee,
the Sublicense fee applicable to the Programs identified in the quote
shall be based on the Price List in effect on such date.
2.3 USERS
The Sublicense fees for a Program shall be based and priced on the
applicable User Level for the maximum number of Users for such
Program, as specified in the Price List. The Alliance Member shall
have the right to Sublicense Programs on any User basis specified in
the Price List in effect at the time the applicable Program is
Sublicensed.
3. TERM
This Addendum shall become effective on the Effective Date of this
Addendum and shall be valid for three (3) years (the "Term") from the
Effective Date, unless terminated as provided in the Agreement. Any
renewal of this Addendum shall be subject to renegotiation of terms
and fees.
Unless the expiration or termination is for default by the Alliance
Member, the Alliance Member may continue using the release of the
Programs then in the Alliance Member's possession on the Designated
Systems for which Development Licenses were granted, solely for the
purpose of continuing technical support for Sublicenses granted prior
to termination. Such continued use of the Programs shall be subject
to all the provisions of this Agreement, including, without
limitation, payment of the Technical Support Fees specified herein.
4. TERRITORY
The Alliance Member shall have the right to market and grant
Sublicenses of Programs in the United States only (the "Territory").
5. TECHNICAL SUPPORT
5.1 TECHNICAL SUPPORT FOR SUBLICENSEES
A. INSTALLATION
The Alliance Member or its Distributors will be responsible for any
assistance needed to install the Application Package at Sublicensee
sites.
B. SUBLICENSING SUPPORT
The Alliance Member is responsible for providing all technical
support, training and consultations to its Sublicensees and
Distributors. In consideration of the payments specified in Section
5.2, the Alliance Member shall have the right to use the Oracle
Technical Support services acquired for its Supported Development
Licenses to provide technical support services to its Sublicensees as
further set forth in the Agreement. The Alliance Member shall
continuously maintain Oracle Technical Support services for the
Development Licenses during the period during which the Alliance
Member provides technical support services to any Sublicensees. Any
questions from the Alliance Member's Sublicensees or Distributors
will be referred by Oracle to the Alliance Member.
5.2 TECHNICAL SUPPORT FEES
For Technical Support services for Sublicensees, each year the
Alliance Member agrees to pay Oracle annual Technical Support Fees
for each Application Specific Full Use Program Sublicensed under this
Addendum, a previous Alliance Member Addendum, or previous
distribution agreement between the parties hereto where the
Sublicensee received technical support services for such Application
Specific Full Use Program during the applicable support period.
Annual Technical Support Fees for a Program shall be equal to the
applicable Technical Support percentage rate for the highest
Technical Support services level selected by the Alliance Member for
Technical Support services for any
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Development License used under this Addendum of the cumulative
Sublicense fees accrued to Oracle for such supported Program.
Upon December 31 of each year, the Alliance Member shall provide to
Oracle a report setting forth all of the Alliance Members'
Sublicenses and those Sublicensed Programs which were supported by
the Alliance Member during the calendar year. The report shall also
include the applicable Technical Support Fees due and payable to
Oracle for such calendar year. The Alliance Member shall provide
Oracle with payment of all Technical Support Fees for such calendar
year required under the applicable December 31 report with such
report in the form of a check made out in the amount of such fees.
All Technical Support Fees paid to Oracle are noncancelable and
nonrefundable.
6. SUBLICENSE REPORTS
Within twenty (20) days of the last day of each month, the Alliance
Member shall send Oracle a report detailing for that month:
A. For each Sublicensed Application Package shipped during the prior
month, Sublicensee name, address, make/model and operating system of
the Designated System, date of shipment, Application Specific Full
Use Programs shipped, maximum number of licensed Users, whether the
Sublicense is a Trial Sublicense, and total Sublicense fees and
Technical Support Fees due to Oracle:
B. For each Application Program licensed to end-users to be used
with previously installed software licensed by Oracle in conjunction
with the Application Program, Sublicensee name, address, make/model
and operating system of the computer, and date of installation; and
C. The Distributor agreements executed during the prior month,
including names and addresses of the Distributors.
The Alliance Member shall require its Distributors to report this
information to the Alliance Member on a monthly basis and will
include it in the report for the month in which the Alliance Member
received the information. The Alliance Member shall provide Oracle
with payment of all fees required under the monthly report with such
report in the form of a check made out in the amount of such fees.
7. ADDITIONAL LICENSES
During the Term, the Alliance Member may order production release
versions of Oracle off-the-shelf Programs available as production
release as of the Effective Date of this Addendum and listed on the
Price List in effect as of such date. The license fee for Development
Licenses shall be equal to Oracle's standard list license fees in
effect when an order is placed. The Alliance Member shall have the
right to order Programs for use as Marketing Support Licenses at no
further charge to the Alliance Member. The Alliance Member may obtain
Technical Support services from Oracle for such Programs under
Oracle's applicable Technical Support fees and policies in effect
when such services are ordered.
The Effective Date of this Addendum shall be 28-Jun-96.
EXECUTED BY VANTIVE CORPORATION: EXECUTED BY ORACLE CORPORATION:
Authorized Signature: /s/ Mike Loo Authorized Signature: /s/ Lloyd Alexander
--------------- ---------------------
Name: Mike Loo Name: Lloyd Alexander
------------------------------- -------------------------------------
Title: VP Finance Title: Manager - Western Region
Channels Sales Support
------------------------------ ------------------------------------
ORACLE
Oracle Corporation
500 Oracle Parkway
Redwood Shores, CA 94065
(415) 506-7000
Oracle is a registered trademark or Oracle Corporation.
8-95
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APPLICATION PACKAGE ATTACHMENT
Name of Application Program and Application Package which the Alliance Member
will be Sublicensing under the Agreement (may not contain the trademarks
"Oracle" or "Ora" or any portion thereof):
Description of Application Package:
Modules:
Functions and Objectives:
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AMENDMENT ONE
TO THE
APPLICATION SPECIFIC SUBLICENSE ADDENDUM
BETWEEN
VANTIVE CORPORATION
AND
ORACLE CORPORATION
This document (Amendment One) shall serve to amend the Application Specific
Sublicense Addendum between Vantive Corporation (the "Alliance Member") and
Oracle Corporation ("Oracle") dated 28-Jun, 1996 (the "Addendum").
The Addendum is hereby amended as follows:
1. In Section 1.1, add the words "...to it," after the word "available" in
the first sentence of the third paragraph of such Section.
2. In Section 2.1, delete the last paragraph of such Section 2.1 and replace
it with the following:
"On or after each anniversary during the Term of this Addendum, Oracle
may amend the Sublicense fee percentage rate set forth above upon 90 days
prior written notice based on Oracle's then-current standard Sublicense
fee percentage rate schedule and the actual amount of Sublicense fees
received by Oracle hereunder."
3. In Section 2.2, after the first paragraph of such Section add the
following new paragraph:
"All Sublicense fees for Sublicenses installed outside the United
States shall be based on Oracle's Global Price List in effect at the time
the Application Package is Sublicensed."
4. In Section 4, delete the body of such Section and replace it with the
following:
4. TERRITORY
The Alliance Member shall have the right to market and grant
Sublicenses of Programs in the Application Package in all countries
worldwide (the "Territory") subject to the terms of this Section.
Oracle may from time to time deny the Alliance Member the right
to Sublicense in certain countries in the Territory in order to protect
Oracle's interests if, in the reasonable opinion of Oracle's counsel,
such countries (i) do not provide adequate protection for Oracle's
proprietary rights through copyright, trade secret, patent, or other
laws; or (ii) have laws or regulations or the government has committed
acts which in the opinion of Oracle's counsel, are injurious to Oracle's
interests in the Programs.
The Alliance Member acknowledges that the Programs are subject to
export controls imposed on Oracle and the Alliance Member by the U.S.
Export Administration
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Act, United States Departments of Commerce, Treasury, and State
regulations and directives, and other United States law ("Export Laws").
The Alliance Member certifies that neither the Programs nor any direct
product thereof are (i) exported, directly or indirectly, in violation of
Export laws; or (ii) are intended to be used for any purposes prohibited
by the Export laws, including, without limitation, nuclear, chemical, or
biological weapons proliferation. Furthermore, the Alliance Member shall
not transfer the Programs outside of the territory for which the Alliance
Member has Sublicense rights under this Agreement.
The Alliance Member warrants that neither it nor its Distributors will
grant Sublicenses in or ship any Programs to a country until it (or the
Distributor) has completed all necessary government formalities in such
country and upon reasonable request by Oracle, the Alliance Member (or
its Distributor) provides evidence of completion of such formalities to
Oracle. The Alliance Member will indemnify Oracle for any losses, costs,
liability, and damages incurred by Oracle as a result of a failure by
the Alliance Member or its Distributors to comply with the necessary
government requirements in any country. The obligations under this
Section shall survive the expiration or termination of this Addendum.
Upon Oracle's reasonable request, the Alliance Member shall make records
available to Oracle to allow to confirm the Alliance Member's compliance
with this Section."
5. In Section 5.1.B, add the words "Except as otherwise provided in this
Section" at the beginning of the first sentence in such Section.
After Section 5.1.B, add the following new paragraph:
"Sublicensees may acquire Oracle Technical Support services for the
Sublicensed Programs directly from Oracle at Oracle's standard rates and
fees in effect at the time such Technical Support services are ordered
from Oracle under an Oracle Technical Support Services Agreement executed
by the applicable Sublicensee and Oracle and upon execution of a standard
Oracle Technical Support policies statement letter applicable to Technical
Support services for Programs in Sublicensed in an Application Package."
6. In Section 5.2, add the following new paragraphs at the end of such
Section:
"Further, Oracle agrees that the Alliance Member shall have the right to
offer Oracle annual Technical Support services to Sublicensees in the
United States that are currently acquiring Application Specific Full Use
Programs. The Alliance Member shall only offer Oracle Technical Support
services with respect to the initial first year of Technical Support for
a Sublicensed Program. The Alliance Member shall only offer Oracle annual
Technical Support services to a Sublicensee provided that:
A. Oracle receives from the Sublicensee an executed, standard
Oracle Technical Support Services Agreement, Oracle Agreement, or other
terms to govern the Technical Support services as agreed to in writing
by Oracle and the Sublicensee:
B. The Application Specific Full Use Programs are currently
Sublicensed by the Alliance Member:
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C. The Alliance Member pays Oracle its required Sublicense fee
for the applicable Sublicensed Programs as provided under the Agreement,
and the Alliance Member pays Oracle the applicable Technical Support
services fees as set forth herein in advance:
D. The Alliance Member's Sublicense of the Application Specific
Full Use Programs coincides with the agreement to provide Technical
Support Services for such Programs; and
E. The net Technical Support services fees represent new
Technical Support revenue to Oracle.
The Technical Support services fees payable by Alliance Member as provided
above shall be Oracle's standard rates for such services as provided
under the Price List in effect at the time the Technical Support services
are ordered, discounted by fifteen percent (15%)."
Other than the addition of the provisions above, the Addendum remains
unchanged and in full force and effect.
The Effective Date of this Amendment One is 28-Jun, 1996.
VANTIVE CORPORATION ORACLE CORPORATION
By: /s/ Mike Loo By: /s/ Lloyd Alexander
------------------------ ----------------------------
Name: Mike Loo Name: Lloyd Alexander
---------------------- --------------------------
Title: V.P. Finance Title: Manager-Western Region
--------------------- Channels Sales Support
-------------------------
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ORACLE
BUSINESS ALLIANCE PROGRAM AGREEMENT
This Business Alliance Program Agreement (the "Agreement") is between Oracle
Corporation with its principal place of business at 500 Oracle Parkway,
Redwood City, California 94065 ("Oracle") and Vantive Corporation (legal
name) with its principal place of business at 2455 Augustine Drive Santa
Clara CA 95054 (the "Alliance Member"). The terms of this Agreement shall
apply to each Program license granted and to all services provided by Oracle
under this Agreement. When completed and executed by both parties, an Order
Form shall evidence the Program licenses granted and the services that are to
be provided.
1. DEFINITIONS
1.1 "COMMENCEMENT DATE" Shall mean the date on which the Programs are
delivered by Oracle, or if no delivery is necessary, the Effective Date
set forth on the relevant Order Form.
1.2 "DESIGNATED SYSTEM" shall mean the computer hardware and operating
system designated on the relevant Order Form or Sublicense report for
use in conjunction with a Sublicensed Program, Development license, or
Marketing Support License.
1.3 "ORDER FORM" shall mean the document by which the Alliance Member
orders Program licenses, Sublicenses, and services, and which is agreed
to by the parties. The Order Form shall reference the Effective Date of
this Agreement.
1.4 "PRICE LIST" shall mean Oracle's standard commercial fee schedule that
is in effect when a Program license, Sublicense, or services are ordered
by the Alliance Member.
1.5 "PROGRAM" shall mean the computer software in object code form owned or
distributed by Oracle for which the Alliance Member is granted a license
or grants a Sublicense pursuant to this Agreement; the user guides and
manuals for use of the software ("Documentation"); and Updates. "LIMITED
PRODUCTION PROGRAM" shall mean a Program not specified on the Price List
or which is designated as Limited Production by Oracle.
1.6 "SUBLICENSE ADDENDA" shall mean the addenda to this Agreement
specifying additional Sublicense terms and Sublicense rates and fees for
the various types of Sublicenses which may be granted by the Alliance
Member.
1.7 "SUBLICENSE" shall mean a nonexclusive, nontransferable right granted
by or through the Alliance Member to an end user to use an object code
copy of the Programs with the Value-Added Package under authority of a
Sublicense Addendum. "Sublicensee" shall mean a third party who is
granted a Sublicense of the Programs with the Value-Added Package for
such party's own internal data processing purposes and not for purposes
of any further distribution.
1.8 "SUPPORTED PROGRAM LICENSE" shall mean a Development License or
Marketing Support License for which the Alliance Member has ordered
Technical Support for the relevant time period. "TECHNICAL SUPPORT"
shall mean Program support provided under Oracle's policies in effect
on the date Technical Support is ordered.
1.9 "UPDATE" shall mean a subsequent release of a Program which is
generally made available for Supported Program licenses at no additional
charge, other than media and handling charges. Update shall not include
any release, option or future product which Oracle licenses separately.
1.10 "USER," unless otherwise specified in the Order Form or Sublicense
report for a user type specified in the Price List in effect when the
Program is Sublicensed, shall mean a specific individual employed by the
Alliance Member or Sublicensee (as the case may be) who is authorized by
such party to use the Programs, regardless of whether the individual is
actively using the Programs at any given time.
1.11 "VALUE-ADDED PACKAGE" shall mean the hardware or software products or
services having added value which are developed, sold, and/or licensed
with the Programs to a Sublicensee by the Alliance Member, as provided
under the applicable Sublicense Addenda.
2. LICENSES GRANTED
2.1 DEVELOPMENT LICENSES AND TRIAL LICENSES
A. Oracle grants to the Alliance Member a nonexclusive license to
use the Development licenses the Alliance Member obtains under this
Agreement and applicable Sublicense Addenda, as follows:
1. to develop or prototype the Value-Added Package on the Designated
System or on a backup system if the Designated System is inoperative,
up to any applicable maximum number of designated Users or other such
limitation as may be applicable.
2. to demonstrate the Programs to potential Sublicensees solely in
conjunction with the Value-Added Package;
3. to provide training and technical support to employees and to
customers solely in conjunction with the Value-Added Package;
4. to use the Documentation provided with the Programs in support of
the Alliance Member's authorized use of the Programs; and
5. to copy the Programs for archival or backup purposes; no other
copies shall be made without Oracle's prior written consent. All titles,
trademarks, and copyright and restricted rights notices shall be
reproduced in such copies. All archival and backup copies of the Programs
are subject to the terms of this Agreement.
B. The Alliance Member may order temporary trial licenses ("Trial
Licenses") for its evaluation purposes only, and not for development or
prototype purposes, for use during a period specified in the Order Form.
Each Order Form for Trial Licenses shall clearly state the trial period
and shall identify that the order is for a Trial License.
2.2 MARKETING SUPPORT LICENSES
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Oracle grants to the Alliance Member a nonexclusive license to use
the Marketing Support Licenses the Alliance Member obtains under this
Agreement and applicable Sublicense Addenda, as follows:
A. to demonstrate the Programs to potential Sublicensees solely in
conjunction with the Value-Added Package, up to any applicable maximum
number of designated Users or other such limitation as may be applicable;
B. to develop customized prototypes of the Value-Added Package for
prospective Sublicensees on the Designated System if the Alliance Member
does not receive any fees related to the development of such customized
prototypes;
C. to use the Documentation provided with the Programs in support of
the Alliance Member's authorized use of the programs; and
D. to copy the Programs for archival or backup purposes; no other
copies shall be made without Oracle's prior written consent. All titles,
trademarks, and copyright and restricted rights notices shall be
reproduced in such copies. All archival and backup copies of the programs
are subject to the terms of this Agreement.
2.3 SUBLICENSING
A. LICENSE TO SUBLICENSE PROGRAMS
As further set forth in the applicable Sublicense Addenda,
Oracle hereby grants the Alliance member a nonexclusive, nontransferable
license to market and grant Sublicenses as set forth in such Sublicense
Addenda and at the rates and fees set forth in such Sublicense Addenda.
The Alliance Member shall only have the right to Sublicense Programs
pursuant to an effective Sublicense Addendum between the parties hereto.
B. SUBLICENSE AGREEMENT
Every Sublicense agreement shall include, at a minimum,
contractual provisions which;
1. Restrict use of the Programs to object code, subject to the
restrictions provided under the applicable Sublicense Addenda and
consistent with the Sublicense fees payable to Oracle;
2. Prohibit (a) transfer of the Programs except for temporary
transfer in the event of computer malfunction; (b) assignment,
timesharing and rental of the Programs; and (c) title to the Programs
from passing to the Sublicensee or any other party;
3. Prohibit the reverse engineering, disassembly or decompilation of
the Programs and prohibit duplication of the Programs except for a single
backup or archival copy;
4. Disclaim, to the extent permitted by applicable law, Oracle's
liability for any damages, whether direct, indirect, incidental or
consequential, arising from the use of the Programs;
5. Require the Sublicensee, at the termination of the Sublicense, to
discontinue use and destroy or return the Alliance Member all copies of
the Programs and Documentation;
6. Prohibit publication of any results of benchmark tests run on the
Programs;
7. Require the Sublicensee to comply fully with all relevant export
laws and regulations of the United States to assure that neither the
Programs, nor any direct product thereof, are exported, directly or
indirectly, in violation of United States law; and
8. Specify Oracle as a third party beneficiary of the Sublicense
agreement to the extent permitted by applicable law.
C. MARKETING/SUBLICENSING PRACTICES
In marketing and Sublicensing the Programs, the Alliance Member
shall:
1. Not engage in any deceptive, misleading, illegal or unethical
practices that may be detrimental to Oracle or the the Programs;
2. Not make any representations, warranties, or guarantees to
Sublicensees concerning the Programs that are inconsistent with or in
addition to those made in this Agreement or by Oracle; and
3. Comply with all applicable federal, state, and local laws and
regulations in performing its duties with respect to the Programs.
2.4 ACCEPTANCE OF PROGRAMS
For each Program license for which delivery from Oracle is
required under this Agreement, the Alliance Member shall have a 15 day
Acceptance Period, beginning on the Commencement Date, in which to
evaluate the Program. During the Acceptance Period, the Alliance
Member may cancel the license by giving written notice to Oracle
and returning the Program in accordance with Section 6.6 below.
Unless such cancellation notice is given, the license will be
deemed to have been accepted by the Alliance Member at the end of
the Acceptance Period.
2.5 LIMITATIONS ON USE
The Alliance Member shall not use or duplicate the Programs
(including the Documentation) for any purpose other than as
specified in this Agreement or make the Programs available to
unauthorized third parties. The Alliance Member shall not (a) use the
Programs for its internal data processing or for processing customer
data; (b) rent, electronically distribute, or timeshare the Programs or
market the Programs by interactive cable or remote processing services
or otherwise distribute the Programs other than as specified in this
Agreement; or (c) cause or permit the reverse engineering, disassembly,
or decompilation of the Programs.
2.6 TITLE
Oracle shall retain all title, copyright, and other proprietary
rights in the Programs and any modifications or translations thereof.
The Alliance Member and its Sublicensees do not acquire any rights in
the Programs other than those specified in this Agreement.
2.7 TRANSFER OF PROGRAMS
The Alliance Member may transfer a Development License or Marketing
Support License
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within its organization upon notice to Oracle: transfers are subject to
the terms and fees specified in Oracle's transfer policy in effect at
the time of the transfer.
2.8 USE OF PROGRAMS BY AGENTS
The Alliance Member and each Sublicensee (as the case may be) shall
have the right to allow each such party's own third party agents to use
each such party's licensed Programs as licensed or Sublicensed under
this Agreement so long as the applicable party ensures that its agents
use the Programs in accordance with the terms of this Agreement or the
applicable Sublicense agreement.
2.9 PRE-PRODUCTION PROGRAMS
As an accommodation to the Alliance Member, Oracle may supply the
Alliance Member with pre-production releases of Programs (which may be
labeled "Alpha" or "Beta"). These products are not suitable for
production use.
3. TECHNICAL SERVICES
3.1 TECHNICAL SUPPORT SERVICES
Oracle shall provide Technical Support services ordered by the
Alliance Member under Oracle's Technical Support policies in effect on
the data Technical Support is ordered, subject to the payment by the
Alliance Member of the applicable fees. Reinstatement of lapsed
Technical Support services is subject to Oracle's Technical Support
reinstatement fees in effect on the date Technical Support is
reordered. The Alliance Member may obtain Technical Support services
for Limited Production Programs and pre-production releases of Programs
on a time and materials basis.
3.2 TRAINING SERVICES
Oracle will provide training services agreed to by the parties under
the terms of this Agreement. For any on-site services requested by the
Alliance Member, the Alliance Member shall reimburse Oracle for actual,
reasonable travel and out-of-pocket expenses incurred.
4. FEES AND PAYMENTS
4.1 LICENSE FEES AND SUBLICENSE FEES
The Alliance Member may order Development Licenses or Marketing
Support Licenses at the standard Program license fees set forth in the
Price List or at the fees otherwise provided in a Sublicense Addendum.
For each Sublicense granted by the Alliance Member, the Alliance Member
agrees to pay Oracle a Sublicense fee as set forth in the applicable
Sublicense Addenda. The Alliance Member shall not be relieved of its
obligation to pay Sublicense fees owed to Oracle by the nonpayment of
such fees by the Sublicensee.
The Alliance Member is free to determine unilaterally its own
license fees to its Sublicensees. If the Alliance Member or a
Sublicensee upgrades the Programs to a larger computer, transfers the
Programs outside the United States and/or to another operating system,
or increases the licensed number of Users, the Alliance Member will pay
additional Sublicense fees to Oracle as provided under Oracle's
transfer policies and rates in effect at the time the Program is
upgraded or transferred.
4.2 TECHNICAL SUPPORT FEES
Technical Support services ordered by the Alliance Member for
Development Licenses and Marketing Support Licenses will be provided
under Oracle's Technical Support policies and rates in effect on the
date Technical Support is ordered.
4.3 GENERAL PAYMENT TERMS
Except as otherwise provided in a Sublicense Addendum, invoices for
payment of license fees shall be payable 30 days from the Commencement
Date. Technical Support fees for Sublicenses shall be payable as
specified in the applicable Sublicense Addendum. Technical Support fees
for Development Licenses and Marketing Support Licenses shall be
payable annually in advance, net 30 days from the renewal date: such
fees will be those in effect at the beginning of the period for which
the fees are paid. All payments made shall be in United States currency
and shall be made without deductions based on any taxes or
withholdings, except where such deduction is based on gross income. Any
amounts payable by the Alliance Member hereunder which remain unpaid
after the due date shall be subject to a late charge equal to 1.5% per
month from the due date until such amount is paid. The Alliance Member
agrees to pay applicable media and shipping charges. The Alliance
Member shall issue a purchase order, or alternative document
acceptable to Oracle, on or before the Effective Date of the applicable
Order Form.
4.4 TAXES
The fees listed in this Agreement do not include taxes; if Oracle is
required to pay sales, use, property, value-added, or other federal,
state or local taxes based on the licenses granted under this
Agreement, or the Sublicenses granted by the Alliance Member, then such
taxes shall be billed to and paid by the Alliance Member. This shall
not apply to taxes based on Oracle's income.
5. RECORDS
5.1 RECORDS INSPECTION
The Alliance Member shall maintain adequate books and records in
connection with activity under this Agreement. Such records shall
include, without limitation, executed Sublicense agreements, the
information required in or related to the Sublicense reports required
under a Sublicense Addendum, the number of copies of Programs used or
Sublicensed by the Alliance Member, the computers on which the Programs
are installed, and the number of Users using the Programs. Oracle may
audit the relevant books and records of the Alliance Member to ensure
compliance with the terms of this Agreement upon reasonable notice to
the Alliance Member. Any such audit shall be conducted during regular
business hours at the Alliance Member's offices and shall not interfere
unreasonably with the Alliance Member's business activities. If an
audit reveals that the Alliance Member has underpaid fees to Oracle,
the Alliance Member shall be invoiced for such underpaid fees based on
the Price List in effect at the time the audit is completed. If the
underpaid fees exceed five percent (5%) of the applicable license fees
or Sublicense fees paid, then the Alliance Member shall
2
<PAGE>
pay Oracle's reasonable costs of conducting the audit. Audits shall be
made no more than once annually.
5.2 NOTICE OF CLAIM
The Alliance Member will notify the Oracle legal department promptly
in writing of: (a) any claim or proceeding involving the Programs that
comes to its attention and (B) any material change in the management or
control of the Alliance Member.
6. TERM AND TERMINATION
6.1 TERM
This Agreement shall become effective on the Effective Date
and shall be valid until the expiration or termination of all
Sublicense Addenda hereunder, unless terminated earlier as set forth
herein. If not otherwise specified on the Order Form, each Program
license granted under this Agreement shall remain in effect perpetually
under the terms of this Agreement unless the license or this Agreement
is terminated as provided in this Article 6 below. The term of each
Sublicense Addendum hereunder shall be as set forth in each such
Addendum.
6.2 TERMINATION BY THE ALLIANCE MEMBER
The Alliance Member may terminate any Program license, any
Sublicense Addenda, or this Agreement at any time; however, termination
shall not relieve the Alliance Member's obligations specified in
Sections 6.5 and 6.6.
6.3 TERMINATION BY ORACLE
Oracle may terminate any Program license, any Sublicense
Addenda, or this Agreement upon written notice if the Alliance Member
breaches this Agreement and fails to correct the breach within 30 days
following written notice specifying the breach.
6.4 FORCE MAJEURE
Neither party shall be liable to the other for failure or
delay in the performance of a required obligation if such failure or
delay is caused by strike, riot, fire, flood, natural disaster, or
other similar cause beyond such party's control, provided that such
party gives prompt written notice of such condition and resumes its
performance as soon as possible, and provided further that the other
party may terminate this Agreement if such condition continues for a
period of one hundred eighty (180) days.
6.5 EFFECT OF TERMINATION
Upon expiration or termination of a Sublicense Addendum or
this Agreement, all the Alliance Member's rights to market and
Sublicense the Programs as set forth in such Sublicense Addendum or
this Agreement shall cease.
The termination of this Agreement, a Sublicense Addendum, or
any license shall not limit either party from pursuing any other
remedies available to it, including injunctive relief, nor shall such
termination relieve the Alliance Member's obligation to pay all fees
that have accrued or that the Alliance Member has agreed to pay under a
Sublicense Addendum or any Order Form, other similar ordering document
under this Agreement, or that appear in a Sublicense report. The
parties' rights and obligations under Sections 2.5, 2.6, 2.7 and
Articles 4, 5, 6, 7, and 8 shall survive termination of this Agreement.
6.6 HANDLING OF PROGRAMS UPON TERMINATION
If a license granted under this Agreement expires or
otherwise terminates, the Alliance Member shall: (a) cease using the
applicable Programs; and (b) certify to Oracle within one month after
expiration or termination that the Alliance Member has destroyed or has
returned to Oracle the Programs and all copies. This requirement
applies to copies in all forms, partial and complete, in all types of
media and computer memory, and whether or not modified or merged into
other materials. Before returning Programs to Oracle, the Alliance
Member shall acquire a Return Material Authorization ("RMA") number
from Oracle.
7. INDEMNITY, WARRANTIES, REMEDIES
7.1 INFRINGEMENT INDEMNITY
Oracle will defend and indemnify the Alliance Member against
a claim that Programs infringe a copyright or patent, provided that:
(a) the Alliance Member notifies Oracle in writing within 30 days of
the claim; (b) Oracle has sole control of the defense and all related
settlement negotiations; and (c) the Alliance Member provides Oracle
with the assistance, information and authority necessary to perform
Oracle's obligations under this Section. Reasonable out-of-pocket
expenses incurred by the Alliance Member in providing such assistance
will be reimbursed by Oracle.
Oracle shall have no liability for any claim of infringement
based on use of a superseded or altered release of Programs if the
infringement would have been avoided by the use of a current unaltered
release of the Programs which Oracle provides to the Alliance Member.
In the event the Programs are held or are believed by Oracle
to infringe, Oracle shall have the option, at its expense, to (a)
modify the Programs to be noninfringing; (b) obtain for the Alliance
Member a license to continue using the Programs; or (c) terminate the
license for the infringing Programs and refund the license fees paid
for those Programs, prorated over a five year term from the
Commencement Date. This Section 7.1 states Oracle's entire liability
and the Alliance Member's exclusive remedy for infringement.
7.3 WARRANTIES AND DISCLAIMERS
A. PROGRAM WARRANTY
Oracle warrants for a period of one year from the
Commencement Date that each unmodified Program for which the Alliance
Member has a Supported Program License will perform the functions
described in the Documentation provided by Oracle when operated on the
Designated System.
B. MEDIA WARRANTY
Oracle warrants the tapes, diskettes or other media to be
free of defects in materials and workmanship under normal use for 90
days from the Commencement Date.
C. SERVICES WARRANTY
Oracle warrants that its Technical Support and training
services will be performed consistent with generally accepted industry
standards. This warranty shall be valid for 90 days from performance of
service.
D. DISCLAIMERS
3
<PAGE>
THE WARRANTIES ABOVE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
ORACLE DOES NOT WARRANT THAT THE PROGRAMS WILL RUN PROPERLY
ON ALL HARDWARE, THAT THE PROGRAMS WILL MEET REQUIREMENTS OF THE
ALLIANCE MEMBER OR THE SUBLICENSEES OR OPERATE IN THE COMBINATIONS
WHICH MAY BE SELECTED FOR USE BY THE ALLIANCE MEMBER OR THE
SUBLICENSEES, THAT THE OPERATION OF THE PROGRAMS WILL BE UNINTERRUPTED
OR ERROR FREE, OR THAT ALL PROGRAM ERRORS WILL BE CORRECTED. LIMITED
PRODUCTION PROGRAMS, PRE-PRODUCTION RELEASES OF PROGRAMS, AND
COMPUTER-BASED TRAINING PRODUCTS ARE DISTRIBUTED "AS IS."
The Alliance Member shall not make any warranty on Oracle's
behalf.
7.3 EXCLUSIVE REMEDIES
For any breach of the warranties contained in Section 7.2
above, the Alliance Member's exclusive remedy, and Oracle's entire
liability, shall be:
A. FOR PROGRAMS
The correction of Program errors that cause breach of the
warranty, or if Oracle is unable to make the Program operate as
warranted, the Alliance Member shall be entitled to recover the fees
paid to Oracle for the Program license.
B. FOR MEDIA
The replacement of defective media returned within 90 days of
the Commencement Date.
C. FOR SERVICE
The performance of the services, or if Oracle is unable to
perform the services as warranted, the Alliance Member shall be
entitled to recover the fees paid to Oracle for the unsatisfactory
services.
7.4 INDEMNIFICATION OF ORACLE
The Alliance Member agrees to enforce the terms of its
Sublicense agreements required by this Agreement and to notify Oracle
of any known breach of such terms. The Alliance Member will defend and
indemnify Oracle against:
A. All claims and damages to Oracle arising from any use by the
Alliance Member or its Sublicensees of any product not provided by
Oracle but used in combination with the Programs if such claim would
have been avoided by the exclusive use of the Programs;
B. All claims and damages to Oracle caused by the Alliance
Member's failure to include the required contractual terms set forth in
Section 2.3.B hereof in each Sublicense agreement; and
C. All claims and damages to Oracle caused by Sublicensees'
breach of any of the applicable provisions required by Section 2.3
hereof.
7.5 EQUITABLE RELIEF
The Alliance Member acknowledges that any breach of its
obligations with respect to proprietary rights of Oracle will cause
Oracle irreparable injury for which there are inadequate remedies at
law and that Oracle shall be entitled to equitable relief in addition
to all other remedies available to it.
8. GENERAL TERMS AND CONDITIONS
8.1 NONDISCLOSURE
Neither party shall, without first obtaining the written
consent of the other party disclose the terms and conditions of this
Agreement, except as may be required to implement and enforce the terms
of this Agreement, or as may be required by legal procedures or by law.
No other information exchanged between the parties shall be deemed
confidential unless the parties otherwise agree in writing. The
Alliance Member shall not disclose the results of benchmark tests or
other evaluation of the Programs to any third party without Oracle
prior written approval.
8.2 COPYRIGHTS
The Programs are copyrights by Oracle. The Alliance Member
shall retain all Oracle copyright notices on the Programs used by the
Alliance Member under its Development Licenses or Marketing Support
Licenses. The Alliance Member shall include the following on all copies
of the Programs in software Value-Added Packages incorporating the
Programs distributed by the Alliance Member.
A. A reproduction of Oracle's copyright notice; or
B. A copyright notice indicating that the copyright is vested in
Alliance Member containing the following.
1. A "c" in a circle and the word "copyright";
2. The Alliance Member's name';
3. The date of copyright; and
4. The worlds "All Rights Reserved."
Such notices shall be placed on the Documentation, the
sign-on screen for any software Value-Added package incorporating the
Programs, and the diskette or tape labels. Notwithstanding any
copyright notice by the Alliance Member to the contrary, the copyright
to the Program included in any such application package shall remain in
Oracle. Other than as specified above, on any reproduction or
translation of any Programs, Documentation, or promotional material, the
Alliance Member agrees to reproduce Oracle's copyright notices intact.
8.3 TRADEMARKS
"Oracle" and any other trademarks and service marks adopted
by Oracle to identify the Programs and other Oracle products and
services belong to Oracle; the Alliance Member will have no rights in
such marks except as expressly set forth herein and as specified in
writing from time to time. The Alliance Member's use of Oracle's
trademarks shall be under Oracle's trademark policies and procedures in
effect from time-to-time. The Alliance Member agrees not to use the
trademark "ORACLE," or any mark beginning with the letters "Ora," or
any other mark likely to cause confusion with the trademark "ORACLE" as
any portion of the Alliance Member's tradename, trademark for the
Alliance Members Value-Added Package, or trademark for any other
products of the Alliance Member. The Alliance Member shall have the
right to use the trademark "ORACLE" and other Oracle trademarks solely
to refer to Oracle's Programs, products and services.
4
<PAGE>
The Alliance Member agrees with respect to each registered
trademark of Oracle, to include in each advertisement, brochure, or
other such use of the trademark symbol "circle R" and the following
statement:
_________ is a registered trademark of Oracle Corporation,
Redwood City, California.
Unless otherwise notified in writing by Oracle, the Alliance
Member agrees, with respect to every other trademark of Oracle, to
include in each advertisement, brochure, or other such use of the
trademark, the symbol "TM" and the following statement:
_________ is a trademark of Oracle Corporation.
Redwood City, California
The Alliance Member shall not market the Oracle Programs in
any way which implies that the Oracle Programs are the proprietary
product of the Alliance Member or of any party other than Oracle.
Oracle shall not have any liability to the Alliance Member for any
claims made by third parties relating to the Alliance Member's
use of Oracle's trademarks.
8.4 RELATIONSHIPS BETWEEN PARTIES
In all matters relating to this Agreement, the Alliance
Member will act as an independent contractor. The relationship between
Oracle and the Alliance Member is that of licensor/licensee. Neither
party will represent that it has any authority to assume or create any
obligation, express or implied, on behalf of the other party, nor to
represent the other party as agent, employee, franchisee, or in any
other capacity. Nothing in this Agreement shall be construed to limit
either party's right to independently develop or distribute software
which is functionally similar to the other party's product, so long as
proprietary information of the other party is not included in such
software.
8.5 ASSIGNMENT
The Alliance Member may not assign or otherwise transfer any
rights under this Agreement without Oracle's prior written consent.
8.6 NOTICE
All notices, including notices of address change, required to
be sent hereunder shall be in writing and shall be deemed to have been
given when deposited in first class mail to the first address listed in
the relevant Order Form (if to the Alliance Member) or to the Oracle
address on the Order Form (if to Oracle).
To expedite order processing, the Alliance Member agrees that
Oracle may treat documents faxed by the Alliance Member to Oracle as
original documents; nevertheless, either party may require the other to
exchange original signed documents.
8.7 GOVERNING LAW/JURISDICTION
This Agreement, and all matters arising out of or relating to
this Agreement, shall be governed by the substantive and procedural
laws of the State of California and shall be deemed to be executed in
Redwood City, California. The parties agree that any legal action or
proceeding relating to this Agreement shall be instituted in any state
or federal court in San Francisco or San Mateo County, California.
Oracle and the Alliance Member agree to submit to the jurisdiction of,
and agree that venue is proper in, these courts in any such legal action
or proceeding.
8.8 SEVERABILITY
In the event any provision of this Agreement is held to be
invalid or unenforceable, the remaining provisions of this Agreement
will remain in full force and effect.
8.9 EXPORT
The Alliance Member agrees to comply fully with all relevant
export laws and regulations of the United States ("Export Law") to
assure that neither the Programs, nor any direct product thereof, are
(a) exported, directly or indirectly, in violation of Export Laws; or
(b) are intended to be used for any purposes prohibited by the Export
Laws, including without limitation, nuclear, chemical or biological
weapons proliferation.
8.10 LIMITATION OF LIABILITY
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOSS OF
PROFITS, REVENUE, DATA OR USE, INCURRED BY EITHER PARTY OR ANY THIRD
PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT, EVEN IF THE OTHER
PARTY OR ANY OTHER PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. ORACLE'S LIABILITY FOR DAMAGES HEREUNDER SHALL IN NO EVENT
EXCEED THE AMOUNT OF FEES PAID BY THE ALLIANCE MEMBER UNDER THIS
AGREEMENT, AND IF SUCH DAMAGES RESULT FROM THE ALLIANCE MEMBER'S USE OF
THE PROGRAM OR SERVICES, SUCH LIABILITY SHALL BE LIMITED TO FEES PAID
FOR THE RELEVANT PROGRAM OR SERVICES GIVING RISE TO THE LIABILITY,
PRORATED OVER A FIVE-YEAR TERM FROM THE COMMENCEMENT DATE OF THE
APPLICABLE LICENSE OR THE DATA OF PERFORMANCE OF THE APPLICABLE SERVICES.
The provisions of this Agreement allocate the risks between
Oracle and the Alliance Member. Oracle's pricing reflects this
allocation of risk and the limitation of liability specified herein.
8.11 FEDERAL GOVERNMENT SUBLICENSES
If the Alliance Member grants a Sublicense to the United
States government, the Programs shall be provided with "Restricted
Rights" and the Alliance Member will place a legend, in addition to
applicable copyright notices, on the documentation, and on the tape or
diskette label, substantially similar to the following:
RESTRICTED RIGHTS LEGEND
"Use, duplication of disclosure by the Government is subject to
restrictions as set forth in subparagraph(c)(1)(ii) of the Department
of Defense Regulations Supplement ("DFARS") 252.227-7013, Rights in
Technical Data and Computer Software (October 1988) and Federal
Acquisition Regulation ("FAR") 52.227-14, Rights in Data-General,
including Alternate III (June 1987), as applicable. Oracle Corporation,
500 Oracle Parkway, Redwood City, CA 94065."
8.12 WAIVER
The waiver by either party of any default or breach of this
Agreement shall not constitute a waiver of any other or subsequent
default or breach. Except for actions of non-payment or breach of
Oracle's proprietary rights in the Programs, no action,
5
<PAGE>
regardless of form, arising out of this Agreement may be brought by
either party more than one year after the cause of action has accrued.
ENTIRE AGREEMENT
This Agreement constitutes the complete agreement between the
parties and supersedes all prior or contemporaneous agreements or
representations, written or oral, concerning the subject matter of this
Agreement. This Agreement may not be modified or amended except in a
writing signed by a duly authorized representative of each party; no
other act, document, usage or custom shall be deemed to amend or modify
this Agreement. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute together but one and the same document.
It is expressly agreed that the terms of this Agreement and any
Order Form shall supersede the terms in any Alliance Member purchase
order or other ordering document. This Agreement shall also supersede
the terms of any shrinkwrap or break-the-seal license agreement
included in any package for Oracle-furnished software, except terms
contained in such license agreement that grant specific use rights for
the Programs.
The Effective Date of this Agreement shall be 28-Jun-96.
EXECUTED BY VANTIVE CORPORATION: EXECUTED BY ORACLE CORPORATION:
Authorized Signature: /s/ Mike Loo Authorized Signature: /s/ Lloyd Alexander
------------- --------------------
Name: Mike Loo Name: Lloyd Alexander
---------------------------- ------------------------------------
Title: VP Finance Title: Manager - Western Region
Channels Sales Support
---------------------------- ------------------------------------
Oracle Corporation
500 Oracle Parkway
Redwood Shores, CA 94065
(415) 506-7000
Oracle is a registered trademark of Oracle Corporation.
1-95
6
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