-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G9a8kKaPdQaWUqL0KamAoZhjFuCPZTwaT2tuLg0qT8c93KAdEl2AD5sfs2j2GEpw BH8UAlBmOPs0ehdJOJMLpw== /in/edgar/work/20000811/0000912057-00-036578/0000912057-00-036578.txt : 20000921 0000912057-00-036578.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912057-00-036578 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 40 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIEWLOCITY INC CENTRAL INDEX KEY: 0001103970 STANDARD INDUSTRIAL CLASSIFICATION: [ ] IRS NUMBER: 582494122 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: SEC FILE NUMBER: 333-43568 FILM NUMBER: 694045 BUSINESS ADDRESS: STREET 1: 3475 PIEDMONT STREET 2: STE 1700 CITY: ATLANTA STATE: GA ZIP: 30305 BUSINESS PHONE: 4042676400 MAIL ADDRESS: STREET 1: 3475 PIEDMONT ROAD STREET 2: SUITE 1700 CITY: ATLANTA STATE: GA ZIP: 30305 S-1 1 s-1.txt S-1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 11, 2000 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------ FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------------ VIEWLOCITY, INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 7372 58-2494122 (State or other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification Number)
------------------------------ 3475 PIEDMONT ROAD SUITE 1700 ATLANTA, GEORGIA 30305 (404) 267-6400 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) ------------------------------ MR. GREGORY CRONIN CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER VIEWLOCITY, INC. 3475 PIEDMONT ROAD, SUITE 1700 ATLANTA, GEORGIA 30305 (404) 267-6400 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) ------------------------------ COPIES TO: DAVID M. CALHOUN, ESQ. JOHN J. KELLEY III, ESQ. BROOKS W. BINDER, ESQ. KING & SPALDING BRANDY A. BAYER, ESQ. 191 PEACHTREE STREET MORRIS, MANNING & MARTIN, L.L.P. ATLANTA, GEORGIA 30303 1600 ATLANTA FINANCIAL CENTER (404) 572-4600 3343 PEACHTREE ROAD, NE ATLANTA, GEORGIA 30326-1044 (404) 233-7000
------------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this registration statement is declared effective. If any of the securities being registered on this form are offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act") please check the following box. / / If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------------------ CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF REGISTRATION SECURITIES TO BE REGISTERED OFFERING PRICE (1) FEE Common stock, par value $.01 per share...................... $67,275,000 $17,761
(1) Estimated solely for the purpose of computing the registration fee in accordance with Rule 457(o) under the Securities Act of 1933. -------------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED AUGUST 11, 2000 PROSPECTUS Shares [LOGO] Common Stock This is an initial public offering of common stock by Viewlocity, Inc. We are selling shares of common stock. We anticipate that the initial public offering price will be between $ and $ per share. ------------------- Prior to this offering, there has been no public market for our common stock. We have applied to have the shares of our common stock listed for quotation on the Nasdaq National Market under the symbol VIEW. -------------------
Per Share Total --------- ----------- Initial public offering price............................... $ $ Underwriting discounts and commissions...................... $ $ Proceeds to Viewlocity, before expenses..................... $ $
A selling stockholder has granted the underwriters an option for a period of 30 days to purchase up to additional shares of common stock. We will not receive any of the proceeds from any such sale of shares by the selling stockholder. ------------------- Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 7. ----------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. CHASE H&Q BEAR, STEARNS & CO. INC. WIT SOUNDVIEW , 2000 [Artwork Depicted in Prospectus] 1. Inside front page portrays the following: The title bar at the top of the page states: "A Comprehensive View Across All Your Trading Partners." In the center of the page is a screen shot from Viewlocity's TradeSync-TM-Community Manager product, overlapped with a screen shot from Viewlocity's TradeSync-TM- Shipment Visibility product. In the bottom left of the page is a picture of a man using a notebook computer. Radiating outward below this picture are five pictures. The first picture on the left is a picture of a factory, above which is the text "ERP." Next is a picture of a train, above which is the text "Rail Tracking." Next is a picture of a warehouse with trucks at loading docks, above which is the text "Warehouse Systems." Next is a picture of a truck, above which is the text "Transportation Systems." The last picture is a picture of a man arranging products on shelves, above which is the text "Customer Systems." There are five arrows running from left to right underneath the five pictures. Below the pictures is the text "A New Internet-based Approach to Connecting Your Disparate Systems with Your Partners." In the bottom right corner of the page is the stylized Viewlocity logo. 2. Inside front gate-fold portrays the following: The title bar at the top right of the page states "Viewlocity provides Supply Web Solutions." On the left side of the page are four connected hub-and-spoke diagrams, each consisting of a hub of two concentric circles with spokes radiating outward and circles attached to the spokes. In the center of the top hub-and-spoke diagram is a picture of a power plant. Above the diagram is the text "Manufacturer's e-Business Network." In the center of the left hub-and-spoke diagram is a picture of a warehouse. Underneath the diagram is the text "Procurement Exchanges." In the center of the right hub-and-spoke diagram is a picture of a person at a computer holding a credit card. Underneath the diagram is the text "E-tailer." In the center of the bottom hub-and-spoke diagram is the picture of a truck. Underneath the diagram is the text "Logistics Service Provider." On the right side of the page are five bullets of text. The first bullet states "Integrate diverse applications." The second bullet states "Simplify trading partner connectivity." The third bullet states "Monitor shared supply web activities." The fourth bullet states "Manage interactive business processes." The fifth bullet states "Enable corrective action in real-time." In the bottom right corner of the page is the stylized Viewlocity logo. TABLE OF CONTENTS
PAGE -------- Prospectus Summary.......................................... 3 Risk Factors................................................ 7 Forward-Looking Statements.................................. 16 Use of Proceeds............................................. 16 Dividend Policy............................................. 16 Capitalization.............................................. 17 Dilution.................................................... 18 Selected Consolidated Financial Data........................ 19 Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 20 Business.................................................... 33 Management.................................................. 48 Related Party Transactions.................................. 55 Principal and Selling Stockholders.......................... 58 Description of Capital Stock................................ 60 Shares Eligible for Future Sale............................. 63 Underwriting................................................ 65 Legal Matters............................................... 67 Experts..................................................... 67 Where You Can Find More Information......................... 68 Index to Consolidated Financial Statements.................. F-1
------------------------ In this prospectus, "Viewlocity," "us," we" and "our" refer to Viewlocity, Inc. and its subsidiaries, unless the context otherwise requires. AMTRIX-REGISTERED TRADEMARK-, TRADESYNC-TM- AND VIEWLOCITY-TM- ARE OUR TRADEMARKS. THIS PROSPECTUS ALSO INCLUDES TRADEMARKS, SERVICE MARKS AND TRADE NAMES OF OTHER COMPANIES. 2 PROSPECTUS SUMMARY THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS. THIS SUMMARY MAY NOT CONTAIN ALL THE INFORMATION YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING "RISK FACTORS" AND THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES THERETO, BEFORE MAKING AN INVESTMENT DECISION. VIEWLOCITY, INC. WHO WE ARE We are a leading global provider of e-business applications and integration software and services that enable e-business networks and synchronize supply webs. Our solutions for trading communities and e-business networks provide application integration, business-to-business integration and trading community management. In addition, our synchronization solutions provide for the automation of business processes and information flows between customers, suppliers and trading communities, and offer decision support applications for managing the flow of goods and services throughout the supply web. We believe that we are the first e-business network solutions provider to offer business value by combining integration applications with supply chain domain expertise and supply web applications. Our products and services integrate diverse platforms and applications, simplify the connection of trading partners to networks, monitor shared supply web activities and information, model and manage interactive business processes, and allow our customers to interpret and react in real time to events that could jeopardize shared operations. Our solutions enable our customers to create value by accelerating their time to market, increasing their market share and revenue opportunities, improving asset utilization, reducing inventory and logistics expenses and improving customer satisfaction. We believe our Internet-based supply web synchronization components provide a significant competitive advantage. Our solutions use monitoring and notification capabilities in combination with event-based business rules to provide trading partners with suggested responses to flagged events via early detection and automatic response to execution exceptions. We have implemented solutions that automate, extend and synchronize the supply web operations of multi-national consumer products companies, leading logistics service providers, online trading exchanges and e-business networks. As of June 30, 2000, we had over 1,000 customers worldwide with over 3,200 product implementations. OUR MARKET As new business models emerge during the rapid evolution of Internet-based collaboration among businesses and the related formation of e-business networks, integration and synchronization become essential to this new environment. We believe that to remain competitive, e-business networks must fully synchronize their logistics operations with those of their trading partners. This increases the pressure placed upon all members of the extended supply web to integrate, automate and improve the efficiency of all supply web transactions. We believe that other providers do not offer a solution that combines business- to-business, or B2B, integration solutions with supply web logistics solutions. Our comprehensive solution provides components that synchronize the supply web to drive business value. A significant opportunity exists to provide companies with the ability to accelerate their time to market globally and to synchronize their supply webs, leveraging the full potential of the e-business network. OUR STRATEGY Our strategy is to strengthen our position as a leading global provider of comprehensive solutions that integrate complex e-business networks. We intend to expand our e-business technology and application leadership. In addition, we intend to increase our supply chain domain expertise through research and development and additional personnel. Our sales strategy is to focus on selected high-growth, global 3 markets, including third-party logistics, technology, consumer packaged goods, e-commerce and traditional retail and apparel. We intend to support and leverage our existing customers and to increase our visibility to prospective customers within their existing trading communities. We also will continue to pursue acquisitions and investments in complementary businesses that provide us with opportunities for enhanced product and service offerings, additional technology solutions and new distribution channels. COMPANY INFORMATION We were incorporated in Delaware in February 1999. Prior to our incorporation, our business was a division of Frontec AB, a Swedish corporation publicly traded on the OM Stock Exchange (formerly the Stockholm Stock Exchange). Our company was formed with the existing assets and operations of Frontec AB's AMTrix software division. Our headquarters are located at 3475 Piedmont Road, Suite 1700, Atlanta, Georgia 30305, our telephone number is (404) 267-6400 and our web site address is WWW.VIEWLOCITY.COM. Information contained on our web site does not constitute part of this prospectus, and you should rely only on the information contained in this prospectus in deciding whether to invest in our common stock. 4 THE OFFERING Common stock offered by Viewlocity................. shares Common stock to be outstanding after this shares offering......................................... Use of proceeds.................................... For repayment of debt and general corporate purposes, including working capital, sales and marketing, product development and potential acquisitions. See "Use of Proceeds." Proposed Nasdaq National Market symbol............. VIEW
The number of shares to be outstanding after this offering is based on the number of shares outstanding as of June 30, 2000, and does not include the following: - 5,213,890 common shares subject to options outstanding as of June 30, 2000, at a weighted average exercise price of $1.22 per share; - 595,750 common shares subject to warrants outstanding as of June 30, 2000, at a weighted average exercise price of $1.17 per share; and - 2,364,410 additional common shares reserved for issuance under our stock incentive plan and 2,500,000 common shares reserved for issuance under our employee stock purchase plan. ------------------- EXCEPT AS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS: - REFLECTS THE ISSUANCE OF AN ASSUMED AGGREGATE OF 5,411,745 SHARES OF OUR SERIES B CONVERTIBLE PREFERRED STOCK UPON THE CASHLESS EXERCISE OF OUTSTANDING WARRANTS, THE CONVERSION OF ALL OUTSTANDING SHARES OF OUR SERIES A, B, D AND E CONVERTIBLE PREFERRED STOCK INTO AN AGGREGATE OF 29,883,484 SHARES OF OUR COMMON STOCK, AND THE CONVERSION OF ALL OUTSTANDING SHARES OF OUR SERIES C CONVERTIBLE PREFERRED STOCK INTO AN ASSUMED 2,562,500 SHARES OF OUR COMMON STOCK, EACH OF WHICH WILL OCCUR IMMEDIATELY UPON THE COMPLETION OF THIS OFFERING; - REFLECTS THE AMENDMENT AND RESTATEMENT OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS, WHICH WILL OCCUR IMMEDIATELY BEFORE THE COMPLETION OF THIS OFFERING; AND - ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. 5 SUMMARY CONSOLIDATED FINANCIAL DATA The following is a summary of the consolidated financial data for our company. You should read this information together with the consolidated financial statements and the related notes appearing at the end of this prospectus and the information under "Management's Discussion and Analysis of Financial Condition and Results of Operations." The pro forma consolidated balance sheet data below gives effect to the issuance of an assumed aggregate of 5,411,745 shares of our Series B convertible preferred stock upon the cashless exercise of outstanding warrants, the conversion of all outstanding shares of our Series A, B and D convertible preferred stock into an aggregate of 25,875,418 shares of our common stock, and the conversion of all outstanding shares of our Series C convertible preferred stock into an assumed 2,562,500 shares of our common stock, each of which will occur immediately upon the completion of this offering, as if the exercise and conversion occurred on March 31, 2000. The pro forma as adjusted consolidated balance sheet data summarized below also reflects the sale of the common stock in this offering after deducting underwriting discounts and estimated offering expenses payable by us.
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, ------------------------------ ------------------- 1997 1998 1999 1999 2000 -------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenue..................................................... $11,694 $13,664 $ 19,448 $ 4,838 $ 6,473 Gross profit................................................ 7,430 7,325 8,264 2,936 3,304 Operating loss.............................................. (9,643) (9,469) (20,340) (1,305) (15,795) ------- ------- -------- ------- -------- Net loss.................................................... $(9,661) $(9,630) $(20,413) $(1,401) $(15,746) ======= ======= ======== ======= ======== Net loss per share: Basic and diluted......................................... $ (0.28) $ (0.28) $ (0.60) $ (0.04) $ (0.51) ======= ======= ======== ======= ======== Weighted average shares used in computation............... 34,062 34,062 34,062 34,062 30,867 ======= ======= ======== ======= ======== Pro forma net loss per share (unaudited): Basic and diluted......................................... $ (0.28) $ (0.28) $ (0.47) $ (0.04) $ (0.30) ======= ======= ======== ======= ======== Weighted average shares used in computation............... 34,062 34,062 43,858 35,676 53,238 ======= ======= ======== ======= ========
MARCH 31, 2000 ---------------------------------- PRO FORMA ACTUAL PRO FORMA AS ADJUSTED -------- --------- ----------- (IN THOUSANDS) (UNAUDITED) CONSOLIDATED BALANCE SHEET DATA: Cash and cash equivalents................................... $ 6,923 $ 6,923 Working capital............................................. 3,036 3,036 Total assets................................................ 26,247 26,247 Capital lease obligation, less current portion.............. 968 968 Redeemable, convertible preferred stock..................... 41,999 -- Total stockholders' equity (deficit)........................ (30,571) 11,428
This table does not include: - 5,730,949 common shares subject to outstanding options as of March 31, 2000, at a weighted average exercise price of $1.20 per share; - 595,750 common shares subject to outstanding warrants as of March 31, 2000, at a weighted average exercise price of $1.17 per share; - 266,702 additional common shares reserved for issuance under our stock incentive plan as of March 31, 2000; and - the issuance of 2,520,261 shares and 1,487,805 shares of Series E convertible preferred stock on April 18, 2000, and June 22, 2000, respectively, and the conversion of these shares into an aggregate of 4,008,066 shares of our common stock immediately upon completion of this offering. 6 RISK FACTORS YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS AND ALL OTHER INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING OUR COMMON STOCK. INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. ANY OF THE FOLLOWING RISKS, AS WELL AS OTHER RISKS AND UNCERTAINTIES THAT ARE NOT YET IDENTIFIED OR THAT WE CURRENTLY BELIEVE ARE IMMATERIAL, MAY HARM OUR BUSINESS AND OPERATING RESULTS AND MAY RESULT IN A LOSS OF ALL OR PART OF YOUR INVESTMENT. RISKS RELATED TO OUR BUSINESS BECAUSE WE HAVE A LIMITED OPERATING HISTORY AS AN INDEPENDENT COMPANY, IT MAY BE DIFFICULT TO EVALUATE OUR BUSINESS AND PROSPECTS. We have operated as an independent company since February 1999. Prior to February 1999, our business was conducted as a division of Frontec AB, a Swedish corporation publicly traded on the OM Stock Exchange (formerly the Stockholm Stock Exchange), and focused on traditional enterprise application integration, or EAI, software and services. Shortly after our formation as a separate entity, we retained a new management team and implemented a new business strategy focusing on the expansion of e-business solutions for trading communities. These changes have required that we adjust our business strategy, develop additional software products and hire additional employees. We cannot be certain that our new business strategy will be successful. You must consider our prospects in light of the risks, expenses and challenges we may encounter given our limited operating history as an independent company. Frontec AB historically provided us with shared functions and services such as accounting, legal and insurance. Since our separation from Frontec AB in February 1999, we have created the infrastructure to support our business on a stand-alone basis. Frontec AB has no obligation to assist us in the future, and if our financial, operational, administrative and other systems are not sufficient to support our business as an independent company, our business and operating results may be adversely affected. WE HAVE NOT ACHIEVED PROFITABILITY TO DATE, WE EXPECT LOSSES IN THE FUTURE, AND WE MAY NEVER ACHIEVE OR MAINTAIN PROFITABILITY. We incurred operating losses of approximately $15.8 million in the three months ended March 31, 2000, and approximately $20.3 million, $9.5 million and $9.6 million in the years ended 1999, 1998 and 1997, respectively. As of March 31, 2000, we had an accumulated deficit of approximately $73.1 million. Since our formation as an independent company in February 1999, we have invested significantly in building our management team and attracting product designers, software architects and supply chain and logistics experts. We also have invested significantly in the development of our software products. We expect to continue to spend substantial financial and other resources on developing enhancements to our existing products, introducing new products and expanding our professional services, sales and marketing activities. As a result, we need to generate significant revenue to achieve and maintain profitability. If we fail to achieve profitability within the time frame expected by investors, it may adversely affect the market price of our common stock. We cannot assure you that we will be successful in achieving profitability. WE HAVE NOT BEEN ABLE TO FUND OUR OPERATIONS FROM CASH GENERATED BY OUR BUSINESS, AND WE MAY NOT BE ABLE TO DO SO IN THE FUTURE. We have financed our operations to date principally through the private placement of shares of our convertible preferred stock. We believe that available cash and cash equivalents, including the net proceeds from our recent private placements of our convertible preferred stock, and the net proceeds from this offering, will be sufficient to meet our working capital needs and capital expenditures for at least the next 12 months. After that, we may need to raise additional funds, and we cannot be certain that we will be able to obtain additional financing on favorable terms, if at all. If we do not generate sufficient cash from our business to fund operations or if we do not obtain additional capital through equity or debt financings, our growth may be limited. Our inability to grow as planned may reduce our chances of 7 achieving profitability, which, in turn, may have an adverse effect on the market price of our common stock. OUR FUTURE REVENUE IS UNPREDICTABLE, AND WE EXPECT OUR QUARTERLY OPERATING RESULTS TO FLUCTUATE, WHICH MAY CAUSE OUR COMMON STOCK PRICE TO DECLINE. Our operating results have fluctuated in the past and may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control. In particular, we derive a significant portion of our revenue in each quarter from a limited number of customers that have relatively large orders and from a limited number of companies that resell our products. The delay or failure to complete sales in a particular quarter could reduce our revenue in that quarter and subsequent quarters over which revenue from such sales likely would be recognized. In addition, because our revenue from implementation, maintenance and training services correlates with our license revenue, a decline in license revenue may cause a decline in our services revenue in the same quarter or in subsequent quarters. Because our operating results are volatile and difficult to predict, we believe that comparisons of our quarterly operating results are not a good indication of our future performance. Factors that may harm our business or cause our operating results to fluctuate include the following: - the market acceptance of, and demand for, our products and professional services; - any flexible pricing structure that we may adopt, including equity investments in our customers and recurring revenue models, in lieu of our typical license fees; - the length of our sales cycle, as well as timing, amount and recognition of payments from customers; - our ability to market new products and enhancements of current products and professional services to existing customers; - the revenue mix of our products and professional services; - the amount and timing of our operating costs and capital expenditures; - seasonality in the sales of our products and professional services, which may differ in our markets; and - the number, timing and significance of product enhancements and new product introductions by competitors. Any change in one or more of these factors, as well as others, may cause our annual or quarterly operating results to fluctuate, which, in turn, may cause the market price of our common stock to decline. WE DEPEND ON OUR AMTRIX PRODUCT OFFERING FOR SUBSTANTIALLY ALL OF OUR REVENUE. We currently derive substantially all of our revenue from the sale of our AMTrix product offering and related professional services. We expect revenue from this product offering to continue to account for a significant portion of our revenue for the foreseeable future. As a result, factors adversely affecting the pricing of or demand for our AMTrix product offering, such as competition and technological change, may harm our business and operating results. OUR FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO ENHANCE OUR EXISTING PRODUCTS, TO DEVELOP NEW PRODUCTS AND TO PROMOTE OUR PROFESSIONAL SERVICES. To be competitive, we must successfully introduce product enhancements, develop new products and promote our professional services. Although we are able to leverage our traditional integration solutions, our e-business integration software and supply web synchronization applications are in their early stages and continue to evolve. Our failure to develop and introduce new products and enhancements and promote our professional services may have an adverse effect on our business and operating results. The emerging nature of the market for e-business integration software and supply web synchronization applications and evolving customer needs requires that we continually improve the performance, features 8 and reliability of our products, as well as introduce new products. Any delays or failure to successfully develop market-accepted solutions may negatively affect our business and operating results. WE FACE SIGNIFICANT COMPETITION FROM OTHER COMPANIES. The market for B2B integration solutions is highly competitive, and we expect competition to increase in the future. Many of our current and potential competitors have substantially greater financial, technical, marketing, distribution and other resources than we do. As a result, they may be able to respond more quickly to new or changing opportunities, technologies, industry standards or customer requirements. In addition, many of our competitors have a greater presence in the U.S. market than we do. We currently compete with EAI software vendors and with third-party software companies that develop and license electronic data interchange, or EDI, formats and communications applications. We also compete with traditional supply chain, enterprise resource planning and transportation management system software vendors. In addition, in-house information technology, or IT, departments may adopt a proprietary standard that is inoperable with our solution or makes our solution obsolete. We expect that additional competitors will enter the market with competing products as the size and visibility of the market opportunity increases. Increased competition may result in pricing pressures, reduced margins or the failure of our products to achieve or maintain market acceptance. In addition, new technologies will likely increase the competitive pressures that we face. The development of competing technologies by market participants or the emergence of new industry standards may adversely affect our competitive position. As a result of these and other factors, we may not be able to compete effectively with current or future competitors, which may adversely affect our business and operating results. WE RELY ON STRATEGIC RELATIONSHIPS TO IMPLEMENT AND MARKET OUR SOFTWARE PRODUCTS, AND IF THESE RELATIONSHIPS END, OUR BUSINESS MAY BE HARMED. We have entered into relationships with third-party systems integrators, component assembly partners, hardware platform and software applications developers, service providers, value-added resellers and alliance partners. We have derived, and anticipate that we will continue to derive, a significant portion of our revenue from customers that purchase products or services from entities with which we have strategic relationships. In most cases, these entities refer customers to us, and we enter into license agreements directly with the customers. Our future growth will be limited if we fail to work effectively with or increase the number of these entities. In addition, entities with which we have strategic relationships are not required to market or promote our products and generally are not restricted from working with competing software companies. Accordingly, our success in this marketing channel will depend on the willingness and ability of these third parties to devote sufficient resources and efforts to marketing our line of products rather than the products of others. If these relationships end, we will have to devote substantially more resources to the distribution, sales and marketing, implementation and support of our products than we would otherwise, and our efforts may not be as effective as those of our partners, which may harm our business and operating results. We have in the past and may in the future choose to enter into strategic relationships that contain non-competition provisions. Any such provisions may adversely affect our ability to effectively conduct our business. WE DEPEND ON TECHNOLOGY LICENSED FROM THIRD PARTIES FOR USE IN OUR PRODUCTS, AND IF WE LOSE ACCESS TO THESE TECHNOLOGIES, OUR BUSINESS MAY BE HARMED. We license from third parties certain technologies that are incorporated into our products. Any significant interruption in the supply or support of any licensed software may adversely affect our sales, unless we can replace the functionality provided by this licensed software. Because our products incorporate software developed and maintained by third parties, we depend on these third parties to deliver and support reliable products, enhance their current products, develop new products on a timely 9 and cost-effective basis and respond to emerging industry standards and other technological changes. The failure of these third parties to meet these criteria may harm our business and operating results. If we lose access to these technologies, we may experience delays in developing and introducing new products and enhancements to our existing products while attempting to develop or access suitable replacement technology, which we may not be able to develop or access. Any delays may adversely affect our business and operating results. In light of the rapidly evolving nature of our industry and our strategy to pursue strategic relationships and alliances, we believe that we will need to continue to rely on technology from third-party vendors who may also be competitors. There is no assurance that technology from these vendors will continue to be available to us on commercially reasonable terms, if at all. IF OUR PRODUCTS CONTAIN ERRORS, WE MAY LOSE CUSTOMERS AND REVENUE. Our software products are complex and may contain undetected errors, or bugs, that result in product failures. The occurrence of errors may result in a loss of or delay in revenue, loss of market share, failure to achieve market acceptance, increased product development costs, diversion of development resources, injury to our reputation or damage to our efforts to build brand awareness. We also may be subject to product liability claims relating to our customers' critical business operations. Many of our supply web software applications are critical to the operations of our customers' businesses. Any failure in a customer's supply web network may result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although we maintain general liability insurance, we cannot assure you that such coverage will continue to be available on reasonable terms or will be adequate to indemnify us for all liability that may be imposed on us. OUR INTERNATIONAL OPERATIONS PRODUCE A MAJORITY OF OUR REVENUES AND ARE SUBJECT TO SPECIAL RISKS AND UNCERTAINTIES, WHICH MAY NEGATIVELY AFFECT OUR BUSINESS. We have in the past and will in the future derive a significant portion of our revenue from international operations. Although we have significant experience with international operations and the localization of our products for foreign markets, our international operations require significant management attention and financial resources and are subject to a number of risks and uncertainties, including: - the costs and complexity of staffing and managing widely dispersed foreign operations, including the ability to identify, attract and retain qualified managers and sales personnel; - the need to maintain and establish new relationships with third-party systems integrators and services, distribution and marketing partners and the performance of these partners in selling our products; - the costs and complexity of localizing products for foreign markets, such as the development of multilingual capabilities in our products; - changes in regulatory requirements of foreign countries and regional authorities; - legal uncertainties regarding liability, export and import restrictions, tariffs and other trade barriers; - reduced protection of intellectual property in some countries; - increased difficulty in collecting delinquent or unpaid accounts in some countries; - fluctuations in the value of the U.S. dollar relative to the currencies of other countries; - potentially adverse tax consequences; and - political and economic instability. Any of these factors, as well as others, may impair our ability to expand our international operations in these markets or to generate significant revenues from those markets in which we operate. 10 WE MAY EXPERIENCE LOST OR DELAYED SALES IF OUR SALES CYCLES LENGTHEN, WHICH MAY CAUSE OUR OPERATING RESULTS TO FLUCTUATE. Our products are complex and often involve significant investment decisions by prospective customers. Accordingly, the license of our products requires us to engage in a lengthy sales cycle and to provide a significant level of education to prospective customers regarding the use and benefits of our products. The purchase of our products by our customers for deployment within their organizations typically involves a significant commitment of customers' capital and resources, and is therefore subject to delays that are beyond our control, such as our customers' internal procedures to approve large capital expenditures, budgetary constraints and the testing and acceptance of new technologies that affect key operations, among other factors. The decision-making process also can be impacted by the sales practices of, and product introductions by, our competitors. We cannot assure you that we will be able to shorten our sales cycles or prevent our sales cycles from lengthening. Any delay or loss in sales of our products may adversely affect our business and operating results. WE HAVE EXPERIENCED SIGNIFICANT GROWTH IN OUR BUSINESS IN RECENT PERIODS, AND WE MAY NOT BE ABLE TO MANAGE OUR FUTURE GROWTH SUCCESSFULLY. Our ability to successfully offer software and professional services and implement our strategy in a rapidly evolving market requires effective planning and management. We have increased, and plan to continue increasing, the scope of our operations at a rapid rate. The number of people we employ has grown and will continue to grow substantially. As of June 30, 2000, we had a total of 420 employees compared to 240 employees as of December 31, 1999. Future expansion efforts may be expensive and strain our managerial and other resources. To manage future growth effectively, we must maintain and enhance our financial and accounting systems and controls, integrate new personnel and manage expanded operations. If we do not manage growth properly, it may harm our business and operating results. WE MAY HAVE DIFFICULTY IDENTIFYING ACQUISITIONS AND INTEGRATING THEM INTO OUR BUSINESS, WHICH MAY ADVERSELY AFFECT OUR BUSINESS AND OPERATING RESULTS. We have engaged, and may from time to time in the future engage, in acquisitions of companies with complementary products and professional services or for other purposes. Any past or future acquisitions may expose us to increased risks, including those associated with the assimilation of new operations, technologies and personnel and the diversion of financial and management resources from existing operations. In addition, we cannot assure you that we will be able to generate sufficient revenue from any such acquisition to offset associated acquisition costs, or that we will be able to maintain uniform standards of quality, service and controls, which may result in the impairment of relationships with customers, employees and new personnel. Certain acquisitions also may result in additional stock issuances that may adversely affect the price of our common stock. IF WE LOSE THE SERVICES OF ONE OR MORE OF OUR KEY PERSONNEL OR ARE UNABLE TO ATTRACT, ASSIMILATE AND RETAIN OTHER HIGHLY QUALIFIED PERSONNEL IN THE FUTURE, WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE AND EXPAND OUR BUSINESS. We are dependent on the continued services and performance of our senior management and other key personnel. The loss of any of our key personnel may have an adverse effect on our business and operating results. Our future success also will depend on our ability to identify, hire, train, retain and motivate additional highly skilled technical, managerial, marketing, professional services and customer service personnel. We are investing significant resources to substantially increase the size of our sales force and business development teams, as well as adding personnel in other areas. Competition for such personnel, particularly in the technology industry, is intense, and we cannot assure you that we will be able to successfully attract, assimilate or retain sufficiently qualified personnel in the future. As our sales increase, we must be able to hire and train more systems implementation professionals to implement the 11 applications sold. Training and education is costly and can drain management resources. To meet our needs for professional services personnel, we will continue to use third-party consultants, which are generally more costly. We cannot assure you that we will be able to manage our personnel needs successfully or to engage, train and retain qualified third-party implementation providers. Any failure to do so may have an adverse effect on the quality of our products and technology, our ability to retain customers and key personnel, our business and our operating results. RISKS RELATED TO OUR INDUSTRY OUR OPERATING RESULTS DEPEND ON THE CONTINUED USE OF THE INTERNET AND THE DEVELOPING MARKET FOR B2B INTEGRATION SOLUTIONS, INCLUDING INTERNET-BASED SUPPLY WEB SOFTWARE APPLICATIONS. We depend on the increased acceptance and use of the Internet as a medium for B2B e-commerce and for the development of trading communities and the adoption by businesses of B2B integration and supply web synchronization solutions. Rapid growth in the use of the Internet is a recent occurrence. As a result, acceptance and use may not continue to develop at historical rates, and a sufficiently broad base of business customers may not adopt or continue to use the Internet as a medium of commerce. Businesses are just beginning to seek solutions for integrating and synchronizing with their trading partners, and concerns about the security, reliability and quality of services delivered over the Internet may inhibit the growth of our market. Our future operating results depend on the development and growth of the market for B2B integration solutions, including Internet-based supply web software applications. We have spent, and intend to continue to spend, considerable resources educating potential customers and indirect channel partners about our products. However, we cannot assure you that such expenditures will enable our products to achieve or maintain any significant degree of market acceptance. If the market for B2B integration solutions, including Internet-based supply web software applications, fails to grow at the rate that we anticipate, our business and operating results may be harmed. WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY. Our success depends in large part on our proprietary technology. We rely on a combination of trademarks, copyrights, service marks, trade dress, trade secrets, non-disclosure agreements and similar intellectual property measures to protect our proprietary technology. We license rather than sell our solutions and require our customers to enter into license agreements that impose restrictions on their ability to use our software. We currently have patent rights pending in many countries throughout the world. We have licensed in the past, and expect that we may license in the future, certain of our proprietary rights, such as our software and other confidential information, trademarks and copyrighted material, to third parties. Additionally, certain customers currently use our AMTrix product without a written license agreement. While we try to ensure that the quality of our brand is maintained by all of our licensees, we cannot assure you that such licensees will not take actions that adversely affect the value of our proprietary rights or reputation. We have registered certain trademarks and have other trademark registrations pending in the U.S. and foreign jurisdictions. The trademarks that we currently use have not been registered in all the countries in which we do business and may never be registered in all such countries. We cannot assure you that our efforts to register our marks will be successful or that our use of these marks will not result in liability for trademark infringement, trademark dilution or unfair competition. We cannot assure you that all of the steps taken by us to protect our proprietary rights in the U.S. or abroad will be adequate. Further, we cannot assure you that third parties will not infringe or misappropriate our proprietary rights or reverse engineer or obtain and use information that we regard as proprietary. Any infringement, misappropriation or other actions regarding our proprietary rights may adversely affect our business and operating results. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the U.S. We also cannot assure you that competing companies will not independently develop technology similar or superior to our proprietary 12 technology. Further, through acquisitions of third parties, we have acquired and may in the future acquire technology that is subject to the same risks as technology we develop. INTELLECTUAL PROPERTY CLAIMS AGAINST US MAY BE COSTLY AND IMPAIR OUR BUSINESS. There has been a substantial amount of litigation in the software industry regarding intellectual property rights. We cannot predict whether third parties will assert claims of infringement against us, or whether any future assertions will harm our business. If we are forced to defend against any such claims, whether they are with or without merit or are determined in our favor, we may face costly litigation, diversion of technical and management personnel or product shipment delays, any of which could adversely impact our business and operating results. As a result of such a dispute, we may have to develop non-infringing technology or enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may be unavailable on terms acceptable to us, if at all. If there is a successful claim of product infringement against us and we are unable to develop non-infringing technology or to license the infringed or similar technology on a timely basis, our business and operating results may be adversely affected. In addition, although we are generally indemnified if a third-party vendor's technology infringes the proprietary rights of others, such indemnification is not always available for all types of intellectual property rights. In some cases, the scope of our indemnification is limited and the third parties providing such indemnification are not always capitalized sufficiently to fully indemnify us. We cannot assure you that infringement claims arising from using third-party technology, and claims for indemnification from our customers resulting from such claims, will not be asserted or prosecuted against us. Such claims, even if not meritorious, may cause us to spend significant financial and managerial resources and incur product redevelopment costs and delays, all of which may adversely affect our business and operating results. INCREASED SECURITY RISKS OF E-BUSINESS MAY DETER FUTURE USE OF OUR SOFTWARE AND SERVICES. A fundamental requirement of conducting B2B e-commerce is the secure transmission of confidential information over public and private networks. Advances in computer capabilities, new discoveries in the field of cryptography or other developments may result in a compromise or breach of the security features used by our customers and their business partners to protect content and transactions on Internet e-commerce marketplaces or proprietary information in our customers' and their business partners' databases. Anyone who is able to circumvent security measures may misappropriate confidential information or cause interruptions in our customers' and their business partners' operations. Our customers and their business partners may be required to incur significant costs to protect against security breaches or to alleviate problems caused by breaches, reducing their demand for our solutions. Further, a well publicized compromise of security may deter businesses from using the Internet to conduct transactions that involve transmitting confidential information. The failure of the security features of our customers to prevent security breaches, or well publicized security breaches affecting the Internet in general, may harm our business and operating results. INTERNET-RELATED LAWS COULD LIMIT THE MARKET FOR OUR SOFTWARE. Regulation of the Internet is largely unsettled and in the early stages. The adoption of laws or regulations that increase the costs or administrative burdens of doing business using the Internet may cause companies to seek an alternative means of transacting business. If the adoption of new Internet laws or regulations causes companies to seek alternative methods for conducting business, the demand for our solutions may decrease and our business and operating results may be adversely affected. 13 RISKS RELATED TO THIS OFFERING THE MARKET PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY FOLLOWING THIS OFFERING, AND AS A RESULT, YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT. Prior to the offering, there has been no public market for our common stock. We have applied to have our common stock listed for quotation on the Nasdaq National Market. We do not know how our common stock will trade in the future. The initial public offering price will be determined through negotiations between us and representatives of the underwriters, and that price may not be indicative of prices that will prevail in the trading market. You may not be able to resell your shares at or above the initial public offering price due to a number of factors, including: - actual or anticipated fluctuations in our revenue and operating results; - changes in expectations as to our future financial performance or ability to achieve estimates of securities analysts; - the operating and stock price performance of other comparable companies; - announcements by us or our competitors of significant contracts, acquisitions, strategic relationships or capital commitments; and - additions or departures of key personnel. The stock market in general, and the market for technology-related stocks in particular, has experienced dramatic price and volume fluctuations from time to time. These fluctuations may or may not be based upon any business or operating results. Our common stock may experience similar or even more dramatic price and volume fluctuations that may continue indefinitely. In addition, securities litigation has often been brought against a company following a decline in the market price of its common stock. This risk is especially acute for us because technology companies have experienced greater than average stock price volatility in recent years and, as a result, have been subject to, on average, a greater number of securities class action claims than companies in other industries. We may in the future be the target of similar litigation. Securities litigation may result in substantial costs, divert management's attention and resources and harm our business and operating results. OUR EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS WILL RETAIN SUBSTANTIAL CONTROL OVER US AFTER THIS OFFERING. Upon the closing of this offering, our executive officers, directors and 5% or more stockholders, and their affiliates, will, in the aggregate, own approximately % of our outstanding common stock. As a result, such persons, acting together, will have the ability to control matters submitted to our stockholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets. Accordingly, such concentration of ownership may have the effect of delaying or preventing a transaction that would result in a change in control, even if such a transaction would be beneficial to our other stockholders. FUTURE SALES OF OUR COMMON STOCK MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK. Following this offering, we will have a large number of shares of common stock outstanding and available for resale beginning at various points in the future. The market price for our common stock may decline as a result of sales of large numbers of shares of our common stock in the market following this offering, or the perception that such sales may occur. These sales may make it more difficult to sell securities in the future at a time and price we may deem appropriate. The number of shares of common stock available for sale in the public market is limited by restrictions under federal securities law and under some agreements that our stockholders have entered into with the underwriters. Those agreements restrict our stockholders, other than Frontec AB, the selling stockholder, from selling, pledging or otherwise disposing of their shares for a period of 180 days after the date of this prospectus, without the prior written consent of Chase Securities Inc. The agreement with 14 Frontec AB provides for similar restrictions, except that it will expire 270 days after the date of this prospectus. However, Chase Securities Inc. may, in its sole discretion, release all or any portion of the common stock from the restrictions of these agreements. Further, Frontec AB has granted the underwriters an option for a period of 30 days to purchase up to shares of our common stock. The following table indicates approximately when the 64,931,360 shares of our common stock that are not being sold in the offering but that will be outstanding when this offering is complete will be eligible for sale into the public market:
ELIGIBILITY OF RESTRICTED SHARES FOR SALE IN PUBLIC MARKET ------------------------- On the date of this prospectus.............................. -- 180 days after the date of this prospectus.................. 23,219,869 Thereafter upon expiration of one year holding periods...... 15,800,444 270 days after the date of this prospectus.................. 25,911,047
We have an agreement with the holders of an aggregate of 30,427,234 shares of our common stock, including shares issuable upon conversion of outstanding convertible securities and warrants, that gives them the right to require us to register their shares of common stock for resale under the Securities Act of 1933. The exercise of these registration rights will cause the registered shares to become eligible for sale. The sale of a large number of these shares, or the possibility that such sales may occur, may adversely affect the market price of our common stock. For more information, see "Shares Eligible for Future Sale." YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE NET TANGIBLE BOOK VALUE OF THE SHARES YOU PURCHASE. If you purchase shares of common stock in this offering, you will experience immediate and substantial dilution of $ per share, based on an initial public offering price of $ per share. This dilution is in large part because our earlier investors paid substantially less than the public offering price when they purchased their shares of common stock or convertible preferred stock. You will experience additional dilution upon the exercise of outstanding stock options or warrants to purchase our common stock. WE WILL RETAIN BROAD DISCRETION IN USING THE NET PROCEEDS FROM THIS OFFERING, AND WE MAY SPEND A SUBSTANTIAL PORTION IN A WAY IN WHICH YOU DO NOT AGREE. We will retain broad discretion over the application of the net proceeds from this offering, as well as the timing of our expenditures. We may apply the net proceeds from this offering in a way that may vary substantially from our current intentions or in a manner with which you do not agree. For more information, see "Use of Proceeds." WE HAVE IMPLEMENTED ANTI-TAKEOVER PROVISIONS WHICH MAY DELAY OR PREVENT A TAKEOVER, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL TO OUR STOCKHOLDERS. Provisions of our certificate of incorporation and bylaws, as well as provisions of Delaware law, may make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. These provisions include: - establishing a classified board of directors requiring that not all members of the board may be elected at one time; - authorizing the issuance of preferred stock that could be issued by our board of directors to increase the number of outstanding shares and deter a takeover attempt; - limiting the ability of stockholders to call special meetings of stockholders; - prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; and 15 - establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings. In addition, Section 203 of the Delaware General Corporation Law and the terms of our stock option plans may delay or prevent a change in control of our company. For more information, see "Description of Capital Stock." 16 FORWARD-LOOKING STATEMENTS Some of the statements under the captions "Prospectus Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," and elsewhere in this prospectus constitute forward-looking statements. These forward-looking statements include, but are not limited to, statements about our plans, objectives, expectations and intentions, and other statements contained in the prospectus that are not historical facts. When used in this prospectus, the words "expect," "anticipate," "intend," "plan," "may," "will," "believe," "seek," "could," "would," "should," "might," "estimate" and similar expressions are generally intended to identify forward-looking statements. These statements are only predictions. Because these forward-looking statements involve risks and uncertainties, there are important factors that may cause actual results to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors discussed under "Risk Factors" and other factors identified by cautionary language used elsewhere in this prospectus. We are under no duty to update any of the forward-looking statements after the date of this prospectus. USE OF PROCEEDS We expect to receive net proceeds of approximately $ million from the sale of shares of common stock, assuming a public offering price of $ per share and after deducting underwriting discounts and commissions of $ million and estimated expenses of approximately $ million. We will not receive any of the proceeds from the sale of shares by the selling stockholder pursuant to the over-allotment option. After we repay the outstanding balance of a bank loan of approximately $2.5 million, we intend to use the remaining net proceeds primarily for working capital and other general corporate purposes, including funding product development and expanding our sales and marketing capabilities. In addition, we may use a portion of the net proceeds for further development of our product lines through acquisitions of products, technologies and businesses. The bank loan matures on November 25, 2000 and bears interest at the bank's prime rate plus 2% per annum, which interest was 11.5% as of June 30, 2000. The amount of net proceeds that we actually expend for working capital purposes will vary significantly depending on a number of factors, including our future revenue growth, if any, the amount of cash we generate from operations and the progress of our product development efforts. We will have significant discretion in applying the net proceeds of this offering. Pending the uses described above, we will invest the net proceeds in investment-grade, interest-bearing securities. DIVIDEND POLICY We have never declared or paid cash dividends on our capital stock and we do not anticipate declaring or paying any cash dividends for the foreseeable future. We currently expect to retain all earnings, if any, for investment in our business. The terms of our existing bank loan agreement prohibit us from paying dividends. 17 CAPITALIZATION The following table describes our capitalization as of March 31, 2000: - on an actual basis; - on a pro forma basis to reflect the issuance of an assumed aggregate of 5,411,745 shares of our Series B convertible preferred stock upon the cashless exercise of outstanding warrants, the conversion of all outstanding shares of our Series A, B and D convertible preferred stock into an aggregate of 25,875,418 shares of our common stock and the conversion of all outstanding shares of our Series C convertible preferred stock into an assumed 2,562,500 shares of our common stock, each of which will occur immediately upon the completion of this offering, as if the exercise and conversion occurred on March 31, 2000; and - on a pro forma as adjusted basis to further reflect the sale of the shares of our common stock in this offering at an assumed price of $ per share and our receipt of the estimated net proceeds, after deducting the underwriting discounts and commissions and the estimated offering expenses that we expect to pay in connection with this offering. You should read this table along with "Management's Discussion and Analysis of Financial Condition and Results of Operations," our consolidated financial statements and related notes and the other financial information in this prospectus.
MARCH 31, 2000 ------------------------------------- PRO FORMA ACTUAL PRO FORMA AS ADJUSTED --------- ---------- ------------ (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Capital lease obligation, less current portion.............. $ 968 $ 968 $ 968 Redeemable, convertible preferred stock: Series A convertible preferred stock: $.01 par value per share; 10,000 shares authorized, issued and outstanding (actual); no shares issued and outstanding (pro forma and pro forma as adjusted).............................. 14,153 -- -- Series B convertible preferred stock: $.01 par value per share; 7,005 shares authorized; no shares issued and outstanding (actual, pro forma and pro forma as adjusted)............................................... -- -- -- Series D convertible preferred stock: $.01 par value per share; 13,270 shares authorized; 10,464 shares issued and outstanding (actual); no shares issued and outstanding (pro forma and pro forma as adjusted)....... 27,846 -- -- -------- -------- -------- 41,999 -- -- -------- -------- -------- Stockholders' equity (deficit): Series C convertible preferred stock: $.01 par value per share; 2 shares authorized, issued and outstanding (actual); no shares issued and outstanding (pro forma and pro forma as adjusted).............................. -- -- -- Common stock: $.01 par value per share; 75,000 shares authorized; 36,064 shares issued and outstanding (actual); 64,502 shares issued and outstanding (pro forma); shares issued and outstanding (pro forma as adjusted)............................................... 361 645 Additional paid in capital................................ 48,439 90,154 Treasury stock: 3,998 shares held in treasury............. (40) (40) (40) Notes receivable from stockholders........................ (6,817) (6,817) (6,817) Deferred compensation..................................... (848) (848) (848) Retained earnings (deficit)............................... (73,064) (73,064) (73,064) Accumulated other comprehensive income.................... 1,398 1,398 1,398 -------- -------- -------- Total stockholders' equity (deficit).................... (30,571) 11,428 -------- -------- -------- Total capitalization.................................. $ 12,396 $ 12,396 $ ======== ======== ========
This table does not include: - 5,730,949 common shares subject to outstanding options as of March 31, 2000, at a weighted average exercise price of $1.20 per share; - 595,750 common shares subject to outstanding warrants as of March 31, 2000, at a weighted average exercise price of $1.17 per share; - 266,702 additional common shares reserved for issuance under our stock incentive plan as of March 31, 2000; and - the issuance of 2,520,261 shares and 1,487,805 shares of Series E convertible preferred stock on April 18, 2000, and June 22, 2000, respectively, and the conversion of such shares into an aggregate of 4,008,066 common shares of our common stock immediately upon completion of this offering. 18 DILUTION Our pro forma net tangible book value as of March 31, 2000, was $5.8 million, or $.10 per share of common stock. We have calculated this amount by: - subtracting our total liabilities from our pro forma total tangible assets; and - then dividing the difference by the total pro forma number of shares of common stock outstanding, including the number of shares of common stock that will be issued upon the conversion of our convertible preferred stock upon completion of this offering, not including the 4,008,066 shares of common stock that will be issued upon the conversion of our Series E convertible preferred stock upon completion of this offering. If we give effect to our sale of shares of common stock in this offering at the assumed initial public offering price of $ per share, our adjusted pro forma net tangible book value as of March 31, 2000, would have been $ million, or $ per share. This amount represents an immediate increase in pro forma net tangible book value of $ per share to existing stockholders and an immediate dilution of $ per share to new investors. The following table illustrates this per share dilution: Assumed initial public offering price per share............. $ Pro forma net tangible book value as of March 31, 2000.... $ Pro forma increase in net tangible book value attributable to this offering........................................ $ ------ Pro forma net tangible book value after this offering..... $ ------ Dilution to new investors................................... $ ======
The following table summarizes, on the pro forma basis discussed above, as of March 31, 2000, the total number of shares of common stock purchased, the total consideration paid and the average price per share paid by existing stockholders and to be paid by new investors in this offering before deducting estimated underwriting discounts and offering expenses:
SHARES PURCHASED TOTAL CONSIDERATION --------------------- ---------------------- AVERAGE PRICE NUMBER PERCENT AMOUNT PERCENT PER SHARE ---------- -------- ----------- -------- ------------- Existing stockholders................. $ New investors......................... ---------- ----------- Total............................... 100.0% $ 100.0% ========== ===== =========== =====
If the underwriters exercise their over-allotment option in full, the number of shares held by existing stockholders will decrease to , or % of the total shares outstanding, and the number of shares held by new investors will increase to , or % of the total shares outstanding. The above computations do not include: - 5,730,949 common shares subject to outstanding options as of March 31, 2000, at a weighted average exercise price of $1.20 per share; - 595,750 common shares subject to outstanding warrants as of March 31, 2000, at a weighted average exercise price of $1.17 per share; - 266,702 additional common shares reserved for issuance under our stock incentive plan as of March 31, 2000; and - the issuance of 2,520,261 shares and 1,487,805 shares of Series E convertible preferred stock on April 18, 2000, and June 22, 2000, respectively, and the conversion of such shares into an aggregate of 4,008,066 common shares of our common stock immediately upon completion of this offering. From March 31, 2000, through June 30, 2000, options were exercised to purchase an aggregate of 423,938 shares of common stock. If any additional options and warrants are exercised, investors will experience further dilution. 19 SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with our consolidated financial statements and related notes appearing at the end of this prospectus and the information under "Management's Discussion and Analysis of Financial Condition and Results of Operations." The statement of operations data for the years ended December 31, 1997, 1998 and 1999 and the balance sheet data as of December 31, 1998 and 1999, are derived from, and are qualified by reference to, the consolidated financial statements included elsewhere in this prospectus, which have been audited by PricewaterhouseCoopers LLP. The consolidated statements of operations data for the year ended December 31, 1996, and the three months ended March 31, 1999 and 2000, and the consolidated balance sheet at March 31, 2000, are derived from unaudited, consolidated financial statements. The unaudited consolidated statements of operations for the three months ended March 31, 1999, and 2000, and the unaudited balance sheet at March 31, 2000, are included elsewhere in this prospectus. Historical results are not necessarily indicative of results to be expected in the future. Prior to February 1999, Frontec AB operated our business as a division of its operations.
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, -------------------------------------------- ------------------- 1996 1997 1998 1999 1999 2000 ----------- -------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (UNAUDITED) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenue: Licenses.................................................. $ 4,034 $ 6,522 $ 6,767 $ 8,849 $ 2,246 $ 3,439 Support................................................... 1,360 1,609 2,024 2,991 685 988 Services.................................................. 2,560 3,563 4,873 7,608 1,907 2,046 -------- ------- ------- -------- ------- -------- Total revenue:.......................................... 7,954 11,694 13,664 19,448 4,838 6,473 Cost of revenue: Licenses.................................................. 130 162 362 1,024 161 155 Support and services...................................... 3,219 4,102 5,977 10,160 1,741 3,014 -------- ------- ------- -------- ------- -------- Total cost of revenue:.................................. 3,349 4,264 6,339 11,184 1,902 3,169 Gross profit................................................ 4,605 7,430 7,325 8,264 2,936 3,304 Operating expenses: Sales and marketing....................................... 6,998 8,199 8,208 14,580 2,277 6,350 Research and development.................................. 3,578 3,132 2,784 4,045 634 3,611 General and administrative................................ 4,071 4,986 4,741 8,891 1,111 2,423 Purchased research and development........................ -- -- -- -- -- 5,200 Deferred compensation expense............................. -- -- -- -- -- 914 Depreciation and amortization............................. 427 756 1,061 1,088 219 601 -------- ------- ------- -------- ------- -------- Total operating expenses................................ 15,074 17,073 16,794 28,604 4,241 19,099 Operating loss.............................................. (10,469) (9,643) (9,469) (20,340) (1,305) (15,795) Other income (expense), net................................. (104) 226 (206) 21 (78) 79 -------- ------- ------- -------- ------- -------- Loss before provision (benefit) for income taxes............ (10,573) (9,417) (9,675) (20,319) (1,383) (15,716) Provision (benefit) for income taxes........................ 6 244 (45) 94 18 30 -------- ------- ------- -------- ------- -------- Net loss.................................................... $(10,579) $(9,661) $(9,630) $(20,413) $(1,401) $(15,746) ======== ======= ======= ======== ======= ======== Net loss per share: Basic and diluted......................................... $ (0.31) $ (0.28) $ (0.28) $ (0.60) $ (0.04) $ (0.51) ======== ======= ======= ======== ======= ======== Weighted average shares used in computation............... 34,062 34,062 34,062 34,062 34,062 30,867 ======== ======= ======= ======== ======= ======== Pro forma net loss per share (unaudited): Basic and diluted......................................... $ (0.31) $ (0.28) $ (0.28) $ (0.47) $ (0.04) $ (0.30) ======== ======= ======= ======== ======= ======== Weighted average shares used in computation............... 34,062 34,062 34,062 43,858 35,676 53,238 ======== ======= ======= ======== ======= ========
DECEMBER 31, ------------------------------ MARCH 31, 1997 1998 1999 2000 -------- -------- -------- ----------- (IN THOUSANDS) (UNAUDITED) CONSOLIDATED BALANCE SHEET DATA: Cash and cash equivalents................................... $ 1,422 $ 1,597 $ 9,316 $ 6,923 Working capital (deficit)................................... 2,167 (258) 144 3,036 Total assets................................................ 8,616 9,898 19,110 26,247 Long-term payables to associated companies.................. 15,750 14,527 -- -- Capital lease obligation, less current portion.............. -- -- 589 968 Redeemable, convertible preferred stock..................... -- -- 23,751 41,999 Total stockholders' deficit................................. (12,119) (12,922) (20,786) (30,571)
20 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES APPEARING AT THE END OF THIS PROSPECTUS. OVERVIEW We are a leading global provider of e-business applications and integration software and services that enable e-business networks and synchronize supply webs. Our solutions for trading communities and e-business networks provide application integration, business-to-business integration and trading community management. In addition, our synchronization solutions provide for the automation of business processes and information flows between customers, suppliers and trading communities, and offer decision support applications for managing the flow of goods and services throughout the supply web. We were incorporated in Delaware in February 1999. Prior to our incorporation, Frontec AB operated our business as a division of its operations. Frontec AB marketed the AMTrix product through wholly owned subsidiaries that we now wholly own. Our company was formed with the existing assets and operating subsidiaries of Frontec AB that were engaged in the AMTrix business. Subsequent to our separation from Frontec AB, we have financed our operations primarily through private sales of convertible preferred stock to third-party investors. Subsequent to our organization as a separate entity, we moved the headquarters of our global operations to Atlanta, Georgia and accelerated the development of our sales and marketing organizations. In order to expand our AMTrix product offering, we have invested heavily in the development of new products to provide B2B and trading community integration solutions and supply web synchronization applications. We generate revenue by licensing our software systems and providing support and professional services for these systems. We generally license our software for a perpetual term by charging a license fee that grants the customer the right to use the software system that is currently available at the time the agreement is reached. We also provide professional services, including systems implementation and integration assistance, consulting and training, which are available under services agreements and contracted for separately from our license fees. These services generally are sold on a time and materials basis and, in some circumstances, under fixed price arrangements. Additionally, we provide telephone support and maintenance for our software systems under support agreements. These agreements provide unspecified software upgrades and technical support over a specified term, which is typically 12 months and renewable on an annual basis. We recognize software license revenue when there is persuasive evidence of an agreement, the software has been shipped, collectibility is probable and payment is due within one year. When license payment terms are in excess of one year, we recognize the related revenue as the payments become due. When licenses are sold through a reseller, we recognize revenue once the software is shipped to the reseller's end-user customer and all other revenue recognition criteria have been met. When uncertainties exist relating to any of these criteria, we recognize the revenue upon resolution of the uncertainty or when payment is received. Professional services revenue is recognized as the service is performed. Under fixed price arrangements, professional services revenue is recognized on the basis of the estimated percentage of completion of the service provided. Changes in estimates to complete and losses, if any, are recognized in the period they are determined. Support contracts typically are paid in advance, and revenues from these contracts are deferred and recognized ratably over the term of the contract. Our revenue recognition policies are in accordance with Statement of Position ("SOP") 97-2, "Software Revenue Recognition" and SOP 98-9, "Modification of SOP 97-2." 21 For the year ended December 31, 1999, we derived 65.0% of our revenue from Europe, 17.8% from Asia / Pacific and 17.2% from the U.S. Our revenue increased in 1999 in each of these markets with the exception of the U.S., where revenue decreased slightly. This decrease primarily resulted from the restructuring and rebuilding of our U.S. sales and marketing organization during 1999. We market and sell our products and professional services through our direct sales force and through our indirect sales channel, which includes value-added resellers, systems integrators and technology vendors. We have derived, and expect to continue to derive, a significant portion of our revenue from sales to or through our indirect sales channel. Our value-added resellers typically buy our products at a discount from our standard list price and either resell our product to their customers or incorporate our product into their product offerings. Our relationships with third-party systems integrators and technology vendors typically are structured as co-marketing arrangements in which the customer is referred by the third-party system integrator or technology vendor to license the software directly from us. Most of these arrangements require us to pay a commission to the referring entity. Generally, the arrangements with our indirect channel partners do not impose any limitations on our ability to sell our products directly. As we expanded our global operations, we invested significantly in the areas of product and technology development, sales, marketing, professional services, recruitment and training. As a result, we have incurred significant costs, and as of March 31, 2000, we had an accumulated deficit of approximately $73.1 million. We plan to continue investing in research and development, sales, marketing, professional services, recruitment and training. We therefore expect to continue incurring significant operating losses for the foreseeable future. As of June 30, 2000, we had 420 employees and intend to hire a significant number of employees in the future. Our continued global expansion places significant demands on our management team and our operational resources. To effectively manage our future growth, we must maintain and enhance our operational systems, integrate new personnel and manage expanded operations. RECENT ACQUISITIONS On February 3, 2000, we completed the acquisition of Nexstep, Inc., a software development enterprise based in Plano, Texas, which focuses on visibility fulfillment solutions for Internet retail organizations. The aggregate consideration of approximately $10.1 million was paid by the issuance of 2,002,000 shares of our common stock and cash of approximately $4.2 million. Our board of directors determined the fair value of the common stock issued as part of the consideration to be $2.94 per share based on recent sales of our convertible preferred stock for cash to third-party investors. The acquisition has been accounted for as a purchase and accordingly, the purchase price has been allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the date of acquisition. Nexstep's results of operations have been included with ours beginning on January 1, 2000, the effective date of the acquisition for accounting purposes. On June 21, 2000 we completed the acquisition of Electronic Data Transfer, SA, an EDI solutions provider for supply chains and a reseller of our AMTrix product based in Grenoble, France. The consideration to be paid for the acquisition of EDT consists of both cash and shares of our common stock. The total cash consideration due the shareholders of EDT is $1.0 million, half of which was paid at the closing, and the other half which is to be paid on December 31, 2000. In addition to the cash consideration, the shareholders of EDT will be issued shares of our common stock on December 31, 2000 and December 31, 2001. The aggregate number of shares of our common stock to be issued to EDT's shareholders is determined by the value of our common stock during December 2000 and December 2001, and the maximum aggregate number of shares of our common stock issuable to the shareholders of EDT is 1,012,966. The issuance of the shares of our common stock on each of December 31, 2000 and December 31, 2001 is contingent upon the continued employment and services of certain of EDT's shareholders. The EDT acquisition has been accounted for as a purchase and accordingly, the purchase 22 price has been allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the date of the acquisition. On July 31, 2000, we completed the acquisition of SC21 Pte, Ltd., a software development enterprise based in Singapore that provides supply web visibility solutions for small to medium sized companies. The consideration to be paid for the acquisition of SC21 consists of both cash and shares of our common stock. At the closing, we issued 750,000 shares of our common stock to the shareholders of SC21, and paid them $1.0 million in cash. If all contingencies are met during the 17 month period following the closing, we will be obligated to issue to the shareholders of SC21 up to 450,000 additional shares of our common stock, and pay an additional $4.0 million in cash. The issuance of the additional shares of our common stock and payment of $2.0 million of the additional cash consideration is contingent upon the continued employment and services of certain of the shareholders of SC21. In addition, Nanyang Technical University (Singapore) had rights to certain of SC21's assets, and at the closing of the acquisition of SC21 we paid Nanyang Technical University (Singapore) $182,672 in satisfaction and extinguishment of those rights. The SC21 acquisition has been accounted for as a purchase and accordingly, the purchase price has been allocated to the assets acquired and the liabilities assumed based on their estimated fair valudes at the date of the acquisition. PRESENTATION The following discussion and analysis of our financial condition and results of operations reviews the financial condition of the AMTrix businesses that Frontec AB transferred to us as if we were a separate entity for all periods presented. Certain costs and expenses presented in these financial statements primarily have been allocated based on headcount or management estimates, depending on the nature of the expense. The primary expenses that were allocated relate to corporate administrative functions, including administrative, legal, accounting and other corporate overhead. We believe that these allocations are reasonable, however, the financial information included herein may not necessarily reflect our financial position, results of operations and cash flows in the future, or what they would have been had we been a separate entity during each of the periods presented. 23 RESULTS OF OPERATIONS The following table sets forth certain operating data as a percentage of total revenue for the periods indicated. Our historical operating results are not necessarily indicative of the results for any future period.
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, ------------------------------------ ---------------------- 1997 1998 1999 1999 2000 -------- -------- -------- -------- -------- STATEMENT OF OPERATION DATA: Revenue: Licenses........................................ 55.8% 49.5% 45.5% 46.4% 53.1% Support......................................... 13.7 14.8 15.4 14.2 15.3 Services........................................ 30.5 35.7 39.1 39.4 31.6 ----- ----- ------ ----- ------ Total revenue................................. 100.0 100.0 100.0 100.0 100.0 Cost of revenue: Licenses........................................ 1.4 2.7 5.3 3.3 2.4 Support and services............................ 35.1 43.7 52.2 36.0 46.6 ----- ----- ------ ----- ------ Total cost of revenue......................... 36.5 46.4 57.5 39.3 49.0 ----- ----- ------ ----- ------ Gross profit...................................... 63.5 53.6 42.5 60.7 51.0 Operating expenses: Sales and marketing............................. 70.1 60.1 75.0 47.1 98.1 Research and development........................ 26.8 20.4 20.8 13.1 55.8 General and administrative...................... 42.6 34.7 45.7 23.0 37.4 Purchased research and development.............. -- -- -- -- 80.3 Deferred compensation expense................... -- -- -- -- 14.1 Depreciation and amortization................... 6.5 7.8 5.6 4.5 9.3 ----- ----- ------ ----- ------ Total operating expenses...................... 146.0 123.0 147.1 87.7 295.0 ----- ----- ------ ----- ------ Operating loss.................................... (82.5) (69.4) (104.6) (27.0) (244.0) Other income (expense), net....................... 2.0 (1.4) 0.1 (1.6) 1.2 ----- ----- ------ ----- ------ Loss before provision (benefit) for income taxes............................................. (80.5) (70.8) (104.5) (28.6) (242.8) Provision (benefit) for income taxes.............. 2.1 (0.3) 0.5 0.4 0.5 ----- ----- ------ ----- ------ Net loss.......................................... (82.6)% (70.5)% (105.0)% (29.0)% (243.3)% ===== ===== ====== ===== ======
COMPARISON OF THREE MONTHS ENDED MARCH 31, 2000 AND 1999 REVENUE LICENSES. License revenue increased to $3.4 million for the three months ended March 31, 2000, from $2.2 million in the corresponding period in the prior year, an increase of $1.2 million, or 53.1%. This increase primarily was due to growth in the number of licenses sold to new customers for the three months ended March 31, 2000. In particular, a single U.S. customer licensed our software in March 2000 for a total license fee of $1.0 million. SUPPORT. Support revenue increased to $988,000 for the three months ended March 31, 2000, from $685,000 in the corresponding period in the prior year, an increase of $303,000, or 44.2%. This increase was the result of an increase in the number of new support agreements, as well as the renewal of support agreements entered into in earlier periods. 24 SERVICES. Services revenue increased to $2.0 million for the three months ended March 31, 2000, from $1.9 million in the corresponding period in the prior year, an increase of $139,000, or 7.3%. This increase was due to growth in new services engagements resulting from new and existing customers. COST OF REVENUE LICENSES. Cost of licenses consists of royalties paid to third parties for certain technology incorporated into our products, commissions paid to third-party systems integrators and technology vendors, and the costs of duplicating media and documentation. Our cost of licenses remained relatively consistent at $155,000 for the three months ended March 31, 2000, compared to $161,000 in the corresponding period in the prior year. As a percentage of license revenue, cost of licenses was 4.5% and 7.2% for the three months ended March 31, 2000, and 1999, respectively. The lower cost of licenses on a percentage basis for the three months ended March 31, 2000, primarily was due to the $1.0 million license fee from a single U.S. customer, which had a lower proportion of third-party technology for which we paid royalties. SUPPORT AND SERVICES. Cost of support and services primarily consists of salaries and related costs for our support and service personnel, an allocation of our office expenses, payments to third-party consultants and other direct costs incurred in providing customer support, implementation and integration, consulting and training. Our cost of support and services increased to $3.0 million for the three months ended March 31, 2000, from $1.7 million for the corresponding period in the prior year, an increase of $1.3 million, or 73.1%. During 1999, we hired additional support personnel to build customer support centers in the U.S. and Asia / Pacific based on our anticipated growth. Also during 1999, we began to invest significantly in new personnel for our professional services organization in order to be less dependent on third-party service providers and so that we would have trained personnel available for our anticipated growth. We anticipate that our cost of support and services will increase as we continue to expand our support and professional services organizations to meet anticipated customer demand. OPERATING EXPENSES SALES AND MARKETING. Sales and marketing expenses primarily consist of salaries, commissions and related costs for our sales and marketing personnel, and an allocation of our office expenses, travel, entertainment and promotional expenses. Sales and marketing expenses increased to $6.4 million for the three months ended March 31, 2000, from $2.3 million for the corresponding period in the prior year, an increase of $4.1 million, or 178.9%. This increase was due to an increased number of sales and marketing personnel, primarily in the U.S., and an increase in promotional expenses associated with increased efforts to develop market awareness of our products and services and re-branding our company as Viewlocity after our separation from Frontec AB. We expect to continue increasing our marketing and promotional activities and to hire additional sales personnel. Accordingly, we anticipate that sales and marketing expenses will continue to increase. RESEARCH AND DEVELOPMENT. Research and development expenses include costs associated with the development of new products, enhancements to existing products and quality assurance activities. These expenses primarily consist of salaries and related costs for our development staff, an allocation of our office expenses and payments to third-party consultants. Research and development expenses increased to $3.6 million for the three months ended March 31, 2000, from $634,000 for the corresponding period in the prior year, an increase of $3.0 million, or 469.6%. Approximately $700,000 of this increase resulted from the acquisition of Nexstep in February 2000 and the inclusion of its results with ours. The balance primarily resulted from increased costs for research and development personnel, as we focused on expanding our software solutions and developing new products since our separation from Frontec AB. Research and development expenditures as a percentage of revenue increased to 55.8% for the three months ended March 31, 2000, compared to 13.1% for the three months ended March 31, 1999. We expect that our research and development expenses will increase as we continue to add personnel to our research and development team and expand our product offerings. 25 GENERAL AND ADMINISTRATIVE. General and administrative expenses consist of salaries and related costs for our administrative, executive and finance personnel, information systems costs, outside professional service fees and other general costs and expenses. General and administrative expenses increased to $2.4 million for the three months ended March 31, 2000, from $1.1 million for the corresponding period in the prior year, an increase of $1.3 million, or 118.1%. Since our separation from Frontec AB, we have incurred higher general and administrative costs primarily related to our new management team and the enhancement of our finance and information systems departments. We expect that general and administrative expenses will increase as we add personnel and incur additional costs related to the anticipated growth of our business. PURCHASED RESEARCH AND DEVELOPMENT. In connection with our purchase of Nexstep, we recorded a one-time charge to expense of $5.2 million during the three months ended March 31, 2000 related to in-process research and development ("IPR&D") for their Enterprise Application Architecture and related application components for supply chain management. The value of the IPR&D was determined by an independent appraisal firm by estimating the present value of the projected net cash flows to be generated by the in-process products. To determine the projected net cash flows, revenue, expenses, and other cash flow items associated with the commercialization of the in-process products was estimated for the period from 2000 though 2006. Strong revenue growth was projected through 2002; thereafter, revenue was expected to increase moderately through 2005 and then decline sharply in 2006 as other new products are expected to be introduced. The projected net cash flows were then discounted to present value at 30%, a rate of return that considers the relative risk of achieving the projected cash flows and the time value of money. Finally, a stage of completion factor was applied to the discounted cash flows. Nexstep's historical revenues were generated by providing professional services. At the date of acquisition, Nexstep's products were neither complete nor being marketed. Consistent with our policy for accounting for costs to develop our software, these products are not capitalizable under SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed" and have no alternative future use other than in research and development. We anticipate that the IPR&D will be successfully developed. The Enterprise Application Architecture and certain of the application components are currently being integrated with products that we were developing prior to the acquisition. DEFERRED COMPENSATION EXPENSE. Certain options granted during the three months ended March 31, 2000, resulted in deferred stock compensation, as the estimated fair value of the underlying common stock was greater than the exercise price on the date of grant. Our board of directors determined the fair value of the underlying common stock on the grant date based on recent sales of our preferred stock for cash to third-party investors. The total deferred stock compensation associated with these options was approximately $1.8 million. This amount is being amortized over the respective vesting periods of these options, ranging from two to four years. Approximately $914,000 was amortized during the three months ended March 31, 2000. DEPRECIATION AND AMORTIZATION. Depreciation and amortization includes the depreciation of property and equipment and the amortization of capitalized software, goodwill and other intangible assets. Depreciation and amortization increased to $601,000 for the three months ended March 31, 2000, from $219,000 for the corresponding period in the prior year, an increase of $382,000, or 174.4%. This increase was due to the amortization of goodwill and other intangible assets associated with our aquisition of Nexstep and higher levels of depreciable fixed assets during the three months ended March 31, 2000. OTHER INCOME (EXPENSE), NET. Interest, the largest component of other income (expense), primarily consists of interest earned on cash and cash equivalents, offset by interest expense related to obligations under lines of credit, loans and capital leases. Net interest income was $104,000 for the three months ended March 31, 2000, compared to net interest expense of $33,000 for the corresponding period in the prior year. The increase in net interest income primarily was due to increased interest income earned on higher cash and cash equivalent balances. 26 PROVISION (BENEFIT) FOR INCOME TAXES. As a result of our net losses, we have generated operating loss carryforwards. As of March 31, 2000, we have net operating loss carryforwards in the U.S. totaling approximately $28.6 million and net operating loss carryforwards from foreign operations totaling approximately $13.2 million. Realization of the resulting deferred tax assets is dependent on future taxable income. We have recorded a full valuation allowance against these deferred tax assets as of March 31, 2000, because we believe that it is unlikely that such assets will be realized; however, ultimate realization could be impacted by market conditions or other variables not known or anticipated at this time. COMPARISON OF YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 REVENUE LICENSES. License revenue increased to $8.8 million in 1999 from $6.8 million in 1998, an increase of $2.0 million, or 30.8%. This increase primarily was due to growth in the number of licenses to new customers in 1999 as compared to 1998. Since our separation from Frontec AB, we have invested significantly in our sales and marketing efforts, focusing on our software products. Previously, our sales and marketing efforts primarily were focused on our service offerings. License revenue increased to $6.8 million in 1998 from $6.5 million in 1997, an increase of $245,000, or 3.8%. SUPPORT. Support revenue increased to $3.0 million in 1999 from $2.0 million in 1998, an increase of $1.0 million, or 47.8%. Support revenue also increased to $2.0 million in 1998 from $1.6 million in 1997, an increase of $415,000, or 25.8%. These increases were the result of an increase in the number of new support agreements, as well as the renewal of support agreements entered into in earlier periods. SERVICES. Services revenue increased to $7.6 million in 1999 from $4.9 million in 1998, an increase of $2.7 million, or 56.1%. Services revenue increased to $4.9 million in 1998 from $3.6 million in 1997, an increase of $1.3 million, or 36.8%. These increases generally were due to growth in new services engagements resulting from new and existing customers during the periods. COST OF REVENUE LICENSES. Our cost of licenses increased to $1.0 million in 1999 from $362,000 in 1998, an increase of $662,000, or 182.9%. As a percentage of license revenue, cost of licenses increased to 11.6% in 1999 from 5.3% in 1998. This increase primarily was due to increased commissions paid to third-party systems integrators and technology vendors. Our cost of licenses increased to $362,000 in 1998 from $162,000 in 1997, an increase of $200,000, or 123.5%. As a percentage of license revenue, cost of licenses increased to 5.3% in 1998 from 2.5% in 1997. This increase primarily was due to increased cost of royalties for technology incorporated into our products. Our cost of licenses can vary from period to period based on the mix of revenue generated from our direct sales channel compared to our indirect sales channel. SUPPORT AND SERVICES. Our cost of support and services increased to $10.2 million in 1999 from $6.0 million in 1998, an increase of $4.2 million, or 70.0%. During 1999, we hired new support personnel to build customer support centers in the U.S. and Asia / Pacific based on our anticipated growth. Also during 1999, we began to invest significantly in new personnel for our professional services organization in order to be less dependent on third-party service providers and so that we would have trained personnel on staff to support our anticipated growth. Cost of support and services increased to $6.0 million in 1998 from $4.1 million in 1997, an increase of $1.9 million, or 45.7%. This increase was due to growth in the number of professional services engagements in 1998 compared to 1997. We anticipate that our cost of support and services will increase as we continue to expand our support and professional services organizations to meet anticipated customer demand. 27 OPERATING EXPENSES SALES AND MARKETING. Sales and marketing expenses increased to $14.6 million in 1999 from $8.2 million in 1998, an increase of $6.4 million, or 77.6%. This increase was due to an increased number of sales and marketing personnel, primarily in the U.S., and an increase in promotional expenses associated with increased efforts to develop market awareness of our products and services and re-branding our company as Viewlocity after our separation from Frontec AB. Sales and marketing expenses remained consistent from 1997 to 1998 at $8.2 million. We expect to continue increasing our marketing and promotional activities and to hire additional sales personnel. Accordingly, we anticipate that sales and marketing expenses will continue to increase. RESEARCH AND DEVELOPMENT. Research and development expenses increased to $4.0 million in 1999 from $2.8 million in 1998, an increase of $1.2 million, or 45.3%. This increase primarily was the result of an increase in the number of research and development personnel in order to support investment in and enhancement of our software solutions and the development of new products. Research and development expenditures as a percentage of revenue remained relatively consistent from 1998 to 1999. Research and development expenses decreased slightly to $2.8 million in 1998 from $3.1 million in 1997, a decrease of $348,000, or 11.1%. This decrease primarily was due to the consolidation of our development organization in Sweden during 1998. We have capitalized certain development expenses ranging from $400,000 to $500,000 in each of the three years ended December 31, 1997, 1998 and 1999. We expect that our research and development expenses will increase as we continue to add personnel to our research and development team and expand our product offerings. GENERAL AND ADMINISTRATIVE. General and administrative expenses increased to $8.9 million in 1999 from $4.7 million in 1998, an increase of $4.2 million, or 87.5%. After our separation from Frontec AB, we hired a new management team and enhanced our information systems department. Additionally, we incurred increased costs related to outside professional service fees and travel associated with our separation from Frontec AB and building our new management team. We also incurred approximately $800,000 in costs associated with moving and consolidating certain of our offices during 1999. General and administrative costs decreased slightly to $4.7 million in 1998 from $5.0 million in 1997, a decrease of $245,000, or 4.9%. This decrease primarily was the result of consolidating and relocating certain of our U.S. operations in early 1998. We expect that general and administrative expenses will increase as we add personnel and incur additional costs related to the anticipated growth of our business. DEPRECIATION AND AMORTIZATION. Depreciation and amortization remained consistent in 1999 and 1998 at $1.1 million in each year. Depreciation and amortization increased to $1.1 million in 1998 from $756,000 in 1997, an increase of $305,000, or 40.3%. This increase was primarily due to increased amortization of capitalized software in 1998 compared to 1997. OTHER INCOME (EXPENSE), NET. Net interest income was $67,000 in 1999 compared to net interest expense of $191,000 in 1998. This increase in net interest income primarily was due to increased interest income earned on higher cash and cash equivalent balances during 1999. Net interest expense increased to $191,000 in 1998 from $53,000 in 1997, an increase of $138,000, or 260.4%. This increase was the result of $2.5 million in borrowings during 1998 under a new loan agreement. Other income (expense) primarily consists of gains and losses from foreign currency transactions. In 1997, we realized foreign currency gains in Sweden related to favorable exchange rate fluctuations between U.S. and Swedish currencies. PROVISION (BENEFIT) FOR INCOME TAXES. As a result of our net losses, we have generated operating loss carryforwards. As of December 31, 1999, we had net operating loss carryforwards in the U.S. totaling approximately $21.9 million and net operating loss carryforwards from foreign operations totaling approximately $9.6 million. Realization of the resulting deferred tax assets is dependent on future taxable income. We have recorded a full valuation allowance against these deferred tax assets as of December 31, 1999, 1998 and 1997, because we believe that it is unlikely that such assets will be realized; however, ultimate realization could be impacted by market conditions or other variables not known or anticipated at this time. 28 SELECTED QUARTERLY RESULTS OF OPERATIONS The following tables present certain unaudited quarterly statements of operations data for each of our last five quarters, as well as the percentage of our total revenues represented by each item. The information has been derived from our unaudited financial statements, which have been prepared on substantially the same basis as the audited financial statements contained in this prospectus. Our unaudited financial statements contain all adjustments, consisting only of normal recurring adjustments, that we consider to be necessary to present fairly this information when read in conjunction with our financial statements and related notes appearing elsewhere in this prospectus. The results of operations for any quarter are not necessarily indicative of the results to be expected for any future period.
THREE MONTHS ENDED ----------------------------------------------------------------- MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, 1999 1999 1999 1999 2000 -------- -------- --------- -------- -------- (IN THOUSANDS) (UNAUDITED) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenue: Licenses................................................ $ 2,246 $ 1,693 $ 3,036 $ 1,874 $ 3,439 Support................................................. 685 767 745 794 988 Services................................................ 1,907 2,202 2,087 1,412 2,046 ------- ------- ------- ------- -------- Total revenue......................................... 4,838 4,662 5,868 4,080 6,473 Cost of revenue: Licenses................................................ 161 190 533 140 155 Support and services.................................... 1,741 2,388 2,943 3,088 3,014 ------- ------- ------- ------- -------- Total cost of revenue................................. 1,902 2,578 3,476 3,228 3,169 Gross profit.............................................. 2,936 2,084 2,392 852 3,304 Operating expenses: Sales and marketing..................................... 2,277 3,575 3,996 4,732 6,350 Research and development................................ 634 931 1,073 1,407 3,611 General and administrative.............................. 1,111 2,047 2,188 3,545 2,423 Purchased research and development...................... -- -- -- -- 5,200 Deferred compensation expense........................... -- -- -- -- 914 Depreciation and amortization........................... 219 248 229 392 601 ------- ------- ------- ------- -------- Total operating expenses.............................. 4,241 6,801 7,486 10,076 19,099 ------- ------- ------- ------- -------- Operating loss............................................ (1,305) (4,717) (5,094) (9,224) (15,795) Other income (expense), net............................... (78) 178 (71) (8) 79 ------- ------- ------- ------- -------- Loss before provision (benefit) for income taxes.......... (1,383) (4,539) (5,165) (9,232) (15,716) Provision (benefit) for income taxes...................... 18 35 48 (7) 30 ------- ------- ------- ------- -------- Net loss.................................................. $(1,401) $(4,574) $(5,213) $(9,225) $(15,746) ======= ======= ======= ======= ======== AS A PERCENTAGE OF REVENUE: Revenue: Licenses................................................ 46.4% 36.3% 51.7% 45.9% 53.1% Support................................................. 14.2 16.5 12.7 19.5 15.3 Services................................................ 39.4 47.2 35.6 34.6 31.6 ------- ------- ------- ------- -------- Total revenue......................................... 100.0 100.0 100.0 100.0 100.0 Cost of revenue: Licenses................................................ 3.3 4.1 9.1 3.4 2.4 Support and services.................................... 36.0 51.2 50.1 75.7 46.6 ------- ------- ------- ------- -------- Total cost of revenue................................. 39.3 55.3 59.2 79.1 49.0 Gross profit.............................................. 60.7 44.7 40.8 20.9 51.0 Operating expenses: Sales and marketing..................................... 47.1 76.7 68.1 116.0 98.1 Research and development................................ 13.1 20.0 18.3 34.5 55.8 General and administrative.............................. 23.0 43.9 37.3 86.9 37.4 Purchased research and development...................... -- -- -- -- 80.3 Deferred compensation expense........................... -- -- -- -- 14.1 Depreciation and amortization........................... 4.5 5.3 3.9 9.6 9.3 ------- ------- ------- ------- -------- Total operating expenses.............................. 87.7 145.9 127.6 247.0 295.0 ------- ------- ------- ------- -------- Operating loss............................................ (27.0) (101.2) (86.8) (226.1) (244.0) Other income (expense), net............................... (1.6) 3.8 (1.2) (0.2) 1.2 ------- ------- ------- ------- -------- Loss before provision (benefit) for income taxes.......... (28.6) (97.4) (88.0) (226.3) (242.8) Provision (benefit) for income taxes...................... 0.4 0.7 0.8 (0.2) 0.5 ------- ------- ------- ------- -------- Net loss.................................................. (29.0)% (98.1)% (88.8)% (226.1)% (243.3)% ======= ======= ======= ======= ========
29 Our license revenue has fluctuated over the last five quarters primarily as a result of two factors. First, since our separation from Frontec AB in February 1999, we have been increasing our sales and marketing focus on our software solutions relative to our professional services offerings. Second, our license revenue is affected by the timing of our customers' decisions to enter into license agreements with us. Support and services revenue increased or remained relatively consistent in each quarter with the exception of the quarter ended December 31, 1999, when many of our customers were focusing on their internal year 2000 issues. As a result, we entered into fewer new professional services engagements during the fourth quarter of 1999. Our cost of license revenue remained relatively consistent over the five quarters presented with the exception of the quarter ended September 30, 1999, when we incurred increased commissions to third-party systems integrators and technology vendors. Our cost of support and services has increased in each quarter due to the expansion of our support and professional services organizations. Our operating expenses generally have increased in each quarter due to increased staffing in sales and marketing, research and development and general and administrative functions and increases in marketing programs and promotional activities. In addition, general and administrative expenses have increased due to increases in travel, legal, accounting and other professional services fees. LIQUIDITY AND CAPITAL RESOURCES During 1997 and 1998, we financed our operations primarily through loans and capital contributions from Frontec AB. Since our separation from Frontec AB in February 1999, we have financed our operations primarily through private sales of convertible preferred stock, which totaled $37.8 million in net proceeds through March 31, 2000. As of March 31, 2000, we had $6.9 million of cash and cash equivalents. Net cash used in operating activities was $14.4 million for the three months ended March 31, 2000, and $10.4 million, $10.0 million and $7.4 million for the years ended December 31, 1999, 1998 and 1997, respectively. For all periods, cash used in operating activities primarily was attributable to our net losses during those periods. Our sales cycle is lengthy and unpredictable and may cause our revenues and operating results to fluctuate from period to period. Any lengthening of our sales cycle may adversely affect the amount of cash provided by our operating activities. During the three months ended March 31, 2000, we expended $5.9 million in cash for investing activities compared to $85,000 for the corresponding period in the prior year. We expended $4.2 million for the purchase of Nexstep and an additional $1.7 million for capital expenditures. Net cash used in investing activities was $2.4 million, $1.0 million and $1.2 million for the years ended December 31, 1999, 1998 and 1997, respectively. For each of these periods, cash used in investing activities primarily was attributable to purchases of property and equipment and capitalized software development expenditures. In 1999, we also expended $180,000 related to the acquisition of a services company in Germany. In order to fund our operations during 1999, we raised $20.5 million in proceeds from the sale of convertible preferred stock to third parties. We raised an additional $17.3 million in proceeds from the sale of convertible preferred stock to third parties during the three months ended March 31, 2000. Additional funding was derived from an equipment financing facility which provided borrowings of $693,000 in 1999 and an additional $470,000 during the three months ended March 31, 2000. For 1997 and 1998, cash provided by financing activities was derived primarily from capital contributions by Frontec AB. In 1998, we also borrowed $2.4 million through a line of credit with a bank in Sweden which we refinanced through a loan from a bank in the U.S. during 1999. In February 1999, in connection with our separation from Frontec AB, we issued 2,000 shares of Series C convertible preferred stock to Frontec AB in exchange for the satisfaction and cancellation of 30 substantially all debt owed to Frontec AB or any of its other subsidiaries at that time, which debt was approximately $15.4 million. As of March 31, 2000, our principal commitments consisted of obligations outstanding under operating leases and our equipment financing facility. Although we have no material commitments for capital expenditures, we anticipate that capital expenditures and lease commitments will increase, consistent with our anticipated growth in operations, infrastructure and personnel. We intend to spend an estimated $1.2 million to $1.7 million to complete the development of the in-process research and development acquired as part of the acquisition of Nexstep. On April 18, 2000, and June 22, 2000, we issued 2,520,261 shares and 1,487,805 shares of Series E convertible preferred stock, respectively, at $6.17 per share. The proceeds, net of expenses, were approximately $24.6 million. We expect to experience significant growth in our operating expenses for the foreseeable future in order to execute our business strategy. As a result, we anticipate that operating expenses and planned capital expenditures will constitute a material use of our cash resources. In addition, we may use cash resources to fund acquisitions or investments in other businesses, technologies or product lines. We believe that available cash and cash equivalents, including the net proceeds from our recent private placements of equity, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. However, we may require additional funds to acquire or invest in other businesses, to support our working capital and capital expenditure needs or for other purposes, and may seek to raise these additional funds through public or private debt or equity financings. If we are unable to obtain additional financing when needed, we may be required to reduce the scope of our planned product development and marketing efforts, which may harm our business and operating results. We cannot assure you that additional financing will be available, or if available, will be on reasonable terms and not dilutive to our stockholders. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as amended by SFAS No. 137, is effective for all quarters of fiscal years beginning after June 15, 2000. Currently, we do not utilize derivative financial instruments. Therefore, the adoption of SFAS No. 133 is not expected to have a material impact on our results of operations or financial position. In December 1999, the Securities and Exchange Commission ("SEC") issued SAB No. 101, "Revenue Recognition in Financial Statements." The SAB requires four basic criteria to be met before companies can record revenue. These are: (a) persuasive evidence that an arrangement exists; (b) delivery has occurred or services have been rendered; (c) the seller's price to the buyer is fixed or determinable; and (d) collectibility is reasonably assured. Many of the examples in the SAB address situations that give rise to the potential for recording revenue prematurely. They include transactions subject to uncertainties regarding customer acceptance, including rights to refunds and extended payment terms, or require continuing involvement by the seller. In March 2000, the SEC issued SAB No. 101A, "Amendment: Revenue Recognition in Financial Statements," that delays the implementation date of certain provisions of SAB 101. The adoption of SAB 101 is not expected to have a material impact on our results of operations or financial position. In March 2000, the Financial Accounting Standards Board issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation, an interpretation of APB Opinion No. 25." The Interpretation poses and answers 20 separate questions dealing with APB 25 implementation practice issues. 31 The Interpretation will be applied prospectively to new awards, modifications to outstanding awards, and changes in employee status on or after July 1, 2000, except as follows: (i) requirements related to the definition of an employee apply to new awards granted after December 15, 1998; (ii) modifications that directly or indirectly reduce the exercise price of an award apply to modifications made after December 15, 1998; and (iii) modifications to add a reload feature to an award apply to modifications made after January 12, 2000. Financial statements for periods prior to July 1, 2000 will not be affected. The adoption of Interpretation 44 is not expected to have a material impact on our results of operations or financial position. YEAR 2000 To date, we have not experienced any significant system or application failures due to the year 2000 issue. We incurred immaterial costs to address year 2000 remediation issues within our organization. Based on our experience, it is not anticipated that we will incur material additional expenses to address year 2000 concerns. SEASONALITY AND INFLATION Although our operations have not proven to be significantly seasonal, quarterly revenues and earnings may vary at times. This primarily is attributable to the timing of customers entering into license agreements with us and fluctuations in the amount of professional services used by our customers, especially during holiday seasons. We are not able to control the timing of these decisions or fluctuations. Although we cannot accurately determine the amounts attributable to inflation, we have been affected by inflation through increased costs of employee compensation and other operating expenses. To the extent permitted by the marketplace for our products and services, we attempt to recover increases in costs by periodically increasing prices. Additionally, most of our support agreements provide for annual increases in pricing. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK The following discusses our exposure to market risk related to changes in foreign currency exchange rates and interest rates. This discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may vary materially as a result of a number or factors, including those set forth in the "Risk Factors" and elsewhere in this prospectus. FOREIGN CURRENCY EXCHANGE RATE RISK In 1999, we derived approximately 83% of our recognized revenue from customers outside the U.S. Most of the billings to these customers were denominated in currencies other than the U.S. dollar. As a result, our operating results are subject to fluctuations based upon changes in the exchange rates of certain currencies in relation to the U.S. dollar. Furthermore, to the extent that we engage in international sales denominated in U.S. dollars, an increase in the value of the U.S. dollar relative to foreign currencies may make our products less competitive in international markets. To date, we have not used financial hedging techniques. Although we will continue to monitor our exposure to currency exchange rate fluctuations, and when appropriate, may use financial hedging techniques in the future to minimize the effect of these fluctuations, we cannot assure you that exchange rate fluctuations will not adversely affect our financial results in the future. INTEREST RATE RISK As of March 31, 2000, we had cash and cash equivalents of $6.9 million, which consist of cash and highly liquid short-term investments, and our exposure to interest rate changes has therefore been immaterial. 32 As of March 31, 2000, we had total debt outstanding of $2.7 million, which has interest rates that are tied to the lenders' prime rates. Therefore, we are subject to exposure to interest rate risk for these borrowings based on fluctuations in the prime rate. Based upon the outstanding indebtedness under these arrangements, an increase in the prime rate of 0.5% would cause a corresponding increase in our annual interest expense of approximately $13,500. The interest rate on our capital leases is fixed, and as such, we are not subject to risks associated with market rate increases. 33 BUSINESS OVERVIEW We are a leading global provider of e-business applications and integration software and services that enable e-business networks and synchronize supply webs. Our solutions for trading communities and e-business networks provide application integration, business-to-business integration and trading community management. In addition, our synchronization solutions provide for the automation of business processes and information flows between customers, suppliers and trading communities, and offer decision support applications for managing the flow of goods and services throughout the supply web. We believe that we are the first e-business network solutions provider to offer business value by combining integration applications with supply chain domain expertise and supply web applications. Our products and services integrate diverse platforms and applications, simplify the connection of trading partners to the network, monitor shared supply web activities and information, model and manage interactive business processes, and allow our customers to interpret and react in real time to events that could jeopardize shared operations. Our solutions enable our customers to create value by accelerating their time to market, increasing their market share and revenue opportunities, improving asset utilization, reducing inventory and logistics expenses and improving customer satisfaction. We believe our Internet-based supply web synchronization components provide a significant competitive advantage. Our solutions use monitoring and notification capabilities in combination with event-based business rules to provide trading partners with suggested responses to flagged events via early detection and automatic response to execution exceptions. We have implemented solutions that automate, extend and synchronize the supply web operations of multi-national consumer products companies, leading logistic service providers, online trading exchanges and e-business networks. As of June 30, 2000, we had over 1,000 customers worldwide with over 3,200 product implementations. INDUSTRY BACKGROUND THE EMERGENCE OF TRADING COMMUNITIES AND E-BUSINESS NETWORKS The emergence of the Internet has resulted in significant changes in global economic and business conditions. Enterprises in this new economy are recognizing the need to leverage the Internet to transform their traditional corporate structures and relationships with trading partners into trading communities and e-business networks. Members of these new e-business networks are able to outsource supply web operations to their most efficient trading partners resulting in effective, streamlined operations and the ability to remain focused on customer satisfaction. As a result, members of the e-business networks also are realizing incremental value through improved asset utilization, reduction of inventory and logistics expenses, and improved customer satisfaction, thereby providing competitive differentiation. The creation of a trading community requires the automation and integration of processes and information flows among trading partners. It also requires precise execution of global logistics sourcing and fulfillment. Sharing information across the integrated supply web permits real-time, interactive collaboration among trading partners. As a result, trading partners are able to address logistics constraints through visibility into the supply web, which provides a competitive advantage to the trading partners and allows for improved efficiencies, cost reduction and better customer service. We believe that the most successful businesses will require trading partners to be tightly integrated and synchronized, which can be a complex and challenging task for most organizations. The migration to Internet-based systems is underway. According to estimates by Forrester Research, the total dollar value of business-to-business, or B2B, transactions over the Internet is expected to grow to over $2.7 trillion by 2004, and B2B e-commerce will account for more than 90% of U.S. e-commerce transactions by 2004. In addition, the Delphi Group forecasts that revenues from B2B e-commerce software and services will grow from $5 billion in 1999 to $40 billion in 2002. 34 THE EVOLUTION OF LEGACY SYSTEMS Most large organizations have implemented some form of Enterprise Resource Planning, or ERP, applications to automate their internal business processes. These applications, including manufacturing, financial, supply chain management, transportation management and warehouse management, provide organizations with the ability to define, automate and refine internal business processes. In addition, many organizations have acquired complementary best of breed applications, and some have implemented Electronic Data Interchange, or EDI, or other secure communications protocols for limited trading partner integration. Initially, these applications provided significant competitive advantage to organizations through higher efficiency and better quality at lower production costs. However, in order to continue to create incremental value, organizations are now attempting to integrate their applications across the entire trading partner network to achieve greater efficiencies in logistics. Extending inventory visibility to suppliers and customers can allow for significantly better coordination and optimization of materials delivery, manufacturing and shipping plans. This can decrease cycle times, transaction costs and working capital requirements, while also increasing available capacity, market share and levels of customer service. Within an e-business enterprise there are a number of basic applications such as manufacturing, materials requirements planning, supply chain planning, inventory management, warehouse management, transportation, sales force automation and order entry systems. Each application impacts the other applications, and to be interactive must rely on common information. While many large organizations have implemented ERP applications, most of these applications are neither integrated within the enterprise nor ready to be integrated across trading partners. To integrate an organization's applications with a network of trading partners, the applications must share the same set of information with the applications of partners and as that information changes, it must be updated in real time. e-Business models require interaction and integration at the business process, or application, level in order to maximize B2B e-commerce benefits. For example, a retail trading partner is able to improve its inventory turnover by gaining visibility into a supplier's inventory, securing available goods and communicating this transaction to others. In order to obtain this breadth of visibility throughout the supply web, companies typically need to consolidate and integrate inventory data among multiple trading partners and from different application systems, such as Supply Chain Management, or SCM, and Supply Chain Execution, or SCE. Companies select and configure application systems to fulfill the internal requirements of their particular businesses and to support traditional sequential supply chain relationships. SCE systems provide limited integration and real-time capabilities with third parties. Although each of these systems can be integrated among third parties, traditional systems require that all parties must implement the same application and configurations to achieve B2B e-commerce benefits. Companies are addressing the demands of B2B e-commerce through the real-time integration and automation of systems and business processes and the subsequent development of trading communities. Companies are reducing their investment in physical assets, such as inventory, transportation equipment and excess production capability and are replacing their existing methods of order and fulfillment logistics. The Yankee Group estimates that 35% to 40% of total corporate IT spending is currently directed toward the costs of systems integration, both within the enterprise and among trading partners. Increasingly, companies are addressing these B2B integration demands through outsourcing and increased reliance on trading partners. LIMITATIONS OF EXISTING E-BUSINESS TRADING COMMUNITY SOLUTIONS To compete successfully, companies must leverage their significant IT investments through the integration of business critical systems, both within the enterprise and among trading partners. Achieving trading community integration and synchronization is difficult because companies use a wide array of disparate IT systems and communication protocols, including packaged applications and custom business systems. We believe that no single approach effectively delivers the full spectrum of internal, external and 35 community-based e-business integration and business process management solutions. Existing approaches generally do not effectively address the integration of older legacy systems. These approaches can be grouped into the following categories: INTERNAL INTEGRATION is the connection of business processes, systems, data and communication methods essential to gain visibility within the enterprise and prepare for external partner interactions. Historically, companies bridged disparate systems through custom development of point-to-point integrations. Companies have also solved point-to-point integration with EAI software that integrates most major packaged applications. Generally, neither custom integration nor EAI software is capable of implementing real-time, event-driven messaging that integrates business processes between trading partners. In addition, these integration methods generally are resource-intensive and cannot scale to handle numerous systems or large numbers of transactions. EXTENDED ENTERPRISE INTEGRATION is the communication among trading partners that allows the transparent interaction of IT infrastructures through messaging technologies without regard to business-specific processes, individual system configurations or communication preferences. The two most widely used messaging technologies are EDI formats and Extensible Markup Language, or XML. EDI generally has been used by large organizations that rely on batch-oriented systems for B2B communication over proprietary networks. To extend EDI benefits to additional trading partners, software and network installations must be set up at the site of each additional partner. XML tools allow applications to exchange data over the Internet using XML data definitions. For a trading community to take full advantage of XML, all trading partners must agree on a specific dialect standard to define the data structure. Often, the large number and variety of participants in trading communities make both of these approaches expensive and labor-intensive. BUSINESS PROCESS INTEGRATION is the collaboration among multiple businesses to create public and private virtual exchanges and to build larger community affiliations populated by market makers, trading partners, customers and suppliers. Historically, business process integration between companies resulted in a solution for a single purpose, such as Just In Time or Vendor Managed Inventory, and restricted any modifications with respect to trading partners, processes, data and data structures. We believe that for effective business process integration, solutions must facilitate flexible business processes that allow data exchange and dynamic trading interactions among trading partners. TRADING COMMUNITY SYNCHRONIZATION is the coordination of the information flow within an entire trading community delivered through real-time communication and event execution across the trading community. Currently, real-time trading community synchronization approaches are not widespread because synchronization requires complex integration and real-time event execution solutions. THE OPPORTUNITY FOR E-BUSINESS INTEGRATION AND TRADING COMMUNITY SOLUTIONS We believe there is a significant market opportunity to provide best-of-breed B2B integration software and supply web logistics applications that function within a component based architecture and an integrated application environment. To be successful in the emerging e-business market, companies need comprehensive solutions that accelerate time to market and provide quantifiable business value. Companies must bridge new technology with older existing legacy systems and applications. Companies must also find solutions that allow management to make proactive decisions to resolve dynamic business problems. THE VIEWLOCITY SOLUTION Our e-business network solutions include application integration, B2B integration and trading community management. In addition, our synchronization solutions provide for the automation of business processes and information flows between customers, suppliers and trading communities, and decision support applications for managing the flow of goods and services in the supply web. 36 Our integration solutions give customers the ability to successfully build trading community infrastructures that address the complexities of many-to-many integration in a diverse IT environment. Our integration technology provides remote connectivity of trading partners with their existing IT environments, without imposing new standards or applications. As a result, trading partners can communicate information and collaborate through shared business processes in real-time. Our community management solutions provide a framework for managing a dynamic trading community while quickly, easily and remotely populating the community with new participants. Through our process management solutions, we enable our customers to define and enhance business processes and easily change the processes with minimal customization. Our customers can define integration requirements through graphical workflow, business process models and rules-based logic. Building upon our integration products, our supply web synchronization solutions enable our customers to leverage trading community information from multiple sources and systems. Our supply web synchronization solutions provide: - VISIBILITY that provides up-to-date information regarding the status of goods and services across multiple enterprises and gives a common and comprehensive view of the movement of the goods and services; - MONITORING of business events within an enterprise and throughout supply webs allowing for exception management and proactive problem resolution; - EVENT IDENTIFICATION of potential difficulties within trading communities before implementing business decisions and processes by simulating and validating a customer's proposed model; and - NOTIFICATION of events to individuals and systems driven by specific business rules. We leverage strong relationships worldwide with leading application software and systems integration partners to provide value-added, scalable solutions. We believe that we are the first solutions provider to create business value by combining B2B integration tools with supply web synchronization applications specifically designed and developed to be utilized over the Internet. Our solutions provide the following benefits: FIRST MOVER ADVANTAGE. We believe that our solutions provide companies the potential to accelerate their time to market through rapid implementation, retention of existing IT infrastructure and applications and capacity for growth. We accomplish this through the utilization of our many-to-many B2B integration solutions. The benefits can be measured in terms of increased market share and revenue opportunities for the trading community and increased speed to realize benefits for the community members. REAL-TIME INTERACTION. We believe we are the leading provider of B2B integration solutions that allow real-time interaction among trading partners. Our event-driven solutions allow for optimization of supply web processes and the ability to react to unexpected and exception events quickly. Early detection of exception events provides a broader set of response alternatives. These real-time decisions reduce the risk of uninformed decisions and often increase sales and asset utilization, reduce expenses and improve customer satisfaction. Our visibility components provide customer access to real-time order fulfillment status information using an Internet-based graphical dashboard. INCREASED RETURN ON INVESTMENT. Our solutions allow our customers to maximize their return on investment by leveraging existing IT systems, best-of-breed applications and emerging technologies and by creating greater visibility, monitoring and decision support capabilities. In addition, our solutions integrate these technologies with trading partners and trading communities through all major communication protocols. Our solutions support all business systems, including ERP, SCM and EAI, as well as technologies, including Java and XML, open Application Program Interface and all major international EDI formats (American, Asian and European). Our solutions help drive increased return on assets, reduced cycle times, lower inventories and higher inventory turnover. 37 REDUCED IMPLEMENTATION RISK. Because of our proven performance, our solutions reduce implementation and scalability risks for our customers. We have designed, developed and implemented over 3,200 solutions for more than 1,000 customers in 51 countries. STRATEGY Our strategy is to strengthen our global leadership position in providing software and services that enable complex trading communities and synchronize supply webs. Key elements of our strategy are: EXPAND E-BUSINESS TECHNOLOGY AND APPLICATION LEADERSHIP. We intend to expand our leadership position in providing integration solutions including B2B integration software and innovative Internet-based logistics synchronization applications that further enable organizations to maximize the value of their extended enterprise. We will continue to invest in our product offerings through research and development, both internally and on location at client sites, and we plan to launch new synchronization applications that provide trading partners with real-time visibility into their extended supply webs. In addition, we will continue to build our e-business solutions group to provide support and consulting services to our clients and further drive innovation and technical and thought leadership. ENHANCE OUR E-BUSINESS SUPPLY CHAIN DOMAIN EXPERTISE. We believe that the market for B2B integration applications will experience significant changes over the next few years. Traditional linear supply chains are already transforming into dynamic trading communities, and e-business value chain applications will mature through the use of real-time and Internet technology. Our objective is to be at the forefront of these developments as the leading provider of B2B integration applications. Our management team has significant B2B integration and supply chain domain expertise, including ERP, advance planning, transportation management systems and supply chain and logistics operations. We will continue to enhance our e-business logistics expertise through research and development, acquisitions and strategic alliances to provide solutions that offer significant value to our customers. TARGET HIGH-GROWTH, GLOBAL MARKETS. We focus our sales efforts on selected high-growth, global markets in which we believe our solutions can provide significant business benefits and in which we can reduce our sales and implementation cycles. We currently target companies that specialize in technology, consumer packaged goods, e-commerce and traditional retail and apparel and third-party logistics. These markets are characterized by high rates of growth, dynamic business processes and rapid adoption of e-business solutions. We seek to further penetrate these and other markets that we believe are rapidly adopting e-business strategies. LEVERAGE AND SUPPORT OUR GLOBAL CUSTOMERS. We believe our customer-centric focus provides significant opportunity to proactively market to our existing customer base and develop follow-on sales opportunities. We will continue to leverage our existing customers who serve as reference accounts and increase visibility to prospective customers within their trading communities. In addition, our account management team focuses exclusively on maximizing customer satisfaction. This team resolves outstanding issues, educates customers on our latest products and services and establishes communications with our customers' senior management to facilitate further business development. CONTINUE OUR GLOBAL LEADERSHIP THROUGH STRATEGIC ALLIANCES. We plan to continue to significantly increase our presence in the U.S. and expand our global leadership by establishing additional offices, increasing our sales and marketing personnel and pursuing strategic alliances. We have sales and services offices in Australia, China, France, Germany, the Netherlands, Singapore, Sweden, the U.K. and the U.S. We also have a sales office in Malaysia and Hong Kong. We plan to aggressively expand our sales efforts utilizing our direct sales force and partnerships and alliances with third-party systems integrators and value-added resellers. Our partnerships and alliances provide additional global marketing and distribution channels that enable us to reach a larger customer base. In addition, we intend to continue pursuing 38 acquisitions and investments in complementary businesses that provide us with opportunities for enhanced product and services offerings, additional technology solutions and distribution channels. PRODUCTS AND TECHNOLOGY TRADESYNC FAMILY OF PRODUCTS Our TradeSync family of products provides a comprehensive solution of applications for trading community integration, communication and synchronization. Our product offerings create trading community efficiencies by capturing business transactions within the extended supply web, managing trading partner relationships and providing companies with structure and value-added information to integrate and synchronize processes and activities within trading communities. Our solution suite emphasizes our expertise in solving complex B2B integration and synchronization issues among global trading communities. INTEGRATION BROKER AMTrix is our powerful integration technology that has been developed, deployed and enhanced over a nine year period, and as a result, has evolved into a highly reliable and proven product. AMTrix enables real-time information integration between diverse and remote systems by connecting multiple applications within an enterprise or a trading community. AMTrix's distributed architecture and strong scalability is tailored for B2B business environments that require expanding business functionality and extensive reusability of business process models. By capturing and processing business events in real-time, AMTrix supports dynamic business processes, workflows and associated information flows. Operating on UNIX, Windows NT and AS/400, AMTrix provides the full range of functions needed to integrate diverse systems across operating platforms, databases, communication protocols, technology infrastructures, e-commerce standards and message and application formats. AMTrix's open, agnostic architecture enables one AMTrix system to connect with multiple diverse and remote systems involving different hardware, operating systems, databases, communication protocols and message formats, including XML dialects, EDI dialects, ERP systems, planning systems and legacy systems. Key features of AMTrix include: - flexible architecture designed for B2B integration and e-business growth; - remote set-up of trading partners using their existing IT environments without imposing new software on the trading partner; and - message broker technology that manages real-time, event-based business interactions, including message queuing transport and transformation, application connectors and business rules. INTEGRATION CONNECTORS Our integration connectors automatically translate and map data from one structure, application, protocol or event to another, both within a single enterprise and across multiple enterprises, regardless of data formats. We offer an extensive library of connectors that provide quick access to data contained in 39 disparate business applications. Our integration connectors are add-on modules to the AMTrix system. The following table illustrates the range of our pre-packaged B2B integration connectors:
CONNECTORS BENEFIT EXAMPLES - ----------------------------- ----------------------------- ----------------------------- TECHNOLOGY CONNECTORS Enable one data structure to EDI, HTML, XML (multiple be mapped to any other dialects), Oracle, Informix, structure Sybase, MS SQLServer, MS BizTalk, DB2/400, DB2 (AIX), ODBC APPLICATION CONNECTORS Enable comprehensive SAP R/3, JDE OneWorld integration of key business applications COMMUNICATION CONNECTORS Enable communication between HTTP, SAP ALE, IBM MQ series, major protocols and E-mail, FTP, OFTP, X.420, environments X.435, Sockets, ASYNC, SNADS,TCP/IP, X.25 EVENT NOTIFICATION CONNECTORS Enable event-based E-mail, Fax, Pager, Microsoft notification to individuals Exchange, Lotus Notes and systems
CONNECTOR DEVELOPMENT PLATFORM Our Connector Development Platform, or CDP, provides a simplified method for our partners and customers to rapidly develop and implement additional application connectors. Our CDP includes the requisite mechanisms for describing the nature, structure and meaning of data and for accessing and converting data. It provides a standard, flexible process to quickly implement seamless data and logical links between different applications and environments across disparate IT infrastructures. This reduces the cost and time of developing and maintaining application integration interfaces by allowing our partners and customers to rapidly develop and implement customized connectors that join disparate data, applications, protocols and events. PROCESS MANAGER Our Process Manager supplies the foundation for managing and synchronizing business events and provides business process technology that solves the challenges of both business process integration and application integration. Our Process Manager enables our customers to define and enhance business processes and easily change the processes with minimal customization. This enables our customers to define integration requirements through graphical workflow, business process models and rules-based logic. When business processes change, the workflow and process models are easily adapted to reflect the desired interaction among trading partners. Our Process Manager provides the following benefits in business process modeling, integration and synchronization: - visualization of business processes for easier modeling; - synchronization and timing of business events; - integration of both manual and automated processes; - identification of potential difficulties before implementation of the business process model by simulating and validating a customer's proposed model; - availability of an enterprise-wide, real-time graphical dashboard of key performance indicators; and - ability to easily change enterprise processes and integration points. 40 COMMUNITY MANAGER Our Community Manager provides a framework for establishing and managing a dynamic trading community while quickly, easily and remotely populating the communities with new participants. We leverage the capabilities of our B2B integration technology and process broker technology to connect and communicate across multi-enterprise trading communities and to support a diversity of trading relationships and transactions in an Internet-based, user-friendly environment. The Community Manager automates trading relationships by: - providing remote access by non-technical users to the system management, setup and administration of the trading community; - selecting and managing business processes through community business rules; - facilitating business analysis through access to logging and monitoring of business events that allows for exception management, problem resolution and informational alerts; - establishing profiles for trading community members through secure authentication and authorization that allows the members to define and manage the level of access to information provided to specific members of the trading community; and - creating a community catalog that maintains shared definitions using both XML and EDI. SUPPLY WEB COMPONENTS Our Supply Web components are Internet-based solutions for monitoring and managing a multitude of events across extended supply webs or within complex trading communities. These components aggregate information throughout the supply web or within a trading community so that the information can be shared among participating members. Designed to accommodate the volume and velocity of the information in supply webs and other complex trading communities, our Supply Web components manage by exception and alert participants when scheduled events do not occur. This alert notification works in conjunction with workflow rules to generate appropriate operational responses. We designed our Supply Web components using a common architectural framework. As a result, we can embed these components as modules in our applications or the applications developed by third parties, including third party warehouse management systems, SCM and ERP applications. This common architecture also allows third parties to develop additional components, either as extensions and modifications of our base components or solutions to different business problems. Our Inventory Visibility component provides aggregation and monitoring of inventory levels and product activity data within an enterprise and among the members of a trading community. Our Inventory Visibility component captures data fragments from various sources and presents this information in a single, up-to-date view of inventory status across multiple enterprises and in the extended supply web. Additionally, the Inventory Visibility component translates inventory descriptions into a single community language to enable comprehensive inventory visibility and effective management. Using this application, all parties along the supply web are able to track and monitor each other's inventory status, enabling greater efficiency and quicker, more reliable supply web performance. 41 Our Shipment Visibility component provides a multi-enterprise, multi-leg view of shipments, orders and associated inventory throughout the trading community. This component permits trading partners to query and retrieve shipment information related to outstanding orders, which provides greater visibility into shipments throughout the supply web. Our Shipment Visibility component also: - provides current shipment details including scheduled departure and arrival times, as well as origin, routing and destination information and status; - allows users to view events associated with a shipment life cycle so they may intervene to assure that customer delivery dates are met; and - generates exception event alerts to enable users to take corrective actions. PROFESSIONAL SERVICES E-BUSINESS VALUATION ASSESSMENT METHODOLOGY. Our professional services organization consists of over 85 consultants worldwide providing support to our customers and third-party systems integrators with the implementation of our e-business technology solutions. Incorporating our e-business valuation and assessment methodology, or e-VA, we assist customers and partners in rapidly developing e-business solutions. The e-VA methodology aligns inter- and intra-company processes and technology and identifies the business objectives that will provide identifiable gains for an organization. Once business objectives are determined and prioritized, we develop an implementation plan to achieve our objectives. E-VA is designed to help companies achieve rapid incremental returns while deploying our solutions. E-BUSINESS VALUE EXECUTION. To ensure global consistency of approach and quality, our professional services team utilizes our proprietary e-business value execution, or e-VX, full life cycle implementation methodology. Our consultants are trained in this methodology by our global training experts. This methodology enables us to service our large multi-national customers and third-party systems integrators globally with local resources in a seamless fashion. We emphasize this competitive advantage of our "think global, act local" deployment capability. CUSTOMER SUPPORT. Through our comprehensive customer service programs, the relationships we establish with our customers extend beyond initial systems implementations. We are a worldwide solutions provider with an engineering group of 45 technical support consultants. We offer our customers a choice of several levels of customer support, all of which provide dependable and timely resolution of technical inquiries. Customers covered by a support agreement have support available seven days a week and 24 hours a day. Customers can access our global support organization by using our toll-free telephone service, e-mail or by submitting support requests over the Internet. Progress of support requests can be monitored over the Internet. Our support web site provides customers with access to our knowledge database, product bulletins, product patches, product manuals, documentation updates, e-group discussion forums and customer feedback. Customers also have unlimited access to trained maintenance personnel. Customer satisfaction is a high priority for us. We use a third-party research company to evaluate our customers' satisfaction on a recurring basis. We use the customer feedback we receive to help identify, analyze and improve our customer service offerings. In addition, we maintain a job-rotation program between our support and professional services organizations, which provides an ongoing learning experience for our consultants and a greater knowledge base for our customers. TRAINING. We believe that effective training is a key component of delivering a comprehensive e-business solution. Our global training offers a full range of training courses, deliverable worldwide to a broad audience. Courses include introductions to our products, integration methodology, product extensions and workshops that tie multiple dimensions together. The curriculum is partitioned into basic, intermediate and advanced offerings that target audiences from business-oriented to highly technical. We offer certification in these roles since each plays a key part in planning, implementing and administering solutions. We conduct training and certification in centers located in Atlanta, Georgia; Beijing, China; London, U.K.; Singapore; Stockholm, Sweden; and Sydney, Australia. 42 SIGNIFICANT RELATIONSHIPS We have formed significant business relationships with leading organizations to increase our global market presence and sales and implementation capabilities. Through these relationships, we provide our customers with rapid implementations of our highly scalable e-business solutions. VALUE-ADDED RESELLERS. We market and sell our e-business solutions through value-added resellers, or VARs, including Origin Taiwan BV, and Logica UK Ltd. Many of our VARs specialize in providing solutions within the vertical markets and functional areas in which we focus. We intend to leverage our industry expertise with VARs to deliver solutions that accelerate our penetration in key vertical markets. GLOBAL SYSTEMS INTEGRATORS AND COMPONENT ASSEMBLY RELATIONSHIPS. We have informal relationships with many leading third-party systems integrators based on jointly pursuing customers and implementing our solutions. These relationships include Andersen Consulting, Cap Gemini, S.A., Ernst & Young, IBM Global Services, Asea Brown Boveri Inc., Electronic Data Systems Corporation, Origin International BV, BORN Information Systems, Inc. and iXL Enterprises, Inc. Many of these entities and others with which we have worked have significant e-business initiatives with Fortune 100 early adopter customers, which enables us to quickly reach key decision makers. In addition to reducing our sales cycle, these entities enable us to leverage our service organization and our ability to service more customers. SOFTWARE COMPANY RELATIONSHIPS. We have informal relationships with leading ERP, supply chain planning and supply chain execution software providers such as Ariba, SAP AG, J.D. Edwards World Solutions Corporation, Industri-Matematik International AB, IBM, Manhattan Associates, Inc., Microsoft Corporation and Tradeum Inc. TRADING COMMUNITIES. These communities are powerful relationships that give us access to all community members, enhancing our ability to sell e-business solutions to those members. We have informal relationships with trading communities such as CarrierPoint, Inc., ECnet, Inc. (formerly Advanced Manufacturing Online Ltd.), Industry Networks, InfoChain (formerly Marconi Data Systems, Inc.) Mainpath, Inc. and VLO Investments Pty Limited. CUSTOMERS As of June 30, 2000, we had over 1,000 customers worldwide with over 3,200 product implementations. Many of our customers are Global 2000 organizations. The following are representative direct and indirect customers that use our software products:
ENTERPRISES American Standard, Inc. Kraft Jacob Suchard Erzeugnisse GmbH & Co. KG Brown and Williamson Tobacco Corporation Mars UK Limited Carrefour SA Ryder Integrated Logistics, Inc. China Ocean Shipping (Group) Company Schenker AB DHL International, Ltd. Siemens Corporation E.I. du Pont de Nemours and Company Warner-Lambert France Telecomm Wyle Systems, LLC TRADING COMMUNITIES 3Plex.com Marconi Corporation plc CarrierPoint, Inc. (Electronic Logistics Management Solutions) China Communications Import and Export Sony Systems Design International Pte. Ltd. ECnet, Inc. Swedish Pharmacy (apoteksbolaget) IndustryNetworks.com, L.L.C. Telia Electronic Commerce Mainpath, Inc. UK Utilities Volvo AB
43 SELECTED CUSTOMER CASE STUDIES The following case studies illustrate how some of our customers are using our solutions: CARREFOUR SA Carrefour SA, based in Paris, France, which is the second largest retail organization in the world, operates more than 9,000 stores in 26 countries. These stores offer a wide variety of merchandise ranging from food and clothing to appliances and computers, as well as financial and optical services. OPPORTUNITY: Carrefour's strategic initiative for deploying an Efficient Customer Response application throughout its global operations called for a solution to link its internal applications and external suppliers. Located in 26 countries, Carrefour needed a robust solution with the breadth and depth of functionality to support a global supply web. SOLUTION: Carrefour has already implemented AMTrix in several countries to quickly and seamlessly integrate its merchandising and logistics applications. By using AMTrix, Carrefour avoided many classic point-to-point problems associated with hard-coded integration because our solution provided the insulation between its internal applications and its external trading partners. To date, AMTrix and its wide range of connectors have met more than 95% of Carrefour's requirements. CARRIERPOINT CarrierPoint, based in Atlanta, Georgia, is a collaborative transportation marketplace that drives value to both shippers and carriers by delivering contract management and dynamic spot market pricing tools for truckload and less-than-truckload shipments. CarrierPoint's Marketplace(SM) allows each participant to use the web to set up and retain control over their processes using their normal business rules. OPPORTUNITY: CarrierPoint differs from a typical load posting site in several important ways: dynamic matching based on weighted criteria on performance metrics other than price; private exchanges; contract management tools; automatic payment processing; data warehousing and a rating system for both carriers and shippers. CarrierPoint sought a strategic initiative for deploying their Dynamic Shipping Marketplace-TM- (DSM). As part of their strategy, CarrierPoint needed a system that provided an integration infrastructure between the company and the back-end systems of large shippers and carriers. This would allow their larger customers to create entries on their own ERP systems, without having to create duplicate entries on the company's web site. SOLUTION: CarrierPoint implemented our AMTrix integration broker to link the disparate systems and platforms within the exchange, and chose our supply web synchronization applications to provide visibility over customer shipments. AMTrix's robust, open, non-intrusive integration infrastructure reduced the barrier of entry, and, in turn, allowed CarrierPoint to integrate rapidly the back-end systems of their customers into DSM. CarrierPoint's new flexible infrastructure provides B2B integration for a wide range of system architectures, supports the multiple communication protocols and adapts to the customers' business and technical models. DHL INTERNATIONAL, LTD. DHL International, Ltd., the world's largest international air express carrier, operates in 228 countries with over 66,000 employees. DHL is organized into three geographical regions with Europe/Africa as the largest division, serving 118 countries. OPPORTUNITY: Running a demanding global operation under competitive pressure means that DHL must have a fully integrated system that supports the multiple data types and non-standard formats of both its divisions and its customer base in order to satisfy short delivery times and customer service requirements. SOLUTION: DHL adopted AMTrix as a core operational technology to run a decentralized operation in 11 countries. In combination with the implementation of AMTrix, DHL's Internet-based tracking option 44 provides the ability to track any international shipment for a known airway bill number around the world. In addition, this information is available to the customer on a continuous, real-time basis. DHL benefits from improved data quality, lower costs, better quality control and greater customer satisfaction. ECNET, INC. Established in 1995, ECnet, Inc. is a leading e-market for the technology manufacturing industry. ECnet provides Internet-based supply chain management services for global technology manufacturers. ECnet's solutions enable collaborative efforts between manufacturers and their trading partners, tangibly improving effectiveness and efficiency. OPPORTUNITY: Unlike traditional software solutions, ECnet was striving for a non-proprietary, non-intrusive installation. To facilitate early market success, ECnet desired a neutral, browser-based system to connect multiple trading partners through the Internet. ECnet had to ensure that all community members could interact despite their use of disparate internal business systems. SOLUTION: ECnet implemented AMTrix as part of its B2B exchange service because AMTrix's flexible architecture supports information collaboration across multiple platforms via multiple communications protocols and message formats, allowing all community members to interface with one another and exchange information in real-time. ECnet uses AMTrix to support processes in supply chain management, including planning, procurement, order management, logistics, distribution and payment. Additionally, ECnet uses other AMTrix features including its FTP Communications Connector, E-mail Communication Connector, R/3 Connector for SAP and Datamapper for transaction mapping between format standards. ECnet also implemented our Connector Development Platform, which enables ECnet to create an interface into ERP applications and other technologies. RYDER INTEGRATED LOGISTICS, INC. Ryder Integrated Logistics, Inc., a business unit of Ryder System, Inc., provides leading-edge logistics, supply chain and transportation management solutions worldwide that support clients' entire supply chains, from sourcing of inbound raw materials through distribution and delivery of finished goods. Ryder currently serves client needs throughout North America, Latin America, Europe and Asia. OPPORTUNITY: Ryder Integrated Logistics, Inc. developed an e-Channels Solutions (ECS) offering to provide e-business logistics fulfillment solutions to the growing B2B and business-to-consumer market. ECS required a robust solution that could leverage current Ryder Integrated Logistics capabilities in warehousing and transportation management and rapidly connect to the legacy systems maintained by traditional brick and mortar trading partners and customers. SOLUTION: Ryder Integrated Logistics selected our integration broker and supply web synchronization components because they provided flexibility, a comprehensive view of supply chain operations and rapid integration of Ryder Integrated Logistics' transportation management system, multiple warehouse management systems and the myriad of legacy systems. By purchasing our supply web synchronization components, Ryder Integrated Logistics has cross-domain visibility of the inventory and shipments moving through its network. SALES AND MARKETING We sell our products and professional services primarily through our direct sales organization, which is complemented by indirect sales through our strategic partners. Our sales and marketing efforts are focused on selling e-business solutions comprised of our integration software products and supply web components and solutions. We sell to new customers as well as our installed base of more than 1,000 customers. As of June 30, 2000, we had 131 employees in sales and marketing geographically dispersed throughout major global marketplaces. We have U.S. sales offices in Atlanta, Chicago, Dallas and Los Angeles and international sales offices in Australia, China, France, Germany, Hong Kong, Malaysia, the 45 Netherlands, Singapore, Sweden and the U.K. We also have alliance partners in all global markets who in most cases serve as both VARs and implementers of our products. Our sales process incorporates a consultative-based selling approach that leverages our supply chain domain expertise to position our products as a solution to our customers' business problems. We primarily target five industry vertical markets that we believe will derive significant supply web value from our products and professional services. These markets include third-party logistics, technology, consumer packaged goods, e-commerce and traditional retail and apparel. We believe our e-business consultative sales approach has allowed us to increase our average sales price and improve our successful close rate relative to our competitors. Our sales team is comprised of direct sales professionals, pre-sales technical engineers and industry focused supply web experts. Our direct sales professionals, with our industry experts, target specific accounts and develop supply web value-based propositions for penetration into those accounts. These value propositions are used as a vehicle for establishing a dialogue with our customers' senior management teams. Our pre-sales technical engineers provide technical product knowledge and solution architecture to assist the customer with their technical diligence requirements. Typically, our sales teams help customers identify short interval deployment projects that allow customers to realize value quickly upon purchasing our products. We focus our marketing efforts on educating potential customers, generating new sales opportunities and creating awareness of our products and their applications. We conduct a variety of marketing programs to educate existing and prospective customers in our target markets, including seminars, trade shows, direct mail campaigns, advertising, speaking engagements, white paper articles, press relations, interviews and industry analyst programs. COMPETITION As a global provider of e-business applications and integration software and services, we believe that none of our competitors currently offer a solution that provides the full range of capabilities included in our product offerings. However, we are aware of a number of companies that provide a portion of the technologies we utilize and limited portions of our integration solutions. These companies generally can be grouped into three categories: (1) EAI software vendors that provide integration middleware and application connectors, including Active Software, Inc., Extricity Software Inc., New Era of Networks, Inc., TIBCO Software Inc., Vitria Technology, Inc. and webMethods, Inc.; (2) third-party software companies that develop and license EDI formats and communication applications, including General Electric Information Services, Inc., Peregrine Systems Inc. and Sterling Software Inc.; and (3) traditional supply chain, ERP and transportation management system software vendors that develop client server business systems with integration components, including Descartes Systems Group Inc. and i2 Technologies, Inc. Our competitors and potential competitors may enhance their technologies or expand their market focus and compete with us directly. Our customers and strategic alliances also may become competitors in the future. Additionally, in-house IT departments may adopt a proprietary standard that is inoperable with our solution or makes our solution obsolete. Upon the occurrence of any of these events, we may face greater competition, and our business and operating results may be harmed. We believe that the key competitive factors affecting the market for trading community integration solutions include: - product functionality, flexibility, quality and performance; - ability to interact seamlessly among disparate systems, technologies and languages; - capability to support a large number of trading partners; - short implementation cycles and ease of deployment; - quality of consultative and professional services; - customer service and support; and 46 - global depth of customers and strategic alliances. We believe that our solutions compete favorably with respect to these factors. However, our market is evolving rapidly and industry standards are continuing to change. We may not be able to maintain our competitive position compared to our existing or potential competitors, especially those that have greater financial, technical, marketing and other resources. RESEARCH AND DEVELOPMENT We have development offices in Atlanta, Georgia; Dallas, Texas; Raleigh-Durham, North Carolina; Singapore; and Stockholm, Sweden. As of June 30, 2000, our Global Product Division consisted of 91 employees, divided into the following groups: PRODUCT MANAGEMENT. Our product management group defines our product strategies and manages the introduction of products to market. The product introduction process includes: - program management of development activities; - management of product testing programs; - sales training; - deployment staff training; and - transition of new product releases to customer support. APPLICATION PRODUCT DEVELOPMENT. Our application product development group is responsible for development of our application components for dynamic trading community management. Our application development teams include solutions engineers, software engineers, quality analysts and development managers responsible for a specific component release. We employ a single team strategy with the goal of ensuring close communication and rapid development of releases through continuity of team members and simplicity of reporting structure. INFRASTRUCTURE PRODUCT DEVELOPMENT. Our infrastructure product development group is responsible for the development of our core integration broker technology, Connector Development Platform and process manager products. QUALITY ASSURANCE AND PLATFORM SUPPORT. Our quality assurance and platform support group designs and manages processes to identify and prevent software defects throughout the development cycle. We spent a total of $4.5 million, $3.2 million and $3.6 million in 1999, 1998 and 1997, respectively, on research and development activities. Of this amount, we capitalized software development costs of $422,000, $436,000 and $485,000 in 1999, 1998 and 1997, respectively. Amortization expense of $225,000 and $196,000 was charged in 1999 and 1998, respectively, and no amortization expense was charged in 1997. INTELLECTUAL PROPERTY GENERAL. We rely on a combination of copyright, trade secret, trademark and trade dress laws, confidentiality procedures and contractual provisions to protect our proprietary rights in our products and technology. We generally enter into confidentiality agreements with our employees, consultants, customers and potential customers and limit access to, and distribution of, our proprietary information. We maintain trademarks to identify the source of our products, development tools and service offerings and rely upon trademark laws to protect our proprietary rights in these marks. These measures may not be sufficient to protect our proprietary rights, and we cannot be certain that third parties will not misappropriate our technology and use it for their own benefit. Further, we cannot assure you that our methods of protecting our proprietary rights in the U.S. or abroad will be adequate. The laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the U.S. Also, most of these protections do not preclude our competitors from independently developing products with functionality or features substantially equivalent or superior to our software. Any failure to protect our intellectual property may have a material adverse effect on our business. 47 LICENSES. Our license agreements are designed to prohibit unauthorized use, copying, transfer and disclosure of our software technology and contain confidentiality terms customary to the industry in order to protect our proprietary rights in our software. The provisions protecting our software technologies may be unenforceable under the laws of specific jurisdictions and foreign countries. Our license agreements generally warrant that our software will materially comply with our written documentation. We also warrant that we own or have the right to license the software we distribute and have not violated the intellectual property rights of others. Some customers currently use our AMTrix product without a written license agreement. We license our products in a format that does not permit the users to change the source code. In addition, because we treat the source code for our products as a trade secret, all employees and third parties who require access to the source code are required to sign nondisclosure agreements or are otherwise under a duty of confidentiality. PATENTS. We have patent rights pending before numerous countries throughout the world in accordance with the Patent Cooperation Treaty. We are seeking or plan to seek patent protection in Australia, Belgium, France, Germany, Israel, Japan, the Netherlands, Sweden, the U.K. and the U.S. generally relating to technology that defines systems, methods and articles for organizing automated electronic interchange. This technology involves the definition of data structures to be sent and received and organizes function blocks to control processing of data. There is no guarantee that our pending applications will result in issued patents or, if issued, will provide us with a competitive advantage. TRADEMARKS. We have trademark registrations on the AMTrix mark in Belgium, Denmark, Finland, France, Germany, Italy, Norway, Portugal, Sweden, Switzerland, the U.K. and the U.S. We also have trademark registrations on the Viewlocity mark pending in Australia, China, Japan, New Zealand, Singapore and the U.S. We have filed applications for the SmartSync and TradeSync marks in the U.S. In addition, we have a trademark registration on an Intel Messaging mark in Sweden. We cannot be certain that the trademark applications for these marks will be issued. As a result, we cannot assure you that our efforts to use and register these trademarks will ultimately be successful or that our use will not result in liability for trademark infringement, trademark dilution or unfair competition. We are active in policing our marks, and have filed an opposition in Europe against an applicant for the ACTRIX mark based on its similarity to our AMTrix mark. We also claim common law protections for the other marks we use in our business. Competitors of ours and others may adopt marks similar to ours or try to prevent us from using our marks, which may impede our ability to build brand identity and possibly leading to customer confusion. COPYRIGHTS. We do not currently have any of our software registered with the U.S. Copyright Office or any other foreign copyright office. We rely primarily on the U.S. Copyright Act and the laws of other countries to protect our software. THIRD-PARTY INTELLECTUAL PROPERTY. We license from third parties certain technologies that are incorporated into our products. If we lose access to these technologies, we may experience delays in developing and introducing new products and enhancements to our existing products while attempting to develop or access suitable replacement technology, which we may never be able to develop or access. FACILITIES Our headquarters are located in Atlanta, Georgia. We currently lease approximately 24,000 square feet of office space at our Atlanta headquarters. The lease expires in October 2009. We also lease an additional 12,000 square feet of office space in Atlanta, Georgia and 18,000 square feet of office space in Dallas, Texas; these leases expire in September 2004 and November 2009, respectively. We also occupy office suites in Raleigh-Durham, North Carolina on a short-term basis. In addition to our U.S. offices, we have offices in North Sydney and Melbourne, Australia; Beijing and Shanghai, China; Paris and Grenoble, France; Munich and Bremen, Germany; Hong Kong; Kuala Lumpur; Malaysia; Amsterdam, the Netherlands; Solna and Gothenburg, Sweden; Singapore; and London, U.K. 48 Each of these offices occupies from approximately 1,000 to 26,000 square feet with lease terminations ranging from 2000 to 2003. EMPLOYEES As of June 30, 2000, we had a total of 420 employees, including 91 in research and development, 131 in sales and marketing, 136 in professional services and product support and 62 in finance and administration. None of our employees is represented by a collective bargaining agreement, nor have we experienced any work stoppages. We consider our relations with our employees to be good. LEGAL PROCEEDINGS We are not a party to any material legal proceeding. 49 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS Our executive officers, directors and key employees, the positions held by them and their ages as of August 1, 2000, are as follows:
NAME AGE POSITION(S) - ---- -------- ----------- EXECUTIVE OFFICERS AND DIRECTORS Gregory Cronin....................... 53 Chairman of the Board, President and Chief Executive Officer Maurice A. Trebuchon................. 36 Executive Vice President and Chief Operating Officer Stan F. Stoudenmire.................. 48 Senior Vice President and Chief Financial Officer Jeffrey B. Cashman................... 37 Senior Vice President of Global Business Development and International Field Operations Paul R. Leiske....................... 53 Senior Vice President of Global Customer Service Leo Apotheker........................ 46 Director Olof Englund......................... 44 Director Mark E. Hastings..................... 32 Director William M. Stuek..................... 57 Director Scott R. Tobin....................... 29 Director KEY EMPLOYEES Michael Handley...................... 32 Senior Vice President and Chief Technology Officer Michael Medin........................ 46 Senior Vice President of Global Product Development for e-Business Infrastructure Robert de Souza...................... 41 Senior Vice President and Chief Knowledge Officer Christer Wahlander................... 48 Senior Vice President and Chief Science Officer
EXECUTIVE OFFICERS AND DIRECTORS GREGORY CRONIN has served as our President and Chief Executive Officer and as a director since March 1999. Mr. Cronin has served as our Chairman of the Board since March 2000. From December 1997 to February 1999, Mr. Cronin served as executive vice president of Manhattan Associates, Inc., a provider of supply chain execution systems. From 1988 to November 1997, Mr. Cronin was employed by McHugh Software International, a provider of logistics execution systems, last serving as president and chief operating officer. From 1986 to 1988, he served as director of consulting services for IMI Systems, Inc., a software provider of warehouse management system solutions. MAURICE A. TREBUCHON has served as our Executive Vice President and Chief Operating Officer since November 1999. From 1988 to November 1999, Mr. Trebuchon served in various positions with PricewaterhouseCoopers LLP, a national accounting firm, most recently serving as a partner in the firm's supply chain practice. STAN F. STOUDENMIRE has served as our Senior Vice President and Chief Financial Officer since May 1999. From May 1998 to April 1999, Mr. Stoudenmire was a financial consultant in the software and services industry. From July 1997 to May 1998, Mr. Stoudenmire served as chief financial officer and vice president of finance and administration of Ross Systems, Inc., a supplier of enterprise resource planning systems and services. From 1987 to July 1997, Mr. Stoudenmire served in various positions with Mynd Corporation (formerly Policy Management Systems Corporation), a provider of applications software for the insurance industry, most recently serving as vice president and worldwide corporate controller. JEFFREY B. CASHMAN has served as our Senior Vice President of Global Business Development and International Field Operations since August 2000 and served as our Senior Vice President of Global Marketing and Business Development from April 1999 until August 2000. From September 1997 to 50 March 1999, Mr. Cashman served as senior vice president of marketing and business development of McHugh Software International. From 1995 to September 1997, Mr. Cashman served as an associate partner with Andersen Consulting, a national business consulting firm, in the firm's global supply chain strategy practice. PAUL R. LEISKE has served as our Senior Vice President of Global Customer Service since April 1999. From March 1998 to April 1999, Mr. Leiske served as vice president of customer service of Manhattan Associates, Inc. From 1993 to February 1998, Mr. Leiske served as vice president of implementation services of McHugh Software International. LEO APOTHEKER has served in various executive positions with SAP AG, an international enterprise software company, since July 1995, most recently serving as president of the Europe/Middle East/Africa region of SAP. Mr. Apotheker is a member of SAP's Global Operational Management Team and Extended Executive Board. From 1994 to July 1995, he served as a managing partner at ABP Partners, a strategic management consulting firm specializing in global strategy definition and implementation for software companies. Previously, he was founder, president and chief operating officer of Ecsoft B.V., a software company based in Europe. He has been a director of Viewlocity since September 1999. OLOF ENGLUND has been an executive director of Frontec AB, an information technology services company that is publicly traded on the OM Stock Exchange (formerly the Stockholm Stock Exchange), since July 2000. From February 1999 to June 2000, Mr. Englund was chief executive officer and president of Frontec AB. Mr. Englund was a co-founder of Frontec AB in 1986. From August 1993 to January 1999, Mr. Englund was executive vice president, corporate affairs of Frontec AB. Prior to that time, Mr. Englund was chief financial officer of Frontec AB. Mr. Englund is a director of Trio AB, a Swedish company focusing on computer-telephony integration software products. He has been a director of Viewlocity since February 1999. MARK E. HASTINGS has been a general partner at BCI Partners, a venture capital firm, since August 1997. From April 1994 to August 1997, Mr. Hastings was an associate at Edison Venture Fund, a venture capital fund. Mr. Hastings has been a director of Viewlocity since December 1999. WILLIAM M. STUEK has been a senior advisor to both Chase Capital Partners and The Beacon Group III-Focus Value Fund, L.P. since July 2000. From September 1999 to July 2000, Mr. Stuek was a limited partner with The Beacon Group, a merchant banking firm. From January 1998 to September 1999, Mr. Stuek was chairman and chief executive officer of System Software Associates, Inc., a provider of ERP software for industrial and manufacturing companies. From 1966 to December 1997, Mr. Stuek was an executive at IBM. Mr. Stuek has been a director of Viewlocity since April 2000. SCOTT R. TOBIN has been a general partner at Battery Ventures, a venture capital firm, since May 2000. Mr. Tobin served in various positions with Battery Ventures from August 1997 to May 2000, most recently serving as a principal. From December 1996 to August 1997, Mr. Tobin was an associate in the technology group of First Albany Corporation's corporate finance department. Prior to that time, Mr. Tobin was the director of corporate development at Future Vision, a software company. He has been a director of Viewlocity since February 1999. KEY EMPLOYEES MICHAEL HANDLEY has served as our Chief Technology Officer since August 2000 and served as our Senior Vice President of e-Business Application Development from February 2000 until August 2000. Mr. Handley was chairman and chief executive officer of Nexstep, Inc., a software development enterprise that focuses on visibility fulfillment solutions for Internet retail organizations, from January 1999 until our acquisition of Nexstep in February 2000. From September 1998 to February 1999, Mr. Handley was a senior manager of EXE Technologies, Inc., a provider of supply chain execution software. From March 1998 to September 1998, Mr. Handley was a practice manager of Oracle Corporation, a systems 51 software and business applications software provider. From 1993 to February 1998, Mr. Handley was vice president of development of Metasys, Inc., a transportation management software provider. MICHAEL MEDIN has served as our Senior Vice President of Global Product Development for e-Business Infrastructure since October 1999. From January 1997 to September 1999, Mr. Medin was a vice president of EAI professional services with subsidiaries of Frontec AB. From 1993 to December 1996, Mr. Medin served as a regional and product manager with a subsidiary of Frontec AB. From 1978 to 1992, Mr. Medin served in various product development positions with Ericsson and with Siemens, both multinational telecommunications companies. ROBERT DE SOUZA has served as our Senior Vice President and Chief Knowledge Officer since August 2000. From March 1991 to May 2000, Dr. de Souza was a professor and served in various positions at Nanyang Technological University in Singapore, including Director of the Masters program in Logistics, Deputy Director of the Design Research Centre, Co-Chair and Director of Intelligent Manufacturing Systems and Director of the Centre of Engineering and Technology Management. Dr. de Souza co-founded SC21 Pte, Ltd., a Singapore-based supply chain solutions firm, in November 1998 and served in various positions, most recently as Director, Vice Chairman and Chief Executive Officer. We acquired SC21 Pte, Ltd. in July 2000. Prior to 1991, Dr. de Souza served in various positions at Loughborough University of Technology in the United Kingdom, including senior researcher and consultant. CHRISTER WAHLANDER has served as our Chief Science Officer since August 2000 and served as our Chief Technology Officer from April 1999 to August 2000. From 1981 to April 1999, Mr. Wahlander led the research and development of the AMTrix and Process Manager technologies for Frontec AMT AB. At Frontec AMT AB, Mr. Wahlander held several executive positions, including chief technology officer from June 1997 to March 1999, senior vice president of development from February 1996 to June 1997, and chief executive officer from 1987 to September 1996. During his tenure at Frontec AMT AB, he also served as president of a joint venture with Unisys Corporation, a provider of e-business solutions. TERMS OF DIRECTORS AND EXECUTIVE OFFICERS Upon the completion of this offering, our board of directors will be divided into three classes, each serving for staggered three-year terms. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the directors of the same class whose terms are then expiring. Messrs. Englund and Tobin will be in the class of directors whose term expires at the 2001 annual meeting of stockholders. Messrs. Apotheker and Hastings will be in the class of directors whose term expires at the 2002 annual meeting of stockholders. Messrs. Cronin and Stuek will be in the class of directors whose term expires at the 2003 annual meeting of stockholders. Our bylaws provide that each class of directors will be elected by a plurality of all votes cast at the meeting and that the authorized number of directors may be changed only by resolution of the board of directors. Executive officers are appointed by the board of directors and serve until their successors have been elected and qualified or until their earlier resignation or removal. There are no family relationships among any of our directors or executive officers. BOARD COMMITTEES Our audit committee consists of Mr. Hastings, chairman, and Messrs. Apotheker and Stuek. The audit committee reviews the results and scope of the audits and other services provided by our independent auditors. In addition, the audit committee reviews and evaluates our internal audit and control functions and makes recommendations to our board of directors regarding the selection of independent auditors. Our compensation committee consists of Mr. Tobin, chairman, and Messrs. Hastings and Englund. The compensation committee reviews the compensation and benefits of all our officers, reviews general policies relating to compensation and benefits of our employees and makes recommendations concerning 52 these matters to our board of directors. The compensation committee also administers our stock incentive plan and employee stock purchase plan. Our executive committee consists of Messrs. Cronin, Hastings and Tobin. The executive committee has the authority to act on behalf of our board of directors in the management and direction of our business and affairs, to the extent authorized by resolution of a majority of the board of directors and subject to any limitations imposed by Delaware law. DIRECTOR COMPENSATION Other than Mr. Apotheker, who receives $2,000 per meeting which he attends in person, directors do not currently receive compensation for services performed in their capacity as directors. We reimburse each director for reasonable expenses incurred in attending board and committee meetings. In addition, non-employee directors who are not associated with venture capital firms with an ownership interest in our company are eligible to receive options to purchase our common stock under our stock incentive plan. The board of directors determines the vesting schedule and exercise price for options granted to non-employee directors. In 1999, we granted to Mr. Apotheker options to purchase 170,000 shares of common stock at an exercise price of $1.00 per share. The options vest over four years. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee. EXECUTIVE COMPENSATION The following table sets forth the total compensation we paid during the year ended December 31, 1999, to our Chief Executive Officer and our next three most highly compensated executive officers whose salary and bonus for 1999 exceeded $100,000. These executive officers are referred to as the Named Executive Officers elsewhere in this prospectus. 53 SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION(1) ------------------- ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION - --------------------------- -------- -------- -------- ------------ Gregory Cronin...................................... 1999 $161,958 $75,000 $ -- Chairman of the Board, President and Chief Executive Officer Stan F. Stoudenmire................................. 1999 102,295 35,000 -- Senior Vice President and Chief Financial Officer Jeffrey B. Cashman.................................. 1999 147,091 30,000 125,991(2) Senior Vice President of Global Marketing and Business Development Paul R. Leiske...................................... 1999 125,070 -- -- Senior Vice President of Global Customer Service
- ------------------------ (1) For a description of compensation arrangements, see "--Employment Agreements, Severance and Change of Control Arrangements." (2) Consists of relocation expenses in connection with Mr. Cashman's employment with Viewlocity. OPTION GRANTS IN LAST FISCAL YEAR In the year ended December 31, 1999, we did not grant any options to purchase shares of our common stock to any Named Executive Officer. In the year ended December 31, 1999, we granted options to purchase up to an aggregate of 4,767,896 shares to employees and directors. These options were granted with an exercise price equal to the fair market value of our common stock on the date of grant as determined by our board of directors based on recent sales of our convertible preferred stock for cash to third-party investors. All of the options are non-qualified stock options. Typically, our options vest over four years, with 25% of the shares vesting six months after the grant date and the remaining shares vesting ratably each month thereafter. Our option grants typically have a term of ten years. Options granted to our employees in Sweden are generally exercisable immediately upon grant and expire four years from the date of grant. STOCK OPTION AND OTHER COMPENSATION PLANS AMENDED AND RESTATED STOCK INCENTIVE PLAN We have established a stock incentive plan, which has recently been amended and restated. The plan is intended to promote our interests by providing employees and key persons the opportunity to purchase shares of common stock and to receive compensation based upon appreciation in the value of those shares. We have reserved 14,713,511 shares of common stock for issuance under this plan. The plan provides for the grant of four types of awards: - incentive stock options that qualify for tax benefits; - non-qualified stock options; - restricted stock awards; and - stock appreciation rights. 54 Our plan is administered by the compensation committee of our board of directors. The compensation committee has the authority to determine to whom awards are granted, the terms of such awards, including the type of awards to be granted, the exercise price, the number of shares subject to awards and the vesting and exercisability of the awards. The terms of a stock option award granted under the plan generally may not exceed 10 years. As of June 30, 2000, we had outstanding options to purchase 5,213,890 shares of our common stock at a weighted average exercise price of $1.22 per share. As of June 30, 2000, we had issued 754,196 shares of common stock upon exercise of options granted under our stock incentive plan. EMPLOYEE STOCK PURCHASE PLAN In August 2000, our board of directors approved an employee stock purchase plan. We anticipate that our stockholders will approve this plan prior to completion of this offering. The stock purchase plan is intended to qualify under Section 423 of the Internal Revenue Code. The stock purchase plan will be effective upon completion of this offering and will allow employees to purchase common stock through payroll deductions. Participation in the stock purchase plan is voluntary. Employees may become participants in the stock purchase plan by authorizing payroll deductions up to a certain percentage of their base pay. At the end of each purchase period, each participant in the stock purchase plan will receive an amount of our common stock equal to the sum of that participant's payroll deductions during the period divided by 85% of the fair market value of our common stock at the beginning of the period. No employee may participate in the stock purchase plan if such employee owns or would own 5% or more of the voting power of our common stock. There are currently 2,500,000 shares of common stock reserved for issuance under the stock purchase plan. No shares will be sold by us to participants in the stock purchase plan until after the completion of this offering. 401(K) PLAN We maintain a 401(k) plan qualified under Section 401(k) of the Internal Revenue Code. Under the 401(k) plan, a participant may contribute a maximum of 17% of his or her pre-tax salary, commissions and bonuses through payroll deductions, up to the statutorily prescribed annual limit of $10,500 in calendar year 2000. The percentage elected by more highly compensated participants may be required to be lower. In addition, at the discretion of the board of directors, we may make discretionary profit-sharing contributions into the 401(k) plan for all eligible employees. During the year ended December 31, 1999, we made no such contributions. EMPLOYMENT AGREEMENTS, SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS Generally, we do not enter into employment agreements with our non-executive employees. The employment relationship with each such employee is "at will." However, we generally require each employee to enter into an agreement prohibiting the employee from disclosing or using any of our confidential or proprietary information without our permission and providing that the employee agrees to assign to us all inventions developed during the course of employment. In addition, the employee agrees not to solicit any of our customers or employees or, in some cases, to work for a competitor for a period of time after termination of his or her employment. In March 1999, we entered into an agreement with Gregory Cronin concerning the terms of his employment as Chief Executive Officer. The agreement provides for an annual salary of $200,000 and a bonus of up to $150,000. The bonus for the first 12 months will be at least $75,000, will be paid in two installments and will be based on performance objectives as determined by the board of directors. If Mr. Cronin's employment is terminated without cause and if Mr. Cronin executes a release, he is entitled to nine months severance pay. The agreement contains provisions restricting Mr. Cronin from soliciting our employees for a period of one year following any termination of his employment. In connection with his 55 employment, Mr. Cronin purchased 2,768,421 shares of restricted stock at $1.00 per share that are subject to a time-based vesting schedule over four years, provided that vesting may be partially accelerated if Mr. Cronin's employment is terminated without cause or upon a change in control of the company. In March 1999, we entered into an agreement with Jeffrey B. Cashman concerning the terms of his employment as Senior Vice President of Global Marketing and Business Development. The agreement provides for an annual salary of $200,000, a signing bonus of $25,000 and a bonus of up to $100,000. The bonus for the first 12 months will be paid in two installments and will be based on performance objectives as determined by the Chief Executive Officer and the board of directors. If Mr. Cashman's employment is terminated without cause and if Mr. Cashman executes a release, he is entitled to six months severance pay. The agreement contains provisions restricting Mr. Cashman from soliciting our employees for a period of one year following any termination of his employment. In connection with his employment, Mr. Cashman purchased 830,525 shares of restricted stock at $1.00 per share that are subject to a time-based vesting schedule over four years, provided that vesting may be partially accelerated if Mr. Cashman's employment is terminated without cause or upon a change in control of the company. In March 1999, we entered into an agreement with Paul R. Leiske concerning the terms of his employment as Senior Vice President of Global Customer Service. The agreement provides for an annual salary of $185,000 and a bonus of up to $82,500. The bonus for the first 12 months will be based on performance objectives as determined by the Chief Executive Officer and the board of directors. If Mr. Leiske's employment is terminated without cause and if Mr. Leiske executes a release, he is entitled to six months severance pay. The agreement contains provisions restricting Mr. Leiske from soliciting our employees for a period of one year following any termination of his employment. In connection with his employment, Mr. Leiske purchased 411,187 shares of restricted stock at $1.00 per share that are subject to a time-based vesting schedule over four years, provided that vesting may be partially accelerated if Mr. Leiske's employment is terminated without cause or upon a change in control of the company. In May 1999, we entered into an agreement with Stan F. Stoudenmire concerning the terms of his employment as Senior Vice President and Chief Financial Officer. The agreement provides for an annual salary of $150,000 and a bonus of up to $35,000. The bonus will be based on performance objectives as determined by the Chief Executive Officer and the board of directors. If Mr. Stoudenmire's employment is terminated without cause and if Mr. Stoudenmire executes a release, he is entitled to six months severance pay. The agreement contains provisions restricting Mr. Stoudenmire from soliciting our employees for a period of one year following any termination of his employment. In connection with his employment, Mr. Stoudenmire purchased 274,125 shares of restricted stock at $1.00 per share that are subject to a time-based vesting schedule over four years, provided that vesting may be partially accelerated if Mr. Stoudenmire's employment is terminated without cause or upon a change in control of the company. In October 1999, we entered into an agreement with Maurice A. Trebuchon concerning the terms of his employment as Executive Vice President and Chief Operating Officer. The agreement provides for an annual salary of $250,000, a signing bonus of $50,000 and a bonus of up to $250,000 annually. The bonus will be paid every six months and will be based on performance objectives as determined by the Chief Executive Officer and Mr. Trebuchon. If Mr. Trebuchon's employment is terminated without cause and if Mr. Trebuchon executes a release, he is entitled to nine months severance pay. In connection with his employment, Mr. Trebuchon purchased 892,500 shares of restricted stock at $1.00 per share that are subject to a time-based vesting schedule over four years, provided that vesting may be partially accelerated if Mr. Trebuchon's employment is terminated without cause or upon a change in control of the company. LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS Our amended and restated certificate of incorporation and bylaws provide that the liability of directors for monetary damages shall be eliminated to the fullest extent permissible under Delaware law and that we shall indemnify our officers, employees and agents to the fullest extent permitted under Delaware law. 56 Our amended and restated certificate of incorporation also provides that our directors will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for: - any breach of the director's duty of loyalty to us or our stockholders; - acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; - unlawful payments of dividends or unlawful stock repurchases or redemptions; or - transactions from which the director derived an improper personal benefit. Any amendment, modification or repeal of these provisions will not eliminate or reduce the effect of these provisions for any act or failure to act, or any cause of action, suit or claim that would accrue or arise before any amendment, modification or repeal of these provisions. If Delaware law is amended to provide for further limitations on the personal liability of directors of corporations for breach of duty of care or other duty as a director, then the personal liability of the directors will be so further limited to the greatest extent permitted by Delaware law. This limitation of liability does not affect a director's responsibilities under any other law, such as the federal securities laws or state or federal environmental laws. We intend to enter into agreements to indemnify our executive officers and directors in addition to indemnification provided for in our amended and restated certificate of incorporation. These agreements, among other things, may require us to indemnify these individuals against liabilities that arise by reason of their status or services as officers and directors, other than liabilities arising from willful misconduct, and to advance expenses incurred as a result of any proceedings against them for which they could be indemnified. The Company intends to purchase a directors and officers liability insurance policy with appropriate coverages prior to the completion of this offering. 57 RELATED PARTY TRANSACTIONS RESTRUCTURING Prior to our formation, the AMTrix software business was conducted by Frontec AB and its wholly owned subsidiaries. Effective January 1, 1999, Frontec AB consolidated the AMTrix business in certain of its subsidiaries through a series of asset and stock contribution agreements. In connection with the consolidation of the AMTrix business into regional subsidiaries, Frontec AB also acquired a wholly owned subsidiary currently known as Viewlocity Integra AB. Pursuant to a stock contribution agreement dated February 21, 1999, as amended, Frontec AB capitalized Viewlocity Integra by contributing all of the capital stock of each of the regional subsidiaries to Viewlocity Integra. On February 22, 1999, Frontec AB formed Viewlocity, Inc., as a Delaware corporation and on February 23, 1999, contributed to us all of the issued and outstanding shares of Viewlocity Integra in exchange for 34,062,058 shares of our common stock. As a result, Viewlocity Integra and the regional operating subsidiaries became wholly owned subsidiaries of Viewlocity. In addition to the acquisition of the Frontec subsidiaries, we also agreed to assume all of the Frontec AB liabilities relating to the AMTrix business. The holders of common stock, of which Frontec AB currently owns a majority, were allocated two seats on our board of directors, of which one seat is currently filled by Olof Englund and the other seat is vacant. This right to representatives on our board expires upon completion of this offering. SERIES A CONVERTIBLE PREFERRED STOCK AND SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANTS In February 1999, we sold an aggregate of 10,000,000 shares of our Series A convertible preferred stock at a price of $1.00 per share and warrants to purchase an aggregate of 7,005,495 shares of Series B convertible preferred stock at an exercise price of $1.82 per share. The holders of the Series A convertible preferred stock were allocated two seats on our board of directors, of which one seat is currently filled by Scott R. Tobin and the other seat is currently filled by William M. Stuek, an independent director not affiliated with holders of the Series A convertible preferred stock. This right to representatives on our board expires upon completion of this offering. The holders of the warrants to purchase our Series B convertible preferred stock have irrevocably agreed to exercise the warrants on a cashless basis. Pursuant to the warrant agreements, the holders of the warrants will receive a number of shares of Series B convertible preferred stock equal to 7,005,495 multiplied by the difference between (a) the initial public offering price and (b) $1.82, divided by the initial public offering price. The shares of Series A and Series B convertible preferred stock will automatically convert into an assumed aggregate of 15,411,745 shares of common stock upon completion of this offering. SERIES C CONVERTIBLE PREFERRED STOCK In connection with the Series A and Series B convertible preferred stock transactions, we issued 2,000 shares of our Series C convertible preferred stock to Frontec AB in exchange for the cancellation of certain liabilities owed to Frontec AB in the approximate amount of $15.4 million. The shares of Series C convertible preferred stock will automatically convert into an assumed aggregate of 2,562,500 shares of our common stock upon completion of this offering. SERIES D CONVERTIBLE PREFERRED STOCK On December 30, 1999, we sold an aggregate of 9,801,020 our shares of Series D convertible preferred stock at a price of $2.94 per share. On March 29, 2000, we sold an additional 662,653 shares of our Series D convertible preferred Stock at $2.94 per share to certain of our executive officers. The holders of the Series D convertible preferred stock were allocated one seat on our board of directors, 58 currently filled by Mark E. Hastings. This right to a representative on our board expires upon completion of this offering. The shares of Series D convertible preferred stock will automatically convert into 10,463,673 shares of common stock upon completion of this offering. SERIES E CONVERTIBLE PREFERRED STOCK On April 18, 2000 and June 22, 2000, we sold 2,520,261 shares and 1,487,805 shares of our Series E convertible preferred stock, respectively, at a price of $6.17 per share. The shares of Series E convertible preferred stock will automatically convert into an aggregate of 4,008,066 shares of common stock upon completion of this offering. In connection with the convertible preferred stock financings described above, the following directors, executive officers and 5% stockholders purchased shares of preferred stock:
NO. OF NO. OF NO. OF NO. OF NO. OF SHARES OF SERIES B SHARES OF SHARES OF SHARES OF SERIES A PREFERRED SERIES C SERIES D SERIES E TOTAL AGGREGATE PURCHASER PREFERRED WARRANTS PREFERRED PREFERRED PREFERRED SHARES CONSIDERATION - --------- ---------- --------- --------- --------- --------- ---------- ------------- Funds Affiliated with Battery Ventures IV, L.P............................... 10,000,000 7,005,495 -- 340,136 194,489 17,540,120 $12,200,000 Frontec AB.............................. -- -- 2,000 -- -- 2,000 $15,363,000 Funds Affiliated with BCI Growth V, L.P................................... -- -- -- 3,401,361 194,490 3,595,851 $11,200,000 Gregory Cronin.......................... -- -- -- 102,041 -- 102,041 $ 300,000 Maurice A. Trebuchon.................... -- -- -- 68,027 -- 68,027 $ 200,000 Stan F. Stoudenmire..................... -- -- -- 23,810 -- 23,810 $ 70,000 Paul R. Leiske.......................... -- -- -- 58,163 -- 58,163 $ 171,000 Jeffrey B. Cashman...................... -- -- -- 144,558 -- 144,558 $ 425,000
In connection with the above transactions, we also entered into an agreement with the investors in our Series A, B, D and E convertible preferred stock providing for registration rights with respect to the shares of common stock issuable upon conversion of the preferred stock. See "Description of Capital Stock--Registration Rights." OPTIONS FOR FRONTEC AB EXECUTIVES In February 1999, we issued to certain executive officers and directors of Frontec AB options to purchase a total of 500,000 shares of our common stock, at an exercise price of $1.00 per share. We granted to each of Olof Englund, Bengt Wallentin, Christer Wahlander, Goran Tuvsedt and Sune Fogelstrom an option to purchase 100,000 shares of common stock. Christer Wahlander was an employee of Viewlocity at the time of the grant. These option holders exercised all of their options on or before April 4, 2000. STOCK PURCHASE AND ESCROW AGREEMENT On March 12, 1999, we entered into a stock purchase and escrow agreement with Frontec AB, pursuant to which Frontec AB transferred to escrow 10,713,511 shares of our common stock then owned by Frontec AB. These escrowed shares were made available for grants of stock options, restricted stock or other grants to our employees, directors, consultants and other key persons provided that we purchase from Frontec AB any such shares for $.01 per share. As of December 31, 1999, 6,168,133 shares of restricted stock had been sold to certain of our officers and employees out of the escrowed shares in exchange for promissory notes, and we had paid Frontec AB $61,681 for such shares. On January 1, 2000, we purchased the remaining 4,545,378 shares of common stock from Frontec AB for $45,454 and terminated the escrow agreement. 59 RESTRICTED STOCK ISSUED TO EXECUTIVE OFFICERS Effective September 2, 1999, certain of our executive officers purchased escrowed shares of common stock pursuant to our stock incentive plan and individualized restricted stock agreements at $1.00 per share. The executive officers who acquired such shares were Gregory Cronin (2,768,421 shares), Stan F. Stoudenmire (274,125 shares), Jeffrey B. Cashman (830,525 shares) and Paul R. Leiske (411,187 shares). Effective November 15, 1999, Maurice A. Trebuchon purchased 892,500 escrowed shares of common stock pursuant to our stock incentive plan and an individual restricted stock agreement at $1.00 per share. Each executive delivered to us a full recourse promissory note bearing a market rate of interest for the aggregate purchase price of the stock and entered into a restricted stock agreement that prohibits transfer of the shares prior to vesting and provides for forfeiture of any unvested shares upon termination of employment. The shares purchased generally vest over a four-year period immediately following the executive's date of employment. Each purchasing executive filed with the Internal Revenue Service an election to be taxed under Section 83(b) of the Internal Revenue Code. In addition, stock option grants to directors and executive officers are described under the captions "Management--Director Compensation" and "Management--Executive Compensation." LICENSE AGREEMENT WITH FRONTEC AB One of our wholly owned subsidiaries, Viewlocity AB, has an agreement with a subsidiary of Frontec AB pursuant to which Viewlocity AB grants to the Frontec AB subsidiary a world-wide non-exclusive right to market, sublicense and service the AMTrix product line. The initial term of the agreement ends November 1, 2002, and is thereafter subject to automatic two year extensions unless either party gives written notice of its intent to terminate the license. The agreement entitles the Frontec AB subsidiary to receive a 50% discount off of the list price for any AMTrix software it sublicenses (or a 70% discount for AMTrix software if sublicenses for EDI messaging only within the Nordic countries or to Nordic-based customers). In addition, the Frontec AB subsidiary receives 40% of the first year maintenance fee paid to Viewlocity AB by a customer if the Frontec AB subsidiary assisted in the sale of the maintenance contract. The Frontec AB subsidiary can also sell its own maintenance contracts directly to its customers, in which case Frontec AB is required to pay Viewlocity AB between 7% and 10.6% of the list price of the software being supported, depending on the level of support sold by the Frontec AB subsidiary. In 1999, we received license revenue of $638,000 and support revenue of $638,000 from Frontec AB in connection with this license arrangement. FRONTEC AB GUARANTEE OF SINGAPORE LINE OF CREDIT We maintain a line of credit with a bank in Singapore providing borrowings of up to $200,000 for working capital purposes. Interest is payable at the bank's prime rate plus 1%. The line of credit is secured by a corporate guarantee by Frontec AB and has no significant covenants. POLICY ON FUTURE TRANSACTIONS Our board of directors has adopted a resolution whereby all future transactions with related parties, including any loans from us to our officers, directors and principal stockholders or their family members and affiliates must be approved by a majority of the board of directors, including a majority of the independent and disinterested members of the board of directors or a majority of the disinterested stockholders, and must be on terms no less favorable to us than could be obtained from unaffiliated third parties. 60 PRINCIPAL AND SELLING STOCKHOLDERS The following table presents information about the beneficial ownership of our common stock as of June 30, 2000, and as adjusted to reflect the sale of common stock offered by this prospectus, by: - each person or entity who is known by us to be the beneficial owner of more than 5% of our outstanding common stock; - each of our directors; - each Named Executive Officer; and - all of our directors and executive officers as a group. Frontec AB, one of our stockholders, has granted to the underwriters the option to purchase up to shares of common stock to cover over-allotments. Footnote (1) to the Principal and Selling Stockholders table below provides information concerning the stock holdings of Frontec AB after the offering if the over-allotment option is exercised in full. For purposes of calculating the percentage beneficially owned, the number of shares of common stock deemed outstanding prior to the offering includes 32,485,376 common shares outstanding as of June 30, 2000, and 32,445,984 shares issuable upon the automatic conversion of our convertible preferred stock upon completion of this offering. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to the securities. The number of shares beneficially owned by a person includes shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of June 30, 2000. The shares issuable under these options are treated as if outstanding for computing the percentage ownership of the person holding these options, but are not treated as if outstanding for the purposes of computing the percentage ownership of any other person. Except as noted below, the business address of the named beneficial owner is c/o Viewlocity, Inc., 3475 Piedmont Road, Suite 1700, Atlanta, Georgia 30305.
NUMBER OF SHARES BENEFICIALLY OWNED PERCENT BENEFICIALLY ----------------------- OWNED AFTER NAME OF BENEFICIAL OWNER SHARES PERCENTAGE OFFERING - ------------------------ ---------- ---------- -------------------- Frontec AB (1)...................................... 26,211,047 40.4% Entities affiliated with Battery Ventures IV, L.P. (2)............................................... 15,946,370 24.6 Entities affiliated with BCI Growth V, L.P. (3)..... 3,595,851 5.5 Gregory Cronin (4).................................. 2,870,462 4.4 Maurice A. Trebuchon (5)............................ 960,527 1.5 Stan F. Stoudenmire (6)............................. 297,935 * Jeffrey B. Cashman (7).............................. 975,083 1.5 Paul R. Leiske (8).................................. 469,350 * Leo Apotheker (9)................................... 56,694 * Olof Englund (10)................................... 26,011,047 40.0 Mark E. Hastings (11)............................... 3,595,851 5.5 William M. Stuek (12)............................... 2,461,989 3.8 Scott R. Tobin (13)................................. 15,946,370 24.6 All directors and executive officers as a group (10 persons).......................................... 53,645,308 82.6
- ------------------------ * Represents beneficial ownership of less than 1% of the outstanding shares of common stock. (1) Includes 300,000 shares held by executive officers and directors of Frontec AB. Frontec AB is located at Gardsvagen 7, S-169 70 Solna, Sweden. If the underwriters exercise their over-allotment in full, 61 Frontec AB will sell shares of common stock in this offering and would remain the beneficial owner of shares of common stock. (2) Includes 15,707,175 shares held by Battery Ventures IV, L.P. and 239,195 shares held by Battery Investment Partners IV, LLC. Entities affiliated with Battery Ventures IV, L.P. are located at 20 William Street, Wellesley, MA 02181. (3) Includes 3,538,173 shares held by BCI Growth V, L.P. and 57,678 shares held by BCI Investors, LLC. Entities affiliated with BCI Growth V, L.P. are located at Glenpointe Centre West, Teaneck, NJ 07666-6883. (4) Includes 1,903,286 shares subject to repurchase by Viewlocity. (5) Includes 669,375 shares subject to repurchase by Viewlocity. (6) Includes 211,645 shares subject to repurchase by Viewlocity. (7) Includes 570,966 shares subject to repurchase by Viewlocity. (8) Includes 291,278 shares subject to repurchase by Viewlocity. (9) Includes 56,694 shares subject to options which are exercisable within 60 days of June 30, 2000. (10) Includes 25,911,047 shares held by Frontec AB. Mr. Englund is the chief executive officer and president of Frontec AB. (11) Includes 3,538,173 shares held by BCI Growth V, L.P. and 57,678 shares held by BCI Investors, LLC. Mr. Hastings is a general partner of BCI Partners, L.P. (12) Includes 2,291,921 shares held by The Beacon Group III--Focus Value Fund, L.P. Mr. Stuek is a senior advisor of The Beacon Group III--Focus Value Fund, L.P. (13) Includes 15,707,175 shares held by Battery Ventures IV, L.P. and 239,195 shares held by Battery Investment Partners IV, LLC. Mr. Tobin is a general partner of Battery Ventures. 62 DESCRIPTION OF CAPITAL STOCK GENERAL Our authorized capital stock consists of 100,000,000 shares of common stock, $.01 par value per share, and 40,000,000 shares of preferred stock, $.01 par value per share. The following description of our capital stock is a summary and is qualified in its entirety by the provisions of our amended and restated certificate of incorporation and bylaws that we intend to adopt prior to the completion of this offering. COMMON STOCK As of June 30, 2000, there were 32,485,376 shares of common stock outstanding. Upon the exercise of warrants to purchase shares of our Series B convertible preferred stock and the conversion of all outstanding shares of our convertible preferred stock, which will automatically occur upon closing of this offering according to the terms of our amended and restated certificate of incorporation, there will be an aggregate of 64,931,360 shares of common stock outstanding. The holders of common stock are entitled to one vote per share for the election of directors and on all other matters to be submitted to a vote of our stockholders. Subject to the rights of any holders of preferred stock that may be issued in the future, the holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the board of directors and paid out of funds legally available for that purpose. In the event of our dissolution, liquidation or winding up, holders of common stock are entitled to share ratably in all assets remaining after payment of all liabilities, subject to the prior distribution rights of preferred stock, if any, then outstanding. The holders of common stock have no preemptive or conversion rights or other subscription rights. The outstanding shares of common stock are, and the shares of common stock to be issued by us in connection with this offering will be, duly authorized, validly issued, fully paid and nonassessable. PREFERRED STOCK Under our amended and restated certificate of incorporation, our board of directors is authorized, without further stockholder approval, to issue from time to time up to an aggregate of 40,000,000 shares of preferred stock in one or more series. The board also has the right to fix or alter the designations, preferences, rights and any qualifications, limitations or restrictions of any preferred stock issued, including dividend rights and rates, conversion rights, voting rights, terms of redemption, including sinking fund provisions, liquidation preferences and the number of shares constituting any series or designations of such series. The issuance of preferred stock with greater rights, privileges and preferences than those applicable to the common stock may adversely affect the voting power, market price and other rights and privileges of the common stock, and may delay or prevent a change of control of our company. REGISTRATION RIGHTS On June 22, 2000, we entered into a third amended and restated registration rights agreement with the holders of our Series A, B, D and E convertible preferred stock and warrants, pursuant to which investors holding an aggregate of 30,427,234 shares of common stock are entitled to certain rights with respect to the registration of these shares under the Securities Act. At any time, the holders of at least 20% of the shares of our common stock covered by the agreement may request that we register their shares under the Securities Act. If at any time we propose to register any of our common stock under the Securities Act, either for our own account or for the account of our stockholders, the holders of these shares are entitled to notice of registration and to include their shares of common stock in the registration. In addition, after we have been a reporting company under the securities laws for at least one year, and we have been filing Securities and Exchange Commission reports in a timely manner, any holder of shares covered by the registration rights agreement may request that we 63 register all or part of their shares under the Securities Act, subject to a minimum anticipated aggregate price to the public of the shares covered by the requested registration. These registration rights are subject to conditions and limitations, among which is the right of the underwriters in an offering to limit the number of shares to be included in the registration. WARRANTS On October 27, 1999, we entered into a convertible debenture financing with William Street Associates II, LLC. In connection with that transaction, we issued to William Street a warrant that expires on October 27, 2004, for the purchase of 393,750 shares of our common stock at a price of $1.00 per share. On November 12, 1999, we entered into an equipment lease financing agreement with CommVest, LLC and issued to CommVest a warrant that expires on November 12, 2004, for the purchase of 150,000 shares of our common stock at a price of $1.00 per share. On November 26, 1999, we entered into a line of credit agreement with Imperial Bancorp and issued to Imperial Bancorp a warrant that expires on November 26, 2006, for the purchase of 52,000 shares of our common stock at a price of $2.94 per share. Each of these warrants is subject to anti-dilution adjustment if we issue additional shares of capital stock prior to this offering at a price per share less than the applicable exercise price of the warrant. ANTI-TAKEOVER EFFECTS OF OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW ANTI-TAKEOVER PROVISIONS Our board of directors, without stockholder approval, has the authority under our amended and restated certificate of incorporation to issue preferred stock with rights superior to the rights of holders of common stock. As a result, preferred stock may be issued quickly and may adversely affect the rights of holders of common stock and may be issued with terms calculated to delay or prevent a change of control of our company or make removal of management more difficult. Under Delaware law, all stockholder actions must be effected at a duly called annual or special meeting or by written consent. Our amended and restated certificate of incorporation provides that stockholder action may not be effected by written consent. The amended and restated certificate of incorporation also provides that the board is divided into three classes, with each director assigned to a class with a term of three years. Our amended and restated bylaws provide that, except as otherwise required by law, special meetings of our stockholders can only be called by the board of directors, the chairman of the board of directors, the chief executive officer or the president. In addition, our amended and restated bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of persons for election to the board of directors. These provisions of our amended and restated bylaws are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by the board of directors, and to discourage certain types of transactions that may involve an actual or threatened change of control. Such provisions are designed to reduce vulnerability to an unsolicited acquisition proposal and, accordingly, may discourage potential acquisition proposals and may delay or prevent a change in control. These provisions may also have the effect of preventing changes in our management. EFFECT OF DELAWARE ANTI-TAKEOVER STATUTE We are subject to Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, the statute prevents publicly held Delaware corporations from engaging in a "business combination" with an "interested stockholder" for three years following the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. For purposes of the statute, a "business combination" includes a merger, consolidation 64 or sale of more than 10% of the assets of our company, and an "interested stockholder" is any entity or person beneficially owning 15% or more of the outstanding voting stock of our company and any entity or person affiliated with or controlling or controlled by such entity or person. LISTING Our shares of common stock are proposed to be listed for quotation on the Nasdaq National Market under the symbol VIEW. TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for our common stock is SunTrust Bank, Atlanta, Georgia. 65 SHARES ELIGIBLE FOR FUTURE SALE Sales of substantial amounts of our common stock in the public market after the offering may adversely affect the market price of our common stock and our ability to raise equity capital in the future on terms favorable to us. After this offering, shares of our common stock will be outstanding, assuming none of the outstanding stock options or warrants are exercised. Of these shares, all of the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, unless these shares are purchased by "affiliates" as that term is defined in Rule 144 under the Securities Act. The remaining shares of common stock held by existing stockholders are "restricted securities" as that term is defined in Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which rules are summarized below. The following table indicates approximately when the 64,931,360 shares of our common stock that are not being sold in this offering but which will be outstanding when this offering is complete will be eligible for sale in the public market:
ELIGIBILITY OF RESTRICTED SHARES FOR SALE IN THE PUBLIC MARKET ------------------------- On the date of this prospectus........................ -- 180 days after the date of this prospectus............ 23,219,869 Thereafter upon expiration of one year holding periods............................................. 15,800,444 270 days after the date of this prospectus............ 25,911,047
Most of the restricted shares that will become available for sale in the public market starting 180 or 270 days after the date of this prospectus will be subject to volume and other resale restrictions under Rule 144 because the holders are our affiliates. RULE 144 In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person (or persons whose shares are aggregated) who has beneficially owned shares of our common stock for at least one year is entitled to sell, within any three-month period, a number of shares that is not more than the greater of: - 1% of the number of shares of common stock then outstanding, which will equal approximately shares immediately after this offering; or - the average weekly trading volume of the common stock on the Nasdaq National Market during the four calendar weeks before a notice of sale on Form 144 is filed. Sales under Rule 144 also are subject to manner of sale provisions and notice requirements and to the availability of current public information about us. RULE 144(K) Under Rule 144(k), a person (or persons whose shares are aggregated) who is not deemed to have been one of our affiliates at any time during the 90 days before a sale and who has beneficially owned restricted shares for at least two years, is entitled to sell the shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. 66 RULE 701 In general, under Rule 701 of the Securities Act as currently in effect, any of our employees, consultants or advisors who purchase shares from us under a stock option plan or other written agreement can resell those shares 90 days after the effective date of this offering in reliance on Rule 144, but without complying with certain restrictions, including the holding period, contained in Rule 144. LOCK-UP AGREEMENTS Our directors, officers and all of our stockholders, warrantholders and optionees holding shares and options to acquire shares of our common stock after this offering are subject to lock-up agreements under which they have agreed not to transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock, for a period of 180 days after the date of this prospectus, or 270 days in the case of Frontec AB. Transfers or dispositions can be made sooner with the prior written consent of Chase Securities Inc. We have also entered into an agreement with Chase Securities Inc. that we will not, subject to certain exceptions, offer, sell or otherwise dispose of common stock for a period of 180 days from the date of this prospectus. REGISTRATION RIGHTS AND STOCK PLANS Some of our existing stockholders and warrantholders have the right to require us to register under the Securities Act up to 30,427,234 shares of their common stock at any time. All of these shares are subject to the lock-up agreements described above. Once we register these shares, they can be freely sold in the public market, subject to these lock-up agreements. See "Description of Capital Stock--Registration Rights." Immediately after this offering, we intend to file a registration statement under the Securities Act covering 17,213,511 shares of common stock reserved for issuance under our stock incentive plan and our employee stock purchase plan. This registration statement is expected to be filed and become effective as soon as practicable after the effective date of this offering. As the number of shares reserved for issuance under these plans increases, we will file amendments to this registration statement covering the additional shares. As of June 30, 2000, options to purchase 5,213,890 shares of common stock were issued and outstanding. When the lock-up agreements described above expire, there will be vested options outstanding that will be exercisable to acquire 3,382,796 shares of common stock, based on options outstanding as of June 30, 2000. Accordingly, shares registered under that registration statement will, subject to vesting provisions and Rule 144 volume limitations applicable to our affiliates, be available for sale in the open market immediately after the 180 day lock-up agreements expire. 67 UNDERWRITING Subject to the terms and conditions contained in an underwriting agreement dated , the underwriters named below, through their representatives, Chase Securities Inc., Bear, Stearns & Co. Inc. and Wit SoundView Corporation, have severally agreed to purchase from us the respective numbers of shares of common stock set forth opposite their names below:
NUMBER OF UNDERWRITERS SHARES ------------ --------- Chase Securities Inc........................................ Bear, Stearns & Co. Inc..................................... Wit SoundView Corporation................................... --------- Total................................................... =========
The underwriting agreement provides that the obligations of the underwriters are subject to certain conditions precedent, including the absence of any material adverse change in our business and the receipt of certain certificates, opinions and letters from us, our counsel and the independent auditors. The underwriters are obligated to purchase all shares of common stock offered by us (other than those shares covered by the over-allotment option described below) if they purchase any shares. The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by us and the selling stockholder. These amounts are shown assuming both no exercise and full exercise of the underwriters' over-allotment option to purchase additional shares.
PAID BY THE SELLING PAID BY VIEWLOCITY STOCKHOLDER --------------------------- --------------------------- NO EXERCISE FULL EXERCISE NO EXERCISE FULL EXERCISE ----------- ------------- ----------- ------------- Per Share................ $ $ $ -- $ Total.................... $ $ $ -- $
We estimate that the total expenses of this offering, excluding underwriting discounts and commissions, will be approximately $ . The underwriters propose to offer the shares of common stock directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share. The underwriters may allow and the dealers may reallow a concession not in excess of $ per share to certain other dealers. After the initial public offering of the shares, the offering price and other selling terms may be changed by the underwriters. The representatives have informed us that the underwriters do not intend to confirm discretionary sales of more than 5% of the shares of common stock offered in this offering. The selling stockholder has granted to the underwriters an option, exercisable no later than 30 days after the date of this prospectus, to purchase up to additional shares of common stock at the initial public offering price, less the underwriting discount, set forth on the cover page of this prospectus. To the extent that the underwriters exercise this option, each of the underwriters will have a firm commitment to purchase approximately the same percentage thereof that the number of shares of common stock to be purchased by it shown in the above table bears to the total number of shares of common stock offered hereby. The selling stockholder will be obligated, pursuant to the option, to sell shares to the underwriters to the extent the option is exercised. The underwriters may exercise this option solely to cover over-allotments, if any, made in connection with the sale of shares of common stock offered hereby. 68 The offering of the shares is made for delivery when, as and if accepted by the underwriters and subject to prior sale and withdrawal, cancellation or modification of the offering without notice. The underwriters reserve the right to reject an order for the purchase of shares in whole or in part. We and the selling stockholder have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect of these liabilities. All of our stockholders, including officers, directors, principal stockholders, warrantholders and optionees who will own in the aggregate 70,741,000 shares of common stock after the offering, have agreed not to, without the prior written consent of Chase Securities Inc., sell, offer, contract to sell, transfer the economic risk of ownership in, make any short sale, pledge or otherwise dispose of any shares of common stock or any securities convertible into or exchangeable or exercisable for shares of common stock for a period of 180 days from the date of this prospectus, or 270 days in the case of Frontec AB. We have agreed that we will not, without the prior written consent of Chase Securities Inc., sell, offer, contract to sell, transfer the economic risk of ownership in, make any short sale, pledge or otherwise dispose of any shares of common stock or any securities convertible into or exchangeable or exercisable for shares of common stock for a period of 180 days following the date of this prospectus, except that we may issue shares upon the exercise of options granted prior to the date hereof and may grant additional options under our stock option plans. Without the prior written consent of Chase Securities Inc., none of these additional options shall be exercisable during the 180 day period. At our request, the underwriters have reserved not more than % of the shares of common stock offered hereby for sale at the initial public offering price to our directors, officers, employees, business associates and related persons. The number of shares of common stock available for sale to the general public will be reduced by the number of reserved shares such persons purchase. Any reserved shares which are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus. Persons who purchase reserved shares will be required to agree that they will not, without the prior written consent of Chase Securities Inc., sell, offer, contract to sell, transfer the economic risk of ownership in, make any short sale, pledge or otherwise dispose of any shares of common stock or any securities convertible into or exchangeable or exercisable for shares of common stock for a period of 180 days from the date of this prospectus. Prior to this offering, there has been no public market for the common stock. The initial public offering price for the common stock will be determined by negotiation among us and the representatives of the underwriters. Among the factors considered in determining the initial public offering price will be prevailing market and economic conditions, our revenue and earnings, market valuations of other companies engaged in activities similar to ours, estimates of our business potential and our prospects, the present state of our business operations, our management and other factors deemed relevant. We have applied for quotation of the common stock on the Nasdaq National Market under the symbol VIEW. Persons participating in this offering may over-allot or effect transactions that stabilize, maintain or otherwise affect the market price of the common stock at levels above those that might otherwise prevail in the open market, including by entering stabilizing bids, effecting syndicate covering transactions or imposing penalty bids. A stabilizing bid means the placing of any bid or the effecting of any purchase for the purpose of pegging, fixing or maintaining the price of the common stock. A syndicate covering transaction means the placing of any bid on behalf of the underwriting syndicate or the effecting of any purchase to reduce a short position created in connection with the offering. A penalty bid means an arrangement that permits the underwriters to reclaim a selling concession from a syndicate member in connection with the offering when shares of common stock sold by the syndicate member are purchased in syndicate covering transactions. Such transactions may be effected on the Nasdaq National Market, in the over-the-counter market or otherwise. This stabilizing, if commenced, may be discontinued at any time. 69 A prospectus in electronic format is being made available on an Internet website maintained by Wit SoundView's affiliate, Wit Capital Corporation. In addition, other dealers purchasing shares from Wit SoundView in this offering have agreed to make a prospectus in electronic format available on websites maintained by each of these dealers. LEGAL MATTERS The validity of the common stock offered by this prospectus will be passed upon for us by Morris, Manning & Martin, L.L.P., Atlanta, Georgia. As of the date of this prospectus, attorneys with Morris, Manning and Martin, L.L.P. own approximately 21,070 shares of our common stock. King & Spalding has served as counsel for the underwriters in connection with this offering. EXPERTS The financial statements of Viewlocity and Nexstep included in this prospectus to the extent and for the periods indicated in their reports have been audited by PricewaterhouseCoopers LLP, independent accountants, and are included herein in reliance upon the authority of said firm as experts in accounting and auditing. 70 WHERE YOU CAN FIND MORE INFORMATION We have filed with the Securities and Exchange Commission a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered hereby. This prospectus is only a part of the registration statement and does not contain all of the information included in the registration statement. Further information with respect to Viewlocity and the common stock offered hereby can be found in the registration statement and the exhibits and schedules thereto. Statements made in this prospectus as to the contents of any contract, agreement or other document are not necessarily complete, and in each instance reference is made to the copy of such contract or other documents filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference. The registration statement and the exhibits and schedules thereto may be inspected without charge, and copied at prescribed rates, at the Public Reference Room maintained by the Commission in Room 1024, 450 Fifth Street, N. W., Washington, D.C. 20549, and at the following regional offices of the Commission: Seven World Trade Center, Room 1400, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. In addition, Viewlocity is required to file electronic versions of these documents with the Commission through the Commission's Electronic Data Gathering, Analysis and Retrieval, or EDGAR, system. The Commission maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. Information concerning Viewlocity is also available for inspection at the offices of The Nasdaq Stock Market, Reports Section, 1735 K Street, N.W., Washington, D.C. 20006. Viewlocity intends to furnish to its stockholders annual reports containing consolidated financial statements audited by an independent public accounting firm and quarterly reports for the first three quarters of each fiscal year containing unaudited consolidated financial information. 71 VIEWLOCITY, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE -------- VIEWLOCITY, INC. AND SUBSIDIARIES Report of Independent Accountants........................... F-2 Consolidated Financial Statements: Consolidated Balance Sheets............................... F-3 Consolidated Statements of Operations..................... F-4 Consolidated Statements of Changes in Stockholders' Equity (Deficit) and Comprehensive Income...................... F-5 Consolidated Statements of Cash Flows..................... F-6 Notes to Consolidated Financial Statements................ F-7 VIEWLOCITY, INC. AND SUBSIDIARIES--UNAUDITED PRO FORMA FINANCIAL INFORMATION Unaudited Pro Forma Consolidated Balance Sheet.............. F-28 Unaudited Pro Forma Consolidated Statement of Operations.... F-29 Notes to the Unaudited Pro Forma Financial Information...... F-30 NEXSTEP, INC. Report of Independent Accountants........................... F-31 Financial Statements: Balance Sheet............................................. F-32 Statement of Operations................................... F-33 Statement of Changes in Stockholders' Deficit............. F-34 Statement of Cash Flows................................... F-35 Notes to Financial Statements............................. F-36
F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors of Viewlocity, Inc. and Subsidiaries: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, changes in stockholders' equity (deficit) and comprehensive income, and cash flows present fairly, in all material respects, the financial position of Viewlocity, Inc. and its subsidiaries (the "Company") at December 31, 1998 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers LLP Atlanta, Georgia July 28, 2000 F-2 VIEWLOCITY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA)
PRO FORMA STOCKHOLDERS' DECEMBER 31, EQUITY AS OF ----------------------------- MARCH 31, MARCH 31, 1998 1999 2000 2000 ------------- ------------- --------- ------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents............................... $ 1,597 $ 9,316 $ 6,923 Accounts receivable, net................................ 5,323 4,827 7,881 Other receivables....................................... 465 514 594 Prepaid expenses and other current assets............... 216 719 1,070 -------- -------- -------- Total current assets................................ 7,601 15,376 16,468 Property and equipment, net............................... 1,415 2,383 3,786 Capitalized software development, net..................... 725 940 928 Goodwill and other intangibles, net....................... -- 104 4,723 Other non-current assets.................................. 157 307 342 -------- -------- -------- Total assets........................................ $ 9,898 $ 19,110 $ 26,247 ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable........................................ $ 866 $ 4,650 $ 2,605 Short-term debt......................................... 2,650 2,708 2,701 Payables to associated companies........................ -- 1,320 145 Capital lease obligations............................... -- 104 195 Accrued expenses........................................ 2,421 4,997 4,929 Deferred revenues....................................... 1,922 1,453 2,857 -------- -------- -------- Total current liabilities........................... 7,859 15,232 13,432 Payables to associated companies.......................... 14,527 -- -- Capital lease obligations, less current portion........... -- 589 968 Deferred income taxes..................................... 351 324 309 Other..................................................... 83 -- 110 -------- -------- -------- Total liabilities................................... 22,820 16,145 14,819 -------- -------- -------- Commitments and contingencies Redeemable, convertible preferred stock: issuable in series, $.01 par value; 39,998 shares authorized; 19,801 shares issued and outstanding at December 31, 1999; 20,464 shares issued and outstanding at March 31, 2000.................................................... -- 23,751 41,999 $ -- -------- -------- -------- -------- Stockholders' equity (deficit): Divisional equity (deficit)............................. (15,060) -- -- -- Convertible preferred stock: $.01 par value; 2 shares authorized; 2 shares issued and outstanding at December 31, 1999 and March 31, 2000.................. -- -- -- -- Common stock: $.01 par value; 75,000 shares authorized; 34,062 shares issued and outstanding at December 31, 1999; 36,064 shares issued and outstanding at March 31, 2000........................................ -- 341 361 645 Additional paid in capital.............................. -- 40,831 48,439 90,154 Treasury stock: 3,998 shares held in treasury at March 31, 2000.............................................. -- -- (40) (40) Notes receivable from stockholders...................... -- (6,168) (6,817) (6,817) Deferred compensation................................... -- -- (848) (848) Retained earnings (deficit)............................. -- (57,318) (73,064) (73,064) Accumulated other comprehensive income.................. 2,138 1,528 1,398 1,398 -------- -------- -------- -------- Total stockholders' equity (deficit)................ (12,922) (20,786) (30,571) $ 11,428 -------- -------- -------- ======== Total liabilities and stockholders' equity (deficit)......................................... $ 9,898 $ 19,110 $ 26,247 ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. F-3 VIEWLOCITY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, ------------------------------ ------------------- 1997 1998 1999 1999 2000 -------- -------- -------- -------- -------- (UNAUDITED) Revenue: Licenses..................................... $ 6,522 $ 6,767 $ 8,849 $ 2,246 $ 3,439 Support...................................... 1,609 2,024 2,991 685 988 Services..................................... 3,563 4,873 7,608 1,907 2,046 ------- ------- -------- -------- -------- Total revenue.......................... 11,694 13,664 19,448 4,838 6,473 ------- ------- -------- -------- -------- Cost of revenue: Licenses..................................... 162 362 1,024 161 155 Support and services......................... 4,102 5,977 10,160 1,741 3,014 ------- ------- -------- -------- -------- Total cost of revenue.................. 4,264 6,339 11,184 1,902 3,169 ------- ------- -------- -------- -------- Gross profit................................... 7,430 7,325 8,264 2,936 3,304 ------- ------- -------- -------- -------- Operating expenses: Sales and marketing.......................... 8,199 8,208 14,580 2,277 6,350 Research and development..................... 3,132 2,784 4,045 634 3,611 General and administrative................... 4,986 4,741 8,891 1,111 2,423 Purchased research and development........... -- -- -- -- 5,200 Deferred compensation expense................ -- -- -- -- 914 Depreciation and amortization................ 756 1,061 1,088 219 601 ------- ------- -------- -------- -------- Total operating expenses............... 17,073 16,794 28,604 4,241 19,099 ------- ------- -------- -------- -------- Operating loss................................. (9,643) (9,469) (20,340) (1,305) (15,795) ------- ------- -------- -------- -------- Other income (expense): Other, net................................... 279 (15) (46) (45) (25) Interest, net................................ (53) (191) 67 (33) 104 ------- ------- -------- -------- -------- Other income (expense), net............ 226 (206) 21 (78) 79 ------- ------- -------- -------- -------- Loss before provision (benefit) for income taxes........................................ (9,417) (9,675) (20,319) (1,383) (15,716) ------- ------- -------- -------- -------- Provision (benefit) for income taxes........... 244 (45) 94 18 30 ------- ------- -------- -------- -------- Net loss....................................... $(9,661) $(9,630) $(20,413) $ (1,401) $(15,746) ======= ======= ======== ======== ======== Net loss per share: Basic and diluted............................ $ (0.28) $ (0.28) $ (0.60) $ (0.04) $ (0.51) ======= ======= ======== ======== ======== Weighted average shares used in computation................................ 34,062 34,062 34,062 34,062 30,867 ======= ======= ======== ======== ======== Pro forma net loss per share (unaudited): Basic and diluted............................ $ (0.28) $ (0.28) $ (0.47) $ (0.04) $ (0.30) ======= ======= ======== ======== ======== Weighted average shares used in computation................................ 34,062 34,062 43,858 35,676 53,238 ======= ======= ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. F-4 VIEWLOCITY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (IN THOUSANDS)
COMMON STOCK PREFERRED STOCK ------------------- ------------------- NOTES DIVISIONAL NUMBER NUMBER ADDITIONAL RECEIVABLE EQUITY OF OF PAID IN TREASURY FROM (DEFICIT) SHARES AMOUNT SHARES AMOUNT CAPITAL STOCK STOCKHOLDERS ---------- -------- -------- -------- -------- ---------- -------- ------------ BALANCE DECEMBER 31, 1996...... $(12,318) -- $ -- -- $ -- $ -- $ -- $ -- Net loss..................... (9,661) Contributions from parent.... 8,017 Change in translation adjustment................. -------- ------- ---- ----- ------ ------- ----- ------- BALANCE DECEMBER 31, 1997...... (13,962) -- -- -- -- -- -- -- Net loss..................... (9,630) Contributions from parent.... 8,532 Change in translation adjustment................. -------- ------- ---- ----- ------ ------- ----- ------- BALANCE DECEMBER 31, 1998...... (15,060) -- -- -- -- -- -- -- Contributions from parent.... 963 Effect of separation......... 14,097 34,062 341 22,467 Issuance of preferred stock--series C............ 2 -- 15,363 Repurchase of common stock... (62) Issuance of common stock under stock incentive plan....................... 6,106 62 (6,168) Issuance of warrants......... 128 Accretion of preferred stock...................... (3,233) Net loss..................... Change in translation adjustment................. -------- ------- ---- ----- ------ ------- ----- ------- BALANCE DECEMBER 31, 1999...... -- 34,062 341 2 -- 40,831 -- (6,168) Repurchase of common stock... (45) Issuance of common stock for acquisition................ 2,002 20 5,866 Issuance of common stock under stock incentive plan....................... 950 5 (649) Deferred compensation related to grant of stock options.................... 1,762 Amortization of deferred compensation............... Accretion of preferred stock...................... (970) Net loss..................... Change in translation adjustment................. -------- ------- ---- ----- ------ ------- ----- ------- BALANCE MARCH 31, 2000 (UNAUDITED).................. $ -- 36,064 $361 2 $ -- $48,439 $ (40) $(6,817) ======== ======= ==== ===== ====== ======= ===== ======= ACCUMULATED TOTAL OTHER STOCKHOLDERS' DEFERRED RETAINED COMPREHENSIVE EQUITY COMPENSATION EARNINGS INCOME (DEFICIT) ------------- -------- -------------- ------------- BALANCE DECEMBER 31, 1996...... $ -- $ -- $ 66 $(12,252) Net loss..................... (9,661) Contributions from parent.... 8,017 Change in translation adjustment................. 1,777 1,777 ------- -------- ------- -------- BALANCE DECEMBER 31, 1997...... -- -- 1,843 (12,119) Net loss..................... (9,630) Contributions from parent.... 8,532 Change in translation adjustment................. 295 295 ------- -------- ------- -------- BALANCE DECEMBER 31, 1998...... -- -- 2,138 (12,922) Contributions from parent.... 963 Effect of separation......... (36,905) -- Issuance of preferred stock--series C............ 15,363 Repurchase of common stock... (62) Issuance of common stock under stock incentive plan....................... -- Issuance of warrants......... 128 Accretion of preferred stock...................... (3,233) Net loss..................... (20,413) (20,413) Change in translation adjustment................. (610) (610) ------- -------- ------- -------- BALANCE DECEMBER 31, 1999...... -- (57,318) 1,528 (20,786) Repurchase of common stock... (45) Issuance of common stock for acquisition................ 5,886 Issuance of common stock under stock incentive plan....................... 306 Deferred compensation related to grant of stock options.................... (1,762) -- Amortization of deferred compensation............... 914 914 Accretion of preferred stock...................... (970) Net loss..................... (15,746) (15,746) Change in translation adjustment................. (130) (130) ------- -------- ------- -------- BALANCE MARCH 31, 2000 (UNAUDITED).................. $ (848) $(73,064) $ 1,398 $(30,571) ======= ======== ======= ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. F-5 VIEWLOCITY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, ------------------------------ ------------------- 1997 1998 1999 1999 2000 -------- -------- -------- -------- -------- (UNAUDITED) Cash flow provided by (used in) operating activities: Net loss.............................................. $(9,661) $(9,630) $(20,413) $ (1,401) $(15,746) Adjustments to reconcile net loss to cash flow provided by (used in) operating activities: Depreciation and amortization......................... 756 1,061 1,088 220 601 Purchased research and development.................... -- -- -- -- 5,200 Stock-based compensation.............................. -- -- 33 -- 920 Allowance for doubtful accounts....................... (39) 117 67 (111) 52 Deferred income taxes................................. 79 (229) (27) (21) (15) Changes in assets and liabilities: Accounts receivable................................. (463) (885) 429 (702) (2,919) Other receivables................................... (142) (210) (49) 99 (80) Prepaid expenses and other current assets........... 171 (97) (433) (23) (351) Accounts payable.................................... (36) (142) 3,784 515 (2,144) Accrued expenses.................................... (266) 129 2,577 988 (211) Associated company payables, net.................... 1,948 (1,223) 3,119 1,754 (1,175) Deferred revenue.................................... 311 1,269 (470) (142) 1,403 Other............................................... (34) (198) (138) (74) 110 ------- ------- -------- -------- -------- Net cash provided by (used in) operating activities.................................... (7,376) (10,038) (10,433) 1,102 (14,355) ------- ------- -------- -------- -------- Cash flow used in investing activities: Capital expenditures.................................. (735) (567) (1,825) (11) (1,653) Capitalized software development costs................ (485) (436) (422) (74) (83) Acquisition of business............................... -- -- (180) -- (4,165) ------- ------- -------- -------- -------- Net cash used in investing activities........... (1,220) (1,003) (2,427) (85) (5,901) ------- ------- -------- -------- -------- Cash flow provided by financing activities: Borrowing (repayment) of short-term debt, net......... (46) 2,419 58 (116) (18) Borrowing under capital leases, net................... -- -- 693 -- 470 Issuance of common stock.............................. -- -- -- -- 307 Repurchase of common stock............................ -- -- (62) -- (45) Issuance of preferred stock, net...................... -- -- 20,518 9,950 17,278 Capital contributions by Frontec AB................... 8,017 8,532 -- -- -- ------- ------- -------- -------- -------- Net cash provided by financing activities....... 7,971 10,951 21,207 9,834 17,992 ------- ------- -------- -------- -------- Effect of exchange rate on cash flows................... 1,677 265 (628) (866) (129) Net increase in cash.................................... 1,052 175 7,719 9,985 (2,393) Cash at beginning of period............................. 370 1,422 1,597 1,597 9,316 ------- ------- -------- -------- -------- Cash at end of period................................... $ 1,422 $ 1,597 $ 9,316 $ 11,582 $ 6,923 ======= ======= ======== ======== ======== Supplemental cash flow information: Cash paid for interest................................ $ 59 $ 208 $ 180 $ 72 $ 110 ======= ======= ======== ======== ======== Cash paid for taxes................................... $ 89 $ 177 $ 46 $ 14 $ 30 ======= ======= ======== ======== ======== Noncash financing activities: Conversion of associated company payables to Series C convertible preferred stock......................... $ -- $ -- $ 15,363 $ 15,363 $ -- ======= ======= ======== ======== ======== Noncash capital contributions by parent............... $ -- $ -- $ 963 $ 963 $ -- ======= ======= ======== ======== ======== Deferred stock compensation........................... $ -- $ -- $ 128 $ -- $ 1,762 ======= ======= ======== ======== ======== Issuance of common stock for acquisition.............. $ -- $ -- $ -- $ -- $ 5,886 ======= ======= ======== ======== ======== Common stock issued for notes receivable.............. $ -- $ -- $ 6,168 $ -- $ 649 ======= ======= ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS. F-6 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 1. ORGANIZATION Viewlocity, Inc. (referred to hereafter as "we," "Viewlocity" or the "Company"), a Delaware corporation, provides e-business applications and integration software and services that enable e-business networks and synchronize supply webs. Viewlocity's solutions for trading communities and e-business networks provide application integration, business-to-business integration and trading community management. Viewlocity was incorporated on February 22, 1999 as a wholly owned subsidiary of Frontec AB, a Swedish company publicly traded on the OM Stockholm Exchange (formerly the Stockholm Stock Exchange). Viewlocity was formed to be the new parent of Frontec AB's AMTrix software division. On February 23, 1999, Frontec AB transferred, at historical cost, the AMTrix business to Viewlocity through a series of asset contribution agreements. The assets transferred consisted of all of the assets relating to the AMTrix business, including customer relationships, license agreements with customers, accounts receivable, intellectual property and employees. Viewlocity also assumed all of the liabilities and obligations relating to the AMTrix business, including intercompany payables owed to Frontec AB and its other subsidiaries (the "Frontec AB Liabilities"). Shortly after the transfer, substantially all of the Frontec AB Liabilities were converted into equity of Viewlocity. Since our separation from Frontec AB, we have been further capitalized by the issuance of several series of convertible preferred stock to third party investors. These transactions are described further in Note 14 to the consolidated financial statements. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION We have ten wholly owned subsidiaries that operate in seven foreign countries. The consolidated financial statements include the accounts of Viewlocity and all of its subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. BASIS OF PRESENTATION The consolidated financial statements have been prepared using Frontec AB's historical basis in the assets and liabilities and historical results of operations and cash flows relating to the AMTrix business, since there was no change in control at the date of separation. These financial statements generally reflect our financial position, results of operations and cash flows as if we were a separate entity for all periods presented. Certain costs and expenses presented in these financial statements have been allocated primarily based on headcount or management estimates, depending on the nature of the expense. The primary expenses that were allocated related to corporate administrative functions, including administrative, legal, accounting and other corporate overheads. We believe that these allocations are reasonable, however, the financial information included herein may not necessarily reflect our financial position, results of operations and cash flows in the future, or what they would have been had we been a separate entity during each of the periods presented. UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Data and information as of March 31, 1999 and 2000 and for the three months ended March 31, 1999 and 2000 are unaudited. In the opinion of our management, the unaudited interim consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair F-7 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) presentation of the financial position and results of operations for those periods. The three month results are not necessarily indicative of the expected results for the year ending December 31, 2000. USE OF ESTIMATES AND SIGNIFICANT RISKS The preparation of financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. The most significant estimates used in these financial statements include the valuation of capitalized software development costs, lives of intangible assets, taxes, the allowance for doubtful accounts receivable and the allocation of certain costs and expenses from Frontec AB. Changes in the facts or circumstances underlying these estimates could result in material changes and actual results could differ from these estimates. We have a history of recurring losses and negative cash flows from operations. Historically, we have funded our cash needs by capital contributions from Frontec AB and private equity financings. We believe that continued private financings or an initial public offering of common stock and the successful commercialization of our products and services will generate sources of liquidity and adequate capital to meet our annual cash needs. If we are unable to obtain additional financing when needed, we may be required to reduce the scope of our planned product development and marketing efforts, which may harm our business and operating results. We believe that available cash and cash equivalent and borrowings, including the net proceeds from our recent private placements of convertible preferred stock, will be sufficient to meet our capital needs and capital expenditures for at least the next 12 months. Our operations are subject to certain risks and uncertainties, including, among others, our limited operating history as an independent company, our history of unprofitability, our inability to fund our operations with cash generated from our business, operating results that are often volatile and difficult to predict, our dependence on one of our product offerings, our ability to develop new products and the market's acceptance of those new products, a highly competitive marketplace, our reliance on strategic relationships to market our products, our use of technology licensed from third parties, errors in our products, risks associated with significant international operations, lengthy sales cycles, the need to manage our growth, our acquisition strategy and the integration of our acquisitions, and the need to retain key personnel. Any of these factors could impair our ability to expand our operations or to generate significant revenues from those markets in which we operate. As a result of the above and other factors, our earnings and financial condition can vary significantly from quarter-to-quarter and year-to-year. REVENUE RECOGNITION Our revenue is generated primarily by licensing our software systems and providing support and professional services for those systems. We account for our software and support revenues in accordance with Statements of Position issued by the American Institute of Certified Public Accountants. In October 1997, the American Institute of Certified Public Accountants issued Statement of Position 97-2, "Software Revenue Recognition." SOP 97-2 provides guidance on applying generally accepted accounting principles in recognizing revenue on software transactions, and is effective for transactions entered into in fiscal years beginning after December 31, 1997. We adopted SOP 97-2 on January 1, 1998, and the F-8 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) adoption did not have a material impact on our consolidated financial statements. Prior to January 1, 1998, we accounted for software transactions under Statement of Position 91-1, the previous guidance on revenue recognition for software transactions by the American Institute of Certified Public Accountants. Our software is generally licensed for a perpetual term by charging a license fee that grants the customer the right to use the software system that is currently available at the time the agreement is reached. License fees for software are recognized as revenue when there is persuasive evidence of an agreement, the software has been shipped, collectibility is probable and payment is due within one year. When payment terms are in excess of one year, we recognize the license fee as the payments become due. When licenses are sold through a reseller, we recognize revenue once the software system is shipped to the reseller's end-user customer and all other revenue recognition criteria have been met. When uncertainties exist relating to any of these criteria, the revenue is recognized when the uncertainty is resolved or cash is received. We provide telephone support and maintenance for our software systems under support agreements. Generally, these agreements provide unspecified software upgrades and technical support over a specified term, which is typically twelve months and renewable on an annual basis. Support contracts are usually paid in advance, and revenues from these contracts are recognized ratably over the term of the contract. We also provide professional services, including systems implementation and integration assistance, consulting and training, which are available under services agreements and contracted for separately from our license fees. These services are generally provided on a time and materials basis and, in some circumstances, under fixed price arrangements. Under fixed price arrangements, revenue is recognized on the basis of the estimated percentage of completion of the service provided. Changes in estimates to complete and losses, if any, are recognized in the period they are determined. GOODWILL AND OTHER INTANGIBLE ASSETS Identifiable intangible assets and goodwill are recorded and amortized over their estimated economic lives or periods of future benefit. The lives established for these assets are based on many factors, and are subject to change because of the nature of our operations. This is particularly true for goodwill, which reflects value attributable to the going-concern nature of acquired businesses, the stability of their operations, market presence and reputation. Accordingly, we evaluate the continued appropriateness of these estimated lives and recoverability of the carrying value of such assets based upon the latest available economic factors and circumstances. We amortize goodwill on a straight-line basis over an estimated life of up to 15 years for goodwill related to service company acquisitions and up to ten years for goodwill related to software company acquisitions. We believe these lives appropriately reflect the current economic circumstances for such businesses and the related period of future benefit. Other identifiable intangible assets are amortized on a straight-line basis over their estimated period of future benefit ranging from 2 to 15 years. IMPAIRMENT OF LONG-LIVED ASSETS We periodically evaluate the recoverability of our long-lived assets, including intangible assets. This evaluation consists of a comparison of the estimated future cash flows from the related operations with the then corresponding carrying values of those assets. If the expected future cash flows exceed the carrying F-9 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) value of those assets, no impairment is recognized. If there is an impairment of value, it is recognized as an expense in the period it is determined. A rate considered to be commensurate with the risk involved is used to discount the cash flows for any recognized impairment. SOFTWARE DEVELOPMENT COSTS We capitalize certain costs incurred for the development of computer software that we intend to license to customers. We expense all research and development costs as they are incurred before a product becomes technologically feasible and after a product is generally available. Between the time a product is considered technologically feasible and when it is generally available, we capitalize the costs associated with the development. We begin amortizing capitalized software development costs once a product is generally available. Amortization is provided at the greater of the amount computed using (i) the ratio that current revenues for a product bear to the total of the current and anticipated future revenues of that product or (ii) on a straight-line basis over the estimated useful life of the related product, generally two to five years. As of each balance sheet date, we perform a net realizable value analysis and the amount by which unamortized software development costs exceeds the net realizable value, if any, is recognized as expense in the period it is determined. CASH AND CASH EQUIVALENTS We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. PROPERTY AND EQUIPMENT Property and equipment is stated at cost less accumulated depreciation. Leased property or equipment meeting certain criteria is capitalized and the related capital lease obligation is recorded as a liability. Depreciation is provided on a straight-line basis over the estimated useful life of the related asset, except for leasehold improvements, which are depreciated over the life of the related lease. Gains and losses on dispositions of property and equipment are determined based on the difference between the cash plus the fair value of any assets received (in the case of a non-monetary transaction) less the net book value of the asset disposed of at the date of disposition. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS The functional currency for each of our foreign subsidiaries is generally the local currency of the country in which they operate. The assets and liabilities of these foreign operations were translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Income statement items were translated into U.S. dollars at the average exchange rate that prevailed during the reporting period. The net gains and losses that result from this translation are reported as foreign currency translation adjustments as a component of comprehensive income and are not included in the results of operations. Transaction gains and losses are included in the results of operations in the period that they occur and are not significant in any of the periods presented. F-10 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of our current assets and liabilities approximate fair value because of the short maturity of these instruments. The carrying amount of our short-term debt approximates fair value based on floating interest rates. The carrying amount of our capital lease obligations approximate fair value based on insignificant differences between the rates being charged and market rates. INCOME TAXES Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences and income tax credits. Temporary differences are primarily the result of differences between the tax bases of assets and liabilities and their financial reporting amounts. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to future years in which deferred tax assets or liabilities are expected to be settled or realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. DIVISIONAL EQUITY (DEFICIT) Divisional equity (deficit) includes accumulated retained earnings (deficit) and capital contributions by Frontec AB. NET LOSS PER COMMON SHARE Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. The weighted average number of common shares outstanding assumes that the 34,062,058 shares issued upon our separation from Frontec AB were outstanding for the periods prior to the separation. Diluted net loss per common share is computed using the weighted average number of common shares outstanding and, when dilutive, potential common shares from options and warrants using the treasury stock method, and from convertible securities using the as-if converted method. All potential common shares have been excluded from the computation of the dilutive net loss per common share for all periods presented because the effect would have been antidilutive. Such outstanding securities consist of the following:
DECEMBER 31, MARCH 31, 1999 2000 ------------ --------- (IN THOUSANDS) Series A convertible preferred stock............... 10,000 10,000 Series B convertible preferred stock warrants outstanding...................................... 7,005 7,005 Series D convertible preferred stock............... 9,801 10,464 Outstanding options................................ 4,783 5,731 Outstanding warrants............................... 596 596 ------ ------ Total.............................................. 32,185 33,796
Additionally, our Series C convertible preferred stock is convertible into common shares only upon the consummation of a qualifying initial public offering. Assuming the aggregate fair market value of our company immediately prior to our initial public offering is greater than $150 million, our Series C F-11 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) convertible preferred stock is convertible into common shares based on the calculation of $20.5 million divided by the initial public offering price per share. PRO FORMA STOCKHOLDERS' EQUITY (UNAUDITED) Stockholders' equity has been presented on a pro forma basis to reflect the issuance of an assumed 5,411,745 shares of our Series B convertible preferred stock upon the cashless exercise of outstanding warrants and the conversion of all the outstanding shares of our Series A, B, C and D convertible preferred stock into an assumed aggregate of 28,437,918 shares of our common stock which will occur immediately upon the completion of our initial public offering as if the exercise and conversion had occurred on March 31, 2000. All references to pro forma information in the notes to the financial statements are unaudited. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as amended by SFAS No. 137, is effective for all quarters of all fiscal years beginning after June 15, 2000. Currently, we do no utilize derivative financial instruments. Therefore, the adoption of SFAS No. 133 is not expected to have a material impact on our results of operations or financial position. In December 1999, the Securities and Exchange Commission ("SEC") issued SAB No. 101, "Revenue Recognition in Financial Statements." The SAB requires four basic criteria to be met before companies can record revenue. These are: (a) persuasive evidence that an arrangement exists; (b) delivery has occurred or services have been rendered; (c) the seller's price to the buyer is fixed or determinable; and (d) collectibility is reasonably assured. Many of the examples in the SAB address situations that give rise to the potential for recording revenue prematurely. They include transactions subject to uncertainties regarding customer acceptance, including rights to refunds and extended payment terms, or require continuing involvement by the seller. In March 2000, the SEC issued SAB No. 101A, "Amendment: Revenue Recognition in Financial Statements," that delays the implementation date of certain provisions of SAB 101. The adoption of SAB 101 is not expected to have a material impact on our results of operations or financial position. In March 2000, the Financial Accounting Standards Board issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation, an interpretation of APB Opinion No. 25." The Interpretation poses and answers 20 separate questions dealing with APB 25 implementation practice issues. The Interpretation will be applied prospectively to new awards, modifications to outstanding awards, and changes in employee status on or after July 1, 2000, except as follows: (i) requirements related to the definition of an employee apply to new awards granted after December 15, 1998; (ii) modifications that directly or indirectly reduce the exercise price of an award apply to modifications made after December 15, 1998; and (iii) modifications to add a reload feature to an award apply to modifications made after January 12, 2000. Financial statements for periods prior to July 1, 2000 will not be affected. The F-12 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) adoption of Interpretation 44 is not expected to have a material impact on our results of operations or financial position. 3. ACCOUNTS RECEIVABLE Accounts receivable consists of the following:
DECEMBER 31, ------------------- MARCH 31, 1998 1999 2000 -------- -------- --------- (IN THOUSANDS) Billed receivables............................... $5,442 $4,994 $7,351 Unbilled receivables............................. 37 56 806 Less: allowance for doubtful accounts............ (156) (223) (276) ------ ------ ------ $5,323 $4,827 $7,881 ====== ====== ======
4. PROPERTY AND EQUIPMENT Property and equipment consists of the following:
ESTIMATED DECEMBER 31, USEFUL LIFE ------------------- MARCH 31, (YEARS) 1998 1999 2000 ------------ -------- -------- --------- (IN THOUSANDS) Computer equipment and software...... 2-5 $1,880 $ 3,010 $ 4,089 Furniture, fixtures and office equipment.......................... 4-7 1,310 668 1,026 Leasehold improvements and other..... 2-10 449 483 616 ------ ------- ------- 3,639 4,161 5,731 Less: accumulated depreciation....... (2,224) (1,778) (1,945) ------ ------- ------- $1,415 $ 2,383 $ 3,786 ====== ======= =======
Depreciation expense was $756,000, $866,000, $857,000 and $278,000 in 1997, 1998, 1999 and the three months ended March 31, 2000, respectively. 5. CAPITALIZED SOFTWARE DEVELOPMENT Capitalized software development consists of the following:
DECEMBER 31, ------------------- MARCH 31, 1998 1999 2000 -------- -------- --------- (IN THOUSANDS) Balance, beginning of period...................... $ 485 $ 921 $1,343 Amount capitalized................................ 436 422 83 ----- ------ ------ Balance, end of period............................ 921 1,343 1,426 Less: accumulated amortization.................... (196) (403) (498) ----- ------ ------ $ 725 $ 940 $ 928 ===== ====== ======
F-13 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 5. CAPITALIZED SOFTWARE DEVELOPMENT (CONTINUED) We spent a total of $3.6 million, $3.2 million and $4.5 million in 1997, 1998 and 1999, respectively, on research and development activities. Of this amount, we capitalized software development costs of $485,000, $436,000, and $422,000 in 1997, 1998 and 1999, respectively. No amortization expense was charged in 1997, and $196,000 and $225,000 was charged in 1998 and 1999, respectively. We spent a total of $3.7 million on research and development activities during the three months ended March 31, 2000. Of this amount, we capitalized software development costs of $83,000. Amortization expense for the period was $95,000. 6. SHORT-TERM DEBT Short-term debt consists of the following:
DECEMBER 31, ------------------- MARCH 31, 1998 1999 2000 -------- -------- --------- (IN THOUSANDS) Note payable in Sweden........................... $2,468 $ -- $ -- Note payable in the U.S.......................... -- 2,490 2,490 Line of credit in Singapore...................... 182 180 175 Other............................................ -- 38 36 ------ ------ ------ $2,650 $2,708 $2,701 ====== ====== ======
In 1999, we entered into a $2.5 million loan agreement with a bank in the U.S., in order to repay the note payable in Sweden that became due in November 1999. Interest is payable at the bank's prime rate plus 1%. The loan is collateralized by substantially all of our assets. The agreement contains restrictive covenants that require us to maintain, among other things, a ratio of debt to tangible net worth of 1 to 1. We must also maintain a ratio of cash to debt of 2 to 1. We expect to repay all outstanding balances under this agreement within one year from the balance sheet date. In connection with this loan agreement, we issued the bank a warrant to purchase 52,000 shares of our common stock at $2.94 per share. The warrant may be exercised in whole or in part at any time on or before November 26, 2006. The fair value of the warrant, as determined using the Black-Scholes valuation model, was $29,000, which was recorded as an expense in 1999. We maintain an additional line of credit with a bank in Singapore providing borrowings of up to $200,000 for working capital purposes. Interest is payable at the bank's prime rate plus 1%. The line of credit is collateralized by a corporate guarantee by Frontec AB and has no significant covenants. We expect to repay all outstanding balances under this agreement on or before December 31, 2000. 7. COMMITMENTS AND CONTINGENCIES We are subject to legal proceedings and claims that arise in the normal course of business. While the outcome of these matters cannot be predicted with certainty, our management does not believe the outcome of any of these legal matters will have a material adverse effect on our results of operations or financial position. F-14 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 8. LEASE COMMITMENTS In November 1999, we entered into an equipment lease facility with a leasing company for the purchase of equipment and software. Under this agreement, we can enter into draws against the facility up to a total of $3.2 million. The interest rate under the lease is fixed at 12.55%. Principal and interest is payable under each draw in 48 monthly installments. At lease expiration, we can purchase the equipment at 5% of the original cost. In connection with this lease facility, we issued the lessor a warrant to purchase 150,000 shares of our common stock at $1.00 per share. The warrant may be exercised in whole or in part at any time on or before November 12, 2004. The fair value of the warrant, as determined using the Black-Scholes valuation model, was $98,000, which will be amortized over the term of the lease facility. We lease office space, automobiles and certain other items under operating leases expiring through 2009. Rental expense for 1997, 1998 and 1999 was $906,000, $800,000 and $875,000, respectively. As of December 31, 1999, future minimum lease payments under our operating and capital leases are as follows:
OPERATING CAPITAL --------- -------- (IN THOUSANDS) 2000..................................................... $1,292 $ 184 2001..................................................... 1,254 217 2002..................................................... 968 221 2003..................................................... 722 302 2004..................................................... 742 10 Thereafter............................................... 3,906 -- ------ ----- $8,884 934 Less: amounts representing interest...................... (241) ----- 693 Less: current portion.................................... (104) ----- Capital lease obligation, net of current portion......... $ 589 =====
9. ACQUISITIONS On May 18, 1999, we completed the acquisition of a services company in Germany for approximately $180,000. The acquisition has been accounted for as a purchase and accordingly, the purchase price has been allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the date of acquisition. The results of operations have been included with ours beginning on May 1, 1999, the effective date of the acquisition. The excess consideration above the fair value of net assets acquired of approximately $110,000 has been recorded as goodwill or other intangible assets. Supplemental pro forma information is not presented since this acquisition was not material to our consolidated results of operations. F-15 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 9. ACQUISITIONS (CONTINUED) On February 3, 2000, we completed the acquisition of Nexstep, Inc, a software development enterprise based in Plano, Texas, which focuses on visibility fulfillment solutions for Internet retail organizations. The aggregate consideration of approximately $10.1 million was paid by the issuance of 2,002,000 shares of our common stock and cash of approximately $4.2 million. Our board of directors determined the fair value of the common stock issued as part of the consideration to be $2.94 per share based on recent sales of our convertible preferred stock for cash to third-party investors. The acquisition has been accounted for as a purchase and accordingly, the purchase price has been allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the date of acquisition. Nexstep's results of operations have been included with ours beginning on January 1, 2000, the effective date of the acquisition for accounting purposes. The excess consideration above the fair value of the net assets acquired was approximately $10.0 million. We have allocated the intangible assets as follows (in thousands):
ESTIMATED USEFUL LIFE (YEARS) ----------- In-process research and development..................... $ 5,200 n/a Workforce............................................... 410 3 Goodwill................................................ 4,438 6 ------- $10,048
An independent appraiser estimated the fair market value of the intangible assets, including the in-process research and development ("IPR&D"). In addition to continuing the development of Nexstep's products, we intend to integrate their products with our solutions. We have recorded approximately $5.2 million in charges related to the estimated purchased IPR&D based on the income approach valuation method. This amount reflects the fair value of Nexstep's products, which were neither complete nor being marketed and will be used solely in our research and development activities. Consistent with our policy for accounting for costs to develop our software, these products are not capitalizable under SFAS No. 86 "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed" and have no alternative future use other than in research and development. For pro forma information related to this acquisition, see the unaudited pro forma financial statements elsewhere in this prospectus. 10. INCOME TAXES Historically, certain of our operations have, in effect, been included in the consolidated foreign income tax returns filed by Frontec AB. Companies in Sweden are assessed income taxes individually and not on a consolidated or group basis. However, Swedish income tax rules permit losses incurred by other companies within a group to be distributed through the use of annual group contributions. For tax purposes, these contributions are considered deductible by the paying corporation and income to the receiving corporation. Effectively, these contributions have transferred certain of our net operating loss carryforwards at their full value to Frontec AB. These contributions have been reflected in our financial statements as capital rather than income transactions and have been included in divisional equity (deficit). F-16 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 10. INCOME TAXES (CONTINUED) We had no Federal or state income tax expense during any of the periods presented. The significant components of foreign income tax expense (benefit) are as follows:
THREE MONTHS YEAR ENDED ENDED DECEMBER 31, MARCH 31, ------------------------------------ ---------------------- 1997 1998 1999 1999 2000 -------- -------- -------- -------- -------- (IN THOUSANDS) Current................................ $ 88 $ 176 $ 177 $ 18 $ 30 Deferred............................... 157 (221) (83) -- -- ---- ----- ----- ----- ----- Total.................................. $245 $ (45) $ 94 $ 18 $ 30 ==== ===== ===== ===== =====
A reconciliation of the provision (benefit) for income taxes to the amount computed by applying the statutory federal income tax rate to loss before income taxes is as follows:
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, ------------------------------ ------------------- 1997 1998 1999 1999 2000 -------- -------- -------- -------- -------- (IN THOUSANDS) Income tax benefit at statutory rate............................ $(3,296) $(3,387) $(7,112) $ (484) $(5,501) Increase (decrease) in provision from: Deferred tax asset valuation allowance..................... 1,171 129 7,154 528 3,499 Goodwill and other intangible assets........................ -- -- -- -- 1,948 Effect of annual group contributions................. 1,704 2,227 -- -- -- Differences in foreign and U.S. tax rates and other........... 666 986 52 (26) 84 ------- ------- ------- ------- ------- Total............................. $ 245 $ (45) $ 94 $ 18 $ 30 ======= ======= ======= ======= =======
F-17 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 10. INCOME TAXES (CONTINUED) Temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax liability relate to the following:
THREE MONTHS YEAR ENDED ENDED DECEMBER 31, MARCH 31, ------------------- ------------ 1998 1999 2000 -------- -------- ------------ (IN THOUSANDS) Deferred tax assets: U.S. net operating loss carryforwards.... $ 3,034 $ 8,285 $ 10,878 Foreign net operating loss carryforwards.......................... -- 3,015 4,074 Deferred tax asset valuation allowance... (3,034) (11,264) (14,916) Other.................................... -- 38 23 -------- -------- -------- Total deferred tax assets.................. -- 74 59 Deferred tax liabilities: Capitalized software..................... (203) (263) (250) Other.................................... (148) (135) (118) -------- -------- -------- Total deferred tax liabilities............. (351) (398) (368) Net deferred tax liabilities............... $ (351) $ (324) $ (309) ======== ======== ========
As of December 31, 1999, we had net operating loss carryforwards in the U.S. that expire at various times from 2012 through 2019 totaling approximately $21.9 million and net operating loss carryforwards from foreign operations totaling approximately $9.6 million. As of March 31, 2000, we had net operating loss carryforwards in the U.S. that expire at various times from 2012 through 2020 totaling approximately $28.6 million and net operating loss carryforwards from foreign operations totaling approximately $13.2 million. Realization of the resulting deferred tax assets is dependent on future taxable income. We have recorded valuation allowances of $11.3 million as of December 31, 1999 and $14.9 million as of March 31, 2000 related to these deferred tax assets because we believe that it is unlikely that such assets will be realized, however, ultimate realization could be impacted by market conditions or other variables not known at this time. We will continue to assess the valuation allowance and to the extent it is determined that such allowance is no longer required, the tax benefit of the remaining net deferred tax assets may be recognized in the future. 11. MAJOR CUSTOMERS AND SEGMENT INFORMATION We sell our products and services to a variety of customers, and no individual customer accounted for more than 10% of our revenues during 1997, 1998 or 1999. Our primary form of internal reporting is aligned with the offering of our products and services. Therefore, we believe that we operate in one segment. We do, however, derive a substantial portion of our revenue from our foreign operations. The following table presents revenue by geographic region based on F-18 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 11. MAJOR CUSTOMERS AND SEGMENT INFORMATION (CONTINUED) country of invoice origin and identifiable and long-lived assets by geographic region based on the location of the assets.
U.S. EUROPE ASIA/PACIFIC ELIMINATION TOTAL -------- -------- ------------ ----------- -------- (IN THOUSANDS) Year ended December 31, 1997 Revenue to external customers.......... $ 1,861 $ 8,214 $1,619 $ -- $11,694 Identifiable assets.................... 4,553 23,584 2,296 (21,817) 8,616 Long-lived assets...................... 684 1,252 232 -- 2,168 Year ended December 31, 1998 Revenue to external customers.......... $ 3,745 $ 8,295 $1,624 $ -- $13,664 Identifiable assets.................... 3,644 28,737 2,135 (24,618) 9,898 Long-lived assets...................... 437 1,510 193 -- 2,140 Year ended December 31, 1999 Revenue to external customers.......... $ 3,346 $12,647 $3,455 $ -- $19,448 Identifiable assets.................... 39,152 28,391 3,758 (52,191) 19,110 Long-lived assets...................... 1,034 2,079 314 -- 3,427 Three months ended March 31, 2000 Revenue to external customers.......... $ 1,879 $ 3,038 $1,556 $ -- $ 6,473 Identifiable assets.................... 64,653 40,208 5,671 (84,285) 26,247 Long-lived assets...................... 6,996 2,036 405 -- 9,437
12. EMPLOYEE BENEFIT PLANS RETIREMENT SAVINGS PLANS We maintain a defined contribution 401(k) profit-sharing plan and trust (the "401(k) Plan") in the U.S. Most full-time U.S. employees are eligible to participate in the 401(k) Plan. A participating employee, by electing to defer a portion of his or her compensation, may make pre-tax contributions to the 401(k) Plan of a percentage of his or her total compensation. Participant contributions and earnings are 100% vested at all times. We do not currently contribute to the 401(k) Plan, however, the 401(k) Plan provides us with the opportunity to contribute if we chose to in the future. We also maintain similar defined contribution plans for certain of our employees outside the U.S. We pay all expenses associated with the 401(k) Plan and similar plans, which have been minimal to date. EQUITY INCENTIVE PLANS In connection with our initial capitalization, Frontec AB transferred 10,713,511 shares of its Viewlocity common stock into escrow (the "Escrowed Shares"). We had the right to repurchase the Escrowed Shares from Frontec AB for their par value ($.01 per share) and issue the shares in the form of stock options, F-19 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 12. EMPLOYEE BENEFIT PLANS (CONTINUED) restricted stock or otherwise to employees, directors, officers, consultants and other key persons who make significant contributions to our welfare. On September 2, 1999, we implemented our stock incentive plan which provides for the granting of stock options, stock appreciation rights and restricted stock to employees, directors and consultants to the Company. The stock incentive plan is administered by the compensation committee of our board of directors. We have reserved 12,713,511 shares for issuance under our stock incentive plan, which is comprised of the 10,713,511 Escrowed Shares plus an additional 2,000,000 shares authorized by our board of directors and stockholders. Also on September 2, 1999, we exercised our right to purchase 6,168,133 of the Escrowed Shares for an aggregate purchase price of $61,681. Certain of our executive officers purchased Escrowed Shares pursuant to our stock incentive plan and individualized restricted stock agreements. The purchase price for the common stock was $1.00 per share, the fair market value at the date of purchase. The board of directors determined the fair market value of the underlying common stock on the purchase date based on recent sales of our convertible preferred stock for cash to third-party investors. Each executive delivered to us a full recourse promissory note bearing a market rate of interest of 7.1% for the aggregate purchase price of the stock and entered into a restricted stock agreement that prohibits transfer of these shares prior to vesting and provides for forfeiture of any unvested shares upon termination of employment. The shares purchased generally vest over a four-year period immediately following the executive's date of hire. The promissory notes become due and payable on the earlier of (i) December 31, 2001, (ii) twelve months after an initial public offering of the Company's common stock or (iii) ninety days following the effective date of termination of employment with the Company. On December 31, 1999, the aggregate amount of these promissory notes, excluding accrued interest, was $6,168,133, which is reflected on our balance sheet as notes receivable from stockholders. During the three months ended March 31, 2000, an additional $649,000 of full recourse promissory notes were accepted as payment for issuances of stock under our stock incentive plan. On January 1, 2000, we purchased the remaining 4,545,378 Escrowed Shares for an aggregate purchase price of $45,454. These shares, net of reissuances under our stock incentive plan during the three months ended March 31, 2000, are held in treasury. Treasury stock is held at cost and presented as a reduction of stockholders' equity. 3,997,651 shares were held in treasury at March 31, 2000. Options granted under our stock incentive plan generally have exercise prices equal to the fair value of the underlying common stock at the date of grant. Options granted to our employees in Sweden are generally exercisable immediately upon grant and expire four years from the date of grant. All other options generally vest over four years at the rate of 25% after six months of employment with the remaining vesting at a rate of 1/42 per month for the remaining 42 months and expire ten years from the date of grant unless otherwise specified in the option agreement. Our board of directors determined the fair values of the underlying common stock on the grant dates based on recent sales of our convertible preferred stock for cash to third party investors. F-20 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 12. EMPLOYEE BENEFIT PLANS (CONTINUED) The following table summarizes information about stock option transactions under our stock incentive plan (in thousands, except per share data):
THREE MONTHS YEAR ENDED ENDED DECEMBER 31, 1999 MARCH 31, 2000 ---------------------- ---------------------- WEIGHTED WEIGHTED AVERAGE AVERAGE EXERCISE EXERCISE SHARES PRICE SHARES PRICE -------- -------- -------- -------- Shares under option at beginning of period............................ -- -- 4,783 $1.01 Granted........................... 4,868 $1.01 1,476 $1.74 Exercised......................... -- -- (335) $1.00 Forfeited......................... (85) $1.00 (193) $1.00 ----- ----- Shares under option at end of period............................ 4,783 $1.01 5,731 $1.20 ===== ===== Shares under option exercisable at end of period..................... 2,534 $1.00 2,805 $1.00 ===== =====
Included in the table above are options to purchase an aggregate of 400,000 shares of our common stock granted to four non-employee shareholders and directors of Frontec AB in connection with our separation. The aggregate fair value of these options, as determined using the Black-Scholes valuation model, was $124,000 and was included in the value of our common stock at the date of the separation. 200,000 of these options have been exercised as of March 31, 2000. Also included in the table above are options to purchase 100,000 shares of our common stock granted to a consultant. The fair value of these options as determined using the Black-Scholes valuation model was $59,000 which will be amortized over the term of the consulting agreement. Certain options granted during the three months ended March 31, 2000 resulted in deferred stock compensation, as the estimated fair value of the underlying common stock was greater than the exercise price on the date of grant. Our board of directors determined the fair value of the underlying common stock on the grant date based on recent sales of our convertible preferred stock for cash to third-party investors. The total deferred stock compensation associated with these options was approximately $1.8 million. This amount is being amortized over the respective vesting periods of these options, ranging from two to four years. Approximately $914,000 was amortized during the three months ended March 31, 2000. F-21 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 12. EMPLOYEE BENEFIT PLANS (CONTINUED) The following table summarizes information about stock options outstanding at December 31, 1999 and March 31, 2000 (in thousands, except per share data): December 31, 1999
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ---------------------------------------------- --------------------------- WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE RANGE OF EXERCISE PRICES SHARES REMAINING LIFE EXERCISE PRICE SHARES EXERCISE PRICE - ------------------------ -------- ---------------- ---------------- -------- ---------------- $1.00 to $2.00.......... 4,753 6.8 years $1.00 2,534 $1.00 $2.00 to $3.00.......... 30 10.0 years $2.94 -- ----- ----- 4,783 6.8 years $1.01 2,534 $1.00 ===== =====
March 31, 2000
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ---------------------------------------------- --------------------------- WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE RANGE OF EXERCISE PRICES SHARES REMAINING LIFE EXERCISE PRICE SHARES EXERCISE PRICE - ------------------------ -------- ---------------- ---------------- -------- ---------------- $0.00 to $0.99.......... 598 9.8 years $0.74 307 $0.74 $1.00 to $2.00.......... 4,455 7.3 years $1.00 2,457 $1.00 $2.00 to $3.00.......... 678 9.3 years $2.94 41 $2.94 ----- ----- 5,731 7.8 years $1.20 2,805 $1.00 ===== =====
Pro forma information regarding net loss has been determined as if we had accounted for employee stock options under the fair value method. The fair value for these options was estimated at the date of grant using the Black-Scholes valuation model with the following weighted average assumptions for the year ended December 31, 1999: Risk free interest rate..................................... 5.7% Expected dividend yield..................................... 0% Expected lives (years)...................................... 6.8 Expected volatility......................................... 0% Weighted average fair value of options granted at fair market value during the year.............................. $0.41
F-22 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 12. EMPLOYEE BENEFIT PLANS (CONTINUED) The total value of the options granted, as calculated using the Black-Scholes valuation model, is amortized over the vesting periods of the options. Pro forma information required under SFAS No. 123 is as follows for the year ended December 31, 1999 (in thousands except per share data):
Net loss: As reported........................................... $(20,413) Pro forma............................................. $(21,236) Basic and diluted net loss per share: As reported........................................... $(0.60) Pro forma............................................. $(0.62)
13. RELATED PARTY TRANSACTIONS ALLOCATION OF COSTS The consolidated financial statements have been prepared using Frontec AB's historical basis in the assets and liabilities and historical results of operations relating to the AMTrix product lines. These financial statements generally reflect the financial position, results of operations and cash flows of the AMTrix business as if it were a separate entity for all periods presented. Approximately $1.6 million, $1.2 million and $600,000 of allocated costs from Frontec AB for 1997, 1998 and 1999, respectively, have been included in general and administrative expenses. These represent costs that have been allocated for corporate administrative functions including administrative, legal, accounting and other corporate overheads. These expenses were primarily allocated based on headcount or management estimates depending on the nature of the expense. We believe that the allocations are reasonable, however, the financial information included herein may not necessarily reflect our financial position, results of operations and cash flows in the future, or what they would have been had we been a separate entity during each of the periods presented. SALES TO RELATED PARTIES We recognized license revenue totaling $815,000, $730,000 and $638,000 in 1997, 1998 and 1999, respectively, and support revenue totaling $311,000 and $638,000 in 1998 and 1999, respectively, from Frontec AB as a reseller of our software products. Frontec AB remains a reseller of our software products and the terms of this reseller agreement are substantially the same as our other third-party resellers. 14. EQUITY TRANSACTIONS ISSUANCE OF COMMON STOCK On February 23, 1999, Frontec AB contributed the AMTrix business to us in exchange for 34,062,058 shares of our common stock, which represented all of the issued and outstanding common stock at that time. F-23 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 14. EQUITY TRANSACTIONS (CONTINUED) In connection with our initial capitalization, Frontec AB transferred the 10,713,511 Escrowed Shares, which we had the right to repurchase from Frontec AB for their par value ($.01 per share) and issue in the form of stock options, restricted stock or otherwise to employees, directors, officers, consultants and other key persons who make significant contributions to our welfare. Our common stock has voting rights entitling the holders to one vote per share. The holders of our common stock are entitled to dividends when, as and if such dividends are declared by our board of directors; however, a majority of the Series A, Series B and Series D convertible preferred stockholders must consent to the payment of such dividends. ISSUANCE OF SERIES C CONVERTIBLE PREFERRED STOCK In February 1999, our board of directors authorized the issuance of 2,000 shares of Series C convertible preferred stock to Frontec AB in exchange for the satisfaction and cancellation of substantially all debt owed to Frontec AB or any of its other subsidiaries at that time, which debt was approximately $15.4 million. Except as provided by law, the holder of our Series C convertible preferred stock has no right to vote on any matter to be voted on by our stockholders. The Series C convertible preferred stock is convertible into common shares only upon the consummation of a qualifying initial public offering. Assuming the aggregate fair market value of our company immediately prior to our initial public offering is greater than $150 million, our Series C convertible preferred stock is convertible into common shares based on the calculation of $20.5 million divided by the initial public offering price per share. The holder of Series C convertible preferred stock is entitled to dividends when and if such dividends are declared by our board of directors; however, a majority of the Series A, Series B and Series D convertible preferred stockholders must consent to the payment of such dividends. ISSUANCE OF MANDATORILY REDEEMABLE, CONVERTIBLE PREFERRED STOCK In February 1999, our board of directors authorized the issuance of 10 million shares of Series A convertible preferred stock at $1.00 per share. These shares were issued in a series of two transactions that occurred on March 12, 1999 and April 9, 1999 resulting in net proceeds of $10.0 million. In connection with the issuance of the Series A convertible preferred stock, we issued the purchasers warrants to purchase 7,005,495 shares of Series B convertible preferred stock at $1.82 per share. These warrants may be exercised in whole or in part at any time on or before the earlier of March 8, 2004 or the date on which we consummate a qualifying initial public offering of our common stock. As of the date of these financial statements, the holders of these warrants have not exercised their right to purchase shares of Series B convertible preferred stock. On December 31, 1999, we completed a private placement of 9,801,020 shares of Series D convertible preferred stock at $2.94 per share. The proceeds, net of underwriter's commissions and other expenses, were $25.9 million. Net proceeds of $15.3 million were not received until January 2000. As such, this amount has been recorded as subscription receivables and netted against the value of the Series D convertible preferred stock on our balance sheet. F-24 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 14. EQUITY TRANSACTIONS (CONTINUED) In connection with the issuance of the Series D convertible preferred stock, we issued one of the purchasers a warrant to purchase 393,750 shares of our common stock at $1.00 per share. This warrant may be exercised in whole or in part at any time on or before November 12, 2004. As of the date of these financial statements, the holder of the warrant has not exercised its right to purchase shares of our common stock. On March 29, 2000, we completed a private placement of an additional 662,653 shares of Series D convertible preferred stock at $2.94 per share to certain of our officers and key employes. The proceeds, net of expenses, were $1.9 million. The Series A, Series B and Series D convertible preferred stock have voting rights entitling the holders to the number of votes per share equal to the number of shares of common stock into which each share of preferred stock is then convertible and to vote as a single class. Each share of Series A, Series B and Series D convertible preferred stock is convertible into one share of our common stock. The holders of Series A, Series B and Series D convertible preferred stock are entitled to dividends when and if such dividends are declared by our board of directors. The Series A, Series B and Series D convertible preferred stock is convertible at any time at the option of the holder, or automatically upon the consummation of a qualifying initial public offering. At any time after February 25, 2004, the holders of a majority of the outstanding shares of Series A, Series B and Series D convertible preferred stock, acting together, may request the redemption of all of their preferred stock in two equal installments. The first installment must be within 120 days of providing notice to the Company with the second installment one year later. The redemption price would be the greater of the then fair market value per share or the respective purchase price per share plus accrued but unpaid dividends, if any. As a result of the mandatory redemption feature on these series of convertible preferred stock, they have been excluded from stockholders' equity (deficit). We record periodic accretion under the interest method for the excess of the redemption value over the carrying value. F-25 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 14. EQUITY TRANSACTIONS (CONTINUED) The following table summarizes our mandatorily redeemable, convertible preferred stock transactions through March 31, 2000:
SERIES A SERIES B SERIES D ------------------- ------------------- ------------------- NUMBER NUMBER NUMBER OF OF OF SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT TOTAL -------- -------- -------- -------- -------- -------- -------- (IN THOUSANDS) BALANCE AT DECEMBER 31, 1998..................... -- $ -- -- $ -- -- $ -- $ -- Issuance of Series A convertible preferred stock.................. 10,000 9,950 9,950 Issuance of Series D convertible preferred stock.................. 9,801 25,904 25,904 Series D convertible preferred stock subscription receivable............. (15,336) (15,336) Accretion to redemption price.................. 3,233 3,233 ------ ------- ------ ------ ------ -------- -------- BALANCE AT DECEMBER 31, 1999..................... 10,000 13,183 -- -- 9,801 10,568 23,751 Receipt of Series D convertible preferred stock subscription receivable............. 15,336 15,336 Issuance of Series D convertible preferred stock.................. 663 1,942 1,942 Accretion to redemption price.................. 970 970 ------ ------- ------ ------ ------ -------- -------- BALANCE AT MARCH 31, 2000..................... 10,000 $14,153 -- $ -- 10,464 $ 27,846 $ 41,999 ====== ======= ====== ====== ====== ======== ========
15. SUBSEQUENT EVENTS On April 18, 2000 and June 22, 2000 we completed private placements of 2,520,261 shares and 1,487,805 shares, respectively, of Series E mandatorily redeemable, convertible preferred stock at $6.17 per share. The proceeds, net of expenses, were approximately $24.6 million. The Series E convertible preferred stock has the same rights as the Series A, Series B and Series D convertible preferred stock. On June 21, 2000 we completed the acquisition of Electronic Data Transfer, SA, an EDI solutions provider for supply chains and a reseller of our AMTrix product based in Grenoble, France. The consideration to be paid for the acquisition of EDT consists of both cash and shares of our common stock. The total cash consideration due the shareholders of EDT is $1.0 million, half of which was paid at the closing, and the other half which is to be paid on December 31, 2000. In addition, to the cash consideration the shareholder of EDT will be issued shares of our common stock on December 31, 2000 and December 31, 2001. The aggregate number of shares of our common stock to be issued to EDT's F-26 VIEWLOCITY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (ALL INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED) 15. SUBSEQUENT EVENTS (CONTINUED) shareholders is determined by the value of our common stock during December 2000 and December 2001, and the maximum aggregate number of shares of our common stock issuable to the shareholders of EDT is 1,012,966. The issuance of the shares of our common stock on each of December 31, 2000 and December 31, 2001 is contingent upon the continued employment and services of certain of EDT's shareholders. The EDT acquisition has been accounted for as a purchase and accordingly, the purchase price has been allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the date of the acquisition. On July 31, 2000 we completed the acquisition of SC21 Pte, Ltd., a software development enterprise based in Singapore that provides supply web visibility solutions for small to medium sized companies. The consideration to be paid for the acquisition of SC21 consists of both cash and shares of our common stock. At the closing, we issued 750,000 shares of our common stock to the shareholders of SC21, and paid them $1.0 million in cash. If all contingencies are met during the 17 month period following the closing, we will be obligated to issue to the shareholders of SC21 up to 450,000 additional shares of our common stock, and pay an additional $4.0 million in cash. The issuance of the additional shares of our common stock and payment of $2.0 million of the additional cash consideration is contingent upon the continued employment and services of certain of the shareholders of SC21. In addition, Nanyang Technical University (Singapore) had rights to certain of SC21's assets, and at the closing of the acquisition of SC21 we paid Nanyang Technical University (Singapore) $182,672 in satisfaction and extinguishment of those rights. The SC21 acquisition has been accounted for as a purchase and accordingly, the purchase price has been allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the date of the acquisition. F-27 VIEWLOCITY, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA FINANCIAL INFORMATION On February 3, 2000, we completed the acquisition of Nexstep, Inc. ("Nexstep"), a software development enterprise based in Plano, Texas, which focuses on visibility fulfillment solutions for Internet retail organizations. The acquisition has been accounted for as a purchase and accordingly, the purchase price has been allocated to the assets and the liabilities assumed based on their estimated fair values at the date of acquisition. Nexstep's results of operation have been included with ours beginning on January 1, 2000, the effective date of the acquisition for accounting purposes. The pro forma financial information is based on our historical consolidated financial statements at December 31, 1999 and the financial statements of Nexstep at December 31, 1999. The unaudited pro forma balance sheet at December 31, 1999 reflects the combination of our historical consolidated December 31, 1999 balance sheet and the December 31, 1999 balance sheet of Nexstep. The unaudited pro forma statement of operations reflects the combination of our historical consolidated December 31, 1999 statement of operations with the December 31, 1999 statement of operations of Nexstep. The pro forma financial information is based on available information and certain assumptions that management believes are reasonable. In our opinion, all adjustments have been made that are necessary to present fairly the pro forma data. The pro forma financial information is provided for illustrative purposes only and does not purport to represent what our results of operations or financial condition would have been had this acquisition in fact occurred on such date or to project our results of operations or financial condition for any future period or date. The pro forma financial information and accompanying notes should be read in conjunction with our historical financial statements and the financial statements of Nexstep. F-28 VIEWLOCITY, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, 1999 --------------------------- PRO FORMA PRO FORMA VIEWLOCITY NEXSTEP ADJUSTMENTS CONSOLIDATED ------------ ------------ ------------ ------------ ASSETS Current assets: Cash and cash equivalents.............................. $ 9,316 $ 141 $ (4,165)(1) $ 5,072 Accounts receivable, net............................... 4,827 187 5,014 Other receivables...................................... 514 (150)(2) 364 Prepaid expenses and other current assets.............. 719 2 721 -------- -------- -------- -------- Total current assets................................. 15,376 330 (4,315) 11,171 Property and equipment, net.............................. 2,383 28 2,411 Capitalized software development, net.................... 940 940 Goodwill and other intangibles, net...................... 104 104 Nexstep intangible assets................................ 9,171 (1)(3) 9,391 Other non-current assets................................. 307 307 -------- -------- -------- -------- Total assets......................................... $ 19,110 $ 358 $ 4,856 $ 24,324 ======== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable....................................... $ 4,650 $ 99 $ 4,749 Short-term debt........................................ 2,708 161 $ (150)(2) 2,719 Payables to associated companies....................... 1,320 1,320 Capital lease obligations.............................. 104 104 Accrued expenses....................................... 4,997 144 5,141 Deferred revenues...................................... 1,453 1,453 -------- -------- -------- -------- Total current liabilities............................ 15,232 404 (150) 15,486 Capital lease obligations, less current portion.......... 589 589 Deferred income taxes.................................... 324 324 -------- -------- -------- -------- Total liabilities.................................... 16,145 404 (150) 16,399 -------- -------- -------- -------- Commitments and contingencies Redeemable, convertible preferred stock; issuable in series, $.01 par value; 39,998 shares authorized; 19,801 shares issued and outstanding at December 31, 1999................................................... 23,751 23,751 Stockholders' equity (deficit): Convertible preferred stock: $.01 par value; 2 shares authorized; 2 shares issued and outstanding at December 31, 1999.................................... -- -- Common stock: $.01 par value; 75,000 shares authorized; 34,062 shares issued and outstanding December 31, 1999................................................. 341 3 17 (1) 361 Additional paid in capital............................. 40,831 5,866 (1) 46,697 Notes receivable from stockholders..................... (6,168) (6,168) Retained earnings (deficit)............................ (57,318) (49) (877)(3) (58,244) Accumulated other comprehensive income................. 1,528 1,528 -------- -------- -------- -------- Total stockholders' equity (deficit)................. (20,786) (46) 5,006 (15,826) -------- -------- -------- -------- Total liabilities and stockholders' equity (deficit).......................................... $ 19,110 $ 358 $ 4,856 $ 24,324 ======== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. F-29 VIEWLOCITY, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED ------------------------------------------------------ DECEMBER 31, 1999 ------------------------- PRO FORMA PRO FORMA VIEWLOCITY NEXSTEP ADJUSTMENTS CONSOLIDATED ----------- ----------- ----------- ------------ Revenue: Licenses............................. $ 8,849 $ 8,849 Support.............................. 2,991 2,991 Services............................. 7,608 $ 1,242 8,850 -------- -------- -------- Total revenue...................... 19,448 1,242 20,690 -------- -------- -------- Cost of revenue: Licenses............................. 1,024 1,024 Support and services................. 10,160 507 10,667 -------- -------- -------- Total cost of revenue.............. 11,184 507 11,691 -------- -------- -------- Gross profit........................... 8,264 735 8,999 -------- -------- -------- Operating expenses: Sales and marketing.................. 14,580 14,580 Research and development............. 4,045 501 4,546 General and administrative........... 8,891 282 9,173 Depreciation and amortization........ 1,088 $ 877 (3) 1,965 -------- -------- -------- -------- Total operating expenses........... 28,604 783 877 30,264 -------- -------- -------- -------- Operating loss......................... (20,340) (48) (877) (21,265) -------- -------- -------- -------- Other income (expense): Other, net........................... (46) (46) Interest, net........................ 67 (1) 66 -------- -------- -------- Other income (expense), net........ 21 (1) 20 -------- -------- -------- -------- Loss before provision (benefit) for income taxes......................... (20,319) (49) (877) (21,245) -------- -------- -------- -------- Provision (benefit) for income taxes... 94 -- 94 -------- -------- -------- Net loss............................... $(20,413) $ (49) $ (877) $(21,339) ======== ======== ======== ======== Net loss per share: Basic and diluted.................... $ (0.60) $ (0.63) ======== ======== Weighted average shares used in computation........................ 34,062 34,062 ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. F-30 VIEWLOCITY, INC. AND SUBSIDIAIRES NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION 1. DESCRIPTION OF TRANSACTION On February 3, 2000, we completed the acquisition of Nexstep, a software development enterprise based in Plano, Texas, which focuses on visibility fulfillment solutions for Internet retail organizations. The acquisition has been accounted for as a purchase and accordingly, the purchase price has been allocated to the assets and the liabilities assumed based on their estimated fair values at the date of acquisition. Their results of operation have been included with ours beginning on January 1, 2000, the effective date of the acquisition for accounting purposes. 2. PRO FORMA ADJUSTMENTS (1) To reflect the aggregate purchase price of approximately $10.1 million that was paid by the issuance of 2,002,000 shares of our common stock plus cash of approximately $4.2 million and to record the Nexstep intangible assets to be allocated upon purchase. (2) Pro forma adjustment to eliminate the balance of a loan made by us to Nexstep as of December 31, 1999. (3) Pro forma adjustment to amortize the Nexstep intangible assets. F-31 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors of Viewlocity, Inc. and Subsidiaries: In our opinion, the accompanying balance sheet and the related statement of operations, of changes in stockholders' deficit and of cash flows present fairly, in all material respects, the financial position of Nexstep, Inc. (the "Company") at December 31, 1999, and the results of its operations and its cash flows for the period from inception (January 26, 1999) through December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. /s/ PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers LLP Atlanta, Georgia April 4, 2000 F-32 NEXSTEP, INC. BALANCE SHEET DECEMBER 31, 1999
1999 -------- ASSETS Cash and cash equivalents................................... $140,919 Accounts receivable, net of allowance for doubtful accounts of $10,000................................................ 187,814 Prepaid expenses and other current assets................... 1,868 -------- Total current assets................................ 330,601 Property and equipment, net................................. 27,836 -------- Total assets........................................ $358,437 ======== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable.......................................... $ 99,148 Accrued expenses.......................................... 143,996 Note payable to bank...................................... 11,429 Note payable to Viewlocity................................ 150,000 -------- Total current liabilities........................... 404,573 -------- Commitments and contingencies Stockholders' deficit: Common stock: no par value; 1,500 shares authorized; 1,500 shares issued and outstanding at December 31, 1999.................................................... 3,000 Accumulated deficit....................................... (49,136) -------- Total stockholders' deficit......................... (46,136) -------- Total liabilities and stockholders' deficit......... $358,437 ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-33 NEXSTEP, INC. STATEMENT OF OPERATIONS PERIOD FROM INCEPTION (JANUARY 26, 1999) THROUGH DECEMBER 31, 1999
1999 ---------- Consulting services revenue................................. $1,242,433 Cost of consulting services................................. (507,173) ---------- Gross profit................................................ 735,260 Operating expenses: Research and development.................................. (501,332) General and administrative................................ (281,932) ---------- Loss from operations.................................. (48,004) Interest expense............................................ (1,132) ---------- Net loss.............................................. $ (49,136) ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-34 NEXSTEP, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT FOR THE PERIOD FROM INCEPTION (JANUARY 26, 1999) THROUGH DECEMBER 31, 1999
COMMON STOCK -------------------- ACCUMULATED SHARES PAR VALUE DEFICIT TOTAL -------- --------- ----------- -------- Issuance of common stock to founders............... 1,500 $3,000 $ 3,000 Net loss........................................... $(49,136) (49,136) ------ ------ -------- -------- Balance at December 31, 1999....................... 1,500 $3,000 $(49,136) $(46,136) ====== ====== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-35 NEXSTEP, INC. STATEMENT OF CASH FLOWS FOR THE PERIOD FROM INCEPTION (JANUARY 26, 1999) THROUGH DECEMBER 31, 1999
1999 --------- Cash flow provided by operating activities: Net loss.................................................. $ (49,136) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization........................... 2,115 Allowance for doubtful accounts......................... 10,000 Changes in assets and liabilities Increase in accounts receivable....................... (197,814) Increase in prepaid expenses and other current assets.............................................. (1,868) Increase in accounts payable.......................... 99,148 Increase in accrued expenses.......................... 143,996 --------- Net cash provided by operating activities......... 6,441 --------- Cash flow used in investing activities: Purchases of property and equipment....................... (29,951) --------- Net cash used in investing activities............. (29,951) --------- Cash flow provided by financing activities: Proceeds from issuance of common stock.................... 3,000 Proceeds from line of credit.............................. 11,429 Proceeds from note payable from Viewlocity................ 150,000 --------- Net cash provided by financing activities......... 164,429 --------- Net increase in cash and cash equivalents................... 140,919 Cash and cash equivalents, beginning of period.............. -- --------- Cash and cash equivalents, end of period.................... $ 140,919 ========= Supplemental cash flow information: Cash paid for interest.................................... $ 1,132 =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-36 NEXSTEP, INC. NOTES TO FINANCIAL STATEMENTS 1. NATURE OF THE BUSINESS Nexstep, Inc. (the "Company") was incorporated in 1998 and initially capitalized during January 1999. The Company was formed to design and develop visibility fulfillment solutions for Internet retail organizations. The Company's development effort was funded by consulting services provided to customers. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of the Company's financial instruments, which include cash equivalents, accounts receivable, accounts payable and other accrued expenses approximate their fair values due to their short maturities. Based on borrowing rates currently available to the Company for loans with similar terms, the carrying value of notes payable approximate fair value. CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of trade accounts receivable. To minimize risk, ongoing credit evaluations of customers' financial condition are performed, although collateral generally is not required. At December 31, 1999, two customers accounted for 64% and 23% of gross accounts receivable. For the cumulative period from January 26, 1999 (date of inception) to December 31, 1999, three customers accounted for 43%, 20% and 15% of total revenue, respectively. PROPERTY AND EQUIPMENT Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to income. Repairs and maintenance costs are expensed as incurred. RESEARCH AND DEVELOPMENT AND SOFTWARE DEVELOPMENT COSTS Costs incurred in the research and development of the Company's products are expensed as incurred, except for certain software development costs. Costs associated with the development of computer software are expensed prior to establishment of technological feasibility and capitalized thereafter until the product F-37 NEXSTEP, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) is available for general release to customers. No software development costs were capitalized for the period from January 26, 1999 (date of inception) to December 31, 1999. REVENUE RECOGNITION The Company's revenue is primarily derived from consulting services provided to customers. Revenue from these consulting services is recognized as the related services are performed. 3. PROPERTY AND EQUIPMENT Property and equipment consists of the following:
ESTIMATED USEFUL LIFE DECEMBER 31, (YEARS) 1999 ----------- ------------ Purchased software................................ 3 $11,655 Furniture and office equipment.................... 5 to 7 18,296 ------- 29,951 Less: accumulated depreciation.................... (2,115) ------- $27,836 =======
Depreciation and amortization expense for the period from January 26, 1999 (date of inception) to December 31, 1999 was $2,115. 4. SHORT-TERM DEBT LINE OF CREDIT In February 1999, the Company entered into an agreement with a bank which provides for a $15,000 revolving line of credit which accrues interest monthly at the bank's prime rate plus 4.25%. At December 31, 1999, the Company had an outstanding balance on the revolving line of credit of $11,429. The balance on the line of credit was paid during January 2000. In December 1999, the Company entered into an agreement with Viewlocity which provides for a $150,000 term loan which accrues interest monthly at the rate of 12% annually. The balance of the term loan was due at the earlier date of an effective merger of the Company and Viewlocity or March 31, 2000. Subsequent to the purchase of the Company by Viewlocity, the balance of the note was accounted for as a component of the consideration paid by Viewlocity in the subsequent purchase of the Company. 5. COMMON STOCK Each share of common stock is entitled to one vote. 6. INCOME TAXES The Company qualifies as an S Corporation in the U.S. for federal and state income tax purposes. However, the State of Texas assesses franchise tax on capital at the entity level. Accordingly, a provision F-38 NEXSTEP, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 6. INCOME TAXES (CONTINUED) has been made for this tax. Individual stockholders report their share of the U.S. taxable income or loss on their respective individual income tax returns. 7. COMMITMENTS AND CONTINGENCIES The Company leases its office space and certain office and computer equipment under noncancelable operating leases. Total rent expense under these operating leases was approximately $33,471 for the period from January 26, 1999 (date of inception) to December 31, 1999. Future minimum lease payments under noncancelable operating leases at December 31, 1999 are as follows:
DECEMBER 31, YEAR ENDING DECEMBER 31, 1999 - ------------------------ ------------ 2000........................................................ $27,134 2001........................................................ 14,184 2002........................................................ 5,412 ------- $46,730 =======
We are subject to legal proceedings and claims that arise in the normal course of business. While the outcome of these matters cannot be predicted with certainty, our management does not believe the outcome of any of these legal matters will have a material adverse effect on our results of operations or financial position. 8. SUBSEQUENT EVENT Effective January 1, 2000, Viewlocity purchased all of the outstanding shares of the Company. F-39 3. Inside back page portrays the following: The title bar at the top of the page states "The Power to Manage Trading Communities." In the center of the page is a propeller diagram. In the center of the propeller is an oval with the stylized Viewlocity logo inside. In the top-left propeller is a photograph of a person putting together puzzle pieces. To the left of the propeller is the text "Connect" underneath which is the text "enterprise application integration." In the top-right propeller is a photograph of interlocking gears. To the right of the propeller is the text "Synchronize" underneath which is the text "supply web." In the bottom-right propeller is a photograph of two persons shaking hands in front of a world map. Underneath the propeller is the text "Collaborate" underneath which is the text "trading community networks." In the bottom-left propeller is a photograph of a person using the telephone with another person sitting behind him. Underneath the propeller is the text "Communicate" underneath which is the text "B2B integration." In the bottom left of the page is the following text: "Viewlocity is a leading global provider of e-business integration software that enables trading communities and their members to conduct B2B e-commerce in real-time." In the bottom right corner of the page is the stylized Viewlocity logo. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Shares [LOGO] Common Stock -------------- PROSPECTUS ----------------- CHASE H&Q BEAR, STEARNS & CO. INC. WIT SOUNDVIEW ----------------- , 2000 ----------------- You should rely only on information contained in this prospectus. We have not authorized anyone to provide you information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Until , 2000 (25 days after the date of this prospectus), all dealers that effect transactions in these shares of common stock may be required to deliver a prospectus. This is in addition to the dealer's obligations to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Securities and Exchange Commission registration fee......... $17,761 National Association of Securities Dealers, Inc. fee........ $ 7,228 Nasdaq Stock Market listing fee............................. $95,000 Accountants' fees and expenses.............................. $ Legal fees and expenses..................................... $ Blue sky fees and expenses.................................. $ Transfer agent's fees and expenses.......................... $ Printing and engraving expenses............................. $ Miscellaneous............................................... $ Directors and officers insurance............................ $ ------- Total expenses.......................................... $ =======
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS Our amended and restated certificate of incorporation limits personal liability for breach of the fiduciary duty of our directors to the fullest extent provided by the Delaware General Corporation Law and provides that the registrant shall fully indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (whether civil, criminal, administrative or investigative) by reason of the fact that such person is or was our director or officer or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding. Such provisions provide that no director of Viewlocity shall have personal liability to us or to our stockholders for monetary damages for breach of fiduciary duty of care or other duty as a director. However, such provisions shall not eliminate or limit the liability of a director: - for any breach of the director's duty of loyalty to us or to our stockholders; - for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; - for voting or assenting to unlawful distributions; or - for any transaction for which the director derived an improper personal benefit. The Delaware General Corporation Law provides further that the indemnification permitted thereunder shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under our bylaws, any agreement, a vote of our stockholders or otherwise. We intend to enter into agreements to indemnify our officers and directors in addition to indemnification provided for in our amended and restated certificate of incorporation. These agreements may require us to indemnify these individuals against liabilities that arise by reason of their status as officers or directors, other than liabilities arising from willful misconduct, and to advance expenses incurred as a result of any proceedings against them. In addition, we intend to purchase a directors and officers liability insurance policy with appropriate coverages. At present, there is no pending litigation or proceeding involving any director, officer, employee or agent as to which indemnification will be required or permitted under our amended and restated II-1 certificate of incorporation. We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification. The Underwriting Agreement filed as Exhibit 1.1 hereto also contains provisions pursuant to which certain officers, directors and controlling persons of Viewlocity may be entitled to be indemnified by the underwriters named therein. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES During the past three years, we have issued the securities set forth below that were not registered under Section 5 of the Securities Act of 1933, as amended: Prior to our formation, the AMTrix software business was conducted by Frontec AB and its wholly owned subsidiaries. Effective January 1, 1999, Frontec AB consolidated the AMTrix business in certain of its subsidiaries through a series of asset and stock contribution agreements. In connection with the consolidation of the AMTrix business into regional subsidiaries, Frontec AB also acquired a wholly owned subsidiary currently known as Viewlocity Integra AB. Pursuant to a stock contribution agreement dated February 21, 1999, as amended, Frontec AB capitalized Viewlocity Integra AB, by contributing all of the capital stock of each of the regional subsidiaries to Viewlocity Integra AB. On February 22, 1999, Frontec AB formed Viewlocity, Inc. as a Delaware corporation and on February 23, 1999, contributed to Viewlocity all of the issued and outstanding shares of Viewlocity Integra AB in exchange for 34,062,058 shares of our common stock. As a result, Viewlocity Integra AB and the regional operating subsidiaries became wholly owned subsidiaries of Viewlocity. In February 1999, we sold an aggregate of 10,000,000 shares of our Series A convertible preferred stock and warrants to purchase an aggregate of 7,005,495 shares of our Series B convertible preferred stock to Battery Ventures IV, L.P. and Battery Investment Partners IV, LLC (collectively, "Battery"). Battery paid us an aggregate purchase price of $10.0 million for the Series A convertible preferred stock and the warrants to purchase Series B convertible preferred stock. The Series A convertible preferred stock may be converted into shares of our common stock, on a one for one share basis, subject to adjustment upon certain events. Battery may exercise the warrants to purchase the Series B convertible preferred stock in whole or in part at any time on or before the earlier of March 8, 2004, or the date on which we consummate this offering, at an exercise price of $1.82 per share, subject to adjustment upon certain events. The Series B convertible preferred stock may be converted into shares of our common stock, on a one to one share basis, subject to adjustment upon certain events. Additionally, the holders of the warrants to purchase our Series B convertible preferred stock have irrevocably agreed to exercise the warrants on a cashless basis. Pursuant to the warrant agreements, the holders of the warrants will receive a number of shares of Series B convertible preferred stock equal to 7,005,495 multiplied by the difference between (a) the initial public offering price and (b) $1.82, divided by the initial public offering price. Additionally, all of the outstanding shares of Series A convertible preferred stock and Series B convertible preferred stock will be converted into an aggregate of 15,411,745 shares of our common stock upon completion of this offering. In connection with the Series A and Series B convertible preferred stock transaction, we issued 2,000 shares of our Series C convertible preferred stock to Frontec AB in exchange for the satisfaction and cancellation of certain liabilities owed to Frontec AB in the approximate amount of $15.4 million. Pursuant to its terms, the Series C convertible preferred stock will convert into 2,562,500 shares of our common stock upon completion of this offering. In February 1999, we issued to certain executive employees of Frontec AB options to purchase a total of 500,000 shares of our common stock, at an exercise price of $1.00 per share. Each of Olof Englund, Bengt Wallentin, Christer Wahlander, Goran Tuvsedt and Sune Fogelstrom was granted an option to II-2 purchase 100,000 shares of our common stock, and these option holders exercised all of their options on or before April 4, 2000. On March 12, 1999, we entered into a stock purchase and escrow agreement with Frontec AB, pursuant to which Frontec AB transferred to escrow 10,713,511 shares of our common stock. These escrowed shares were made available for grants to our employees, directors, consultants and other key persons provided that we purchased from Frontec AB any such shares for $.01 per share. As of December 31, 1999, 6,168,133 shares of restricted stock had been sold to certain of our officers and employees out of the escrowed shares, and we had paid Frontec AB of $61,681 for such shares. On January 1, 2000, we purchased the remaining 4,545,378 shares of common stock for use in future option grants to our employees from Frontec AB for $45,454 and terminated the escrow agreement. On October 27, 1999, we sold a convertible subordinated debenture to William Street Associates II, LLC. William Street Associates II, LLC paid us $2.25 million for this convertible subordinated debenture, which was manditorily convertible on December 30, 1999 into 765,306 shares of our Series D convertible preferred stock. The sale of our Series D convertible preferred stock is described below. On October 27, 1999, in connection with the sale of the convertible subordinated debenture, we also issued to William Street Associates II, LLC a contingent warrant for the purchase of 393,750 shares of our common stock at a price of $1.00 per share. The terms of this contingent warrant were that it would only be exercisable if the issuance of the Series D convertible preferred stock did not occur on or before December 15, 1999, and the convertible subordinated debenture was not converted pursuant to its terms as of such date. We did not sell our Series D convertible preferred stock until December 30, 1999, and as a result, the contingent warrant became exercisable. This warrant expires on October 27, 2004. Effective September 2, 1999, certain of our officers and employees purchased escrowed shares pursuant to our stock incentive plan and individualized restricted stock agreements at a price of $1.00 per share. The officers and employees and the number of shares purchased by each are as follows: Gregory Cronin (2,768,421 shares); Stan F. Stoudenmire (274,125 shares); Jeffrey B. Cashman (830,525 shares); Mikael Ahlund (188,125 shares); Jon R. Kirkegaard (548,250 shares); and Paul R. Leiske (411,187 shares). Each officer and employee delivered to us a full recourse promissory note bearing a market rate of interest for the aggregate purchase price of the restricted stock and entered into restricted stock agreements that prohibit transfer of the shares prior to vesting and provides for forfeiture of any unvested shares upon termination of employment. The shares purchased generally vest over a four-year period immediately following the person's date of hire. Each purchasing officer and employee filed with the Internal Revenue Service an election to be taxed under Section 83(b) of the Internal Revenue Code. On November 12, 1999, in connection with our entering into an equipment lease financing agreement, we issued to CommVest, LLC a warrant for the purchase of 150,000 shares of our common stock at a price of $1.00 per share. This warrant expires on November 12, 2004. Effective November 15, 1999, one of our officers and an employee purchased escrowed shares pursuant to our stock incentive plan and individualized restricted stock agreements at a price of $1.00 per share. Maurice A. Trebuchon, an officer, purchased 892,500 shares and Joseph Nentwig, an employee, purchased 255,000 shares. Both purchasers delivered to us a full recourse promissory note bearing a market rate of interest for the aggregate purchase price of the restricted stock and entered into restricted stock agreements that prohibit transfer of the shares prior to vesting and provides for forfeiture of any unvested shares upon termination of employment. The shares purchased generally vest over a four-year period immediately following the person's date of hire. Both purchasers filed with the Internal Revenue Service an election to be taxed under Section 83(b) of the Internal Revenue Code. On November 26, 1999, in connection with our entering into a line of credit agreement, we issued to Imperial Bancorp a warrant for the purchase of 52,000 shares of our common stock at a price of $2.94 per share. This warrant expires on November 26, 2006. II-3 On December 30, 1999, we sold an aggregate of 9,801,020 shares of Series D convertible preferred stock at a price of $2.94 per share. BCI Growth V, L.P. and its affiliate BCI Investors, LLC, purchased a total of 3,401,361 of the shares of our Series D convertible preferred stock at an aggregate purchase price of $10.0 million. The Beacon Group III--Focus Value Fund, L.P. purchased a total of 2,380,952 shares of our Series D convertible preferred stock at an aggregate purchase price of $7.0 million. BancBoston Capital, Inc. purchased a total of 2,380,952 shares of our Series D convertible preferred stock at an aggregate purchase price of $7.0 million. CommVest Partners I Company purchased a total of 170,068 shares of Series D convertible preferred stock at an aggregate purchase price of $500,000. William Street Associates II, LLC, purchased a total of 935,374 shares of our Series D convertible preferred stock by converting the convertible subordinated debenture described above and by paying us an additional cash purchase price of $500,000. The total purchase price paid by William Street Associates II, LLC was $2.75 million. Battery Ventures IV, L.P. and its affiliate, Battery Investment Partners IV, LLC purchased a total 340,136 shares of Series D convertible preferred stock at an aggregate purchase price of $1.0 million. One of our underwriters in this offering, Chase Securities Inc., also served as placement agent for the private placement of our Series D convertible preferred stock and received compensation in the amount of $1.66 million in cash and 192,177 shares of our Series D convertible preferred stock. On February 3, 2000, we completed the acquisition of Nexstep, Inc., a software development enterprise based in Plano, Texas, which focuses on visibility fulfillment solutions for Internet retail organizations. The aggregate consideration of approximately $10.1 million was paid by the issuance of 2,002,000 shares of our common stock and cash of approximately $4.2 million. Our board of directors determined the fair value of the common stock issued as part of the consideration to be $2.94 per share; based on recent sales of our convertible preferred stock for cash to third-party investors. Effective March 23, 2000, Daniel Basmajian, an employee, purchased 212,500 escrowed shares pursuant to our stock incentive plan and a restricted stock agreement at a price of $2.94 per share. Mr. Basmajian delivered to us a full recourse promissory note bearing a market rate of interest for the aggregate purchase price of the restricted stock and entered into a restricted stock agreement that prohibits transfer of the shares prior to vesting and provides for forfeiture of any unvested shares upon termination of employment. The shares purchased generally vest over a four-year period immediately following the person's date of hire. Mr. Basmajian has filed with the Internal Revenue Service an election to be taxed under Section 83(b) of the Internal Revenue Code. On March 29, 2000, we sold an additional 662,653 shares of our Series D convertible preferred stock at $2.94 per share to certain of our executive officers and key employees. Gregory Cronin, our Chairman, Chief Executive Officer and President, paid a total purchase price of $300,000 and purchased 102,041 shares of our Series D convertible preferred stock. Maurice A. Trebuchon, our Chief Operating Officer, paid a total purchase price of $200,000 and purchased 68,027 shares of our Series D convertible preferred stock. Stan F. Stoudenmire, our Senior Vice President and Chief Financial Officer, paid a total purchase price of $70,000 and purchased 23,810 shares of our Series D convertible preferred stock. Michael Lantz, our former Managing Director of EMEA, paid a total purchase price of $88,000 and purchased 30,000 shares of our Series D convertible preferred stock. Anders Berglund, our Managing Director of Asia/ Pacific, paid a total purchase price of $400,000 and purchased 136,054 shares of Series D convertible preferred stock. Christer Wahlander, our Chief Technology Officer, paid a total purchase price of $294,000 and purchased 100,000 shares of our Series D convertible preferred stock. Paul R. Leiske, our Senior Vice President of Global Customer Services, paid a total purchase price of $170,000 and purchased 58,163 shares of our Series D convertible preferred stock. Jeffrey B. Cashman, our Senior Vice President of Global Marketing and Business Development, paid a total purchase price of $425,000 and purchased 144,558 shares of our Series D convertible preferred stock. On April 18, 2000, we sold an aggregate of 2,520,261 shares of our Series E convertible preferred stock at a price of $6.17 per share. Deutsche Post International B.V. purchased a total of 716,370 shares of our Series E convertible preferred stock at an aggregate purchase price of $4.42 million. DHL II-4 International Limited purchased a total of 810,373 shares of our Series E convertible preferred stock at an aggregate purchase price of $5.0 million. Marconi Capital Limited purchased a total of 486,224 shares of our Series E convertible preferred stock at an aggregate purchase price of $3.0 million. Sing Tel Ventures (Singapore) Pte Ltd. purchased a total of 486,224 shares of Series E convertible preferred stock at an aggregate purchase price of $3.0 million. B2B Capital II, LLC purchased a total of 21,070 shares of our Series E convertible preferred stock at an aggregate purchase price of $130,000. On June 21, 2000 we completed the acquisition of Electronic Data Transfer, SA, an EDI solutions provider for supply chains and a reseller of our AMTrix product based in Grenoble, France. The consideration to be paid for the acquisition of EDT consists of both cash and shares of our common stock. The total cash consideration due the shareholders of EDT is $1.0 million, half of which was paid at the closing, and the other half which is to be paid on December 31, 2000. In addition to the cash consideration, the shareholder of EDT will be issued shares of our common stock on December 31, 2000 and December 31, 2001. The aggregate number of shares of our common stock to be issued to EDT's shareholders is determined by the value of our common stock during December 2000 and December 2001, and the maximum aggregate number of shares of our common stock issuable to the shareholders of EDT is 1,012,966. The issuance of the shares of our common stock on each of December 31, 2000 and December 31, 2001 is contingent upon the continued employment and services of certain of EDT's shareholders. The EDT acquisition has been accounted for as a purchase and accordingly, the purchase price has been allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the date of the acquisition. On June 22, 2000, we sold an aggregate of 1,487,805 shares of our Series E convertible preferred stock at a price of $6.17 per share. SK Global America, Inc. purchased a total of 324,150 shares of our Series E convertible preferred stock at an aggregate purchase price of $2.0 million. BCI Growth V, L.P. and its affiliate BCI Investors, LLC, purchased a total of 194,490 of the shares of our Series E convertible preferred stock at an aggregate purchase price of $1.2 million. Battery Ventures IV, L.P. and its affiliate, Battery Investment Partners IV, LLC purchased a total 194,489 shares of Series E convertible preferred stock at an aggregate purchase price of $1.2 million. J&M Venture Capital, LLC purchased a total 175,000 shares of our Series E convertible preferred stock at an aggregate purchase price of $1.08 million. Beacon Group III--Focus Value Fund, L.P. purchased a total of 81,037 shares of our Series E convertible preferred stock at an aggregate purchase price of $500,000. Sands Brothers Venture Capital, LLC and its affiliates, 280 Ventures LLC, SB Content Associates LLC, and SB Synchronized Associates LLC purchased a total of 518,639 shares of our Series E convertible preferred stock at an aggregate purchase price of $3.2 million. On July 31, 2000 we completed the acquisition of SC21 Pte, Ltd., a software development enterprise based in Singapore that provides supply web visibility solutions for small to medium sized companies. The consideration to be paid for the acquisition of SC21 consists of both cash and shares of our common stock. At the closing, we issued 750,000 shares of our common stock to the shareholders of SC21, and paid them $1.0 million in cash. If all contingencies are met during the 17 month period following the closing, we will be obligated to issue to the shareholders of SC21 up to 450,000 additional shares of our common stock, and pay an additional $4.0 million in cash. The issuance of the additional shares of our common stock and payment of $2.0 million of the additional cash consideration is contingent upon the continued employment and services of certain of the shareholders of SC21. In addition, Nanyang Technical University (Singapore) had rights to certain of SC21's assets, and at the closing of the acquisition of SC21 we paid Nanyang Technical University (Singapore) $182,672 in satisfaction and extinguishment of those rights. The SC21 acquisition has been accounted for as a purchase and accordingly, the purchase price has been allocated to the assets acquired and the liabilities assumed based on their estimated fair values at the date of the acquisition. II-5 We currently have 14,713,511 shares of our common stock reserved for issuance upon exercise of stock options, and we have granted a total of 5,213,890 options outstanding for the purchase of our common stock to employees and other key persons. Each of the sales of the above securities was exempt from registration under Section 5 of the Securities Act in reliance upon Section 4(2) or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or transactions pursuant to compensation benefit plans and contracts relating to compensation as provided under such Rule 701. The recipients of securities in each such transaction represented their intentions to acquire the securities for investment only and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends were affixed to the share certificates issued in such transactions. All recipients had adequate access to information about us. ITEM 16. EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ------------------------------------------------------------ 1.1* Form of Underwriting Agreement. 2.1 Agreement and Plan of Merger between and among Viewlocity, Inc., Nexstep Acquisition Corp., Nexstep, Inc., L. Michael Handley and Mohamed Y. Amer dated January 21, 2000.** 2.2 Acquisition of Shares Agreement, dated May 19, 2000, between the Registrant, Salem Bin Mohamed Ibrahim, Teo Keng Leng, Robert Ben Roque Trindade Menezes de Souza, SC21 Options Pte. Ltd. and SC21 Pte. Ltd.** 2.3 English Translation of Sale and Purchase Agreement and Statements and Guaranty of Assets and Liabilities dated June 21, 2000 by and between Viewlocity, Inc., Viewlocity Holding France SARL, EDT, S.A., and the shareholders of EDT, S.A. 3.1* Amended and Restated Certificate of Incorporation of the Registrant. 3.2* Amended and Restated Bylaws of the Registrant. 4.1 See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws of the Registrant defining rights of the holders of common stock of the Registrant. 4.2* Specimen Stock Certificate. 5.1* Opinion of Morris, Manning & Martin, L.L.P., Counsel to the Registrant, as to the legality of the shares being registered. 10.1 Office Lease Agreement by and between EOP--Buckhead, L.L.C. and the Registrant, dated November 5, 1999. 10.2 First Amendment to Office Lease Agreement by and between EOP--Buckhead, L.L.C., and the Registrant, dated November 5, 1999. 10.3 English Translation of Lease Agreement by and between FAB FISKETORGETgm MALAERTORNET AB and Frontec AMT AB, dated October 1, 1999. 10.4 Lease Agreement between CPL Alexandra Point Pte Ltd. and Viewlocity Asia Pacific Pte Ltd., dated October 28, 1999. 10.5 Assignment of Lease Agreement between Aspect Telecommunications Limited and Frontec (UK) Limited, dated December 18, 1998. 10.6 Sublease Agreement dated as of May 8, 2000 between Zurn Industries, Inc. and the Registrant.
II-6
EXHIBIT NUMBER DESCRIPTION - ------- ------------------------------------------------------------ 10.7* Amended and Restated Stock Incentive Plan of the Registrant. 10.8* Employee Stock Purchase Plan of the Registrant. 10.9 Employment Agreement between the Registrant and Gregory Cronin, dated March 3, 1999. 10.10 Employment Agreement between the Registrant and Stan F. Stoudenmire, dated May 6, 1999. 10.11 Employment Agreement between the Registrant and Jeffrey B. Cashman, dated March 19, 1999. 10.12 Employment Agreement between the Registrant and Paul R. Leiske, dated March 25, 1999. 10.13 Employment Agreement between the Registrant and Maurice A. Trebuchon, dated October 27, 1999. 10.14 Form of Restricted Stock Award Agreement between the Registrant and certain of its executive officers. 10.15 Form of Promissory Note between the Registrant and certain of its executive officers. 10.16 Loan and Security Agreement, by and between Imperial Bank and the Registrant, Frontec AMT, Inc. and Viewlocity AB, dated November 26, 1999. 10.17 Series B Convertible Preferred Stock Purchase Warrant, dated March 12, 1999, between the Registrant and Battery Ventures IV, L.P. 10.18 Series B Convertible Preferred Stock Purchase Warrant, dated March 12, 1999, between the Registrant and Battery Investment Partners IV, LLC. 10.19 Series B Convertible Preferred Stock Purchase Warrant, dated April 9, 1999, between the Registrant and Battery Ventures IV, L.P. 10.20 Series B Convertible Preferred Stock Purchase Warrant, dated April 9, 1999, between the Registrant and Battery Investment Partners IV, LLC. 10.21 First Amendment to Series B Convertible Preferred Stock Purchase Warrant, dated May 24, 2000, between the Registrant and Battery Ventures IV, L.P. 10.22 First Amendment to Series B Convertible Preferred Stock Purchase Warrant, dated May 24, 2000, between the Registrant and Battery Investment Partners IV, LLC. 10.23 First Amendment to Series B Convertible Preferred Stock Purchase Warrant, dated May 24, 2000, between the Registrant and Battery Ventures IV, L.P. 10.24 First Amendment to Series B Convertible Preferred Stock Purchase Warrant, dated May 24, 2000, between the Registrant and Battery Investment Partners IV, LLC. 10.25 Letter Agreement, dated May 24, 2000, between the Registrant and Battery Ventures IV, L.P. 10.26 Letter Agreement, dated May 24, 2000, between the Registrant and Battery Investment Partners IV, LLC. 10.27 Letter Agreement, dated May 24, 2000, between the Registrant and Battery Ventures IV, L.P. 10.28 Letter Agreement, dated May 24, 2000, between the Registrant and Battery Investment Partners IV, LLC. 10.29 Contingent Warrant for Purchase of Common Shares, dated October 27, 1999, between the Registrant and William Street Associates II, LLC. 10.30 Warrant, dated November 12, 1999, between the Registrant and CommVest, LLC.
II-7
EXHIBIT NUMBER DESCRIPTION - ------- ------------------------------------------------------------ 10.31 Warrant to Purchase Stock, dated November 26, 1999, between the Registrant and Imperial Bancorp. 10.32 Third Amended and Restated Registration Rights Agreement, dated June 22, 2000, between the Registrant and the parties named therein. 10.33 Form of Indemnification Agreement to be entered into between the Registrant and each of its executive officers and directors. 10.34 Stock Contribution Agreement dated February 23, 1999, by and between Frontec AB and Arctic, Inc. 21.1 List of Subsidiaries. 23.1 Consent of PricewaterhouseCoopers LLP, independent accountants. 23.2 Consent of PricewaterhouseCoopers LLP, independent accountants. 23.3* Consent of Morris, Manning & Martin, L.L.P. (included in Exhibit 5.1). 24.1 Powers of Attorney (included on signature page). 27.1 Financial Data Schedule (for SEC use only).
- ------------------------ * To be filed by amendment ** The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request, as provided in Item 601(b)(2) of Regulation S-K. ITEM 17. UNDERTAKINGS (a) The undersigned Registrant hereby undertakes to provide to the Underwriters at the closing specified in the Underwriting Agreement, certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933, may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions of Item 14 of this Registration Statement or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. (c) The Registrant hereby undertakes that: (i) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (ii) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-8 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia on the 11th day of August, 2000. VIEWLOCITY, INC. BY: /S/ GREGORY CRONIN ----------------------------------------- Gregory Cronin PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD
POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gregory Cronin and Stan F. Stoudenmire, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and any subsequent registration statements pursuant to Rule 462 of the Securities Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorney-in-fact or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- President, Chief Executive /s/ GREGORY CRONIN Officer and Chairman of the ------------------------------------------- Board (Principal Executive August 11, 2000 Gregory Cronin Officer) Senior Vice President and /s/ STAN F. STOUDENMIRE Chief Financial Officer ------------------------------------------- (Principal Financial and August 11, 2000 Stan F. Stoudenmire Accounting Officer) /s/ LEO APOTHEKER Director ------------------------------------------- August 11, 2000 Leo Apotheker /s/ WILLIAM M. STUEK Director ------------------------------------------- August 11, 2000 William M. Stuek
SIGNATURE TITLE DATE --------- ----- ---- /s/ OLOF ENGLUND Director ------------------------------------------- August 11, 2000 Olof Englund /s/ MARK E. HASTINGS Director ------------------------------------------- August 11, 2000 Mark E. Hastings /s/ SCOTT R. TOBIN Director ------------------------------------------- August 11, 2000 Scott R. Tobin
EX-2.1 2 ex-2_1.txt EXHIBIT 2.1 EXHIBIT 2.1 EXECUTION ORIGINAL AGREEMENT AND PLAN OF MERGER between and among VIEWLOCITY, INC. NXSTP ACQUISITION CORP., NEXSTEP INC., L. MICHAEL HANDLEY AND MOHAMED Y. AMER AS OF JANUARY 21, 2000 TABLE OF CONTENTS
PAGE ARTICLE 1. THE MERGER......................................................................................... 2 SECTION 1.1. SURVIVING CORPORATION..................................................................... 2 --------------------- SECTION 1.2. CERTIFICATE OF INCORPORATION.............................................................. 2 ---------------------------- SECTION 1.3. BYLAWS.................................................................................... 2 ------ SECTION 1.4. DIRECTORS................................................................................. 2 --------- SECTION 1.5. EFFECTIVE TIME............................................................................ 2 -------------- ARTICLE 2. CONVERSION OF SHARES............................................................................... 2 SECTION 2.1. NEXSTEP STOCK............................................................................. 2 ------------- SECTION 2.2. FRACTIONAL SHARES......................................................................... 3 ----------------- SECTION 2.3. DELIVERY AND ESCROW OF VIEWLOCITY COMMON STOCK............................................ 3 ---------------------------------------------- SECTION 2.4. EXCHANGE OF NEXSTEP STOCK................................................................. 4 ------------------------- SECTION 2.5. TAX-DEFERRED REORGANIZATION............................................................... 4 --------------------------- ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF NEXSTEP AND THE SHAREHOLDERS.................................... 5 SECTION 3.1. ORGANIZATION.............................................................................. 5 ------------ SECTION 3.2. AUTHORIZATION............................................................................. 5 ------------- SECTION 3.3. ABSENCE OF RESTRICTIONS AND CONFLICTS; CONSENTS........................................... 5 ----------------------------------------------- SECTION 3.4. CAPITALIZATION; OWNERSHIP OF NEXSTEP STOCK; SUBSIDIARIES.................................. 6 -------------------------------------------------------- SECTION 3.5. NEXSTEP FINANCIAL STATEMENTS.............................................................. 7 ---------------------------- SECTION 3.6. ABSENCE OF CERTAIN CHANGES................................................................ 7 -------------------------- SECTION 3.7. EMPLOYEES................................................................................. 8 --------- SECTION 3.8. LEGAL PROCEEDINGS......................................................................... 9 ----------------- SECTION 3.9. COMPLIANCE WITH LAW....................................................................... 9 ------------------- SECTION 3.10. MATERIAL AGREEMENTS....................................................................... 9 ------------------- SECTION 3.11. TAX RETURNS; TAXES........................................................................ 9 ------------------ SECTION 3.12. NEXSTEP EMPLOYEE BENEFIT PLANS............................................................ 10 ------------------------------ SECTION 3.13. LABOR RELATIONS........................................................................... 10 --------------- SECTION 3.14. INSURANCE................................................................................ 10 --------- SECTION 3.15. TITLE TO AND CONDITION OF PROPERTIES...................................................... 11 ------------------------------------ SECTION 3.16. TRANSACTIONS WITH AFFILIATES. NEITHER T.................................................. 11 ---------------------------- SECTION 3.17. BROKERS, FINDERS AND INVESTMENT BANKERS................................................... 11 --------------------------------------- SECTION 3.18. DISCLOSURE................................................................................ 11 ---------- ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF VIEWLOCITY AND MERGER SUB........................................ 13 SECTION 4.1. ORGANIZATION.............................................................................. 13 ------------ SECTION 4.2. AUTHORIZATION............................................................................. 14 ------------- SECTION 4.3. ABSENCE OF RESTRICTIONS AND CONFLICTS..................................................... 14 ------------------------------------- SECTION 4.4. CAPITALIZATION OF VIEWLOCITY.............................................................. 14 ---------------------------- SECTION 4.5. BROKERS, FINDERS AND INVESTMENT BANKERS................................................... 15 --------------------------------------- SECTION 4.6. VIEWLOCITY FINANCIAL STATEMENTS; CHANGES.................................................. 15 ---------------------------------------- SECTION 4.7. LEGAL PROCEEDINGS......................................................................... 16 ----------------- SECTION 4.8. TRANSACTIONS WITH AFFILIATES.............................................................. 16 ---------------------------- SECTION 4.9. DISCLOSURE................................................................................ 16 ---------- ARTICLE 5. OTHER MATTERS...................................................................................... 17 SECTION 5.1. EMPLOYMENT AGREEMENTS..................................................................... 17 --------------------- SECTION 5.2. STOCKHOLDER NON-COMPETITION AGREEMENTS.................................................... 17 --------------------------------------
-i-
PAGE SECTION 5.3. NON-DISCLOSURE AND NON-SOLICITATION AGREEMENTS............................................ 17 ---------------------------------------------- SECTION 5.4. TERMINATION OF NEXSTEP EMPLOYMENT AGREEMENTS.............................................. 17 -------------------------------------------- SECTION 5.5. OPTION PLAN PARTICIPATION................................................................. 17 ------------------------- SECTION 5.6. POST-CLOSING COVENANTS.................................................................... 17 ---------------------- ARTICLE 6. CLOSING............................................................................................ 19 SECTION 6.1. CLOSING DATE.............................................................................. 19 ------------ SECTION 6.2. DELIVERIES BY THE SHAREHOLDERS............................................................ 19 ------------------------------ SECTION 6.3. DELIVERIES BY VIEWLOCITY AND THE SURVIVING CORPORATION.................................... 19 ------------------------------------------------------ SECTION 6.4. OTHER DELIVERIES.......................................................................... 20 ---------------- ARTICLE 7. INDEMNIFICATION.................................................................................... 21 SECTION 7.1. DEFINITIONS............................................................................... 21 SECTION 7.2. AGREEMENT OF NEXSTEP INDEMNITOR TO INDEMNIFY.............................................. 22 -------------------------------------------- SECTION 7.3. AGREEMENT OF VIEWLOCITY INDEMNITORS TO INDEMNIFY.......................................... 22 ------------------------------------------------ SECTION 7.4. PROCEDURES FOR INDEMNIFICATION............................................................ 23 ------------------------------ SECTION 7.5. THIRD PARTY CLAIMS........................................................................ 24 ------------------ SECTION 7.6. OTHER RIGHTS AND REMEDIES NOT AFFECTED; EXCEPTION......................................... 25 ------------------------------------------------- SECTION 7.7. SURVIVAL.................................................................................. 25 -------- SECTION 7.8. TIME LIMITATIONS.......................................................................... 26 ---------------- SECTION 7.9. LIMITATIONS AS TO AMOUNT PAYABLE BY THE NEXSTEP INDEMNITORS............................... 26 ----------------------------------------------------------- SECTION 7.10. LIMITATIONS AS TO AMOUNT PAYABLE BY VIEWLOCITY INDEMNITORS................................ 26 ---------------------------------------------------------- SECTION 7.11. PAYMENT................................................................................... 27 ------- SECTION 7.12. BINDING ARBITRATION/ATTORNEY FEES......................................................... 27 --------------------------------- ARTICLE 8. MISCELLANEOUS PROVISIONS........................................................................... 27 SECTION 8.1. NOTICES................................................................................... 27 ------- SECTION 8.2. DISCLOSURE SCHEDULE AND EXHIBITS.......................................................... 28 -------------------------------- SECTION 8.3. ASSIGNMENT; SUCCESSORS IN INTEREST........................................................ 28 ---------------------------------- SECTION 8.4. CAPTIONS.................................................................................. 29 -------- SECTION 8.5. CONTROLLING LAW; JURISDICTION; INTEGRATION; AMENDMENT..................................... 29 ----------------------------------------------------- SECTION 8.6. CONSENT TO JURISDICTION................................................................... 29 ----------------------- SECTION 8.7. KNOWLEDGE................................................................................. 29 --------- SECTION 8.8. SEVERABILITY.............................................................................. 29 ------------ SECTION 8.9. WAIVER.................................................................................... 30 ------ SECTION 8.10. FEES AND EXPENSES......................................................................... 30 ----------------- SECTION 8.11. COUNTERPARTS.............................................................................. 30 ------------
EXHIBITS: Exhibit 2.1.1(a) Allocation of Merger Consideration Exhibit 2.1.1(b) Form of Stock Restriction Agreement Exhibit 2.3 Escrow Agreement Exhibit 3 Nexstep Disclosure Schedule Exhibit 4 Viewlocity Disclosure Schedule Exhibit 5.1 Form of Executive Employment Agreement Exhibit 5.2 Form of Stockholder Non Competition Agreement Exhibit 5.3 Form of Restrictive Covenants Agreement Exhibit 6.4(v) Form of Legal Opinion Exhibit 6.4(vi) Form of Agreement Terminating Employment Agreement -iii- AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER dated as of January 21, 2000 (the "AGREEMENT"), is by and among VIEWLOCITY, INC., a Delaware corporation ("VIEWLOCITY"), NXSTP ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of VIEWLOCITY ("MERGER SUB"), NEXSTEP INC., a Delaware corporation ("Nexstep"), L. MICHAEL HANDLEY, an individual resident of the State of Texas ("HANDLEY"), and MOHAMED Y. AMER an individual resident of the State of California, ("AMER")(HANDLEY and AMER are collectively referred to herein as the "Shareholders"). W I T N E S S E T H: WHEREAS, the parties hereto have determined it to be in their respective best interests to combine the businesses of Viewlocity and Nexstep; and WHEREAS, the parties hereto desire to set forth their agreement with respect to the combination of Viewlocity and Nexstep and to consummate such transaction on the terms hereof; and WHEREAS, the respective Boards of Directors of Viewlocity, Merger Sub and Nexstep each have approved this Agreement and the merger (the "MERGER") of Nexstep with and into Merger Sub upon the terms and conditions contained herein and in accordance with the Corporation Law of the State of Delaware ("DGCL"); and WHEREAS, Viewlocity, as the sole shareholder of Merger Sub, has approved this Agreement, the Merger and the transactions contemplated hereby, pursuant to action taken by written consent in accordance with the requirements of the DGCL and the Certificate of Incorporation and the Bylaws of Merger Sub; and WHEREAS, the Board of Directors of Nexstep and the Shareholders have approved this Agreement, the Merger and the transactions contemplated hereby, pursuant to actions taken by written consent in accordance with the requirements of the DGCL and the Certificate of Incorporation (and all amendments thereto) and the Bylaws of Nexstep; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged conclusively, the parties hereto, intending to be legally bound, agree as follows: -1- ARTICLE 1. THE MERGER SECTION 1.1. SURVIVING CORPORATION. Subject to the provisions of this Agreement and the DGCL, at the Effective Time (as hereinafter defined), Nexstep shall be merged with and into Merger Sub and the separate corporate existence of Nexstep shall cease. Merger Sub shall be the surviving corporation in the Merger (hereinafter sometimes called the "SURVIVING CORPORATION") and shall continue its corporate existence under the laws of the State of Delaware. The Merger shall have the effects set forth in Section 259 of the DGCL. SECTION 1.2. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of Merger Sub, as amended to change the name of Merger Sub to that of Nexstep at the Closing, shall be the Certificate of Incorporation of the Surviving Corporation until thereafter duly amended in accordance with its terms and the DGCL. SECTION 1.3. BYLAWS. The Bylaws of Merger Sub shall be the Bylaws of the Surviving Corporation until thereafter duly amended in accordance with their terms and the DGCL. SECTION 1.4. DIRECTORS. The directors of the Surviving Corporation shall consist of the directors of Merger Sub immediately prior to the Effective Time, and all of such directors shall hold office until their respective successors are duly elected and qualified. SECTION 1.5. EFFECTIVE TIME. The parties hereto shall cause a Certificate of Merger meeting the requirements of the DGCL (the "CERTIFICATE OF MERGER") to be properly executed and filed on the Closing Date (as hereinafter defined) with the Secretary of State of the State of Delaware. The Merger shall become effective as of the filing of a properly executed Certificate of Merger. The date and time when the Merger becomes effective is herein referred to as the effective time (the "EFFECTIVE TIME"). ARTICLE 2. CONVERSION OF SHARES SECTION 2.1. NEXSTEP STOCK. As of the Effective Time, by virtue of the Merger and without any action on the part of any holder thereof: 2.1.1. (a) Subject to Sections 2.2 and 2.3, all of the shares of the common stock of Nexstep ("NEXSTEP STOCK") issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive (i) an aggregate of 2,002,000 shares (the "VIEWLOCITY SHARES") of Viewlocity Common Stock, $0.01 par value per share (the "VIEWLOCITY COMMON STOCK"), which the parties acknowledge and agree has a value of $2.94 per share as of the date of this Agreement, and (ii) an aggregate of $3,411,200 in cash less an amount determined at or prior -2- to the Closing by mutual agreement between Viewlocity and the Shareholders which is reflected on an amended EXHIBIT 2.1.1.(a) and which is required for satisfaction of any obligations or loans owed by Nexstep to either Viewlocity or any other creditor of Nexstep (the "CASH CONSIDERATION") (the Viewlocity Common Stock and the Cash Consideration are collectively referred to herein as the "MERGER CONSIDERATION"). The Merger Consideration shall be allocated among the Shareholders as set forth in EXHIBIT 2.1.1(a). (b) The Shareholders hereby acknowledge and agree that the Viewlocity Shares shall be subject to certain restrictions on sale, transfer or other disposition, and the Shareholders shall execute and deliver at Closing a Stock Restriction Agreement ("Stock Restriction Agreement") in the form attached hereto as EXHIBIT 2.1.1(b). 2.1.2. Each share of common stock, par value $0.01 per share, of Merger Sub that is issued and outstanding immediately prior to the Effective Time shall remain outstanding and shall be unchanged after the Merger, all of which shares shall be issued to Viewlocity and shall thereafter constitute the only outstanding shares of capital stock of the Surviving Corporation. 2.1.3. Each share of Nexstep Stock issued and outstanding immediately prior to the Effective Time that is then held in the treasury of Nexstep, if any, shall be cancelled and retired and all rights in respect thereof shall cease to exist, without any conversion thereof or payment of any consideration therefor. 2.1.4. Each warrant, stock option or other right, if any, to purchase shares of Nexstep Stock issued and outstanding immediately prior to the Effective Time shall be cancelled (whether or not such warrant, option or other right is then exercisable). SECTION 2.2. FRACTIONAL SHARES. No scrip or fractional shares of Viewlocity Common Stock shall be issued pursuant to this Agreement. In lieu thereof, if the Shareholder would otherwise have been entitled to a fractional share of Viewlocity Common Stock hereunder, then the Shareholder shall be entitled, after the later of (a) the Effective Time or (b) the surrender of its Certificate(s) (as hereinafter defined) that represent such shares of Nexstep Stock, to receive from Viewlocity an amount in cash in lieu of such fractional share. SECTION 2.3. DELIVERY AND ESCROW OF VIEWLOCITY COMMON STOCK. At the Closing (a) 1,001,000 shares of Viewlocity Common Stock shall be issued and delivered directly to the Shareholders ("Closing Shares"); and (b) 1,001,000 shares of Viewlocity Common Stock shall be issued in the names of the Shareholders and the Shareholders shall cause such shares (the "Escrowed Shares") to be deposited with an independent escrow agent ("Escrow Agent") for the benefit of the Shareholders pursuant to an escrow agreement substantially in the form attached hereto as EXHIBIT 2.3 ("Escrow Agreement"). The Escrowed Shares shall be available, on the terms and conditions set forth in the Escrow Agreement, to satisfy the Shareholders' indemnity obligations as set forth in Article 7 of this Agreement, and shall be released to the Shareholders -3- over a period of twenty-seven (27) months following the Closing Date, pursuant to the terms of the Escrow Agreement. SECTION 2.4. EXCHANGE OF NEXSTEP STOCK. 2.4.1. From and after the Effective Time, upon surrender of a certificate or certificates which immediately prior thereto represented outstanding shares of Nexstep Stock duly endorsed in blank (the "CERTIFICATE" or "CERTIFICATES"), the Certificate or Certificates so surrendered shall forthwith be canceled, and the Shareholders thereafter shall be entitled to receive the Merger Consideration in accordance with Sections 2.1 and 2.2 hereof, subject to Section 2.3. No interest shall be paid or accrued on the cash payable upon the surrender of any Certificate. No portion of the consideration to be received pursuant to Sections 2.1 and 2.2 upon exchange of a Certificate (whether a certificate representing shares of Viewlocity Stock or by check or wire transfer representing any Cash Consideration payable hereunder) may be issued or paid to a person other than the person in whose name the Certificate surrendered in exchange therefor is registered. If all payments in respect of shares of Nexstep are made in accordance with the terms hereof, such payments shall be deemed to have been made in full satisfaction of all rights pertaining to such securities. 2.4.2. In the case of any lost, mislaid, stolen or destroyed Certificate, the Shareholder may be required, as a condition precedent to delivery to the Shareholder of the consideration described in Sections 2.1 and 2.2, to deliver to Viewlocity a bond in such reasonable sum or a satisfactory indemnity agreement as Viewlocity may direct as indemnity against any claim that may be made against Viewlocity or the Surviving Corporation with respect to the Certificate alleged to have been lost, mislaid, stolen or destroyed. 2.4.3. After the Effective Time, there shall be no transfers on the stock transfer books of the Surviving Corporation of the shares of Nexstep Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation for transfer, they shall be canceled and exchanged for the consideration described in Sections 2.1 and 2.2, subject to Section 2.3. SECTION 2.5. TAX-DEFERRED REORGANIZATION. The parties hereto intend that the Merger shall constitute a tax-deferred reorganization under U.S. Internal Revenue Code ("CODE") Section 368(a). All parties covenant to report on their applicable federal and state tax returns the Merger and the consequences of the Merger consistently with the foregoing. -4- ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF NEXSTEP AND THE SHAREHOLDERS With such exceptions as may be set forth in a schedule (the "NEXSTEP DISCLOSURE SCHEDULE") delivered by Nexstep to Viewlocity prior to the execution hereof, and attached hereto as EXHIBIT 3, Nexstep and the Shareholders, jointly and severally, hereby represent and warrant to Viewlocity as follows: SECTION 3.1. ORGANIZATION. Nexstep is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Nexstep is duly qualified to transact business, and is in good standing as a foreign corporation in each jurisdiction where the character of its activities requires such qualification, except where the failure to so qualify would not have a material adverse effect on its assets, liabilities, results of operations, financial condition, business or prospects. Nexstep has heretofore made available to Viewlocity accurate and complete copies of its Certificate of Incorporation (as amended) and Bylaws, as currently in effect, and has made available to Viewlocity its respective minute books and stock records. The Nexstep Disclosure Schedule contains a true and correct list of the jurisdictions in which Nexstep is qualified to do business as a foreign corporation. SECTION 3.2. AUTHORIZATION. Nexstep has full corporate power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement and to consummate the Merger and the other transactions contemplated hereby. The execution and delivery of this Agreement by Nexstep and the performance by Nexstep of its obligations hereunder and the consummation of the Merger and the other transactions provided for herein have been duly and validly authorized by all necessary corporate action on its part. The Board of Directors of Nexstep has approved the execution, delivery and performance of this Agreement and the consummation of the Merger and the other transactions contemplated hereby. The Shareholders have approved this Agreement, the Merger and the transactions contemplated hereby in accordance with the requirements of the DGCL and the Certificate of Incorporation and Bylaws of Nexstep. This Agreement has been duly executed and delivered by Nexstep and the Shareholders and constitutes the valid and binding agreement of Nexstep and the Shareholders, enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws affecting the enforceability of creditors' rights generally, general equitable principles and the discretion of courts in granting equitable remedies. SECTION 3.3. ABSENCE OF RESTRICTIONS AND CONFLICTS; CONSENTS. The execution, delivery and performance of this Agreement, the consummation of the Merger and the other transactions contemplated by this Agreement and the fulfillment of and compliance with the terms and conditions of this Agreement do not and will not, with the passing of time or the -5- giving of notice or both, violate or conflict with, constitute a breach of or default under, result in the loss of any material benefit under, or permit the acceleration of any obligation under (i) any term or provision of the Certificate of Incorporation or Bylaws of Nexstep, (ii) any Nexstep Material Agreements (as hereinafter defined), (iii) any judgment, decree or order of any court or governmental authority or agency to which Nexstep or Shareholders are a party or by which Nexstep or any of Nexstep's properties is bound, or (iv) any statute, law, regulation or rule applicable to Nexstep, so as to have in the case of subsections (ii) through (iv) above, a material adverse effect on the assets, liabilities, results of operations, financial condition, business or prospects of Nexstep. Except for the filing and recordation of the Certificate of Merger, no consent, approval, order or authorization of, or registration, declaration or filing with, any governmental agency or public or regulatory unit, agency, body or authority with respect to Nexstep or the Shareholders is required in connection with the execution, delivery or performance of this Agreement by Nexstep or the Shareholders or the consummation of the transactions contemplated by this Agreement by Nexstep, the failure to obtain which would have a material adverse effect upon the assets, liabilities, results of operations, financial condition, business or prospects of Nexstep. The Nexstep Disclosure Schedule contains a complete list of all Material Agreements requiring the consent of any party thereto to any of the transactions contemplated hereby. SECTION 3.4. CAPITALIZATION; OWNERSHIP OF NEXSTEP STOCK; SUBSIDIARIES. 3.4.1. CAPITALIZATION. The authorized capital stock of Nexstep consists of 1,500 shares of common stock, without par value. As of the date hereof, there are 1,500 shares of Nexstep Stock issued and outstanding. Each share of capital stock of Nexstep which is outstanding as of the date hereof is duly authorized, validly issued, fully paid and nonassessable and free of pre-emptive rights. Except as set forth in the Nexstep Disclosure Schedule, there are no subscriptions, options, convertible securities, calls, rights, warrants or other agreements, claims or commitments of any nature whatsoever obligating Nexstep to issue, transfer, deliver or sell, or cause to be issued, transferred, delivered or sold, additional shares of the capital stock or other securities of Nexstep or obligating Nexstep to grant, extend or enter into any such agreement or commitment. The Nexstep Disclosure Schedule contains a complete list of each agreement, written or verbal, by or among Nexstep, its shareholders and any other party which in any manner relates to the capital stock of or other securities of Nexstep. Immediately upon the Closing of the transactions contemplated hereby, there shall be no subscriptions, options, convertible securities, calls, rights, warrants or other agreements, claims or commitments of any nature whatsoever obligating either Nexstep (or Merger Sub as the successor to Nexstep) to issue, transfer, deliver or sell, or cause to be issued, transferred, delivered or sold, additional shares of the capital stock or other securities of either Nexstep (or Merger Sub as the successor to Nexstep), or obligating Merger Sub (as the successor to Nexstep) to grant, extend or enter into any such agreement or commitment. 3.4.2. OWNERSHIP. Except as set forth in the Nexstep Disclosure Schedule, the Shareholders are the record and beneficial owner of all shares of Nexstep Stock to be exchanged -6- pursuant to Section 2.4, and own all such shares free and clear of any liens, claims, options, charges, encumbrances or rights of others. 3.4.3. NEXSTEP SUBSIDIARIES. Nexstep does not own, nor has it ever owned, any subsidiary. SECTION 3.5. NEXSTEP FINANCIAL STATEMENTS. Nexstep has made available to Viewlocity the unaudited balance sheet of Nexstep as of December 31, 1999 (the "Nexstep Balance Sheet") and the related unaudited statements of income for the twelve month period ended December 31, 1999 (together with the Nexstep Balance Sheet, the "Nexstep Financial Statements"). The books and records of Nexstep are maintained on an accrual basis and the Nexstep Financial Statements have been prepared from, and are in accordance with, the books and records of Nexstep and present fairly the financial position and results of operations of Nexstep as of the date and for the period indicated. Nexstep has no liability or obligation of any nature whatsoever, whether accrued, absolute, contingent or otherwise, required by generally accepted accounting principles to be reflected in the Nexstep Balance Sheet other than (x) current liabilities and obligations which are recurring in nature and not overdue on their terms and (y) liabilities and obligations reflected and adequately provided for in the Nexstep Balance Sheet. The Nexstep Disclosure Schedule sets forth a true and complete list of all loss contingencies (within the meaning of Statement of Financial Accounting Standards No. 5) of Nexstep. SECTION 3.6. ABSENCE OF CERTAIN CHANGES. 3.6.1. CERTAIN FINANCIAL MATTERS; PROPERTY; DIVIDENDS. Since the date of the Nexstep Balance Sheet, there has not been (i) any material adverse change in the assets, liabilities, results of operations, financial condition, business or prospects of Nexstep, (ii) any damage, destruction, loss or casualty to property or assets of Nexstep, whether or not covered by insurance, which property or assets are material to its operations or business, (iii) any declaration, setting aside or payment of any dividend or distribution (whether in cash, stock or property) with respect to the capital stock of Nexstep, or any redemption or other acquisition by Nexstep of any of the capital stock of Nexstep or any split, combination or reclassification of shares of capital stock declared or made by Nexstep, or (iv) any agreement to do any of the foregoing. 3.6.2. OTHER CHANGES. Since the date of the Nexstep Balance Sheet, there have not been (i) any material assets mortgaged, pledged or made subject to any lien, charge or other encumbrance, (ii) any material liability or obligation (absolute, accrued or contingent) incurred or any material bad debt, contingency or other reserve increase suffered, except, in each such case, in the ordinary course of business and consistent with past practice, (iii) any material claims, liabilities or obligations (absolute, accrued or contingent) paid, discharged or satisfied, other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of claims, liabilities and obligations incurred in the ordinary course of business and consistent with past practice since the date of the Nexstep Balance Sheet, (iv) -7- any material guarantees, checks, notes or accounts receivable written off as uncollectible, except write-offs in the ordinary course of business and consistent with past practice, (v) any material write down of the value of any asset or investment on Nexstep's books or records, except for depreciation and amortization taken in the ordinary course of business and consistent with past practice, (vi) any cancellation of any material debts or waiver of any material claims or rights of substantial value, or sale, transfer or other disposition of any material properties or assets (real, personal or mixed, tangible or intangible) of substantial value, except, in each such case, in transactions in the ordinary course of business and consistent with past practice and which in any event do not exceed $10,000 in the aggregate, (vii) any single capital expenditure or commitment in excess of $5,000 for additions to property or equipment, or aggregate capital expenditures and commitments in excess of $5,000 for additions to property or equipment, (viii) any material transactions (other than transactions contemplated hereby) entered into other than in the ordinary course of business, (ix) any agreements to do any of the foregoing, or (x) any other events, developments or conditions of any character that have had or are reasonably likely to have a material adverse effect on the assets, liabilities, results of operations, financial condition business or prospects of Nexstep. SECTION 3.7. EMPLOYEES. Set forth in the Nexstep Disclosure Schedule is a complete and accurate list of each current employee of Nexstep, the job title of each such employee, the current annual salary and bonus paid to such employee or which such employee may be entitled to receive (other than as contemplated in this Agreement), and a designation of which employees are Key Employees (as hereinafter defined). Except as otherwise expressly provided in this Section 3.7, to the knowledge of Nexstep and the Shareholders, no employee of the Company is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency that would conflict with such employee's obligation to use his best efforts to promote the interests of Nexstep or that would conflict with Nexstep's business as conducted or as proposed to be conducted. Except as otherwise expressly provided in this Section 3.7, to the knowledge of Nexstep and the Shareholders, neither the execution nor delivery of this Agreement, nor the carrying on of Nexstep's business by the employees of Nexstep, nor the conduct of Nexstep's business as currently proposed, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees is now obligated. Except as otherwise expressly provided in this Section 3.7, to the knowledge of Nexstep and the Shareholders, no employee or consultant of Nexstep is in violation of any term of any employment contract, proprietary information and inventions agreement, noncompetition agreement or any other contract or agreement relating to the relationship of any such employee or consultant with Nexstep. To the knowledge of Nexstep and the Shareholders, no officer of Nexstep nor any Key Employee (as hereinafter defined) has any present intention of terminating his or her employment with Nexstep. The representations and warranties contained in this Section 3.7 do not apply to Donald Wicklegren, Ajay Patel, Charles Grissom or Dan Bamajian. -8- For purposes of this Agreement, "Key Employee" shall mean and include the president, chief executive officer, chief financial officer, chief operating officer, chief technology officer, chief marketing officer, or any other individual who performs a significant role in the development or marketing of the Company's products or services, or who otherwise contributes to the operations of the Company in a significant manner and whose skills would be difficult or impossible to replace. SECTION 3.8. LEGAL PROCEEDINGS. There are no suits, actions, claims, proceedings or investigations pending or, to the knowledge of Nexstep, threatened against, relating to or involving Nexstep (or any of its officers or directors) before any court, arbitrator or administrative or governmental body, which, if finally determined adversely, are reasonably likely, individually or in the aggregate, to have a material adverse effect on the assets, liabilities, results of operations, financial condition, business or prospects of Nexstep. SECTION 3.9. COMPLIANCE WITH LAW. Nexstep has all material authorizations, approvals, licenses and orders of and from all governmental and regulatory officers and bodies necessary to carry on its business as it is currently being conducted, to own or hold under lease the properties and assets it owns or holds under lease and to perform all of its obligations under the agreements to which it is a party, and Nexstep has been and is in compliance with all applicable laws, regulations and administrative orders of any country, state or municipality or of any subdivision thereof. SECTION 3.10. MATERIAL AGREEMENTS. The Nexstep Disclosure Schedule contains a complete list of all of the following material agreements to which Nexstep is a party: (a) all contracts, agreements and instruments that involve a commitment by Nexstep in excess of $10,000; (b) all stock purchase agreements; (c) all loan, lease or debt agreements in excess of $10,000; (d) all employment agreements; (e) all licenses of any patent, trade secret or other proprietary right to or from Nexstep; (f) any existing or currently effective plan, contract or arrangement, whether written or oral, providing for bonuses, pensions, deferred compensation, severance pay or benefits, retirement payments, profit-sharing or the like; and (g) any other existing or currently effective agreement, contract or commitment that is material to Nexstep (collectively, the "Material Agreements"). All the Material Agreements are valid and binding obligations of Nexstep, in full force and effect in all material respects. Nexstep is not in default and is not aware of any default by another party, either pending or threatened, with respect to the Material Agreements. SECTION 3.11. TAX RETURNS; TAXES. Nexstep has duly filed all federal, state, local and foreign tax returns required to be filed by it prior to the Closing Date and has duly paid or made adequate provision for the payment of all taxes which are due and payable by Nexstep prior to the Closing Date pursuant to such returns or pursuant to any assessment with respect to taxes in such jurisdictions, whether or not in connection with such returns, except for incidental interest and penalties which may be due and payable, but which are not material in amount. The liability for taxes reflected in the Financial Statements is sufficient for the payment of all unpaid taxes, -9- whether or not disputed, that are accrued or applicable for the period ended December 31, 1999, and for all years and periods ended prior thereto. All deficiencies asserted against Nexstep as a result of any examinations by the U.S. Internal Revenue Service ("IRS") or any other taxing authority have been paid, fully settled or adequately provided for in the Nexstep Balance Sheet. There are no pending claims asserted for taxes of Nexstep or outstanding agreements or waivers extending the statutory period of limitation applicable to any tax return of Nexstep for any period. Nexstep has made available to Viewlocity true, complete and correct copies of its federal income tax returns filed for each taxable year since its incorporation on June 3, 1998 and made available such other tax returns requested by Viewlocity. SECTION 3.12. NEXSTEP EMPLOYEE BENEFIT PLANS. The Nexstep Disclosure Schedule sets forth a true, correct and complete list of all "employee benefit plans" as such term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") (the "Benefit Plans") covering the employees of Nexstep. Each Benefit Plan is in compliance in all material respects with all applicable provisions of law, including ERISA and the Code. There are no pending or, to Nexstep's or the Stockholders' knowledge, threatened claims against any Benefit Plan (except for claims for benefits payable in the normal operation of the Benefit Plans) that could give rise to any material liability to Nexstep. All reports, notices and returns required to be filed with any governmental agency or provided to any person or entity with respect to the Benefit Plans have been timely filed. Nexstep has never had and does not now have any Benefit Plan that is an employee pension plan (as defined in Section 3(2) of ERISA) nor does Nexstep contribute to any multiemployer pension or multiemployer welfare benefit plan (within the meaning of Section 3(37) of ERISA). SECTION 3.13. LABOR RELATIONS. There are no agreements with or pending petitions for recognition of any labor union or association as the exclusive bargaining agent for any or all of the employees of Nexstep and no such petition has been pending at any time during the two years prior to the date hereof. To Nexstep's or the Stockholders' knowledge, there has not been any organizing effort by any union or other group seeking to represent any employees of Nexstep as its exclusive bargaining agent at any time during the two years prior to the date hereof. There are no labor strikes, work stoppages or other labor disputes now pending or to the knowledge of Nexstep and the Stockholders, threatened against the Company, nor has there been any such labor strike, work stoppage or other labor dispute or grievance at any time during the two years prior to the date hereof. SECTION 3.14. INSURANCE. The Nexstep Disclosure Schedule sets forth a true, correct and complete list of all insurance policies or binders of insurance or programs of self-insurance which relate to the business of Nexstep as of the date hereof. The coverage under each such policy and binder is in full force and effect. Neither Nexstep nor the Shareholders have knowledge of nor has Nexstep nor the Shareholders received any notice of cancellation, termination, nonrenewal or disallowance of any claim thereunder or with respect thereto. Neither Nexstep nor the Shareholders have knowledge of any claim against Nexstep relating to its business, assets, properties or operations which could increase the insurance premiums payable -10- by Nexstep under such policy or binder in excess of normal increases consistent with industry practices. SECTION 3.15. TITLE TO AND CONDITION OF PROPERTIES. 3.15.1. TITLE. Nexstep has good and valid title to or valid leasehold interests in its properties reflected in the Nexstep Balance Sheet or acquired after the date thereof (other than properties sold or otherwise disposed of in the ordinary course of business), and all of such properties are held free and clear of all title defects, liens, encumbrances and restrictions, except, with respect to all such properties, (a) mortgages and liens securing debt reflected as liabilities on the Nexstep Balance Sheet, and (b)(i) liens for current taxes and assessments not in default, (ii) mechanics', carriers', workmen's, materialmen's, repairmen's, statutory or common law liens either not delinquent or being contested in good faith, and (iii) encumbrances, covenants, rights of way, building or use restrictions, easements, exceptions, variances, reservations and other similar matters or limitations, if any, which do not have a material adverse effect on Nexstep's use of the property affected. Notwithstanding the immediately preceding sentence, Nexstep makes no representation or warranty in this Section 3.12 or otherwise regarding the validity of title to any such properties in which Nexstep has only a leasehold interest. 3.15.2. CONDITION OF PROPERTY. All personal property owned by Nexstep or held by Nexstep pursuant to personal property leases that is material to the conduct of Nexstep's business (i) is in good operating condition and repair, subject only to ordinary wear and tear, (ii) has been operated, serviced and maintained properly within the recommendations and requirements of the manufacturers thereof, and (iii) is suitable and appropriate for the use thereof made and proposed to be made by Nexstep in its business and operations. SECTION 3.16. TRANSACTIONS WITH AFFILIATES. Neither the Shareholders nor any director or officer of Nexstep, or any person with whom the Shareholders or any director or officer has any direct or indirect relation by blood, marriage or adoption, or any entity in which any such person owns any beneficial interest (other than a publicly held corporation whose stock is traded on a national securities exchange or in the over-the-counter market and less than 5% of the stock of which is beneficially owned by all such persons) has any interest in: (a) any contract, arrangement or understanding with, or relating to the business or operations of, Nexstep; (b) any loan, arrangement, understanding, agreement or contract for or relating to indebtedness of Nexstep; or (c) any property (real, personal or mixed, tangible or intangible), used, or currently intended to be used in, the business or operations of Nexstep. SECTION 3.17. BROKERS, FINDERS AND INVESTMENT BANKERS. Neither Nexstep nor any of its officers, directors or employees has employed any broker, finder or investment banker or incurred any liability for any investment banking fees, financial advisory fees, brokerage fees or finders' fees in connection with the transactions contemplated herein. SECTION 3.18. DISCLOSURE. No representation or warranty made by Nexstep or the Shareholders in this Agreement, the Nexstep Disclosure Schedule or any Exhibit attached hereto -11- contains an untrue statement of a material fact. Except as set forth herein or in the Nexstep Disclosure Schedule, neither Nexstep nor the Shareholders know of any fact or circumstance which is reasonably likely to have a material adverse effect on the assets, liabilities, results of operations, financial condition, business or prospects of Nexstep. ARTICLE 3A. SHAREHOLDER INVESTMENT REPRESENTATIONS AND WARRANTIES Each Shareholder hereby severally, and not jointly, represents, warrants, covenants and agrees that: (1) Such Shareholder is acquiring the Viewlocity Common Stock to be issued in connection herewith for investment for an indefinite period, not with a view to the sale or distribution of any part of all thereof by public or private sale or disposition. (2) Such Shareholder has been advised that the Viewlocity Common Stock has not been registered under the Securities Act or registered or qualified under any other securities law, on the ground, among others, that no distribution or public offering of the Viewlocity Common Stock is to be effected and the Viewlocity Common Stock will be issued by Viewlocity in connection with a transaction that does not involve any public offering within the meaning of Section 4(2) of the Securities Act, or the rules and regulations of the Securities and Exchange Commission and under comparable exemption provisions of the securities laws, rules and regulations of other jurisdictions. Such Shareholder understands that Viewlocity is relying in part on the such Shareholder's representations as set forth herein for purposes of claiming such exemptions and that the basis for such exemptions may not be present if, notwithstanding the Shareholder's representations, such Shareholder has in mind merely acquiring Viewlocity Common Stock for resale on the occurrence or non-occurrence of some predetermined event. Such Shareholder has no such intention. (3) Such Shareholder has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the Viewlocity Common Stock and has the capacity to protect his own interest in connection with his proposed acquisition of the Viewlocity Common Stock. Such Shareholder is an "Accredited Investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended (the "SECURITIES ACT"). (4) Such Shareholder acknowledges that he has been furnished with such financial and other information concerning Viewlocity as he considers necessary in connection with his acquisition of the Viewlocity Common Stock. Such Shareholder has carefully reviewed such information and is thoroughly familiar with the proposed business, operations, properties -12- and financial condition of Viewlocity and has discussed with representatives of Viewlocity questions relating to the acquisition he may have. Such Shareholder understands: (i) the risks involved in this offering, including the speculative nature of the investment; (ii) the financial hazards involved in this offering, including the risk of losing the Shareholder's entire investment; (iii) the lack of liquidity and restrictions on transfers of the Viewlocity Common Stock; and (iv) the tax consequences of this investment. Such Shareholder has consulted with his own legal, accounting, tax, investment and other advisers with respect to the tax treatment of an investment by such Shareholder in the Viewlocity Common Stock and the merits and risks of an investment in the Viewlocity Common Stock. In determining to proceed with the transactions contemplated hereby, such Shareholder has relied solely on the results of his own independent investigation with respect to Viewlocity and the Viewlocity Common Stock. (5) Such Shareholder understands that the Viewlocity Common Stock will be "restricted securities" as the term is defined in Rule 144 under the Securities Act, that the Viewlocity Common Stock must be held indefinitely unless it is subsequently registered under the Securities Act and qualified under any other applicable securities law or exemption from such registration and qualification are available. Such Shareholder understands that Viewlocity is under no obligation to register or qualify the Viewlocity Common Stock under the Securities Act, or any other securities law. (6) This Agreement constitutes a valid and binding obligation of such Shareholder, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF VIEWLOCITY AND MERGER SUB With such exceptions as may be set forth in a letter (the "VIEWLOCITY DISCLOSURE SCHEDULE") delivered by Viewlocity and Merger Sub to Nexstep prior to the execution hereof, and attached hereto as EXHIBIT 4, Viewlocity and Merger Sub, jointly and severally, hereby represent and warrant to Nexstep and the Shareholder as follows: SECTION 4.1. ORGANIZATION. Each of Viewlocity and Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and Viewlocity and Merger Sub have all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each of Viewlocity and Merger Sub is duly qualified to transact business, and is in good standing, as a foreign corporation in each jurisdiction where the character of its activities requires -13- such qualification, except where the failure to so qualify would not have a material adverse effect on the assets, liabilities, results of operations, financial condition, business or prospects of Viewlocity, Merger Sub or their respective subsidiaries taken as a whole. SECTION 4.2. AUTHORIZATION. Each of Viewlocity and Merger Sub has full corporate power and authority to execute and deliver this Agreement and to perform its respective obligations under this Agreement and to consummate the Merger and the other transactions contemplated hereby. The execution and delivery of this Agreement by Viewlocity and Merger Sub and the performance by Viewlocity and Merger Sub of their respective obligations hereunder and the consummation of the Merger and the other transactions provided for herein have been duly and validly authorized by all necessary corporate action on the part of each of Viewlocity and Merger Sub. This Agreement has been duly executed and delivered by each of Viewlocity and Merger Sub and constitutes the valid and binding agreement of Viewlocity and Merger Sub, enforceable against each of Viewlocity and Merger Sub in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws affecting the enforceability of creditors' rights generally, general equitable principles and the discretion of courts in granting equitable remedies. SECTION 4.3. ABSENCE OF RESTRICTIONS AND CONFLICTS. The execution, delivery and performance of this Agreement, the consummation of the Merger and the other transactions contemplated by this Agreement, and the fulfillment of and compliance with the terms and conditions of this Agreement do not and will not, with the passing of time or the giving of notice or both, violate or conflict with, constitute a breach of or default under, result in the loss of any material benefit under, or permit the acceleration of any obligation under, (i) any term or provision of the Certificate of Incorporation or Bylaws of either Viewlocity or Merger Sub, (ii) any contract material to the business and operations of either Viewlocity or Merger Sub, (iii) any judgment, decree or order of any court or governmental authority or agency to which Viewlocity is a party or by which Viewlocity or Merger Sub or any of their properties is bound, or (iv) any statute, law, regulation or rule applicable to Viewlocity or Merger Sub, so as to have, in the case of subsections (ii) through (iv) above, a material adverse effect on the assets, liabilities, results of operations, financial condition, business or prospects of Viewlocity and its subsidiaries taken as a whole. Except for filing and recordation of the Certificate of Merger, no consent, approval, order or authorization of, or registration, declaration or filing with, any government agency or public or regulatory unit, agency, body or authority with respect to Viewlocity or Merger Sub is required in connection with the execution, delivery or performance of this Agreement by Viewlocity or Merger Sub or the consummation of the transactions contemplated by this Agreement by Viewlocity or Merger Sub, the failure to obtain which would have a material adverse effect upon the assets, liabilities, results of operations, financial condition, business or prospects of Viewlocity and its subsidiaries taken as a whole. SECTION 4.4. CAPITALIZATION OF VIEWLOCITY. The authorized capital of the Company, immediately prior to the Closing, will consist of (i) 40,000,000 shares of preferred stock, $0.01 par value (the "Preferred Stock"), of which 10,000,000 shares have been designated as Series A -14- Convertible Preferred Stock, (the "Series A Preferred Stock"), 7,005,495 shares have been designated as Series B Convertible Preferred Stock (the "Series B Preferred Stock"), 2,000 shares have been designated as Series C Convertible Preferred Stock ("Series C Preferred Stock"), and 13,270,408 shares have been designated as Series D Convertible Preferred Stock, and (ii) 75,000,000 shares of common stock, $0.01 par value (the "Common Stock"). As of the date hereof, before giving effect to the transactions contemplated by this Agreement, (i) there are issued and outstanding (a) 34,062,058 shares of Common Stock, 4,545,378 of which are held by Viewlocity for purposes of grants of restricted stock to and exercise of incentive stock options by Key Persons (as such term is defined in the Stock Purchase and Escrow Agreement dated March 12, 1999 by and between Frontec AB and the Company (formerly known as Arctic, Inc.)); (b) 10,000,000 shares of Series A Convertible Preferred Stock (c) Purchase Warrants for the purchase of 7,005,495 shares of Series B Preferred Stock ("Series B Purchase Warrants") (d) 2,000 shares of Series C Preferred Stock, (e) 9,801,020 shares of Series D Convertible Preferred Stock, and (f) warrants to purchase an aggregate of 595,750 shares of Common Stock, and (ii) there are reserved for issuance (a) 10,000,000 shares of Common Stock to be issued upon conversion of the Series A Preferred Stock, (b) 7,005,495 shares of Series B Convertible Preferred Stock to be issued upon exercise of the Series B Purchase Warrants, (c) 7,005,495 shares of Common Stock to be issued upon conversion of the Series B Preferred Stock, (d) a sufficient number of shares of Common Stock to be issued upon conversion of the Series C Preferred Stock, and (e) 13,270,408 shares of Common Stock to be issued upon conversion of the Series D Preferred Stock. SECTION 4.5. BROKERS, FINDERS AND INVESTMENT BANKERS. Neither Viewlocity, Merger Sub, nor any of their officers, directors or employees has employed any broker, finder or investment banker or incurred any liability for any investment banking fees, financial advisory fees, brokerage fees or finders' fees in connection with the transactions contemplated herein. SECTION 4.6. VIEWLOCITY FINANCIAL STATEMENTS; CHANGES. Viewlocity has delivered to Nexstep and each of the Shareholders copies of Viewlocity's audited financial statements as of and for the fiscal years ended December 31, 1998 and December 31, 1997, and unaudited financial statements for the nine (9) months ended September 30, 1999 (the "Viewlocity Financial Statements"). Except as set forth in the Viewlocity Disclosure Schedule, the Viewlocity Financial Statements, which were prepared in accordance with generally accepted accounting principles consistently applied throughout the period indicated, are true, correct and complete and fairly present the financial position of Viewlocity at the dates thereof and the results of operations of Viewlocity for the periods covered thereby. Since September 30, 1999 and except as set forth in the Viewlocity Disclosure Schedule, (i) there has not been any materially adverse change in the assets, liabilities, business, operations, financial condition or operating results of Viewlocity from that reflected in the Financial Statements; (ii) neither the business, condition, operations or prospects of Viewlocity nor any of the properties or assets of Viewlocity have been materially adversely affected as the result of any legislative or regulatory change, any revocation or change in any franchise, permit, license or right to do business, or any other event or occurrence, whether or not insured against; and (iii) Viewlocity has not entered -15- into any material transaction other than in the ordinary course of business, made any dividend or distribution on its capital stock, or redeemed or repurchased any of its capital stock. SECTION 4.7. LEGAL PROCEEDINGS. There are no suits, actions, claims, proceedings or investigations pending or, to the knowledge of Viewlocity, threatened against, relating to or involving Viewlocity (or any of its officers or directors) before any court, arbitrator or administrative or governmental body, which, if finally determined adversely, are reasonably likely, individually or in the aggregate, to have a material adverse effect on the assets, liabilities, results of operations, financial condition, business or prospects of Viewlocity. SECTION 4.8. TRANSACTIONS WITH AFFILIATES. Except as set forth in the Viewlocity Disclosure Schedule, there are no loans, leases, royalty agreements or other continuing transactions between the Company and (a) any officer, employee or director of the Company, or (b) any Person owning 5% or more of any class of capital stock of Viewlocity, or (c) any member of the immediate family of such officer, employee, director or stockholder, or (d) any corporation or other entity controlled by such officer, employee, director or stockholder or a member of the immediate family of such officer, employee, director or stockholder. For purposes of this Agreement, "Person" shall mean an individual, corporation, partnership, joint venture, trust or unincorporated organization, or government or any agency or political subdivision thereof. SECTION 4.9. DISCLOSURE. Subject to the qualifications set forth herein with respect to the Private Placement Memorandum (hereinafter defined), no representation, warranty or covenant made by Viewlocity in this Agreement, the Viewlocity Disclosure Schedule or any Exhibit hereto contains any untrue statement of a material fact or omits to state a material fact required to be stated herein or therein or necessary to make the statements contained herein or therein not misleading. The Private Placement Memorandum dated November 1999 and attached as EXHIBIT 4.9 hereto (the "Private Placement Memorandum"), does not contain any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading. The financial projections contained in the Private Placement Memorandum ("Financial Projections") are based on Viewlocity's experience in the industry and on assumptions of fact and opinion as to future events which Viewlocity, at the date of delivery of the Private Placement Memorandum, believed to be reasonable, but which Viewlocity cannot and does not assure or guarantee the attainment of in any manner. Other than the Financial Projections and as otherwise set forth in this Agreement and the Viewlocity Disclosure Schedule, the statements made by Viewlocity in the Private Placement Memorandum were true as of the date of the Private Placement Memorandum and the Company has no present reason to believe that there exists any event, fact or condition which would materially alter the accuracy or truth of any statement made by Viewlocity in the Private Placement Memorandum. -16- ARTICLE 5. OTHER MATTERS SECTION 5.1. EMPLOYMENT AGREEMENTS. At the closing of the transactions contemplated by this Agreement (the "CLOSING"), employment agreements substantially in the form attached hereto as EXHIBIT 5.1 (the "EXECUTIVE EMPLOYMENT AGREEMENT") shall be executed and delivered by each Shareholder and by Michael Sherman. SECTION 5.2. STOCKHOLDER NON-COMPETITION AGREEMENTS. At the Closing, non-competition agreements substantially in the form attached hereto as EXHIBIT 5.2 (the "STOCKHOLDER NON-COMPETITION AGREEMENT") shall be executed and delivered by the Shareholders. SECTION 5.3. NON-DISCLOSURE AND NON-SOLICITATION AGREEMENTS. At the Closing, non-disclosure and non-solicitation agreements substantially in the form attached hereto as EXHIBIT 5.3 (the "RESTRICTIVE COVENANTS AGREEMENT") shall be executed and delivered by the Shareholders and the Retained Employees (as defined in Section 5.4). SECTION 5.4. TERMINATION OF NEXSTEP EMPLOYMENT AGREEMENTS. At the Closing, Viewlocity shall contribute an aggregate of $588,800 in cash to Merger Sub to be paid to the Retained Employees at Closing in connection with the termination, satisfaction and full release of (i) all employment agreements to which Nexstep is a party, and (ii) all agreements, promises, offers or other undertakings by Nexstep or any of its officers, directors or representatives to provide such Retained Employees options or other rights to purchase capital stock of Nexstep. SECTION 5.5. OPTION PLAN PARTICIPATION. As soon as practicable subsequent to the Closing, the board of directors of Viewlocity (the "Board") or other administrator under Viewlocity's stock option plans shall ratify a list mutually agreed to by the Stockholders and Viewlocity of the employees (excluding the Stockholders) of Nexstep ("Retained Employees") who shall be granted options to acquire in the aggregate 598,000 shares of Viewlocity Stock ("Employee Options"), all of such Employee Options to be issued under Viewlocity's current stock option plan. Upon ratification by the Board (or such other administrator), such options shall be exercisable over not longer than a ten (10) year period, shall have an exercise price not to exceed $0.74, and shall vest fifty percent (50%) effective as of the Closing Date and fifty percent (50%) in equal portions over the twenty-seven (27) month period following the Closing Date. SECTION 5.6. POST-CLOSING COVENANTS. 5.6.1. PREPARATION AND FILING OF TAX RETURNS. Viewlocity shall prepare or cause to be prepared and file or cause to be filed all tax returns for Nexstep for all periods ending on or prior to the day before the Closing Date, other than Nexstep's federal corporate income tax returns for periods ending on or prior to the day before the Closing Date. Shareholders shall prepare or cause to be prepared and shall file or cause to be filed all of federal corporate income tax returns required to be filed by Nexstep for periods ending on or prior to the day before the -17- Closing Date. Shareholders shall permit Viewlocity to review and comment on each such tax return described in the preceding sentence prior to filing. 5.6.2. ACCESS TO BOOKS AND RECORDS. Viewlocity and the Shareholders recognize that each of them will need access, from time to time, after the Closing Date, to certain accounting and tax records and information concerning Nexstep held by the Viewlocity and/or the Surviving Corporation to the extent the records and information pertain to events occurring on or prior to the Closing Date; therefore, Viewlocity agrees to cause the Surviving Corporation to (a) use its best efforts to properly retain and maintain those records for a period of six (6) years from the date the tax returns for the year in which the Closing occurs are filed or until the expiration of the statute of limitations that applies to the tax return in question (i.e., including tax returns for years preceding the year in which the Closing occurs and taking into account any extensions of the statute of limitations of which Viewlocity and/or the Surviving Corporation has been notified), whichever is later, (b) allow the Shareholders and their agents and representatives at times and dates mutually acceptable to the parties, to inspect, review and make copies of those records that the other party may deem necessary or appropriate from time to time, those activities to be conducted during normal business hours and at the other party's expense, and (c) to give the Shareholders reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the Shareholders so request, the Surviving Corporation shall allow the Shareholders to take possession of such books and records. 5.6.3. COVENANTS WITH RESPECT TO TAX-FREE REORGANIZATION. Following the Effective Time, Viewlocity and the Surviving Corporation covenant, to the extent necessary to preserve the treatment of the transaction as a tax-free reorganization under Code Section 368(a), that: (a) The Surviving Corporation will hold at least ninety (90) percent of the fair market value of the net assets and at least seventy (70) percent of the fair market value of the gross assets held by Nexstep immediately prior to the transaction. For purposes of this covenant, Nexstep assets used to pay reorganization expenses, and all redemptions and distributions (except for regular, normal dividends) made by Nexstep immediately preceding the transaction, will be included as assets of Nexstep held immediately prior to the transaction. (b) Neither Viewlocity, through redemption or otherwise, nor any party related to Viewlocity within the meaning of Treasury Regulation Section 1.368-1(e)(3), will reacquire any of Viewlocity's stock issued in the transaction. (c) Following the transaction, the Surviving Corporation will not issue additional shares of its stock that would result in Viewlocity losing control of the Surviving Corporation within the meaning of Code Section 368(c)(1). (d) Viewlocity will not liquidate the Surviving Corporation; merge the Surviving Corporation with or into another corporation; sell or otherwise dispose of the stock of the Surviving Corporation except transfer of stock to corporations controlled by Viewlocity; or -18- cause the Surviving Corporation to sell or otherwise dispose of any of the assets of Nexstep acquired in the transaction, except for dispositions made in the ordinary course of business or transfers of assets to a corporation controlled by the Surviving Corporation. (e) Following the transaction, the Surviving Corporation will continue the historic business of Nexstep or use a significant portion of Nexstep's business assets in a business in a manner that satisfies the continuity of business enterprise requirements set forth in Treasury Regulation Section 1.368-1(d). ARTICLE 6. CLOSING SECTION 6.1. CLOSING DATE. The Closing shall take place at the offices of Morris, Manning & Martin, L.L.P., 3343 Peachtree Road, N.E., 1600 Atlanta Financial Center, Atlanta, Georgia 30326, at 10:00 a.m., local time, on February 2, 2000, or at such other time or place or on such other date as the parties hereto may agree to in writing (the "CLOSING DATE"). The Closing shall be effective as of 12:01 a.m., local time, on the Closing Date. SECTION 6.2. DELIVERIES BY THE SHAREHOLDERS. At the Closing, the Shareholders shall deliver the following: (i) The Certificates representing the Nexstep Stock to Viewlocity, duly endorsed for transfer to Viewlocity with signatures notarized; (ii) A certificate executed by each Shareholder to the effect that each Shareholder's representations and warranties in this Agreement were accurate in all respects as of the date of this Agreement and are accurate in all respects as of the Closing Date as if made on the Closing Date. (iii) Executed counterparts of EXHIBIT 2.3; (iv) Executed counterparts of EXHIBIT 5.1; (v) Executed counterparts of EXHIBIT 5.2. SECTION 6.3. DELIVERIES BY VIEWLOCITY AND THE SURVIVING CORPORATION. At the Closing, Viewlocity and/or Merger Sub (as applicable) shall deliver the following: (i) The Cash Consideration in immediately available funds; (ii) Certificates representing the Closing Shares to the Shareholders and certificates representing the Escrowed Shares to the Escrow Agent, pursuant to Section 2.3; -19- (iii) Executed counterparts to EXHIBIT 2.3 (iv) Executed counterparts of EXHIBIT 5.1; (v) An executed Certificate of Merger to the Secretary of State of the State of Delaware; (vi) Certificates executed by duly authorized officers of Viewlocity and Merger Sub, respectively, to the effect that Viewlocity's and Merger Sub's representations and warranties in this Agreement were accurate in all respects as of the date of this Agreement and are accurate in all respects as of the Closing Date as if made on the Closing Date; SECTION 6.4. OTHER DELIVERIES. At the Closing, the following additional deliveries shall be made: (i) Nexstep shall execute and deliver a counterpart of the Certificate of Merger to the Secretary of State of the State of Delaware; (ii) Retained Employees shall execute and deliver executed counterparts of EXHIBIT 5.3 to Viewlocity and the Surviving Corporation; (iii) A certificate executed by a duly authorized officer of Nexstep to the effect that Nexstep's representations and warranties in this Agreement were accurate in all respects as of the date of this Agreement and are accurate in all respects as of the Closing Date as if made on the Closing Date shall be executed and delivered to Viewlocity and Merger Sub; (iv) Nexstep shall deliver to Viewlocity (a) a certificate, dated as of the Closing hereunder, signed by the Secretary of Nexstep and in form and substance satisfactory to Viewlocity, that shall certify (i) the names of its officers authorized to sign this Agreement, and the other documents, instruments or certificates to be delivered pursuant to this Agreement by Nexstep or any of its officers, together with true signatures of such officers; (ii) that the copy of the Certificate of Incorporation, as amended (including all amendments thereto) attached thereto is true, correct and complete; (iii) that the copy of the Bylaws attached thereto is true, correct and complete; (iv) that the copy of Board of Directors' resolutions attached thereto evidencing the approval of this Agreement and the other matters contemplated hereby were duly adopted and are in full force and effect; and (v) that the copy of stockholders' resolutions attached thereto evidencing approval of the transactions contemplated hereby were duly adopted and are in full force and effect; and (b) a copy of the Certificate of Incorporation of the Company, as amended, certified by the Secretary of State of the State of Delaware. (v) Counsel to Nexstep and the Shareholders shall deliver to Viewlocity an opinion letter substantially in the form attached hereto as EXHIBIT 6.4(v), addressed to Viewlocity, dated the date of Closing hereunder. -20- (vi) All employees of Nexstep shall deliver Agreements Terminating Employment Agreement in the form attached hereto as EXHIBIT 6.4(vi); (vii) Michael Sherman shall deliver an executed counterpart to EXHIBIT 5.1; (viii) An executed stock power (with signature notarized) from each Shareholder's spouse (as applicable) conveying to Viewlocity any and all right, title and interest in and to the Nexstep Stock; and (ix) Nexstep and the Shareholders shall deliver to Viewlocity such other documents and agreements as Viewlocity or its counsel may reasonably request, including but not limited to (i) assignments and/or terminations of any Material Agreements to which Nexstep is a party or under which Nexstep may have continuing obligations, and (ii) a UCC-3 duly executed and filed by Riviera Finance of Texas, Inc. ("Riviera") terminating and releasing any and all rights and claims to the assets of Nexstep. ARTICLE 7. INDEMNIFICATION SECTION 7.1. Definitions. For the purposes of this Article 7: (i) "VIEWLOCITY INDEMNITEES" shall mean Viewlocity, the Surviving Corporation, and their respective agents, representatives, employees, officers, directors, shareholders, controlling persons and affiliates (other than the Shareholders). (ii) "VIEWLOCITY INDEMNITORS" shall mean Viewlocity and the Surviving Corporation, jointly and severally. (iii) "VIEWLOCITY INDEMNITORS REPRESENTATIVE" shall mean Viewlocity. (iv) "INDEMNIFICATION CLAIM" shall mean a claim for indemnification hereunder. (v) "INDEMNITEE" or "INDEMNITEES" shall mean one or more, as the case may be, of the Viewlocity Indemnitees and the Nexstep Indemnitee, as the context requires. (vi) "INDEMNITOR" or "INDEMNITORS" shall mean one or more, as the case may be, of the Viewlocity Indemnitors and the Nexstep Indemnitor, as the context requires. (vii) "LOSSES" shall mean any and all demands, claims, actions or causes of action, assessments, losses, damages (including special and consequential damages), liabilities, costs and expenses, including interest, penalties, cost of investigation and defense, and reasonable attorneys' and other professional fees and expenses. -21- (viii) "NEXSTEP INDEMNITEES" shall mean the Shareholders. (ix) "NEXSTEP INDEMNITORS" shall mean the Shareholders. (x) "THIRD PARTY CLAIM" shall mean any claim, suit or proceeding (including a binding arbitration or an audit by any taxing authority) that is instituted against an Indemnitee by a person or entity other than an Indemnitor and which, if prosecuted successfully, would result in a Loss for which such Indemnitee is entitled to indemnification hereunder. SECTION 7.2. AGREEMENT OF NEXSTEP INDEMNITOR TO INDEMNIFY. Subject to the terms and conditions of this Article 7, the Nexstep Indemnitors, jointly and severally, agree to indemnify, defend and hold harmless the Viewlocity Indemnitees, and each of them, from, against, for and in respect of any and all Losses asserted against, or paid, suffered or incurred by, a Viewlocity Indemnitee and resulting from, based upon or arising out of: (i) the inaccuracy or untruth of any representation or warranty of Nexstep or the Nexstep Indemnitors contained in or made pursuant to this Agreement or the Nexstep Disclosure Schedule or in or made pursuant to any exhibit furnished by Nexstep or the Nexstep Indemnitors in connection herewith regardless of whether the same was deliberate, reckless, negligent, innocent or unintentional; or (ii) a breach of or failure to perform any covenant, undertaking, condition or agreement of Nexstep or the Nexstep Indemnitors made in this Agreement, or any other agreement executed and delivered pursuant to this Agreement, regardless of whether the same was deliberate, reckless, negligent, innocent or unintentional; PROVIDED, HOWEVER, that any obligation or liability of the Nexstep Indemnitors to indemnify the Viewlocity Indemnitees which arises solely under this Section 7.2(ii) shall be several and not joint. SECTION 7.3. AGREEMENT OF VIEWLOCITY INDEMNITORS TO INDEMNIFY. Subject to the terms and conditions of this Article 7, the Viewlocity Indemnitors, jointly and severally, agree to indemnify, defend and hold harmless the Nexstep Indemnitees from, against, for and in respect of any and all Losses asserted against, or paid, suffered or incurred by, the Nexstep Indemnitees and resulting from, based upon, arising out of or in connection with: (i) the inaccuracy or untruth of any representation or warranty of any Viewlocity Indemnitor, contained in or made pursuant to this Agreement or the Viewlocity Disclosure Schedule or in or made pursuant to any exhibit furnished by the Viewlocity Indemnitors, or either of them, in connection herewith regardless of whether the same was deliberate, reckless, negligent, innocent or unintentional; or (ii) a breach of or failure to perform any covenant, undertaking, condition or agreement of the Viewlocity Indemnitors, or either of them, made in this Agreement or any other agreement executed and delivered pursuant to this Agreement regardless of whether the same was deliberate, reckless, negligent, innocent or unintentional. -22- SECTION 7.4. PROCEDURES FOR INDEMNIFICATION. The obligations and liabilities of the parties with respect to an Indemnification Claim shall be subject to the following terms and conditions: (i) An Indemnification Claim shall be made by a Viewlocity Indemnitee by delivery of a written notice to the Nexstep Indemnitors requesting indemnification from the Nexstep Indemnitors and specifying the basis on which indemnification is sought and the amount of asserted Losses and, in the case of a Third Party Claim, containing (by attachment or otherwise) such other information as such Indemnitee shall have concerning such Third Party Claim. (ii) An Indemnification Claim shall be made by the Nexstep Indemnitees by delivery of a written notice to the Viewlocity Indemnitors Representative requesting indemnification and specifying the basis on which indemnification is sought and the amount of asserted Losses and, in the case of a Third Party Claim, containing (by attachment or otherwise) such other information as such Indemnitee shall have concerning such Third Party Claim. (iii) If the Indemnification Claim involves a Third Party Claim, the procedures set forth in Section 7.5 hereof shall also be observed by the Indemnitee and the Indemnitor or Viewlocity Indemnitors Representative, as applicable. (iv) If the Indemnification Claim involves a matter other than a Third Party Claim, the Indemnitor or Viewlocity Indemnitors Representative, as applicable, shall have thirty (30) days after receipt by the Indemnitor or the Viewlocity Indemnitors Representative of written notice of the Indemnification Claim to object to such Indemnification Claim by delivery of a written notice of such objection to such Indemnitee specifying in reasonable detail the basis for such objection (a "Counter Notice"). Failure to object timely shall constitute a final and binding acceptance of the Indemnification Claim by the Indemnitor or Viewlocity Indemnitors Representative on behalf of all the subject Indemnitor(s), and the Indemnification Claim shall be paid in accordance with subsection (v) hereof. In the case of an Indemnification Claim with respect to which a Counter Notice is timely delivered, the Indemnitor and the Viewlocity Indemnitors Representative shall use good faith efforts such dispute amicably over a fifteen (15) day period following receipt of the Counter Notice. If the dispute cannot be amicably resolved during such fifteen (15) day period, then either party may initiate arbitration of such dispute, which arbitration shall be handled in accordance with Section 7.12 below. (v) Upon determination of the amount of an Indemnification Claim, whether by agreement between the Indemnitor or Viewlocity Indemnitors Representative, as applicable, and the Indemnitee, or as determined by an arbitrator pursuant to Section 7.12 hereof, the Indemnitor(s) shall pay the amount of such Indemnification Claim within ten (10) days of the date such amount is determined. -23- SECTION 7.5. THIRD PARTY CLAIMS. The obligations and liabilities of the parties hereunder with respect to a Third Party Claim shall be subject to the following terms and conditions: (i) The Indemnitee shall give the applicable Indemnitor or Viewlocity Indemnitors Representative written notice of a Third Party Claim promptly after receipt by the Indemnitee of notice thereof, and the Indemnitor or Viewlocity Indemnitors Representative, as applicable, on behalf of the Indemnitor(s), may undertake the defense, compromise and settlement thereof by representatives of its own choosing reasonably acceptable to the Indemnitee. The failure of the Indemnitee to notify the Indemnitor or Viewlocity Indemnitors Representative, as applicable, of such claim shall not relieve the Indemnitor(s) of any liability that they may have with respect to such claim except to the extent the Indemnitor(s) demonstrates that the defense of such claim is prejudiced by such failure. The assumption of the defense, compromise and settlement of any such Third Party Claim by the Indemnitor or Viewlocity Indemnitors Representative, as applicable, shall be an acknowledgment of the obligation of the Indemnitor(s) to indemnify the Indemnitee with respect to such claim hereunder. If the Indemnitee desires to participate in, but not control, any such defense, compromise and settlement, it may do so at its sole cost and expense. If, however, the Indemnitor or Viewlocity Indemnitors Representative, as applicable, fails or refuses to undertake the defense of such Third Party Claim within ten (10) days after written notice of such claim has been given to such Indemnitor or Viewlocity Indemnitors Representative by the Indemnitee, the Indemnitee shall have the right to undertake the defense, compromise and settlement of such claim with counsel of its own choosing. In the circumstances described in the immediately preceding sentence, the Indemnitee shall, promptly upon its assumption of the defense of such claim, make an Indemnification Claim as specified in Section 7.4, which shall be deemed an Indemnification Claim that is not a Third Party Claim for the purposes of the procedures set forth herein. (ii) If, in the reasonable opinion of the Indemnitee, any Third Party Claim or the litigation or resolution thereof involves an issue or matter which could have a material adverse effect on the business, operations, assets, properties, financial condition or prospects of the Indemnitee (including the administration of the tax returns and responsibilities under tax laws applicable to the Indemnitee), the Indemnitee shall, subject to paragraph (iii) below, have the right to control the defense, compromise and settlement of such Third Party Claim undertaken by the Indemnitor or Viewlocity Indemnitors Representative, as applicable, and the reasonable costs and expenses of the Indemnitee in connection therewith shall be included as part of the indemnification obligations of the Indemnitor(s) hereunder. If the Indemnitee shall elect to exercise such right, the Indemnitor or Viewlocity Indemnitors Representative, as applicable, shall have the right to participate in, but not control, the defense, compromise and settlement of such Third Party Claim at its sole cost and expense. (iii) No settlement of a Third Party Claim involving the asserted liability of the Indemnitor(s) under this Article 7 shall be made without the prior written consent by or on behalf -24- of the Indemnitor or Viewlocity Indemnitors Representative, as applicable, which consent shall not be unreasonably withheld or delayed. Consent shall be presumed in the case of settlements of $2,500 or less where the Indemnitor or Viewlocity Indemnitors Representative, as, applicable, has not responded within five (5) business days of notice of a proposed settlement. If the Indemnitor or the Viewlocity Indemnitors Representative assumes the defense of such a Third Party Claim, (A) no compromise or settlement thereof may be effected by the Indemnitor or Viewlocity Indemnitors Representative without the Indemnitee's consent unless (i) there is no finding or admission of any violation of law or any violation of the rights of any person and no effect on any other claim that may be made against the Indemnitee, (ii) the sole relief provided is monetary damages that are paid in full by the Indemnitor(s), and (iii) the compromise or settlement includes, as an unconditional term thereof, the giving by the claimant or the plaintiff to the Indemnitee of a release, in form and substance satisfactory to the Indemnitee, from all liability in respect of such Third Party Claim, and (B) the Indemnitee shall have no liability with respect to any compromise or settlement thereof effected without its consent. (iv) In connection with the defense, compromise or settlement of any Third Party Claim, the parties to this Agreement shall execute such powers of attorney as may reasonably be necessary or appropriate to permit participation of counsel selected by any party hereto and, as may reasonably be related to any such claim or action, shall provide access to the counsel, accountants and other representatives of each party during normal business hours to all properties, personnel, books, tax records, contracts, commitments and all other business records of such other party and will furnish to such other party copies of all such documents as may reasonably be requested (certified, if requested). SECTION 7.6. OTHER RIGHTS AND REMEDIES NOT AFFECTED; EXCEPTION. The rights of the Indemnitees under this Article 7 are independent of and in addition to such rights and remedies as the Indemnitees may have at law or in equity or otherwise for any misrepresentation, breach of warranty or the failure to fulfill any agreement or covenant hereunder on the part of any Indemnitor, including the right to seek specific performance, rescission or restitution, none of which rights or remedies shall be affected or diminished hereby; PROVIDED, HOWEVER, that in any event, recovery from an Indemnitor shall be subject to the limitations set forth in Sections 7.8 and 7.9. SECTION 7.7. SURVIVAL. Subject to Section 7.8 hereof, all representations, warranties and agreements contained in this Agreement or in any certificate, schedule or exhibit attached to this Agreement, in each case as supplemented or amended by the respective Indemnitors' Disclosure Schedule, shall survive the Closing notwithstanding any investigation conducted with respect thereto or any knowledge acquired as to the accuracy or inaccuracy of any such representation or warranty (but, with respect to the representations and warranties, only as of the date of the Closing). -25- SECTION 7.8. TIME LIMITATIONS. 7.8.1. The Nexstep Indemnitors shall have no liability under Section 7.2, unless on or before the second anniversary of the Closing Date the Nexstep Indemnitor is given notice asserting an Indemnification Claim with respect thereto; PROVIDED, HOWEVER, that an Indemnification Claim based upon a breach of the representations and warranties of the Nexstep Indemnitors contained in (i) Sections 3.1, 3.2, 3.3, 3.4 and 3.15.1 may be made at any time except as limited by law, (ii) Section 3.11 may be made at any time prior to the expiration of the applicable statute of limitations relative to the liability relating thereto, and (iii) Article 3A may be made at any time prior to the third anniversary of the Closing Date. 7.8.2. The Viewlocity Indemnitors shall have no liability under Section 7.3, unless on or before the second anniversary of the Closing Date the Viewlocity Indemnitors are given notice asserting an Indemnification claim with respect thereto; PROVIDED, HOWEVER, that an Indemnification Claim based upon a breach of the representations and warranties of the Viewlocity Indemnitors contained in Sections 4.1, 4.2, 4.3 and 4.4 or a breach of the covenants set forth in Sections 2.5 and 5.6 may be made at any time except as limited by law. SECTION 7.9. LIMITATIONS AS TO AMOUNT PAYABLE BY THE NEXSTEP INDEMNITORS. The Nexstep Indemnitors shall have no liability with respect to the matters described in Section 7.2 until the total of all Losses with respect thereto exceeds $50,000.00, in which event the Nexstep Indemnitors shall be obligated to indemnify the Viewlocity Indemnitees for any amounts in excess of $50,000, subject to the terms and conditions of this Article 7, including, but not limited to, the limitation of liability set forth in this Section 7.9; PROVIDED, HOWEVER, that the obligation of the Nexstep Indemnitors to indemnify and hold harmless the Viewlocity Indemnitees shall be limited to the Merger Consideration actually received; PROVIDED FURTHER, that the limitations set forth in this Section 7.9 shall not apply to Losses related to (i) any taxes owed by Nexstep or the Shareholders for any period of time prior to the Closing Date; (ii) any intentional misrepresentation or intentional breach of warranty of the Nexstep Indemnitors or (iii) any intentional failure to perform or comply with any covenant or agreement of the Nexstep Indemnitors under this Agreement or any other agreement entered into in connection herewith, and the Nexstep Indemnitors shall be liable for all Losses with respect to those exceptions set forth in items (i), (ii) and (iii) of this Section 7.9; PROVIDED FURTHER, HOWEVER, that if a Nexstep Indemnitor intentionally fails to perform such a covenant or agreement, only the breaching Nexstep Indemnitor shall be liable for any resulting indemnifiable Losses. SECTION 7.10. LIMITATIONS AS TO AMOUNT PAYABLE BY VIEWLOCITY INDEMNITORS. The Viewlocity Indemnitors shall have no liability with respect to the matters described in Section 7.3 until the total of all Losses with respect thereto exceeds $50,000.00, in which event the Viewlocity Indemnitors shall be obligated to indemnify the Nexstep Indemnitees for any amounts in excess of $50,000, subject to the terms and conditions of this Article 7; PROVIDED, HOWEVER, the obligation of the Viewlocity Indemnitors to indemnify and hold harmless the -26- Nexstep Indemnitees shall be limited, in the aggregate, to an amount equal to the value at the Effective Time of the Merger Consideration; PROVIDED, FURTHER, that the limitations set forth in this Section 7.10 shall not apply to Losses related to any intentional misrepresentation or breach of warranty of the Viewlocity Indemnitors or any intentional failure to perform or comply with any covenant or agreement of the Viewlocity Indemnitors, and the Viewlocity Indemnitors shall be liable for all Losses with respect thereto. SECTION 7.11. PAYMENT. In the event that the Indemnitor(s) are required to make any payment under this Article 7, the Indemnitor(s) shall promptly pay the Indemnitee the amount so determined. SECTION 7.12. BINDING ARBITRATION/ATTORNEY FEES. Except as otherwise provided in this Agreement, disputes arising under this Article 7 shall be submitted to and settled by arbitration. Arbitration shall be by one (1) arbitrator selected in accordance with the rules of the American Arbitration Association ("AAA"). The hearing before the arbitrator shall be held in Atlanta, Georgia and shall be conducted in accordance with the rules of the AAA existing at the date thereof to the extent not inconsistent with this Agreement. The decision of the arbitrator shall be final and binding as to any matters submitted to the arbitrator under this Article 7. All costs and expense incurred in connection with any such arbitration proceeding and those incurred in any civil action to enforce the same shall be borne by the party against which the decision is rendered. ARTICLE 8. MISCELLANEOUS PROVISIONS SECTION 8.1. NOTICES. All notices and other communications under this Agreement shall be in writing and may be given by any of the following methods: (i) personal delivery; (ii) facsimile transmission; (iii) registered or certified mail, postage prepaid, return receipt requested; or (iv) overnight delivery service requiring acknowledgment of receipt. Any such notice or communication shall be sent to the appropriate party at its address or facsimile number given below (or at such other address or facsimile number for such party as shall be specified by notice given hereunder): To Viewlocity, Merger Sub or the Surviving Corporation: Viewlocity, Inc. 400 Perimeter Center Terrace Suite 320 Atlanta, Georgia 30346 Telecopy No.: (770) 512-8902 Attn: Stan F. Stoudenmire -27- with a copy to: Morris, Manning & Martin, L.L.P. 3343 Peachtree Road, N.E. 1600 Atlanta Financial Center Atlanta, Georgia 30326 Telecopy No.: (404) 365-9532 Attn: John C. Yates, Esq. To the Shareholders: Mr. L. Michael Handley 8812 Pocono Drive Plano, Texas 75025 (972) 390-1071 Mr. Mohamed Y. Amer 28322 Nicholas Circle Saugus, California 91350 (661) 297-8581 with a copy to: Davis Wright Tremaine, LLP 1501 Fourth Avenue, Suite 2600 Seattle, Washington 98101 Telecopy No. (206) 628-7699 Attn: Eric A. DeJong, Esq. All such notices and communications shall be deemed received upon (i) actual receipt thereof by the addressee, (ii) actual delivery thereof to the appropriate address as evidenced by an acknowledged receipt, or (iii) in the case of a facsimile transmission, upon transmission thereof by the sender and confirmation of receipt. SECTION 8.2. DISCLOSURE SCHEDULE AND EXHIBITS. The Nexstep Disclosure Schedule and the Viewlocity Disclosure Schedule and all Exhibits hereto are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full in this Agreement. SECTION 8.3. ASSIGNMENT; SUCCESSORS IN INTEREST. No assignment or transfer by Viewlocity, Merger Sub, Nexstep or Shareholders of their respective rights and obligations hereunder shall be made except with the prior written consent of the other parties hereto. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their permitted successors and assigns, and any reference to a party hereto shall also be a reference to a permitted successor or assign. -28- SECTION 8.4. CAPTIONS. The titles, captions and table of contents contained in this Agreement are inserted herein only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof. SECTION 8.5. CONTROLLING LAW; JURISDICTION; INTEGRATION; AMENDMENT. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Georgia without reference to its choice of law rules. This Agreement and the documents executed pursuant hereto supersede all negotiations, agreements and understandings among the parties with respect to the subject matter hereof and constitutes the entire agreement among the parties hereto, this Agreement may not be amended, modified or supplemented except by written agreement of the parties hereto. SECTION 8.6. CONSENT TO JURISDICTION. Each party hereto agrees to the exclusive jurisdiction of any court of competent jurisdiction within a fifty (50) mile radius of the United States District Court for the Northern District of Georgia, Atlanta Division, with respect to any claim or cause of action, whether in law or equity, including specific performance, arising under or relating to this Agreement, and waives personal service of any and all process upon it, and consents that all services of process may be made by certified or registered mail, postage pre-paid and return receipt requested, to the address of the parties set forth in Section 8.1 hereof. Each party hereto waives any objection based on forum nonconveniens and waives any objection to venue of any action instituted hereunder. Each party hereto waives trial by jury in any action brought hereunder. Each party hereto agrees that a final judgment in any such action shall be conclusive and may be enforced in any other jurisdiction by suit on a judgment or in any other manner provided by law. Nothing in this Section 8.6 shall affect the right of any party hereto to serve legal process in any other manner permitted by law. To the extent that any party hereto has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process with respect to itself or its property, such party hereby waives (to the fullest extent permitted by applicable law) such immunity in respect of its obligations hereunder. SECTION 8.7. KNOWLEDGE. As used in this Agreement, the terms "THE KNOWLEDGE OF NEXSTEP," "THE KNOWLEDGE OF THE SHAREHOLDER," "KNOWN TO NEXSTEP," "KNOWN TO THE SHAREHOLDER" or words of similar import used herein with respect to Nexstep or the Shareholder shall mean the actual knowledge of each of the officers of Nexstep (in the case of Nexstep) and the actual knowledge of each Shareholder (in the case of the Shareholders), in each case, together with the knowledge a reasonable business person would have obtained after making reasonable inquiry and after exercising reasonable diligence with respect to the matters at hand. SECTION 8.8. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction. -29- SECTION 8.9. WAIVER. At any time prior to the Effective Time, the parties hereto, by or pursuant to action taken by their respective Boards of Directors in the case of Viewlocity, Merger Sub and Nexstep, may, to the extent legally permitted: (i) extend the time for the performance of any of the obligations or other acts of any other party; (ii) waive any inaccuracies in the representations or warranties of any other party contained in this Agreement or in any document or certificate delivered pursuant hereto; (iii) waive compliance or performance by any other party with any of the covenants, agreements or obligations of such party contained herein; and (iv) waive the satisfaction of any condition that is precedent to the performance by the party so waiving of any of its obligations hereunder. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. A waiver by one party of the performance of any covenant, agreement, obligation, condition, representation or warranty shall not be construed as a waiver of any other covenant, agreement, obligation, condition, representation or warranty. SECTION 8.10. FEES AND EXPENSES. Each party hereto shall pay its own fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including the fees, costs and expenses of its financial advisors, accountants and counsel. SECTION 8.11. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -30- [SIGNATURE PAGE FOR THE AGREEMENT AND PLAN OF MERGER] IN WITNESS WHEREOF, the Shareholders have duly executed and delivered this Agreement, and Viewlocity, Merger Sub and Nexstep each have caused this Agreement to be duly executed under seal and delivered on its behalf by an officer or representative thereto duly authorized, all as of the date first above written. VIEWLOCITY, INC. By: /s/ Gregory Cronin ----------------------- Its: President -- CEO ----------------------- [CORPORATE SEAL] NXSTP ACQUISITION CORP. By: /s/ Stan F. Stoudenmire --------------------------- Its: President --------------------------- [CORPORATE SEAL] NEXSTEP INC. By: /s/ L. Michael Handley --------------------------- Its: Chairman --------------------------- [CORPORATE SEAL] -31- SHAREHOLDERS: /s/ L. Michael Handley (SEAL) ----------------------- L. Michael Handley /s/ Mohamed Y. Amer (SEAL) ----------------------- Mohamed Y. Amer -32- EX-2.2 3 ex-2_2.txt EXHIBIT 2.2 Exhibit 2.2 DATED THIS 19TH DAY OF MAY 2000 Between VIEWLOCITY And SALEM BIN MOHAMMAD IBRAHIM And TEO KENG LENG And ROBERT BEN ROQUE TRINDADE MENEZES DE SOUZA AND SC21 PTE LTD ******************************************************************************** ACQUISITION OF SHARES AGREEMENT ******************************************************************************** ACQUISITION OF SHARES AGREEMENT THIS AGREEMENT is made on May 19, 2000 BETWEEN: 1. VIEWLOCITY, INC. of 3475 Piedmont Road, Suite 1700, Atlanta, GA30305 USA (the "Purchaser"); 2. SALEM BIN MOHAMED IBRAHIM (NRIC No. S0175213H) of 28 Lynwood Grove Singapore 358668 ("SI"); 3. TEO KENG LENG (NRIC No. S1301532E) of 47 Li Hwan Close Singapore 557170 ("TKL"); 4. ROBERT BEN ROQUE TRINDADE MENEZES DE SOUZA (NRIC No. S2610631A) of 33 Hume Avenue #07-11 Singapore 598734 ("RDS"); 5. SC21 OPTIONS PTE LTD (Company Registration No. 199906239Z) of 79 Robinson Road #16-06 CPF Building Singapore 068897 ("SOPL") (SI, TKL, RDS and SOPL collectively, the "Vendors"); and 6. SC21 PTE LTD (Company Registration No. 199805598H) of 79 Robinson Road #16-06 CPF Building Singapore 068897 ("SC21"). RECITALS (1) SC21 has been incorporated in Singapore to operate the business of commercialising supply-chain management software and multimedia works that will optimise inventory management, provide material visibility and improve overall operation efficiency across supply webs. (2) SC21 has an authorised and paid up capital, and all the Vendors' shares are as listed in the Schedule 1 attached hereto. (3) SC21 is the proprietor and beneficial owner of the intellectual properties, particulars of which are set out in Schedule 2. (4) The Vendors and the Purchaser have executed a Letter of Intent dated _______________ whereby the Purchaser has agreed to buy the Sale Shares and the intellectual property rights of SC21 subject to the results of the legal and financial due diligence audit being satisfactory to the Purchaser and subject to the terms and conditions of a definitve agreement. 1 (5) At the said consideration to be paid by the Purchaser as hereinbefore described, and subject to the terms and conditions mentioned herein, the Vendors have agreed to sell, dispose or to convey to the Purchaser all the Sale Shares and all the intellectual property rights of SC21. NOW IT IS AGREED as follows: 1. DEFINITIONS 1.1 In this Agreement, unless the context otherwise requires, the following words or expressions shall have the following meanings:- "Accounts" means the Audited Accounts and the management accounts; "Audited Accounts" means the respective audited accounts of the SC21 for the financial year ended 31 December 1999; "Balance Sheet Date" means the date as reflected under the balance sheet of the Accounts; "Business" means the business being operated by the SC21 as described in Recital (1) above; "Completion Date" means a date falling no later than seven (7) days after the date of this Agreement, or such other date as the parties hereto may otherwise agree in writing; "Confidential Information" means all and any special and exclusive information on operational, technical knowhow, secret processes or systems which are used only by the SC21 in the conduct of its Business and any further development of those same technical knowhow, secret processes or systems; "Disclosure Letter" means the letter as of the date of this Agreement from the Vendors to the Purchaser disclosing:- (a) information constituting exceptions to the warranties hereinafter contained; and (b) particulars of other matters hereinafter referred to; "Dollars" and the sign "$" means the lawful currency of the United States of America; "Know-How" means all the intellectual property rights in the software, operational methods, systems and other like items (including but not limited to all source codes thereof) relating to the Business more particularly set out in Schedule 2; "Letter of Intent" means the letter of intent dated _________________ 2000 signed by the Vendors and the Purchaser; "MAXIMS Software" means the software and intellectual property rights transferred by Nanyang Technological University to SC21 pursuant to letter agreement dated 25 November 1998 between the said parties; 2 "Related Company" means at any time, SC21 and/or (a) any corporation which is the holding company of SC21 or the subsidiary of such holding company; (b) the subsidiary of SC21 and (c) their respective subsidiaries; "Sale Shares" means the aggregate of the 100,000 issued and fully paid-up ordinary shares of S$1.00 each in SC21 which are held by the Vendors as set out in Schedule 1; "Service Agreement" means the service agreement to be entered into between RDS and SC21 in the form set out under Schedule 7 hereof including any supplemental written agreement, variations or amendments thereto, the contents of which have been expressly agreed between RDS and the Purchaser prior to the execution of this Agreement; "TAF" means Target Airfreight (Asia) Pte Ltd, a company duly incorporated in Singapore. "TAF Business" means the provision by TAF of physical logistics services as well as the hosting of software applications related to inventory visibility, track and trace, and warehouse management systems. TAF Business is not and shall not at any time include the development, licensing, sale or resale to third parties of software applications or supply chain solutions similar to or incorporating any function of (i) SC21 4 PLWeb, SC21 TrackWeb, or SC21 BackWeb as described on Schedule 2 hereof, or (ii) future product offerings of SC21, or (iii) present or future product offerings of the Purchaser. "Taxation" means all forms of taxation whether of Singapore or elsewhere in the world, past, present and future (including, without limitation, capital gains tax, income tax, estate duty, stamp duty, goods and services tax, customs and other import or export duties) and all other statutory, governmental or state impositions, duties and levies and all penalties, charges, costs and interest relating thereto; "Terminated for Cause" means to be terminated from the employment under the Service Agreement pursuant to clause 7.2 thereof; "Voluntarily Cease Employment" means to resign or cease employment under the Service Agreement purely by choice or own volition and not by reason of mental or physical incapacity or death. "Voluntarily Resign" means to resign or cease to be a director purely by choice or own volition and not for any other reason including but not limited to legal, mental or physical incapacity or death. The sign "S$" means the lawful currency of Singapore. 1.2 Any reference to a statutory provision shall include such provision and any regulations made in pursuance thereof as from time to time modified or re-enacted whether before or after the date of this Agreement so far as such modification or re-enactment applies or is capable of applying to any transactions entered into prior to completion and (so far as liability thereunder may exist or can arise) shall include also any past statutory provisions or regulations (as from time to time modified or re-enacted) which such provisions or regulations have directly or indirectly replaced; 1.3 References to Recitals, Clauses or Schedules are to recitals, clauses and schedules of this Agreement; 3 1.4 Any reference to "completion" shall mean completion of the sale and purchase of the Sale Shares under this Agreement; and 1.5 The headings are for convenience only and shall not affect the interpretation hereof. 2. CONDITIONS PRECEDENT 2.1 The obligations of the Purchaser under this Agreement are conditional upon:- i. all approvals, consents and licences (whether governmental, corporate or otherwise) for the transactions described or contemplated herein having been obtained and not having been revoked or amended and, where such approval is subject to conditions, such conditions being acceptable to the Purchaser and, to the extent that any such conditions are required to be fulfilled on or before completion, they are so fulfilled; ii. the Purchaser being satisfied with the results of the due diligence exercise (legal, financial or otherwise) on SC21, in particular, on the Know-How, as advised by legal counsel, accountants or other professional advisers appointed by the Purchaser; iii. RDS executing the Service Agreement. 2.2 If any of such conditions are not fulfilled on or before completion and such non-fulfilment is not waived by the party requiring fulfilment of the condition precedent, this Agreement shall ipso facto cease and determine and one party shall not have any claim against the other for costs, damages, compensation or otherwise. The Vendors hereby jointly and severally undertake to use their best endeavours to ensure the satisfaction of all the conditions above set out in Clause 2.1. 3. CONSIDERATION 3.1 Subject to the terms and conditions contained in this Agreement, the Purchaser shall purchase and the Vendors shall sell all that are itemised and described in and under Clause 4 at a consideration the particulars of which are set out in Clause 5. 4. THE SALE ITEMS 4.1 The description of the items sold to the Purchaser by the Vendors are : (1) The legal and beneficial interests in the Sale Shares belonging to the Vendors in the SC21 as described in SCHEDULE 1 herein. (2) The full rights, title, interest, benefit and goodwill attaching to the brand name of SC21 and the Know-How more particularly set out in Schedue 2 hereto and all modifications, variations, and derivations thereof which vest or which may otherwise accrue to SC21. 5. PURCHASE PRICE AND METHOD OF PAYMENT 4 5.1 The consideration shall be paid by the Vendors in the following manner: (1) Upon completion on the Completion Date and subject to the due compliance with the terms and conditions herein:- (a) the Purchaser shall pay an aggregate of $1,000,000.00 by individual bank drafts in favour of the Vendors in the following proportions: SI : $333,334.00 RDS : $333,333.00 TKL : $333,333.00 (b) the Purchaser shall issue without requiring payment from the Vendors an aggregate of 750,000 common shares of par value $0.01 each in the share capital of the Purchaser in favour of the Vendors in the following proportions:- SI : 250,000 RDS : 250,000 TKL : 250,000 (2) On 31 December 2000 (the "Second Completion Date") and subject to the due compliance with the terms and conditions herein, the Purchaser shall pay an aggregate of $2,000,000 by individual bank drafts in favour of the Vendors in the following proportions: SI : $666,668.00 RDS : $666,666.00 TKL : $666,666.00 (3) On the Second Completion Date, the Purchaser shall additionally:- (a) pay an aggregate of $1,000,000.00 by individual bank drafts in favour of the Vendors in the proportions set out in Clause 5.1(1)(a) above; and (b) the Purchaser shall issue without requiring payment from the Vendors an aggregate of 225,000 common shares of par value $0.01 each in the share capital of the Purchaser in favour of the Vendors in the following proportions:- SI : 75,000 RDS : 75,000 TKL : 75,000 5 PROVIDED always that if RDS shall Voluntarily Cease Employment, or TKL or SI shall Voluntarily Resign as director of SC21, as the case may be, for the period commencing on the date hereof up to and including the Second Completion Date, then that person solely shall absolutely and irrevocably cease to be entitled to their portion of the said payment/common shares, and PROVIDED FURTHER that if RDS shall be Terminated for Cause during the period commencing on the date hereof up to and including the Second Completion Date, then his entitlement to his portion of the said payment/common shares shall be reduced proportionately having regard to the actual period of service rendered by him prior to such termination. (4) On 31 December 2001 (the "Third Completion Date"), the Purchaser shall:- (a) pay an aggregate of $1,000,000.00 by individual bank drafts in favour of the Vendors in the proportions set out in Clause 5.1(3)(a) above; and (b) the Purchaser shall issue without requiring payment from the Vendors an aggregate of 225,000 common shares of par value $0.01 each in the share capital of the Purchaser in favour of the Vendors in the proportions set out in Clause 5.1(3)(b) above. PROVIDED always that if RDS shall Voluntarily Cease Employment, or TKL or SI shall Voluntarily Resign as director of SC21, as the case may be, for the period commencing on the date hereof and up to and including the Third Completion Date, then that person solely shall absolutely and irrevocably cease to be entitled to their portion of the said payment/common shares, and PROVIDED FURTHER that if RDS shall be Terminated for Cause during the period commencing on the date hereof up to and including the Third Completion Date, then his entitlement to his portion of the said payment/common shares shall be reduced proportionately having regard to the actual period of service rendered by him prior to such termination. 5.2 In consideration of the Purchaser agreeing at the request of SOPL to acquire the Sale Shares, SOPL hereby agrees, confirms and acknowledges that the consideration payable by the Purchaser to SOPL for the transfer of SOPL's portion of the Sale Shares (as detailed in Schedule 1) to the Purchaser under this Agreement shall be fully and adequately satisfied by and upon the completion of the acquisition of the Sale Shares by the Purchaser in accordance with the terms and conditions of this Agreement, and that such completion of the acquisition of the Sale Shares shall discharge the Purchaser from all and any further liability in respect of the payment of any consideration to SOPL under this Agreement and that SOPL hereby absolutely and irrevocably waives all rights to the whole or any part of the consideration payable by the Purchaser under Clause 5.1. 6. COVENANTS UP TO COMPLETION 6 BY THE VENDORS 6.1 The Vendors hereby jointly and severally covenant and undertake to the Purchaser that prior to completion and without the prior written consent of the Purchaser:- i. there shall be no extraordinary withdrawal of cash, deposits or any other form of current assets from SC21; ii. there shall be no removal or disposal of any of the fixed assets of SC21 without the consent of the Purchaser; iii. SC21 shall not incur any expenditure on capital account or enter into any commitments to do so other than in the course of running their day to day business; iv. SC21 shall not borrow any money or make any payments out of or drawings on its bank account(s) other than for the purposes set out in Clause 6.1(i) above or for routine payments and in the normal course of business; v. SC21 shall not enter into any unusual contract or commitment or (a) grant or agree to grant any lease or third party right in respect of any of their properties or assets or assign or agree to assign or otherwise dispose of the same, (b) make any loan, or (c) enter into any leasing hire purchase or other agreement or arrangements for payment on deferred terms; vi. SC21 shall not declare make or pay any dividend or other distribution or do or suffer anything which may render its financial position less favourable than as at the date of this Agreement; vii. SC21 shall not grant or issue or agree to grant or issue any mortgages charges debentures or other securities or give or agree to give any guarantees or indemnities save and except by agreement with the Purchaser, such agreement shall not be unreasonably withheld; viii. there shall be no change in the terms and conditions of employment or pension benefits of any of SC 21 directors or employees and SC21 shall not employ or terminate (other than for good cause) the employment of any person except in the ordinary course of business; ix. SC21 shall not permit any of their insurances to lapse or do or omit to do anything which would make any policy of insurance void or voidable; x. SC21 shall not create issue or grant any option in respect of any class of share or loan capital or agree to do so; xi. SC21 shall not in any way depart from the ordinary course of their respective day-to-day business either as regards the nature scope or the manner of conducting the same; xii. none of the Vendors shall dispose of any interest in the Sale Shares or any part thereof or grant any option over or mortgage charge or otherwise encumber the Sale Shares or any part thereof; 7 xiii. none of the Vendors shall permit any of SC21 to pass any resolution in general meeting save and except with the written consent of the Purchaser, such consent not to be unreasonably withheld; xiv. the Vendors shall use their best endeavours to maintain the trade and trade connections of SC21 and the Business and shall not by any action omission default or neglect knowingly damage or risk damage to the same. 6.2 Pending completion, the Vendors shall procure that the Purchaser or its agents or representatives be given reasonable access to the properties and to the books and records (whether statutory, managerial, financial or otherwise) of SC21 and the Vendors shall upon request furnish such information regarding the businesses and affairs of SC21 as the Purchaser may reasonably require. 7. WARRANTIES AS TO TITLE BY VENDORS 7.1 The Vendors hereby jointly and severally warrant and undertake to and with the Purchaser and its successors in title (with the intent that the provisions of this Clause shall continue to have full force and effect notwithstanding completion) as follows:- (a) that each Vendor is or will on the Completion Date be legally and beneficially entitled to the Sale Shares; (b) that the Sale Shares are or will on the Completion Date be free from all and any charges, liens, pledges, trusts and other encumbrances whatsoever and together with all rights now or hereafter attaching to the Sale Shares; and (c) that save as provided in the Disclosure Letter, the information contained in Recitals (1) to (5) inclusive and all Schedules, including but not limited to the warranties set out in Schedule 3 of this Agreement, are true, complete and accurate in all material respects. BY PURCHASER 7.2 The Purchaser hereby warrant and undertake to and with the Vendors and its successors in title (with the intent that the provisions of this Clause shall continue to have full force and effect notwithstanding completion) as follows:- (a) that on the Completion Date, Second and Third Completion Date, they will be legally and beneficially entitled to issue the common shares to the Vendors; and (b) that the said common shares are or will on the Completion Date, Second and Third Completion Date be free from all and any charges, liens, pledges, trusts and other encumbrances whatsoever and together with full shareholder rights and all rights now or hereafter attaching to them. 7.3 Each of the warranties, representations and undertakings in this Agreement (including but not limited to those contained in the Recitals and/or any of the Schedules) shall be separate and independent and shall not be limited by anything in this Agreement. All warranties, representations and undertakings given hereunder or pursuant hereto shall not in any respect be 8 extinguished or affected by completion and the benefits thereof may be assigned in whole or in part by the Purchaser. 8. WARRANTIES AND UNDERTAKINGS BY THE VENDORS 8.1 The Vendors hereby jointly and severally undertake, represent and warrant to and with the Purchaser and its successors in title (with the intent that the provisions of this Clause shall continue to have full force and effect notwithstanding Completion):- (a) that each of the Vendors has and will have full power and authority to enter into and perform this Agreement and the same shall constitute valid and binding obligations of each of the Vendors in accordance with its terms; (b) in relation to SC21 in the terms set out in Schedule 3 subject only to (i) any exceptions disclosed in the Disclosure Letter or expressly provided under the terms of this Agreement or (ii) any matter or thing hereafter done or omitted to be done pursuant to this Agreement or otherwise at the request in writing or with the approval in writing of the Purchaser; and (c) that at all times after completion and prior to the appointment by the Purchaser of any new directors onto the board of SC21 following completion, none of the Vendors shall permit the board of directors of SC21 to pass any board resolution in board meeting or undertake any corporate action on behalf of SC21. 8.2 The Vendors further jointly and severally undertake, represent and warrant to and with the Purchaser and its successors in title that without prejudice to Clauses 7.1 and 7.2:- (a) save as provided in the Disclosure Letter, all representations, warranties and undertakings contained in this Agreement (including but not limited to those contained in the Recitals and/or any of the Schedules) will be fulfilled down to and will be true and correct at the Completion Date in respects as if they had been entered into afresh at the Completion Date; and (b) if after signing of this Agreement and before the Completion Date any event shall occur or matter arises which results or may result in any of the said representations, warranties and undertakings being untrue, misleading, incorrect or inaccurate in any material respect at Completion, the Vendors shall immediately notify the Purchaser in writing thereof prior to the Completion Date and shall make any investigation concerning the event or matter which the Purchaser may reasonably require. 8.3 No information, knowledge, thing or matter relating to the Vendors of which the Purchaser has knowledge (actual or constructive) or could have discovered (and notwithstanding any investigation made by or on behalf of the Purchaser into the affairs of the Vendors whether before or after the execution of this Agreement or the Completion Date, shall prejudice any claim by the Purchaser under any representation, warranty or undertaking by the Vendors in this Agreement or operate to reduce any amount recoverable by the Purchaser, and 9 completion shall not in any way constitute a waiver of any of the Purchaser's rights and remedies. 8.4 The representations and warranties given under this Clause shall be separate and independent and save as expressly otherwise provided shall not be limited by anything in this Agreement and shall not be affected by the due diligence investigation of SC21 by the Purchaser. The benefits of the said representations and warranties shall not in any respect be extinguished or affected by completion. 8.5 If prior to the Completion Date, it shall be found that any of the representations, warranties and undertakings on the part of the Vendors under this Agreement (including but not limited to those contained in the Recitals and/or any of the Schedules) has not in any material respect been carried out or complied with or otherwise untrue, misleading, incorrect or inaccurate, the Purchaser shall be entitled by notice in writing to the Vendors to rescind this Agreement but failure to exercise this right shall not constitute a waiver of any other rights of the Purchaser or its successors in title arising out of any breach of representation, warranty or undertaking. 8.6 Rescission of this Agreement under Clause 8.5 above shall not extinguish any right to damages or any other right or remedy which the Purchaser or its successors in title may be entitled to in respect of any breach of this Agreement save that the maximum liabilty of the Vendors shall be limited to the aggregate of the purchase consideration received by the Vendors from the Purchaser (including any common shares to be issued by the Purchaser under this Agreement) plus S$1,000,000.00. BY THE PURCHASER 8.7 The Purchaser hereby represents and warrants to and with the Vendors and their successors in title (with the intent that the provisions of this Clause shall continue to have full force and effect notwithstanding Completion):- (a) that the Purchaser has and will have full power and authority to enter into and perform this Agreement and the same shall constitute valid and binding obligations of the Purchaser in accordance with its terms; (b) all representations, warranties and undertakings contained in this Agreement (including but not limited to those contained in the Recitals) will be fulfilled down to and will be true and correct at the Completion Date in respects as if they had been entered into afresh at the Completion Date; (c) if after signing of this Agreement and before the Completion Date any event shall occur or matter arises which results or may result in any of the said representations, warranties and undertakings by the Purchaser being untrue, misleading, incorrect or inaccurate in any material respect at Completion, the Purchaser shall immediately notify the Vendors in writing thereof prior to the Completion Date and shall make any investigation concerning the event or matter which the Vendors may reasonably require. 10 (d) No information, knowledge, thing or matter relating to the Purchaser of which the Vendors have knowledge (actual or constructive) or could have discovered (and notwithstanding any investigation made by or on behalf of the Vendors into the affairs of the Purchaser whether before or after the execution of this Agreement or the Completion Date, shall prejudice any claim by the Vendors under any representation, warranty or undertaking by the Purchaser in this Agreement or operate to reduce any amount recoverable by the Vendors, and completion shall not in any way constitute a waiver of any of the Vendors' rights and remedies. (e) The representations and warranties given under this Clause shall be separate and independent and save as expressly otherwise provided shall not be limited by anything in this Agreement. The benefits of the said representations and warranties shall not in any respect be extinguished or affected by completion. (f) If prior to the Completion Date, it shall be found that any of the representations, warranties and undertakings on the part of the Purchaser under this Agreement (including but not limited to those contained in the Recitals) has not in any material respect been carried out or complied with or otherwise untrue, misleading, incorrect or inaccurate, the Vendors shall be entitled by notice in writing to the Purchaser to rescind this Agreement but failure to exercise this right shall not constitute a waiver of any other rights of the Vendors or their successors in title arising out of any breach of representation, warranty or undertaking. (g) Rescission of this Agreement under Clause 8.7 above shall not extinguish any right to damages or any other right or remedy which the Vendors or their successors in title may be entitled to in respect of any breach of this Agreement save that the maximum liabilty of the Purchaser shall be limited to the aggregate of the purchase consideration received by the Vendors from the Purchaser (including any common shares to be issued by the Purchaser under this Agreement) plus S$1,000,000.00. 9. INDEMNITY 9.1 The Vendors shall indemnify the Purchaser for all loss, damage, claims and other liabilities suffered or incurred by the Purchaser on account of or arising out of any breach of the warranties, representations or undertakings in the Agreement save that the maximum liabilty of the Vendors shall be limited to the aggregate of the purchase consideration received by the Vendors from the Purchaser (including any common shares to be issued by the Purchaser under this Agreement) plus S$1,000,000.00. 9.2 The Purchaser shall indemnify the Vendors for all loss, damage, claims and other liabilities suffered or incurred by the Vendors on account of or arising out of any breach of the warranties, representations or undertakings in the Agreement save that the maximum liability of the Purchaser shall be limited to the aggregate of the purchase consideration received by the Vendors from the Purchaser (including any common shares to be issued by the Purchaser under this Agreement) plus S$1,000,000.00. 10. COMPLETION MATTERS 11 10.1 Subject as hereinafter provided, completion shall take place on the Completion Date at ____________________________________________ at or about ____ am/pm (or at such other place, date and time as the parties may agree in writing) when all transactions mentioned in this Clause 10 shall take place. 10.2 On completion, the Vendors shall deliver to the Purchaser:- (a) satisfactory evidence (if any) of the due fulfilment of all the conditions specified in Clauses 2.1 above, including but not limited to the delivery of the original signed letters of waiver of transfer restrictions and rights of pre-emption from all parties having such rights in relation to the Sale Shares (whether pursuant to SC21's articles of association or any other document whatsoever); (b) duly completed and executed transfer(s) of the Sale Shares in favour of the Purchaser or as it may direct, together with the original share certificate(s) in respect of the Sale Shares; (c) a sworn statutory declaration (or where the Inland Revenue Authority of Singapore ("IRAS") has stipulated that a confirmatory letter may be given in lieu of a statutory declaration, such a letter) in the form currently prescribed by the IRAS for the purposes of determining the payment of stamp duty, if any, by the Purchaser in respect of the Sale Shares; (d) a duly executed and completed requisition form or any other documents which are currently stipulated by the IRAS to be presented to the Stamp Duty Branch of the IRAS for the stamping of any share transfer forms; (e) duly executed Stock Restriction Agreement in respect of the shares of common stock of the Purchaser in the form set out under Schedule 4 hereof; (f) all items listed under Schedule 5 hereof; (g) the original signed letter agreement from Nanyang Technological University to the Purchaser in the form and content set out under Schedule 6 hereof; (h) the original signed Service Agreement; and (i) the original signed resignation letter from RDS in relation to his resignation as director of SC21 with effect from the Completion Date. 10.3 On completion, the Vendors shall also procure the passing of board resolutions of SC21 inter alia:- (a) approving the registration of the transfers of the Sale Shares (subject to the transfers being duly stamped); 12 (b) authorising the signing of this Agreement and all the documents required thereunder; (c) approving the resignation of RDS as director of SC21 and appointing such persons (subject to the maximum number permitted by the articles of association of SC21) as the Purchaser may nominate as directors of SC21; (d) if required, revoking all existing authorities to bankers in respect of the operation of the bank accounts of SC21 and giving authority in favour of such persons as the Purchaser may nominate to operate such accounts; and the Vendors shall deliver to the Purchaser duly certified copies of such resolutions. 10.4 On completion, the Purchaser shall procure the passing of its board resolutions authorising the signing of this Agreement and all documents required thereunder and shall deliver to the Vendors duly certified copies of such resolutions. 10.5 Against compliance with each of the foregoing provisions in this Clause, the Purchaser shall pay or deliver to the Vendors the purchase consideration in the manner as provided in Clause 5.1. 10.6 If any document required to be delivered to the Purchaser as set out in this Clause is not delivered or if delivered is not authorised, valid or effective for its purpose for any reason whatsoever or if in any respect the provisions of Clauses 10.2 and 10.3 are not fully complied with, the Purchaser shall be entitled (in addition to and without prejudice to all other rights or remedies available to the Purchaser but subject to the same limitation of the Vendors' liability as in Clause 8.6) to elect to rescind this Agreement or to effect completion so far as practicable having regard to the defaults which have occurred or to fix a new date for completion in which case the provisions of this Clause shall apply to the deferred completion. 11. NO MATERIAL CHANGES IN OPERATION, MANAGEMENT OR BUSINESS 11.1 From the date of execution of this Agreement until the Completion Date or the day this Agreement is aborted or terminated, the Vendors shall not make any material change to the operations or management of SC21 or to the nature of their Business without the consent of the Purchaser. 11.2 "Material changes" shall mean decisions and implementation of those decisions which will substantially change the character and style of the management, operations and of the Business of SC21 or to materially affect the financial position and standing of SC21 or to make substantial changes to the budget or expenditure of the said companies. 12. CONFIDENTIALITY 13 12.1 The parties agree, acknowledge and confirm that the confidentiality and disclosure requirements set out under the Letter of Intent shall continue to have full force and binding effect until the Completion Date. 12.2 After the completion of the sale, the Vendors shall not divulge or disclose to anyone not having the beneficial interest, duty or responsibility to receive any such Confidential Information unless the same has been deemed as public knowledge or unless authorised by the Purchaser or its agents. 13. NON COMPETITION 13.1 The Vendors hereby severally agree and undertake that each of them shall not for the period commencing from the Completion Date up to and including 31 December 2001: (a) within any jurisdiction or marketing area in which SC21 or any Related Company is doing business, directly or indirectly own, manage, operate, control, be employed by or participate in the ownership, management, operation or control of, or be connected in any manner with, any business of the type and character engaged in and competitive with that conducted by SC21 or any Related Company. For these purposes, ownership of securities not exceeding 5 per cent of any class of securities of a public company listed on a stock exchange shall not be considered to be competition with SC21 or any Related Company; or (b) persuade or attempt to persuade any potential customer or client to which SC21 or any Related Company has made a presentation, or with which SC21 or any Related Company has been in negotiations or having discussions, not to deal with or hire SC21 or any Related Company or to deal with or hire another company; or (c) solicit for himself or any person other than SC21 or any Related Company the business of any supplier, customer or client of SC21 or any Related Company, or was its supplier, customer or client within 1 year prior to the Completion Date; or (d) persuade or attempt to persuade any employee of SC21 or any Related Company, or any individual who was an employee during the period of 1 year prior to the Completion Date, to leave SC21's or any Related Company's employ, or to become employed by any person other than SC21 or any Related Company. 13.2 With respect to TKL, the obligations pursuant to this Clause 13 shall not affect the TAF Business. 13.3 The Vendors severally acknowledge and agree that: 14 (a) each of the sub-clauses of Clause 13.1 constitutes an entirely separate and independent restriction; (b) the duration, extent and application of each of the restrictions set out in Clause 13.1 are reasonable and no greater than is necessary for the protection of the interests of SC21 or any Related Company; (c) if any such restriction set out in Clause 13.1 shall be adjudged by any court of competent jurisdiction to be void or unenforceable as going beyond what is reasonable in the circumstances for the protection of the interests of SC21 or any Related Company but would be valid if a part of the wording thereof was deleted and/or the period thereof was reduced and/or the area dealt with thereby was reduced, the said restriction shall apply within the jurisdiction of that court with such modifications as may be necessary to make it valid and effective; (d) if any of the Vendors violate any of the restrictive covenants under Clause 13.1 and SC21 brings legal action for injunctive or other relief hereunder, SC21, as a result of the time involved in obtaining the relief, will be deprived of the benefit of the full limitation period of the restrictions referred to in this clause. Accordingly, the aforesaid period of the restrictions shall be deemed to have the full duration as aforesaid, computed from the date relief is granted, but reduced by the time between the period when the restriction began to run at the Completion Date and the date of the first violation of the restriction; and (e) if the legal remedies for breach of the restrictions set forth in Clause 13.1 are inadequate then, in addition to all other remedies available to SC21, in the event of a breach or a threatened breach of any such restriction, SC21 may obtain temporary, preliminary and permanent injunctions against any and all such actions. 14. RELEASE AND INDULGENCE BY THE PURCHASER Any liability to the Purchaser under this Agreement may in whole or in part be released, compounded or compromised, or time or indulgence given, by the Purchaser in its absolute discretion without in any way prejudicing or affecting its rights against the Vendors provided always that no failure, delay or forbearance on the part of the Purchaser in exercising any right or power in this Agreement shall operate as a waiver thereof and no waiver on the part of the Purchaser of any breach of any term or condition in this Agreement by the Vendors shall prejudice the rights of the Purchaser in respect of any other or subsequent breach of any term or condition in this Agreement. 15. CONTINUING EFFECT OF AGREEMENT 15 All provisions of this Agreement shall so far as they are capable of being performed or observed continue in full force and effect notwithstanding completion except in respect of matters then already performed. 16. NON ASSIGNMENT Save as provided in Clause 7.3, none of the parties may assign or transfer all or part of its rights or obligations under this Agreement without the prior written consent of the other party. 17. PREVALENCE OF AGREEMENT In the event of any inconsistency between the provisions of this Agreement and the respective memoranda and articles of association of SC21 or the Letter of Intent, the provisions of this Agreement shall as between the parties hereto prevail and the Vendors shall forthwith cause such necessary alterations to be made to such memoranda and articles of association as are required so as to remove such inconsistency. 18. TIME OF ESSENCE Any time or period mentioned in any provision of this Agreement may be extended by mutual agreement between the parties hereto but as regards any time, date or period originally fixed or any time, date or period so extended as aforesaid, time shall be of the essence. 19. COSTS Each party shall bear all legal and other costs and expenses incurred by it personally in connection with this Agreement and the transfer of the Sale Shares except for stamp duty on the transfer of the Sale Shares which shall be borne by the Purchaser. 20. NOTICES Any notice, communication or demand required to be given, made or served under this Agreement shall be in writing in the English language and delivered by hand or sent by prepaid registered post or by fax or telex to the intended recipient thereof at the following address, fax or telex number or to such other address, fax or telex number as may from time to time be notified (in accordance with this Clause) by the relevant party to the other parties: (a) Vendors: c/o Salem Ibrahim, 16 Salem Ibrahim and Partners 79 Robinson Road #16-06 CPF Building Singapore 068897 Fax: 65-226-791-2400 (b) Purchaser: Viewlocity Inc., Attn: Mr Stan Stoudenmire 3475 Piedmont Road, Suite 1700, Atlanta, GA 30305, USA Fax: 001-1-770 512 8902 Any such notice, communication or demand shall be deemed to have been duly served (if given or made by fax or telex) immediately on such transmission or (if given or made by letter) two days after posting and in proving the same, it shall be sufficient to produce the fax or telex report or to show that the envelope containing the same was duly addressed, stamped and posted. 21. FURTHER ASSURANCE The parties shall execute and do and procure all other persons if necessary, to execute and do all such further deeds, assurances, acts and things as may be reasonably required whether before or after completion so that full effect may be given to the terms and conditions of this Agreement. 22. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the laws of Singapore. 17 AS WITNESS TO THIS AGREEMENT the parties have signed this agreement on the date first written above. Signed by ) for and on behalf of Viewlocity, Inc. ) /s/ Gregory Cronin in the presence of ) Signed by Salem bin Mohamed Ibrahim ) /s/ Salem bin Mohamed Ibrahim the presence of ) Signed by Teo Keng Leng ) /s/ Teo Keng Leng the presence of ) Signed by Robert Ben Roque ) Trindade Menezes De Souza ) /s/ Robert De Souza the presence of ) Signed by ) for and on behalf of ) /s/ Salem bin Mohamed Ibrahim SC21 Options Pte Ltd ) the presence of ) Signed by ) for and on behalf of ) /s/ Salem bin Mohamed Ibrahim SC21 Pte Ltd ) the presence of ) 18 SCHEDULE 1 CAPITAL AND SHAREHOLDINGS STRUCTURE OF SC21 AUTHORISED CAPITAL : 100,000 of S$1.00 ordinary shares PAID UP CAPITAL : S$100,000 of 100,000 ordinary shares SHAREHOLDERS AND (PERCENTAGE OF SHARES HELD) : - ------------------------------------------------ --------------------------- --------------------------- Salem Bin Mohammad Ibrahim 20,000 ordinary shares* 20% - ------------------------------------------------ --------------------------- --------------------------- Teo Keng Leng 20,000 ordinary shares* 20% - ------------------------------------------------ --------------------------- --------------------------- Robert Ben Roque Trindade Menezes De Souza 20,000 ordinary shares* 20% - ------------------------------------------------ --------------------------- --------------------------- SC21 Options Pte Ltd 40,000 ordinary shares* 40% - ------------------------------------------------ --------------------------- ---------------------------
* REFERS TO THE SALE SHARES 19 SCHEDULE 2 DETAILED DESCRIPTION OF KNOW-HOW The SC21 SupplyWeb for intelligent supply chain solutions consisting of 3 webs namely : - - SC21 4PLWeb - - SC21 TrackWeb - - SC21 BackWeb THE SC21 4PLWEB CONSISTING of 3 main modules: - - The Unique System Administration module which provides definition of participating organisations and members within the organisations and also provides secure access rights and levels - - The Demand Management Module which houses the information for tracking of customer orders and supplier commitments - - The Order Fulfillment Module which manages the information for fulfilling of orders upon arrival at the 3PL or customer warehouse and post delivery activities such as Sales Orders, Delivery Orders and Consumption Orders THE SC21 TRACKWEB CONSISTING of the facility to track goods shipments by enabling the exchange of information along the shipment chain allowing the consignee to know the status of an order at any point in time. THE SC21 TRACKWEB encompasses subsystems to capture information about Shipment Tasks, Shipment Schedules, Goods Reception by 3PL company, Inventory Management, Location and Item Management. THE SC21 BACKWEB is a one-stop facility for: - - Monitoring of inventory levels at distribution centres and management of customer orders from call centres, - - Automation of the replenishment of stocks at the staging level for maintenance of safe stock levels at distribution centres - - Tracking and tracing of movement of goods from manufacturing sites to the staging levels 20 SCHEDULE 2 (CONTINUED) DESCRIPTION OF MAXIMS SUPPLY CHAIN MANAGEMENT SYSTEM MAXIMS is an enterprise planning and optimisation suite state of tools that is essentially based on the concepts of discrete event simulation, linear programming and heuristic business rules. The suite encompasses facilities for enterprise network topology design, supply chain co-ordination, clustered planning for materials planning, manufacturing planning and distribution planning. Coupled with planning is a point to point supply chain execution system. The planning and design subsystem, based on discrete event simulation is in the form of value added templates to the ARENA simulation software from Systems Modelling Inc. The heuristic business rules and supply chain co-ordination modules are based on proprietary PhD & theses. The execution module is the precursor to the end-to-end supply web. All of the aforementioned modules are inventory visibility solutions for manufacturing centric enterprises. 21 SCHEDULE 3 WARRANTIES BY THE VENDORS IN RELATION TO THE COMPANY * UNDER CLAUSE 8 * THE CONTEXT OF "THE COMPANY" HEREIN WILL REFER TO "SC21" The Vendors hereby jointly and severally represent and warrant to the Purchaser and/or their nominees as follows: 1. INFORMATION The Recitals are to the best of the Vendors' knowledge and personal belief true and correct in all aspects and to the same extent, all information which has been given by the Vendors to the Purchaser or to the Purchaser's representatives in the course of negotiations leading to this Agreement and all information contained in the Accountant's Report and other Documents were when given and are true, complete and accurate TO THE BEST OF the Vendors' personal belief and knowledge. 2. ORGANISATION The Company is duly incorporated and validly existing under the laws of Singapore and has the power and authority to own, lease and operate all its properties and to carry on its business as its is now being conducted. The corporate minute books of the Company which the Vendors have made available to the Purchaser on or prior to completion are complete and correct and will reflect accurately as at completion, all corporate actions of the Company requiring the approval of its board of directors or shareholders prior to completion. 3. COPIES OF ACCOUNTS, MEMORANDUM AND ARTICLES, ETC (a) The copies of the Accounts and other financial statements of the Company delivered to the Purchaser are true copies. (b) The copies of the memorandum and articles of association or other like documents of the Company delivered to the Purchaser are complete and accurate and fully set out the rights and restrictions attaching to each class of share capital of the Company to which they relate. (c) All the accounts, books, ledgers, financial and other records of any kind whatsoever ("the records") of the Company in its possession or control have been properly and accurately kept and completed. They contain, give and reflect a true and fair view of its business and trading transactions and its financial, contractual, business and trading positions; and do not contain any material inaccuracies or discrepancies. 22 (d) The statutory books (including all registers and minute books) of the Company are in its possession or control. They have been properly kept and contain an accurate and complete record of the matters which should be dealt with in those books. 4. THE ACCOUNTS 4.1 (a) The Audited Accounts have been prepared in accordance with the laws of Singapore and on a consistent basis in accordance with proper accounting principles, standards and practices generally accepted in Singapore so as to give a true and fair view of the state of affairs of the Company as at the Balance Sheet Date and of the profit or loss for the period concerned. (b) The Audited Accounts as at the date of the Agreement: (i) Comply with the requirements of the Companies Act (Cap.50); (ii) Are accurate in all material respects and show a true and complete and fair view of the state of affairs financial position assets and liabilities of the Company and of its results for the financial period ending on the Balance Sheet Date; (iii) As at the Balance Sheet Date are not affected by any unusual or non-recurring items; (iv) Make full provision for depreciation of the fixed assets of the Company having regard to their original cost and estimated life; (v) Make due provision for any bad or doubtful debts; (vi) Fully disclose all assets of the Company as at the Balance Sheet Date; and (vii) Set out correctly all such reserves or provisions for Taxation as are necessary on the basis of the rates of tax now in force to cover all Taxation (present and future) in respect of any transaction occurring prior to the Balance Sheet Date liable to be assessed on the Company or for which the Company is accountable up to such date. (c) In the Audited Accounts: (i) any slow moving stock has been written down appropriately and redundant obsolete or unsaleable stock and irrecoverable work-in-progress costs have been wholly written off and (ii) the value attibuted to the remaining stock new materials and work-in-progress does not exceed the lowest of cost (on a first in first out valuation) or net realisable value or replacement price at the Balance Sheet Date and (iii) the same basis was adopted for the valuation of stock and work-in-progress as had been adopted in the preparation of all audited accounts of the Company laid before the Company in general meeting for the financial periods ending prior to the date of this Agreement or for each accounting period since incorporation. 23 (d) All liabilities or outstanding capital commitments of the Company as at the Balance Sheet Date have been included in the Audited Accounts by way of full provision or reserve or (in the case of such a liability as was contingent unquantified or disputed) by way of note stating the maximum amount which has been or could be claimed and the best estimate of the directors (after taking all relevant professional advice) of the likelihood of such a claim materialising or being successful. (e) No asset of the Company has been acquired for any consideration in excess of its market value at the date of is acquisition or otherwise than by way of bargain at arm's length. (f) Each of the book debts shown in the Audited Accounts and such other book debts relating to the period up to and including the Completion Date will realise in the normal course of collection their nominal value less the value attributed to any reserve for bad or doubtful debts included in the Audited Accounts and none of the book debts is subject to any counter-claim or set-off. (g) No event has occurred during the period covered by the Audited Accounts that has resulted in the profits of the Company in respect of such period being abnormally high or low. 4.2 (a) The management accounts: (i) have been prepared on a basis wholly consistent with that warranted as adopted in the preparation of the Audited Accounts and (ii) are accurate in all material respects and show a true and fair view of the assets and liabilities of the Company and of its results for the financial period ending on the Completion Date and (iii) make full provision or reserve for all liabilities and other matters warranted as provided for or reserved in the Audited Accounts such that the Company has no liabilities of any nature whatsoever other than those disclosed or provided for in the management accounts. 4.3 The accounting and other books ledgers financial and other records of the Company :- (i) Are in its possession; (ii) have at all times been properly and fully written up; (iii) accurately present and reflect in accordance with generally accepted accounting principles and standards and the Companies Act (Cap.50) all of the transactions entered into by the Company or the transactions to which the Company has been a party and its financial contractual and trading position; and (iv) have been held for the periods required by the Companies Act (Cap.50). 5. CHANGES SINCE BALANCE SHEET DATE The value of the net tangible assets of the Company completion determined in accordance with 24 the same accounting basis and policies as those applied in the Accounts will not be less than the net tangible assets of the Company at the Balance Sheet Date as shown in the Accounts. Since the Balance Sheet Date as regards the Company: (i) there has been no material adverse change (nor is any such material change expected) in the position or prospects of the Company or in the value or state of the assets or amount or nature of the liabilities of the Company as compared with the position disclosed in the Audited Accounts; (ii) the Company has not disposed of any assets or assumed or incurred any outstanding capital commitment or any material liabilities (whether actual or contingent) otherwise than in the ordinary course of carrying on its business (and for this purpose disposals of fixed assets fixed and loose plant and machinery fixtures and fittings vehicle and office equipment shall be deemed to be not in the ordinary course of business); and (iii) the business of the Company has been carried on in the ordinary and usual course of business without interruption and so as to maintain the same as a going concern. 6. CONTRACTS AND COMMENTS (a) The Company is not a party to any contract or arrangement which restricts its freedom to carry on its business in any part of the world in such manner as it may think fit, or to any agency, distributorship or management agreement. (b) Save for any guarantee or warranty implied by law and/or product/services guarantees/warranties given in the normal course of business, the Company has not given any guarantee or indemnity under which any liability or contingent liability is outstanding, or given any warranties, or made any representation, in respect of goods or services supplied or contracted to be supplied by it or accepted any liability or obligation that would apply after any such goods or services had been supplied by it. (c) The Company is not a party to any agreement or arrangement or under any obligation under which it is or may become liable to make any investment with, or to deposit any money with, or to provide any loan or financial accommodation or credit (other than normal trade credit) to any person or to subscribe, convert, acquire, dispose of or underwrite any investment. 7. CONTRACTS WITH CONNECTED PERSONS (a) There is not, and there has not been at any time, any contract or arrangement to which the Company is, or was, a party and in which the Vendors, or any director of the Company either directly or indirectly have an interest but if so such contracts or arrangements were conducted at arm's length. (b) Without prejudice to the generality of the preceding subparagraph, there is not, and there has not at any time been: (i) any loan made by the Company to the Vendors; except that disclosed in the 25 Accounts given; (ii) any debt owing to the Company by the Vendors or the Company and/or any person connected with the Vendors except that disclosed in the Accounts given; (iii) any securities for any such loans or debts as aforesaid. 8. POWERS OF ATTORNEY The Company has not given any power of attorney or other authority (express, implied or ostensible) which is still outstanding or effective to any person to enter into any contract or commitment on its behalf other than to its employees to enter into routine trading contracts in the normal course of their duties. 9. BANK ACCOUNTS AND BORROWINGS (a) Full details of all bank accounts of the Company (including the name and address of the bank with whom the account is kept and the number and nature of the account) have been disclosed to the Purchaser in the Disclosure Letter. (b) No banking or credit facilities have been granted to the Company or obtained by the Company since its incorporation. (c) The Company has not factored any of its debts, or engaged in any borrowing or financing of a type which would not require to be shown or reflected in the Audited Accounts, or borrowed any money from any party which it has not repaid. 10. INSOLVENCY (a) No order has been made and no resolution has been passed for the winding up of the Company or for a provisional liquidator to be appointed in respect of the Company and no petition has been presented and no meeting has been convened for the purpose of winding up the Company. (b) No judicial management order has been made and no petition for such an order has been presented in respect of the Company. (c) No receiver (which expression shall include a receiver and manager) has been appointed and no steps has been taken for the appointment of a receiver in respect of the Company or all or any of its assets or undertaking. (d) No distress, charging order, garnishes order execution or other process has been levied against the Company and no action has been taken to repossess the assets, goods and/or properties in the possession or control of the Company. (e) The Company has not made or propose to make any arrangement or composition with its creditors or any class of its creditors. 26 (f) No unsatisfied judgment is outstanding against the Company. (g) No event analogous to any of the aforesaid has occurred in or outside Singapore. 11. LITIGATION (a) Since the Agreement Date, no claim sounding in damages has been made against the Company. (b) The Company is not engaged in any litigation or arbitration or administrative or criminal proceedings, whether as plaintiff, defendant or otherwise, and no litigation or arbitration, administrative or criminal proceedings by or against the Company is pending, threatened or expected. (c) There are no litigation or arbitration or administrative or criminal proceedings against any director or employee of the Company in respect of any act or default for which the Company might be vicariously liable. (d) So far as the Vendors are aware, after making due and careful enquiries, as of the Completion Date, other than potential claims by customers relating to SC21's untimely performance under SC21's current customer contracts with Jim Thompson (The Thai Silk Co Ltd., Thailand), Compaq Asia Pte Ltd, Natsteel Electronics Ltd and SYY Pte Ltd, there is no fact or circumstance likely to give rise to any such litigation or arbitration, or administrative or criminal proceedings. 12. LICENCES, CONSENTS AND COMPLIANCE WITH STATUTES (a) The Company has at all times carried on business and conducted its affairs in all respects in accordance with its memorandum and articles of association for the time being in force and any other documents to which it is or has been a party and the Company is empowered and duly qualified to carry on business in all jurisdictions which it now carries on business. (b) All licences, and approvals required for or in connection with the ownership of assets now being owned and the carrying on of the business now being carried on by the Company, are in full force and effect. There is no circumstance which indicates that any licence, or approval is likely to be revoked, annulled or modified or which may confer a right of revocation, annulment or modification. (c) The Company is in good standing with all relevant regulatory authorities in all jurisdictions in which it carries on business. (d) The Company has conducted its business and corporate affairs in all materials respects in accordance with and has complied with (as the case may be) the Companies Act, and all other applicable laws, regulations, directives and guidelines of Singapore and of all other jurisdictions in which it carries on business; there is no violation of, or default with respect to, any statute, regulations or directives which could have a material or adverse effect upon the assets or business of the Company. 27 (e) So far as the Vendors is aware after having made reasonable enquiries, no investigation or enquiry is pending or its being or has been conducted by any governmental, statutory or other body in respect of the affairs of the Company. 13. OWNERSHIP OF ASSETS (a) The Company legally and beneficially own or had good and marketable title to all assets included in each of the Accounts or have otherwise been represented as being the property due to the Company and each of those assets capable of possession or control, is in the possession or control of the Company. (b) The Company has not created or granted or agreed to create or grant any security interest or other encumbrance in respect of any of the assets included in each of the Accounts, otherwise than in the ordinary course of its business. (c) None of the property, assets, undertaking, goodwill or uncalled capital of the Company is subject to, and the Company has not agreed to grant any option, charges lien, encumbrance, or, right of pre-emption of any nature whatsoever in respect thereof. 14. INSURANCE ON ASSETS, BUSINESS AND PROPERTIES (a) All the fixed assets of the Company of any insurable nature are and have at all material times been, insured in amounts representing their full replacement or reinstatement value against fire and other risks normally insured against by persons carrying on the same business as that carried on by the Company. (b) Each of the Properties is insured against third party and public liabilities to an adequate extent. (c) The Company is now and has at all material times been adequately covered against accident, damage, injury, third party loss and other risks normally insured against by persons carrying on the same business as that carried on by the Company. (d) All insurance is currently in full force and effect, all premiums have been duly paid and nothing has been done or omitted to be done which could make any insurance policy void or voidable or which is likely to result in any increase in premium or variation of any term of such insurance policies. (e) No claim is outstanding or may be made under any of the insurance policies and no circumstances exist which are likely to give rise to such a claim. 15. EMPLOYEES AND TERMS OF EMPLOYMENT (a) Full particulars of the identities, dates of commencement of employment, or appointment to office, and terms and conditions of employment of all the employees and officers in the Company, including without limitation profit sharing, commission, discretionary bonus arrangements or any other receipt of or entitlement benefit to 28 (either in cash or otherwise) leave have been disclosed to the Purchaser in the Disclosure Letter. (b) Save as disclosed in the Accounts, the Company has not made or agreed to make any payment to or provided or agreed to provide any benefit for any present or former directors or employee, which is not allowable as a deduction for the purposes of taxation. 16. BONUS, SHARE OPTION SCHEMES (a) There are no schemes in operation by, or in relation to, the Company whereunder any employee of the Company is entitled to a commission or remuneration of any other sort, calculated by reference to the whole or part of the turnover, profits, sales or performance of the Company, or is otherwise variable (other than normal overtime). (b) The Company does not have in existence or is proposing to introduce any share incentive scheme, share option scheme or profit sharing scheme for all or any of its directors or employees. 17. HEALTH AND SAFETY AND COMPLIANCE WITH STATUTES The Company has at all relevant times complied with all its obligations under statute and otherwise concerning the health and safety at work of its employees, and there are no claims capable of arising or threatened or pending by any employee of the Company or any other person in respect of any accident or injury which are not fully covered by insurance which are in full force and effect. 18. CONTRIBUTIONS (a) The Company has paid, and there are no outstanding liabilities to pay, to any relevant competent governmental or regulatory authority any contribution (including employer's contributions), arising or in connection with the employment or appointment of personnel. (b) Proper records have been maintained and kept in respect of all such payments (or deductions) and all regulations and guidelines applicable thereto have been complied with. 19. TAX RETURNS AND ADMINISTRATION (a) The Company has duly made all returns and given or delivered all notices, accounts and information which on or before the date hereof ought to have been made, given or delivered for the purposes of Taxation and all such returns, notices, accounts and information supplied to the inland revenue or to the customs and excise concerned for any such purpose have been correct and made on a proper basis and none of such returns, notices, accounts or information is disputed in any material respect. There is not in existence any fact which might be the occasion of any such dispute or of any claim for Taxation in respect of any financial period. 29 (b) The amount of tax chargeable on the Company during any accounting period has not, to any material extent, depended on any concession, agreement or other formal or informal arrangement with the inland revenue, the customs and excise or other fiscal authorities. (c) The Company has not received any notice from any fiscal authority, including the inland revenue, which required or will or may require the Company to withhold tax from any payment made or which will or may be made after the date of this Agreement. 20. TAX PAYMENTS AND DISPUTES (a) The Company has duly and punctually paid all Taxation which it is liable to pay and is under no liability to pay any penalty or interest in connection with any claim for Taxation and has not paid any Taxation which is not liable or was not properly due to pay. (b) There is no dispute or disagreement and there are no circumstances likely to give rise to any dispute or disagreement with the inland revenue, customs and excise or other fiscal authorities regarding liability or potential liability to any Taxation payable by or recoverable from the Company or regarding the availability of any relief, exemption or waiver from or rebate on any Taxation of the Company. 21. EXISTING CONTRACTS No contract, licence, permit or arrangement which any of the Company is a party to shall be abrogated or affected by the purchase of the Sale Shares by the Purchaser by the performance of the terms of this Agreement. 22. PENSIONS There is not in existence nor has any proposal been announced to establish any retirement, death or disability benefit schemes for directors or employees nor are there any obligations to or in respect of present or former directors or employees with regards to retirement, death or disability pursuant to which the Company is or may become liable to make payments and no payments and no pension or retirement or sickness gratuity is currently being paid or has been promised by the Company to or in respect of any former director or former employee. 23. BOOK DEBTS The book debts receivable by the Company which are included in the Accounts or which have subsequently arisen will realise in the normal course of collection their full value as included in the Accounts or in the books of the Company after taking into account the provision for bad and doubtful debts in the Accounts. The accounts receivable of the Company recorded in the Accounts and all of such accounts receivable or any such other accounts receivable which are thereafter acquired or arise 30 subsequent to the date hereof, have arisen in the ordinary course of business of the Company (as the case may be). 24. COMPLIANCE WITH LEASES AND OTHER AGREEMENTS To the best of the knowledge and belief of the Vendors after making due and careful enquiries:- (i) the terms of all leases, tenancies, licences, concessions and agreements of whatsoever nature to which the Company is a party have been duly complied with by all the parties thereto; (ii) no such lease, tenancy, licence, concession or agreement will become subject to avoidance, revocation or be otherwise affected in consequence of the making or implementation of this Agreement; and (iii) save as disclosed, the Company does not occupy or does not have an interest in any freehold or leasehold property and (where applicable) the Company has a good and marketable title to such property it is occupying or having an interest in free of any onerous or unusual covenants, restrictions and encumbrances. 25. NAMES OF THE COMPANY The Company has full rights to use its name in Singapore or elsewhere for the conduct of its business. The Company has not received any notice of conflict with respect to the rights of others regarding its name. Neither the Vendors nor the Company has authorised any person, firm or corporation or other business association doing business, to use its name or to hold itself out to the public as a partner or an associate or affiliate of the Vendors or the Company. 26. OPTIONS ON SHARE CAPITAL No person has the right (whether exercisable now or in the future and whether contingent or not) to call for the allotment, issue, sale or transfer of any share or loan capital of the Company under any option or other agreement (including any option or any conversion rights or rights of pre-emption). 27. NON-CONTRAVENTION The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement do not and will not violate any provision of the memoranda and articles of association of the Company or violate or result, with or without the giving of notice or the lapse of time or both, in a violation of any provision of, or result in the acceleration of, or entitle any party to accelerate (whether or not after the giving of notice or lapse of time or both), any material obligation under, or result in the creation or imposition of any material lien, charge, pledge, security interest or other encumbrance upon the property of the Vendors or the Company (as the case may be) pursuant to any provision of any mortgage, lien, agreement, licence, 31 instrument, law, ordinance, rule, regulation, order, arbitration award, judgement or decree to which the Vendors or the Company (as the case may be) is a party or by which any of them is bound, and the same do not and will not constitute an event permitting termination of any mortgage, lien, agreement, licence or instrument to which the Vendors or the Company is a party. 28. INVESTMENTS, ASSOCIATIONS AND BRANCHES The Company is not and/or has not been a party to any joint venture or consortium or any partnership arrangement or agreement or to any agreement or arrangement for sharing commissions or other income relating to the Business. The Company does not conduct and/or has not conducted any part of the Business through a branch, agency, subsidiary, associated company or permanent establishment either within or outside Singapore. The Company is not a member of any partnership trade association society or other group whether formal or informal which is relevant to or has any material influence over the Business as now carried on. 29. INTELLECTUAL PROPERTY The Vendors warrant that :- (a) SC21 is the sole, legal and beneficial owner of the Know-How set out in Schedule 2 hereto and the Vendors have no claim and will make no claim whatsoever to any rights, title, benefits or interest in the Know-How and the Vendors hereby relinquish all rights, title, benefits or interest in the Know-How which they may have or which may accrue to the Vendors notwithstanding this warranty; (b) the Vendors have not applied to register and/or have not registered the "SC21" brandname or any derivation, variation or modification thereof in any other country and will make no claim to any rights, title, benefits or interest in the "SC21" brandname or any derivation, variation or modification thereof in Singapore allow in any other country; (c ) SC21 has full power to sell, transfer and assign the Know-How to the Purchaser; (d) no licences have been granted to use the Know-How set out in Schedule 2, the Know-How or the "SC21" brandname or any derivation, variation or modification thereof in any other country; (e) neither the Company nor the Vendors have suffered the said Know-How set out in Schedule 2, Know-How and the "SC21" brandname to be the subject of any charge, mortgage or other encumbrance; (f) there are no restrictions on the use of the Know-How and the "SC21" brandname in relation to the Business; (g) there are no claims pending or completed actions or proceedings relating to the Know-How and the "SC21" brandname; (h) the Purchaser shall have and shall enjoy quiet possession of the Know-How and the "SC21" brandname uninterrupted or disturbed by the Vendors or any person claiming under or in trust for it; 32 (i) the Business and/or its conduct and/or operation will not infringe any patent, registered design, trade mark, copyright, trade secret or other intellectual property or industrial property right of any third party or give rise to any liability to pay royalty or other compensation; (j) the Know-How and the "SC21" brandname or any part thereof do not utilise or infringe any patent, registered design, trademark, copyright, trade secret or other intellectual or industrial property right of any third party or give rise to any liability to pay royalty or other compensation; (k) the Vendors and the Company have not (except in the ordinary and normal course of its business) disclosed or permitted to be disclosed or undertaken or arranged to disclose to any person other than the Purchaser any of Know-How, Confidential Information, price lists or lists of customers or suppliers relating to the Business; and (l) the information disclosed by the Vendors and the Company to the Purchaser relating to the Know-How and the "SC21" brandname is true, accurate and complete, and the use of the Know-How and the "SC21" brandname will not give rise to any claims by third parties in tort or otherwise against the Purchaser or the Company arising in any way out of the said use. 30. REGISTRATION BY PURCHASER The Purchaser may take such steps as are necessary in to effect registration of its interest in the Know-How and the "SC21" brandname and all modifications, variations and derivations thereof and the Vendors shall execute all such documents, and do all such acts and things and sign all such documents that the Purchaser may require or to confer on the Purchaser all rights of action relating to any infringement by third parties at the date hereof and in the case of default, the Vendors hereby irrevocably appoint the Purchaser as the Vendors' attorney for such purpose. 31. TRANSFER OF KNOW-HOW The Vendors shall forthwith deliver, divulge, transfer, disclose, impart or otherwise communicate to the Purchaser the Know-How, the Confidential Information and all related documentation in whatever form or medium and all copies thereof. 32. STATUS OF SOPL As at the date of this Agreement, the shareholders of SOPL are SI, TKL and RDS. No person has the right (whether exercisable now or in the future and whether contingent or not) to call for the allotment, issue, sale or transfer of any share or loan capital of SOPL under any option or other agreement (including any option or any conversion rights or rights of pre-emption). None of the property, assets, undertaking, goodwill or uncalled capital of SOPL is subject to, 33 and SOPL has not agreed to grant any option, charges, lien, encumbrance, or, right of pre-emption of any nature whatsoever in respect thereof. 33. TAF BUSINESS TKL hereby represents, warrants, undertakes, acknowledges and agrees that for so long as he is a direct or indirect substantial shareholder and/or has management control (whether directly or indirectly) of TAF, the TAF Business is not and shall not at any time include the development, licensing, sale or resale to third parties of software applications or supply chain solutions similar to or incorporating any function of (i) SC21 4 PLWeb, SC21 TrackWeb, or SC21 BackWeb as described on Schedule 2 hereof, or (ii) future product offerings of SC21, or (iii) present or future product offerings of the Purchaser. 34 SCHEDULE 4 FORMAT OF STOCK RESTRICTION AGREEMENT 35 SCHEDULE 5 LIST OF ITEMS/TECHNICAL SPECIFICATIONS A. SOFTWARE (7 DISKS) 1. 4PL Web 2. BackWeb 3. TrackWeb 4. Jim Thomson 5. Generic Product 6. Maxins - CTP, DP 7. Maxins - ATP, MRP, Liability, Sales Analysis DOCUMENTATION INTELLECTUAL PROPERTY RIGHTS OF SC21 PTE LTD, MAY 2000 CONSISTING OF: CHAPTER 1 FUNCTIONAL SPECIFICATIONS OF SC21 PRODUCTS 1 1.1 Introduction 1 1.2 4PLWeb 1 1.2.1 The Supply Chain 1 1.2.2 Functional Scope of the Actors 1 1.2.3 The Transaction Flow 2 1.2.4 Modules 3 1.2.5 Transaction Flow (Screen) 4 1.3 BackWeb 21 1.3.1 The Supply Chain 21 1.3.2 Functional Scope of the Actors 21 1.3.3 The Transaction Flow 21 1.3.4 Modules 22 1.3.5 Transaction Flow (Screen) 23 1.4 TrackWeb 30 1.4.1 The Supply Chain 30 1.4.2 Functional Scope of the Actors 30 1.4.3 Transaction Flow (Screen) 32
36 Chapter 2 ASP Technical Specifications 42 4PLWeb (Compaq) 2.1 Introduction 42 2.2 ASP Technical Specifications 42 Chapter 3 Views/Database Technical Specifications 70 4PLWeb (Compaq) 3.1 Introduction 70 3.2 Database Technical Specifications 70 Chapter 4 Functional Specification of Sales Analysis 163 4.1 Introduction 163 4.2 Sales Analysis 163 4.2.1 Product Movement Analysis 163 4.2.2 Quantity against Sales Analysis 166 4.2.3 Sales by Shop Analysis 167 4.2.4 Profitability 168 4.2.5 Non-moving Items 169 4.2.6 Stock Inventory 169 Chapter 5 Design Document on ATP 171 (Available to Promise) 5.1 Introduction 171 5.2 Basic Requirement 171 5.2.1 Objective 171 5.2.2 Functionality Requirement 171 Chapter 6 Version Control 191
Appendix I Requirements Analysis Report (Compaq) Appendix II Data Structure 37 SCHEDULE 6 FORMAT OF LETTER FROM NANYANG TECHNOLOGICAL UNIVERSITY [DRAFT ON NTU'S LETTERHEAD] Date : To : Viewlocity Inc. 3475 Piedmont Road Suite 1700 Atlanta, GA30305 USA Re : TRANSFER OF "SUPPLY CHAIN MANAGEMENT SOFTWARE SUITE - MAXIMS" I am the duly authorized agent and representative of Nanyang Technological University ("NTU"), and this letter is a valid and binding obligation of NTU. NTU hereby agrees, confirms and acknowledges that all and any of the copyright, trademarks, trade names, patents and all other intellectual property rights subsisting in or used in connection with the Maxims Supply Chain Management Software Suite invented by NTU including all documentation, manuals, source codes, all improvements, new inventions, designs or processes evolved therefrom that then existed or were in future to exist, and which were vested in NTU (the "Maxims Software"), were transferred absolutely and irrevocably to SC21 Pte. Ltd by a letter agreement dated 25 November 1998 between NTU and SC21 Pte Ltd (the "1998 Agreement"), in consideration of certain future payments as described in the 1998 Agreement. NTU further represents, warrants and covenants that prior to transferring the Maxim's Software to SC21 Pte. Ltd., under the 1998 Agreement, it was the sole and lawful owner of the Maxims Software and that NTU had good right to sell the same and will warrant and defend the title thereto unto SC21 Pte. Ltd, its successors, and assigns, against the claims and demands of all persons whomsoever. With the written consent of SC21 Pte. Ltd. in writing, NTU hereby agrees to substitute the remaining consideration it is due presently and in the future under the 1998 Agreement for the payment by Viewlocity, Inc. to NTU of the following consideration: (i) the payment of the sum of S$100,000.00 by Viewlocity, and (ii) (ii) the grant to NTU of an option ("Stock Option") to purchase five thousand (5,000) shares Viewlocity's common stock, $0.01 par value per share ("Common Stock"). The exercise price of the Stock Option shall be set by the Compensation Committee of the Board of Directors of Viewlocity and shall reflect the fair market value of the Common Stock at the date of grant. The Stock Option granted to NTU pursuant to this Agreement shall be subject to the terms and conditions of the Company's Stock Incentive Plan, as amended from time to time, and shall be fully vested upon grant. (the " New Consideration"). Upon payment to NTU of the New Consideration, NTU further hereby agrees and acknowledges that all rights, title, and interest in and to the Maxims Software shall be fully, absolutely and irrevocably vested in SC21. 38 It is further agreed that : (a) the Consideration shall be satisfied by Viewlocity by no later than May 26, 2000 at 5:00 p.m., United States Eastern Daylight Time; (b) this letter agreement supercedes the previous letter agreement dated 25 November 1998 between NTU and SC21 Pte Ltd in respect of the Maxims Software (the "1998 Agreement") and the 1998 Agreement hereby ceases to be binding and effective as between the parties thereof. Kindly sign the duplicate copy of this letter to confirm your agreement to the above terms. Yours faithfully, Dean of School of Mechanical & Production Engineering Nanyang Technological University c.c Salem Ibrahim, Chairman, SC21 Pte. Ltd. 39 SCHEDULE 7 FORM FOR SERVICE AGREEMENT For the avoidance of any doubt, the terms of the Service Agreement have been expressly agreed between RDS and the Purchaser. 40 EX-2.3 4 ex-2_3.txt EXHIBIT 2.3 EXHIBIT 2.3 SALE AND PURCHASE AGREEMENT BETWEEN THE UNDERSIGNED - - Mr. Jean-Jacques HIRSCH, born on March 16, 1947 in NICE, of French nationality, residing at 26 rue du Veymont, 38320 POISAT, - - Ms. Christiane HIRSCH, born on October 31, 1952 in CANNES, of French nationality, residing at 26 rue de Veymont, 38320 POISAT, - - Mr. Francois HIRSCH, born on June 23, 1975 in GRENOBLE, of French nationality, residing at 2 Allee du Pre Blanc, 38240 MEYLAN, - - Miss Florence HIRSCH, born on October 23, 1973 in GRENOBLE, of French nationality, residing at 2 Allee du Pre Blanc, 38240 MEYLAN, - - Mr. Charles MALKA, born on June 26, 1941 in CASABLANCA (MOROCCO) of French nationality, residing at 43 bis Chemin de la Chaumetiere, 38240 MEYLAN, - - Ms. Judith MALKA, born on September 26, 1941 in AHFIR (MOROCCO) of French nationality, residing at 43 bis Chemin de la Chaumetiere, 38240 MEYLAN, - - Mr. Noam MALKA, born on July 22, 1969 in GRENOBLE of French nationality, residing at 5 rue de Charonne, 75011 PARIS, 2 - - Mr. Andre MEYER, born on December 27, 1946 in PARIS, of French nationality, residing at Le Clos du Rozat, 38330 SAINT ISMIER, - - Mr. Michael LANTZ, born on January 31, 1952 in STOCKHOLM (SWEDEN) of Swedish nationality, residing at 19 The Slimney, Camberley 64151 HH (UNITED KINGDOM) - - Ms. Corinne PITON, born on November 23, 1966 in La TRONCHE of French nationality, residing at 155 Chemin Pouilot, 38660 LUMBIN, - - Mr. Sebastien POINSON, born on June 20, 1969 in LYONS of French nationality, residing at 2 bis rue Jean Giono, 38000 GRENOBLE, present or represented herein by Mr. Jean-Jacques HIRSCH or Mr. Charles MALKA duly empowered to this effect, Hereinafter referred to together as the "ASSIGNORS", ---------------------------------------------------- PARTIES TO THE FIRST PART, - - the company VIEWLOCITY HOLDING FRANCE SARL, limited liability company with 50 000 F capital headquarters at ISSY LES MOULINEAUX (92430), 16 rue Kleber , a company in the process of being recorded with the Register of Commerce and Companies of NANTERRE, represented herein by Mr. Michel FORTIN, its Manager, duly qualified, Hereinafter referred to as the "ASSIGNEE", ------------------------------------------ PARTY TO THE SECOND PART, 3 - - The company E.D.T. -- ELECTRONIC DATA TRANSFEr, limited liability company with 1,000,000F share capital, headquarters in MEYLAN (38240), 4 Chemin de Malacher, registered with the Register of Trade and Companies of GRENOBLE under number B 352 753 800, represented herein by Mr. Jean-Jacques HIRSCH, President of the Board of Directors, duly qualified, Hereinafter referred to as the "COMPANY", ----------------------------------------- PARTY TO THE THIRD PART, AND - - The company VIEWLOCITY, INC., A company governed under the laws of Delaware, headquarters in103 Centre Road, Wilmington, Delaware 19805, United States of America, registered with the Secretary of State of the State of DELAWARE, represented herein by Mr. Stan STOUDENMIRE, duly qualified, Hereinafter referred to as "VIEWLOCITY, INC.", ---------------------------------------------- PARTY TO THE FOURTH PART. 4 PRIOR TO THIS AGREEMENT, THE FOLLOWING HAS BEEN SET FORTH: BRIEF The ASSIGNORS own the entirety of the 10,000 shares making up the capital of the COMPANY. The list of shareholders and the number of shares held by each in the COMPANY are set up in DOCUMENT 1. The ASSIGNORS wish to transfer their share interest in the COMPANY. Subsequently, VIEWLOCITY, INC. has expressed its interest in purchasing the share interest of the ASSIGNORS by the intermediary of the ASSIGNEE, a French subsidiary, whose entire shares are held by VIEWLOCITY, INC. The ASSIGNORS also recognize that the ASSIGNEE would not have contracted without the execution of the "Representations and Guarantee of assets and liabilities", object of an agreement signed simultaneously, which represents an essential condition of the assignment of the entire shares of the COMPANY for the agreed price. This Agreement is aimed at defining the conditions and terms of this share transfer. Many declarations concerning the COMPANY do not appear herein but in the aforementioned warranty agreement. Accordingly, the parties agree not to refer back to them in this agreement, but consider that they form an integral part of this Agreement. ACCORDINGLY, THE FOLLOWING HAVE BEEN AGREED TO AND RULED UPON: AGREEMENTS ARTICLE 1 -- TRANSFER OF SHARES The ASSIGNORS hereby assign, under normal guarantees and lawful conditions in the field, to the ASSIGNEE, who hereby acquires the 10,000 shares of the COMPANY, valued at 100F each, fully paid up (the " SHARES "). The ASSIGNEE becomes owner of the SHARES as of this date. However, he has the enjoyment retroactively thereof as of April 1, 2000 The ASSIGNEE is purely and simply subrogated in all rights and obligations attached to the assigned SHARES as of this date. 5 The ASSIGNORS hereby deliver all share transfers concerning the SHARES signed by all the ASSIGNORS against payment by the ASSIGNEE of the price agreed to below. ARTICLE 2 -- PRICE OF SHARE TRANSFER - PAYMENT 2.1.-- The price of the SHARES is fixed at one million U.S. dollars (US$1,000,000), i.e., $100 per share, corresponding at this date to French francs SIX MILLION EIGHT HUNDRED EIGHTY FOUR THOUSAND FRENCH FRANCS (6,884,000 FF) . The price may be subject to a price complement for some ASSIGNORS if several conditions are fulfilled. The price complement will be paid by issuing a certain number of shares of VIEWLOCITY, INC. under the conditions provided for in article 3 hereafter. This $1,000,000 price will be paid as follows : 0 Cash payment this day of FIVE HUNDRED THOUSAND AMERICAN DOLLARS (US$ 500,000), corresponding on this date to the amount of THREE MILLION FOUR HUNDRED FORTY TWO THOUSAND FRENCH FRANCS (3,442,000 FF) paid by bank guaranteed checks or electronic wire transfers from the ASSIGNEE to the ASSIGNORS; This amount is distributed as follows: - Mr. Jean-Jacques HIRSCH : 40.67% of the selling price (or the amount of US$203,350, representing the equivalent of 1,399,861.40 French francs); - Ms. Christiane HIRSCH : 9% of the selling price (or the amount of US$45,000, representing the equivalent of 309,780 French francs); - Mr. Francois HIRSCH : 0.04% of the selling price (or the amount of US$200, representing the equivalent of 1,376.80 French francs); - Miss Florence HIRSCH : 0.02% of the selling price (or the amount of US$100, representing the equivalent of 688.40 French francs); - Mr. Charles MALKA : 40.79% of the selling price (or the amount of US$203,950, representing the equivalent of 1,403,991.80 French francs); - Ms. Judith MALKA : 0.03% of the selling price (or the amount of US$150, representing the equivalent of 1,032.60 French francs); - Mr. Noam MALKA : 8.93% of the selling price (or the amount of US$44,650, representing the equivalent of 307,370.60 French francs); - Mr. Andre MEYER : 0.01% of the selling price (or the amount of US$50, representing the equivalent of 344.20 French francs); - Mr. Michael LANTZ : 0.01% of the selling price (or the amount of US$ 50, representing the equivalent of 344.20 French francs); - Ms. Corinne PITON : 0.20% of the selling price (or the amount of US$ 1,000, representing the equivalent of 6,884 French francs); 6 - Mr. Sebastien POINSON : 0.30% of the selling price (or the amount of US$1,500, representing the equivalent of 10,326 French francs). - Payment on December 31, 2000 of FIVE HUNDRED THOUSAND AMERICAN DOLLARS (US$500,000), corresponding to the amount of THREE MILLION FOUR HUNDRED FORTY TWO THOUSAND FRENCH FRANCS (3,442,000 FF) paid by bank guaranteed checks or electronic wire transfers from the ASSIGNEE to the ASSIGNORS and allocated as stated hereabove. The Company VIEWLOCITY, INC. hereby undertakes to pay to the ASSIGNORS upon first demand of the latter, without question, this US$500,000 differed price in case of the ASSIGNEE's default on said date. 2.2.--This price is fixed, unconditional and irrevocable, for any reason whatsoever, at the request of one or the other party, the sale of said SHARES being final and definitive in consideration of the US$1,000,000 payment against the remittance of the transfer shares provided for hereabove, despite the eventual enforcement of the "Statements and Guarantees of assets and liabilities", or despite any difficulty whatsoever that could be incurred in connection with the payment or default in payment of the price complement hereunder referred to in Article 3. More generally, the provisions of this Article concerning the price of share transfer are independent and different from any other provisions of this Agreement, in particular those concerning the price complement. ARTICLE 3 --PRICE COMPLEMENTS OF SHARES TRANSFER 3.1.-- This $1,000,000 price in exchange for the SHARES may be subject to a price complement to benefit only certain ASSIGNORS in the event of their compliance of certain conditions as specified hereafter. For four principal ASSIGNORS, the potential price complements are linked to their current presence on December 31,2000 and December, 2001 in the COMPANY, in which case the price complements are due. For the other ASSIGNORS, the price complements are due with no condition attached. The price complements will not be paid in cash but against shares of the company VIEWLOCITY, INC. which will be issued to the ASSIGNORS. To this end, the debts corresponding to the price complements due by the ASSIGNEE will be transferred to VIEWLOCITY, INC. for a price equal to the nominal value of the debts. The transfer price for the debts will be paid to the ASSIGNORS by way of issuance of VIEWLOCITY, INC.'s stocks. To this end, VIEWLOCITY, INC. hereby undertakes to acquire the debts of the assignors in exchange for the issuance of VIEWLOCITY, INC.'s stock. The number and the value of the shares VIEWLOCITY, INC. are specified hereafter depending on whether or not the company will be quoted on the Stock Exchange on the following dates: - - Delivery on December 31, 2000 with an effective date as of January 1, 2001 of an N0 number of shares of the company VIEWLOCITY, INC. according to the V0 value of the shares on December 31, 2000 determined under the following conditions: - - - if V Greater than US$31.25 : N = 125 000 x | 31.25 | 0 0 | ----- | | V | | 0 | - - 7 - - if US$ 25 Less Than or Equal to V :Less Than or Equal to US$31.25:N = 125 000 0 0 - - - - if US$ 6.17 Less Than or Equal to V Less Than US$25 : N = 125 000 x | 25 | 0 0 | -- | | V | | 0 | - - - - if V Less Than US$6.17 : N = 506 483 0 0 With: 1) V equal to the average of stock quotations of the company 0 VIEWLOCITY, INC. over the month preceding December 31, 2000 in the hypothesis that VIEWLOCITY, INC. would be quoted on the NASDAQ on this date; 2) V equal to the value of the share taken into account in the 0 framework of the last issuance of shares of the company VIEWLOCITY, INC., including the last operation of the exchange of shares of companies preceding the date of issuance for which more than 50% of the capital would have been assigned to VIEWLOCITY, INC. in exchange for shares in VIEWLOCITY, INC.. - - Delivery on December 31, 2001 with an effective date as of January 1, 2002 of a N number of shares of the company VIEWLOCITY, INC. according 1 to the V value of the shares on December 31, 2001 determined under the 1 following conditions: - - - - if V Greater Than US$35 : N = 125 000 x | 35 | 1 1 | -- | | V | | 1 | - - - - if US$25 Less Than or Equal to V Less Than or Equal to US$35 : N = 125 000 1 1 - - - - if US$6.17 Less Than or Equal to V Less Than US$25 : N = 125 000 x | 25 | 1 1 | -- | | V | | 1 | - - - - if V Less Than US$6.17 : N = 506 483 1 1 With: 1) V equal to the average of the stock quotations of the 1 company VIEWLOCITY, INC. over the month preceding December 31, 2001 in the hypothesis that VIEWLOCITY, INC. would be quoted on the NASDAQ on this date; 2) V equal to the value of the share taken into account in the 1 framework of the last issuance of shares of the company VIEWLOCITY, INC., including the last operation of the exchange of shares of companies preceding the date of issuance for which more than 50% of the capital would have been assigned to VIEWLOCITY, INC. in exchange for shares in VIEWLOCITY, INC. These Shares will be allocated on December 31, 2000, and December 31, 2001 as follows: - Mr. Jean-Jacques HIRSCH : 40.67% of the N or N amount of the 0 1 shares of the company VIEWLOCITY, INC.; 8 - Ms. Christiane HIRSCH : 9% of the N or N amount of the 0 1 shares of the company VIEWLOCITY, INC.; - Mr. Francois HIRSCH : 0.04% of the N or N amount of the 0 1 shares of the company VIEWLOCITY, INC.; - Miss Florence HIRSCH : 0.02% of the N or N amount of the 0 1 shares of the company VIEWLOCITY, INC.; - Mr. Charles MALKA : 40.79% of the N or N amount of the 0 1 shares of the company VIEWLOCITY, INC.; - Ms. Judith MALKA : 0.03% of the N or N amount of the shares 0 1 of the company VIEWLOCITY, INC.; - Mr. Noam MALKA : 8.93% of the N or N amount of the shares of 0 1 the company VIEWLOCITY, INC.; - Mr. Andre MEYER :0.01% of the N or N amount of the shares of 0 1 the company VIEWLOCITY, INC.; - Mr. Michael LANTZ : 0.01% of the N or N amount of the shares 0 1 of the company VIEWLOCITY, INC.; - Ms. Corinne PITON : 0.20% of the N or N amount of the shares 0 1 of the company VIEWLOCITY, INC.; - Mr. Sebastien POINSON : 0.30% of the N or N amount of the 0 1 shares of the company VIEWLOCITY, INC. 3.2. -- In the event the number of shares of VIEWLOCITY, INC. issued and outstanding between this day and December 31, 2000 or December 31, 2001, by means of a stock split, stock dividend, reverse stock split or any other similar recapitalization, the reference value of the shares VIEWLOCITY, INC. as defined hereabove and the number of shares to be issued to the ASSIGNORS shall be adjusted appropriately to reflect said restructuring. For instance, in the event of a 2 for 1 stock split or a 1 for 1 stock dividend, the adjustments to the computation provided for in article 3.1. hereabove will be as follows: - 125,000 shares become 250,000 shares - the reference values for the 12/31/00 distribution should change from $25 - $31.25 to $12.50 - $15.625, and those for the 12/31/01 distribution should change from $25-$35 to $12.50 -$17.50; - the floor and ceiling share values should change as follows: - $15.625 instead of $31.25; - $3.085 instead of $ 6.17. On the other hand in the event of a 1 for 2 reverse stock split, the adjustments to the computation provided in article 3.1. hereabove will be as follows: 9 - 125,000 shares become 62,000 shares - the reference values for the 12/31/00 distribution should change from $25 - $31.25 to $50 - $62.50 and those for the 12/31/01 distribution should change from $25 - $ 35 to $ 50 - $70; - the floor and ceiling share values should change as follows: - $62.50 instead of $31.25; - $12.34 instead of $6.17. 3.3.-- If a dispute arises between the parties concerning (i) the reference value of the share VIEWLOCITY, INC. (without leaving the parties to have any possibilities to challenge the reference value itself as defined in article 3.1. herebelow which value is binding upon the parties), (ii) the computation of the number of shares or the value of the VIEWLOCITY, INC. shares to be issued in conformity with article 3.2. herebelow and, consequently, the number No or N1 of shares to be issued to some or all of the ASSIGNORS, it will be referred to a third party belonging to the national list of Accountants, in conformity with Article 1592 of the Civil Code, agreed upon by the parties, or, if need be, decided by the President of the Commercial Court of NANTERRE, referring to the request of the claimant party. The Expert could request any and all documents concerning his assignment and will have to specify the reference value of the VIEWLOCITY, INC. Shares, proceed with the computation herebelow defined and determine the number of shares to be issued to each of the ASSIGNORS within the month of his appointment. The Expert Testimony will take place in Paris. The ASSIGNEE undertakes to provide for all appropriate documents and information to the Expert. The costs incurred for an accountant will be divided equally between the parties. 3.4.-- In case of change of control in the capital of the company VIEWLOCITY, INC. (i.e. change of more than 50% of the capital or the voting rights) before December 31, 2000 or December 31, 2001, VIEWLOCITY, INC. will, immediately following the change of control, proceed with the issuance of the shares corresponding to the price complements listed in this contract and the payment of the differed price as described in article 2.1. hereabove. The V0 and/or V1 values will correspond to the value of the shares of the company VIEWLOCITY, INC. taken into account in the framework of the transfer of control or voting right of the latter. 3.5.-- It is agreed between the parties that the shares of the company VIEWLOCITY, INC., object of the price complements provided for hereabove, will be delivered by the ASSIGNEE to Mr. Jean-Jacques HIRSCH, Mr. Charles MALKA, Ms. Corinne PITON and Mr. Sebastien POINSON on the condition that these Beneficiaries, for the delivery each should obtain, are still employees and/or officers of the COMPANY on December 31, 2000 and/or December 31, 2001. However, these people on December 31, 2000 and/or December 31, 2001, will have the right to an earlier delivery of the shares of the company VIEWLOCITY, INC., even though they are not anymore an employee of the COMPANY, in the following cases: - in case of either a revocation or a non-renewal of his officer position without cause in the sense of the regime of members of the Directory concerning Mr. Charles MALKA, or a termination different from a termination for fault of which the origin is prior to the dates listed hereabove concerning Mr. Jean-Jacques HIRSCH, Mr. Sebastien POINSON and Ms. Corinne PITON; - in case of death or inability of these people in the sense of article L. 341.4-2) and 3) of the Social Security Code; 10 - in case of transformation of the COMPANY leading to Mr. MALKA's dismissal. 3.6. -- In any event, the issuance of the VIEWLOCITY, INC. shares will be subject to certain conditions specified in the Stock Restriction Agreement hereto attached as DOCUMENT 2. Each ASSIGNOR declares and acknowledges that he read the attached document in the English language and fully understood its terms. This document constitutes an essential and determining condition of the issuance of said shares to each Assignor. They undertake to initial and sign the Stock Restriction Agreement in the same form as the one hereto attached prior to any issuance of shares. It is however specified that if any minor changes are made because of the necessity to comply with current regulation, each ASSIGNOR expressly undertakes to sign the document as modified prior to any issuance of shares. 3.7.-- The issuance of the VIEWLOCITY, INC. shares will finally be subject to certain conditions specified in the document entitled Offshore Investment Representations hereto attached as DOCUMENT 3. Each ASSIGNOR declares and acknowledges that he read the attached document in the English language and fully understood its terms. Each ASSIGNOR hereby also undertakes to comply with all of the US securities regulations contained in this document. ARTICLE 4 -- REIMBURSEMENT OF SHAREHOLDERS' LOANS The ASSIGNORS are, as of this day, holders of the following shareholders' loans, registered in their names in the COMPANY's books : - - M.Charles MALKA for an amount of 140 000 F, - - M. Jean-Jacques HIRSCH for an amount of 2 405 F. The BENEFICIARY reimburses on this date to each of these ASSIGNORS in the amount of their shareholders' loans to the COMPANY. ARTICLE 5 - DOCUMENTS DELIVERED THIS DAY BY THE ASSIGNORS TO THE ASSIGNEE The ASSIGNORS deliver this day to the ASSIGNEE the following documents: 1. The Statements and Guarantees of assets and liabilities, duly signed by the ASSIGNORS; 2. All stock transfer certificates duly completed and signed concerning the SHARES as specified in Article 1 above; 3. The unconditional resignation letters with no compensation possible from all Board members of the COMPANY; 4. The corporate documents concerning the COMPANY (register of shares' transfers; shareholders' accounts updated as of this date; register of the minutes of the Shareholders' and Board of Directors' Meetings of the COMPANY); 11 5. A certified copy of the minutes of the Board of Directors' Meeting of the COMPANY, approving the ASSIGNEE as is provided for in Article 8.1. herebelow; 6. A certified copy of the minutes of the Board of Directors of the COMPANY inviting shareholders to attend the Special Shareholders' Meeting on June 21, 2000 as specified in Article 8.2 hereunder. ARTICLE 6 -- GUARANTEE OF THE ASSIGNORS Mr. Jean-Jacques HIRSCH and Mr. Charles MALKA grant ASSIGNEE all the SHARES forming the COMPANY's share capital, a guarantee according to the terms of an agreement titled "Statements and Gurantees of assets and liabilities," signed simultaneously on this day, which concerns the COMPANY's accounts already submitted to the ASSIGNEE, closed on December 31, 1999 and the COMPANY's accounting status closed on March 31, 2000. This Share and Purchase Agreement and the Statements and Guarantees Agreement are integral to each other. ARTICLE 7 -- INTERIM PERIOD As far as the interim period is concerned ranging from March 31, 2000 to this day, the ASSIGNORS declare: 7.1. -- The COMPANY has not, since March 31, 2000, carried out any assignment or acquisition of intangible fixed assets. It has not, since March 31, 2000, either assigned or acquired any tangible asset of a substantial nature other than in the normal course of its business. It has not to date, conferred or subscribed other than in the normal course of its business, any promise of sale or purchase having as its object any asset whatsoever, notably securities such as shares in French or foreign companies, elements of industrial, commercial or artistic property, real estate or real estate rights or property rights or any goodwill, elements of goodwill, rights or options to leases, and this list isnon-exhaustive. It has not, since March 31, 2000, abandoned any rights or privileges or made any exceptional losses above in an amount exceeding 5,000F. Since March 31, 2000, the COMPANY has not contracted or incurred any certain debt, whether immediately due or not which is not accounted for in this balance sheet with the exception however of current liabilities incurred in the normal and habitual course of business. 7.2. -- Since March 31, 2000, the COMPANY has not subscribed any hire-purchase contract, off balance sheet transaction and has not given any security or endorsement; it has not been the subject of any guarantee given by a third party. 7.3.-- Since March 31, 2000, and up until the present date, no allocation, payment or distribution of a dividend or installment thereon or reserve to the shareholders of the COMPANY has taken place. 12 7.4. -- Since March 31, 2000, the rent under the current lease has not been increased other than in accordance with the contractual indexation provided for in the said lease. 7.5. -- Since March 31, 2000, the COMPANY has not granted any individual, general or uniform increase of remuneration in whatever form, to its executives, managers, leaders or representatives notably bonuses or retirement schemes. 7.6. -- Since March 31, 2000, the COMPANY has not recorded the mass resignation or intention to resign of either the commercial staff or the executive managers, and more generally of any person whose departure would have a material effect on the business operations of the COMPANY. 7.7. -- More generally, there has been since March 31, 2000, up until this date no major change affecting in a significant and durable way the financial or business situation of the COMPANY as the COMPANY has been regularly managed according to the same methods as during prior financial years. The ASSIGNORS thus confirm that since March 31, 2000, up until this date, only operations of a basic nature, forming part of the framework of the COMPANY's customary activities were accomplished. The ASSIGNORS are unaware of any precise elements that occurred during this period and that could significantly or unfavorably influence the situation of the COMPANY or the interest of the ASSIGNEE in the take-over. 7.8. -- To the knowledge of the ASSIGNORS, the COMPANY's financial situation so far has not developed unfavorably compared to that of March 31, 2000, and they are unaware of any elements or specific circumstance that, to date, could have any substantially negative consequences upon the operation of the COMPANY. More generally, all Declarations and Guarantees mentioned in the agreement titled " Statements and Guarantees of assets and liabilities " signed simultaneously with this Agreement, concerning the COMPANY's situation prior to this date shall be applicable to this interim period. ARTICLE 8 -- GENERAL CONDITIONS 8.1. -- ASSIGNEE'S APPROVAL The ASSIGNEE has been approved by the competent authorities of the COMPANY as is the result of the copy of the minutes of the Board of Directors Meeting dated June 1, 2000. 8.2. -- CHANGE OF AGENTS The ASSIGNORS deliver to the ASSIGNEE the letter of resignation from each of the COMPANY's Directors on this date. In addition, the ASSIGNORS agree to convene an Extraordinary Shareholders' Meeting with the following on the agenda: - - resignation of the members of the Board of Directors to take effect as of this date, 13 - - appointment of Mr. Charles MALKA Mr. Stanyarne STOUDENMIRE and Mr. Gregory CRONIN as new Directors to take effect as of this date. 8.3. -- UNDERTAKING OF SOME ASSIGNORS 8.3.1. -- NON-COMPETITION UNDERTAKING As long as they will exercise an activity in the COMPANY and during two (2) years which will follow the termination of their duties with the COMPANY, whatever the reason may be and whichever party takes the initiative, including the cases of resignation or dismissal for those of the ASSIGNORS who will remain to have duties with the COMPANY, or during a period of two (2) years from the date of this Agreement for those of the ASSIGNORS who will no longer have any duties with the COMPANY, the ASSIGNORS undertake not to exercise any activities which would compete with the activities carried out by the COMPANY on the date they cease to exercise their duties with the COMPANY or on the date of this Agreement, as the case may be, and this, directly or indirectly, personally or by any other person, in return for payment or free of charge, acting for themselves or for a third party. 8.3.2. -- NON-REEMPLOYMENT UNDERTAKING During the first two (2) years which will follow the termination of their duties with the COMPANY, whatever the reason may be and whichever party takes the initiative, including the cases of resignation and dismissal for those of the ASSIGNORS who will remain to have duties with the COMPANY, or during a period of two (2) years from the date of this Agreement for those of the ASSIGNORS who will no longer have any duties with the COMPANY, the ASSIGNORS undertake not to solicit, directly or indirectly, for themselves or for any other person whatsoever, any employees, agents or directors of the COMPANY. 8.3.3. -- EXCLUSIVITY UNDERTAKING As long as they will exercise an activity in the COMPANY, those of the ASSIGNORS who will remain to have duties with the COMPANY undertake to devote the whole of their time and the exclusivity of their professional activity, even should it be part time, exclusively for the COMPANY. 8.4. -- SANCTIONS Any harm caused by any violation of the undertakings certified in 8.3.1., 8.3.2. and 8.3.3., will give place to injunctive relief to stop this breach as well as the allocation of damages in favour of one of the COMPANY and/or the ASSIGNEE. ARTICLE 9 -- ATTRIBUTION OF JURISDICTION - APPLICABLE LAW The Commercial Court of NANTERRE will solely be considered competent for any litigation concerning the performance, interpretation and consequences of this Agreement Solely French law will apply to this Agreement. ARTICLE 10 -- CONFIDENTIALITY 14 The parties agree that this Agreement as well as all other related documents are confidential and may not be disclosed except as required by law or any relevant regulatory body. Consequently, any party in breach of this covenant will bear all of the costs and fees related to this breach and indemnify the other party for any harm suffered. It is however agreed between parties that the Beneficiary is authorized to provide a copy of this document to the appropriate authorities in case of public offering of the company VIEWLOCITY, INC. or any other affiliate thereof. ARTICLE 11 - GENERAL PROVISIONS These operations are an integral whole and cannot be carried out in part, except as far as concerns the victim in renouncing all or part of its rights if it so deems fit. Each party will bear the costs of its counsels. This agreement and its attachments are a complete protocol replacing any prior agreement or memorandum written or oral elsewhere and which are considered as null and void. In Paris Dated June 21, 2000 THE ASSIGNEE THE ASSIGNORS FOR VIEWLOCITY HOLDING FRANCE SARL Mr. Jean-Jacques HIRSCH - ---------------------------------- Ms. Michel FORTIN Ms. Christiane HIRSCH Mr. Francois HIRSCH Miss Florence HIRSCH Mr. Charles MALKA Ms. Judith MALKA 15 THE COMPANY Mr. Noam MALKA FOR EDT S.A. Mr. Andre MEYER - ------------ Mr. Jean-Jacques HIRSCH Mr. Michael LANTZ Ms. Corinne PITON Mr. Sebastien POINSON FOR VIEWLOCITY, INC. - -------------------- - -------------------- Greg CRONIN 16 DOCUMENT 1 LIST OF SHAREHOLDERS -------------------- AND NUMBER OF SHARES HELD BY EACH OF THEM ----------------------------------------- - - Mr. Jean-Jacques HIRSCH : 4 067 actions - - Ms. Christiane HIRSCH : 900 actions - - Mr. Francois HIRSCH : 4 actions - - Miss Florence HIRSCH : 2 actions - - Mr. Charles MALKA : 4 079 actions - - Ms. Judith MALKA : 3 actions - - Mr. Noam MALKA : 893 actions - - Mr. Andre MEYER : 1 action - - Mr. Michael LANTZ : 1 action - - Ms. Corinne PITON : 20 actions - - Mr. Sebastien POINSON : 30 actions ------------- TOTAL : 10 000 actions
17 STATEMENTS AND GUARANTEE OF ASSETS AND LIABILITIES BETWEEN THE UNDERSIGNED: - - MR. JEAN-JACQUES HIRSCH, born on March 16, 1947 in NICE, of French nationality, residing at 26 rue du Veymont, 38320 POISAT, - - MR. CHARLES MALKA, born on June 26, 1941 in CASABLANCA (MOROCCO), of French nationality, residing at 43 bis Chemin de la Chaumetiere, 38240 MEYLAN, acting jointly and severally and undertaking jointly themselves and their descendents, minor or otherwise, HEREINAFTER REFERRED TO TOGETHER AS THE "GUARANTOR", PARTIES TO THE FIRST PART, AND : - - THE COMPANY VIEWLOCITY HOLDING FRANCE SARL, limited liability company with 50 000 F capital, headquarters at ISSY LES MOULINEAUX (92430), 16 rue Kleber , a company in the process of being recorded with the Register of Commerce and Companies of NANTERRE, under the number B___________________ represented herein by Mr. FORTIN, its Manager, duly empowered, HEREINAFTER REFERRED TO AS THE "BENEFICIARY", PARTY TO THE SECOND PART, 18 AND : - - THE COMPANY EDT - ELECTRONIC DATA TRANSFER, described in full herebelow, represented herein by Mr. Jean-Jacques HIRSCH, in his capacity as President of the Board of Directors, duly empowered, PRIOR TO THIS AGREEMENT, THE FOLLOWING HAS BEEN SET FORTH : BRIEF The Guarantor has transferred to the Beneficiary the entirety of the 10,000 shares making up the capital of company EDT - ELECTRONIC DATA TRANSFER (a limited liability company with a share capital of 1,000,000F with a registered office at 4 chemin de Malacher, Meylan - 38240, and registered with the Register of Commerce and Companies of GRENOBLE under number B 352 753 800)(hereafter referred to as the "COMPANY"). The acquisition of the Company from the Guarantor by the Beneficiary was completed through the Statements given to it by the Guarantor, and through the confirmation of the provisions of the Guarantees stated herein. This agreement is aimed at defining the conditions and terms of this obligation. ACCORDINGLY, THE FOLLOWING HAVE BEEN AGREED UPON AND FINALIZED AS: ARTICLE 1 - GENERAL STATEMENTS The Guarantor declares and guarantees that: 1.1.- CONSTITUTION AND OPERATION OF THE COMPANY The company EDT - ELECTRONIC DATA TRANSFER is a limited liability company with a registered office at 4 chemin de Malacher, Meylan - 38240, and is filed with the Register of Commerce and Companies of GRENOBLE under number B 352 753 800, as indicated by the K-bis extract attached hereto (ANNEX 1). 19 It validly holds the title of the corporate name EDT-ELECTRONIC DATA TRANSFER, the property of which can not be contested, nor does it infringe the right to principle use by a legal entity, nor the rights of a trademark or trade name holder whatsoever. The Company's business activity is in conformity with those provided for in the Company's bylaws attached hereto (ANNEX 2). The Company's share capital is currently set at 1,000,000F, divided into 10,000 shares of a per value of 100F each, fully paid up. The closing of the Company's fiscal year is on December 31st of each year. The Company is managed by a Board of Directors composed of four members. Mr. Jean-Jacques HIRSCH declares on this date not to be the beneficiary of an employment contract on top of his position as President of the Board of Directors. No Board Member is the beneficiary of an employment contract on top of his/her position at the Board level. The Company's auditors are: - - Mr. Claude GENGOUX, Principal Auditor, - - Mr. Thierry GLENAT, Deputy Auditor, Their term of office expires upon the Annual Shareholders' Meeting to approve the financial statements for the fiscal year ending on December 31, 2001. The minutes of the Board of Directors' and the Shareholders' Meetings and the attendance sheets to such Meetings are in conformity with the current regulations, regularly kept up to date and signed. Since the incorporation of the Company, all formalities of notice resulting from the decisions reached from the very beginning have been followed regularly in accordance with the current regulations. 1.2.- SHARES OF THE COMPANY The 10,000 shares making up the share capital of the Company being acquired by the Beneficiary are free of any mortgage, privilege, option, restriction, seizure or engagement whatsoever and their origin of ownership in the hands of the Guarantor is regular. The ownership of the Company shares results from their registration with the register of share transfer (COPY IN ANNEX 3). 20 Except the 10,000 shares making of its share capital, the Company has established no other shares whatsoever of any kind. Each share comprising the share capital of the Company corresponds to the right to a one vote. 1.3.- ANNUAL ACCOUNTS OF THE COMPANY AND THE INTERIM ACCOUNTING STATUS AS OF MARCH 31, 2000 - FINANCIAL STATE AND SITUATION OF THE TREASURY The annual accounts (balance sheet, profits and loss accounts and appendixes) of the Company, closed on December 31, 1999, decided by the Board of Directors of March 15, 2000 and approved by the Ordinary General Shareholders' Meeting dated May 3, 2000 (minutes of the Board of Directors' and the Shareholders' Meetings are hereto attached as ANNEX 4) and the interim accounting status of the Company of March 31, 2000 (the "Interim Accounting Status of March 31, 2000") were drawn up in conformity with the accounting principles in effect, and in compliance with continuity in their applications from one financial year to another. These accounts are attached to this Agreement (ANNEX 5 AND 6) and are a sincere and faithful image of the Company's situation, as well as of its assets, and of its activities on those dates. All the obligations or commitments of the Company on December 31, 1999 and March 31, 2000 are duly accounted for or given an allowance according to the same principles and accounting rules as for the previous fiscal years. All the Company's assets are subject to depreciation due to the events occurred before December 31, 1999 or March 31, 2000, or that are underway on these dates. On the balance sheets on these dates, there are sufficient allowance to offset such depreciation. They also contain all allowances needed for any loss or charge that might reasonably be anticipated. Finally, all allowances concerning the proper accounting and financial management are reported in the accounting entries, and in particular, all necessary allowances have been made for all direct or indirect taxation imposed or to be imposed on the Company for the closing period on December 31, 1999 and for the period prior to the Interim Accounting Status as of March 31, 2000, including an allowance of 88,000F for a penalty that the company France TELECOM may claim against the company in connection with the order number 946 M 853. Accordingly, the Guarantor declares and guarantees that there are no known liabilities on December 31, 1999 and/or on the date of the Interim Accounting Status due or the term of which is known, determined or determinable, not indicated in the balance sheet of the Company closed on December 31, 2000 and/or the interim accounting status of March 31, 2000. The different books and accounting documents required by the current regulations have been kept regularly and depict the exact situation of the Company. 1.4.- MATERIAL, INSTALLATIONS AND EQUIPMENT 21 The Company is the full owner of all material, installations and equipment listed in its balance sheet closed on December 31, 1999. The Guarantor declares that it has full ownership of the material, installations and equipment listed in the Interim Accounting Status of March 31, 2000. None of the elements comprising the material, installations and equipment necessary for the operation at present nor the real property of the Company's business has been rented or loaned to the Company, nor given by a third party, the Company having sole ownership, with the exception of those elements listed in ANNEX 7. Said Annex also contains the current capital lease contracts. None of these assets or rights has been seized or is subject to seizure. The Guarantor has no knowledge of any restrictions or limitations whatsoever concerning the use of these rights and assets in the context of their present exploitation. None of them is the subject of any retention of title provision. All of the various materials and equipment used by the Company is, as of this date, in its normal state of use, maintenance and repair. 1.5.- COMPANY'S ASSETS The business freeholds operated by the Company were established by the Company upon its incorporation. The elements comprising the Company's assets and, more particularly, its business freeholds, are free from any inscription, mortgage, privilege, option, restriction, seizure or engagement whatsoever, other than those listed in ANNEX 8. The Guarantor declares that nothing hinders the Company's right to free disposal and enjoyment of its business freeholds (with the exception of rights resulting from the pledge inscriptions listed in Annex 8 mentioned above) and all elements comprising said business freeholds. The Company is the valid holder of a sub-rental agreement hereto attached as ANNEX 9, for the premises located at its registered office; it is not the holder of any other lease agreement nor of any domiciliation agreement, except for a draft of lease agreement for the future location of the Company, for which a copy is hereto attached as ANNEX 10; nor has it agreed to a lease or domiciliation agreement. The Company's right to occupy the premises on which its registered office is located is presently valid, and no termination thereof has been sent; the next term is set for September 30, 2000, and in absence of a statement request otherwise from either the principal tenant or the Company, this lease will continue until September 30, 2002, at which time the Company must definitively leave the premises. 1.6.- OFF-BALANCE SHEET ENGAGEMENT - ENDORSEMENTS AND GUARANTIES 22 The Company has neither given nor received, up until present, any endorsement or guarantee of any kind for the execution of engagements contracted either by itself, or by a third party. There exists, at present, for the Company, no off-balance sheet obligations nor capital loans, other than that listed in ANNEX 11. 1.7.- INSURANCE The Company is insured with a reputable and solvent company against damages which may cover the companies' properties, and its professional civil liability conforming with the custom in its field of profession, and the Company has not done or omitted to do anything which might render null or of no effect the said policies. Premiums are regularly paid and there is no late payment. 1.8.- ONGOING CONTRACTS The Company is not bound by any other contract or commitment whatsoever, that can be terminated without indemnity in compliance with a prior notice in excess of three months. The state of the Company's loans and lines of credit (mentioning the ongoing guaranties granted) included in ANNEX 12 are true and correct. The Company has duly complied with and still complies with its contractual obligations in such a way that no claim or termination of contracts may be applicable on this date. The take-over of the Company by the Beneficiary is not likely to give rise to the early termination of any contracts, which are significant to the carrying on of the Company's activities or to the termination of any loan agreements entered into by the Company. Moreover, the Company has not received any letter from any client concerning their intent to terminate their relations with the Company after the take-over, purpose of this Agreement. The Company has not committed itself, in its contracts entered into with its clients or suppliers, to any obligation that could be considered as exorbitant applicable to said contracts, according to their nature or specificity. The Company purchases directly from its suppliers or their subsidiaries without the intervention of intermediaries directly or directly linked to the Guarantor. The Company is not bound by any contract limiting its freedom to compete. It has not entered into any contract with sales representatives or commercial agents or any other person and has not taken any commitment whatsoever referring to the purchase, distribution and sale of its products. 23 All of the Company's supplies have at present been made under conditions comparable on all points with those of the free competition market. Prior to this date, no particular advantage whatsoever has been granted to the benefit of the Company or to its detriment through preferential transactions which could have, in the past, affected the annual accounts and, in the future, modified operating conditions. Similarly, sales have gone through prior to this date under normal market conditions without any preferential condition on the Company or any exceptional discount with the exception of the simple interplay of normal business practice. The Company's General Conditions of Sales, hereto attached as ANNEX 13, comply in particular with the economic regulation in force. Furthermore, both for purchase and sales of goods or services, there is no engagement to operate at prices that are already determined or to be determined according to a pre-established formula. There is no agreement, even verbal, which would have the result of obliging the Company of accepting imposed purchase prices or of preventing them from freely setting their sales prices in the future. No substantial interruption has occurred prior to the takeover by the Beneficiary in business relations between the Company and its suppliers or major customers and nothing suggests that such an interruption or refusal to pay for current orders may occur. The Company has not taken any engagement that would preclude them from passing on these prices increases for raw materials and other purchases, to their current retail prices until after this date. 1.9.- EMPLOYMENT CONTRACTS - LABOR POLICY The list of employees, hereto attached as ANNEX 14, is correct and represents the complete state of personnel at present. The Company is subject to the bargaining agreement of the Office of Technical Studies, Engineering Advisors and Consulting Firms. No employment contract or particular advantage has been granted by the Company to any one of its officers, nor has any employment contract intended for any one of the employees been created with more favorable provisions, in particular in terms of termination indemnity, including retirement plans, profit-sharing schemes or otherwise, other than those listed in the applicable bargaining convention. There exists no fixed-term employment contract. The employment contracts concluded between the Company and its personnel all conform with the applicable regulations (legislative, statutory or those issued from the Company's applicable bargaining convention). 24 The Guarantor declares and guarantees that the Company has not, at present, granted nor promised any increase in salary or other advantages to its employees or company officers. All of the Company's registers (in particular the registers concerning incoming and outgoing personnel, pay, etc.) are regularly opened and kept up to date. Working regulations in the Company are in conformity with legal prescriptions in terms of labor, hygiene and safety regulations and the Company is not the subject of any claims, procedures or penalties on this point; the Company is in compliance with the legislative provisions and regulations regarding the working hours. The Company has always complied with labor regulations and is up to date in the payment of all its contributions regarding social security, family allowances and all the retirement and unemployment organizations. The Company complies with all social security regulations. It also complies in every way with the applicable regulation in terms of personnel representative bodies. The Guarantor declares that all information required by law and regulations resulting from change of control of the Company have been given regularly to the employees and in particular to the personnel representative bodies. 1.10.- FISCAL REGULATIONS The Company has always complied, up to this date, with the fiscal regulations, and is up to date with the payment of all taxes and dues. There exists at present no request for information or contention from the tax authorities, nor any complaint of any kind. The Guarantor declares that all acts and operations completed up until present by the Company have been and are regular, notably from a tax point of view. He guarantees to the Beneficiary that all fiscal operations up until present regarding taxes are up to date. 1.11.- CURRENT LITIGATION The Company is not a part, as of this date, of any legal action, litigation, arbitration on both the defense or the claiming side except for the litigation listed in ANNEX 15 FOR WHICH THE GUARANTOR REMAINS LIABLE. 25 Moreover, there exists no legal action against someone whose acts would subject and bind the Company to be legally responsible. The Guarantor declares that, to his knowledge and the knowledge of the Company's officers, there is no action, inquiry or similar procedure to be engaged which might affect the Company, its activities or its assets. The Company has complied with both the French and European economic regulations relating to competition, and is not the subject of any request, proceedings or claim in these areas. The Company operates in accordance with the legislative and regular provisions that apply specifically to it. It has not been notified, as of this date, of any infringement, even if claimed against, which could prohibit it from exercising all or part of its activities or restricting such exercise or even more so, depreciating its assets. The industrial and/or intellectual property rights are owned by the Company and are not, as of this date, the subject of any court injunction; the Guarantor has no knowledge, as of this date, of any infringement of the said rights by any third party, nor of any claim by a third party for violation by the Company of the rights belonging to third parties. The products manufactured and marketed by the Company conform with legislative and regular provisions whether general or specific to its activity, in particular those concerning hygiene and safety and information and protection of consumers. No particular guarantee has been given for these products under the terms of which the Company might be responsible beyond the limits and duration provided for by law. As of this date, there is no action underway for liability or termination of contract against the Company for reasons of non-conformity, hidden defects or defective products. Further, to the knowledge of the Guarantor, no event susceptible to cause such action has occurred. The Guarantor remains in any event liable for any defects, disfunctions or others incurring a complaint on the part of the clients concerning the design, the manufacturing and/or the deliveries of these products prior to this date. The Company has not committed any illegal acts regarding freedom of prices and competition regulations, whether national or European, regarding customs regulations, regulations concerning financial relations with foreign countries. More particularly, there are no claims or investigations being underway for infringement of legislation concerning freedom of prices or competition. 1.12.- MANAGEMENT OF THE COMPANY FOR THE PERIOD SINCE DECEMBER 31, 1999 26 Between December 31, 1999 and the date of signature of the present agreement, the Company has undergone no modification in its financial situation, other than changes resulting from normal activity. The Company has filed, in due time, all taxes, special taxes and company statements imposed by legislation in force. The Company is, as of this date, up to date with the payment of all its taxes, duties, social contributions, etc., and in the subject of no assessment, upcoming audit or complaint by any authorities whatsoever, with the exception of the tax assessment which occurred during the months of February and March, 2000 for the period from January 1, 1997 up until September 30, 1999 and for which the elements listed in ANNEX 16 are communicated by the Guarantor. The Company has never been in bankruptcy or liquidation proceedings, and no inscription has ever been filed against it at the Register of Pledges. The Company has no interest, even a minority interest, in any company whatsoever, or in any other grouping or legal entity. The Guarantor declares, moreover, that the Company has made a total turnover before tax 3,000,000F for the period from January 1, 2000 to March 31, 2000, and that in the same period, the estimated loss is 200,000F. 1.13.- ENGAGEMENTS CONCERNING THE " TRANSITION INTO THE YEAR 2000 " CONCERNING COMPUTER EQUIPMENT USED BY THE COMPANY IN ORDER TO OPERATE THE COMPANY The Guarantor guarantees that all computer equipment used by the Company in order to operate the Company can sustain the transition from the year 2000 to the year 2001. He guarantees the Beneficiary that all consequences of any future system malfunction causing harm to the Company and caused by said transition will be the subject of compensation paid by the Guarantor. CONCERNING THE COMMITMENTS MADE BY THE COMPANY IN REGARD TO THIRD PARTIES ON THE COMPATIBILITY OF PRODUCTS SOLD, DEVELOPED OR INSTALLED BY IT IN THE FRAMEWORK OF THE TRANSITION TO THE YEAR 2000 AND 2001 The Company guaranteed to certain clients that the products that it installed or sold or developed for them are completely compatible with the transition to the year 2000 as well as the year 2001. The Guarantor guarantees the Beneficiary against all consequences resulting from product malfunction in the framework of these events except for the AM Trix products supplied by VIEWLOCITY, INC.; all cases of malfunction, except for those cases related to the AM Trix products, detrimental to the Company will be subject to compensation by the Guarantor based on this Agreement. 27 1.14.- OWNERSHIP RIGHTS The Company holds by right, without any restriction or reservation, all the trademarks, brand names, logos, signs, drawings, patents, author's rights and other rights (hereinafter referred to as the "RIGHTS") that it uses for conducting its activities included in the list attached in the ANNEX 17 and there is no conflict with the rights held by third parties. The Rights are held and when they can be registered, are validly registered in the name of the Company (and not in particular in the name of the Guarantor or an employee of the Company) and are free of any lien. The Company has paid up all corresponding fees. The Company has not granted to any party whatsoever any rights or license to use any of the Rights. The Rights are not the subject of any contestation by third parties and are not liable to be so. The Company is not a user and does not need to use and has no interest in the trademarks, trade names, logos, drawings, patents or author's rights other than the Rights. The Company has not counterfeited any patents, trademarks, trade names, drawings, author's rights held by third parties. As owners or licensee on an exclusive basis and for all countries in which it operates, the Company holds all of the intellectual and industrial property rights related to the activities of the Company of which a complete list and description are given in ANNEX 17. The Guarantor hereby confirms that the rights the Company can grant to its clients in the framework of its activities are valid and do not interfere with any right of any third party nor cause any harm to any third party. For the rights to which it is not the owner, the Company has always settled any dues it owed, in conformity with the provisions of the license agreements. These rights are not the subject of any claim by third parties and are not likely to become one. The Rights benefiting from legal protection have been duly registered or deposited by the Company. 1.15.- CREDITS The client debts, bills and receivables held by the Company are valid and recoverable for the amounts entered into the Company's accounts as of December 31, 1999 and/or March 31, 2000, less such applicable provisions for bad debts which have been entered into its accounts and for 28 which sufficient allowance as of December 31, 1999 or March 31, 2000 has been made so that their net value reflects exactly the amounts recoverable. The Company owns the bank accounts entered on its balance sheets. It has the free disposition of all sums credited to such bank accounts. The signing powers are granted to Jean-Jacques HIRSCH and Corinne PITON. 1.16.- GRANTS The Company has not entered into any agreement that could incur the reimbursement or the non-payment of a grant or a subsidy that would have been or that should be paid to it. All grants or subsidies paid to the Company over the last six years have been disclosed to the Beneficiary and are listed in ANNEX 18. 29 1.17.- DEBTS The cumulative borrowings and other financial debts set out in lines DV and DU of the Company's March 31, 2000 Interim Accounting Status are not greater than 763,353 French Francs as of this date, and the cash flow corresponding to the CF line of the Company's March 31, 2000 Interim Accounting Status are not inferior, as of this date, to _________ French Francs. As of this date, there is no engagement aimed at making or financing an investment. The Company has not granted guarantees or any promise of loan, subsidies on lost capital or advanced capital to the benefit of any third party or any of its employees, including to the benefit of any of their Board Members, managers or shareholders or companies or entities whose the Guarantor or the officers of the Company are officers, shareholders or partners. There exist no loan between the Company and the Guarantor or companies controlled directly or indirectly by the Guarantor, nor any particular advantages or guarantees, securities, comfort letters given by the Company to the Guarantor or granted by the Guarantor to the Company. The Company has not granted any loan or advance payment nor any security whatsoever to any Board Member, manager, employee or shareholder of the Company. As of this date, all assignor shareholders have no current accounts opened in the Company's books. 1.18.- GENERAL STATEMENTS No statement made by the Guarantor herein and its appendixes omits to disclose a material fact which would be determining or would render misleading all or part of the statements contained in this Guarantee and which might have affected the Beneficiary in his decision to go through with the take-over. ARTICLE 2 - GUARANTIES 2.1.- INACCURACY OR OMISSION The Guarantor declares that the Declarations and Guarantees hereabove reflect the truth of the situation of the Company and omits no fact, element, information, event or inquiry susceptible to negatively affect, as of this date, the situation of the Company as well as its future perspectives. 30 The Guarantor will compensate either the Company or the Beneficiary, at the latter's choice, for all damages resulting from the inaccuracy or omission in the Statements or Guarantees included in the present contract and in the Appendixes as well as for non-compliance with the obligations mentioned therein. In such a case, it is the Beneficiary's responsibility to notify the Guarantor of the nature of the inaccuracy or omission that would be revealed, to prove the harm that would be incurred as well as the amount of this harm, with all backup documents, if there is any. 2.2.- GUARANTEE OF ASSETS AND LIABILITIES 2.2.1.- PURPOSE OF THE GUARANTEE 2.2.2.1.- The Guarantor guarantees and certifies the existence and reality of all elements included in the assets, as they are listed in the balance sheet of the Company closed on December 31, 1999 and in the Interim Accounting Status of March 31, 2000. Consequently, the Guarantor guaranties to the Beneficiary to indemnify the Company or the Beneficiary, at the latter's choice, for the following: any amounts borne by or to the charge of the Company due because of insufficient assets and excess liabilities the cause of which is prior to the balance sheet of the Company closed on December 31, 1999 and/or the Interim Accounting Status of March 31, 2000 and/or resulting, among others, from irregular or false accounting entries in these balance sheets and more particularly: - - insufficient assets resulting more particularly from the non-existence or an insufficiency of the provisions of any element of the assets entered into the balance sheet of the Company closed on December 31, 1999 and/or the Interim Accounting Status of March 31, 2000; - - any unposted or supplementary liabilities whatsoever (unpaid, payments, reimbursements, charges, debts, irregular accounting entries, penalties or other), including those resulting from insufficient provisions not included in the balance sheet closed on December 31, 1999 and/or in the Interim Accounting Status of March 31, 2000 (having a generator effect prior to December 31, 1999 or the date of the Interim Accounting Status of March 31, 2000), and more particularly any amounts covered and placed at the expense of the Company and claimed by tax, customs, social security administrations, or retirement funds as supplementary contributions or rights of any nature whatsoever, as well as penalties, double rights and fines relating thereto, such liabilities also applying to off balance sheet commitments such as guarantees or other securities that the Company has agreed to provide and not brought to the knowledge of the Beneficiary as of this date. 2.2.2.- EXTENT OF THE GUARANTEE 31 It is also expressly agreed, that: - - any assets insufficiently accounted for in the balance sheet as defined hereabove will be taken into account for its net value, taking into account in particular all deductions and potential tax credits the Company may benefit from; - - this guarantee will not include any tax reminders which constitute a simple transfer in time of the corresponding charge (reintegration of provisions; depreciation, etc.). However, penalties or increases not related to the above reminders will be borne by the Guarantor; - - in the case of the missing of a tangible asset, the Guarantor's indemnification will be equal to the net accountable value of the missing asset; - - the Guarantor will advance to the Company all sums it will be obliged to pay out due to any court order, even if they consider that the request of the claimants is unfounded, and appeal this court order in accordance with the conditions stated in 2.3. hereafter; - - in the event that some guarantees would be requested from the Company, in particular by the French authorities, the Guarantor will be personally responsible for them, and if this is impossible, he will offer equivalent guarantees to the Company. 2.3.- IMPLEMENTATION OF THE GUARANTEES The responsibility of the Guarantor can only be engaged on the condition that he is notified by the Beneficiary by registered mail with return receipt requested. By necessity of this contract, the Guarantor appoints Mr. Jean-Jacques HIRSCH or Mr. Charles MALKA as agents in charge of receiving certified letters, requests and to assume the role of intermediary between the Beneficiary and/or the Company in the framework of this Agreement. Consequently, the Beneficiary will be considered as having validly implemented this Agreement or validly addressed all notification required by this Agreement by notifying either Mr. Jean-Jacques HIRSCH or Mr. Charles MALKA. For all litigation, upon receipt of the notice letter, the Guarantor may appoint, if need be, a representative, at the Guarantor's expense, to participate in the discussions and proceedings, concurrently with the Company's representatives. The notice for indemnification will be validly notified by registered mail with return receipt requested addressed to the Guarantor and the sums due will be payable in the month following the mailing of said letter. 32 The parties expressly agree that the Beneficiary may prefer, if he so wishes, to decide not to pay to the Guarantor all or part of price of $500,000 due on December 31, 2000 and/or not to issue to the Guarantor all or part of the VIEWLOCITY, INC. common shares for a value corresponding to all or part of the indemnity that would be due on December 31, 2000 or December 31, 2001 as a substitute for the indemnity due either to the Beneficiary or the Company. He may enforce this provision at any time. It is hereby specified that the above described compensation may not be exercised by the Beneficiary unless the indemnification is not contested by the Guarantor or an arbitration decision sentenced the Guarantor to such an indemnification in accordance with the provisions of article 2.9. hereafter. This present warranty agreement shall benefit all heirs and legal successors. The Guarantor shall always comply with the present undertakings and, more particularly, and although the list is not exhaustive, in the event of a change of legal structure of the Company, merger with another company, transfer of the Company shares by the Beneficiary. 2.4.- DURATION OF THE GUARANTEE The above Guarantee is valid for a period terminating on December 31, 2003, except when it concerns the assessments following tax or social security controls, for which the guarantee will continue to be valid during the entire period of the Statute of Limitations for all operations occurred prior to December 31, 1999. 2.5.- TRIGGERING THRESHOLD It is agreed that the present guarantee shall only apply in the event that the amount du by the Guarantor would positively exceed the total amount of two hundred thousand French Francs (200,000F), this amount being agreed as a triggering threshold. This amount of 200,000F applies consistently throughout and not per separate event. 2.6.- NOTICE All notices and/or other communications shall be addressed by certified letter with return receipt to Mr. Jean-Jacques HIRSCH's or Mr. Charles MALKA's address. They must notify any changes of address in order to render opposable said notifications. 2.7.- CEILING In the case of implementation of this guarantee, the obligation for payment by the Guarantor will be limited to the total amount of acquisition price for the shares of the Company by the Beneficiary, including the price complements, as determined on the date the guarantee is implemented. 33 It is specifically agreed between the parties that the indemnity each Guarantor is committed may not exceed the purchase price (including the price complements) received by each Guarantor. 34 2.8.- GENERAL PROVISIONS The beneficiaries of each Guarantor and each Guarantor himself are and will be jointly and severally required to carry out the contracted engagements in full under the terms of this Agreement. In addition, the Guarantor must always comply with these obligations in the event of assignment and/or transfer of this guarantee to a third party, more particularly, and although the list is non-exhaustive, in the event of a change of the Company's form, its absorption by another company or the assignment by the Beneficiary of the Company's shares. This Guarantee contains the full agreement of the parties concerning the subject and purpose of the guarantee and no other document or contracts, other than those mentioned herein, may be used for interpreting any clause of this guarantee. It may not be modified, changed or amended, except in writing, duly signed by the parties to this Guarantee. All provisions of this Guarantee must be enforced in spite of the fact that the Beneficiary proceeded with an audit and other inspections of the Company's situation before this date. The Appendixes are an integral part of this Agreement. The Company or the Beneficiary, at the latter's option, operates in the present as Beneficiary of any compensation that may be due as part of this agreement and agrees to accept all rights and obligations announced herein. 2.9.- APPLICABLE LAW - ARBITRATION CLAUSE The present contract, its interpretation, its execution and its consequences are governed by French law. The parties undertake to amicably resolve all problems that could arise concerning the present Agreement and its application. They also undertake to submit all unresolved litigation that could arise from the validity, interpretation or the execution of this Agreement to an arbitration court. The parties expressly recognize that the obligations of this Agreement result from an operation of a commercial nature and, consequently, differences of opinion may enter into play among the parties concerning the meaning, scope, interpretation and execution of this Agreement will be resolved by an arbitrator in application of articles 1442 to 1491 of the French Civil Procedure Code relating to internal arbitration. 35 In case of resort to an arbitration, the arbitration Court will be constituted as follows: - - the party to resort to arbitration (the first party) shall give the other party (the second party) a notification letter by registered mail with return receipt requested indicating the difference of opinion and its desire to recourse either to one arbitrator or three arbitrators and, in this case, the first party indicates the name of the arbitrator that it chooses; - - the second party responds by registered mail with return receipt requested either to accept the recourse to one arbitrator proposed by the first party, or to propose the name of an arbitrator among the three arbitrators' option that it chooses; - - if the second party has not responded within fifteen (15) days following the date the letter was presented by the first party, the designation of a second arbitrator will immediately be made by the President of the Commercial Court of NANTERRE, ruling on an emergency basis at the request of the first party. The two chosen arbitrators must designate a third arbitrator within a fifteen-day period. Failing to do so, the third arbitrator will be appointed by the President of the Commercial Court of NANTERRE, ruling on an emergency basis at request of the party who made the request first. The arbitrators must be chosen among professionals having experience in accounting, finance and tax affairs. The parties will submit the case to the Arbitration Court, without prior agreement, by registered mail with return receipt requested stating the purpose of the litigation; such letter shall be addressed by one of the parties to each other party and to each of the arbitrators. The Arbitration Court is located at PARIS , will rule within a period of three (3) months from the date the case was submitted to the Court. The arbitrators shall divide the arbitration expenses (arbitrators' invoices and expertise expenses) between the parties. The decision shall not be subject to any appeal or opposition. 2.10.- CONFIDENTIALITY The parties undertake expressly not to refer to the present document to any third party with the sole exception of their advisors or with a view to compel the Guarantor to comply with their obligations due to their refusal to do so. It is however agreed between the parties that the Beneficiary is authorized to provide a copy of this document to the appropriate authorities in case of public offering of the company VIEWLOCITY, INC. or any other affiliate thereof. 36 Signed on June 21, 2000 in four originals. THE BENEFICIARY THE GUARANTOR For Viewlocity Holding France SARL Mr. Jean-Jacques HIRSCH - ----------------------------------- Mr. Michel FORTIN Mr. Charles MALKA THE COMPANY For EDT S.A. - -------------- Mr. Jean-Jacques HIRSCH EX-10.1 5 ex-10_1.txt EXHIBIT 10.1 EXHIBIT 10.1 PROMINENCE IN BUCKHEAD ATLANTA, GEORGIA STANDARD FORM OFFICE LEASE BETWEEN EOP-BUCKHEAD, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY ("LANDLORD") AND VIEWLOCITY, INC., A DELAWARE CORPORATION ("TENANT") TABLE OF CONTENTS I. BASIC LEASE INFORMATION; DEFINITIONS..................................1 II. LEASE GRANT...........................................................5 III. POSSESSION; TERMINATION OPTION FOR LATE DELIVERY......................5 IV. RENT..................................................................7 V. USE..................................................................15 VI. SECURITY DEPOSIT.....................................................15 VII. SERVICES TO BE FURNISHED BY LANDLORD.................................16 VIII. LEASEHOLD IMPROVEMENTS...............................................17 IX. GRAPHICS.............................................................18 X. REPAIRS AND ALTERATIONS..............................................18 XI. USE OF ELECTRICAL SERVICES BY TENANT.................................19 XII. ENTRY BY LANDLORD....................................................20 XIII. ASSIGNMENT AND SUBLETTING............................................21 XIV. LIENS................................................................22 XV. INDEMNITY AND WAIVER OF CLAIMS.......................................23 XVI. TENANT'S INSURANCE...................................................24 XVII. SUBROGATION..........................................................25 XVIII. LANDLORD'S INSURANCE.................................................25 XIX. CASUALTY DAMAGE......................................................25 XX. DEMOLITION...........................................................27 XXI. CONDEMNATION.........................................................27 XXII. EVENTS OF DEFAULT....................................................27 XXIII. REMEDIES.............................................................28 XXIV. LIMITATION OF LIABILITY..............................................30 XXV. NO WAIVER............................................................30 XXVI. EVENT OF BANKRUPTCY..................................................30 XXVII. WAIVER OF JURY TRIAL.................................................32 XXVIII. RELOCATION...........................................................32 XXIX. HOLDING OVER.........................................................32 XXX. SUBORDINATION TO MORTGAGES; ESTOPPEL CERTIFICATE.....................33 XXXI. ATTORNEYS'FEES.......................................................33 XXXII. NOTICE...............................................................33 XXXIII. LANDLORD'S LIEN......................................................34 XXXIV. EXCEPTED RIGHTS......................................................34 XXXV. SURRENDER OF PREMISES................................................34 XXXVI. MISCELLANEOUS........................................................34 XXXVII. ENTIRE AGREEMENT.....................................................36
i OFFICE LEASE AGREEMENT THIS OFFICE LEASE AGREEMENT (the "Lease") is made and entered into as of the 5th day of November, 1999, by and between EOP-BUCKHEAD, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY ("Landlord") and VIEWLOCITY, INC., A DELAWARE CORPORATION ("Tenant"). I. BASIC LEASE INFORMATION; DEFINITIONS. A. The following are some of the basic lease information and defined terms used in this Lease. 1. "Additional Base Rental" shall mean Tenant's Pro Rata Share of Basic Costs and any other sums (exclusive of Base Rental) that are required to be paid by Tenant to Landlord hereunder, which sums are deemed to be additional rent under this Lease. Additional Base Rental and Base Rental are sometimes collectively referred to herein as "Rent". 2. "Base Rental" shall be payable by Tenant to Landlord in one hundred twenty (120) monthly installments as follows:
--------------------------- ---------------- --------------------- ---------------- --------------- PERIOD IN RSF FOR ANNUAL RATE BASE RENTAL MONTHLY LEASE TERM BASE RENTAL PER SQUARE FOOT FOR PERIOD BASE RENTAL --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 10/15/99 - 10/31/99 15,000 $27.50 $18,850.79 $18,850.798 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 11/01/99 - 2/29/00 15,000 $27.50 $137,500.00 $34,375.00 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 3/01/00 - 5/31/00 19,413 $27.50 $133,464.39 $44,488.13 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 6/01/00 - 10/31/00 23,827 $27.50 $273,017.70 $54,603.54 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 11/01/00 - 10/31/01 23,827 $28.33 $675,018.96 $56,251.58 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 11/01/01 - 10/31/02 23,827 $29.18 $695,271.84 $57,939.32 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 11/01/02 - 10/31/03 23,827 $30.05 $716,001.36 $59,666.78 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 11/01/03 - 10/31/04 23,827 $30.95 $737,445.60 $61,453.80 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 11/01/04 - 10/31/05 23,827 $31.88 $759,604.80 $63,300.40 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 11/01/05 - 10/31/06 23,827 $32.84 $782,478.72 $65,206.56 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 11/01/06 - 10/31/07 23,827 $33.83 $806,067.36 $67,172.28 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 11/01/07 - 10/31/08 23,827 $34.84 $830,132.64 $69,177.72 --------------------------- ---------------- --------------------- ---------------- --------------- --------------------------- ---------------- --------------------- ---------------- --------------- 11/01/08 - 10/31/09 23,827 $35.89 $855,151.08 $71,262.59 --------------------------- ---------------- --------------------- ---------------- ---------------
3. "Building" shall mean the office building (sometimes referred to herein as the "Phase I Building") at 3475 Piedmont Road, NE, Atlanta, Georgia, County of Fulton, City of Atlanta, State of Georgia, commonly known as Prominence in Buckhead and, at Landlord's option, shall include any other office building to be constructed or acquired by Landlord on the parcel of land located adjacent to the land on which the Phase I Building is to be constructed (sometimes referred to herein as the "Phase II Building"). 4. The "Commencement Date," "Lease Term" and "Termination Date" shall have the meanings set forth below: a. The "Lease Term" shall mean a period of one hundred twenty (120) months and seventeen (17) days commencing on October 15, 1999 (the "Commencement Date") and, unless sooner terminated as provided herein, ending on October 31, 2009 (the "Termination Date"). b. Intentionally Omitted. 1 5. The "Premises" shall mean the area to be located on the 17th floor of the Building, as generally outlined on EXHIBIT A attached hereto. The Premises shall be known as Suite No. 1700. It is acknowledged by the parties that Landlord has not named any of the floors in the Building as the "13th" floor and, therefore, the 12th and 14th floors are actually contiguous to one another and there is no intervening floor between them. (If a 13th floor were named, then the Premises would be located on the 16th floor.) Landlord and Tenant hereby stipulate and agree that (i) the "Rentable Area of the Premises shall mean 23,827 square feet; and (ii) the "Rentable Area of the Building" shall mean 424,635 square feet. If the Premises being leased to Tenant hereunder include one or more floors within the Building in their entirety, the definition of Premises with respect to such full floor(s) shall include all corridors and restroom facilities located on such floor(s). Notwithstanding the foregoing, unless specifically provided herein to the contrary and except for purposes of calculating the Rentable Area of the Premises, the Premises shall not include any telephone closets, electrical closets, janitorial closets, equipment rooms or similar areas on any full or partial floor that are used by Landlord for the operation of the Building. However, if Landlord acquires or constructs the Phase II Building and elects to include the Phase II Building within the definition of "Building" as provided in Section I.A.3. as described above, then the Rentable Area of the Building and Tenant's Pro Rata Share shall be appropriately adjusted by Landlord. 6. "Permitted Use" shall mean general office use. 7. "Security Deposit" shall mean $1,212,468.06 in the form of a letter of credit, as more fully described in Article VI. 8. "Tenant's Pro Rata Share" shall mean 5.6112%, which is the quotient (expressed as a percentage), derived by dividing the Rentable Area of Premises by the Rentable Area of the Building. 9. "Guarantor(s)" NONE. 10. "Notice Addresses" shall mean the following addresses for Tenant and Landlord, respectively: Tenant: On and after the Commencement Date, notices shall be sent to Tenant at the Premises. 2 Prior to the Commencement Date, notices shall be sent to Tenant at the following address: Viewlocity, Inc. c/o Frontec Amt 400 Perimeter Center Terrace Suite 320 Atlanta, Georgia 30346 Attn: _________________________ With a copy of any notices whereby Landlord is asserting a claim or defense against the Tenant based upon the subject matter of the notice (as opposed to routine notices concerning the operation of the Building) to: Nelson Mullins Riley & Scarborough, L.L.P. 999 Peachtree Street, N.E. First Union Plaza Suite 1400 Atlanta, Georgia 30309 Attn: Wade H. Stribling, Esq. Landlord: EOP-Buckhead, L.L.C. c/o Equity Office Properties Trust 3475 Piedmont Road, NE Atlanta, Georgia 30305 Attention: Building Manager With a copy to: Equity Office Properties Trust Two North Riverside Plaza Suite 2200 Chicago, Illinois 60606 Attention: Regional Counsel - Southeast Payments of Rent only shall be made payable to the order of: EQUITY OFFICE PROPERTIES at the following address: Equity Office Properties Post Office Box 100768 Atlanta, Georgia 30384-0768 B. The following are additional definitions of some of the defined terms used in the Lease. 1. "Base Year" with respect to Taxes and Expenses shall mean the calendar year 2000. a. "Tax Base Amount" shall mean Taxes for the Base Year, per rentable square foot, multiplied by the Rentable Area of the Building. b. "Expense Base Amount" shall mean Expenses for the Base Year, per rentable square foot, multiplied by the Rentable Area of the Building. For purposes of this Section I.B.1. and Article IV, "Expenses" shall mean all Basic Costs with the exception of Taxes. In determining the Expense Base Amount under this subsection I.B.1.(b), Expenses for the Base Year shall be determined as if the Building had been ninety-five percent (95%) 3 occupied and Landlord had been supplying services to ninety-five percent (95%) of the Rentable Area of the Building during such year. Such extrapolation of Expenses shall be performed in the manner described in Section IV.B. If the Phase II Building is included in the definition of "Building", as provided in Section I.A.3. as described above, then, at such time, the Tax Base Amount and the Expense Base Amount described above shall be adjusted to include the additional rentable square footage included in the Phase II Building. 2. "Basic Costs" shall mean all costs and expenses paid or incurred in connection with operating, maintaining, repairing, managing and owning the Building and the Property, as further described in Article IV hereof. 3. "Broker" means, collectively, (a) Insignia/ESG, Inc. ("Tenant's Broker") and (b) Holder Properties, Inc. and the in-house leasing representatives of Equity Office Properties (collectively, the "Landlord's Broker"). 4. "Building Standard" shall mean the type, grade, brand, quality and/or quantity of materials Landlord designates from time to time to be the minimum quality and/or quantity to be used in the Building. 5. "Business Day(s)" shall mean Mondays through Fridays exclusive of the normal business holidays ("Holidays") of New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Landlord, from time to time during the Lease Term, shall have the right to designate additional Holidays, provided that such additional Holidays are commonly recognized by other office buildings in the area where the Building is located. 6. "Common Areas" shall mean those areas provided for the common use or benefit of all tenants generally and/or the public, such as corridors, elevator foyers, common mail rooms, restrooms, vending areas, lobby areas (whether at ground level or otherwise) and other similar facilities. 7. "Landlord Work" shall mean the work, if any, that Landlord is obligated to perform in the Premises pursuant to the Work Letter Agreement, if any, attached hereto as EXHIBIT D. 8. "Maximum Rate" shall mean the greatest per annum rate of interest permitted from time to time under applicable law. 9. "Normal Business Hours" for the Building shall mean 8:00 A.M. to 6:00 P.M. Mondays through Fridays, and 8:00 A.M. to 1:00 P.M. on Saturdays, exclusive of Holidays. 10. "Prime Rate" shall mean the per annum interest rate publicly announced by The First National Bank of Chicago or any successor thereof from time to time (whether or not charged in each instance) as its prime or base rate in Chicago, Illinois. 11. "Property" shall mean the Phase I Building and the parcel(s) of land on which it is located and, at Landlord's discretion, the Building garage, if any, and all other improvements owned by Landlord and serving the Phase I Building and the tenants thereof and the parcel(s) of land on which they are located. If the definition of "Building" also includes the Phase II Building as provided in Section I.A.3. above, then, at Landlord's option, the "Property" shall also include the Phase II Building and the parcel(s) of land on which it is located and, at Landlord's discretion, the Building garage, if any, and all other improvements owned by Landlord and serving the Phase II Building and the tenants thereof and the parcel(s) of land on which they are located. 4 12. "Law(s)" means all applicable statutes, codes, ordinances, orders, rules and regulations of any municipal or governmental entity. II. LEASE GRANT. Subject to and upon the terms herein set forth, Landlord leases to Tenant and Tenant leases from Landlord the Premises, together with the right, in common with others, to use the Common Areas. III. POSSESSION; RENT CREDIT AND TERMINATION OPTION FOR LATE DELIVERY. A. DETERMINATION OF SUBSTANTIAL COMPLETION DATE; RENT CREDIT AND TERMINATION OPTION. 1. RENT CREDIT. The Commencement Date shall not be postponed if the Landlord Work in the Premises is not substantially completed as of the Commencement Date. (The date that the Landlord Work in the Premises is substantially completed, as described in Subsection 4 below, is defined as the "Substantial Completion Date"). However, if the Substantial Completion Date has not occurred on or before ninety (90) days after the later of (a) the date the final Plans (as defined in EXHIBIT D) have been approved by Landlord and Tenant and (b) the date that Tenant executes and delivers this Lease and all prepaid rent and security deposits required hereunder to Landlord (the date which is 90 days after the later of the dates described in (a) and (b) above is referred to herein as the "Credit Completion Date"), then, following the Substantial Completion Date, Tenant shall be entitled to a rent abatement equal to one day of Base Rental (at the daily rate payable during the first month of the Lease Term) for every day in the period beginning on the Credit Completion Date and ending on the Substantial Completion Date. Landlord and Tenant acknowledge and agree that the Credit Completion Date shall be postponed by the number of days the Substantial Completion Date is delayed due to events of Force Majeure. Further, if Landlord shall be delayed in substantially completing the Landlord Work in the Premises as a result of any Tenant Delays (defined in Subsection 3 below), then, for purposes of determining the Substantial Completion Date, the date of substantial completion of the Landlord Work in the Premises shall be deemed to be the day that said Landlord Work would have been substantially completed absent any such Tenant Delay(s). 2. TERMINATION OPTION. If the Substantial Completion Date has not occurred on or before the date which is 120 days after the Commencement Date (the "Outside Completion Date"), then Tenant, as its sole remedy, may terminate this Lease by giving Landlord written notice of termination on or before the earlier to occur of: (i) five (5) Business Days after the Outside Completion Date; and (ii) the Substantial Completion Date. In such event, this Lease shall be deemed null and void and of no further force and effect and, so long as Tenant has not previously defaulted under any of its obligations under the Work Letter, Landlord shall return the Security Deposit to Tenant as described in this Lease, Landlord shall reimburse to Tenant any Base Rental and Tenant's Pro Rata Share of Taxes and Operating Expenses paid by Tenant for the period commencing as of the Commencement Date through the date of termination described above for any portion of the Premises not occupied by Tenant during such period, and the parties hereto shall have no further responsibilities or obligations to each other with respect to this Lease. Landlord and Tenant acknowledge and agree that the Outside Completion Date shall be postponed by the number of days the Substantial Completion Date is delayed due to events of Force Majeure. Further, if Landlord shall be delayed in substantially completing 5 the Landlord Work in the Premises as a result of any Tenant Delays (defined below), then, for purposes of determining the Substantial Completion Date, the date of substantial completion of the Landlord Work in the Premises shall be deemed to be the day that said Landlord Work would have been substantially completed absent any such Tenant Delay(s) . Notwithstanding anything herein to the contrary, if Landlord determines that it will be unable to cause the Substantial Completion Date to occur by the Outside Completion Date, Landlord shall have the right to immediately cease its performance of the Landlord Work and provide Tenant with written notice (the "Outside Extension Notice") of such inability, which Outside Extension Notice shall set forth the date on which Landlord reasonably believes that the Substantial Completion Date will occur. Upon receipt of the Outside Extension Notice, Tenant shall have the right to terminate this Lease by providing written notice of termination to Landlord within five (5) Business Days after the date of the Outside Extension Notice. If Tenant does not terminate this Lease within such five (5) Business Day period, the Outside Completion Date shall automatically be amended to be the date set forth in Landlord's Outside Extension Notice. 3. TENANT DELAYS. "Tenant Delay" means any act or omission of Tenant or its agents, employees, vendors or contractors that actually delays the substantial completion of the Landlord Work, including, without limitation: (1) Tenant's failure to furnish information or approvals within any time period specified in this Lease, including the failure to prepare or approve preliminary or final plans by any applicable due date; (2) Tenant's selection of equipment or materials that have long lead times after first being informed by Landlord that the selection may result in a delay; (3) changes requested or made by Tenant to previously approved plans and specifications; (4) performance of work in the Premises by Tenant or Tenant's contractor(s) during the performance of the Landlord Work; (5) if the performance of any portion of the Landlord Work depends on the prior or simultaneous performance of work by Tenant, a delay by Tenant or Tenant's contractor(s) in the completion of such work; or (6) Tenant's failure to comply with the time periods reflected on the Critical Date Schedule attached hereto as EXHIBIT G. Landlord shall use reasonable efforts to notify Tenant of any circumstances of which Landlord is aware that have caused or may cause a Tenant Delay, so that Tenant may take whatever action is appropriate to minimize or prevent such Tenant Delay. The Critical Date Schedule is included only as a guideline as to the dates that must be complied with in order for the Landlord Work to be substantially completed as of the Commencement Date and, except as specifically described in this Section III.A., shall not modify this Section III.A. in any manner. 4. SUBSTANTIAL COMPLETION OF LANDLORD WORK. The Landlord Work in the Premises shall be deemed to be substantially completed on the later of (i) the date that Landlord reasonably determines that all Landlord's Work in the Premises has been performed (or would have been performed absent any Tenant Delays), other than any details of construction, mechanical adjustment or any other matter, the noncompletion of which does not materially interfere with Tenant's use of the Premises or (ii) the date Landlord receives all governmental approvals which are required to obtain a temporary or permanent certificate of occupancy for the Premises from the local governmental authority (or would have been received absent any Tenant Delays). Tenant's right to terminate this Lease as described above shall be Tenant's sole remedy and shall constitute full settlement of all claims that Tenant might otherwise have against Landlord by reason of the Substantial Completion Date not occurring on or before the Outside Completion Date. B. By taking possession of the Premises, Tenant is deemed to have accepted the Premises and agreed that the Premises is in good order and satisfactory condition, with no representation or warranty by Landlord as to the condition of the Premises or the Building or suitability thereof for Tenant's use. Notwithstanding the foregoing, Tenant's acceptance of the Premises shall be subject to Landlord's obligation to correct portions of the Landlord Work as set forth on a construction punch list prepared by Landlord and Tenant in accordance with the terms hereof. Within fifteen (15) days after the substantial completion of the Landlord Work in the Premises, Landlord and Tenant shall together conduct an 6 inspection of such portion of the Premises and prepare a "punch list" setting forth any portions of the Landlord Work that are not in conformity with the Landlord Work as required by the terms of this Lease. Notwithstanding the foregoing, at the request of Landlord, such construction punch list shall be mutually prepared by Landlord and Tenant prior to the date on which Tenant first begins to move its furniture, equipment or other personal property into the Premises. Landlord, as part of the Landlord Work, shall use good faith efforts to correct all such items within a reasonable time following the completion of the punch list. Notwithstanding anything contained herein to the contrary, Tenant shall have eleven (11) months from the completion of Landlord Work in the Premises in which to discover and notify Landlord of any latent defects in Landlord's Work in such portion of the Premises. Landlord shall be responsible for the correction of any latent defects with respect to which it received timely notice from Tenant. C. Notwithstanding anything to the contrary contained in the Lease, Landlord shall not be obligated to tender possession of any portion of any other space leased by Tenant from time to time hereunder (exclusive of the initial Premises) that, on the date possession is to be delivered, is occupied by a tenant or other occupant or that is subject to the rights of any other tenant or occupant, nor shall Landlord have any other obligations to Tenant under this Lease with respect to such space until the date Landlord: (1) recaptures such space from such existing tenant or occupant; and (2) regains the legal right to possession thereof. This Lease shall not be affected by any such failure to deliver possession and Tenant shall have no claim for damages against Landlord as a result thereof, all of which are hereby waived and released by Tenant. The Commencement Date and Termination Date shall be determined as provided in Section III.A. above. D. If Tenant takes possession of the Premises prior to the Commencement Date for any purpose (including for purposes of installing furniture or equipment or conducting business operations therein), such possession shall be subject to all the terms and conditions of the Lease and Tenant shall pay Additional Base Rental (but not Base Rental) for such portion of the Premises to Landlord for each day of occupancy prior to the Commencement Date. Tenant shall, however, be liable for the cost of any services (e.g. electricity, HVAC, freight elevators) that are provided to Tenant or the Premises during the period of Tenant's possession prior to the Commencement Date. Nothing herein shall be construed as granting Tenant the right to take possession of any portion of the Premises prior to the Commencement Date, whether for construction, fixturing or any other purpose, without the prior consent of Landlord. IV. RENT. A. During each calendar year, or portion thereof, falling within the Lease Term, Tenant shall pay to Landlord as Additional Base Rental hereunder the sum of (1) Tenant's Pro Rata Share of the amount, if any, by which Taxes (hereinafter defined) for the applicable calendar year exceed the Tax Base Amount plus (2) Tenant's Pro Rata Share of the amount, if any, by which Expenses for the applicable calendar year exceed the Expense Base Amount. Tenant's Pro Rata Share of increases in Taxes and Tenant's Pro Rata Share of increases in Expenses shall be computed separate and independent of each other prior to being added together to determine the "Excess". In the event that Taxes and/or Expenses, as the case may be, in any calendar year decrease below the amount of the Tax Base Amount or the Expense Base Amount, as applicable, Tenant's Pro Rata Share of Taxes and/or Tenant's Pro Rata Share of Expenses, as the case may be, for such calendar year shall be deemed to be $0, it being understood that Tenant shall not be entitled to any credit or offset if Taxes decrease below the Tax Base Amount or if Expenses decrease below the Expense Base Amount. Prior to January 1 of the calendar year immediately following the Base Year, and prior to January 1 of each subsequent calendar year during the Lease Term, or as soon thereafter as practical, Landlord shall make a good faith estimate of the Excess for the applicable calendar year and Tenant's Pro Rata Share thereof. On or before the first day of each month during such calendar year, Tenant shall pay to Landlord, as Additional Base Rental, a monthly installment equal to one-twelfth of Tenant's Pro Rata Share of Landlord's estimate of the Excess. Landlord shall have the right from time to time during any 7 such calendar year to revise the estimate of Basic Costs and the Excess for such year and provide Tenant with a revised statement therefor, and thereafter the amount Tenant shall pay each month shall be based upon such revised estimate. If Landlord does not provide Tenant with an estimate of the Basic Costs and the Excess by January 1 of any calendar year, Tenant shall continue to pay a monthly installment based on the previous year's estimate until such time as Landlord provides Tenant with an estimate of Basic Costs and the Excess for the current year. Upon receipt of such current year's estimate, an adjustment shall be made for any month during the current year with respect to which Tenant paid monthly installments of Additional Base Rental based on the previous year's estimate. Tenant shall pay Landlord for any underpayment within thirty (30) days after demand. Any overpayment shall, at Landlord's option, be refunded to Tenant within thirty (30) days or credited against the next installments of Base Rental and Additional Base Rental due for the months immediately following the furnishing of such estimate. Any amounts paid by Tenant based on any estimate shall be subject to adjustment pursuant to the immediately following paragraph when actual Basic Costs are determined for such calendar year. As soon as is practical following the end of each calendar year during the Lease Term, Landlord shall furnish to Tenant a statement of Landlord's actual Basic Costs and the actual Excess for the previous calendar year. If, however, Landlord fails to furnish Tenant a statement of actual Basic Costs for a given calendar year within twelve (12) months after the end of said calendar year and such failure continues for an additional sixty (60) days after Landlord's receipt of a written request from Tenant that such statement of actual Basic Costs should be furnished (the "Request for Statement of Basic Costs"), and provided the Request for Statement of Basic Costs contains a statement that Landlord's failure to furnish such statement may prejudice Landlord's right to collect any underpayment of Basic Costs from Tenant as described in Section IV.A. of the Lease, then Landlord shall be deemed to have waived any rights to recover any underpayment of Basic Costs from Tenant applicable to said calendar year (except to the extent such underpayment is attributable to a default by Tenant in its obligation to make estimated payments of Basic Costs). Further, in no event shall the foregoing provision describing the time period during which Landlord is to deliver the statement of actual Basic Costs in any manner limit or otherwise prejudice Landlord's right to modify such statement of actual costs after such time period if new, additional or different information relating to such statement of actual costs is discovered or otherwise determined. If the estimated Excess actually paid by Tenant for the prior year is in excess of Tenant's actual Pro Rata Share of the Excess for such prior year, then Landlord shall apply such overpayment against Base Rental and Additional Base Rental due or to become due hereunder, provided if the Lease Term expires prior to the determination of such overpayment, Landlord shall refund such overpayment to Tenant within thirty (30) days after first deducting the amount of any Rent due hereunder. Likewise, Tenant shall pay to Landlord, within ten (10) days after demand, any underpayment with respect to the prior year, whether or not the Lease has terminated prior to receipt by Tenant of a statement for such underpayment, it being understood that this clause shall survive the expiration of the Lease. B. Basic Costs shall mean Taxes and all costs and expenses paid or incurred in each calendar year in connection with operating, maintaining, repairing, managing the Building and the Property, including, but not limited to, the following: 1. All labor costs for all persons performing services required or utilized in connection with the operation, repair, replacement and maintenance of and control of access to the Building and the Property, including but not limited to amounts incurred for wages, salaries and other compensation for services, payroll, social security, unemployment and other similar taxes, workers' compensation insurance, uniforms, training, disability benefits, pensions, hospitalization, retirement plans, group insurance or any other similar or like expenses or benefits. 8 2. All management fees (not to exceed, an a per annum basis, 5% of the gross receipts for the Building), the cost of equipping and maintaining a management office at the Building, accounting services, legal fees not attributable to leasing and collection activity, and all other administrative costs relating to the Building and the Property. If management services are not provided by a third party, Landlord shall be entitled to a management fee comparable to that due and payable to third parties provided Landlord or management companies owned by, or management divisions of, Landlord perform actual management services of a comparable nature and type as normally would be performed by third parties. 3. All rental and/or purchase costs of materials, supplies, tools and equipment used in the operation, repair, replacement (other than replacements deemed to be a capital improvement under generally accepted accounting principles, in which event Section IV.B.11 below shall control with respect to such item) and maintenance and the control of access to the Building and the Property. 4. All amounts charged to Landlord by contractors and/or suppliers for services, replacement parts, components, materials, equipment and supplies furnished in connection with the operation, repair, maintenance, replacement of and control of access to any part of the Building, or the Property generally, including the heating, air conditioning, ventilating, plumbing, electrical, elevator and other systems and equipment. 5. All premiums and deductibles paid by Landlord for fire and extended coverage insurance, earthquake and extended coverage insurance, liability and extended coverage insurance, rental loss insurance, elevator insurance, boiler insurance and other insurance customarily carried from time to time by landlords of comparable office buildings in the Buckhead area of Atlanta, Georgia or required to be carried by Landlord's Mortgagee. 6. Charges for water, gas, steam and sewer, but excluding those charges for which Landlord is otherwise reimbursed by tenants, and charges for Electrical Costs. For purposes hereof, the term "Electrical Costs" shall mean: (i) all charges paid by Landlord for electricity supplied to the Building, Property and Premises, regardless of whether such charges are characterized as distribution charges, transmission charges, generation charges, public good charges, disconnection charges, competitive transaction charges, stranded cost recoveries or otherwise; (ii) except to the extent otherwise included in Basic Costs, any costs incurred in connection with the energy management program for the Building, Property and Premises, including any costs incurred for the replacement of lights and ballasts and the purchase and installation of sensors and other equipment that saves energy; and (iii) if and to the extent permitted by law, a reasonable fee for the services provided by Landlord in connection with the selection of utility companies and the negotiation and administration of contracts for the generation of electricity. Notwithstanding the foregoing, Electrical Costs shall be adjusted as follows: (a) any amounts received by Landlord as reimbursement for above standard electrical consumption shall be deducted from Electrical Costs, (b) the cost of electricity incurred in providing overtime HVAC to specific tenants shall be deducted from Electrical Costs, it being agreed that the electrical component of overtime HVAC Costs shall be calculated as a reasonable percentage of the total HVAC costs charged to such tenants, and (c) if Tenant is billed directly for the cost of electricity to the Premises as a separate charge in addition to Base Rental and Basic Costs, the cost of electricity to individual tenant spaces in the Building shall be deducted from Electrical Costs. 7. "Taxes", which for purposes hereof, shall mean: (a) all real estate taxes and assessments on the Property, the Building or the Premises, and taxes and assessments levied in substitution or supplementation in whole 9 or in part of such taxes, (b) all personal property taxes for the Building's personal property, including license expenses, (c) all taxes imposed on services of Landlord's agents and employees, (d) all other taxes, fees or assessments now or hereafter levied by any governmental authority on the Property, the Building or its contents or on the operation and use thereof (except as relate to specific tenants), and (e) all costs and fees incurred in connection with seeking reductions in or refunds in Taxes including, without limitation, any costs incurred by Landlord to challenge the tax valuation of the Building, but excluding income taxes. For the purpose of determining real estate taxes and assessments for any given calendar year, the amount to be included in Taxes for such year shall be as follows: (1) with respect to any special assessment that is payable in installments, Taxes for such year shall include the amount of the installment (and any interest) due and payable during such year; and (2) with respect to all other real estate taxes, Taxes for such year shall, at Landlord's election, include either the amount accrued, assessed or otherwise imposed for such year or the amount due and payable for such year, provided that Landlord's election shall be applied consistently throughout the Lease Term. If a reduction in Taxes is obtained for any year of the Lease Term during which Tenant paid its Pro Rata Share of Basic Costs, then Basic Costs for such year will be retroactively adjusted and Landlord shall provide Tenant with a credit, if any, based on such adjustment. Likewise, if a reduction is subsequently obtained for Taxes for the Base Year (if Tenant's Pro Rata Share is based upon increases in Basic Costs over a Base Year), Basic Costs for the Base Year shall be restated and the Excess for all subsequent years recomputed. Tenant shall pay to Landlord Tenant's Pro Rata Share of any such increase in the Excess within thirty (30) days after Tenant's receipt of a statement therefor from Landlord. 8. All landscape expenses and costs of maintaining, repairing, resurfacing and striping of the parking areas and garages of the Property, if any. 9. Cost of all maintenance service agreements, including those for equipment, alarm service, window cleaning, venetian blind cleaning, janitorial services, pest control, uniform supply, plant maintenance, landscaping, and any parking equipment. 10. Cost of all other repairs, replacements and general maintenance of the Property and Building neither specified above nor directly billed to tenants. 11. The amortized cost of capital improvements made to the Building or the Property which are: (a) primarily for the purpose of reducing operating expense costs or otherwise improving the operating efficiency of the Property or Building; or (b) required to comply with any laws, rules or regulations of any governmental authority. The cost of such capital improvements shall be amortized over a period of five (5) years and shall, at Landlord's option, include interest at a rate that is reasonably equivalent to the interest rate that Landlord would be required to pay to finance the cost of the capital improvement in question as of the date such capital improvement is performed, provided if the payback period for any capital improvement is less than five (5) years, Landlord may amortize the cost of such capital improvement over the payback period. Notwithstanding the foregoing, the portion of the annual amortized costs to be included in Basic Costs in any calendar year with respect to a capital improvement which is intended to reduce expenses or improve the operating efficiency of the Property or Building shall equal the lesser of: a) such annual amortized costs; and b) the actual annual amortized reduction in expenses for that portion of the amortization period of the capital improvement which falls within the Lease Term. 12. Any other expense or charge of any nature whatsoever which, in accordance with general industry practice with respect to the operation of 10 a first-class office building in Atlanta, Georgia, would be construed as an operating expense. In addition, if Landlord incurs any Taxes or costs and expenses in connection with the operation, maintenance, repair, or management of the Building and one or more other buildings, such costs and expenses shall be equitably prorated between the Building and such other buildings and the Building's equitable share thereof shall be included in Basic Costs. Notwithstanding the foregoing, for purposes of computing Tenant's Pro Rata Share of Basic Costs, the Controllable Basic Costs (hereinafter defined) shall not increase by more than six percent (6%) per calendar year on a compounding basis over the course of the Lease Term. In other words, Controllable Basic Costs for the first calendar year after the Base Year shall not exceed one hundred six percent (106%) of the Controllable Basic Costs for the Base Year. Controllable Basic Costs for the second calendar year after the Base Year shall not exceed one hundred six percent (106%) of the limit on Controllable Basic Costs for the first calendar year after the Base Year, etc. By way of illustration, if Controllable Basic Costs were $10.00 per rentable square for the Base Year, then Controllable Basic Costs for the first (1st) calendar year following the Base Year shall not exceed $10.60 per rentable square foot, and Controllable Basic Costs for the second calendar year following the Base Year shall not exceed $11.24 per rentable square foot. "Controllable Basic Costs" shall mean all Basic Costs exclusive of the cost of Taxes, insurance, utilities and capital improvements. Basic Costs shall not include the cost of capital improvements (except as set forth above and as distinguished from replacement parts or components purchased and installed in the ordinary course), depreciation, interest (except as provided above with respect to the amortization of capital improvements), lease commissions, and principal payments on mortgage and other non-operating debts of Landlord. Basic Costs shall also exclude the following: a. Repairs or other work occasioned by (i) fire, windstorm, or other casualty of the type which Landlord has insured (to the extent that Landlord has received insurance proceeds and provided that the amount of any deductible paid by Landlord shall be included in Basic Costs), or (ii) the exercise of the right of eminent domain (to the extent that such repairs or other work are covered by the proceeds of the award, if any, received by Landlord). b. Leasing and brokerage commissions, attorney's fees, costs, and disbursements and other expenses incurred in connection with negotiation of leases with prospective tenants. c. Rental concessions granted to specific tenants and expenses incurred in renovating or otherwise improving or decorating, painting, or redecorating space for specific tenants, other than ordinary repairs and maintenance provided to all tenants. d. Overhead and profit increment paid to subsidiaries or other affiliates of Landlord for services (including management services and the fees paid in connection therewith) on or to the Property, Building and\or Premises to the extent only that the costs of such services exceed the competitive cost for such services rendered by persons or entities of similar skill, competence and experience. e. Advertising and promotional expenditures. f. Any penalties or liquidated damages that Landlord pays to Tenant under this Lease or to any other tenants in the Building under their respective leases. g. Attorney's fees, costs and other expenses incurred in connection with disputes with tenants or other occupants of the Building or 11 incurred to enforce the obligations of tenants under leases of portions of the Building. h. The cost or expense of any services or benefits provided to other tenants in the Building and not provided or available to Tenant. i. The cost of operating any commercial concession which is operated by Landlord in the Building, including without limitation, any compensation paid to clerks, attendants or other persons operating such commercial concessions on behalf of Landlord, but only to the extent revenues from any such commercial concessions exceed such costs and compensation. j. Any fines or penalties incurred as a result of violation by Landlord of any law, order, rule or regulation of any governmental authority. k. Expenses incurred in connection with the initial construction of the Building, Garage and Common Areas. l. All costs of purchasing, repairing and replacing major sculptures, paintings or other major works or objects of art (as opposed to decorations purchased or leased by Landlord for display in the Common Areas of the Building). m. To the extent that parking revenues exceed parking expenses, the costs incurred in owning, operating, maintaining and repairing any underground or above-ground parking garage and/or any other parking facilities associated with the Building and Common Areas. n. Salaries or fringe benefits of (i) employees above the grade of building manager or general manager, and (ii) employees whose time is not spent directly and solely in the operation of the Property, provided that if any employee performs services in connection with the Building and other buildings, costs associated with such employee may be proportionately included in Basic Costs based on the percentage of time such employee spends in connection with the operation, maintenance and management of the Building. o. Any expenses for which Landlord has received actual reimbursement, whether by insurance or otherwise (other than through Basic Costs). p. Any costs, fines or penalties incurred due to violations by Landlord of any environmental law in effect (and as enforced) as of the Commencement Date (except where such costs, fines or penalties are incurred by Landlord for violations of any such law, order, rule or regulation that is ultimately determined to be invalid or inapplicable); and any cost or expense related to removal, cleaning, abatement or remediation of "hazardous materials" in or about the Building, Common Area or Property, including, without limitation, hazardous substances in the ground water or soil, except to the extent such removal, cleaning, abatement or remediation is related to the general repair and maintenance of the Building, Common Area or Property. q. All costs associated with the operation of the business of the ownership or entity which constitutes "Landlord" (as distinguished from the costs of operating, maintaining, repairing and managing the Building) including, but not limited to, Landlord's general corporate overhead and general administrative expenses. r. Costs incurred by Landlord in connection with the correction of defects in design and original construction of the Building, Garage and Common Areas. 12 s. Any fines, costs, penalties or interest resulting from the adjudicated negligence or adjudicated willful misconduct of the Landlord or its agents, contractors, or employees. t. Ground lease rental. u. Landlord's charitable and political contributions. v. Costs incurred (less costs of recovery) for any items to the extent covered by a manufacturer's, materialman's, vendor's or contractor's warranty (a "Warranty") which are paid by such manufacturer, materialman, vendor or contractor (Landlord shall use reasonable efforts to pursue a warranty claim for items covered by a Warranty unless Landlord determines in good faith that such action would not be in the best interest of the Building). w. The cost of statements and reports rendered to shareholders of Landlord. x. All bad debt loss, rent loss, or reserves for bad debt or rent loss; y. To the extent any services (on a per square foot basis) are provided to a tenant or occupant of the Building at a level that is materially greater than the level at which such services are available to Tenant, the cost of providing such services at a level that is over and above the level available to Tenant shall be excluded from Basic Costs. If the Building is not at least ninety-five percent (95%) occupied during any calendar year of the Lease Term or if Landlord is not supplying services to at least ninety-five percent (95%) of the total Rentable Area of the Building at any time during any calendar year of the Lease Term, actual Basic Costs for purposes hereof shall be determined as if the Building had been ninety-five percent (95%) occupied and Landlord had been supplying services to ninety-five percent (95%) of the Rentable Area of the Building during such year. If Tenant pays for its Pro Rata Share of Basic Costs based on increases over a "Base Year" and Basic Costs for any calendar year during the Lease Term are determined as provided in the foregoing sentence, Basic Costs for such Base Year shall also be determined as if the Building had been ninety-five percent (95%) occupied and Landlord had been supplying services to ninety-five percent (95%) of the Rentable Area of the Building. Any necessary extrapolation of Basic Costs under this Article shall be performed by adjusting the cost of those components of Basic Costs that are impacted by changes in the occupancy of the Building (including, at Landlord's option, Taxes) to the cost that would have been incurred if the Building had been ninety-five percent (95%) occupied and Landlord had been supplying services to ninety-five percent (95%) of the Rentable Area of the Building. In addition, if Tenant's Pro Rata Share of Basic Costs is determined based upon increases over a Base Year and Basic Costs for the Base Year include exit and disconnection fees, stranded cost charges and/or competitive transaction charges, such fees and charges may, at Landlord's option, be imputed as a Basic Cost for subsequent years in which such fees and charges are not incurred. In no event, however, shall the amount of such imputed fees and charges exceed the actual amount of exit and disconnection fees, stranded cost charges and/or competitive transaction charges that were actually included in Basic Costs for the Base Year. C. Tenant, within ninety (90) days after receiving Landlord's statement of actual Basic Costs for a particular calendar year, shall have the right to provide Landlord with written notice (the "Review Notice") of its intent to review Landlord's books and records relating to the Basic Costs for such calendar year. Within a reasonable time after receipt of a timely Review Notice, Landlord shall make such books and records available to Tenant or Tenant's agent for its review. If any records are maintained at a location other than the office of the Building, Tenant may either inspect the records at such other location or pay for the reasonable 13 cost of copying and shipping the records. If Tenant retains an agent to review Landlord's books and records for any calendar year, such agent must be CPA firm licensed to do business in the state in which the Building is located. Tenant shall be solely responsible for any and all costs, expenses and fees incurred by Tenant or Tenant's agent in connection with such review. If Tenant elects to review Landlord's books and records, within thirty (30) days after such books and records are made available to Tenant, Tenant shall have the right to give Landlord written notice stating in reasonable detail any objection to Landlord's statement of actual Basic Costs for such calendar year. If Tenant fails to give Landlord written notice of objection within such thirty (30) day period or fails to provide Landlord with a Review Notice within the ninety (90) day period provided above, Tenant shall be deemed to have approved Landlord's statement of Basic Costs in all respects and shall thereafter be barred from raising any claims with respect thereto. Notwithstanding the foregoing, if a subsequent review of Expenses in accordance with the terms hereof discloses that a particular material item of Expenses has been overstated by more than five percent (5%) and there is a reasonable basis to assume such item was similarly overstated in any of the three (3) immediately previous calendar years, Landlord shall allow Tenant to perform a review of Landlord's books and records with respect to such particular item(s) for any of the three (3) immediately previous calendar years in which Tenant elected not to review Landlord's books and records. Upon Landlord's receipt of a timely objection notice from Tenant, Landlord and Tenant shall work together in good faith to resolve the discrepancy between Landlord's statement and Tenant's review. If Landlord and Tenant determine that Basic Costs for the calendar year in question are less than reported, Landlord shall provide Tenant with a credit against future Base Rental and Additional Base Rental in the amount of any overpayment by Tenant. Likewise, if Landlord and Tenant determine that Basic Costs for the calendar year in question are greater than reported, Tenant shall forthwith pay to Landlord the amount of underpayment by Tenant. In addition, if Landlord and Tenant determine that Basic Costs for the Building for the year in question were less than stated by more than five percent (5%), Landlord, within thirty (30) days after its receipt of paid invoices therefor from Tenant, shall reimburse Tenant for any reasonable amounts paid by Tenant to third parties in connection with such review by Tenant. Any information obtained by Tenant pursuant to the provisions of this Section shall be treated as confidential. Notwithstanding anything herein to the contrary, Tenant shall not be permitted to examine Landlord's books and records or to dispute any statement of Basic Costs unless Tenant has paid to Landlord the amount due as shown on Landlord's statement of actual Basic Costs, said payment being a condition precedent to Tenant's right to examine Landlord's books and records. D. Tenant covenants and agrees to pay to Landlord during the Lease Term, without any setoff or deduction whatsoever, the full amount of all Base Rental and Additional Base Rental due hereunder. In addition, Tenant shall pay and be liable for, as additional rent, all rental, sales and use taxes or other similar taxes, if any, levied or imposed by any city, state, county or other governmental body having authority, such payments to be in addition to all other payments required to be paid to Landlord by Tenant under the terms and conditions of this Lease. Any such payments shall be paid concurrently with the payments of the Rent on which the tax is based. The Base Rental, Tenant's Pro Rata Share of Basic Costs and any recurring monthly charges due hereunder shall be due and payable in advance on the first day of each calendar month during the Lease Term without demand, provided that the installment of Base Rental for the first full calendar month of the Lease Term shall be payable upon the execution of this Lease by Tenant. All other items of Rent shall be due and payable by Tenant on or before ten (10) Business Days after Tenant's receipt of billing by Landlord. If the Lease Term commences on a day other than the first day of a calendar month or terminates on a day other than the last day of a calendar month, then the monthly Base Rental and Tenant's Pro Rata Share of Basic Costs for such month shall be prorated for the number of days in such month occurring within the Lease Term based on a fraction, the numerator of which is the number of days of the Lease Term that fell within such calendar month and the denominator of which is thirty (30). All such payments shall be by a good and sufficient check. No payment by Tenant or receipt or acceptance by Landlord of a lesser amount than the correct amount of Rent due under this Lease shall be deemed to be 14 other than a payment on account of the earliest Rent due hereunder, nor shall any endorsement or statement on any check or any letter accompanying any check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance or pursue any other available remedy. The acceptance by Landlord of any Rent on a date after the due date of such payment shall not be construed to be a waiver of Landlord's right to declare a default for any other late payment. Tenant's covenant to pay Rent shall be independent of every other covenant set forth in this Lease. E. If Tenant fails to pay any installment of Rent when due and payable hereunder, a service fee equal to five percent (5%) of such unpaid amount will be due and payable immediately by Tenant to Landlord (provided Tenant shall be entitled to a grace period of five (5) days after notice from Landlord with respect to the first two (2) late payments in any calendar year). Landlord shall also be entitled to interest on late payments of Rent as described in Section XXIII.D. below. V. USE. The Premises shall be used for the Permitted Use and for no other purpose. Tenant agrees not to use or permit the use of the Premises for any purpose which is illegal, dangerous to life, limb or property or which, in Landlord's reasonable opinion, creates a nuisance or which would increase the cost of insurance coverage with respect to the Building. Tenant shall conduct its business and control its agents, servants, contractors, employees, customers, licensees, and invitees in such a manner as not to unreasonably interfere with, annoy or disturb other tenants, or in any way interfere with Landlord in the management and operation of the Building. Tenant will maintain the Premises in a clean and healthful condition, and comply with all laws, ordinances, orders, rules and regulations of any governmental entity with reference to the operation of Tenant's business and to the use, condition, configuration or occupancy of the Premises, including without limitation, the Americans with Disabilities Act (collectively referred to as "Laws") . Except to the extent properly included in Basic Costs, Landlord shall be responsible for the cost of correcting any violations of Title III of the Americans with Disabilities Act (ADA) with respect to the Common Areas of the Building. Notwithstanding the foregoing, Landlord shall have the right to contest any alleged violation in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by law and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by law. Landlord, after the exhaustion of any and all rights to appeal or contest, will make all repairs, additions, alterations or improvements necessary to comply with the terms of any final order or judgment. Tenant, within ten (10) days after receipt thereof, shall provide Landlord with copies of any notices it receives with respect to a violation or alleged violation of any Laws. Tenant will comply with the rules and regulations of the Building attached hereto as EXHIBIT B and such other rules and regulations adopted and altered by Landlord from time to time and will cause all of its agents, servants, contractors, employees, customers, licensees and invitees to do so. All changes to such rules and regulations will be reasonable and shall be sent by Landlord to Tenant in writing. The rules and regulations shall be generally applicable, and generally applied in the same manner, to all tenants of the Building. VI. SECURITY DEPOSIT. A. As security for the performance of Tenant's obligations under this Lease, upon the execution of this Lease by Tenant, Tenant shall deliver to Landlord a Security Deposit consisting of an irrevocable letter of credit (the "Letter of Credit"), which Letter of Credit shall: (a) be in the amount of $1,212,468.06; (b) be issued on the form attached hereto as EXHIBIT F; (c) name EOP-Buckhead, L.L.C. or such other designee of Landlord, as requested by Landlord, as its beneficiary; (d) be drawn on an FDIC insured financial institution satisfactory to the Landlord; and (e) expire no earlier than sixty (60) days after the Termination Date of this Lease. B. The Security Deposit shall be delivered to Landlord and shall be held by Landlord without liability for interest (unless required by law). The Security Deposit is not an advance payment of Rent or a measure of Tenant's liability for damages. Landlord may, from time to time, without prejudice to any other remedy, use all or a portion of the Security Deposit to satisfy past due Rent or to cure any uncured default by Tenant. If Landlord uses the Security Deposit, Tenant shall on demand restore the Security Deposit to its original amount. Landlord shall return 15 any unapplied portion of the Security Deposit to Tenant within 45 days after the later to occur of: (1) the determination of Tenant's Pro Rata Share of any Excess (defined in Section IV.A.) for the final year of the Lease Term; (2) the date Tenant surrenders possession of the Premises to Landlord in accordance with this Lease; or (3) the Termination Date. If Landlord transfers its interest in the Premises, Landlord may assign the Security Deposit to the transferee and, following the assignment, Landlord shall have no further liability for the return of the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its other accounts. C. Notwithstanding anything herein to the contrary, provided Tenant is not in default under this Lease as of the effective date of any reduction of the Letter of Credit, Tenant shall have the right to reduce the amount of the Letter of Credit by $242,493.61 effective as of the 3rd anniversary of the Commencement Date and each subsequent annual anniversary of the Commencement Date thereafter. Landlord may prevent any such reduction by delivering written notice to the issuer of the Letter of Credit that Tenant is in default under the Lease. Notwithstanding the foregoing, effective as of the 3rd anniversary of the Commencement Date, upon written request of Tenant and provided that Tenant is not in default under this Lease as of such date, Landlord agrees to review Tenant's then current financial statements and to discuss with Tenant the feasibility of reducing or eliminating the Security Deposit in its entirety or accelerating the reduction schedule described above. However, although Landlord agrees to discuss such matter with Tenant in good faith, any decision of Landlord with respect to such matter shall be made in Landlord's sole discretion. VII. SERVICES TO BE FURNISHED BY LANDLORD. A. Landlord, as part of Basic Costs (except as otherwise provided), agrees to furnish Tenant the following services: 1. Water for use in the lavatories on the floor(s) on which the Premises is located. If Tenant desires water in the Premises for any approved reason, including a private lavatory or kitchen, cold water shall be supplied, at Tenant's sole cost and expense, from the Building water main through a line and fixtures installed at Tenant's sole cost and expense with the prior reasonable consent of Landlord. If Tenant desires hot water in the Premises, Tenant, at its sole cost and expense and subject to the prior reasonable consent of Landlord, shall install a hot water heater in the Premises. Tenant shall be solely responsible for maintenance and repair of any such hot water heater. 2. Central heat and air conditioning in season during Normal Business Hours, at such temperatures and in such amounts as are appropriate to maintain the standards reflected on the HVAC specifications reflected in the "Mechanical System for Building" portion of EXHIBIT D-1 attached hereto, or as required by governmental authority. If Tenant requires central heat, ventilation or air conditioning at hours other than Normal Business Hours, such central heat, ventilation or air conditioning shall be furnished only upon the oral request of an authorized representative of Tenant (i.e. pre-authorized by Tenant in writing) or the written request of Tenant delivered to Landlord at the office of the Building prior to 12:00 P.M. on the date excess usage is required if such date is a Business Day, or (ii) 12:00 P.M. on the immediately preceding Business Day if such excess usage is desired on a Saturday, Sunday or Holiday. Tenant shall pay Landlord, as Additional Base Rental, the entire cost of additional service as such costs are determined by Landlord from time to time. As of the date hereof, Landlord's charge for after hours heating and air conditioning service is $30.00 per hour. 3. Maintenance and repair of all Common Areas in a first class manner deemed by Landlord to be standard for buildings of similar class, size, age and location in the Buckhead area of Atlanta, Georgia. 16 4. Janitor service on Business Days; provided, however, if Tenant's use, floor covering or other improvements require special services, Tenant shall pay the additional cost reasonably attributable thereto as Additional Base Rental. 5. Passenger elevator service in common with other tenants of the Building, provided that, subject to Force Majeure, at least one (1) passenger elevator servicing the Premises shall be available for the use of Tenant, twenty-four (24) hours a day, 365/6 days per year. 6. Electricity to the Premises for general office use, in accordance with and subject to the terms and conditions set forth in Article XI of this Lease. 7. Access to the Building for Tenant and its employees 24-hours a day, seven (7) days a week, subject to the terms of this Lease and such security or monitoring systems as Landlord may reasonably impose, including, without limitation, sign in procedures and/or presentation of identification cards. 8. Security to the Building consistent with a first-class office building in the Buckhead area in Atlanta, Georgia, which may be provided through a security system involving any one or a combination of cameras, monitoring devices or guards, sign-in or identification procedures or other comparable system. B. Landlord's failure to furnish, or any interruption or termination of, services due to the application of Laws (defined in Section I.B.12 above), the failure of any equipment, the performance of repairs, improvements or alterations, or the occurrence of any event or cause beyond the reasonable control of Landlord (a "Service Failure") shall not render Landlord liable to Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, nor relieve Tenant from the obligation to fulfill any covenant or agreement. However, if the Premises, or a material portion of the Premises, is made untenantable for a period in excess of 3 consecutive Business Days as a result of the Service Failure, then Tenant, as its sole remedy, shall be entitled to receive an abatement of Rent payable hereunder during the period beginning on the 4th consecutive Business Day of the Service Failure and ending on the day the service has been restored. If the entire Premises has not been rendered untenantable by the Service Failure, the amount of abatement that Tenant is entitled to receive shall be prorated based upon the percentage of the Premises rendered untenantable and not used by Tenant. C. Tenant expressly acknowledges that if Landlord, from time to time, elects to provide security services, Landlord shall not be deemed to have warranted the efficiency of any security personnel, service, procedures or equipment and Landlord shall not be liable in any manner for the failure of any such security personnel, services, procedures or equipment to prevent or control, or apprehend anyone suspected of personal injury, property damage or any criminal conduct in, on or around the Property. VIII. LEASEHOLD IMPROVEMENTS. Any trade fixtures, unattached and movable equipment or furniture, or other personalty brought into the Premises by Tenant ("Tenant's Property") shall be owned and insured by Tenant. Tenant shall remove all such Tenant's Property from the Premises in accordance with the terms of Article XXXV hereof. Any and all alterations, additions and improvements to the Premises, including any built-in furniture (collectively, "Leasehold Improvements") shall be owned and insured by Landlord and shall remain upon the Premises, all without compensation, allowance or credit to Tenant. Landlord may, nonetheless, at any time prior to the expiration or earlier termination of this Lease or Tenant's right to possession, require Tenant to remove any Leasehold Improvements performed by or for the benefit of Tenant and all electronic, phone and data cabling as are designated by Landlord (the "Required Removables") at Tenant's sole cost. In the event that Landlord so elects, Tenant shall remove such Required Removables within ten (10) Business Days after notice from Landlord, provided that in no event shall Tenant be required to remove such Required Removables prior to the expiration or earlier termination of 17 this Lease or Tenant's right to possession. In addition to Tenant's obligation to remove the Required Removables, Tenant shall repair any damage caused by such removal and perform such other work as is reasonably necessary to restore the Premises to a "move in" condition. If Tenant fails to remove any specified Required Removables or to perform any required repairs and restoration within the time period specified above, Landlord, at Tenant's sole cost and expense, may remove, store, sell and/or dispose of the Required Removables and perform such required repairs and restoration work. Tenant, within fifteen (15) days after demand from Landlord, shall reimburse Landlord for any and all reasonable costs incurred by Landlord in connection with the Required Removables. Notwithstanding the foregoing, Tenant may request in writing at the time it submits its plans and specifications for an alteration, addition or improvement, that Landlord advise Tenant whether Landlord will require Tenant to remove, at the termination of this Lease or Tenant's right to possession hereunder, such alteration, addition or improvement, or any particular portion thereof and Landlord shall advise Tenant within twenty (20) days after receipt of Tenant's request as to whether Landlord will require removal; provided, however, Landlord shall have the right to require Tenant to remove any vault, stairway, raised floor or structural alterations installed in the Premises, regardless of whether Landlord timely notified Tenant that it would require such removal. IX. GRAPHICS. Landlord shall provide and install, at Tenant's cost (subject to the Allowance), any suite numbers and Tenant identification on the exterior of the Premises using the standard graphics for the Building. Tenant shall not be permitted to install any signs or other identification without Landlord's prior written consent, which consent shall not be unreasonably withheld. Landlord shall include Tenant's name, at Tenant's cost, in the Building lobby directory. X. REPAIRS AND ALTERATIONS. A. Except to the extent such obligations are imposed upon Landlord hereunder, Tenant, at its sole cost and expense, shall perform all maintenance and repairs to the Premises as are necessary to keep the same in good condition and repair throughout the entire Lease Term, reasonable wear and tear excepted. Tenant's repair and maintenance obligations with respect to the Premises shall include, without limitation, any necessary repairs with respect to: (1) any carpet or other floor covering, (2) any interior partitions, (3) any doors, (4) the interior side of any demising walls, (5) any telephone and computer cabling that serves Tenant's equipment exclusively, (6) any supplemental air conditioning units, private showers and kitchens, including any plumbing in connection therewith, and similar facilities serving Tenant exclusively, and (7) any alterations, additions or improvements performed by contractors retained by Tenant. All such work shall be performed in accordance with section X.B. below and the rules, policies and procedures reasonably enacted by Landlord from time to time for the performance of work in the Building. If Tenant fails to make any necessary repairs to the Premises within ten (10) days after notice from Landlord (provided that no prior notice shall be required in the event of an emergency), Landlord may, at its option, make such repairs, and Tenant shall pay the cost thereof to the Landlord on demand as Additional Base Rental, together with an administrative charge in an amount equal to ten percent (10%) of the cost of such repairs. Notwithstanding the foregoing, if the repair to be performed by Tenant cannot reasonably be completed within ten (10) days by Tenant or Landlord, Landlord shall not exercise its right to make such repair on Tenant's behalf so long as Tenant commences such repair within ten (10) days after notice from Landlord and is diligently pursuing the same to completion. Landlord shall, at its expense (except as included in Basic Costs), keep and maintain in good repair and working order and make all repairs to and perform necessary maintenance upon: (a) the roof, gutters, downspouts, if any, and all other structural elements of the Building; and (b) all mechanical, electrical and plumbing systems that serve the Building in general; and (c) the Building facilities common to all tenants including, but not limited to, the ceilings, walls and floors in the Common Areas. B. Tenant shall not make or allow to be made any alterations, additions or improvements to the Premises without first obtaining the written consent of Landlord in each such instance which consent shall not be unreasonably withheld, conditioned or delayed. Prior to commencing any such work and as a condition to obtaining Landlord's consent, Tenant must furnish Landlord with 18 plans and specifications reasonably acceptable to Landlord (which Landlord shall approve or disapprove within five (5) Business Days after receipt from Tenant provided Tenant includes a written reminder notice that Landlord is to respond within five (5) Business Days); names and addresses of contractors reasonably acceptable to Landlord; copies of contracts; necessary permits and approvals; evidence of contractor's and subcontractor's insurance in accordance with Article XVI section B. hereof; and payment bond or other security, all in form and amount satisfactory to Landlord. All such improvements, alterations or additions shall be constructed in a good and workmanlike manner using Building Standard materials or other new materials of equal or greater quality. Landlord, to the extent reasonably necessary to avoid any disruption to the tenants and occupants of the Building, shall have the right to designate the time when any such alterations, additions and improvements may be performed and to otherwise designate reasonable rules, regulations and procedures for the performance of work in the Building. Upon completion, Tenant shall furnish "as-built" plans, contractor's affidavits and full and final waivers of lien and receipted bills covering all labor and materials. All improvements, alterations and additions shall comply with all insurance requirements, codes, ordinances, laws and regulations, including without limitation, the Americans with Disabilities Act. Tenant shall reimburse Landlord upon demand as Additional Base Rental for all reasonable sums, if any, expended by Landlord for third party examination of the architectural, mechanical, electric and plumbing plans for any alterations, additions or improvements. In addition, if Landlord so requests, Landlord shall be entitled to oversee the construction of any alterations, additions or improvements that may affect the structure of the Building or any of the mechanical, electrical, plumbing or life safety systems of the Building. In the event Landlord elects to oversee such work, Landlord shall be entitled to receive a fee for such oversight in an amount equal to ten percent (10%) of the cost of such alterations, additions or improvements. Landlord's approval of Tenant's plans and specifications for any work performed for or on behalf of Tenant shall not be deemed to be a representation by Landlord that such plans and specifications comply with applicable insurance requirements, building codes, ordinances, laws or regulations or that the alterations, additions and improvements constructed in accordance with such plans and specifications will be adequate for Tenant's use. XI. USE OF ELECTRICAL SERVICES BY TENANT. A. All electricity used by Tenant in the Premises shall, at Landlord's option, be paid for by Tenant either: (1) through inclusion in Base Rental and Basic Costs (except as provided in Section XI.B. below with respect to excess usage); or (2) by a separate charge billed directly to Tenant by Landlord and payable by Tenant as Additional Base Rental within ten (10) days after billing; or (3) by a separate charge or charges billed by the utility company(ies) providing electrical service and payable by Tenant directly to such utility company(ies). It is understood that electrical service to the Premises may be furnished by one or more companies providing electrical generation, transmission and/or distribution services and that the cost of electricity may be billed as a single charge or divided into and billed in a variety of categories such as distribution charges, transmission charges, generation charges, public good charges or other similar categories. Landlord shall have the exclusive right to select the company(ies) providing electrical service to the Building, Premises and Property, to aggregate the electrical service for the Building, Premises and Property with other buildings, to purchase electricity for the Building, Premises and Property through a broker and/or buyers group and to change the providers and/or manner of purchasing electricity from time to time. Landlord shall be entitled to receive a reasonable fee (if permitted by law) for the services provided by Landlord in connection with the selection of utility companies and the negotiation and administration of contracts for the generation of electricity. B. Tenant's use of electrical service in the Premises shall not exceed, either in voltage, rated capacity, use beyond Normal Business Hours or overall load, that which Landlord deems to be standard for the Building. For purposes hereof, the electrical "standard" for the Building is: (a) a design load of two (2) watts per square foot of net usable floor area for all Building Standard overhead lighting located within the Premises which requires a voltage of 480/277 volts; and (b) a 19 connected load of five (5) watts per square foot of net usable area for all equipment located and operated within the Premises which requires a voltage of 120/208 volts single phase or less, it being understood that electricity required to operate the base building HVAC system is not included within or deducted from such five (5) watts per square foot. If Tenant shall consume (or request that it be allowed to consume) electrical service in excess of that deemed by Landlord to be standard for the Building, Landlord may refuse to consent to such excess usage or may condition its consent to such excess usage upon such conditions as Landlord reasonably elects (including the installation of utility service upgrades, submeters, air handlers or cooling units), and all such additional usage (to the extent permitted by law), installation and maintenance thereof shall be paid for by Tenant as Additional Base Rental. Landlord, at any time during the Lease Term, shall have the right to separately meter electrical usage for the Premises or to measure electrical usage by survey or any other method that Landlord, in its reasonable judgment, deems to be appropriate. C. Notwithstanding Section A. above to the contrary, if Landlord permits Tenant to purchase electrical power for the Premises from a provider other than Landlord's designated company(ies), such provider shall be considered to be a contractor of Tenant and Tenant shall indemnify and hold Landlord harmless from such provider's acts and omissions while in, or in connection with their services to, the Building or Premises in accordance with the terms and conditions of Article XV. In addition, at the request of Landlord, Tenant shall allow Landlord to purchase electricity from Tenant's provider at Tenant's rate or at such lower rate as can be negotiated by the aggregation of Landlord's and Tenant's requirements for electricity power. XII. ENTRY BY LANDLORD. Landlord and its agents or representatives shall have the right to enter the Premises to inspect the same, or to show the Premises to prospective purchasers, mortgagees, tenants (during the last twelve months of the Lease Term or earlier in connection with a potential relocation) or insurers, or to clean or make repairs, alterations or additions thereto, including any work that Landlord deems necessary for the safety, protection or preservation of the Building or any occupants thereof, or to facilitate repairs, alterations or additions to the Building or any other tenants' premises. Except for any entry by Landlord in an emergency situation or to provide normal cleaning and janitorial service, Landlord shall provide Tenant with reasonable prior notice of any entry into the Premises, which notice may be given verbally. Notwithstanding the foregoing, except in emergency situations as determined by Landlord, Landlord shall exercise reasonable efforts to perform any entry into the Premises in a manner that is reasonably designed to minimize interference with the operation of Tenant's business in the Premises. If reasonably necessary for the protection and safety of Tenant and its employees, Landlord shall have the right to temporarily close the Premises to perform repairs, alterations or additions in the Premises, provided that Landlord shall use reasonable efforts to perform all such work on weekends and after Normal Business Hours. Entry by Landlord hereunder shall not constitute a constructive eviction or entitle Tenant to any abatement or reduction of Rent by reason thereof. Notwithstanding the foregoing, if Landlord temporarily closes the Premises as provided above for a period in excess of three (3) consecutive Business Days, Tenant, as its sole remedy, shall be entitled to receive a per diem abatement of Base Rental during the period beginning on the fourth (4th) consecutive Business Day of closure and ending on the date on which the Premises are returned to Tenant in a tenantable condition. Tenant, however, shall not be entitled to an abatement if the repairs, alterations and/or additions to be performed are required as a result of the acts or omissions of Tenant, its agents, employees or contractors, including, without limitation, a default by Tenant in its maintenance and repair obligations under the Lease. XIII. ASSIGNMENT AND SUBLETTING. A. Subject to XIII.E. below, Tenant shall not assign, sublease, transfer or encumber this Lease or any interest therein or grant any license, concession or other right of occupancy of the Premises or any portion thereof or otherwise permit the use of the Premises or any portion thereof by any party other than Tenant (any of which events is hereinafter called a "Transfer") without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed with respect to any proposed assignment or subletting. Landlord's consent shall not be considered unreasonably withheld if: (1) the proposed 20 transferee's financial responsibility does not meet the same criteria Landlord uses to select Building tenants; (2) the proposed transferee's business is not suitable for the Building considering the business of the other tenants and the Building's prestige or would result in a violation of an exclusive right granted to another tenant in the Building; (3) the proposed use is different than the Permitted Use; (4) the proposed transferee is a government agency or occupant of the Building; (5) Tenant is in default; or (6) any portion of the Building or Premises would become subject to additional or different governmental laws or regulations as a consequence of the proposed Transfer and/or the proposed transferee's use and occupancy of the Premises. Notwithstanding the foregoing, Landlord will not withhold its consent solely because the proposed subtenant or assignee is an occupant of the Building if Landlord does not have space available for lease in the Building that is comparable to the space Tenant desires to sublet or assign. For purposes hereof, Landlord shall be deemed to have comparable space if it has space available on any floor of the Building that is approximately the same size as the space Tenant desires to sublet or assign within six (6) months of the proposed commencement of the proposed sublease or assignment. Tenant acknowledges that the foregoing is not intended to be an exclusive list of the reasons for which Landlord may reasonably withhold its consent to a proposed Transfer. Any attempted Transfer in violation of the terms of this Article shall, at Landlord's option, be void. Consent by Landlord to one or more Transfers shall not operate as a waiver of Landlord's rights as to any subsequent Transfers. In addition, Tenant shall not, without Landlord's consent, publicly advertise the proposed rental rate for any Transfer. B. If Tenant requests Landlord's consent to a Transfer, Tenant, together with such request for consent, shall provide Landlord with the name of the proposed transferee and the nature of the business of the proposed transferee, the term, use, rental rate and all other material terms and conditions of the proposed Transfer, including, without limitation, a copy of the proposed assignment, sublease or other contractual documents and evidence satisfactory to Landlord that the proposed transferee is financially responsible. Notwithstanding Landlord's agreement to act reasonably under Section XIII.A. above, Landlord may, within thirty (30) days after its receipt of all information and documentation required herein, either, (1) consent to or reasonably refuse to consent to such Transfer in writing; or (2) terminate this Lease, with thirty (30) days prior notice, with respect to the Premises (if Tenant is proposing to assign the Lease) or with respect to the portion of the Premises that Tenant is proposing to sublet if the proposed sublease, with or without renewal options, is to expire during the last twelve (12) months of the Lease Term. Notwithstanding the foregoing, Tenant, within ten (10) days after receipt of Landlord's notice of intent to terminate, may withdraw its request for consent to the Transfer. In such event, Landlord's election to terminate the Lease with respect to all or a portion of the Premises as described above shall be null and void and of no force and effect. If Landlord consents to any such Transfer, the Transfer and consent thereto shall be in a form approved by Landlord, and Tenant shall bear all costs and expenses incurred by Landlord in connection with the review and approval of such documentation, which costs and expenses shall be deemed to be at least Five Hundred Dollars ($500.00). Notwithstanding the foregoing, provided that Tenant does not request any changes to this Lease or Landlord's standard form of consent in connection with the proposed transfer, such costs and expenses shall not exceed Five Hundred Dollars ($500.00). C. Fifty percent (50%) of all cash or other proceeds (the "Transfer Consideration") of any Transfer of Tenant's interest in this Lease and/or the Premises, whether consented to by Landlord or not, shall be paid to Landlord and Tenant hereby assigns all rights it might have or ever acquire in any such proceeds to Landlord. In addition to the Rent hereunder, Tenant hereby covenants and agrees to pay to Landlord fifty percent (50%) of all rent and other consideration which it receives which is in excess of the Rent payable hereunder within ten (10) days following receipt thereof by Tenant. Any assignee of Tenant's rights under this Lease shall pay all sums due under this Lease directly to Landlord. Further, if Tenant is in Monetary Default (defined in Section XXII.A. below), Landlord may require that all sublease payments be made directly to Landlord, in which case Tenant shall receive a credit against Rent in the amount of any payments received (less 21 Landlord's share of any excess). However, by accepting any such payments directly from the assignee or subtenant, whether as a result of the foregoing or otherwise, Landlord does not waive any claims against the Tenant hereunder or release Tenant from any obligations under this Lease, nor recognize the subtenant as the tenant under the Lease. D. If Tenant is a corporation, limited liability company or similar entity, and if at any time during the Lease Term the entity or entities who own the voting shares at the time of the execution of this Lease cease for any reason (including but not limited to merger, consolidation or other reorganization involving another corporation) to own a majority of such shares, or if Tenant is a partnership and if at any time during the Lease Term the general partner or partners who own the general partnership interests in the partnership at the time of the execution of this Lease, cease for any reason to own a majority of such interests (except as the result of transfers by gift, bequest or inheritance to or for the benefit of members of the immediate family of such original shareholder[s] or partner[s]), such an event shall be deemed to be a Transfer. The preceding sentence shall not apply whenever Tenant is a corporation, the outstanding stock of which is listed on a recognized security exchange, or if at least eighty percent (80%) of its voting stock is owned by another corporation, the voting stock of which is so listed. E. Notwithstanding anything to the contrary contained in Section XIII.A or Section XIII.D., Tenant may assign its entire interest under this Lease or sublet the Premises to a wholly owned corporation, partnership or other legal entity or affiliate, subsidiary or parent of Tenant or to any successor to Tenant by purchase, merger, consolidation or reorganization (hereinafter, collectively, referred to as "Permitted Transfer" and the transferee of a Permitted Transfer a "Permitted Transferee") without the consent of Landlord, provided: (i) Tenant is not in default under this Lease; (ii) if such proposed transferee is a successor to Tenant by purchase, merger, consolidation or reorganization, the continuing or surviving entity shall own all or substantially all of the assets of Tenant and shall have a net worth which is at least equal to the greater of Tenant's net worth at the date of this Lease or Tenant's net worth at the date of the Transfer; (iii) such proposed transferee operates the business in the Premises for the Permitted Use and no other purpose; and (iv) in no event shall any Permitted Transfer release or relieve Tenant from any of its obligations under this Lease. Tenant shall give Landlord written notice at least thirty (30) days prior to the effective date of such Permitted Transfer. As used herein: (a) "parent" shall mean a company which owns a majority of Tenant's voting equity; (b) "subsidiary" shall mean an entity wholly owned by Tenant or at least fifty-one percent (51%) of whose voting equity is owned by Tenant; and (c) "affiliate" shall mean an entity controlled, controlling or under common control with Tenant. Notwithstanding the foregoing, sale of the shares of equity of any affiliate or subsidiary to which this Lease has been assigned or transferred other than to another parent, subsidiary or affiliate of the original Tenant named hereunder shall be deemed to be an assignment requiring the consent of Landlord hereunder. F. Any Transfer consented to by Landlord in accordance with this Article XIII shall be only for the Permitted Use and for no other purpose. In no event shall any Transfer release or relieve Tenant or any Guarantors from any obligations under this Lease. XIV. LIENS. Tenant will not permit any mechanic's liens or other liens to be placed upon the Premises or Tenant's leasehold interest therein, the Building, or the Property. Landlord's title to the Building and Property is and always shall be paramount to the interest of Tenant, and nothing herein contained shall empower Tenant to do any act that can, shall or may encumber Landlord's title. In the event any such lien does attach, Tenant shall, within twenty (20) days of notice of the filing of said lien, either discharge or bond over such lien to the satisfaction of Landlord and Landlord's Mortgagee (as hereinafter defined), and in such a manner as to remove the lien as an encumbrance against the Building and Property. If Tenant shall fail to so discharge or bond over such lien, then, in addition to any other right or remedy of Landlord, Landlord may, but shall not be obligated to bond over or discharge the same. Any amount paid by Landlord for any of the aforesaid purposes, including reasonable attorneys' fees (if and to the 22 extent permitted by law) shall be paid by Tenant to Landlord on demand as Additional Base Rental. Landlord shall have the right to post and keep posted on the Premises any notices that may be provided by law or which Landlord may deem to be proper for the protection of Landlord, the Premises and the Building from such liens. XV. INDEMNITY AND WAIVER OF CLAIMS. A. Except to the extent caused by the negligence or willful misconduct of Landlord or any Landlord Related Parties (defined below), Tenant shall indemnify, defend and hold Landlord, its trustees, members, principals, beneficiaries, partners, officers, directors, employees, Mortgagee(s) (defined in Article XXX) and agents ("Landlord Related Parties") harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys' fees and other professional fees (if and to the extent permitted by Law), which may be imposed upon, incurred by or asserted against Landlord or any of the Landlord Related Parties and arising out of or in connection with any damage or injury occurring in the Premises or any acts or omissions (including violations of Law) of Tenant, the Tenant Related Parties (defined below) or any of Tenant's transferees, contractors or licensees. B. Except to the extent caused by the negligence or willful misconduct of Tenant or any Tenant Related Parties (defined below), Landlord shall indemnify, defend and hold Tenant, its trustees, members, principals, beneficiaries, partners, officers, directors, employees and agents ("Tenant Related Parties") harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys' fees and other professional fees (if and to the extent permitted by Law), which may be imposed upon, incurred by or asserted against Tenant or any of the Tenant Related Parties and arising out of or in connection with the acts or omissions (including violations of Law) of Landlord, the Landlord Related Parties or any of Landlord's contractors. C. Landlord and the Landlord Related Parties shall not be liable for, and Tenant hereby waives, all claims for loss or damage to Tenant's business or damage to person or property sustained by Tenant or any person claiming by, through or under Tenant [including Tenant's principals, agents and employees (collectively, the "Tenant Related Parties")] resulting from any accident or occurrence in, on or about the Premises, the Building or the Property, including, without limitation, claims for loss, theft or damage resulting from: (1) the Premises, Building, or Property, or any equipment or appurtenances becoming out of repair; (2) wind or weather; (3) any defect in or failure to operate, for whatever reason, any sprinkler, heating or air-conditioning equipment, electric wiring, gas, water or steam pipes; (4) broken glass; (5) the backing up of any sewer pipe or downspout; (6) the bursting, leaking or running of any tank, water closet, drain or other pipe; (7) the escape of steam or water; (8) water, snow or ice being upon or coming through the roof, skylight, stairs, doorways, windows, walks or any other place upon or near the Building; (9) the falling of any fixture, plaster, tile or other material; (10) any act, omission or negligence of other tenants, licensees or any other persons (not including Landlord's employees or agents acting in such capacity) or occupants of the Building or of adjoining or contiguous buildings, or owners of adjacent or contiguous property or the public, or by construction of any private, public or quasi-public work; or (11) any other cause of any nature except, as to items 1-9, where such loss or damage is due to Landlord's negligent or willful failure to make repairs required to be made pursuant to other provisions of this Lease, after the expiration of a reasonable time after written notice to Landlord of the need for such repairs. To the maximum extent permitted by law, Tenant agrees to use and occupy the Premises, and to use such other portions of the Building as Tenant is herein given the right to use, at Tenant's own risk. XVI. TENANT'S INSURANCE. A. At all times commencing on and after the earlier of the Commencement Date and the date Tenant or its agents, employees or contractors enters the Premises for any purpose, Tenant shall carry and maintain, at its sole cost and expense: 23 1. Commercial General Liability Insurance applicable to the Premises and its appurtenances providing, on an occurrence basis, a minimum combined single limit of Two Million Dollars ($2,000,000.00), with a contractual liability endorsement covering Tenant's indemnity obligations under this Lease. 2. All Risks of Physical Loss Insurance written at replacement cost value and with a replacement cost endorsement covering all of Tenant's Property in the Premises. 3. Workers' Compensation Insurance as required by the state in which the Premises is located and in amounts as may be required by applicable statute, and Employers' Liability Coverage of One Million Dollars ($1,000,000.00) per occurrence. 4. Whenever good business practice, in Landlord's reasonable judgment, indicates the need of additional insurance coverage or different types of insurance in connection with the Premises or Tenant's use and occupancy thereof, Tenant shall, upon request, obtain such insurance at Tenant's expense and provide Landlord with evidence thereof. B. Except for items for which Landlord is responsible under the Work Letter Agreement, before any repairs, alterations, additions, improvements, or construction are undertaken by or on behalf of Tenant, Tenant shall carry and maintain, at its expense, or Tenant shall require any contractor performing work on the Premises to carry and maintain, at no expense to Landlord, in addition to Workers' Compensation Insurance as required by the jurisdiction in which the Building is located, All Risk Builder's Risk Insurance in the amount of the replacement cost of any alterations, additions or improvements (or such other amount reasonably required by Landlord) and Commercial General Liability Insurance (including, without limitation, Contractor's Liability coverage, Contractual Liability coverage and Completed Operations coverage,) written on an occurrence basis with a minimum combined single limit of Two Million Dollars ($2,000,000.00) and adding "the named Landlord hereunder (or any successor thereto), Equity Office Properties Trust, a Maryland real estate investment trust, EOP Operating Limited Partnership, a Delaware limited partnership, and their respective members, principals, beneficiaries, partners, officers, directors, employees, agents and any Mortgagee(s)", and other designees of Landlord as the interest of such designees shall appear, as additional insureds (collectively referred to as the "Additional Insureds"). C. Any company writing any insurance which Tenant is required to maintain or cause to be maintained pursuant to the terms of this Lease (all such insurance as well as any other insurance pertaining to the Premises or the operation of Tenant's business therein being referred to as "Tenant's Insurance"), as well as the form of such insurance, shall at all times be subject to Landlord's reasonable approval, and each such insurance company shall have an A.M. Best rating of "A-" or better and shall be licensed and qualified to do business in the state in which the Premises is located. All policies evidencing Tenant's Insurance (except for Workers' Compensation Insurance) shall specify Tenant as named insured and the Additional Insureds as additional insureds. Provided that the coverage afforded Landlord and any designees of Landlord shall not be reduced or otherwise adversely affected, all of Tenant's Insurance may be carried under a blanket policy covering the Premises and any other of Tenant's locations. All policies of Tenant's Insurance shall contain endorsements that the insurer(s) will give to Landlord and its designees at least thirty (30) days' advance written notice of any change, cancellation, termination or lapse of said insurance. Tenant shall be solely responsible for payment of premiums for all of Tenant's Insurance. Tenant shall deliver to Landlord at least fifteen (15) days prior to the time Tenant's Insurance is first required to be carried by Tenant, and upon renewals at least fifteen (15) days prior to the expiration of any such insurance coverage, a certificate of insurance of all policies procured by Tenant in compliance with its obligations under this Lease. The limits of Tenant's Insurance shall in no event limit Tenant's liability under this Lease. 24 D. Tenant shall not do or fail to do anything in, upon or about the Premises which will: (1) violate the terms of any of Landlord's insurance policies; (2) prevent Landlord from obtaining policies of insurance acceptable to Landlord or any Mortgagees; or (3) result in an increase in the rate of any insurance on the Premises, the Building, any other property of Landlord or of others within the Building. In the event of the occurrence of any of the events set forth in this Section, Tenant shall pay Landlord upon demand, as Additional Base Rental, the cost of the amount of any increase in any such insurance premium, provided that the acceptance by Landlord of such payment shall not be construed to be a waiver of any rights by Landlord in connection with a default by Tenant under the Lease. If Tenant fails to obtain the insurance coverage required by this Lease, Landlord may, at its option, obtain such insurance for Tenant, and Tenant shall pay, as Additional Base Rental, the cost of all premiums thereon and all of Landlord's costs associated therewith. XVII. SUBROGATION. Notwithstanding anything in this Lease to the contrary, Landlord and Tenant shall cause their respective insurance carriers to waive any and all rights of recovery, claim, action or causes of action against the other and their respective trustees, principals, beneficiaries, partners, officers, directors, agents, and employees, for any loss or damage that may occur to Landlord or Tenant or any party claiming by, through or under Landlord or Tenant, as the case may be, with respect to Tenant's Property, the Building, the Premises, any additions or improvements to the Building or Premises, or any contents thereof, including all rights of recovery, claims, actions or causes of action arising out of the negligence of Landlord or any Landlord Related Parties or the negligence of Tenant or any Tenant Related Parties, which loss or damage is (or would have been, had the insurance required by this Lease been carried) covered by insurance. XVIII. LANDLORD'S INSURANCE. Landlord shall maintain property insurance on the Building in such amounts as Landlord reasonably elects, provided that, during the Lease Term Landlord shall maintain standard so-called "all risk" property insurance, covering the Building in an amount equal to the replacement cost thereof (including Leasehold Improvements approved by Landlord but excluding foundations and footings) at the time in question. Landlord also shall maintain Commercial General Liability coverage written on an occurrence basis with a minimum combined single limit of at least Two Million Dollars ($2,000,000.00). The cost of such insurance shall be included as a part of the Basic Costs, and payments for losses and recoveries thereunder shall be made solely to Landlord or the Mortgagees of Landlord as their interests shall appear. XIX. CASUALTY DAMAGE. A. If the Premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give prompt written notice thereof to Landlord. In case the Building shall be so damaged that in Landlord's reasonable judgment, substantial alteration or reconstruction of the Building shall be required (whether or not the Premises has been damaged by such casualty) or in the event Landlord will not be permitted by applicable law to rebuild the Building in substantially the same form as existed prior to the fire or casualty or in the event the Premises has been materially damaged and there is less than two (2) years of the Lease Term remaining on the date of such casualty or in the event any Mortgagee should require that the insurance proceeds payable as a result of a casualty be applied to the payment of the mortgage debt or in the event of any material uninsured loss to the Building, Landlord may, at its option, terminate this Lease by notifying Tenant in writing of such termination within ninety (90) days after the date of such casualty. Such termination shall be effective as of the date of fire or casualty, with respect to any portion of the Premises that was rendered untenantable, and the effective date of termination specified in Landlord's notice, with respect to any portion of the Premises that remained tenantable. If Landlord does not elect to terminate this Lease, Landlord shall commence and proceed with reasonable diligence to restore the Building (provided that Landlord shall not be required to restore any unleased premises in the Building) and the Leasehold Improvements (but excluding any improvements, alterations or additions made by Tenant in violation of this Lease) located within the Premises, if any, which Landlord has 25 insured (or is required to insure) to substantially the same condition they were in immediately prior to the happening of the casualty. Notwithstanding the foregoing, Landlord's obligation to restore the Building, and the Leasehold Improvements, if any, shall not require Landlord to expend for such repair and restoration work more than the insurance proceeds actually received by the Landlord as a result of the casualty. When repairs to the Premises have been completed by Landlord, Tenant shall complete the restoration or replacement of all Tenant's Property necessary to permit Tenant's reoccupancy of the Premises, and Tenant shall present Landlord with evidence satisfactory to Landlord of Tenant's ability to pay such costs prior to Landlord's commencement of repair and restoration of the Premises. Landlord shall not be liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from such damage or the repair thereof, except that, subject to the provisions of the next sentence, Landlord shall allow Tenant a fair diminution of Rent on a per diem basis during the time and to the extent any damage to the Premises causes the Premises to be rendered untenantable and not used by Tenant. If the Premises or any other portion of the Building is damaged by fire or other casualty resulting from the negligence of Tenant or any Tenant Related Parties, the Rent hereunder shall not be diminished during any period during which the Premises, or any portion thereof, is untenantable (except to the extent Landlord is entitled to be reimbursed by the proceeds of any rental interruption insurance), and Tenant shall be liable to Landlord for the cost of the repair and restoration of the Building caused thereby to the extent such cost and expense is not covered by insurance proceeds. Landlord and Tenant hereby waive the provisions of any law from time to time in effect during the Lease Term relating to the effect upon leases of partial or total destruction of leased property. Landlord and Tenant agree that their respective rights in the event of any damage to or destruction of the Premises shall be those specifically set forth herein. B. Notwithstanding anything in this Article XIX to the contrary, if all or any portion of the Premises shall be made untenantable by a fire or other casualty, Landlord shall, with reasonable promptness, cause an architect or general contractor selected by Landlord to estimate the amount of time required to substantially complete repair and restoration of the Premises and make the Premises tenantable again, using standard working methods (the "Completion Estimate"). If the Completion Estimate indicates that the Premises cannot be made tenantable within one hundred eighty (180) days from the date the repair and restoration is started, either party shall have the right to terminate this Lease by giving written notice to the other of such election within ten (10) days after its receipt of the Completion Estimate. Tenant, however, shall not have the right to terminate this Lease in the event that the fire or casualty in question was caused by the negligence or intentional misconduct of Tenant or any Tenant Related Parties. If the Completion Estimate indicates that the Premises can be made tenantable within one hundred eighty (180) days from the date the repair and restoration is started and Landlord has not otherwise exercised its right to terminate the Lease pursuant to the terms hereof, or if the Completion Estimate indicates that the Premises cannot be made tenantable within one hundred eighty (180) days but neither party terminates this Lease pursuant to this Article XIX, Landlord shall proceed with reasonable promptness to repair and restore the Premises. Notwithstanding the foregoing, if Tenant was entitled to but elected not to exercise its right to terminate the Lease and Landlord does not substantially complete the repair and restoration of the Premises within two (2) months after the expiration of the estimated period of time set forth in the Completion Estimate, which period shall be extended to the extent of any Reconstruction Delays, then Tenant may terminate this Lease by written notice to Landlord within fifteen (15) days after the expiration of such period, as the same may be extended. For purposes of this Lease, the term "Reconstruction Delays" shall mean: (i) any delays caused by the insurance adjustment process; (ii) any delays caused by Tenant; and (iii) any delays caused by events of Force Majeure. It is agreed that Reconstruction Delays attributable to items (i) or (iii) above shall not exceed ninety (90) days for each such type of delay. C. Landlord shall not terminate this Lease in accordance with this Article XIX unless it also terminates the leases of all similarly affected office tenants in the Building. 26 In determining whether other tenants are similarly affected, Landlord shall be entitled to consider all relevant factors such as the extent of damage, the time to rebuild, the availability of insurance proceeds and the rights of the tenants in question to impose penalties upon Landlord (including the right to terminate) if the repairs are not completed within a specified period of time. Landlord shall not, however, be entitled to consider the rental rates payable under the leases in question or the length of time remaining under the leases in question (unless there is less than two (2) years remaining on the Lease Term hereof) in its determination of whether to terminate or rebuild. XX. DEMOLITION. INTENTIONALLY OMITTED. XXI. CONDEMNATION. Either party may terminate this Lease if the whole or any material part of the Premises, or any portion of the Building or Property such that the Tenant no longer has safe access to the Premises, shall be taken or condemned for any public or quasi-public use under law, by eminent domain or private purchase in lieu thereof (a "Taking"). Landlord shall also have the right to terminate this Lease if there is a Taking of any portion of the Building or Property which would leave the remainder of the Building unsuitable for use as an office building in a manner comparable to the Building's use prior to the Taking. In order to exercise its right to terminate the Lease, Landlord or Tenant, as the case may be, must provide written notice of termination to the other within forty five (45) days after the terminating party first receives notice of the Taking. Any such termination shall be effective as of the date the physical taking of the Premises or the portion of the Building or Property occurs. If this Lease is not terminated, the Rentable Area of the Building, the Rentable Area of the Premises and Tenant's Pro Rata Share shall, if applicable, be appropriately adjusted. In addition, Rent for any portion of the Premises taken or condemned shall be abated during the unexpired Lease Term effective when the physical taking of the portion of the Premises occurs. All compensation awarded for any such taking or condemnation, or sale proceeds in lieu thereof, shall be the property of Landlord, and Tenant shall have no claim thereto, the same being hereby expressly waived by Tenant, except for any portions of such award or proceeds which are specifically allocated by the condemning or purchasing party for the taking of or damage to trade fixtures of Tenant, which Tenant specifically reserves to itself. XXII. EVENTS OF DEFAULT. The following events shall be deemed to be events of default under this Lease: A. Tenant shall fail to pay when due any Base Rental, Additional Base Rental or other Rent under this Lease and such failure shall continue for five (5) Business Days after Tenant's receipt of written notice from Landlord (hereinafter sometimes referred to as a "Monetary Default"). B. Any failure by Tenant (other than a Monetary Default) to comply with any term, provision or covenant of this Lease, including, without limitation, the rules and regulations, which failure is not cured within twenty (20) days after delivery to Tenant of notice of the occurrence of such failure (or such longer period of time as may be reasonably necessary to cure (not to exceed 60 days), provided that Tenant commences to cure such default within twenty (20) days after notice from Landlord and, from time to time upon request of Landlord, furnishes Landlord with evidence that demonstrates, in Landlord's reasonable judgment, that Tenant is diligently pursuing a course that will remedy such failure), provided that if any such failure creates a hazardous condition, such failure must be cured immediately. Notwithstanding the foregoing, if Tenant fails to comply with any particular provision or covenant of this Lease, including, without limitation, Tenant's obligation to pay Rent when due, on three (3) occasions during any twelve (12) month period, any subsequent violation of such provision or covenant shall be considered to be an incurable default by Tenant. C. Tenant or any Guarantor shall become insolvent, or shall make a transfer in fraud of creditors, or shall file bankruptcy or shall make a general assignment for the 27 benefit of creditors, or Tenant or any Guarantor shall admit in writing its inability to pay its debts as they become due. D. Tenant or any Guarantor shall file a petition under any section or chapter of the United States Bankruptcy Code, as amended, pertaining to bankruptcy, or under any similar law or statute of the United States or any State thereof, or Tenant or any Guarantor shall be adjudged bankrupt or insolvent in proceedings filed against Tenant or any Guarantor thereunder; or a petition or answer proposing the adjudication of Tenant or any Guarantor as a debtor or its reorganization under any present or future federal or state bankruptcy or similar law shall be filed in any court and such petition or answer shall not be discharged or denied within sixty (60) days after the filing thereof. E. A receiver or trustee shall be appointed for all or substantially all of the assets of Tenant or any Guarantor or of the Premises or of any of Tenant's Property located thereon in any proceeding brought by Tenant or any Guarantor, or any such receiver or trustee shall be appointed in any proceeding brought against Tenant or any Guarantor and shall not be discharged within sixty (60) days after such appointment or Tenant or such Guarantor shall consent to or acquiesce in such appointment. F. The leasehold estate hereunder shall be taken on execution or other process of law or equity in any action against Tenant. G. INTENTIONALLY OMITTED. H. INTENTIONALLY OMITTED. I. The liquidation, termination, dissolution, forfeiture of right to do business, or death of Tenant or any Guarantor. XXIII. REMEDIES. A. Upon the occurrence of any event or events of default under this Lease, Landlord shall have the option to pursue any one or more of the following remedies without any notice (except as expressly prescribed in Article XXII above) or demand whatsoever (and without limiting the generality of the foregoing, Tenant hereby specifically waives notice and demand for payment of Rent or other obligations due [except as expressly prescribed in Article XXII above] and waives any and all other notices or demand requirements imposed by applicable law): 1. Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord. If Tenant fails to surrender the Premises upon termination of the Lease hereunder, Landlord may without prejudice to any other remedy which it may have, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying said Premises, or any part thereof, and Tenant hereby agrees to pay to Landlord on demand the amount of all loss and damage, including consequential damage, which Landlord may suffer by reason of such termination, whether through inability to relet the Premises on satisfactory terms or otherwise, specifically including but not limited to all Costs of Reletting (hereinafter defined) and any deficiency that may arise by reason of any reletting or failure to relet. 2. Enter upon and take possession of the Premises and expel or remove Tenant or any other person who may be occupying said Premises, or any part thereof, by process of law, without having any civil or criminal liability therefor and without terminating this Lease. Landlord may (but shall be under no obligation to, except as otherwise specifically provided in this subsection 2) relet the Premises or any part thereof for the account of Tenant, in the name of Tenant or Landlord or otherwise, without notice to Tenant for such term or terms which may be greater or less than the period which would otherwise have constituted the balance of the Lease Term and on such conditions (which may include concessions, free rent and alterations of the Premises) and for such uses as Landlord in its 28 absolute discretion may determine, and Landlord may collect and receive any rents payable by reason of such reletting. Tenant agrees to pay Landlord on demand all Costs of Reletting and any deficiency that may arise by reason of such reletting or failure to relet. Landlord shall not be responsible or liable for any failure to relet the Premises or any part thereof or for any failure to collect any Rent due upon any such reletting. No such re-entry or taking of possession of the Premises by Landlord shall be construed as an election on Landlord's part to terminate this Lease unless a written notice of such termination is given to Tenant. Landlord agrees to use reasonable efforts to mitigate damages, provided that such reasonable efforts shall not require Landlord to relet the Premises in preference to any other space in the Building or to relet the Premises to any party that Landlord could reasonably reject as a transferee pursuant to Article XIII hereof. 3. Enter upon the Premises without having any civil or criminal liability therefor, and do whatever Tenant is obligated to do under the terms of this Lease, and Tenant agrees to reimburse Landlord on demand for any reasonable expense which Landlord may incur in thus affecting compliance with Tenant's obligations under this Lease together with interest at the lesser of a per annum rate equal to: (a) the Maximum Rate, or (b) the Prime Rate plus four percent (4%). 4. In order to regain possession of the Premises and to deny Tenant access thereto in any instance in which Landlord has terminated this Lease or Tenant's right to possession, or to limit access to the Premises in accordance with local law in the event of a default by Tenant, Landlord or its agent may, at the reasonable expense and liability of the Tenant, alter or change any or all locks or other security devices controlling access to the Premises without posting or giving notice of any kind to Tenant. Landlord shall have no obligation to provide Tenant a key or grant Tenant access to the Premises so long as Tenant is in default under this Lease beyond the applicable notice and cure period. Tenant shall not be entitled to recover possession of the Premises, terminate this Lease, or recover any actual, incidental, consequential, punitive, statutory or other damages or award of attorneys' fees, by reason of Landlord's alteration or change of any lock or other security device. Landlord may, without notice, remove and either dispose of or store, at Tenant's reasonable expense, any property belonging to Tenant that remains in the Premises after Landlord has regained possession thereof. 5. Terminate this Lease, in which event, Tenant shall immediately surrender the Premises to Landlord and pay to Landlord the sum of: (a) all Rent accrued hereunder through the date of termination, and (b) an amount equal to: the total Rent that Tenant would have been required to pay for the remainder of the Lease Term discounted to present value at the Prime Rate then in effect, minus the then present fair rental value of the Premises for the remainder of the Lease Term, similarly discounted, after deducting all anticipated Costs of Reletting (as defined below). B. For purposes of this Lease, the term "Costs of Reletting" shall mean all reasonable costs and expenses incurred by Landlord in connection with the reletting of the Premises, including without limitation, the cost of cleaning, renovation, repairs, decoration and alteration of the Premises for a new tenant or tenants, advertisement, marketing, brokerage and legal fees (if and to the extent permitted by law), the cost of protecting or caring for the Premises while vacant, the cost of removing and storing any property located on the Premises, any increase in insurance premiums caused by the vacancy of the Premises and any other out-of-pocket expenses incurred by Landlord including tenant incentives, allowances and inducements. C. Except as otherwise herein provided, no repossession or re-entering of the Premises or any part thereof pursuant to Article XXIII hereof or otherwise shall relieve Tenant or any Guarantor of its liabilities and obligations hereunder, all of which shall survive such repossession or re-entering. Notwithstanding any such 29 repossession or re-entering by reason of the occurrence of an event of default, Tenant will pay to Landlord the Rent required to be paid by Tenant pursuant to this Lease. D. If Landlord declares Tenant to be in default after expiration of the applicable notice and cure period, Landlord shall be entitled to receive interest on any unpaid and overdue item of Rent at a rate equal to the lesser of (i) the Maximum Rate, or (ii) the Prime Rate plus four percent (4%) per annum. No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing by agreement, applicable law or in equity. In addition to other remedies provided in this Lease, Landlord shall be entitled, to the extent permitted by applicable law, to injunctive relief, or to a decree compelling performance of any of the covenants, agreements, conditions or provisions of this Lease, or to any other remedy allowed to Landlord at law or in equity. Forbearance by Landlord to enforce one or more of the remedies herein provided upon an event of default shall not be deemed or construed to constitute a waiver of such default. E. This Article XXIII shall be enforceable to the maximum extent such enforcement is not prohibited by applicable law, and the unenforceability of any portion thereof shall not thereby render unenforceable any other portion. XXIV. LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD HEREUNDER) TO TENANT SHALL BE LIMITED TO THE INTEREST OF LANDLORD IN THE BUILDING, AND TENANT AGREES TO LOOK SOLELY TO LANDLORD'S INTEREST IN THE BUILDING FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST THE LANDLORD, IT BEING INTENDED THAT NEITHER LANDLORD NOR ANY MEMBER, PRINCIPAL, PARTNER, SHAREHOLDER, OFFICER, DIRECTOR OR BENEFICIARY OF LANDLORD SHALL BE PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY. TENANT HEREBY COVENANTS THAT, PRIOR TO THE FILING OF ANY SUIT FOR AN ALLEGED DEFAULT BY LANDLORD HEREUNDER, IT SHALL GIVE LANDLORD AND ALL MORTGAGEES WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES OR DEED OF TRUST LIENS ON THE PROPERTY, BUILDING OR PREMISES NOTICE AND REASONABLE TIME TO CURE SUCH ALLEGED DEFAULT BY LANDLORD. XXV. NO WAIVER. Either party's failure to declare a default immediately upon its occurrence, or delay in taking action for a default shall not constitute a waiver of the default, nor shall it constitute an estoppel. Either party's failure to enforce its rights for a default shall not constitute a waiver of its rights regarding any subsequent default. Receipt by Landlord of Tenant's keys to the Premises shall not constitute an acceptance or surrender of the Premises. XXVI. EVENT OF BANKRUPTCY. In addition to, and in no way limiting the other remedies set forth herein, Landlord and Tenant agree that if Tenant ever becomes the subject of a voluntary or involuntary bankruptcy, reorganization, composition, or other similar type proceeding under the federal bankruptcy laws, as now enacted or hereinafter amended, then: A. "Adequate protection" of Landlord's interest in the Premises pursuant to the provisions of Section 361 and 363 (or their successor sections) of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., (such Bankruptcy Code as amended from time to time being herein referred to as the "Bankruptcy Code"), prior to assumption and/or assignment of the Lease by Tenant shall include, but not be limited to all (or any part) of the following: 1. the continued payment by Tenant of the Base Rental and all other Rent due and owing hereunder and the performance of all other covenants and obligations hereunder by Tenant; 30 2. the furnishing of an additional/new security deposit by Tenant in the amount of three (3) times the then current monthly Base Rental. B. "Adequate assurance of future performance" by Tenant and/or any assignee of Tenant pursuant to Bankruptcy Code Section 365 will include (but not be limited to) payment of an additional/new Security Deposit in the amount of three (3) times the then current monthly Base Rental payable hereunder. C. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code, shall be deemed without further act or deed to have assumed all of the obligations of Tenant arising under this Lease on and after the effective date of such assignment. Any such assignee shall, upon demand by Landlord, execute and deliver to Landlord an instrument confirming such assumption of liability. D. Notwithstanding anything in this Lease to the contrary, all amounts payable by Tenant to or on behalf of the Landlord under this Lease, whether or not expressly denominated as "Rent," shall constitute "rent" for the purposes of Section 502(b) (6) of the Bankruptcy Code. E. If this Lease is assigned to any person or entity pursuant to the provisions of the Bankruptcy Code, any and all monies or other considerations payable or otherwise to be delivered to Landlord (including Base Rentals and other Rent hereunder), shall be and remain the exclusive property of Landlord and shall not constitute property of Tenant or of the bankruptcy estate of Tenant. Any and all monies or other considerations constituting Landlord's property under the preceding sentence not paid or delivered to Landlord shall be held in trust by Tenant or Tenant's bankruptcy estate for the benefit of Landlord and shall be promptly paid to or turned over to Landlord. F. If Tenant assumes this Lease and proposes to assign the same pursuant to the provisions of the Bankruptcy Code to any person or entity who shall have made a bona fide offer to accept an assignment of this Lease on terms acceptable to the Tenant, then notice of such proposed offer/assignment, setting forth: (1) the name and address of such person or entity, (2) all of the terms and conditions of such offer, and (3) the adequate assurance to be provided Landlord to assure such person's or entity's future performance under the Lease, shall be given to Landlord by Tenant no later than twenty (20) days after receipt by Tenant, but in any event no later than ten (10) days prior to the date that Tenant shall make application to a court of competent jurisdiction for authority and approval to enter into such assumption and assignment, and Landlord shall thereupon have the prior right and option, to be exercised by notice to Tenant given at any time prior to the effective date of such proposed assignment, to accept an assignment of this Lease upon the same terms and conditions and for the same consideration, if any, as the bona fide offer made by such persons or entity, less any brokerage commission which may be payable out of the consideration to be paid by such person for the assignment of this Lease. G. To the extent permitted by law, Landlord and Tenant agree that this Lease is a contract under which applicable law excuses Landlord from accepting performance from (or rendering performance to) any person or entity other than Tenant within the meaning of Sections 365(c) and 365(e) (2) of the Bankruptcy Code. XXVII. WAIVER OF JURY TRIAL. Landlord and Tenant hereby waive any right to a trial by jury in any action or proceeding based upon, or related to, the subject matter of this Lease. This waiver is knowingly, intentionally, and voluntarily made by Tenant, and Tenant acknowledges that neither Landlord nor any person acting on behalf of Landlord has made any representations of fact to induce this waiver of trial by jury or in any way to modify or nullify its effect. Tenant further acknowledges that it has been represented (or has had the opportunity to be represented) in the signing of this Lease and in the making of this waiver by independent legal counsel, selected of its own free will, and that it has had the opportunity to discuss this waiver with counsel. 31 XXVIII. RELOCATION. A. Landlord, at its expense at any time before or during the Lease Term (but not more than twice), shall be entitled to cause Tenant to relocate from the Premises to space containing not less than 95% of the Rentable Area of the Premises and a comparable layout, leasehold improvements and finishes as the Premises prior to the relocation (the "Relocation Space") within the Building or adjacent buildings within the same project at any time upon ninety (90) days' prior written notice to Tenant. Such a relocation shall not affect this Lease except that from and after the date of such relocation, "Premises" shall refer to the Relocation Space into which Tenant has been moved, rather than the original Premises as herein defined, and the Base Rental shall be adjusted so that immediately following such relocation the Base Rental for the Relocation Space per annum on a per square foot of Rentable Area basis shall be the same as the Base Rental per annum immediately prior to such relocation for the original Premises on a per square foot of Rentable Area basis, provided that the total monthly Base Rental for the Relocation Space shall in no event exceed the Base Rental for the Premises. Tenant's Pro Rata Share shall also be adjusted in accordance with the formula set forth in this Lease, provided that the Additional Base Rental for the Relocation Space shall not exceed the Additional Base Rental for the Premises. Landlord agrees to reimburse Tenant for all reasonable out-of-pocket costs incurred by Tenant in connection with the Relocation and not paid directly by Landlord, including the cost of moving furniture and equipment, installing cabling and wiring, and reprinting existing stationery and business cards and similar items of expense. B. Notwithstanding the foregoing, if Landlord provides Tenant with a notice of relocation intending to relocate the Premises to any location other than the top three (3) floors in the Phase I Building or Phase II Building, Tenant shall have the right to terminate this Lease by giving written notice of termination to Landlord within twenty (20) days after the date of Landlord's notice of relocation to Tenant. Such termination shall be effective sixty (60) days after the date of Landlord's notice of relocation, provided that Landlord, within ten (10) days after receipt of Tenant's notice of termination, shall have the right to withdraw its notice of relocation. In such event, this Lease shall continue in full force and effect as if Landlord had never provided Tenant with notice of relocation. XXIX. HOLDING OVER. In the event of holding over by Tenant after expiration or other termination of this Lease or in the event Tenant continues to occupy the Premises after the termination of Tenant's right of possession pursuant to Articles XXII and XXIII hereof, occupancy of the Premises subsequent to such termination or expiration shall be that of a tenancy at sufferance and in no event for month-to-month or year-to-year. Tenant shall, throughout the entire holdover period, be subject to all the terms and provisions of this Lease and shall pay for its use and occupancy an amount (on a per month basis without reduction for any partial months during any such holdover) equal to one hundred fifty percent (150%) of the Base Rental and Additional Base Rental due for the period immediately preceding such holding over, provided that in no event shall Base Rental and Additional Base Rental during the holdover period be less than the fair market rental for the Premises. No holding over by Tenant or payments of money by Tenant to Landlord after the expiration of the term of this Lease shall be construed to extend the Lease Term, to create a tenancy-at-will under Georgia law, or prevent Landlord from recovery of immediate possession of the Premises by summary proceedings or otherwise. In addition to the obligation to pay the amounts set forth above during any such holdover period, Tenant also shall be liable to Landlord for all damage, including any consequential damage, which Landlord may suffer by reason of any holding over by Tenant, and Tenant shall indemnify Landlord against any and all claims made by any other tenant or prospective tenant against Landlord for delay by Landlord in delivering possession of the Premises to such other tenant or prospective tenant. Notwithstanding the foregoing, Tenant shall not be liable for consequential damages unless: (1) Landlord notifies Tenant that it has entered into a lease for the Premises or has received a bona fide offer to lease the Premises; and (2) Tenant fails to vacate the Premises within ten (10) days after the date of Landlord's notice. XXX. SUBORDINATION TO MORTGAGES; ESTOPPEL CERTIFICATE. 32 A. Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or subsequently arising upon the Premises, the Building or the Property, and to renewals, modifications, refinancings and extensions thereof (collectively referred to as a "Mortgage"). The party having the benefit of a Mortgage shall be referred to as a "Mortgagee". This clause shall be self-operative, but upon request from a Mortgagee, Tenant shall execute a commercially reasonable subordination agreement in favor of the Mortgagee. In lieu of having the Mortgage be superior to this Lease, a Mortgagee shall have the right at any time to subordinate its Mortgage to this Lease. If requested by a successor-in-interest to all or a part of Landlord's interest in the Lease, Tenant shall, without charge, attorn to the successor-in-interest. Notwithstanding the foregoing, upon written request by Tenant, Landlord will use reasonable efforts to obtain a non-disturbance, subordination and attornment agreement from Landlord's then current Mortgagee on such Mortgagee's then current standard form of agreement. "Reasonable efforts" of Landlord shall not require Landlord to incur any cost, expense or liability to obtain such agreement, it being agreed that Tenant shall be responsible for any fee or review costs charged by the Mortgagee. Upon request of Landlord, Tenant will execute the Mortgagee's form of non-disturbance, subordination and attornment agreement and return the same to Landlord for execution by the Mortgagee. Landlord's failure to obtain a non-disturbance, subordination and attornment agreement for Tenant shall have no effect on the rights, obligations and liabilities of Landlord and Tenant or be considered to be a default by Landlord hereunder. Landlord hereby represents and covenants to Tenant that, as of the date of this Lease, the Building is not subject to a loan secured by a Mortgage. B. Landlord and Tenant shall each, within 10 days after receipt of a written request from the other, execute and deliver an estoppel certificate to those parties as are reasonably requested by the other (including a Mortgagee or prospective purchaser). The estoppel certificate shall include a statement certifying that this Lease is unmodified (except as identified in the estoppel certificate) and in full force and effect, describing the dates to which Rent and other charges have been paid, representing that, to such party's actual knowledge, there is no default (or stating the nature of the alleged default) and indicating other matters with respect to the Lease that may reasonably be requested. XXXI. ATTORNEYS' FEES. If either party institutes a suit against the other for violation of or to enforce any covenant or condition of this Lease, or if either party intervenes in any suit in which the other is a party to enforce or protect its interest or rights, the prevailing party shall be entitled to all of its costs and expenses, including, without limitation, reasonable attorneys' fees. XXXII. NOTICE. Whenever any demand, request, approval, consent or notice ("Notice") shall or may be given to either of the parties by the other, each such Notice shall be in writing and shall be sent by hand delivery or by registered or certified mail with return receipt requested, or sent by overnight courier service (such as Federal Express) at the respective addresses of the parties for notices as set forth in Section I.A.10. of this Lease, provided that if Tenant has vacated the Premises or is in default of this Lease Landlord may serve Notice by any manner permitted by law. Any Notice under this Lease delivered by registered or certified mail shall be deemed to have been given, delivered, received and effective on the earlier of (A) the third day following the day on which the same shall have been mailed with sufficient postage prepaid or (B) the delivery date indicated on the return receipt. Notice effected by hand delivery shall be deemed to have been received upon the earlier of actual receipt or refusal thereof. Notice sent by overnight courier service shall be deemed given, delivered, received and effective upon the day after such notice is delivered to or picked up by the overnight courier service. Either party may, at any time, change its Notice Address by giving the other party Notice stating the change and setting forth the new address. XXXIII. LANDLORD'S LIEN. INTENTIONALLY OMITTED. 33 XXXIV. EXCEPTED RIGHTS. This Lease does not grant any rights to light or air over or about the Building. Landlord excepts and reserves exclusively to itself the use of: (1) roofs, (2) telephone, electrical and janitorial closets, (3) equipment rooms, Building risers or similar areas that are used by Landlord for the provision of Building services, (4) rights to the land and improvements below the floor of the Premises, (5) the improvements and air rights above the Premises, (6) the improvements and air rights outside the demising walls of the Premises, and (7) so long as Tenant's ability to use the Premises for the Permitted Use is not materially affected, the areas within the Premises used for the installation of utility lines and other installations serving occupants of the Building. Landlord has the right to change the Building's name or address. Landlord also has the right to make such other changes to the Property and Building as Landlord deems appropriate, provided the changes do not materially affect Tenant's ability to use the Premises for the Permitted Use. Landlord shall also have the right (but not the obligation) to temporarily close the Building if Landlord reasonably determines that there is an imminent danger of significant damage to the Building or of personal injury to Landlord's employees or the occupants of the Building. The circumstances under which Landlord may temporarily close the Building shall include, without limitation, electrical interruptions, hurricanes and civil disturbances. A closure of the Building under such circumstances shall not constitute a constructive eviction nor entitle Tenant to an abatement or reduction of Rent. XXXV. SURRENDER OF PREMISES. At the expiration or earlier termination of this Lease or Tenant's right of possession hereunder, Tenant shall remove all Tenant's Property from the Premises, remove all Required Removables designated by Landlord and quit and surrender the Premises to Landlord, broom clean, and in good order, condition and repair, ordinary wear and tear, casualty and condemnation excepted. If Tenant fails to remove any of Tenant's Property within two (2) days after the termination of this Lease or Tenant's right to possession hereunder, Landlord, at Tenant's sole cost and expense, shall be entitled to remove and/or store such Tenant's Property and Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. Tenant shall pay Landlord, upon demand, any and all reasonable expenses caused by such removal and all storage charges against such property so long as the same shall be in the possession of Landlord or under the control of Landlord. In addition, if Tenant fails to remove any Tenant's Property from the Premises or storage, as the case may be, within ten (10) days after written notice from Landlord, Landlord, at its option, may deem all or any part of such Tenant's Property to have been abandoned by Tenant and title thereof shall immediately pass to Landlord. XXXVI. MISCELLANEOUS. A. If any term or provision of this Lease, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and enforced to the fullest extent permitted by law. This Lease represents the result of negotiations between Landlord and Tenant, each of which has been (or has had opportunity to be) represented by counsel of its own selection, and neither of which has acted under duress or compulsion, whether legal, economic or otherwise. Consequently, Landlord and Tenant agree that the language in all parts of the Lease shall in all cases be construed as a whole according to its fair meaning and neither strictly for nor against Landlord or Tenant. B. Tenant agrees not to record this Lease or any memorandum hereof without Landlord's prior written consent. C. This Lease and the rights and obligations of the parties hereto shall be interpreted, construed, and enforced in accordance with the laws of the state in which the Building is located. D. Events of "Force Majeure" shall include strikes, riots, war, acts of God, and shortages of labor or materials. Whenever a period of time is herein prescribed for the taking of any action by Landlord or Tenant, as the case may be, other than 34 the payment of Rent or any other sums due hereunder, such party shall not be liable or responsible for, and there shall be excluded from the computation of such period of time, any delays due to events of Force Majeure. E. Landlord shall have the right to transfer and assign, in whole or in part, all of its rights and obligations hereunder and in the Building and Property referred to herein, and in such event and upon such transfer Landlord shall be released from any further obligations hereunder, and Tenant agrees to look solely to such successor in interest of Landlord for the performance of such obligations. F. Tenant hereby represents to Landlord that it has dealt directly with and only with the Broker as a broker in connection with this Lease. Tenant agrees to indemnify and hold Landlord and the Landlord Related Parties harmless from all claims of any brokers claiming to have represented Tenant in connection with this Lease. Landlord agrees to indemnify and hold Tenant and the Tenant Related Parties harmless from all claims of any brokers claiming to have represented Landlord in connection with this Lease. Landlord agrees to pay Tenant's Broker any commission due Tenant's Broker in connection with this Lease pursuant to the terms of a separate written agreement between Landlord and Tenant's Broker. G. If there is more than one Tenant, or if the Tenant is comprised of more than one person or entity, the obligations hereunder imposed upon Tenant shall be joint and several obligations of all such parties. All notices, payments, and agreements given or made by, with or to any one of such persons or entities shall be deemed to have been given or made by, with or to all of them. H. 1. Tenant covenants, warrants and represents that: (a) each individual executing, attesting and/or delivering this Lease on behalf of Tenant is authorized to do so on behalf of Tenant; (b) this Lease is binding upon Tenant; and (c) Tenant is duly organized and legally existing in the state of its organization and is qualified to do business in the state in which the Premises are located. 2. Landlord hereby covenants, warrants and represents that: (a) each individual executing, attesting and/or delivering this Lease on behalf of Landlord is authorized to do so on behalf of Landlord; (b) this Lease is binding upon Landlord; and (c) Landlord is duly organized and legally existing in the state of its organization and is qualified to do business in the state in which the Premises are located. I. Tenant acknowledges that the financial capability of Tenant to perform its obligations hereunder is material to Landlord and that Landlord would not enter into this Lease but for its belief, based on its review of Tenant's financial statements, that Tenant is capable of performing such financial obligations. Tenant hereby represents, warrants and certifies to Landlord that its financial statements previously furnished to Landlord were at the time given true and correct in all material respects and that there have been no material subsequent changes thereto as of the date of this Lease. At any time during the Lease Term, Tenant shall provide Landlord, upon ten (10) days' prior written notice from Landlord, with a current financial statement and financial statements of the two (2) years prior to the current financial statement year and such other information as Landlord or its Mortgagee may request in order to create a "business profile" of Tenant and determine Tenant's ability to fulfill its obligations under this Lease. Such statement shall be prepared in accordance with generally accepted accounting principles and certified by Tenant's chief financial officer. J. Except as expressly otherwise herein provided, with respect to all required acts of Tenant, time is of the essence of this Lease. This Lease shall create the relationship of Landlord and Tenant between the parties hereto. Tenant has only a usufruct, not subject to purchase or sale, which may not be assigned by Tenant except as expressly provided in this Lease. K. This Lease and the covenants and conditions herein contained shall inure to the benefit of and be binding upon Landlord and Tenant and their respective permitted successors and assigns. 35 L. Notwithstanding anything to the contrary contained in this Lease, the expiration of the Lease Term, whether by lapse of time or otherwise, shall not relieve Tenant from Tenant's obligations accruing prior to the expiration of the Lease Term, and such obligations shall survive any such expiration or other termination of the Lease Term. M. The headings and titles to the paragraphs of this Lease are for convenience only and shall have no affect upon the construction or interpretation of any part hereof. N. LANDLORD HAS DELIVERED A COPY OF THIS LEASE TO TENANT FOR TENANT'S REVIEW ONLY, AND THE DELIVERY HEREOF DOES NOT CONSTITUTE AN OFFER TO TENANT OR OPTION. THIS LEASE SHALL NOT BE EFFECTIVE UNTIL AN ORIGINAL OF THIS LEASE EXECUTED BY BOTH LANDLORD AND TENANT AND AN ORIGINAL GUARANTY, IF ANY, EXECUTED BY EACH GUARANTOR IS DELIVERED TO AND ACCEPTED BY LANDLORD, AND THIS LEASE HAS BEEN APPROVED BY LANDLORD'S MORTGAGEES, IF REQUIRED. O. QUIET ENJOYMENT. Tenant shall, and may peacefully have, hold, and enjoy the Premises, subject to the other terms of this Lease (including, without limitation, Article XXX hereof), without hindrance or molestation by Landlord or anyone claiming by, through or under Landlord, provided that Tenant pays the Rent herein recited to be paid by Tenant and performs all of Tenant's covenants and agreements herein contained. This covenant and any and all other covenants of Landlord shall be binding upon Landlord and its successors only during its or their respective periods of ownership of the Landlord's interest hereunder. XXXVII. ENTIRE AGREEMENT. This Lease Agreement, including the following Exhibits: EXHIBIT A -Outline and Location of Premises - --------- EXHIBIT A-1 -Outline and Location of Refusal Space - ----------- EXHIBIT B -Rules and Regulations - --------- EXHIBIT C -Commencement Letter (Intentionally Omitted) - --------- EXHIBIT D -Work Letter Agreement - --------- EXHIBIT D-1 -Base Building Work in Premises - ----------- EXHIBIT E -Additional Provisions - --------- EXHIBIT F -Form of Letter of Credit - --------- EXHIBIT G -Critical Date Schedule - --------- constitutes the entire agreement between the parties hereto with respect to the subject matter of this Lease and supersedes all prior agreements and understandings between the parties related to the Premises, including all lease proposals, letters of intent and similar documents. TENANT EXPRESSLY ACKNOWLEDGES AND AGREES THAT LANDLORD HAS NOT MADE AND IS NOT MAKING, AND TENANT, IN EXECUTING AND DELIVERING THIS LEASE, IS NOT RELYING UPON, ANY WARRANTIES, REPRESENTATIONS, PROMISES OR STATEMENTS, EXCEPT TO THE EXTENT THAT THE SAME ARE EXPRESSLY SET FORTH IN THIS LEASE. ALL UNDERSTANDINGS AND AGREEMENTS HERETOFORE MADE BETWEEN THE PARTIES ARE MERGED IN THIS LEASE WHICH ALONE FULLY AND COMPLETELY EXPRESSES THE AGREEMENT OF THE PARTIES, NEITHER PARTY RELYING UPON ANY STATEMENT OR REPRESENTATION NOT EMBODIED IN THIS LEASE. THIS LEASE MAY BE MODIFIED ONLY BY A WRITTEN AGREEMENT SIGNED BY LANDLORD AND TENANT. LANDLORD AND TENANT EXPRESSLY AGREE THAT THERE ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY, SUITABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OF ANY OTHER KIND ARISING OUT OF THIS LEASE, ALL OF WHICH ARE HEREBY WAIVED BY TENANT, AND THAT THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN THIS LEASE. 36 IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year first above written. LANDLORD: EOP-BUCKHEAD, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY By: EOP Operating Limited Partnership, a Delaware limited partnership, its sole member By: Equity Office Properties Trust, a Maryland real estate investment trust, its managing general partner By: /s/ Jeff Sweeney -------------------------- Name: Jeff Sweeney -------------------------- Title: V.P. Leasing -------------------------- TENANT: VIEWLOCITY, INC., A DELAWARE CORPORATION By: /s/ Stan F. Stoudenmire ------------------------------- Name: Stan F. Stoudenmire ----------------------------- Title: Sr. V.P. & CFO ---------------------------- 37 EXHIBIT A OUTLINE AND LOCATION OF PREMISES This Exhibit is attached to and made a part of the Lease dated _____________, 1999, by and between EOP-BUCKHEAD, L.L.C. ("Landlord") and VIEWLOCITY, INC. ("Tenant") for space in the Building located at 3475 Piedmont Road, NE, Atlanta, Georgia. 38 EXHIBIT A-1 OUTLINE AND LOCATION OF REFUSAL SPACE This Exhibit is attached to and made a part of the Lease dated _____________, 1999, by and between EOP-BUCKHEAD, L.L.C. ("Landlord") and VIEWLOCITY, INC. ("Tenant") for space in the Building located at 3475 Piedmont Road, NE, Atlanta, Georgia. 39 EXHIBIT B BUILDING RULES AND REGULATIONS The following rules and regulations shall apply, where applicable, to the Premises, the Building, the parking garage associated therewith (if any), the Property and the appurtenances thereto: 1. Sidewalks, doorways, vestibules, halls, stairways and other similar areas shall not be obstructed by Tenant or used by Tenant for any purpose other than ingress and egress to and from the Premises. No rubbish, litter, trash, or material of any nature shall be placed, emptied, or thrown in those areas. At no time shall Tenant permit Tenant's employees to loiter in common areas or elsewhere in or about the Building or Property. 2. Plumbing fixtures and appliances shall be used only for the purposes for which designed, and no sweepings, rubbish, rags or other unsuitable material shall be thrown or placed therein. Damage resulting to any such fixtures or appliances from misuse by Tenant or its agents, employees or invitees, shall be paid for by Tenant, and Landlord shall not in any case be responsible therefor. 3. No signs, advertisements or notices shall be painted or affixed on or to any windows, doors or other parts of the Building, except those of such color, size, style and in such places as shall be first approved in writing by Landlord. Except in connection with the hanging of lightweight pictures, decorations and wall hangings, no nails, hooks or screws shall be driven or inserted into any part of the Premises or Building except by the Building maintenance personnel, nor shall any part of the Building be defaced by Tenant. 4. Landlord may provide and maintain in the first floor (main lobby) of the Building an alphabetical directory board listing all Tenants, and no other directory shall be permitted unless previously consented to by Landlord in writing. 5. Tenant shall not place any additional lock or locks on any door in the Premises or Building without Landlord's prior written consent. A reasonable number of keys to the locks on the doors in the Premises shall be furnished by Landlord to Tenant at the cost of Tenant, and Tenant shall not have any duplicate keys made. All keys shall be returned to Landlord at the expiration or earlier termination of this Lease. 6. All contractors, contractor's representatives, and installation technicians performing work in the Building shall be subject to Landlord's prior approval and shall be required to comply with Landlord's standard rules, regulations, policies and procedures, as the same may be revised from time to time. Tenant shall be solely responsible for complying with all applicable laws, codes and ordinances pursuant to which said work shall be performed. 7. Movement in or out of the Building of furniture or office equipment, or dispatch or receipt by Tenant of any merchandise or materials which require the use of elevators, stairways, lobby areas, or loading dock areas, shall be restricted to hours designated by Landlord. Tenant must seek Landlord's prior approval by providing in writing a detailed listing of any such activity. If approved by Landlord, such activity shall be under the supervision of Landlord and performed in the manner stated by Landlord. Landlord may prohibit any article, equipment or any other item from being brought into the Building. Tenant is to assume all risk for damage to articles moved and injury to any persons resulting from such activity. If any equipment, property, and/or personnel of Landlord or of any other tenant is damaged or injured as a result of or in connection with such activity, Tenant shall be solely liable for any and all damage or loss resulting therefrom. 8. Landlord shall have the power to prescribe the weight and position of safes and other heavy equipment or items, which in all cases shall not in the opinion of Landlord exceed acceptable floor loading and weight distribution requirements. All damage done to the Building by the installation, maintenance, operation, existence or removal of any property of Tenant shall be repaired at the expense of Tenant. 9. Corridor doors, when not in use, shall be kept closed. 40 10. Tenant shall not: (1) make or permit any improper, objectionable or unpleasant noises or odors in the Building, or otherwise unreasonably interfere in any way with other tenants or persons having business with them; (2) solicit business or distribute, or cause to be distributed, in any portion of the Building any handbills, promotional materials or other advertising; or (3) conduct or permit any other activities in the Building that constitutes a nuisance. 11. No animals, except seeing eye dogs, shall be brought into or kept in, on or about the Premises. 12. No inflammable, explosive or dangerous fluid or substance shall be used or kept by Tenant in the Premises or Building. Except for those substances as are typically found in similar premises used for general business office purposes and are being used by Tenant in accordance with all applicable laws, rules and regulations, Tenant shall not, without Landlord's prior written consent, use, store, install, spill, remove, release or dispose of within or about the Premises or any other portion of the Property, any asbestos-containing materials or any solid, liquid or gaseous material now or hereafter considered toxic or hazardous under the provisions of 42 U.S.C. Section 9601 et seq. or any other applicable environmental law which may now or hereafter be in effect. If Landlord does give written consent to Tenant pursuant to the foregoing sentence, Tenant shall comply with all applicable laws, rules and regulations pertaining to and governing such use by Tenant, and shall remain liable for all costs of cleanup or removal in connection therewith. = 13. Tenant shall not use or occupy the Premises in any manner or for any purpose which would injure the reputation or impair the present or future value of the Premises or the Building; without limiting the foregoing, Tenant shall not use or permit the Premises or any portion thereof to be used for lodging, sleeping or for any illegal purpose. 14. Tenant shall not take any action which would violate Landlord's labor contracts affecting the Building or which would cause any work stoppage, picketing, labor disruption or dispute, or any interference with the business of Landlord or any other tenant or occupant of the Building or with the rights and privileges of any person lawfully in the Building. Tenant shall take any actions necessary to resolve any such work stoppage, picketing, labor disruption, dispute or interference and shall have pickets removed and, at the request of Landlord, immediately terminate at any time any construction work being performed in the Premises giving rise to such labor problems, until such time as Landlord shall have given its written consent for such work to resume. Tenant shall have no claim for damages of any nature against Landlord or any of the Landlord Related Parties in connection therewith, nor shall the date of the commencement of the Term be extended as a result thereof. 15. Tenant shall utilize the termite and pest extermination service designated by Landlord to control termites and pests in the Premises. Except as included in Basic Costs, Tenant shall bear the cost and expense of such extermination services. 16. Tenant shall not install, operate or maintain in the Premises or in any other area of the Building, any electrical equipment which does not bear the U/L (Underwriters Laboratories) seal of approval, or which would overload the electrical system or any part thereof beyond its capacity for proper, efficient and safe operation as determined by Landlord, taking into consideration the overall electrical system and the present and future requirements therefor in the Building. Tenant shall not furnish any cooling or heating to the Premises, including, without limitation, the use of any electronic or gas heating devices, without Landlord's prior written consent. Tenant shall not use more than its proportionate share of telephone lines available to service the Building. 17. Tenant shall not operate or permit to be operated on the Premises any coin or token operated vending machine or similar device (including, without limitation, telephones, lockers, toilets, scales, amusement devices and machines for sale of beverages, foods, candy, cigarettes or other goods), except for those vending machines or similar devices which are for the sole and exclusive use of Tenant's employees, and then only if such operation does not violate the lease of any other tenant of the Building. 41 18. Bicycles and other vehicles are not permitted inside or on the walkways outside the Building, except in those areas specifically designated by Landlord for such purposes. 19. Landlord may from time to time adopt appropriate systems and procedures for the security or safety of the Building, its occupants, entry and use, or its contents. Tenant, Tenant's agents, employees, contractors, guests and invitees shall comply with Landlord's reasonable requirements relative thereto. 20. Landlord shall have the right to prohibit the use of the name of the Building or any other publicity by Tenant that in Landlord's opinion may tend to impair the reputation of the Building or its desirability for Landlord or other tenants. Upon written notice from Landlord, Tenant will refrain from and/or discontinue such publicity immediately. 21. Tenant shall carry out Tenant's permitted repair, maintenance, alterations, and improvements in the Premises only during times agreed to in advance by Landlord and in a manner which will not unreasonably interfere with the rights of other tenants in the Building. 22. Canvassing, soliciting, and peddling in or about the Building is prohibited. Tenant shall cooperate and use its best efforts to prevent the same. 23. At no time shall Tenant permit or shall Tenant's agents, employees, contractors, guests, or invitees smoke in any common area of the Building, unless such common area has been declared a designated smoking area by Landlord, or to allow any smoke from the Premises to emanate into the common areas or any other tenant's premises. Landlord shall have the right at any time to designate the Building as a non-smoking building. 24. Tenant shall observe Landlord's rules with respect to maintaining standard window coverings at all windows in the Premises so that the Building presents a uniform exterior appearance. Tenant shall ensure that to the extent reasonably practicable, window coverings are closed on all windows in the Premises while they are exposed to the direct rays of the sun. 25. All deliveries to or from the Premises shall be made only at such times, in the areas and through the entrances and exits designated for such purposes by Landlord. Tenant shall not permit the process of receiving deliveries to or from the Premises outside of said areas or in a manner which may unreasonably interfere with the use by any other tenant of its premises or of any common areas, any pedestrian use of such area, or any use which is inconsistent with good business practice. 26. The work of cleaning personnel shall not be hindered by Tenant after 5:30 P.M., and such cleaning work may be done at any time when the offices are vacant. Windows, doors and fixtures may be cleaned at any time. Tenant shall provide adequate waste and rubbish receptacles necessary to prevent unreasonable hardship to Landlord regarding cleaning service. 42 EXHIBIT C COMMENCEMENT LETTER INTENTIONALLY OMITTED 43 EXHIBIT D WORK LETTER This Exhibit is attached to and made a part of the Lease dated ____________, 1999, by and between EOP-BUCKHEAD, L.L.C. ("Landlord") and VIEWLOCITY, INC. ("Tenant") for space in the Building located at 3475 Piedmont Road, NE, Atlanta, Georgia. 1. This Work Letter shall set forth the obligations of Landlord and Tenant with respect to the preparation of the Premises for Tenant's occupancy. All improvements described in this Work Letter to be constructed in and upon the Premises by Landlord are hereinafter referred to as the "Landlord Work." It is agreed that construction of the Landlord Work will be completed at Tenant's sole cost and expense, subject to the Allowance (as defined below). Landlord shall also perform the Base Building Work in the Premises (as described in EXHIBIT D-1) at Landlord's sole cost and expense, subject to and in accordance with the terms of EXHIBIT D-1. Any portion of the Base Building Work or other work described in EXHIBIT D-1 which is to be performed at Tenant's cost may be applied by Tenant against the Allowance described herein. Landlord shall enter into a direct contract for the Landlord Work with Griggs Contracting Inc. In addition, Landlord shall have the right to select and/or approve of any subcontractors used in connection with the Landlord Work. Landlord acknowledges that Landlord and its affiliates have previously bid general tenant improvement work performed in office buildings owned by Landlord and/or its affiliates in the Atlanta area. Such bids were obtained from at least five (5) different general contractors, and included unit pricing, and a construction management fee of four and one-half percent (4.5%) and an additional fee of two and 45/100 percent (2.45%). 2. Tenant shall be solely responsible for the timely preparation and submission to Landlord of the final architectural, electrical and mechanical construction drawings, plans and specifications (called "Plans") necessary to construct the Landlord Work, which plans shall be subject to approval by Landlord and Landlord's architect and engineers and shall comply with their requirements to avoid aesthetic or other conflicts with the design and function of the balance of the Building. Tenant shall be responsible for all elements of the design of Tenant's plans (including, without limitation, compliance with law, functionality of design, the structural integrity of the design, the configuration of the premises and the placement of Tenant's furniture, appliances and equipment), and Landlord's approval of Tenant's plans shall in no event relieve Tenant of the responsibility for such design. If requested by Tenant, Landlord's architect will prepare the Plans necessary for such construction at Tenant's cost. Whether or not the layout and Plans are prepared with the help (in whole or in part) of Landlord's architect, Tenant agrees to remain solely responsible for the timely preparation and submission of the Plans and for all elements of the design of such Plans and for all costs related thereto. Tenant has assured itself by direct communication with the architect and engineers (Landlord's or its own, as the case may be) that the final approved Plans (i.e. approved by Tenant and Landlord and in condition required for submittal for a building permit) can be delivered to Landlord on or before August 23, 1999 (the "Plans Due Date"), provided that Tenant promptly furnishes complete information concerning its requirements to said architect and engineers as and when requested by them. Landlord agrees that Landlord shall review and comment on, as necessary, each submittal of Plans within five (5) Business Days after Landlord's receipt of each such Plans submittal, and Tenant shall take this time period(s) into consideration when determining whether it can deliver final approved Plans by the Plans Due Date. Tenant covenants and agrees to cause said final, approved Plans to be delivered to Landlord on or before said Plans Due Date and to devote such time as may be necessary in consultation with said architect and engineers to enable them to complete and submit the Plans within the required time limit. Time is of the essence in respect of preparation and submission of Plans by Tenant. In the event the Plans are not fully completed and approved by the Plans Due Date, Tenant shall be responsible for one (1) day of Tenant Delay (as defined in the Lease) for each day during the period beginning on the day following the Plans Due Date and ending on the date completed Plans are approved. (The word "architect" as used in this EXHIBIT D shall include an interior designer or space planner.) 3. In the event Landlord's estimate and/or the actual cost of construction shall exceed the Allowance, Landlord, prior to commencing any construction of Landlord Work, shall submit to Tenant a written estimate setting forth the anticipated cost of the Landlord 44 Work, including but not limited to labor and materials, contractor's fees and permit fees. Within three (3) Business Days thereafter, Tenant shall either notify Landlord in writing of its approval of the cost estimate, or specify its objections thereto and any desired changes to the proposed Landlord Work. In the event Tenant notifies Landlord of such objections and desired changes, Tenant shall work with Landlord to reach a mutually acceptable alternative cost estimate. 4 In the event Landlord's estimate and/or the actual cost of construction shall exceed the Allowance, if any (such amounts exceeding the Allowance being herein referred to as the "Excess Costs"), Tenant shall pay to Landlord such Excess Costs, plus any applicable state sales or use tax thereon, upon demand, in accordance with the following: 50% of the Excess Costs shall be paid prior to Landlord commencing any Landlord Work and the balance of any Excess Costs shall be paid upon completion of the Landlord Work. The statements of costs submitted to Landlord by Landlord's contractors shall be conclusive for purposes of determining the actual cost of the items described therein. The amounts payable by Tenant hereunder constitute Rent payable pursuant to the Lease, and the failure to timely pay same constitutes an event of default under the Lease. 5. If Tenant shall request any change, addition or alteration in any of the Plans after approval by Landlord, Landlord shall have such revisions to the drawings prepared, and Tenant shall reimburse Landlord for the cost thereof, plus any applicable state sales or use tax thereon, upon demand. Promptly upon completion of the revisions, Landlord shall notify Tenant in writing of the increased cost which will be chargeable to Tenant by reason of such change, addition or deletion. Tenant, within three (3) Business Days, shall notify Landlord in writing whether it desires to proceed with such change, addition or deletion. In the absence of such written authorization, Landlord shall have the option to continue work on the Premises disregarding the requested change, addition or alteration, or Landlord may elect to discontinue work on the Premises until it receives notice of Tenant's decision, in which event Tenant shall be responsible for any Tenant Delay in completion of the Premises resulting therefrom. In the event such revisions result in a higher estimate of the cost of construction and/or higher actual construction costs which exceed the Allowance, such increased estimate or costs shall be deemed Excess Costs pursuant to Paragraph 4 hereof and Tenant shall pay such Excess Costs, plus any applicable state sales or use tax thereon, upon demand, in accordance with the schedule described in Section 4 above, provided, however, if Landlord has commenced the Landlord Work, then the initial 50% of the additional Excess Costs described in this Section 5 shall be immediately payable. 6. Following approval of the Plans and the payment by Tenant of the required portion of the Excess Costs, if any, Landlord shall obtain the permits for the Landlord Work and cause the Landlord Work to be constructed substantially in accordance with the approved Plans. Landlord shall notify Tenant of substantial completion of the Landlord Work. 7. Landlord, provided Tenant is not in default, agrees to provide Tenant with an allowance (the "Allowance") in an amount not to exceed $30.00 per rentable square foot of the Premises to be applied toward the cost of the Landlord Work in the Premises. If the Allowance shall not be sufficient to complete the Landlord Work, Tenant shall pay the Excess Costs, plus any applicable state sales or use tax thereon, as prescribed in paragraph 4 above. If the Allowance exceeds the cost of Landlord Work, any remaining Allowance ("Unused Allowance") shall accrue to the sole benefit of Landlord, it being agreed that, subject to the following, Tenant shall not be entitled to any credit, offset, abatement or payment with respect thereto; provided, however, upon completion of the Landlord Work and payment of all costs related thereto, Landlord shall apply up to 50% of the Unused Allowance (but in no event more than $1.50 per rentable square foot contained in the initial Premises) against the second and subsequent installments of Base Rental and Additional Base Rental due under this Lease. Landlord shall be entitled to deduct from the Allowance a construction management fee for Landlord's oversight of the Landlord Work in an amount equal to four and one-half percent (4.5%) of the total cost of the Landlord Work. 8. In addition to the above described Allowance, Landlord, provided Tenant is not in default, agrees to be responsible for the cost to prepare the initial preliminary space plan and one (1) revision thereto (up to a maximum cost of $0.10 per rentable square foot in the initial Premises) (the "Space Planning Allowance") and Tenant shall be responsible for all 45 other costs incurred in connection with the preparation of the preliminary space plans. The Space Planning Allowance shall be paid to Tenant concurrent with the first disbursement of the Allowance, or, at Landlord's election, the Space Planning Allowance may be applied against the Excess Costs to be paid by Tenant. 9. FINANCE OF EXCESS COSTS. If Tenant has used the entire Allowance as provided herein, Tenant, provided it is not in default under this Lease, shall have the right to borrow up to $5.00 per rentable square foot in the initial Premises (the "Additional Allowance") from Landlord in order to finance the Excess Costs during the initial Lease Term. Any Additional Allowance borrowed by Tenant hereunder shall be repaid to Landlord as Additional Base Rental in equal monthly installments throughout the initial Lease Term at an interest rate equal to thirteen percent (13%) per annum. If Tenant is in default under this Lease after the expiration of applicable cure periods, the entire unpaid balance of the Additional Allowance borrowed by Tenant shall become immediately due and payable and, except to the extent required by applicable law, shall not be subject to mitigation or reduction in connection with a reletting of the Premises by Landlord. 10. This EXHIBIT D shall not be deemed applicable to any additional space added to the original Premises at any time or from time to time, whether by any options under the Lease or otherwise, or to any portion of the original Premises or any additions to the Premises in the event of a renewal or extension of the original Term of this Lease, whether by any options under the Lease or otherwise, unless expressly so provided in the Lease or any amendment or supplement to the Lease. IN WITNESS WHEREOF, Landlord and Tenant have executed this exhibit as of the day and year first above written. LANDLORD: EOP-BUCKHEAD, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY By: EOP Operating Limited Partnership, a Delaware limited partnership, its sole member By: Equity Office Properties Trust, a Maryland real estate investment trust, its managing general partner By: /s/ Jeff Sweeney ---------------------------- Name: Jeff Sweeney -------------------------- Title: V.P. Leasing ------------------------- TENANT: VIEWLOCITY, INC., A DELAWARE CORPORATION By: /s/ Stan F. Stoudenmire ------------------------------- Name: Stan F. Stoudenmire ----------------------------- Title: Sr. V.P. & CFO ---------------------------- 46 EXHIBIT D-1 BASE BUILDING WORK IN OR AFFECTING THE PREMISES This Exhibit is attached to and made a part of the Lease dated ____________, 1999, by and between EOP-BUCKHEAD, L.L.C. ("Landlord") and VIEWLOCITY, INC. ("Tenant") for space in the Building located at 3475 Piedmont Road, NE, Atlanta, Georgia. EXTERIOR WALLS: Glazing: Floor to ceiling painted extruded aluminum "window wall" system with an 8" interior knee wall, allowing for flexible installation of telephone, electrical and data cabling along the perimeter wall. Energy efficient 1" tinted "Low-E" vision glass provides Class "A" system performance and appearance. Mini-Blinds: 1" horizontal mini-blinds on all exterior windows, except at the lobby level. MECHANICAL SYSTEM FOR BUILDING: General Description: Direct Digital Control (DDC) Energy Management System (EMS) controlled mechanical system. Design Criteria: The HVAC equipment maintains conditions to plus or minus 1%, based upon Georgia Energy Code and the local conditions specified in the 1997 edition of ASHRAE Handbook of Fundamentals: SUMMER: 75 Deg.F@ 50% max. relative humidity interior, based upon outside conditions of 94 Deg.F dry bulb and 74 Deg.F wet bulb. WINTER: 72 Deg.F interior, based upon outside conditions of 22 Deg.F dry bulb. The foregoing criteria is based upon the Building standard usage of electricity and lighting and is based upon a maximum of 150 square feet occupied per person System Equipment: A two-cell, induced draft cooling tower with a motor in each cell. Water-cooled self-contained air-conditioned VAV units are connected to medium pressure duct. Primary conditioned air is distributed to the VAV/PIU units through medium pressure ductwork, perimeter low-pressure ductwork, perimeter slots and perforated metal diffusers. Exterior building zones are conditioned with PIU units with electric heat. Interior zones are conditioned with cooling only VAV units. The core zones are conditioned with constant volume PIU units with heat. Tenant is responsible for installing interior HVAC diffusers (but not exterior diffusers, which are part of Base Building Work), and the balancing of HVAC system serving the Premises once the tenant improvements in the Premises are in place. LIFE SAFETY SYSTEM FOR BUILDING: General Description: Base Building fire alarm system complying with all applicable NFPA requirements for shell building including 47 life safety emergency lighting, exit signs, annunciators, smoke detectors, emergency generator, etc. on a full floor, non-partitioned basis. All heated areas of the building will have a "wet-pipe" sprinkler system configured on a full floor, non-partitioned basis with up-right turned up. BUILDING CORE: Gypsum Board Walls: Typical core partitions: 3 5/8" metal studs at 24" o.c. with 5/8" gypsum wallboard. Wood Doors: Building standard doors are white birch 3'0", full height premium pre-finished stain grade solid core wood doors. Frames: Frames at service level will be hollow metals, all others will be aluminum. Hardware: Building standard hardware will be a satin finish chrome plated lever design with mortise lock sets. Plumbing: One domestic water heater with a re-circulating line provides hot water on four to five floor intervals. Two wet columns are available on each floor. Power: Busway at 480/277 volts extending from the main switchboard to the electrical rooms on each floor. Junction box grid system on every floor for future tenant lighting receptacles. Telephone: Telephone closets on each floor with grounded backboards. Metering: Available based on tenant requirements. Exit & Emergency Exits: Emergency fixtures shall be located on a full floor, non-partitioned basis in stairwells, corridors, building exits, lobbies, and toilet rooms BASE BUILDING "ABOVE THE CEILING" DEFINITION: Ceiling: Acoustical tile ceiling is suspended 9'0" above the finished floor. Acoustical tile are 2'-0" x 2'-0" Eclipse by USG (or equal) with Donn Fineline grid by USG (or equal). Tiles and light fixtures are stacked on the floor for installation by the tenant as a part of the tenant improvement installation. The grid is installed as a part of base building. Lighting: The tenant spaces will be provided with 2'x4', 3 lamp, 18 cell recessed troffer, 3" deep parabolic lenses and electronic ballast using T8 octron lamps. Base building fixtures are allotted at a ratio of approximately one fixture per 100 usable square feet of the premises and will be stacked on the floor and installed by the tenant as part of the tenant improvement installation. Fire Sprinkler: Office sprinkler heads are upright turned heads at the concrete deck (1/225 usable square feet). The relocation of existing heads or any additional heads necessitated by the tenant's plan shall be provided by tenant as part of the tenant improvement installation. Electrical: A tenant grid system supporting 120 volt receptacle power and 277 volt lighting will be installed on each floor. This 48 system will consist of junction boxes located approximately 30' centers connected via a disconnect 75 KVA transformer; 100 amp lighting panel and a 225 amp double section receptacle panel. Each junction box will contain branch circuiting capable of supporting the following load densities: receptacle power of 5 watts per usable square foot on a connected load basis and lighting of 2 watts per usable square foot. Window Sill: An 8 inch window sill condition exists below the exterior glass to facilitate Tenant's installation of electrical, telephone and computer cabling. The installation and finishing of the sheetrock at said sill as well as the installation of said electrical, telephone and computer cabling shall be provided by tenant as part of the tenant improvement installation.
IN WITNESS WHEREOF, Landlord and Tenant have executed this exhibit as of the day and year first above written. LANDLORD: EOP-BUCKHEAD, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY By: EOP Operating Limited Partnership, a Delaware limited partnership, its sole member By: Equity Office Properties Trust, a Maryland real estate investment trust, its managing general partner By: _____________________________ Name: ___________________________ Title: __________________________ TENANT: VIEWLOCITY, INC., A DELAWARE CORPORATION By: _____________________________ Name: _____________________________ Title: _____________________________ 49 EXHIBIT E ADDITIONAL PROVISIONS This Exhibit is attached to and made a part of the Lease dated ____________, 1999, by and between EOP-BUCKHEAD, L.L.C. ("Landlord") and VIEWLOCITY, INC. ("Tenant") for space in the Building located at 3475 Piedmont Road, NE, Atlanta, Georgia. I. PARKING. A. During the initial Lease Term, Tenant shall have the right to lease up to 77 unreserved parking spaces and 6 reserved spaces (collectively, the "Spaces") in, or on the roof of, the Building garage ("Garage") for the use of Tenant and its employees. No deductions or allowances shall be made for days when Tenant or any of its employees does not utilize the parking facilities or for Tenant utilizing less than all of the Spaces. Tenant shall not have the right to lease or otherwise use more than the number of reserved and unreserved Spaces set forth above. In order to lease any of the parking Spaces available to Tenant hereunder, Tenant must provide Landlord with at least thirty (30) days prior written notice that it desires to lease the parking Spaces in accordance with this Section. Such notice shall specify the number of Spaces which Tenant elects to lease hereunder (up to an aggregate of 77 unreserved parking spaces and 6 reserved spaces). If Tenant's notice specifies less than the maximum number of Spaces available to Tenant hereunder, Tenant may elect to lease additional Spaces (up to a maximum aggregate of 77 unreserved parking spaces and 6 reserved spaces) by providing subsequent thirty (30) day notices to Landlord. B. During the initial Lease Term, Tenant shall pay Landlord, as Additional Base Rental in accordance with Article IV of the Lease, the sum of $45.00 per month, plus applicable tax thereon, if any, for each unreserved Space leased by Tenant hereunder, and the sum of $75.00 per month, plus applicable tax thereon, if any, for each reserved Space leased by Tenant hereunder, as such rates may be adjusted from time-to-time to reflect the then current rate for parking in the Garage. C. Except for particular spaces and areas designated by Landlord for reserved parking, all parking in the Garage and surface parking areas serving the Building shall be on an unreserved, first-come, first-served basis. D. Landlord shall not be responsible for money, jewelry, automobiles or other personal property lost in or stolen from the Garage or the surface parking areas regardless of whether such loss or theft occurs when the Garage or other areas therein are locked or otherwise secured. Except as caused by the negligence or willful misconduct of Landlord and without limiting the terms of the preceding sentence, Landlord shall not be liable for any loss, injury or damage to persons using the Garage or the surface parking areas or automobiles or other property therein, it being agreed that, to the fullest extent permitted by law, the use of the Spaces shall be at the sole risk of Tenant and its employees. E. Landlord shall have the right from time to time to designate the location of the Spaces and to promulgate reasonable rules and regulations regarding the Garage, the surface parking areas, if any, the Spaces and the use thereof, including, but not limited to, rules and regulations controlling the flow of traffic to and from various parking areas, the angle and direction of parking and the like. Tenant shall comply with and cause its employees to comply with all such rules and regulations as well as all reasonable additions and amendments thereto. Notwithstanding the foregoing, it is agreed that Tenant's reserved Spaces shall not be located on the roof of the Garage and shall be located within reasonable proximity to the Building entrance(s). F. Tenant shall not store or permit its employees to store any automobiles in the Garage or on the surface parking areas without the prior written consent of Landlord. Except for emergency repairs, Tenant and its employees shall not perform any work on any automobiles while located in the Garage or on the Property. If it is necessary for Tenant or its employees to leave an automobile in 50 the Garage or on the surface parking areas overnight, Tenant shall provide Landlord with prior notice thereof designating the license plate number and model of such automobile. G. Landlord shall have the right to temporarily close the Garage or certain areas therein in order to perform necessary repairs, maintenance and improvements to the Garage or the surface parking areas, if any. H. Tenant shall not assign or sublease any of the Spaces without the consent of Landlord, which consent shall not be unreasonably withheld or delayed provided such assignment or subletting of Spaces is to a permitted assignee of Tenant's rights under the Lease or a permitted subtenant of all or a portion of the Premises and does not exceed 3 Spaces per 1,000 rentable square feet in such portion of the Premises. Subject to the foregoing, Landlord shall have the right to terminate this Parking Agreement with respect to any Spaces that Tenant desires to sublet or assign. I. Landlord may elect to provide parking cards or keys to control access to the Garage or surface parking areas, if any. In such event, Landlord shall provide Tenant with one card or key for each Space that Tenant is leasing hereunder, provided that Landlord shall have the right to require Tenant or its employees to place a deposit on such access cards or keys and to pay a fee for any lost or damaged cards or keys. J. Landlord hereby reserves the right to enter into a management agreement or lease with an entity for the Garage ("Garage Operator"). In such event, Tenant, upon request of Landlord, shall enter into a parking agreement with the Garage Operator and pay the Garage Operator the monthly charge established hereunder, and Landlord shall have no liability for claims arising through acts or omissions of the Garage Operator unless caused by Landlord's negligence or willful misconduct. It is understood and agreed that the identity of the Garage Operator may change from time to time during the Lease Term. In connection therewith, any parking lease or agreement entered into between Tenant and a Garage Operator shall be freely assignable by such Garage Operator or any successors thereto. K. Landlord agrees that, in entering into leases for the Building from and after the date of this Lease, Landlord shall not contractually agree to make available more than 3.5 parking spaces in the Garage per 1,000 rentable square feet in any tenant's premises, determined on an average basis among all leases for the Building, unless Landlord retains the right to revoke or reclaim any parking spaces which exceed such limit. II. INTENTIONALLY OMITTED. III. RENEWAL OPTION. A. Tenant shall have the right to extend the Lease Term (the "Renewal Option") for one additional period of five (5) years commencing on the day following the Termination Date of the initial Lease Term and ending on the fifth (5th) anniversary of the Termination Date (the "Renewal Term"), if: 1. Landlord receives notice of exercise ("Initial Renewal Notice") not less than nine (9) full calendar months prior to the expiration of the initial Lease Term and not more than fifteen (15) full calendar months prior to the expiration of the initial Lease Term; and 2. Tenant is not in default under the Lease beyond any applicable cure periods at the time that Tenant delivers its Initial Renewal Notice or at the time Tenant delivers its Binding Notice; and 3. No part of the Premises is sublet, other than to a Permitted Transferee (as defined in Section XIII.E of the Lease), at the time that Tenant delivers its Initial Renewal Notice or at the time Tenant delivers its Binding Notice; and 51 4. The Lease has not been assigned, other than to a Permitted Transferee (as defined in Section XIII.E of the Lease), prior to the date that Tenant delivers its Initial Renewal Notice or prior to the date Tenant delivers its Binding Notice. B. The initial Base Rental rate per rentable square foot for the Premises during the Renewal Term shall equal the Prevailing Market (hereinafter defined) rate per rentable square foot for the Premises. C. Tenant shall pay Additional Base Rental (i.e. Basic Costs) for the Premises during the Renewal Term in accordance with Article IV of the Lease and the Base Year(s) shall be adjusted, if at all, as part of the determination of the Prevailing Market rate. D. Within thirty (30) days after receipt of Tenant's Initial Renewal Notice, Landlord shall advise Tenant of the applicable Base Rental rate for the Premises for the Renewal Term. Tenant, within thirty (30) days after the date on which Landlord advises Tenant of the applicable Base Rental rate for the Renewal Term, shall either (i) give Landlord final binding written notice ("Binding Notice") of Tenant's exercise of its option, or (ii) if Tenant disagrees with Landlord's determination, provide Landlord with written notice of rejection (the "Rejection Notice"). If Tenant fails to provide Landlord with either a Binding Notice or Rejection Notice within such fifteen (15) day period, Tenant's Renewal Option shall be null and void and of no further force and effect. If Tenant provides Landlord with a Binding Notice, Landlord and Tenant shall enter into the Renewal Amendment upon the terms and conditions set forth herein. If Tenant provides Landlord with a Rejection Notice, Landlord and Tenant shall work together in good faith to agree upon the Prevailing Market rate for the Premises during the Renewal Term. Upon agreement Tenant shall provide Landlord with Binding Notice and Landlord and Tenant shall enter into the Renewal Amendment in accordance with the terms and conditions hereof. Notwithstanding the foregoing, if Landlord and Tenant fail to agree upon the Prevailing Market rate within thirty (30) days after the date Tenant provides Landlord with the Rejection Notice, Tenant, by written notice to Landlord (the "Arbitration Notice") within five (5) days after the expiration of such thirty (30) day period, shall have the right to have the Prevailing Market rate determined in accordance with the arbitration procedures described in Section E below. If Landlord and Tenant fail to agree upon the Prevailing Market rate within the thirty (30) day period described and Tenant fails to exercise its right to arbitrate, Tenant's Renewal Option shall be deemed to be null and void and of no further force and effect. E. ARBITRATION PROCEDURE. 1. If Tenant provides Landlord with an Arbitration Notice, Landlord and Tenant, within five (5) days after the date of the Arbitration Notice, shall each simultaneously submit to the other, in a sealed envelope, its good faith estimate of the Prevailing Market rate for the Premises during the Renewal Term (collectively referred to as the "Estimates"). If the Estimates are not the same, then, within seven (7) days after the exchange of Estimates, Landlord and Tenant shall each select an appraiser to determine which of the two Estimates most closely reflects the Prevailing Market rate for the Premises during the Renewal Term. Each appraiser so selected shall be certified as an MAI appraiser or as an ASA appraiser and shall have had at least five (5) years experience within the previous ten (10) years as a real estate appraiser working in the Buckhead area of Atlanta, Georgia, with working knowledge of current rental rates and practices. For purposes of the Lease, an "MAI" appraiser means an individual who holds an MAI designation conferred by, and is an independent member of, the American Institute of Real Estate Appraisers (or its successor organization, or in the event there is no successor organization, the organization and designation most similar), and an "ASA" appraiser means an individual who holds the Senior Member designation conferred by, and is an independent member of, the American Society of Appraisers (or its successor organization, or, in the 52 event there is no successor organization, the organization and designation most similar). 2. Upon selection, Landlord's and Tenant's appraisers shall work together in good faith to agree upon which of the two Estimates most closely reflects the Prevailing Market rate for the Premises. The Estimate chosen by such appraisers shall be binding on both Landlord and Tenant as the Base Rent rate for the Premises, subject to the terms of Section III.E.4 below. If either Landlord or Tenant fails to appoint an appraiser within the seven (7) day period referred to above, the appraiser appointed by the other party shall be the sole appraiser for the purposes hereof. If the two appraisers cannot agree upon which of the two Estimates most closely reflects the Prevailing Market within twenty (20) days after their appointment, then, within ten (10) days after the expiration of such twenty (20) day period, the two (2) appraisers shall select a third appraiser meeting the aforementioned criteria. Once the third appraiser (i.e. arbitrator) has been selected as provided for above, then, as soon thereafter as practicable but in any case within fourteen (14) days, the arbitrator shall make his determination of which of the two Estimates most closely reflects the Prevailing Market rate and such Estimate shall be binding on both Landlord and Tenant as the Base Rent rate for the Premises. If the arbitrator believes that expert advice would materially assist him, he may retain one or more qualified persons to provide such expert advice. The parties shall share equally in the costs of the arbitrator and of any experts retained by the arbitrator. Any fees of any appraiser, counsel or experts engaged directly by Landlord or Tenant, however, shall be borne by the party retaining such appraiser, counsel or expert. 3. If the Prevailing Market rate has not been determined by the commencement date of the Renewal Term for the Premises, Tenant shall pay Base Rent at the Minimum Renewal Term Base Rental Rate until such time as the Prevailing Market rate has been determined. Upon such determination, the Base Rent for the Premises shall be retroactively adjusted to the commencement of the Renewal Term for the Premises. If such adjustment results in an underpayment of Base Rent by Tenant, Tenant shall pay Landlord the amount of such underpayment within thirty (30) days after the determination thereof. If such adjustment results in an overpayment of Base Rent by Tenant, Landlord shall credit such overpayment against the next installment of Base Rent due under the Lease and, to the extent necessary, any subsequent installments, until the entire amount of such overpayment has been credited against Base Rent. 4. Notwithstanding anything to the contrary contained herein, the parties hereby agree that Landlord shall not be obligated to renew this Lease if the Prevailing Market rate for the Premises during the Renewal Term is less than the Base Rental rate, per rentable square foot per annum, applicable during the last year of the initial Lease Term, plus three (3%) of such rate (the "Minimum Renewal Term Base Rental Rate"), regardless of any determination of Prevailing Market rate made by the appraisers or arbitrator, as described above. F. If Tenant is entitled to and properly exercises its Renewal Option, Landlord shall prepare an amendment (the "Renewal Amendment") to reflect changes in the Base Rental, Lease Term, Termination Date and other appropriate terms. The Renewal Amendment shall be sent to Tenant within a reasonable time after receipt of the Binding Notice and Tenant shall execute and return the Renewal Amendment to Landlord within fifteen (15) days after Tenant's receipt of same, but an otherwise valid exercise of the Renewal Option shall, at Landlord's option, be fully effective whether or not the Renewal Amendment is executed. G. For purposes hereof, "Prevailing Market" shall mean the arms length fair market annual rental rate per rentable square foot under renewal leases and amendments entered into on or about the date on which the Prevailing Market is being determined hereunder for space comparable to the Premises in the Building and office buildings comparable to the Building in the Buckhead area of 53 Atlanta, Georgia. The determination of Prevailing Market shall take into account any material economic differences between the terms of this Lease and any comparison lease, such as rent abatements, construction costs and other concessions and the manner, if any, in which the landlord under any such lease is reimbursed for operating expenses and taxes. The determination of Prevailing Market shall also take into consideration any reasonably anticipated changes in the Prevailing Market rate from the time such Prevailing Market rate is being determined and the time such Prevailing Market rate will become effective under this Lease. IV. RIGHT OF FIRST REFUSAL. A. GRANT OF OPTION. Tenant shall have the right of first refusal with respect to the approximately 8,739 rentable square feet of space on the sixteenth (16th) floor of the Building shown on the demising plan attached hereto as EXHIBIT A-1 (the "Refusal Space"), which right of first refusal shall be exercised as follows: when Landlord has a prospective tenant ("Prospect") interested in leasing the Refusal Space, Landlord shall advise Tenant (the "Advice") of the terms under which Landlord is prepared to lease the Refusal Space to such Prospect, as modified by Landlord for Tenant to reflect a lease term for the Refusal Space which terminates coterminous with the initial Premises (the "Advice"), and Tenant may lease the Refusal Space, under such terms in the Advice, by providing Landlord with written notice of exercise ("Notice of Exercise") within five (5) days after the date of the Advice, except that Tenant shall have no such Right of First Refusal and Landlord need not provide Tenant with an Advice if: 1. Tenant is in default under the Lease beyond any applicable cure period at the time Landlord would otherwise deliver the Advice; or 2. more than twenty percent (20%) of the Premises is sublet, other than to a Permitted Transferee (as defined in Section XIII.E of the Lease), at the time Landlord would otherwise deliver the Advice; or 3. the Lease has been assigned, other than to a Permitted Transferee (as defined in Section XIII.E of the Lease), prior to the date Landlord would otherwise deliver the Advice; or 4. the Refusal Space is not intended for the exclusive use of Tenant during the Lease Term; or 5. the Commencement Date has occurred and the Tenant is not occupying the Premises on the date Landlord would otherwise deliver the Advice. B. TERMS FOR REFUSAL SPACE. 1. The term for the Refusal Space shall commence upon the commencement date stated in the Advice and thereupon such Refusal Space shall be considered a part of the Premises, provided that all of the terms stated in the Advice (including, without limitation, the expiration date set forth in the Advice) shall govern Tenant's leasing of the Refusal Space and only to the extent that they do not conflict with the Advice, the terms and conditions of this Lease shall apply to the Refusal Space. 2. The Refusal Space (including improvements and personalty, if any) shall be accepted by Tenant in its condition and as-built configuration existing on the earlier of the date Tenant takes possession of the Refusal Space or the date the term for such Refusal Space commences, unless the Advice specifies work to be performed by Landlord in the Refusal Space, in which case Landlord shall perform such work in the Refusal Space. C. TERMINATION OF RIGHT OF FIRST REFUSAL. The rights of Tenant hereunder with respect to the Refusal Space shall terminate on the earlier to occur of (i) September 30, 2005; (ii) Tenant's failure to exercise its Right of First Refusal within the five (5) day period provided in paragraph A above; and (iii) the date Landlord would have provided Tenant an Advice if Tenant had not been in 54 violation of one or more of the conditions set forth in Paragraph A above. Notwithstanding item (ii) above, if (i) Tenant was entitled to exercise its Right of First Refusal, but failed to provide Landlord with a Notice of Exercise within the five (5) day period provided in paragraph A above, and (ii) Landlord does not enter into a lease for the Refusal Space within a period of six (6) months following the date of the Advice, Tenant shall once again have a Right of First Refusal with respect to the Refusal Space. D. REFUSAL SPACE AMENDMENT 1. If Tenant exercises its Right of First Refusal, Landlord shall prepare an amendment (the "Refusal Space Amendment") adding the Refusal Space to the Premises on the terms set forth in the Advice and reflecting the changes in the Base Rental, Rentable Area of the Premises, Tenant's Pro Rata Share and other appropriate terms. 2. A copy of the Refusal Space Amendment shall be (i) sent to Tenant within a reasonable time after Landlord's receipt of the Notice of Exercise, and (ii) executed by Tenant and returned to Landlord within ten (10) Business Days thereafter, but an otherwise valid exercise of the Right of First Refusal shall, at Landlord's option, be fully effective whether or not the Refusal Space Amendment is executed. E. Notwithstanding anything herein to the contrary, Tenant's Right of First Refusal is subject and subordinate to (i) the renewal or extension rights of any tenant leasing all or any portion of the Refusal Space, and (ii) the expansion rights (whether such rights are designated as a right or first offer, right of first refusal, expansion option or otherwise) of HTG Corporation (or any successor thereof) existing on the date hereof. V. SATELLITE DISH. A. During the initial Lease Term, Tenant shall have the right, by providing written notice to Landlord (the "Antenna Notice"), to lease space on the roof of the Building or other appropriate space on or about the Building, as reasonably determined by Landlord, for the purpose of installing (in accordance with Section X.B of the Lease), operating and maintaining an antenna, satellite dish or other communication device approved by Landlord (the "Dish/Antenna"). If Tenant does not provide Landlord with the Antenna Notice and install the permitted Dish/Antenna equipment in the Roof Space on or before July 1, 2000 (the "Required Antenna Notice Date"), then Tenant's rights under this Section V shall be subject to the availability of appropriate space on the roof of the Building or on or about the Building, as reasonably determined by Landlord. If Tenant does not provide Landlord with the Antenna Notice and install the permitted Dish/Antenna equipment in the Roof Space on or before July 1, 2001, then Tenant's rights under this Section V shall be null and void, unless otherwise agreed by Landlord in writing. In consideration for Tenant's right to install, operate and maintain the Dish/Antenna as described herein, Tenant shall pay Landlord monthly payments of $300.00 per month, subject to 5% escalations each annual anniversary of the Required Antenna Notice Date (the "Dish/Antenna Payments"). The Dish/Antenna Payments shall constitute Additional Base Rental under the terms of the Lease and Tenant shall be required to make these payments in strict compliance with the terms of Section IV of the Lease. The exact location and size of the space on the roof or on or about the Building to be utilized by Tenant shall be designated by Landlord (the "Roof Space"). Landlord reserves the right to relocate the Roof Space as reasonably necessary during the Lease Term. Landlord's designation shall take into account Tenant's use of the Dish/Antenna. Notwithstanding the foregoing, Tenant's right to install the Dish/Antenna shall be subject to the approval rights of Landlord and Landlord's architect and/or engineer with respect to the plans and specifications of the Dish/Antenna, the manner in which the Dish/Antenna is attached to the roof of the Building and the manner in which any cables are run to and from the Dish/Antenna. The precise specifications and a general description of the Dish/Antenna along with all documents Landlord reasonably requires to review the installation of the Dish/Antenna (the "Plans and Specifications") shall be 55 submitted to Landlord for Landlord's written approval no later than twenty (20) days before Tenant commences to install the Dish/Antenna. Tenant shall be solely responsible for obtaining all necessary governmental and regulatory approvals and for the cost of installing, operating, maintaining and removing the Dish/Antenna. Tenant shall notify Landlord upon completion of the installation of the Dish/Antenna. If Landlord determines that the Dish/Antenna equipment does not comply with the approved Plans and Specifications, that the Building has been damaged during installation of the Dish/Antenna or that the installation was defective, Landlord shall notify Tenant of any noncompliance or detected problems and Tenant promptly shall cure the defects. If the Tenant fails to promptly cure the defects, Tenant shall pay to Landlord upon demand the cost, as reasonably determined by Landlord, of correcting any defects and repairing any damage to the Building caused by such installation. If at any time Landlord, in its sole discretion, deems it necessary, Tenant shall provide and install, at Tenant's sole cost and expense, appropriate aesthetic screening, reasonably satisfactory to Landlord, for the Dish/Antenna (the "Aesthetic Screening"). B. Landlord agrees that Tenant, upon reasonable prior written notice to Landlord, shall have access to the roof of the Building and the Roof Space for the purpose of installing, maintaining, repairing and removing the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, all of which shall be performed by Tenant or Tenant's authorized representative or contractors, which shall be approved by Landlord, at Tenant's sole cost and risk. It is agreed, however, that only authorized engineers, employees or properly authorized contractors of Tenant, FCC inspectors, or persons under their direct supervision will be permitted to have access to the roof of the Building and the Roof Space. Tenant further agrees to exercise firm control over the people requiring access to the roof of the Building and the Roof Space in order to keep to a minimum the number of people having access to the roof of the Building and the Roof Space and the frequency of their visits. C. It is further understood and agreed that the installation, maintenance, operation and removal of the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, is not permitted to damage the Building or the roof thereof, or interfere with the use of the Building and roof by Landlord. Tenant agrees to be responsible for any damage caused to the roof or any other part of the Building, which may be caused by Tenant or any of its agents or representatives. D. Tenant agrees to install only equipment of types and frequencies which will not cause unreasonable interference to Landlord or existing tenants of the Building. In the event Tenant's equipment causes such interference, Tenant will change the frequency on which it transmits and/or receives and take any other steps necessary to eliminate the interference. If said interference cannot be eliminated within a reasonable period of time, in the judgment of Landlord, then Tenant agrees to remove the Dish/Antenna from the Roof Space. E. Tenant shall, at its sole cost and expense, and at its sole risk, install, operate and maintain the Dish/Antenna in a good and workmanlike manner, and in compliance with all Building, electric, communication, and safety codes, ordinances, standards, regulations and requirements, now in effect or hereafter promulgated, of the Federal Government, including, without limitation, the Federal Communications Commission (the "FCC"), the Federal Aviation Administration ("FAA") or any successor agency of either the FCC or FAA having jurisdiction over radio or telecommunications, and of the state, city and county in which the Building is located. Under this Lease, the Landlord and its agents assume no responsibility for the licensing, operation and/or maintenance of Tenant's equipment. Tenant has the responsibility of carrying out the terms of its FCC license in all respects. The Dish/Antenna shall be connected to Landlord's power supply in strict compliance with all applicable Building, electrical, fire and safety codes. Neither Landlord nor its agents shall be liable to Tenant for any stoppages or shortages of electrical power furnished to the Dish/Antenna or the Roof Space because of any act, omission or requirement of the public utility serving the Building, or the act or omission of any other tenant, invitee or licensee or their respective agents, employees or contractors, or for any other cause beyond the reasonable control of Landlord, and Tenant shall not be entitled to 56 any rental abatement for any such stoppage or shortage of electrical power. Neither Landlord nor its agents shall have any responsibility or liability for the conduct or safety of any of Tenant's representatives, repair, maintenance and engineering personnel while in or on any part of the Building or the Roof Space. F. The Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, shall remain the personal property of Tenant, and shall be removed by Tenant at its own expense at the expiration or earlier termination of this Lease or Tenant's right to possession hereunder. Tenant shall repair any damage caused by such removal, including the patching of any holes to match, as closely as possible, the color surrounding the area where the equipment and appurtenances were attached. Tenant agrees to maintain all of the Tenant's equipment placed on or about the roof or in any other part of the Building in proper operating condition and maintain same in satisfactory condition as to appearance and safety in Landlord's sole discretion. Such maintenance and operation shall be performed in a manner to avoid any interference with any other tenants or Landlord. Tenant agrees that at all times during the Lease Term, it will keep the roof of the Building and the Roof Space free of all trash or waste materials produced by Tenant or Tenant's agents, employees or contractors. G. In light of the specialized nature of the Dish/Antenna, Tenant shall be permitted to utilize the services of its choice for installation, operation, removal and repair of the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, subject to the reasonable approval of Landlord. Notwithstanding the foregoing, Tenant must provide Landlord with prior written notice of any such installation, removal or repair and coordinate such work with Landlord in order to avoid voiding or otherwise adversely affecting any warranties granted to Landlord with respect to the roof. If necessary, Tenant, at its sole cost and expense, shall retain any contractor having a then existing warranty in effect on the roof to perform such work (to the extent that it involves the roof), or, at Tenant's option, to perform such work in conjunction with Tenant's contractor. In the event the Landlord contemplates roof repairs that could affect Tenant's Dish/Antenna, or which may result in an interruption of the Tenant's telecommunication service, Landlord shall formally notify Tenant at least thirty (30) days in advance (except in cases of an emergency) prior to the commencement of such contemplated work in order to allow Tenant to make other arrangements for such service. H. Tenant shall not allow any provider of telecommunication, video, data or related services ("Communication Services") to locate any equipment on the roof of the Building or in the Roof Space for any purpose whatsoever, nor may Tenant use the Roof Space and/or Dish/Antenna to provide Communication Services to an unaffiliated tenant, occupant or licensee of another building, or to facilitate the provision of Communication Services on behalf of another Communication Services provider to an unaffiliated tenant, occupant or licensee of the Building or any other building. I. Tenant acknowledges that Landlord may at some time establish a standard license agreement (the "License Agreement") with respect to the use of roof space by tenants of the Building. Tenant, upon request of Landlord, shall enter into such License Agreement with Landlord provided that such agreement does not materially alter the rights of Tenant hereunder with respect to the Roof Space. J. Tenant specifically acknowledges and agrees that the terms and conditions of Article XV of the Lease (Indemnity and Waiver of Claims) shall apply with full force and effect to the Roof Space and any other portions of the roof accessed or utilized by Tenant, its representatives, agents, employees or contractors. K. If Tenant defaults under any of the terms and conditions of this Section or the Lease, and Tenant fails to cure said default within the time allowed by Article XXII of the Lease, Landlord shall be permitted to exercise all remedies provided under the terms of the Lease, including removing the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, and restoring the Building and the Roof Space to the condition that existed prior to the installation of the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any. If Landlord removes the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, as a result 57 of an uncured default, Tenant shall be liable for all costs and expenses Landlord incurs in removing the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, and repairing any damage to the Building, the roof of the Building and the Roof Space caused by the installation, operation or maintenance of the Dish/Antenna, the appurtenances, and the Aesthetic Screening, if any. VI. STANDARD OF REASONABLENESS. Except as specifically provided otherwise in this Lease, and except with regard to requests for consent or approval that require Landlord to make a determination of the aesthetics of certain signage, alterations or other things that would be visible from outside the Premises or Building or to assume certain risks, including, without limitation, the risk that a certain alteration, addition and/or improvement could adversely affect the mechanical systems or structure of the Building or require excess removal costs, Landlord and Tenant agree to act reasonably in granting approval or disapproval of any requests by the other for consent or approval. VII. ENVIRONMENTAL MATTERS. A. Landlord represents, to the best of its knowledge, that the Building and Premises are free of Hazardous Materials (as defined below) in amounts, and conditions which pose danger to human beings or are in violation of applicable environmental laws. B. Tenant shall not use, generate, manufacture, store or dispose of, on or about the Premises or Building, or transport to or from the Premises or Building, any flammable explosives, radioactive materials, hazardous wastes, toxic substances, or any related materials or substances, including, without limitation, any substance defined as or included in the definition of "hazardous substances" under any applicable federal, state or local law, regulation or ordinance (collectively, "Hazardous Materials"). C. Notwithstanding the provisions of this Section VII, Tenant and Landlord shall have the right to use, generate and store on the Premises and the Building, and transport to and from the Premises and the Building, those Hazardous Materials which are generally used in the ordinary course in first class office buildings; provided, however, that Tenant's and Landlord's use, generation, storage and transport thereof is in compliance with all applicable federal, state and local laws, regulations and ordinances. D. Promptly, upon either Landlord's or Tenant's obtaining actual knowledge thereof, such party shall immediately notify the other party in writing of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened with respect to Hazardous Materials in or at the Building pursuant to any applicable federal, state or local law, ordinance or regulation, and (ii) all claims made or threatened by any third party against Landlord, Tenant, or the Premises relating to any damage, loss or injury, whether to person or property, resulting from the Hazardous Materials. VIII. TELECOMMUNICATIONS PROVIDER. A. Tenant, at its sole cost and expense, shall have the right to contract with an alternative telecommunications provider ("Alternative Provider") for the provision to the Premises of local telephone service or other telecommunication service and permit such Alternative Provider to install telephone, data or other information cabling or other telecommunications equipment in the Premises for such purpose. Tenant shall be permitted to use its pro rata share of the Building's riser system for the purpose of installing appropriate cabling for such use. The point of entry (and method and manner of same) into the Building by such Alternative Provider shall be subject to Landlord's reasonable approval. B. The rights of Tenant provided herein are subject to (i) Landlord's approval of plans and specifications regarding any telecommunications equipment or cabling to be installed in the Building; (ii) Landlord's approval of the manner and method of any such installation; (iii) Landlord's approval of the Alternative Provider; and (iv) the Alternative Provider's execution and delivery of Landlord's standard telecommunications/communications license agreement. The approval of 58 Landlord required in connection with the foregoing matters shall not be unreasonably withheld. Landlord shall not be entitled to receive any compensation from Tenant in connection with allowing the access described herein, provided such access is used exclusively to provide service to Tenant in the Building. C. Tenant and/or its Alternative Provider shall be permitted access to the Building's riser system for the initial installation of the telecommunications cabling and other equipment and, in order to install, maintain, operate and remove the telecommunications cabling or other equipment, Tenant and the Alternative Provider shall be permitted access to the telecommunications closet(s) on the floors on which the Premises are located. Upon expiration or earlier termination of this Lease or Tenant's right to possession of the Premises, Tenant, at Tenant's cost, if requested by Landlord, shall remove all cabling and conduit from the riser system or other portions of the Building outside of the Premises and other equipment installed by or on behalf of Tenant in connection with the service to be provided in accordance with this Section XIII. IN WITNESS WHEREOF, Landlord and Tenant have executed this exhibit as of the day and year first above written. LANDLORD: EOP-BUCKHEAD, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY By: EOP Operating Limited Partnership, a Delaware limited partnership, its sole member By: Equity Office Properties Trust, a Maryland real estate investment trust, its managing general partner By: _____________________________ Name: ___________________________ Title: __________________________ TENANT: VIEWLOCITY, INC., A DELAWARE CORPORATION By: _____________________________ Name: _____________________________ Title: _____________________________ 59 EXHIBIT F FORM OF LETTER OF CREDIT This Exhibit is attached to and made a part of the Lease dated _____________, 1999, by and between EOP-BUCKHEAD, L.L.C. ("Landlord") and VIEWLOCITY, INC. ("Tenant") for space in the Building located at 3475 Piedmont Road, NE, Atlanta, Georgia. ------------------------------- [Name of Financial Institution] Irrevocable Standby Letter of Credit No. ______________________ Issuance Date:_____________ Expiration Date:____________ Applicant:__________________ BENEFICIARY EOP-Buckhead, L.L.C. c/o Equity Office Properties Trust 3475 Piedmont Road, NE Atlanta, Georgia 30305 Attn: Building Manager Ladies/Gentlemen: We hereby establish our Irrevocable Standby Letter of Credit in your favor for the account of the above referenced Applicant in the amount of One Million Two Hundred Twelve Thousand Four Hundred Sixty Eight and 06/100 U.S. Dollars ($1,212,468.06) available for payment at sight by your draft drawn on us when accompanied by the following documents: 1. An original copy of this Irrevocable Standby Letter of Credit. 2. Beneficiary's dated statement purportedly signed by one of its officers reading: "This draw in the amount of ______________________ U.S. Dollars ($____________) under your Irrevocable Standby Letter of Credit No. ____________________ represents funds due and owing to us as a result of the Applicant's failure to comply with one or more of the terms of that certain lease by and between EOP-Buckhead, L.L.C., as landlord, and Viewlocity, Inc., as tenant." It is a condition of this Irrevocable Standby Letter of Credit that it will be considered automatically renewed for a one year period upon the expiration date set forth above and upon each anniversary of such date, unless at least sixty (60) days prior to such expiration date or applicable anniversary thereof, we notify you in writing by certified mail, return receipt requested, that we elect not to so renew this Irrevocable Standby Letter of Credit. A copy of any such notice shall also be sent to: Equity Office Properties Trust, 2 North Riverside Plaza, Suite 2200, Chicago, IL 60606, Attention: Treasurer. In addition, provided that you have not provided us with written notice of Applicant's default under the above referenced lease prior to the effective date of any reduction, the amount of this Irrevocable Standby Letter of Credit shall automatically reduce in accordance with the following schedule:
EFFECTIVE DATE OF REDUCTION NEW REDUCED AMOUNT OF LETTER OF CREDIT OCTOBER 15, 2002 $969,974.45 OCTOBER 15, 2003 $727,480.84 OCTOBER 15, 2004 $484,987.23 OCTOBER 15, 2005 $242,493.62 OCTOBER 15, 2006 $0.00
In addition to the foregoing, we understand and agree that you shall be entitled to draw upon this Irrevocable Standby Letter of Credit in accordance with 1. and 2. above in the event that we 60 elect not to renew this Irrevocable Standby Letter of Credit and, in addition, you provide us with a dated statement proportedly signed by one of Beneficiary's officers stating that the Applicant has failed to provide you with an acceptable substitute irrevocable standby letter of credit in accordance with the terms of the above referenced lease. We further acknowledge and agree that: (a) upon receipt of the documentation required herein, we will honor your draws against this Irrevocable Standby Letter of Credit without inquiry into the accuracy of Beneficiary's signed statement and regardless of whether Applicant disputes the content of such statement; (b) this Irrevocable Standby Letter of Credit shall permit partial draws and, in the event you elect to draw upon less than the full stated amount hereof, the stated amount of this Irrevocable Standby Letter of Credit shall be automatically reduced by the amount of such partial draw; and (c) you shall be entitled to assign your interest in this Irrevocable Standby Letter of Credit from time to time without our approval and without charge. In the event of an assignment, we reserve the right to require reasonable evidence of such assignment as a condition to any draw hereunder. This Irrevocable Standby Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 revision) ICC Publication No. 500. We hereby engage with you to honor drafts and documents drawn under and in compliance with the terms of this Irrevocable Standby Letter of Credit. All communications to us with respect to this Irrevocable Standby Letter of Credit must be addressed to our office located at ______________________________________________ to the attention of ________________________________________. Very truly yours, __________________________ __________________________ [NAME] __________________________ [TITLE] 61 EXHIBIT G CRITICAL DATE SCHEDULE
CRITICAL DATE ACTUAL DATE ------------- ----------- 1. Equity releases Architect to commence preparation of Construction Drawings Done --------------------- --------------------- 2. Customer supplies Architect final, approved finish selections 8/13/99 --------------------- --------------------- 3. Architect completes Construction Drawings 8/27/99 --------------------- --------------------- 4. Equity and Customer approve Construction Drawings. Construction Release forwarded to TI and PM 8/30/99 --------------------- --------------------- 5. Equity substantially completes construction 10/14/99 --------------------- --------------------- 6. Premises ready for Customer to begin furniture installation 10/15/99 --------------------- --------------------- 7. Move-in date 10/15/99 --------------------- ---------------------
After commencement of construction drawings (step 1 above), Customer (tenant) driven changes to the approved space plans, or to the construction drawings in process, will be handled as follows: a. Tenant will be responsible for the costs of additional drawings necessary to evaluate pricing alternates. b. Tenant will be responsible for any additional costs associated with revising construction documents to reflect changes. c. Tenant will be responsible for any delay in the above schedule. d. Tenant will be billed for the cost of the changes plus an additional 17% project management fee. 62 EX-10.2 6 ex-10_2.txt EXHIBIT 10.2 EXHIBIT 10.2 FIRST AMENDMENT THIS FIRST AMENDMENT (the "Amendment") is made and entered into as of the 5th day of November, 1999, by and between EOP-BUCKHEAD, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY ("Landlord"), and VIEWLOCITY, INC., A DELAWARE CORPORATION ("Tenant"). RECITALS A. Landlord and Tenant are parties to that certain lease dated concurrently as of the date hereof (the "Lease") for space currently containing approximately 23,827 rentable square feet (the "Premises") described as Suite No. 1700 on the 17th floor of the building commonly known as Prominence in Buckhead and the address of which is 3475 Piedmont Road, NE, Atlanta, Georgia 30305 (the "Building"). B. Pursuant to the Lease, Tenant was required to obtain a Letter of Credit in the amount of $1,212,468.06 that would (i) automatically renew for one year periods until 60 days after the Termination Date of the Lease and (i) reduce upon each anniversary of the initial expiration date of the Letter of Credit, as more fully described in the Lease, and a copy of which intended Letter of Credit is attached as Exhibit F of the Lease. At this time, Tenant is only able to obtain a Letter of Credit in the amount of $1,212,468.06, good for one year and without automatic renewals (the "Initial Letter of Credit"). However, Tenant intends to replace the Initial Letter of Credit with a Letter of Credit in the form required by the Lease prior to expiration of the Initial Letter of Credit. C. Tenant and Landlord mutually desire that the Lease be amended on and subject to the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows: I. AMENDMENT. Landlord and Tenant agree that the Lease shall be amended in accordance with the following terms and conditions: A. Effective as of the date of the Lease, Landlord and Tenant agree that, notwithstanding anything to the contrary contained in the Lease, the Letter of Credit to be delivered by Tenant as the initial Letter of Credit required under the Lease shall be in the form of the Letter of Credit attached hereto as EXHIBIT A (the "Initial Letter of Credit"). However, Landlord is entitled to, and Tenant agrees to provide, Landlord with a replacement Letter of Credit substantially in the form attached hereto as EXHIBIT B (the "Replacement Letter of Credit"). If Tenant fails to deliver the Replacement Letter of Credit to Landlord, in form satisfactory to Landlord, on or before 60 days prior to the expiration date of the Initial Letter of Credit, then it shall be deemed a default of Tenant under the Lease and Landlord, as its sole remedy, may immediately draw upon the Initial Letter of Credit in its entirety, without notice to Tenant, and apply and/or hold the proceeds thereof as a Security Deposit in accordance with Section VI of the Lease. II. MISCELLANEOUS. A. This Amendment sets forth the entire agreement between the parties with respect to the matters set forth herein. There have been no additional oral or written representations or agreements. Except as herein modified or amended, the provisions, conditions and terms of the Lease shall remain unchanged and in full force and effect. In the case of any inconsistency between the provisions of the Lease and this Amendment, the provisions of this Amendment shall govern and control. B. Submission of this Amendment by Landlord is not an offer to enter into this Amendment but rather is a solicitation for such an offer by Tenant. Landlord shall not be bound by this Amendment until Landlord has executed and delivered the same to Tenant. C. The capitalized terms used in this Amendment shall have the same definitions as set forth in the Lease to the extent that such capitalized terms are defined therein and not redefined in this Amendment. D. Tenant hereby represents to Landlord that Tenant has dealt with no broker in connection with this Amendment. Tenant agrees to indemnify and hold Landlord, its members, principals, beneficiaries, partners, officers, directors, employees, mortgagee(s) and agents, and the respective principals and members of any such agents (collectively, the "Landlord Related Parties") harmless from all claims of any brokers claiming to have represented Tenant in connection with this Amendment. Landlord hereby represents to Tenant that Landlord has dealt with no broker in connection with this Amendment. Landlord agrees to indemnify and hold Tenant, its members, principals, beneficiaries, partners, officers, directors, employees, and agents, and the respective principals and members of any such agents (collectively, the "Tenant Related Parties") harmless from all claims of any brokers claiming to have represented Landlord in connection with this Amendment. IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of the day and year first above written. LANDLORD: EOP-BUCKHEAD, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY By: EOP Operating Limited Partnership, a Delaware limited partnership, its sole member By: Equity Office Properties Trust, a Maryland real estate investment trust, its managing general partner By: ------------------------------- Name: ----------------------------- Title: ---------------------------- TENANT: VIEWLOCITY, INC., A DELAWARE CORPORATION By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- EXHIBIT A ProForma of Initial Letter of Credit APPLICANT: VIEWLOCITY , INC. 400 PERIMETER CENTER TERRACE ATLANTA, GA 30346 BENEFICIARY: EOP - BUCKHEAD, L.L.C. C/O EQUITY OFFICE PROPERTIES TRUST 3475 PIEDMONT ROAD, NE ATLANTA, GA 30305 ATTN: BUILDING MANAGER AMOUNT: USD1,212,468.06 EXPIRY DATE AND PLACE FOR PRESENTATION OF DOCUMENTS: OCTOBER 27, 2000 IMPERIAL BANK INTERNATIONAL DIVISION, 2015 MANHATTAN BEACH BLVD., 2ND FLR., REDONDO BEACH, CA 90278 CREDIT IS AVAILABLE WITH IMPERIAL BANK INTERNATIONAL DIVISION AGAINST PAYMENT OF DRAFTS DRAWN AT SIGHT ON IMPERIAL BANK INTERNATIONAL DIVISION, 2015 MANHATTAN BEACH BLVD., 2ND FLR., REDONDO BEACH, CA 90278 DOCUMENTS REQUIRED: 1. THE ORIGINAL OF THIS IRREVOCABLE STANDBY LETTER OF CREDIT AND AMENDMENT(S) IF ANY. 2. BENEFICIARY'S STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED OFFICER CERTIFYING THAT THIS DRAW IN THE AMOUNT OF [INSERT AMOUNT] UNDER IRREVOCABLE STANDBY LETTER OF CREDIT NO. [INSERT L/C NO.] REPRESENTS FUNDS DUE AND OWING TO EOP-BUCKHEAD, L.L.C. AS A RESULT OF VIEWLOCITY, INC.'S FAILURE TO COMPLY WITH ONE OR MORE OF THE TERMS OF THAT CERTAIN LEASE BY AND BETWEEN EOP-BUCKHEAD, L.L.C., AS LANDLORD, AND VIEWLOCITY, INC., AS TENANT. SPECIAL CONDITIONS: ALL INFORMATION REQUIRED UNDER DOCUMENT REQUIREMENT NO. 2 WHETHER INDICATED BY BLANKS, BRACKETS OR OTHERWISE, MUST BE COMPLETED AT THE TIME OF DRAWING. ALL SIGNATURES MUST BE MANUALLY EXECUTED ORIGINALS. PARTIAL DRAWINGS MAY BE MADE UNDER THIS LETTER OF CREDIT, PROVIDED, HOWEVER, THAT EACH SUCH DEMAND THAT IS PAID BY US SHALL REDUCE THE AMOUNT AVAILABLE UNDER THIS LETTER OF CREDIT. THIS LETTER OF CREDIT IS TRANSFERABLE IN WHOLE ONLY. YOU MAY TRANSFER THIS LETTER OF CREDIT TO YOUR TRANSFEREE OR SUCCESSOR UPON SATISFACTORY DELIVERY AND PRESENTATION TO THE ISSUING BANK OF (1) THE ORIGINAL STANDBY L/C AND AMENDMENTS, IF ANY, FOR PROPER ENDORSEMENT (2) A REQUEST FOR TRANSFER ON THE ISSUER'S USUAL TRANSFER FORM (3) VERIFICATION OF SIGNATURE AND AUTHORITY ON SUCH TRANSFER FORM SIGNING FOR THE BENEFICIARY (4) PAYMENT OF A TRANSFER FEE, OUR CURRENT STANDARD FEE IS 1/4%, MINIMUM USD150.00 AND (5) ANY OTHER REQUIREMENTS RELATIVE TO THE UCP 500 AND U.S. GOVERNMENT REGULATIONS. ALL DRAFTS AND DOCUMENTS REQUIRED UNDER THIS LETTER OF CREDIT MUST BE MARKED: "DRAWN UNDER IMPERIAL BANK LETTER OF CREDIT NO. [INSERT L/C NO.]" ALL COMMUNICATIONS TO IMPERIAL BANK WITH RESPECT TO THIS IRREVOCABLE STANDBY LETTER OF CREDIT MUST BE ADDRESSED TO OUR OFFICE LOCATED AT 2015 MANHATTAN BEACH BLVD., 2ND FLR., REDONDO BEACH, CA 90278, TO THE ATTENTION OF THE INTERNATIONAL DIVISION, STANDBY L/C DEPT. ALL DOCUMENTS ARE TO BE DISPATCHED IN ONE LOT BY COURIER SERVICE TO IMPERIAL BANK INTERNATIONAL DIVISION, 2015 MANHATTAN BEACH BLVD., 2ND FLR., REDONDO BEACH, CA 90278, TO THE ATTENTION OF THE INTERNATIONAL DIVISION, STANDBY L/C DEPT. THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING AND SUCH UNDERTAKING SHALL NOT BE IN ANY WAY MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE TO ANY DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO HEREIN OR IN WHICH THIS LETTER OF CREDIT IS REFERRED TO OR TO WHICH THIS LETTER OF CREDIT RELATES, AND ANY SUCH REFERENCE SHALL NOT BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY DOCUMENT, INSTRUMENT OR AGREEMENT. WE HEREBY ENGAGE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS CREDIT WILL BE DULY HONORED IF DRAWN AND PRESENTED FOR PAYMENT AT THIS OFFICE ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT. EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED, THIS CREDIT IS SUBJECT TO THE "UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS" (1993 REVISION) INTERNATIONAL CHAMBER OF COMMERCE (PUBLICATION NO. 500). EXHIBIT B ProForma Replacement Letter of Credit APPLICANT: VIEWLOCITY , INC. 400 PERIMETER CENTER TERRACE ATLANTA, GA 30346 BENEFICIARY: EOP - BUCKHEAD, L.L.C. C/O EQUITY OFFICE PROPERTIES TRUST 3475 PIEDMONT ROAD, NE ATLANTA, GA 30305 ATTN: BUILDING MANAGER AMOUNT: USD 1,212,468.06 EXPIRY DATE AND PLACE FOR PRESENTATION OF DOCUMENTS: December 31, 2001, at [INSERT NAME AND ADDRESS OF ISSUING BANK] CREDIT IS AVAILABLE WITH [INSERT NAME OF ISSUING BANK] AGAINST PAYMENT OF DRAFTS DRAWN AT SIGHT ON [INSERT NAME AND ADDRESS OF ISSUING BANK] DOCUMENTS REQUIRED: 1. THE ORIGINAL OF THIS IRREVOCABLE STANDBY LETTER OF CREDIT AND AMENDMENT(S) IF ANY. 2. BENEFICIARY'S STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED OFFICER CERTIFYING THAT THIS DRAW IN THE AMOUNT OF [INSERT AMOUNT] UNDER IRREVOCABLE STANDBY LETTER OF CREDIT NO. [INSERT L/C NO.] REPRESENTS FUNDS DUE AND OWING TO EOP-BUCKHEAD, L.L.C. AS A RESULT OF VIEWLOCITY, INC.'S FAILURE TO COMPLY WITH ONE OR MORE OF THE TERMS OF THAT CERTAIN LEASE BY AND BETWEEN EOP-BUCKHEAD, L.L.C., AS LANDLORD, AND VIEWLOCITY, INC., AS TENANT. SPECIAL CONDITIONS: ALL INFORMATION REQUIRED UNDER DOCUMENT REQUIREMENT NO. 2 WHETHER INDICATED BY BLANKS, BRACKETS OR OTHERWISE, MUST BE COMPLETED AT THE TIME OF DRAWING. ALL SIGNATURES MUST BE MANUALLY EXECUTED ORIGINALS. PARTIAL DRAWINGS MAY BE MADE UNDER THIS LETTER OF CREDIT, PROVIDED, HOWEVER, THAT EACH SUCH DEMAND THAT IS PAID BY US SHALL REDUCE THE AMOUNT AVAILABLE UNDER THIS LETTER OF CREDIT. IT IS A CONDITION OF THIS STANDBY LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY EXTENDED WITHOUT AMENDMENT FOR ONE YEAR PERIODS FROM THE PRESENT EXPIRATION DATE HEREOF, UNLESS SIXTY (60) DAYS PRIOR TO ANY SUCH DATE, WE SHALL NOTIFY YOU IN WRITING BY CERTIFIED MAIL OR COURIER SERVICE AT THE ABOVE LISTED ADDRESS THAT WE ELECT NOT TO CONSIDER THIS IRREVOCABLE LETTER OF CREDIT RENEWED FOR ANY SUCH ADDITIONAL PERIOD. A COPY OF ANY SUCH NOTICE SHALL ALSO BE SENT TO: EQUITY OFFICE PROPERTIES TRUST, 2 NORTH RIVERSIDE PLAZA, STE. 2200, CHICAGO, IL 60606 ATTN: TREASURER. UPON RECEIPT BY YOU OF SUCH NOTICE, YOU MAY DRAW HEREUNDER BY MEANS OF YOUR DRAFT(S) ON US AT SIGHT ACCOMPANIED BY YOUR ORIGINAL SIGNED STATEMENT WORDED AS FOLLOWS: [BENEFICIARY] HAS RECEIVED NOTICE FROM [INSERT NAME OF ISSUING BANK] THAT THE EXPIRATION DATE OF LETTER OF CREDIT NO. [INSERT L/C NO.] WILL NOT BE EXTENDED FOR AN ADDITIONAL PERIOD. AS OF THE DATE OF THIS DRAWING, [BENEFICIARY] HAS NOT RECEIVED A SUBSTITUTE LETTER OF CREDIT OR OTHER INSTRUMENT ACCEPTABLE TO [BENEFICIARY] AS SUBSTITUTE FOR [INSERT NAME OF ISSUING BANK] LETTER OF CREDIT NO. [INSERT L/C NO.] THE PROCEEDS OF THIS DRAWING WILL BE APPLIED TO SATISFY ANY CLAIMS, INTEREST AND CHARGES OUTSTANDING RELATIVE TO THE OBLIGATIONS DUE FROM VIEWLOCITY, INC. OR OTHERWISE HELD AS A SECURITY DEPOSIT PURSUANT TO THE LEASE. NOTWITHSTANDING THE ABOVE, THE FINAL EXPIRATION DATE SHALL BE DECEMBER 31, 2009. THIS IRREVOCABLE STANDBY LETTER OF CREDIT WILL BE AUTOMATICALLY REDUCED TO SPECIFIC AMOUNTS OUTLINED AS FOLLOWS, PROVIDING A DRAWING OR DRAWINGS DID NOT TAKE PLACE IN ACCORDANCE WITH THE TERMS OF THE LETTER OF CREDIT AND THE BALANCE OUTSTANDING IS AVAILABLE UNDER THIS LETTER OF CREDIT TO CAUSE SUCH REDUCTION(S) TO OCCUR, UNLESS BENEFICIARY HAS DELIVERED TO ISSUER A STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED PARTY OF BENEFICIARY CERTIFYING THAT THERE IS A DEFAULT UNDER THE LEASE. DATE L/C AMOUNT OCTOBER 15, 2002 USD969,974.45 OCTOBER 15, 2003 USD727,480.84 OCTOBER 15, 2004 USD484,987.23 OCTOBER 15, 2005 USD242,493.62 OCTOBER 15, 2006 USD10.00 THIS LETTER OF CREDIT IS TRANSFERABLE IN WHOLE ONLY. YOU MAY TRANSFER THIS LETTER OF CREDIT TO YOUR TRANSFEREE OR SUCCESSOR UPON SATISFACTORY DELIVERY AND PRESENTATION TO THE ISSUING BANK OF (1) THE ORIGINAL STANDBY L/C AND AMENDMENTS, IF ANY, FOR PROPER ENDORSEMENT (2) A REQUEST FOR TRANSFER ON THE ISSUER'S USUAL TRANSFER FORM (3) VERIFICATION OF SIGNATURE AND AUTHORITY ON SUCH TRANSFER FORM SIGNING FOR THE BENEFICIARY (4) PAYMENT OF OUR STANDARD TRANSFER FEE, OUR CURRENT STANDARD FEE IS [ISSUING BANK IS TO INSERT THE STANDARD TRANSFER FEE HERE] AND (5) ANY OTHER REQUIREMENTS RELATIVE TO THE UCP 500 AND U.S. GOVERNMENT REGULATIONS. ALL DRAFTS AND DOCUMENTS REQUIRED UNDER THIS LETTER OF CREDIT MUST BE MARKED: "DRAWN UNDER [INSERT NAME OF ISSUING BANK HERE] LETTER OF CREDIT NO. [INSERT L/C NO.]" ALL COMMUNICATIONS TO [INSERT NAME OF ISSUING BANK HERE] WITH RESPECT TO THIS IRREVOCABLE STANDBY LETTER OF CREDIT MUST BE ADDRESSED TO OUR OFFICE LOCATED AT [INSERT NAME AND ADDRESS OF ISSUING BANK HERE], TO THE ATTENTION OF [INSERT NAME OF THE ISSUING BANK'S LETTER OF CREDIT DEPARTMENT HERE] ALL DOCUMENTS ARE TO BE DISPATCHED IN ONE LOT BY COURIER SERVICE TO [INSERT NAME AND ADDRESS OF ISSUING BANK HERE], ATTN: [INSERT NAME OF ISSUING BANK'S LETTER OF CREDIT DEPARTMENT HERE]. THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OF OUR UNDERTAKING AND SUCH UNDERTAKING SHALL NOT BE IN ANY WAY MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE TO ANY DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO HEREIN OR IN WHICH THIS LETTER OF CREDIT IS REFERRED TO OR TO WHICH THIS LETTER OF CREDIT RELATES, AND ANY SUCH REFERENCE SHALL NOT BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY DOCUMENT, INSTRUMENT OR AGREEMENT. WE HEREBY ENGAGE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS CREDIT WILL BE DULY HONORED IF DRAWN AND PRESENTED FOR PAYMENT AT THIS OFFICE ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT. EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED, THIS CREDIT IS SUBJECT TO THE "UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS" (1993 REVISION) INTERNATIONAL CHAMBER OF COMMERCE (PUBLICATION NO. 500). EX-10.3 7 ex-10_3.txt EXHIBIT 10.3 EXHIBIT 10.3 RENTAL CONTRACT Page 1 (2) FOR PREMISES SWEDEN'S PROPERTY OWNERS No. 32058-1007 The undersigned has entered into the following rental agreement on this day. Check the square if the subsequent text applies. - ---------------- ----------------------------------------------------------------------------------- ----------------------- Landlord Signed [Initials] FAB FISKETORGET gm MALARTORNET AB - ---------------- ----------------------------------------------------------------------------------- ----------------------- Tenant Personal Identification Number Signed FRONTEC AMT AB 556209-9829 [Initials] - ---------------- ---------------------------------- ------------------------------------------------------------------------ Address of Municipality District/neighborhood premises Solna Noten 4 - ---------------- ---------------------------------------------------------------------- ----------- ------------------------ Street Floor Apartment No. Tritonvagen 17 - ---------------- ---------------------------------------------------------------------- ----------- ------------------------ Condition and Unless otherwise specified, the premises and corresponding space is to use of premises be rented out in its existing condition to be uses as : Office - ---------------- -------------------------------------------------------------------------- -------------------------------- Size and Shop area Office area on Storage area on Other areas dimensions of -------------------------------------------------------------------------- -------------------------------- premises floor m2 floor m2 ca floor m2 floor m2 floor m2 5 1608 - ---------------- ---------------------------------------------------------------------------------------- ------------------ Appendix X The dimensions of the premises to be rented have been indicated on the attached 5 diagrams. - ---------------- ---------------------------------------------------------------------------------------- ------------------ Parking Garage spaces Outside house Road access for Signage Space for display space(s) for for loading and space case/vending unloading vehicles. machine car(s) car(s) - ---------------- ------------------------------------------------------------------------- ------------------ -------------- Furnishing Premises rents Upon termination Appendix 5 of the rental relationship, the Tenant shall remove their own furnishings and X without special furnishings with special furnishings as shall leave the attached. premises in an acceptable condition, unless otherwise agreed. - ---------------- ------------------------------------------------------------------------- --------------------------------- Contract Period From To October 1, 1999 September 30, 2002 - ---------------- ------------------------------------------------------------------------- --------------------------------- Notification prior to the end of the rental period Cancellation of this contract shall be made period, otherwise the contract Extension with written notification at least appendix 4 months is renewed years each period time. - ---------------- ----------------------------------------------------------------------------------------------------------- Rent Kroner: 2,010,000.00 per year total rent X rent excluding additional payments marked below - ---------------- ----------------------------------------------------------------------------- ----------------------------- Indexing clause X The rent indicated above can be changed in accordance with the attached Appendix indexing clause. 1 - ---------------- ----------------------------------------------------------------- ----------------------------------------- Heat and hot Necessary heating for the premises is the responsibility of: Hot water is supplied water X Landlord Tenant X entire year not at all - ---------------- ----------------------------------------------------------------------------------------- -----------------
Cost Appendix Fuel/Additional heating charge is to be paid as per the attached indexing clause. - ---------------- ----------------------------------------------------------------------------------------- ----------------- Additional Appendix water fee Additional water fee to be paid as per the attached clause. - ---------------- ----------------------------------------------------------------------------------------- ----------------- Cooling/ The costs for operating special air conditioning or ventilation equipment are to be Appendix Ventilation reimbursed as per the attached clause. - ---------------- ----------------------------------------------------------------------------------------------------------- Electricity Included in rent X Tenant has own subscription - ---------------- ----------------------------------------------------------------------------------------------------------- Cleaning stairwell X Included in rent paid for by the Tenant - ---------------- ----------------------------------------------------------------------------------------------------------- Packing and collecting X included in rent paid for and dealt with by the Tenant garbage (however, the Landlord is responsible for supplying garbage cans and the necessary space to store garbage). - ---------------- ----------------------------------------------------------------------------------------------------------- Snow removal and sanding X included in the rent taken care of and paid for by the Tenant - ---------------- ----------------------------------------------------------------------------------------- ----------------- Real estate tax included in rent X paid for according to special agreement. Appendix 2 - ---------------- ----------------------------------------------------------------------------------------------------------- Unforeseen If unforeseen cost increases for the property appear after signing the agreement, due to costs a) Introduction or increase in taxes, fees or other additional charges specifically for the property as decreed by the Swedish Parliament, the government, municipality or other authority. b) General improvements or similar measures to the property, which do not solely involve the premises and which the Landlord is required to complete as a result of decision made by the Swedish Parliament, the government, the municipality, or other authority the Tenant shall compensate the Landlord for the portion of the total annual cost increase for the property corresponding to the premises in question, which are the result of the new cost increases. The portion for the premises is percent (if the portion is not indicated, it is calculated in relation to the property's payable rent at the time of the cost increase.) The tax according to a) does not concern value added tax and real estate tax, to the extent that the compensation heretofore is paid in accordance with the special agreement above. The compensation is paid according to the rules below for paying rent. - ---------------- ----------------------------------------------------------------------------------------------------------- - ---------------- ----------------------------------------------------------------------------------------------------------- Value Added X The property owner/Landlord is responsible for the VAT for renting out the premises. The Tenant shall, Tax (VAT) in addition to the rent, pay any applicable VAT in each case. If, based on the decision of the tax authorities, the property owner/Landlord is liable for the VAT for renting the premises, the Tenant shall, in addition to rent, pay any applicable VAT in each case. That which is paid at the same time as the rent is calculated into the total rent specified according to the applicable rules for VAT on rent in each case, and according to the rental contract for payable fees and other payments in applicable cases. - ---------------- -----------------------------------------------------------------------------------------------------------
SWEDEN'S PROPERTY OWNER'S UNION, FORM NO. 12A ISSUED 1991 IN CONSULTATION WITH SWEDISH UNION OF MERCHANTS/TENANTS AND NATIONAL BUSINESS ORGANIZATION, DOCUMENTCONCEPT AB 97.04 Reprinting prohibited SWEDEN'S PROPERTY OWNERS INDEX CLAUSE for premises Appendix 1 See page two for instructions. - ----------------------- ----------------------------------------------------------------------------------------------- Regarding Rental Contract No. for the property at 32058-1007 Kv. Noten 4, Solna - ----------------------- ----------------------------------------------------------------------------------------------- Landlord FAB FISKETORGET gm MALARTORNET AB - ----------------------- ----------------------------------------------------------------------------------------------- Tenant FRONTEC AMT AB - ----------------------- ----------------------------------------------------------------------------------------------- Clause Of the amount of rent indicated in the contract shall 100 % or 2,010,000 kroner make up the base rent. During the rental period, in relation to changes in the consumer price index (with 1980 as base year), additional charges to the rent shall be payable with a certain percentage added to the base rent according to the reasons given below. For rental agreements starting anytime between January 1 - June 30, the base rent is adjusted to the index for October of the previous year. For rental agreements starting anytime between July 1 - December 31, the base rent is adjusted instead to the index value for October of the same year. The index number for the month of October, to which the based rent is adjusted above, constitutes the base number, to the extent that nothing else has not been agreed upon during the year. The agreed base number, namely the index for October 1999. If, during some subsequent October, the index should have risen by at least three (3) points in relation to the base number, additional charges shall be payable based on the percentage number by which the index is adjusted in relation to the base number. From then on, additional charges shall be payable in relation to changes in the index, whereby the change in rent is calculated on the basis of the percentage change between the base number and the index number for the respective month of October. In order for the change in rent to subsequently occur, the index for October shall be raised or lowered by at least three (3) points in relation to the index number, which was applicable at the last instance when the rent was adjusted according to this clause. However, payable rent shall never be set lower than the amount of rent indicated in the contract. Changes to the rent apply always from January 1 after the October index has been recalculated. - ----------------------- -------------------------------------------------------------- -------------------------------- Signature Place/Date Place/Date Stockholm, July 5, 1999 Solna, July 5 1999 - ----------------------- -------------------------------------------------------------- -------------------------------- Landlord Tenant MALARTORNET AB FRONTEC AMT AB (Signature) -------------------------------- Tenant (Signature) - ----------------------- -------------------------------------------------------------- --------------------------------
Landlord's notes regarding base number: Base number at the start of rental agreement: unknown (October 1999) SWEDEN'S PROPERTY OWNERS UNION, FORM NO. 60 ISSUED 1994 IN CONSULTATION WITH SWEDISH UNION OF MERCHANTS / TENANTS AND NATIONAL BUSINESS ORGANIZATION, INTELLIGENT DOCUMENT SYSTEMS AB 96.01 Reprinting prohibited SWEDEN'S PROPERTY OWNERS REAL ESTATE TAX CLAUSE for premises Appendix 2 - ------------------ --------------------------------------------------------------------------------------------------------- Regarding Rental Contract No. for the property at 32058-1007 Kv. Noten 4, Solna - ------------------ --------------------------------------------------------------------------------------------------------- Landlord FAB FISKETORGET gm MALARTORNET AB - ------------------ --------------------------------------------------------------------------------------------------------- Tenant FRONTEC AMT AB - ------------------ --------------------------------------------------------------------------------------------------------- - ------------------ --------------------------------------------------------------------------------------------------------- Clause Suitable alternatives are marked with an X in the box and have the required amounts filled in. To the extent that those parts of the property which constitute the premises become/are subject to real estate tax, the Tenant shall compensate the Landlord for this along with the rent according to the alternative marked below. X In addition to the rent indicated in the contract, the Tenant shall pay compensation for their portion of any payable real estate for the premises. The Tenant's portion shall be considered to be percent. According to the provisions, which are known at the time of signing the agreement, the compensation that the Tenant shall pay at the start of the rental period is 183, 412 kroner. Compensation for the premises' portion of the real estate tax is included in the rent indicated in the agreement and amounts to kr at the time the agreement is signed. The premises' portion of the real estate tax shall be considered to be percent. The Tenant shall pay compensation, after signing the agreement, for his portion of any changes (regardless of the reason why) to the real estate tax for the premises, to the extent that the tax exceeds the amount of real estate tax compensation that is included in the rent. Should the real estate tax increase/cease so that the Tenant's portion of the compensation falls below the compensation that is included in the rent provided in the agreement as above, the original amount of rent shall still be payable, at a minimum. Thus, other clauses in the agreement (e.g. index) can mean that the total amount of rent that the Tenant pays is/can be higher than the total amount of rent indicated in the agreement. The Tenant's portion indicated above that will be unchanged during the rental period was calculated according to the following: .............................. .............................. .............................. The instructions printed on the overleaf apply to the agreement - ------------------ ------------------------------------------------------------------------- ------------------------------- Signature Place/Date Place/Date Stockholm, July 5, 1999 Solna, July 5 1999 - ------------------ ------------------------------------------------------------------------- ------------------------------- Landlord Tenant MALARTORNET AB FRONTEC AMT AB (Signature} - ------------------ ------------------------------------------------------------------------- ------------------------------- Tenant (Signature) - ------------------ ------------------------------------------------------------------------- -------------------------------
SWEDEN'S PROPERTY OWNERS UNION, FORM NO. 78 ISSUED 1995. REPRINTING FORBIDDEN. INTELLIGENT DOCUMENT SYSTEMS AB 96.01 EX-10.4 8 ex-10_4.txt EXHIBIT 10.4 Exhibit 10.4 DATED THIS DAY Of 28 Oct. 1999 BETWEEN CPL ALEXANDRA POINT PTE LTD AND VIEWLOCITY ASIA PACIFIC PTE LTD LEASE AGREEMENT YCF.nsa.1-999-L4385 KHATTAR WONG & PARTNERS SINGAPORE THIS LEASE is made the 28 day of October One Thousand Nine Hundred and Ninety Nine (1999) between CPL ALEXANDRA POINT PTE LTD (formerly known as TIGER DEVELOPMENTS PTE LTD), a company incorporated in the Republic of Singapore and having its registered office at #21 -00 Alexandra Point, 438 Alexandra Road, Singapore 119958 ("the Lessor") of the one part And VIEWILOCITY ASIA PACIFIC PTE LTD (COMPANY REGISTRATION NO.1 99601493G ), a company incorporated in Singapore and having its registered office at No. 51 Goldhill Plaza, #18-05 Goldhill Plaza, Singapore 308900 ("the Lessee") of the other part. WITNESSETH as follows:- Demise 1. In consideration of the rents and service charges hereinafter reserved and the Lessee's covenants hereinafter contained, the Lessor hereby lets and the Lessee hereby takes ALL the premises more particularly described in the First Schedule hereto (hereinafter called "the Premises") being part of the building situate at 438 Alexandra Road, Singapore and presently known as ALEXANDRA POINT (hereinafter called 'the Building") together with (but to the exclusion of all other liberties easements (rights or advantages and subject always to the Lessor's right to refuse access hereinafter contained): (a) the right for the Lessee and others duly authorised by the Lessee but only so far as necessary and as the Lessor can lawfully grant the same of ingress to and egress from the Premises in over and along all the usual entrances landings passenger lifts and passageways leading thereto in common with the Lessor and all others so authorised by the Lessor and all other persons entitled thereto. (b) the eight for the Lessee and others duly authorised by the Lessee to the use of such sufficient toilet facilities in the Building as shall be designated from time to time by the Lessor but such use shall be in common with the Lessor and all others so autho6sed by the Lessor and all other persons so entitled thereto. - 2 - Excepting and Reserving unto the Lessor the free and uninterrupted use of all Pipes in through above or under the Premises TO HOLD the PREMISES unto the Lessee from the Ist day of May 2000 (hereinafter called "the Commencement Date") for a term ending on the 30th day of APRIL 2003. (hereinafter called "the Term') YIELDING AND PAYING THEREFOR unto the Lessor during the Term : Rent (1) the monthly rent of Dollars ELEVEN THOUSAND EIGHT HUNDRED SIXTY SIX and Cents Seventy Only ($11,866.70) (such amount to be hereinafter called "the Tent") calculated at the rate of Dollars Two and Cents Sixty-Five Only ($2.65) per square foot per month; and Service (2) the monthly service charge of Dollars Four Thousand Seven Hundred Charge and One and Cents Ninety Only ($4,701.90) or such other amount upon revision pursuant to Clause 2 (such amount or other amount to be hereinafter called "the service charge"); both the rent and service charge to be payable monthly in advance without any deduction whatsoever on the first day of each and every month, the first payment of the rent to be made on the Ist day of May 2000 and the first payment of the service charge to be made on the 1st day of December 1999, and thereafter each subsequent payment of the rent and service charge to be made on the first day of every succeeding month PROVIDED that in the event the Commencement Date falls on a day other than the first day of a month, the Lessee shall pay to the Lessor pro-rated rent and service charge calculated from and including the Commencement Date up to the day immediately before the first day of the following month and thereafter all payments shall be made on the first day of each month. For the avoidance of doubt, the opinion of the Lessor that the Lessee is deemed to have commenced business operations referred to above shall be final, conclusive and binding on the Lessee. Calculation (2) The service charge of DOLLARS FOUR THOUSAND SEVEN service HUNDRED AND ONE AND CENTS NINETY ONLY ($4,701.90) per charge service month is calculated at the rate of DOLLARS ONE AND CENTS FIVE charge (S1.05) PER SQUARE FOOT per month of the area of the Premises estimated for the purpose of commencement of the Term as representing the apportioned outgoings of the Building attributable to the Premises and shall be subject to the following provisions :- Revision of (1) The service charge is an estimate only and the Lessor service shall be entitled at any time and from time to time during charge the term to revise the service charge by serving a notice on the Lessee of such intention, At the commencement of each year on 1st January, the Lessor shall be entitled to pre-estimate the costs of services and outgoings for that year and collect the amount attributable to the Premises, such amount to be adjusted upon issue of the accountant's certificate hereinafter mentioned. Payment of (2) If on revision there is any increase in the outgoings; of revised the Building, the Lessee shall pay an additional service service charge in each and every month representing the apportioned extra charge outgoings of the Building as is attributable to the Premises at the same time and in the same manner as hereinbefore mentioned with regard to the service charge and such increase shall take effect as from the date specified in the said notice. For the purpose of ascertaining the additional service charge payable under the provision aforesaid all increases in the outgoings of the Building shall be apportioned in the proportion by which the floor area of the Premises bears to the total area of the rentable floor space of the Building including any floor space occupied by the Lessor and a statement by the Lessor as to the increase of the outgoings of the Building and the apportionment thereof shall be accepted by the Lessee as final and binding. Outgoings (3) The term "outgoings of the Building" where used in this Agreement shall mean the total sum of all outgoings, costs and expenses of the Lessor assessed or assessable, charged or chargeable, paid or payable or otherwise incurred in respect of the Building and the land on which it is erected, the control, management and maintenance thereof and the provision of the services for lessees or occupiers of the Building and in particular but without limiting the generality of the foregoing shall include - (a) all amounts payable in respect of insurances relating to the Building and all fittings and fixtures plant machinery equipment and appliances therein in their full insurable reinstatement value against fire and such other risks as the Lessor may deem necessary or desirable and in respect of public liability insurance; (b) all charges for and costs in relation to the supply of water and removal or disposal of sewerage waste and other garbage from the Building and the land on which it is erected; (c) all charges for gas oil electricity light power fuel telephone and other services, or requirements fumished or supplied to the Building for the general benefit or purposes of the Building; (d) the costs of cleaning the exterior of the Building (including the windows) and of re-painting, repairing and maintaining the Common Area and the costs of landscaping and other environmental improvements on or to the Building and the land on which it is erected; (e) the expenses of the Lessor in supplying paper, soap and other toilet requisites in the toilets; (f) the costs of operating and supplying all services from time to time provided by the Lessor for lessees and occupiers of the Building including security escalator-s lifts and air-conditioning, and of the maintenance and amortization of the Building, and the plant machinery equipment and appliances therein; (g) all costs of management control and administration of the Building including salaries and wages of clerical maintenance security and traffic control personnel and other supervisory staff as well as all fees payable to the auditors accountants managing agent and other consultants; (h) the costs of compliance with any order or notice served on the Lessor by any government or statutory authority in respect of any part of the Building or any part of the land on which it is erected; (i) such sum in each year as the Lessor may decide to set aside as a fund to cover repairs renovations replacements and maintenance of the Building and the plant machinery and equipment therein including escalators lifts and air-conditioning plant and the depreciation and any replacement thereof. Deposit 3. (1) The Lessee shall pay on or before the signing of this Lease or on the date when possession of the Premises is delivered to the Lessee, whichever is the earlier and maintain throughout the Term, a sum equivalent to THREE (3) MONTHS' RENT AND SERVICE CHARGE (hereinafter called "the deposit") which shall be held by the Lessor as security for the due observance and performance by the Lessee of all and singular the several covenants conditions stipulations and agreements on the part of the Lessee herein contained, (2) if the Lessee shall at any time fail to observe or perform any of his obligations and agreements herein contained, the Lessor may, at its option, appropriate and apply all or any part of the deposit to compensate the Lessor for its loss or damage or provide for any contingent liability incurred by the Lessor arising from the breach of any of the obligations and agreements on the part of the Lessee to be observed and performed. (3) Any appropriation by the Lessor of the deposit in terms of sub-clause (2) of this Clause shall not be deemed to be a waiver by the Lessor of any non-payment non-observance or non-performance on the part of the Lessee and shall not preclude the Lessor from exercising any of its other rights and remedies. (4) In the event the Lessor appropriates or applies the deposit in terms of sub-clause (2) of this Clause, the Lessee shall immediately pay to the Lessor a sufficient amount to restore the deposit to the amount equivalent to three (3) months' rent and service charge. (5) In the event the service charge shall be increased by the Lessor upon revision under Clause 2 hereof the Lessee shall pay to the Lessor the difference between the equivalent of three (3) months' service charge so increased and the equivalent of the original three (3) months' service charge as additional security. (6) The Lessee shall not be entitled to off-set any rent and service charge due hereunder against all or any part of the deposit. (7) The deposit shall be refunded to the Lessee (free of interest) within fourteen (14) days after the expiry or sooner determination n of the Term subject to any deduction for any breach or non-observance of the covenants and conditions on the part of the Lessee to be observed and performed herein contained. Fitting Out (1) The Lessee will carry out and complete the Lessee's fitting 3A. out works during the period commencing on THE IST NOVEMBER 1999 (or such later date as the Lessor may notify the Lessee) and ending on the 30TH DAY OF APRIL 2000 (hereinafter called "fitting out period"). (2) The Lessee will be bound by and Will comply with the provisions relating to the Lessee's fitting out works set out in the Second Schedule hereto. (3) The Lessee will pay to the Lessor on demand the cost of making good any damage to the Premises or the Building or any part thereof caused by the Lessee his servant Agent or contractor, (4) The Lessee will be liable for and shall indemnify the Lessor against any expense, liability, loss, claim or proceedings in respect of personal injury to or death to any persons whomsoever or any damage or destruction whatsoever to any property real or personal (including any damage to the Building or any part thereof arising out of or in connection with the Lessee's fitting out works. Lessee's 4. The Lessee hereby covenants with the Lessor as follows: covenants Rent (1) To pay the rent and service charge hereby reserved and service on the days and in the manner aforesaid without any charge deduction or demand whatsoever. Deposit (2) To pay the deposit in accordance with Clause 3 hereof Increase (3) Upon the renewal of the Term in accordance with Clause 5(12) In property herein, to pay as and when required by the Lessor the additional sum in respect of property tax or other imposition of a like nature by whatever name called that may be levied and imposed upon or in respect of or apportioned or attributable to the Premises over and above the amount of such property tax or other imposition of a like nature by whatever name called levied and imposed as at the commencement date of the further term. In the event of the Building and/or the Premises not having been assessed for property tax purposes at the commencement date of the further term, to pay as and when required by the Lessor such additional sum in respect of property tax or other impositions of a like nature by whatever name called that may be levied and imposed upon or in respect of or apportioned or attributable to the Premises by reason of the annual value (as determined by the Chief Assessor of the Property Tax Division, Inland Revenue Department, Government of Singapore) of or attributable to the Premises exceeding the amount of the annual rent of the Premises payable under this Lease, Utilities (4) To pay or reimburse the Lessor for all charges including any taxes now or in the future imposed in respect of water, gas, electricity, and any other service supplied and separately metered to the Premises which shall be charged by the Public Utilities Board or other appropriate authority corporation or body to the Lessee, and in the event of such water gas electricity or other services not being supplied and metered separately to the Premises to pay or reimburse the Lessor a proportionate part of the costs thereof, such costs to be calculated by the Lessor and notified to the Lessee and a statement from the Lessor to the Lessee of such costs and the apportionment thereof shall be accepted by the Lessee as final and binding. In the event of the Public Utilities Board or other appropriate authority corporation or body responsible for the supply of electricity gas water and any other service supplied and used in the Building increasing the charges therefor, to pay or reimburse the Lessor a proportionate part of such increase in charges, such increase in charges to be calculated by the Lessor and notified to the Lessee and a statement from the Lessor to the Lessee of such increase shall be accepted by the Lessee as final and binding. Telephones (5) To install at the Lessee's own cost and expenses all and telephones and other telecommunication facilities (as the telecommu- Lessee may require) in such a manner that the wires shall nication not run across the floor or ceiling or along the walls of facilities the Premises so as to be visible in the Premises but shall be concealed and if running along the floor shall be concealed in the respective ducts in the underfloor trunking provided BY the Lessor for the purpose and all such works shall be carried out by workmen of or engaged by the Telecommunication Authority of Singapore or such other appropriate authority corporation or, body or in the absence of such workmen, by a contractor nominated by the Lessor. (6) Before the Lessee applies to the Telecommunication Authority of Singapore or other appropriate authority corporation. OR BODY for the installation of telephones and/or other telecommunication facilities, to submit for the approval of the Lessor a plan showing Where the telephones or other telecommunication facilities are to be installed, and if any extra underfloor trunking and/or accessories are required by the Lessee other than those already provided by the Lessor, to bear the costs of the installation of such extra underfloor trunking and/or accessories. (7) Not to install within the ducts intended for the carriage of telephone wires any wire other than those installed by the Telecommunication Authority of Singapore or other appropriate authority corporation or body. Internal (8) Not without the prior written consent of the Lessor to fittings carry out within the Premises all or any of the following works:- (a) partitioning within the Premises; (b) installation of all necessary electrical wiring conduits etc. for additional power points light fittings and all other ceiling fixtures and fittings apart from those standard fixtures and fittings supplied and installed by the Lessor; (c) all mechanical works of any kind whatsoever; (d) provision of carpets, tiles (vinyl or otherwise) and other floor covering or finishes of whatever kind; (e) installation of water and other pipes apparatus equipment appliances fittings fixtures and all plumbing; (f) marking painting drilling or defacing any walls ceilings partitions floors wood glass or other parts of the Premises; and (g) all alteration works relating to the existing ceiling fixtures and fittings for lighting air- conditioning and fire protection devices originally supplied and installed by the Lessor. Installa- (9) To use for carrying out the above installations tions and partitioning and other works approved by the Lessor partitions materials of such standard as to type quality colour and size as the Lessor its architect engineer or other consultant shall approve and cause such installations partitioning and other works to be carried out in the Premises in accordance with plans and specifications that shall have received the prior written approval of the Lessor its architect engineer or other consultant and the relevant government and/or statutory authorities. (10) Not to effect the abovementioned installations partitioning and other works except : (a) in the case of any re-alignment or adjustment OF the raised flooring of the Premises or any electrical plumbing or air-conditioning works or installations, including Pipes, by a contractor nominated or approved by the Lessor and appointed by the Lessee at the Lessee's own cost and expense; in all other cases by a contractor appointed by the Lessee at the Lessee's own cost and expense and approved by the Lessor; (c) in every case, in accordance with approved plans and specifications and under the supervision of an architect engineer or other consultant appointed by the Lessor. (11) To pay or reimburse the Lessor on demand the fees of any architect engineer or other consultant employed by the Lessor for the purpose of considering approving and supervising the plans specifications materials and all works carried out by the Lessee and all other costs charges and expenses incurred by the Lessor in connection therewith. Alteration (12) Not to make or permit or suffer to be made any alteration and in or addition to the Premises or any part thereof or the additions Lessors fixtures fittings and decorations therein, and in particular not to make or permit or suffer to be made any such alterations or additions that will prevent the FULL and unrestricted use and benefit of the air-conditioning system to other parts of the Building, without having first obtained the written licence and consent of the Lessor (which licence and consent may be given subject to such conditions as the Lessor may think fit, including the payment by the Lessee of an amount to be determined by the Lessor as security for the due performance by the Lessee of his obligation to remove such alterations and additions so as to restore the Premises to their original state and condition hereinafter mentioned), and in the event of such licence and consent being given, to carry out at the Lessee's own cost and expense such alterations or additions with such materials and in such manner and at such time as shall be designated by the Lessor and in compliance with any other condition as may be imposed by the Lessor for such licence and consent, and upon the determination of the Term, if requested by the Lessor, to remove all such alterations in or additions to the Premises whether or not constructed by the Lessee so as to restore the Premises to their original state and condition at the Lessee's own cost and expense. Other (13) Not without the prior written consent of the Lessor install cooling or use air-conditioning or cooling units or other methods methods of cooling except the air-conditioning system provided by the Lessor. Tenantable (14) To keep the interior of the Premises including the flooring repair and interior plaster or other surface material or rendering on wall and ceilings and the Lessors fixtures therein including doors windows glass locks fastenings electric wires and installations and fittings for light power and air-conditioning in a clean and good state of tenantable repair and condition (fair wear and tear excepted) and to make good to the satisfaction of the Lessor any damage or breakage caused to any part of the Premises or to the Lessor's fixtures and fittings therein. Cleaning (15) The Lessee shall keep the Lessor informed of the particulars of cleaners employed by the Lessee for the purpose of the cleaning of the Premises and the Lessee shall be responsible and liable for any misconduct or negligent act or default of the cleaning contractor and any cleaner so employed by the Lessee for the purpose of the cleaning of the Premises. Access (16) To allow the person or persons for the time being having the for contract for the cleaning of the Building and his or their cleaning servants workmen employees agents contractors and subcontractors free ingress to and egress from the Premises for the purpose of cleaning the exterior of the windows during business hours. Notice of (17) Forthwith to give notice to the Lessor or its building damage or supervisor of any damage the Premises and of any accident to defects or defect in the Pipes or any other fittings fixtures or other facility provided by the Lessor. Access to (18) To permit the Lessor and its duly authorised agents with Premises or without workmen and others and with and without appliances at all reasonable times to enter upon the Premises to examine the state and condition thereof and to do such works and things as may be required for any repair alteration or improvement to the Premises or any other part or parts of the Building and forthwith to repair and mend in a proper and workmanlike manner any defect for which the Lessee is liable and of which written notice shall be given to the Lessee or left on the Premises and to pay the Lessor's costs of inspection or otherwise in respect of the preparation of any such notice and if the Lessee shall not within fourteen (14) days after the service of such notice proceed diligently with the execution of such works, then the Lessor may enter upon the Premises and execute such repair or works and the costs thereof shall be a debt due from the Lessee to the Lessor and recoverable forthwith as such. Raised (19) To permit the Lessor and its duly authorised agents and flooring nominated contractor with or without workmen and others and with or without appliances at all reasonable times to enter upon the Premises to examine the level state and condition of the raised flooring and where re-alignment adjustment or other works is required to be carried out to the raised flooring of which written notice shall be given to the Lessee or left on the Premises to employ the contractor nominated by the Lessor to carry out such re-alignment adjustment or other works at the Lessee's expense and to pay the Lessor's costs of inspection or otherwise in respect of the preparation of any such notice and if the Lessee shall not within fourteen (14) days after the service of such notice employ the contractor nominated by the Lessor to execute such re-alignment adjustment or other works, then the Lessor and its nominated contractor with or without their workmen and appliances may enter upon the Premises and execute such re-alignment adjustment and other works and the costs thereof shall be a debt due from the Lessee to the Lessor and recoverable forthwith as such. Permitted (20) At all times to use and occupy the Premises strictly as and use for offices in connection with the business of the Lessee. Dangerous (21) Not to store or bring upon the Premises or any part goods and thereof or upon the Building or the land on which it is unlawful erected any goods or thing which in the opinion of the storage Lessor are of an obnoxious dangerous or hazardous nature or any explosive or combustible substance and not to place or leave in the Common Area or any part thereof any box or rubbish or otherwise encumber the same. Unlawful (22) Not to use the Premises or any part thereof for any immoral use unlawful or immoral purpose and not to do or permit or or nuisance suffer to be done any act or thing which may be or become a nuisance to or give cause for reasonable complaint from the occupiers of adjoining premises or of other parts of the Building or of neighbouring buildings. Infectious (23) In the event of any infectious illness occurring in the Illness Premises forthwith to give notice thereof to the Lessor and to the proper public authorities and at the expense of the Lessee to thoroughly fumigate and disinfect the Premises to the satisfaction of the Lessor and such public authorities and otherwise comply with their reasonable and lawful requirements in regard to the same. Food and (24) Not without the prior written consent of the Lessor to drinks permit the vendors of food and drink or the servants or agents of such vendors to bring to or onto the Premises or any part thereof or onto the Building or any part thereof food or drink for consumption by the occupiers or others in the Premises save and except in the case of the contractor or contractors who has or have been given the eight by the Lessor to provide food and drink service for the occupiers of the Building. Cooking (25) Save for storage of foods in a fridge or heating of food using microwave, not to permit or suffer cooking or preparation or storage of food and drink on the Premises or any part thereof nor to permit or suffer anyone to sleep or reside therein. Obstruction (26) Not to cover or obstruct or permit or suffer to be covered of windows or obstructed in any manner or by any article or thing etc. (other than blinds approved of by the Lessor) the windows skylights or ventilation shafts or air-inlets or outlets which reflect or admit light or enable air to flow into or out of the Premises. Obstruction (27) Not to obstruct in any manner howsoever the Common Area of way including the entrances exits driveways and footways of and leading to the Building and/or the land on which it is erected and to keep all internal and external parts of the Building and the land clear and free of all obstruction at all times. Auction (28) Not to permit or suffer to be carried on any auction sale Sale upon the Premises or any part of the Building, Use of (29) Not to place or take into the passenger lifts any baggage lifts furniture parcels sacks bags heavy articles or other goods or other merchandise without the prior approval of the Lessor save only such light articles as brief-cases attache cases and handbags, Machinery (30) Not to bring or permit or suffer to be brought onto the Premises or any part of the Building used in common with the Lessor and other lessees any machines or machinery save and except typewriters and such other auxiliary office equipment as are required for the purpose of the Lessee's office and not at any time to load or permit or suffer to be loaded on any part of the floors of the Building or the Premises to a weight greater than 4 kN per square metre and shall when required by the Lessor distribute the load on any part of the floor of the Premises in accordance with the directions and requirements of the Lessor and in the interpretation and application of the provisions of this clause relating to loading the decision of the Lessor shall be final and binding on the Lessee. Before any machine machinery safe equipment or goods is moved into or out of the Premises, to give to the Lessor due notice thereof and the moving of the same must be done under the supervision of a person nominated by the Lessor and at a time approved by the Lessor and at no other time and the Lessor may direct the routing installation and location of all such machine machinery safe equipment and goods and the Lessee shall observe and comply with all such directions. Signs (31) Not to affix paint or otherwise exhibit or permit or suffer to be affixed painted or otherwise exhibited to or upon any part or on the exterior of the Premises or on windows or doors thereof or in or about any part of the Building without the prior written consent of the Lessor any sign light embellishment advertisement name notice or banner whatsoever save and except the Lessee's nameplate or signboard of a size and form as shall be approved in writing by the Lessor, such consent not to be unreasonably withheld, The costs for making such nameplate or signboard shall be borne by the Lessee and placed at a spot to be indicated by the Lessor. Unsightly (32) To keep the windows of the Premises closed at all times and objects not to erect or install any sign device furnishing ornament or object; which, in the opinion of the Lessor, will impair spoil or detract from the architectural form or style or the general appearance of the Building or the Common Area generally, Curtains (33) To install and maintain at his own cost and expense at all times curtains or blinds of the type quality and colour approved by the Lessor for all the windows at the Premises. Radio, (34) Not without the consent in writing of the Lessor to erect Television or place upon within or without the Premises any radio or Aerials television aerial or antenna or any loudspeaker screen or similar device or equipment and not without the like consent to use or permit to be used any radio gramophone television or other like media or equipment likely to be heard or seen from outside the Premises Provided however that any consent so given as aforesaid may at any time be withdrawn where the Lessor so determines having regard to the interests of the Building as a whole and/or the rights or interests of other lessees occupiers or persons lawfully therein. Subletting (35) Not to assign underlet or otherwise part with or share the and actual or legal possession or the use of the Premises or assignment any part thereof for any term whatsoever without the prior written consent of the Lessor. Where the Lessee is a corporation, any form of re-construction, re-organisation, amalgamation, takeover or change in any of the shareholders of the Lessee or any scheme of arrangement or compromise or any other scheme affecting the existing constitution or structure of shareholdings of the Lessee shall be deemed to be an assignment within the meaning of this sub-clause. Avoidance (36) Not to do or permit or suffer to be done anything whereby of policy the policy or policies of insurance on the Building or any and part thereof against loss or damage by fire or other risks increase of for the time being subsisting may become premiavoid or voidable or whereby the rate of premium thereof may be increased and to make good all damage suffered by the Lessor and to repay to the Lessor all sums paid by the Lessor by way of increased premia and all expenses incurred by the Lessor in or about any renewal of such policy or policies rendered necessary by a breach or non-observance of this covenant. Indemnity (37) To indemnify and keep indemnified the Lessor from and against - (a) all claims demands writs -summonses actions suits proceedings judgments orders decrees damages costs losses and expenses of any nature whatsoever which the Lessor may suffer or incur in connection with loss of life personal injury and/or damage to property arising from or out of any occurrence in upon or at the Premises or the use of the Premises or any part thereof by the Lessee or by any of the Lessee's employees independent contractors agents invitees or licensees: (b) all loss and damage to the Premises the Building and to all property therein caused directly or indirectly by the Lessee or the Lessee's employees independent contractors agents invitees or licensees and in particular but without limiting the generality of the foregoing caused directly or indirectly by the use or misuse waste or abuse of water gas or electricity or faulty fittings or fixtures of the Lessee. Lessee's (38) At all times during the Term and during any period of insurance holding over to keep current - (a) an adequate public liability insurance policy which shall be taken out with an insurance company approved by the Lessor in respect of the Premises; (b) an adequate insurance policy which shall be taken out with an insurance company as aforesaid on internal partitions and all goods belonging to or held in trust by the Lessee in the Premises against loss or damage by fire; (c) an adequate insurance policy which shall be taken out with an insurance company as aforesaid in respect of all glass windows doors and walls in or on the Premises in such amount not less than the full insurable value against such risks as the Lessor may require; and to produce to the Lessor on demand the policies referred to above as well as the receipts for payment of premia in respect thereof, Compliance (39) At all times during the Term to promptly comply with and at with the Lessee's cost and expense all such requirements as may statutes be imposed on the occupier of the Premises by any statute now or hereafter in force and any order rule regulation requirement and notice thereunder. [information (40) Should the Lessee receive any notice from government or any to Landlord statutory public or municipal authority with respect to the Premises, to give notice thereof forthwith in writing to the Lessor. Rules and (41) To observe and perform and to cause all his employees regulations independent contractors agents invitees or licensees to observe and comply with all rules and regulations contained in the Third Schedule hereto or as may be varied amended or added to by the Lessor from time to time under Clause 6(5) hereof. Yielding up (42) At the expiry or sooner determination of the Term, to yield up the Premises with the fixtures (other than the Lessee's fixtures as shall belong to the Lessee and such other fixtures as shall be required by the Lessor to be removed) in good and tenantable repair and condition (fair wear and tear excepted) to the Lessor together with all the keys to the Premises and all doors therein, and if so required by the Lessor, to remove all signs names notices internal partitions fixtures and installations of the Lessee or any of them as are specified by the Lessor from the Premises and reinstate the Premises, including all air-conditioning installations, to their original state as at the Commencement Date to the satisfaction of the Lessor, and where the approval OF any government or statutory authority is required for such removal or reinstatement, to procure the same. Removal (43) To carry out the removal and/or reinstatement mentioned and in sub-clause (42) of this Clause - reinstatement (a) in the case of any electrical plumbing or air-conditioning works or installations, by a nominated contractor of the Lessor appointed by the Lessee; (b) in all other cases, by a contractor appointed by the Lessee and approved by the Lessor under the supervision of the Lessors architect engineer and other consultant and to pay for all costs fees and expenses OF such architect engineer and other consultant and to make good all damages done to the Premises by such removal or reinstatement on or prior to the expiry of the Term and if the Lessee shall fail to do so the Lessor may make good all such damages and the costs incurred by the Lessor in making good such damage shall be paid by the Lessee to the Lessor within seven (7) days of the Lessor notifying the Lessee of the amount thereof. Redecoration (44) To redecorate the Premises to the satisfaction of the Lessor immediately prior to the expiry or sooner determination of the Term. For the purposes of this sub-clause, "redecorate" and "redecoration" shall include the washing of the whole of the interior of the Premises, the repainting with two coats of oil paint or emulsion paint or other appropriate treatment of all of the internal parts of the Premises previously so treated and also the replacing of all ceiling boards and floor tiles which in the opinion of the Lessor are worn out or damaged and in need of replacement. (45) If the Lessee shall fail to carry out the removal and reinstatement mentioned in sub-clauses (42) and (43) of this Clause and the redecoration mentioned in sub-clause (44) of this Clause, to pay or reimburse the Lessor the costs of such removal reinstatement and/or redecoration carried out by the Lessor together with such other amounts which the Lessor would have been entitled to receive from the Lessee had the Premises been held over by the Lessee after expiry or sooner determination of the Term without the consent of the Lessor for the period within which such removal reinstatement and/or redecoration is effected by the Lessor. Legal Costs (46) To pay all legal costs (including the Lessor's solicitors' charges on a solicitor and client basis) stamp duty and all other disbursements and out-of-pocket expenses incurred in the preparation and completion of this Lease, and in connection with any assignment sub-letting or termination thereof otherwise than by effluxion of time or with any claim or legal proceedings which may be brought by the Lessor against the Lessee in connection with or arising out of this Lease. Goods and (47) The Lessee shall pay to the Lessor any goods and services Services Tax tax or other imposition of a like nature by whatever name called that may be levied or imposed for any goods or services supplied under or in connection with this Lease. Lessor's 5. The Lessor hereby covenants with the Lessee as follows- covenants (1) To provide, subject to Clause 6(11) hereof- Air- (a) air-conditioning services during the hours of 8.00 a.m, conditioning to 6.00 p.m. on weekdays and 8.00 a.m. toll.00 p.m. on Saturdays (except on public holidays) PROVIDED ALWAYS that such services may at the request of the Lessee be extended by the Lessor (but without any obligation so to do) beyond the hours hereinbefore mentioned on such terms as the Lessor may stipulate, including the payment by the Lessee of additional charges for such additional air-conditioning services; Lifts (b) lift services available for use by the Lessee and the Lessee's employees and visitors between the hours of 8.00 a.m. to 6.00 p.m. on weekdays and 8.00 a.m. to 1.00 p.m. on Saturdays (except on public holidays) and at least one (1) passenger lift and one (1) service lift available for use by the Lessee on a twenty-four (24) hours basis; Electricity (c) electricity for the lighting of the passageways staircases toilets and other common parts of the Building; Water (d) water for the toilets in the Building; and Car Parking (e) SIX (6) CAR PARKING LOTS for use by the Lessee and the their employees agents and invitees. .Taxes (2) Subject to Clause 5(3) HEREOF to pay all present and future rates taxes assessments and outgoings imposed upon or in respect of the Building or any part thereof save and except those herein agreed to be paid by the Lessee. Insurance (3) To insure and keep insured the Building (excluding fittings and fixtures installed by the Lessee) against damage by fire or such other risks as the Lessor may deem fit and adequate. Quiet (4) That the Lessee paying the rent and service charge hereby enjoyment reserved and performing and observing the several covenants herein contained and on his part to be observed and performed shall peaceably hold and enjoy the Premises without any interruption from the Lessor or any person claiming under or in trust for it, 6. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED as follows:- Determina- (1) If the rent and/or the service charge hereby reserved or tion any part thereof shall at any time be unpaid for fourteen (14) days after the same shall have become due (whether formally demanded or not) or if any covenant on the Lessee's part herein contained shall not be observed or performed or if the Lessee being a company shall go into liquidation whether voluntary (save for the purpose of amalgamation or re-construction) or compulsorily or a receiver shall be appointed of its undertaking property or assets or shall be placed under the judicial management of a judicial manager or being an individual shall have a receiving order or an adjudication order made against him or if the Lessee shall make any arrangement or composition with creditors or if any execution or attachment shall be levied upon or issued against any of the property or assets of the Lessee and shall not be paid off or discharged within seven (7) days thereof, then and in any one of the said cases it shall be lawful for the Lessor at any time thereafter to forfeit the deposit or any part thereof as the Lessor may in its absolute discretion determine to compensate the Lessor for its loss or damage and to re-enter upon the Premises or any part thereof in the name of the whole and thereupon the Term shall forthwith and absolutely cease and determine but without prejudice to the right of action of the Lessor in respect of any rent and/or service charge or of any antecedent breach of the Lessee's covenants herein contained. Interest on (2) In addition and without prejudice to any other right power arrears or remedy of the Landlord if the rent and/or service charge hereby reserved or any part thereof shall at any time remain unpaid on its due date (whether formally demanded or not) then the Lessee shall pay to the Lessor interest thereon at two per cent (2%) per annum above the current prime lending rate for advances for the time being prescribed by a leading bank in Singapore selected by the Lessor. The Lessor shall be entitled to recover such interest from the Lessee as if such interest were rent in arrears. Landlord's (3) Notwithstanding anything herein contained if this Lease Rights shall come to an end whether by effluxion of time or Against otherwise if the Lessee shall fall to remove all Lessee's his goods (which expression where hereinafter used Goods shall include personal property of every description) from the Premises forthwith or if the Lessee shall abandon the Premises or the Lessee shall be deemed to have abandoned the Premises and terminated this Lease unilaterally then and in any of the said cases it shall be lawful for the Lessor to sell or otherwise dispose of the goods of the Lessee in the Premises at such time or times and at such price or prices as the Lessor shall think fit and v%4thout prejudice to the other rights and remedies of the Lessor, the Lessor shall after payment out of the proceeds of sale the costs and expenses connected with the said sale apply the net proceeds of sale towards payment of all arrears of rent and the interest thereon and all other sums of money due and payable by the Lessee to the Lessor under this Lease and the balance (if any) shall be paid over to the Lessee. Weights and (4) The Lessor shall have the power to prescribe the weight and measures proper position of all iron or steel safes and other heavy machinery and equipment furniture articles or goods whatsoever in the Premises and any or all damages caused to the Building or any part thereof by the Lessee or anyone on his behalf by taking or moving out any safe machinery equipment furniture goods or other articles during the time such are in the Building shall be made good by the Lessee, or if made good by the Lessor, at the expense of the Lessee- Rules and (5) The Lessor shall have the right at any time and from time regulations to time to add to amend cancel or suspend rules and regulations contained in the Third Schedule as in the judgment of the Lessor may from time to time be required for the management security care or cleanliness of the Building or for the preservation of good order therein or for the convenience of lessees and other occupiers and all such rules and regulations shall bind the Lessee upon and from the date on which notice in writing thereof is given to him by the Lessor. if there shall be inconsistency between the provisions of this Lease and the provisions of such rules and regulations then the provisions of this Lease shall prevail unless otherwise expressly stated. Untenant- (6) That if the Premises or any part thereof shall be damaged ability or destroyed by fire flood lightning storm tempest or other cause s o as to render the Premises substantially unfit for occupation and use (except where such damage or destruction has been caused by the act or default of the Lessee his servant independent contractor agent visitor invitee or licensee) - (a) the rent and service charge hereby covenanted to be paid or a fair and just proportion thereof according to the nature and extent of the damage sustained shall be suspended until the Premises shall again be rendered fit for occupation and use, and any dispute concerning this clause shall be determined by a single arbitrator in accordance with the Arbitration Act (Cap. 10) or any statutory modification or re-enactment thereof for the time being in force; (b) where the Lessor in its absolute discretion shall decide that the Building or the Premises are so badly damaged that the rebuilding or reconstruction thereof in its previous form will be impracticable or undesirable, the Lessor may within ninety (90) days after such damage or destruction has been sustained give notice to the Lessee in writing to terminate the Lease and upon such notice being given, this Lease shall terminate and the Lessee shall (if still in occupation) vacate the Premises without compensation from the Lessor but such termination as aforesaid shall be without prejudice to the rights of the Lessor in respect of any antecedent breach by the Lessee of any of its covenants herein contained; PROVIDED ALWAYS that nothing herein contained shall be deemed to impose any obligation upon the Lessor to rebuild or reinstate or make fit for occupation the Premises. Refusal of (7) Notwithstanding anything herein contained, the Lessor shall access have the right at all times to refuse access to the Building or otherwise control such access in respect of any person whose presence in the Building might in the judgment of the Lessor be prejudicial to the safety character reputation and interest of the Building and its lessees or occupiers. Waiver of (8) No condoning excusing or overlooking by the Lessor of any covenant default breach or non-observance or non-performance by the Lessee at any time or times of any of the Lessee's obligations herein contained shall operate as a waiver of the Lessor's obligations hereunder in respect of any continuing or subsequent default breach or non-observance or non-performance or so as to defeat or affect in any way the rights of the Lessor herein in respect of any such continuing or subsequent default breach or non-observance or non-performance and no waiver by the Lessor shall be inferred from or implied by anything done or admitted by the Lessor unless expressed in writing and signed by the Lessor, Any consent given by the Lessor shall operate as a consent only for the particular matter to which it relates and shall in no way operate as a waiver or release of any of the provisions hereof, nor shall it be construed as dispensing with the necessity of obtaining the specific written consent of the Lessor in future, unless expressly so extended. Landlord not (9) The Lessor shall not be liable or in any way responsible to liable for the Lessee or any of the Lessee's employees independent damages contractors agents invitees or licensees or to any other person for any injury loss or damage WHICH may be suffered or sustained to any property or by any person in the Building or on the land it is erected on howsoever occurring. Service of (10) Any notice or other document or writing required to be notice served delivered or given under this Lease to the Lessee shall be deemed sufficiently served if sent by registered post to or left at the Premises and any notice or other document or writing required to be served delivered or given under this Lease to the Lessor shall be deemed sufficiently served if sent BY registered post to or left at the registered office of the Lessor. A notice by one party to the other party shall be deemed to be received by the other party within forty-eight (48) hours of posting. No claim by (11) Notwithstanding anything herein contained the Lessor shall Lessee not be liable to the Lessee, nor shall the Lessee have any claim against the Lessor in respect of - (a) any interruption in any of the services hereinbefore mentioned by reason of necessary repair replacement or maintenance of any installation or apparatus or any part thereof or damage thereto or destruction thereof by fire water riot act of God or other cause beyond the Lessors control or by reason of mechanical or other defect or breakdown or other inclement condition or shortage of manpower fuel materials electricity or water or by reason of labour dispute; (b) any act omission default misconduct or negligence of any porter attendant or other servant or employee independent contractor or agent of the Lessor in or about the performance or purported performance of any duty relating to the provision of any of the services supplied by the Lessor to lessees and occupiers of the Building: (c) any damage injury or loss arising out of the leakage from the piping wiring and sprinkler system in the Building and or the structure of the Building. Option to (12) The Lessor shall at the written request of the Lessee made renew not less than six (6) months before the expiration of the Term and if there shall not at the time of such request be any existing breach or non-observance of any of the covenants and conditions on the part of the Lessee to be observed and performed herein contained and at the Lessee's expense grant to the Lessee a lease for a further term of ONE (1) YEAR for the Premises on the same terms and conditions as herein contained save for this option to renew clause and at such rent to be determined in accordance with the then prevailing market rental. Notice of (13) In the event of the Lessee failing to sign the new lease vacancy with the Lessor for the aforesaid further term by the date not later than three (3) months prior to the expiry of the Term, the Lessor shall be entitled to exhibit outside the Premises or on the doors thereof a notice stating that the Premises are to be VaC2nt and for letting and the Lessee shall permit all prospective lessees or purchasers of the Premises accompanied by a representative of the Lessor free ingress to and egress from the Premises for the purpose of viewing the Premises. Early (13A) Twenty-Four (24) months after the Commencement Date, the Termination Lessee may terminate the Agreement on giving the Lessor not less than six (6) months' written notice or six (6) months' rental and service charge in lieu of such written notice and in such an event, the Deposit paid hereunder shall be refunded in accordance with Clause 3(7) hereof. For the avoidance of doubt, this Clause 13A shall only be applicable twenty-four (24) months after the Commencement Date. Change of (14) The Lessor shall have the right at any time Without the location of same constituting an actual or constructive eviction of the entrances etc Lessee, and without incurring any liability to the Lessee therefor, to change the arrangement and/or location of entrances passageways doors doorways partitions landings staircases lobbies lifts toilets and other public parts of the Building or any of the services or any apparatus serving the Building and to change the name number or designation by which the Building is known. No liability (15) The Lessor shall not be under any liability whatsoever for injury to the Lessee or to any person whomsoever in respect of any or damage injury or damage to any property or sustained by the Lessee or such other persons as aforesaid, caused by or through or in any way owing to the overflow of water from any offices or premises in the Building whatsoever except where the said overflow of water is caused by the gross negligence of the Lessor. No rights on (16) Nothing herein contained shall confer on the Lessee any Tenant to right to enforce any covenant or agreement relating to enforce other portions of the Building demised by the Lessor or amendments limit or affect the right of the Lessor in respect of any - -relating to such other premises to deal with the same and impose and other portions vary such terms and conditions in respect thereof in any of Buildings manner as the Lessor may think fit. Marginal (17) The marginal notes appearing in this Agreement are inserted Notes only as a matter of convenience and in no way define limit construe or describe the scope or intent of the sections or clauses of this Lease, nor in any way affect this Lease. Condition (18) The Lessee acknowledges and declares that no promise of the representation warranty or undertaking has been given by or Premises on behalf of the Lessor in respect of the suitability of the Premises or the Building for any business to be carried on therein or to the fittings finishes facilities and amenities of the Premises or the Building or as to other businesses to be carried on in the Building otherwise than in the Lease contained. Interpreta- (19) In the interpretation of this Lease except to the extent tion that such interpretation shall be excluded by or be repugnant to the context when used herein - (a) "Common Area" means those parts areas premises and facilities of and in the Building or the land on which it is erected which are not leased or intended to be leased by the Lessor to the Lessee or to any other lessee and which are now or hereafter provided by the Lessor for the common use by lessees of premises in the Building and their respective employees inviteas and licensees in common with the Lessor and all other persons having the like right to use the same (including but without limiting the generality of the foregoing all roads walls carparks walkways pavements passages entrances courts halls toilets stairways escalators elevators and gardens and such other areas amenities grounds and conveniences from time to time provided prescribed or made available by the Lessor for the common or general use or benefit of lessees employees invitees and licensees as aforesaid and all other persons having the like (right); (b) "Dollars" means Singapore Dollars and the sign 'T' shall have the corresponding meaning; (c) "the Lessee" shall include, if the Lessee is an individual, his personal representative and permitted assigns, or if the Lessee is 2 company, its permitted assigns and successor in title; (d) "the Lessor" shall include the successors and assigns of the Lessor; (e) "month" means a calendar month; (f) "person" shall include a corporation; (g) "Pipes" means all pipes sewers drains gutters watercourses flues mains ducts conduits wires and all other conducting media and any other ancillary apparatus; (h) words importing the singular or plural number shall be deemed to include the plural or singular number respectively and words importing the masculine gender only shall include the feminine or neuter gender and vice versa as the case may be; and (j) where two or more persons are included in the term "the Lessee", all covenants agreements terms conditions and restrictions shall be binding on them jointly and each of them severally and shall also be binding on their personal representatives and permitted assigns respectively jointly and severally. AS WITNESS the hands of the parties hereto the day and year first above written. THE-FIRST SCHEDULE ABOVE REFERRED TO (Clause 1) All that the premises on the 17TH STOREY (UNIT #117-011T04) of the Building being the area more particularly delineated and hatched red on the plan annexed hereto and estimated to contain an area of 4,478 square feet or thereabouts. THE SECOND SCHEDULE ABOVE REFERRF-D PROVISIONS RELATING TO LE~EE~'S FITTING OUT-WORKS (Clause 3A(2)) 1 The Lessee will at the Lessee's own cost and expense prepare and submit to the Lessor for approval the plans and specifications of the Lessee's fitting out works and the Lessee's proposed schedule for carrying out the Lessee's fitting out works ("fitting out schedule") before any fitting out work is carried out. 2. The Lessee will at the Lessee's own cost and expense apply for and obtain the necessary approvals from the relevant authorities for the Lessee's fitting out works. 3. The Lessee will hot commence the Lessee's fitting out works unless the approvals of the Lessor and the relevant authorities have been obtained. 4. Prior to the commencement of the Lessee's fitting out works, the Lessee shall:- (a) effect and maintain a public risk insurance and workmen's compensation insurance and shall produce proof thereof to the Lessor on request; and (b) pay to the Lessor a cash renovation deposit of DOLLARS FIVE THOUSAND ONLY $5,000.00) as security for the due performance and completion of the Lessee's fitting out works and such other works as may be prescribed y the Lessor including the removal of waste and debris. The said deposit shall be refunded to the Lessee without interest within one (1) month from the satisfactory completion of the Lessee's fitting out works and the said other works. 5. The Lessee will comply with the Fitting Out Manual for Alexandra Point, including any amendments, variations or additions to such Manual, and observe the instructions of the Lessor, its consultants and its contractors. 6. The Lessee will ensure that the Lessee's fitting out works will allow for and accommodate the execution of any of the works to be carried out by the Lessor. 7. The Lessee will during the fitting out period: (a) carry out and complete with due diligence the Lessee's fitting out works in a good workmanlike manner and in accordance with the approved fitting out plans and specifications, the approved fitting out schedule and good building practice and use good and suitable materials; and (b) comply with all rules, regulations or requirements of any government body or authority in connection with the Lessee's fitting out works and/or the Premises. 8. Notwithstanding any other term or condition herein, the Lessee's fitting out works shall not involve any change which requires approval(s) from any competent authority except with the prior written approval of the Lessor and such competent authority. For the avoidance of doubt, the prior written consent of the Lessor shall be obtained prior to any application to any competent authority for purpose of carrying out such fitting out works. 9. Application for the supply of electricity water and all other utilities for use in connection with the Lessee's fitting out works will be made by the Lessee and the Lessee shall pay all charges for electricity water and other utilities used in connection with the Lessee's fitting out works. 10. If the Lessee is permitted to commence the Lessee's fitting out works the Lessee will comply with all requirements of the Lessors architect engineer or other consultant as to the method of and schedule for carrying out the Lessee's fitting out works. 11. Nothing herein shall prevent the Lessor from carrying out and completing its work in the Premises or the Building or any part thereof during the fitting out period and the Lessee will have no claim against the Lessor for damages compensation or costs whatsoever which the Lessee may suffer or incur as a result thereof. 12. The Lessee hereby acknowledges that the use and occupation of the Premises by the Lessee during the fitting out period shall be for the purpose only of carrying out and completing the Lessee's fitting out works and shall be at the Lessee's sole risk in all respects. All the Lessee's fitting out works in progress or executed, and all materials, goods, stocks and other things brought into or upon the Premises or any area in the Building for or in connection with the Lessee's fitting out works shall stand at the sole risk of the Lessee with regard to any loss thereof or damage thereto. 13. In carrying out the Lessee's fitting out works the Lessee will not do or permit or suffer to be done in or upon the Premises or the Building or any part thereof anything which may be or become a nuisance or annoyance or cause damage to the Lessor or to the tenants or occupiers of neighbouring premises. 14. For the purpose of carrying out any electrical and mechanical works in the Premises, the Lessee shall only employ such contractor as shall be nominated by the Lessor. For the purpose of carrying out all the Lessee's fitting out works in the Premises other than the electrical and mechanical works, the Lessee shall only employ such contractor as shall be approved by the Lessor. 15, The Lessee will on demand pay to or reimburse the Lessor all the costs, fees or charges incurred by the Lessor for and in connection with approving the fitting out plans and specifications and fitting out schedule and supervising the Lessee's fitting out works to ensure that the Lessee's fitting out works are carried out in accordance With the approved fitting out plans and specifications and fitting out schedule. 16. The Lessee will ensure that his servants agents and contractors will properly use the toilets and other facilities so that cleanliness thereof can be maintained and that from time to time and in particular on completion of the Lessee's fitting out works all rubbish and debris are removed from the Premises and the Building and all damages to the Building or any part thereof have been made good. THE THIRD SCHED-ULE ABOVE REFERRED T RULES AND REGULATIONS OF THE BUILDING (Clauses 4(41) and 6(5)) 1. The Lessee will use or permit to be used for the receipt delivery or other movement of any goods wares or merchandise or articles of bulk or quantity only such parts of the Premises and the Common Area and at such times as the Lessor may from time to time direct. 2. The Lessee shall not throw or drop or permit or suffer to be thrown or to be dropped any articles or substance whatsoever from or out of the Premises or the Common Area or any part thereof and shall not place upon any sill ]edge or other like part of the Premises or the Common Area any article or substance. 3. The Lessee will keep clean and free from dirt and rubbish such parts of the Common Area or any passageway as immediately adjoin the Premises. 4. The Lessee will use its best endeavours to protect and keep safe the Premises and any property contained therein from theft or robbery and shall keep all doors windows and other openings closed and securely fastened when the Premises are not occupied and the Lessor shall be entitled by its agents employees servants and workmen to enter and fasten the same if left insecurely fastened. 5. The Lessee shall not permit the keys of the Premises at any time to come into the possession or control of any person other than the Lessee, its servants or agents. 6. No rubbish or waste shall at any time be burnt upon the Premises or the Common Area or any part thereof. 7. The Lessor shall be entitled to close the Building and the Common Area or any part thereof and to prevent and prohibit any person (including the Lessee) from entering or remaining thereon between the hours of 7:00 p.m. and 8:00 a.m., inclusive. Without affecting the generality of the foregoing, the Lessor may close, lock off or otherwise control the Common Area or any part thereof from time to time and may take all such actions as the Lessor may deem necessary for the purposes aforesaid and in particular may prohibit the use of the parking areas in the Building prior to the hour of 8:00 a.m. or such earlier hour as the Lessor may from time to time determine to prevent unauthorized persons not intending to conduct business with or become customers of any of the occupants of the Building from using the parking areas of the Building for any private or other purpose. Provided Always that the Lessee shall be permitted to enter and/or remain in or about the Building and the Common Area or any part thereof between the hours of 7:00 p.m. and 8:00 a.m. inclusive, subject to the Lessee complying with al the rules and regulations, including the operational security requirements, governing the entry and exit to and from the Building. 8. The Lessee shall not bring or permit any person to bring or leave in or about the Building any animal or play or permit any person to play any musical instrument in or about the Premises or any part of the Building. 9. The Lessee shall advise the Lessor of the private address of the Lessee or if the Lessee shall be a corporation, of the manager thereof, or if there shall be more than one lessee of any two of them. The Lessor shall be promptly informed of any change in any such address. 10. The Lessee shall not allow any accumulation of rubbish in the Premises. 11. If at any time during the Term any authority having jurisdiction or authority over or in respect of the Premises or the user thereof requests requires notifies or orders any structural alterations additions or other works to be made to the Premises -the Lessee will at all times permit the Lessor to enter the Premises or any part thereof for the purpose of making any such structural alterations additions or other works or any of them as aforesaid. 12. The Lessee will take all reasonable precautions to keep the Premises free of rodents vermin insects pests birds and animals and in the event of failing so to do will if so required by the Lessor but at the cost of the Lessee employ from time to time or periodically pest exterminators approved by the Lessor. 13. The Lessee a shall not use or permit nor suffer to be used the toilets sinks and drains and other plumbing facilities in the Premises or the Common Area for any purpose other than those for which they were constructed or provided and shall not deposit or permit to be deposited therein any sweepings rubbish or other matter and any damage thereto caused by misuse shall be made good by the Lessee forthwith. 14. The Lessee shall not change or otherwise alter the size or location OF the entrances of the Premises except with the prior written consent OF the Lessor. SIGNED by for and on behalf of JEFFR HENG CPL ALEXANDRA POINT PTE LTD Director in the presence of: V L,,Wk~ SIGNED by for and on behalf of VIEWLOCITY ASIA PACIFIC PTE LTD) in the presence of:- /s/ ANDERS BERGLANO "WA "-I [VIEWLOCITY ASIA PACIFIC PTE LTD SEAL] EX-10.5 9 ex-10_5.txt EXHIBIT 10.5 EXHIBIT 10.5 THIS ASSIGNMENT is made the 18th day of December, 1998 BETWEEN (1) ASPECT TELECOMMUNICATIONS LIMITED whose registered office is 2 The Square Stockley Park Uxbridge Middlesex UB11 1AD (Company Registration No. 2181869) ('the Vendor') and (2) FRONTEC (UK) LIMITED whose registered office is Merchants House Wapping Road Bristol BS1 4RH ('the Purchaser') (Company Registration No. 1912489) NOW THIS DEED WITNESSES as follows: 1. DEFINITIONS AND INTERPRETATIONS In this assignment: 1.1 'the Lease' means the lease particulars of which are set out in the schedule 1.2 'the Property' means the property more particularly described in the Lease 1.3 'the Covenants' means the covenants conditions and all other obligations of the Vendor arising under or contained in the Lease 1.4 'the Term' means the term created by the Lease 1.5 words importing persons shall include firms companies and corporation and vice versa 1.6 words importing one gender shall be construed as importing any other gender 1.7 words importing the singular shall be construed as importing the plural and vice versa 1. where any party comprises more than one person the obligations and liabilities of that party under this assignment shall be joint and several obligations and liabilities of those persons 2. the clause headings do not form part of this assignment and shall not be taken into account in its construction or interpretation 2. RECITALS 2.1 By the Lease the Property was demised to the Vendor for the Term at the rent therein reserved The Property remains vested in the Vendor for the unexpired residue of the Term subject to the Covenants but otherwise free from incumbrances 2.3 The Vendor has agreed to assign the Lease to the Purchaser for the residue of the Term in consideration of the performance and observance of the covenants by the Purchaser contained in this assignment 2.4 The consent of the Landlord has been obtained as required by the Lease 3. ASSIGNMENT In consideration of the covenants by the Purchaser contained in Clause S hereof the Vendor with full title guarantee assigns to the Purchaser ALL THAT the Property TO HOLD to the Purchaser for the unexpired residue of the Term SUBJECT to the performance and observance of the Covenants 4. COVENANTS FOR TITLE It is agreed that THE covenants which are implied by the Law of Property (Miscellaneous Provisions) Act 1994 shall be limited so as not to extend to any breach of the covenants relating to repair and decoration of the Property 5. COVENANT FOR INDEMNITY BY PURCHASER With the object and intention of affording to the Vendor a full and sufficient indemnity but not farther or otherwise the Purchaser covenants with the Vendor that it and its successors in title will: 5.1 during the Term pay the rents reserved in the Lease and perform a the Covenants and 5.2 keep the Vendor and its successors in title indemnified against all actions claims demand losses costs damages and liabilities whatsoever arising by reason of any breach of the Covenants 6. CERTIFICATE OF VALUE It is hereby certified that the transaction hereby effected does not form part of a larger transaction or series of transactions in respect of which the amount or value or aggregate amount or value of the consideration exceeds L60,000 (SIXTY THOUSAND POUNDS) IN WITNESS whereof the parties hereto have caused this Assignment to be executed by their authored representatives the day and year first here and before written SCHEDULE The Lease Dated: 20th February 1997 Parties: (1) Landlord: General Accident Life Assurance Ltd (2) Tenant: Aspect Telecommunications Ltd Premises: Offices on the Third Floor, The Arena, Parkway West, Cranford Lane, Heston Term: Five Years from the 1st February 1997 (excluding Section 24 to 28 of the Landlord and Tenant Act 1954) Rent and Service Charge: As referred to in the Lease SIGNED as a DEED by ASPECT ) TELECOMMUNICATIONS LTD ) acting by a Director and its ) Secretary or two Directors ) Director Secretary or Director WEATHERALL GREEN & SMITH SIGNED as a DEED by FRONTEC ) (UK) LIMITED acting by a Director ) and its Secretary or two Directors ) Director Secretary or Director WEATHERALL GREEN & SMITH DATED 20 FEBRUARY, 1997 (1) Landlord: GENERAL ACCIDENT LIFE ASSURANCE LIMITED (2) Tenant: ASPECT TELECOMMUNICATIONS LIMITED ---------------------------------------------------------------------- L E A S E - of - Offices on the Third Floor The Arena Parkway West Cranford Lane, Heston ---------------------------------------------------------------------- Commencement Date: 1 February 1997 Term: 5 years Expiry Date: 31 January 2002 Rent: L74,592 per annum exclusive (subject to increase and review) ------------------------------------------------- CLIFFORD CHANCE 200 Aldersgate Street London ECIA 411 Ref. CQM/G3/17470/RCSH CQMSOIS7.04 WEATHERALL GREEN & SMITH 2 2.3 The Vendor has agreed to assign the Lease to the Purchaser for the residue of the Term in consideration of the performance and observance of the covenants by the Purchasers contained in this assignment 2.4 The consent of the Landlord has been obtained as required by the Lease 3. ASSIGNMENT In consideration of the covenants by the Purchaser contained in Clause 5 hereof the Vendor with full title guarantee assigns to the Purchaser ALL THAT the Property TO HOLD to the Purchaser for the unexpired residue of the Term SUBJECT to the performance and observance of the Covenants 4. COVENANTS FOR TITLE It is agreed that the covenants which are implied by the law of Property (Miscellaneous Provisions) Act 1994 shall be limited so as not to extend to any breach of the covenants relating to repair and decoration of the Property 5. COVENANT FOR INDEMNITY BY PURCHASER With the object and intention of affording to the Vendor a full and sufficient indemnity but not further or otherwise the Purchaser covenants with the Vendor that it and its successors in title will; 5.1 during the Term pay the rents reserved in the Lease and perform all the Covenants and 5.2 keep the Vendor and its successors in title indemnified against all actions claims demand losses costs damages and liabilities whatsoever arising by reasons of any breach of the Covenants 6. CERTIFICATE OF VALUE It is hereby certified that the transaction hereby effected does not form part of a larger transaction or series of transactions in respect of which the amount or value or aggregate amounts or value of the consideration exceeds L60,000 (SIXTY THOUSAND POUNDS) 3 IN WITNESS whereof the parties hereto have caused this Assignment to be executed by their authorised representatives the day and year first here and before written SCHEDULE The Lease Dated: 20th February 1997 Parties: (1) Landlord: General Accident Life Assurance Ltd (2) Tenant: Aspect Telecommunications Ltd Premises: Offices on the Third Floor, The Arena, Parkway West, Cranford Lane, Heston Term: Five Years from the 1st February 1997 (excluding Section 24 to 29 of the Landlord and Tenant Act 1954) Rent and Service Charge: As referred to in the Lease SIGNED as a DEED by ASPECT ) TELECOMMUNICATIONS LTD ) acting by a Director and its ) Secretary or two Directors ) Director Secretary or Director 4 SIGNED as a DEED by FRONTEC ) (UK) LIMITED acting by a Director ) and its Secretary or two Directors ) Director Secretary or Director 4.18 NUISANCE.........................................................................................12 4.19 ALTERATIONS......................................................................................12 4.20 SIGNS AND ADVERTISEMENTS.........................................................................12 4.21 ALIENATION.......................................................................................13 4.22 REGISTRATION OF DISPOSITIONS.....................................................................15 4.23 DISCLOSURE OF INFORMATION........................................................................15 4.24 LANDLORD'S COSTS.................................................................................15 4.25 STATUTORY REQUIREMENTS...........................................................................16 4.26 PLANNING ACTS....................................................................................17 4.27 STATUTORY NOTICES................................................................................18 4.28 FIRE PRECAUTIONS AND EQUIPMENT...................................................................18 4.29 DEFECTIVE PREMISES...............................................................................19 4.30 ENCROACHMENTS AND EASEMENTS......................................................................19 4.31 RELETTING NOTICES................................................................................19 4.32 INDEMNITY........................................................................................19 4.33 LANDLORD'S REGULATIONS...........................................................................19 4.34 TAXATION.........................................................................................20 4.35 VALUE ADDED TAX..................................................................................20 4.36 COVENANTS AFFECTING REVERSION....................................................................20 5. LANDLORD'S COVENANTS.............................................................................21 5.1 QUIET ENJOYMENT..................................................................................21 5.2 PROVISION OF SERVICES............................................................................21 5.3 PERSONS EXERCISING RIGHTS........................................................................22
6. INSURANCE........................................................................................23 6.1 LANDLORD TO INSURE...............................................................................23 6.2 LANDLORD'S FIXTURES..............................................................................23 6.3 LANDLORD TO PRODUCE EVIDENCE OF INSURANCE........................................................24 6.4 NOTING ON INSURANCE POLICY.......................................................................24 6.5 DESTRUCTION OF THE BUILDING......................................................................24 6.6 OPTION TO DETERMINE..............................................................................25 6.7 WHERE REINSTATEMENT IS PREVENTED.................................................................25 6.8 PAYMENT OF INSURANCE MONEYS REFUSED .............................................................25 6.9 CESSER OF RENT...................................................................................25 6.10 BENEFIT OF OTHER INSURANCES......................................................................25 6.11 INSURANCE BECOMING VOID..........................................................................26 6.12 REQUIREMENTS OF INSURERS.........................................................................26 6.13 NOTICE BY TENANT.................................................................................26 7. PROVISOS ........................................................................................26 7.1 FORFEITURE.......................................................................................26 7.2 NO IMPLIED EASEMENTS.............................................................................28 7.3 EXCLUSION OF WARRANTY AS TO USER.................................................................28 7.4 REPRESENTATIONS..................................................................................28 7.5 USE OF PREMISES OUTSIDE BUSINESS HOURS...........................................................28 7.6 FAILURE BY LANDLORD TO PROVIDE SERVICES..........................................................29 7.7 EXCLUSION OF LANDLORD'S LIABILITY ...............................................................29 7.8 COVENANTS RELATING TO ADJOINING PROPERTY.........................................................29
7.9 EFFECT OF WAIVE..................................................................................29 7.10 EXCLUSION OF STATUTORY COMPENSATION..............................................................29 7.12 NOTICES ........................................................................................30 7.13 DISPUTES WITH ADJOINING OCCUPIERS................................................................30 7.14 TENANT'S OPTION TO DETERMINE.....................................................................30 7.15 CONDITIONS AND RIGHTS OF ENTRY...................................................................31 8. SERVICE CHARGE...................................................................................31 9. AGREEMENT FOR LEASE..............................................................................35 FIRST SCHEDULE RIGHTS AND EASEMENTS GRANTED..............................................................................36 SECOND SCHEDULE EXCEPTIONS AND RESERVATIONS...............................................................................37 THIRD SCHEDULE AUTHORISED GUARANTEE AGREEMENT TO BE GIVEN BY TENANT PURSUANT TO CLAUSE 22(c)(1)..........................39 FOURTH SCHEDULE COVENANTS BY THE GUARANTOR................................................................................43 FIFTH SCHEDULE ITEMS OF EXPENDITURES AS REFERRED TO IN CLAUSE 8..........................................................46 SIXTH SCHEDULE DEEDS AND DOCUMENTS CONTAINING MATTERS TO WHICH THE DEMISED PREMISES ARE SUBJECT..........................52
LEASE PARTICULARS - ----------------------------------------------------------------------------------------------- 1. DATE : 20th day of February 1997 - ----------------------------------------------------------------------------------------------- 2. PARTIES (a) LANDLORD : GENERAL ACCIDENT LIFE ASSURANCE LIMITED whose registered office is at 2 Rougier Street, York YOI IHR (Company registration number 226 742 (b) TENANT : ASPECT TELECOMMUNICATIONS LIMITED whose registered office is at The Harlequin Centre Southall Lane, Southall, Middlesex UB2 5NH (Company registration number 2181869) - ----------------------------------------------------------------------------------------------- 3. DEMISED PREMISES : The Third floor of the Building shown edged red on Plan 1 - ----------------------------------------------------------------------------------------------- 4. BUILDING : The building on the Estate shown edged red on Plan 2 - ----------------------------------------------------------------------------------------------- 5. ESTATE : The pieces or parcels of land situate at Cranford Lane, Heston, together with the Buildings erected thereon or on part thereof known as Parkway West and Parkway Trading Estate the approximate boundaries whereof are shown edged green on Plan numbered 3 as the same are registered at H.M. Land Registry under Title Number MX352739 and NGL242792 - ------------------------------------------------------------------------------------------------ 6. TERM : Five years - ------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------- 7. TERM COMMENCEMENT DATE : 1 February 1997 - ----------------------------------------------------------------------------------------------- 8. INITIAL RENT : Seventy four thousand five hundred and ninety two pounds (L74,592) per annum - ----------------------------------------------------------------------------------------------- 9. RENT COMMENCEMENT DATE : 1 February 1997 - ----------------------------------------------------------------------------------------------- 10. SERVICE CHARGE (a) ESTATE SERVICE To be calculated in accordance with CHARGE : clause 8.1(a) (b) BUILDING SERVICE CHARGE : To be calculated in accordance with clause 8.1(b) - ----------------------------------------------------------------------------------------------- 11. SERVICE CHARGE the date hereof COMMENCEMENT DATE : - ----------------------------------------------------------------------------------------------- 12. PROVISIONAL QUARTERLY L3139.05 SERVICE CHARGE PAYMENT : (exclusive of value added tax) - ----------------------------------------------------------------------------------------------- 13. NET INTERNAL AREA : The total floor area expressed in square feet measured in accordance with the Code of Measuring Practice published on behalf of the Royal Institution, of Chartered Surveyors and the Incorporated Society of Valuers and Auctioneers (Third Edition January 1990) such area being measured in accordance with the definition "Net Internal Area" contained in the said Code in the case of the Building and measured in accordance with the definition "Gross Internal Area" therein contained in the castof all other lettable areas. - -----------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------- 14. PERM1TTED USER : Good class professional or commercial offices within paragraph (a) of Class BI (Business) of the Town and Country Planning (Use Classes) Order 1987 - --------------------------------------------------------------------------------------------------- 15. PRESCRIBED RATE : Four per cent (4%) per annum above Base Rate - --------------------------------------------------------------------------------------------------- 16. BASE RATE : The Base Rate for the time being of Lloyds Bank PLC or some other London clearing bank nominated from time to time by the Landlord or, in the event of Base Rate being abolished, such other reasonable comparable race of interest as the Landlord shall from time to time determine - ---------------------------------------------------------------------------------------------------
T H I S L E A S E made on the Date stated in the Particulars (as hereinafter defined) B E T W E E N the Parties specified in the Particulars W I T N E S S E T H in consideration of the rents and covenants hereinafter reserved and contained as follows:- 1. DEFINITIONS IN this Lease, unless the context otherwise requires, the following expressions shall have the following meanings:- 1.1 "ADJOINING PROPERTY" means all parts of THE ESTATE (other than the Demised Premises) and any land and/or buildings adjoining or neighboring The Estate; 1.2 "BUILDING" means the Building (of which the Demised Promises form part) briefly described in the Particulars and each and every part thereof and all the appurtenances belonging thereto, including: (a) all landlord's fixtures, fixings, plant, machinery, apparatus and equipment now or hereafter in or upon the same; (b) all additions, alterations and improvements thereto; 1.3 BUSINESS HOURS means the usual business or working hours of the Estate which shall be 7:00 a.m.- to 8.00 p.m. on Mondays to Fridays (inclusive) and 8.00: a.m. to 1.00 p.m. on, Saturdays (excluding Christmas Day, Good Friday and all usual bank or public holidays) and such additional hours as may, from time to time, be reasonably approved by the Landlord, who shall have regard to the interests of the tenants and occupiers of the Estate; 1.4 "COMMON AREAS" means the service roads, service areas, service bays, pedestrian areas, yards, forecourts and landscaped areas and also car parking areas and any other amenities on the Estate which are or may from time to time, be provided o r designated by the Landlord for common use by the tenants and occupiers of the Estate and all persons expressly or by implication authorized by them but excluding the Lettable Areas. 1.5 "COMMON PARTS" means the pedestrian ways, courtyards, forecourts, entrance halls, corridors, passages, lobbies, landings, staircases, lifts, lavatories and washrooms and any other amenities in the Building or within the curtilage thereof which are or may, from time to time, be reasonably provided or designated by the Landlord for common use by the tenants and occupiers of the Building and all persons expressly or by implication authorised by them but excluding the Lettable Areas; 1.6 "CONDUITS" means all sewers, drains, pipes, gullies, gutters ducts, mains, watercourses, channels subways, wires. cables, conduits, flues and other conducting media of whatsoever nature; 1.7 "DEMISED PREMISES" means the Demised Premises as briefly described in the Particulars, including:- (a) the internal plaster surfaces and finishes of all structural or load bearing walls and columns therein or which enclose the same, but not any other part of such walls and columns; (b) the entirety of all non-structural or non-load bearing walls and columns therein (c) the inner half severed medially of the internal non-load bearing walls (if any) that divide the same from other parts of the Building; (d) the floor finishes thereof and all carpets save that the lower limit of the Demised Premises shall not extend to anything below the floor finishes except that raised floors and the cavity below them shall be included; (e) the ceiling finishes thereof, including all suspended ceilings (if any) and light fittings save that the upper limit of the Demised Premises shall not extend to anything above the ceiling finishes except that the cavity above any suspended ceilings shall be included; (f) all window frames and window furniture and all glass in the windows and all doors, door furniture and door frames; (g) all sanitary and hot and cold water apparatus and equipment and the radiators (if any) therein and all fin fighting equipment and hoses therein; (h) all Conduits therein and exclusively serving the same, saw those of statutory undertakers; [GRAPHIC OF FLOOR PLAN DIAGRAM] [GRAPHIC OF FLOOR PLAN DIAGRAM] Schedule of Condition taken at 3rd Floor The Arena Cranford Lane Heston on Thursday 19 December 1996 Prepared by: Weatherall Green & Smith Chartered Surveyors 22 Chancery Lane London WC2A ILT December 1996 General Notes- 1. The premises were, unoccupied at die time the schedule was taken. 2. For the purpose of identification it has, been assumed that the east elevation is the one forming the main entrance to the building. 3. The schedule covers the internal office floor area only including the office side of the doors from the stair and lift lobbies. The lift and stair lobbies, toilets and secondary stair tower are not recorded as these are assumed to be common parts and outside the direct repairing obligations of the tenants.
REF. ITEM DESCRIPTION CONDITION PHOTO - ---- ---- ----------- --------- ----- 1.0 Ceiling Suspended ceiling with fissured mineral fibre - Tiles are generally in good condition tiles 600x600mm laid in an exposed grid with although refinishing treatment has filled slots. Edges formed with standard edge beads in fissures. off-white. Tiles have been treated with a proprietary refinishing system. - Grid is generally in reasonable condition. - Edge trim is generally soiled and discoloured. 600x600m fluorescent light fittings To the perimeter of the core there are are incorporated into the ceiling frequent paint marks arising from with chromed low glare diffusers. the painting of the shadow gap. Switched from gang switches Adjacent to entrance doors on both sides. - 9No. tiles along the north side have small holes and marks left by fixings. - Blackening of tiles around supply grill north east corner five tiles and grill affected. - Other supply grills are lightly soiled including the two at the south end. - Small number of tiles have black finger marks on them probably in the region of twenty throughout the floor.
REF. ITEM DESCRIPTION CONDITION PHOTO - ---- ---- ----------- --------- ----- - On west side in the fourth bay from north end tile adjacent column is stained and one above central window pane at edge has smaller but similar stain. - Minor damage to edges of a small number of tiles has occurred. Some damage occurring before refinishing and at least two in south east corner subsequently. - Light fittings generally clean. Sixteen fittings in north end have two, out of four tubes not working and one fitting have one failed tube. 2.0 Walls 2.1 Perimeter Walls Columns have plastered and painted - Decorations are not recent and there is and Columns finishes with timber skirtings with considerable marking of the paintwork to both profile matching plastic skirting columns and infill panels. trunking. Eyeballs are fitted to all columns. - Skirtings to columns are in reasonable condition.
REF. ITEM DESCRIPTION CONDITION PHOTO - ---- ---- ----------- --------- ----- Infill panels below the windows are - One skirting section to the fourth column plastered and painted with three on the west side four bays down from the compartment plastic skirting trunking north has warped and now visibly concave. at floor level and are capped by painted timber window boards. Radiators are fixed to the - Fine vertical crack behind radiator in perimeter wall panels. first bay from north on cast side. To the ends (north and south) there is one per column bay and along the sides (cast and west) every other bay has two radiators. - Hairline horizontal crack above radiator extending 500rnrn to first bay on south side from east corner. - East side first bay from southern end hairline vertical crack to full height of panel and three small indentations and two areas of spalling plaster 20mm dia.
REF. ITEM DESCRIPTION CONDITION PHOTO - ---- ---- ----------- --------- ----- - BT sockets: 6 sockets left on south wall, 2 left on west wall, 3 left on cast wall. - Fine vertical cracks generally occurring between infill panels and columns to all elevations. 2.2 Core Walls Plastered and papered with paint applied over - Plastered and papered with paint applied P1 paper with simple painted timber skirtings. over paper - Paint finish better than external walls but there are some light marks on it. - West side; crack in plaster below hose reel cabinet has left a vertical tear in wallpaper from bottom corner of cabinet to floor level. Further tear extending from top left corner to ceiling level. - Similar tears in wallpaper around east hose reel cabinet. - Mitre joints in timber architraves around hose reel cabinets have opened up. - Paint/glue on edge of east hose reel cabinet.
REF. ITEM DESCRIPTION CONDITION PHOTO - ---- ---- ----------- --------- ----- - Tearing of wallpaper vertically due to vertical crack to left hand side of hose reel on cast side at junction of blockwork and concrete encasing to column. - Poor cutting in of decoration of wall to skirting generally. - North side splashes and dirt on length of skirting 3 metres long. 3.0 Screened pre-cast concrete floor with carpet - Carpet is Secondhand and has been cleaned tile (500 x 500 Henga Graphlex Computerguard) but shows signs of wear. and incorporating a metal two-compartment trunking evident by size of cut tiles running - Appearance is not uniform and streaking P2 mainly north to south with branches east to lines remain from cleaning operation. west. - Fitting of tiles over trunking at P3 junctions is poor particularly at the branches on the east side to both the north and south ends. - Carpet tiles along west side are damp where affected by dampness in wall. - Staining, burns and discolouration are P4 evident in isolated patches throughout the floor.
REF. ITEM DESCRIPTION CONDITION PHOTO - ---- ---- ----------- --------- ----- - Small piece of cut tile is missing from the trunking adjacent to the west side of the core. 4.0 Windows Aluminum framed continuously glazed windows - Window frames are generally dirty and incorporating sliding sash windows at every soiled. other panel with plastic catches. Painted timber window boards capping infill - Window boards in reasonable decorative walls. condition but splitting Of the Paint caused by splitting/lifting of Plywood occurring in isolated areas mainly to south west. Sample of window tried for operation and - Minor build-up of dust and dead insects. performance. - Sashes are generally working although around 20% of upper sashes are difficult to push up fully 10 allow catches to be used. - One plastic catch broken to window in south west corner. 5.0 Doors 5.1 Door to Tower Solid cored timber door in timber frame and - Face of door and frame has light Staircase painted. Fitted with cylinder rim lock with scratching and marks. internal thumb turn, Overhead closer P1.111handle and fire door keep shut sign, - Door in working order. Kicker plate To base and fire exit sign over.
REF. ITEM DESCRIPTION CONDITION PHOTO - ---- ---- ----------- --------- ----- 5.2 Doors to Main Solid core timber door in timber frame with - Door frame and face of door scratched and Staircase matching overpanel and painted. Fitted with marked particularly to bottom 200mm. two Georgian wired glass vision panels, cylinder rim lack, overhead closer, push - Beading to lower vision panel broken at plate, kicker plate and fire door keep shut mitre corner and lower mitre corners to top sign. vision panel have opened up. 5.3 Solid cored timber door and overpanel in - Dust settling in glazing beads. timber frame with timber frame glazed screen. Glazing in Georgian wired glass. Door fitted - Light marking evident on paintwork. with ironmongery as door 5.2 - Previous damage to the edge of frame evident below fresh paint. 6.0 Aluminum alloy with self finish fitted with - Generally in reasonable condition but thermostatic valves. Note monitoring of flow slightly dusty and dirty. temperature ongoing at the time schedule was taken. 7.0 Surface mounted white plastic double sockets - Operation of sockets not tested. to columns. One on north side and one on south side. - Sockets generally clean. Recessed white plastic double sockets to core walls. 18 in total.
REF. ITEM DESCRIPTION CONDITION PHOTO - ---- ---- ----------- --------- ----- Dark grey double socket outlets to perimeter trunking. One per bay to north and south sides and 14 each on west and east sides.
[PHOTO] (i) all landlord's fixtures, fittings, plant, machinery, apparatus and equipment now or hereafter in or upon the same (excluding any air conditioning units and ducting and ancillary machinery, apparatus and equipment): (j) all additions, alterations and improvements thereto, 1.8 "DEVELOPMENT" means development as defined in Section 55 of the Town and Country Planning Act 1990; 1.9 "ESTATE" means the Estate (of which the Building forms part) briefly described in the Particulars and each and every part thereof and all the appurtenances belonging thereto, including:- (a) all landlord's fixtures, fittings, plant, machinery, apparatus and equipment now or hereafter in or upon the same; (b) all additions, alterations and improvements thereto; and shall also include any additional and adjoining land and buildings in which, at any time during the Term, the Landlord shall have acquired a freehold or leasehold interest and which the Landlord intends shall form, part of the Estate, 1.10 "GROUP COMPANY" means a company that is a member of the same group as the Landlord or the Tenant (as the case may be) within the meaning of Section 42 of the Landlord and Tenant Act 1954; 1.11 "GUARANTOR" means the party (if any) named as 'Guarantor' in the Particulars and, in the case of an individual, includes his personal representatives, 1.12 "INSURED RISKS" means fire, storm, tempest, flood, earthquake, lightning, explosion, impact, aircraft (other than hostile aircraft) and other aerial devices and articles dropped therefrom, riot, civil commotion and malicious damage, bursting or overflowing of water tanks, apparatus or pipes, terrorism and such other risks as the Landlord may, in its reasonable discretion from time to time, determine, subject to such exclusions, excesses and limitations as may be imposed by the insurers: 1.13 "LANDLORD" means the-party named as 'Landlord' in the Particulars, and includes the person for the time being entitled to the reversion immediately expectant on the determination of the Term; 1.14 "THIS LEASE" means this Lease and any document which is made supplemental hereto or which is entered into pursuant to or in accordance with the terms hereof, 1.15 "LETTABLE AREAS" means those parts of the Estate leased or intended to be leased to occupational tenants; 1.16 "PARTICULARS" means the descriptions and terms appearing on the preceding pages headed `Lease Particulars' which comprise pan of this Lease; 1.17 "PLAN" followed by a number means the relevant plan annexed to this Lease; 1.18 "PLANNING ACTS" means the Town and Country Planning Act 1990, the Planning (Listed Buildings and Conservation Arms) Art 1990, the Planning (Hazardous Substances) Act 1990, the Planning (Consequential Provisions) Act 1990 and the. Planning and Compensation Act 1991, arid includes any other applicable town and country planning legislation; 1.19 "RETAINED PARTS" means all parts of the Estate which do not comprise Lettable Areas, including, but not limited to:- (a) the Common Parts; (b) office or other accommodation which may from time to time be reserved on the Estate for staff (c) any Pam of the Estate reserved by the Landlord for the housing of plant, machinery and equipment or otherwise in connection with or required for the provision of services (d) all Conduits in, upon, over or under, or exclusively serving the Estate except any that form part of the Lettable Areas; (e) the main structure of the Building and, in particular but not by way of limitation, the roof, foundations, external walls, internal load bearing walls and the structural parts of the roof, ceilings and doors, all party structures, and all exterior Pam of the Building; (f) all party structures, boundary walls, railings, fences and all exterior parts of the Estate and all roads (until such time as the same shall become maintainable at public expense), pavements pavement lights and car parking areas (if any) within the Estate; 1.20 "SERVICE CHARGE" means the Estate Service Charge and the Building Service Charge considered as a whole; 1.21 "SURVEYOR" means any person appointed by the Landlord (including an employee of the Landlord or a Group Company and the person appointed by the Landlord to collect the rents and manage the Estate) to perform the function of a surveyor for any purpose of this Lease but does not include the Surveyor defined in the Third Schedule Provided that in respect of the function of a surveyor any such person shall be suitably qualified; 1.22 "TENANT" means the party named as 'Tenant' in the Particulars and includes the Tenant's successors in title and assigns and, in the case of an individual, his personal representatives; 1.23 "TERM" means the term of years stated in the Particulars but does not include the period of my holding over or any extension or continuation., whether by statute or common law; 1.24 "UTILITIES" means water, soil, steam, air, electricity, radio, television, telegraphic, telephone, telecommunications and other services and supplies of whatsoever nature; [2 PHOTOS OF OFFICE HALLWAYS] 2. INTERPRETATION UNLESS there is something in the subject or context inconsistent therewith:- 2.1 where two or more persons are included in the expression "the Landlord" "the Tenant" and/or "the Guarantor", the covenants which are expressed to be made by the Landlord the Tenant and/or the Guarantor shall be deemed to be made by such persons jointly and severally; 2.2 words importing persons shall include firms, companies and corporations and vice versa, 2.3 any covenant by the Landlord or the Tenant not to do any act or thing shall include an obligation not to permit or suffer such act or thing to be done, 2.4 references to any right of the Landlord to have access to or entry upon the Demised Premises shall be construed as extending to all persons reasonably and properly authorized by the Landlord, including agents, professional advisers, contractors, workmen and others; 2.5 any reference to a statute (whether specifically named or not) shall include any amendment or re-enactment of such statute for the time being in force and all instruments, orders, notices regulations, directions, bye-laws, permissions and plans for the time being made, issued or given thereunder or deriving validity therefrom; 2.6 the titles or headings appearing in this Lease are for reference only and shall not affect its construction; 2.7 any reference to a clause or schedule shall mean a clause or schedule of this Lease 3. DEMISE AND RENTS THE Landlord HEREBY DEMISES unto the Tenant the Demised Premises TOGETHER WITH the rights and easements specified in the First Schedule EXCEPT AND RESERVING the rights and easements specified in the Second Schedule SUBJECT TO all rights, easements, quasi-easements, privileges, covenants, restrictions and stipulations of whatsoever nature affecting the Demised Premises including the matters contained or referred to in the Deeds and documents listed in the Sixth Schedule TO HOLD the Demised Premises unto the Tenant from and including the Term Commencement Date for the Term YIELDING AND PAYING unto the Landlord during the Term:- (a) yearly and proportionately for any fraction of a year. the Initial Rent to be paid (by Banker's standing order if the Landlord so requires) by equal quarterly payments in advance on the four usual quarter days in every year without any deduction, set-off or counterclaim whatsoever unless permitted by law, the first required payment being. a proportionate sum in respect of there the period from and including the Rent Commencement Date to the day before quarter day following the Rent Commencement Date to be made on the 20th day of February 1997; (b) a due proportion (to be fairly and properly determined by the Landlord at the Surveyor) of all sum which the Landlord shall from time to time Pay for insuring the Building against the Insured Risks pursuant to Clause 6.1(a) and the other manors referred to in clause 6.1(c) and the whole of the sums which the Landlord shall from time to time Pay for insuring against less of rent and the Service Chute pursuant to clause 6.1(b), all such sums to be due on and with effect from the date hereof to be paid on receipt of a written demand; (c) the Service Charge, to be paid on receipt of a written demand in accordance with clause 8 4. TENANT'S COVENANTS THE Tenant HEREBY COVENANTS with the Landlord as follows; 4.1 RENTS To pay the rents reserved by this Lease ac the times and in the manner aforesaid 4.2 INTEREST ON ARREARS Without prejudice to any other right, remedy or power herein contained or otherwise available to the Landlord, if any of the rents reserved by this Lease (whether formally demanded or not) shall remain unpaid fourteen days after the date when payment was due or any other sum of money payable to the Landlord by the Tenant under this Lease shall remain unpaid for more than fourteen days after the date when payment was due, to pay interest thereon at the Prescribed Rate from and including the date on which payment was due to the date of payment to the Landlord (both before and after any judgment) Provided That if the Landlord shall decline to accept any such rent so as not to waive any existing breach or alleged breach of covenant, to pay interest thereon at the Prescribed Rate from and including the date on which payment of such rent was due to the date when payment is accepted by the Landlord and, in default of payment, the same shall be recoverable as rent in arrears 4.3 OUTGOINGS (a) To pay and indemnify the Landlord against all existing and future rates, taxes, duties, charges, assessments, impositions and outgoings whatsoever (whether parliamentary, parochial, local or of any other description and whether or not of a capital or non-recurring nature or of a wholly novel character) which now are or may at any time during the Term be charged, levied, assessed or imposed upon or payable in respect of the Demised Premises or upon the owner or occupier of them (excluding any tax payable by the Landlord in respect of rents and other payments under this Lease (other than value added tax pay able by the Tenant) occasioned by any disposition of or dealing with the reversion of this Lease) and, in the absence of a direct assessment on the Demised Premises, to pay to the Landlord a fair proportion (to be reasonably determined by the Landlord) of any such outgoings; (b) To pay all charges for electricity and gas (if any) consumed in the Demised Premises, including any connection and hiring charges and meter rents and to perform and observe all present and future regulations and requirements of the electricity, gas and water supply authorities or boards in respect of the supply and consumption of electricity, gas and water on the Demised Premises and to keep the Landlord indemnified against any breach thereof 4.4 REPAIRS To repair and keep in good and substantial repair and condition the Demised Premises (damage by the Insured Risks excepted save to the extent that payment of the insurance moneys shall be withheld by reason of any act, neglect or default of the. Tenant or any undertenant or any person under its or their control) and, as and when necessary, in order to repair to replace any of the landlord's fixtures and fittings which may be or become beyond repair with new ones which arc similar in type and quality PROVIDED THAT the Tenant shall not have to keep those items listed in a schedule of condition dated 19 December 1996 prepared by Weatherall Green & Smith in any better repair or condition than that evidenced in this schedule, a copy of which is annexed to this Lease 4.5 DECORATIONS In the last three months of the Term (whether determined by effluxion of time or otherwise) in a good and workmanlike manner to prepare and decorate (with two coats at least of good quality paint) or otherwise treat, as appropriate, all parts of the Demised Promises required to be so treated and, as often as may be reasonably necessary, to wash down all tiles, glazed bricks and similar washable surfaces, such decorations and treatment to be executed in such colours and materials as the Landlord may reasonably require 4.6 CLEANING To keep the Demised Premises 'in a clean and tidy condition AND at least once in every month properly to clean both sides of all windows and window frames and all other glass in the Demised Premises 4.7 CARPETING To maintain ad, when necessary, to replace the carpets now or from time to time, laid in the Demised Promises with new carpets of equivalent quality and value 4.8 YIELD UP (a) Immediately prior to the expiration or sooner determination of the Term, at the cost of the Tenant; (i) to replace any of the landlord's fixtures and fittings which shall be missing, broken, damaged or destroyed. with new ones of similar kind and quality; (ii) to remove from the Demised Premises any moulding, sign, writing or painting of the name or business of the Tenant or occupiers and all tenant's fixtures, fittings, furniture and effects and make good, to the reasonable satisfaction of the Landlord, all damage caused by such removal; (iii) if so required by the Landlord, but not otherwise, to remove and make good all alterations or additions made to the Demised Premises during the Term and well and substantially to reinstate the Demised Premises in such manner as the Landlord shall reasonably direct and to its reasonable satisfaction; (b) At the expiration or sooner determination of the Term, quietly to yield up the Demised Premises to the Landlord in good and substantial repair and condition in accordance with the covenants by the Tenant contained in this Lease 4.9 RIGHTS OF ENTRY BY LANDLORD Subject to the provisions of sub-clause 7.15 to permit the Landlord with all necessary materials and appliances to enter and remain upon the Demised Premises for any of the Mowing purposes:- (a) to view and examine the state and condition of the Demised Premises and to take schedules or inventories of the landlord's fixtures; (b) to exercise any of the rights excepted and reserved by this Lease; (c) for the proper and necessary purpose connected with the interest of the Landlord in the Demised Premises or the Building, including , but not limited to, valuing or disposing of any interest of the Landlord 4.10 TO COMPLY WITH NOTICES Whenever the Landlord shall give written notice to the Tenant of any defects, wants of repair or breaches of covenant, the Tenant shall within sixty (60) days of such notice, or sooner if reasonably requisite, make good and remedy the breach of covenant to the reasonable satisfaction of the Landlord and if the Tenant shall fail within twenty-one (21) days of such notice, or as soon as reasonably possible in the case of emergency, to commence and then diligently and expeditiously to continue to comply with such notice, the Landlord may enter the Demised Premises and carry out or cause to be carried out all or any the works referred to in such notice and all reasonable costs and expenses thereby properly incurred shall be paid by the Tenant to the Landlord on written demand and, in default of payment, shall be recoverable as rent in arrear 4.11 DANGEROUS MATERIALS AND USE OF MACHINERY (a) Not to bring into the Estate or keep in the Demised Premises any article or thing which is dangerous, offensive, combustible, inflammable, radio-active or explosive or which Might materially increase the risk of fire or explosion; (b) Not to keep or operate in the Demised Premises any machinery which shall be unduly noisy or cause undue vibration or which will came a nuisance 4.12 OVERLOADING BOARS AND SERVICES (a) Not to overload the floors of the Demised Premises or suspend any excessive eight from the roofs, ceilings, walls, stanchions or structure of the Building and not to overload the Utilities in or serving the Building; (b) Not to do anything which may subject the Demised Premises or the Building to any strain beyond that which they are designed to bear with due margin for safety and to pay to the Landlord on demand all costs properly incurred by the Landlord in obtaining the opinion of a qualified structural engineer as to whether the structure of the Demised Premises or the Building is being or is about to be overloaded; (c) To observe the weight limits prescribed for all lift in the Building 4.13 CONDUITS Not to discharge into any Conduits any oil or grease or any noxious or deleterious effluent or substance whatsoever which may cause an obstruction or might be or become a. source of danger, or which might injure the Conduits or the drainage system of the Estate or the Adjoining Property 4.14 DISPOSAL OF REFUSE Not to deposit in the Common Parts any wade empties, rubbish or refuse of any kind, other than in proper receptacles provided for the purpose, or as may be reasonably designated by the Landlord, and not to bum any rubbish or refuse on the Demised Promises 4.15 OBSTRUCTION OF COMMON AREAS AND COMMON PARTS Not to do anything whereby the Common Areas and the Common Parts or ocher areas over which the Tenant may have rights of access or use may be damaged, or the lawful use thereof by others may be obstructed in any manner whatsoever AND not to park any vehicles of any description upon any road or open area within the Estate other than in the car parking spaces from time to time designated for the Tenant's use 4.16 PROHIBITED USERS (a) Not to use the Demised Premises or any part thereof for any public or political meeting, public exhibition or public entertainment show or spectacle of any kind, nor for any dangerous, noisy, noxious or offensive trade, business or occupation whatsoever, nor for any illegal or immoral purpose, nor for residential or sleeping purposes; (b) Not to use the Demised Premises or any part thereof for gambling, betting, gaming or wagering, or as a betting office, or as a club, or for the sale of beer, wines and spirits, and not to play or use any musical instrument, record player, loud speaker or similar apparatus in such a manner as to be audible outside the Demised Premises, and not to hold any auction on the Demised Premises; (c) Not to place outside the Demised Premises or in the Common Parts, nor to expose from the windows of the Demised Premises any articles, goods or things of any kind User 4.17 USER (a) Not to use the Demised Premises or any part thereof except for the Permitted User (excluding offices for a turf accountancy, pools promoter, estate agency, travel agency, staff agency, employment agency, job centre or any government department and any other uses to which the Landlord may reasonably object on the grounds of good estate management); (b) Not to leave the Demised Premises continuously unoccupied for more than thirty (30) days without notifying the Landlord and providing or paying for such caretaking or security arrangements as the Landlord shall reasonably require in order to protect the Demised Premises from vandalism, theft or unlawful occupation; (c) To ensure that, at all times, the Landlord has written notice of the name, home address and home telephone number of at least two keyholders of the Demised Premises, 4.18 NUISANCE Not to do anything in or about The Demised Premises or the Building which may be or become a nuisance, or which may cause damage, or disturbance to the Landlord or the other tenants in the Building or the owners, tenants or occupiers of the Adjoining Property, or which may be injurious to the value, tone, amenity or character of the Building or the amenity thereof, 4.19 ALTERATIONS (a) Not to alter, divide, cut, maim, injure or remove any of the principal or load-bearing walls, floors, beams or columns of or enclosing the Demised Premises, cat to make any other alterations or additions of a structural nature; (b) Not to make any alterations or additions to the landlord's fixtures or to any of the conduits without the consent of the Landlord, such consent not to be unreasonably withheld or delayed; (c) Not to make any alterations or additions of a non-structural nature to the Demised Premises without the consent of the Landlord, such consent may not to be unreasonably withheld or delayed except that the Tenant may install, alter and remove demountable partitioning in the Demised Premises without consent but the Tenant shall comply with all statutory requirements applicable to the works being carried out; (d) The Landlord may, as a condition of giving any such consent, require the Tenant to enter into such covenants, as the Landlord shall reasonably require, regarding the execution of any such marks and the reinstatement of the Demised Premises at the end or sooner determination of the Term 4.20 SIGNS AND ADVERTISEMENTS Not to erect or display on the exterior of the Demised Premises or in the windows thereof so as to be visible from the exterior, any pole, gag, aerial, advertisement, poster, notice, or other sign or thing whatsoever, save that the Tenant may display on the entrance door to the Demised Premises a sign stating the Tenant's name and business or profession on obtaining the prior written consent of the Landlord to the size, style, and the position thereof and the materials to be used, such consent not to be unreasonably withheld or delayed 4.21 ALIENATION 4.21.1 (a) Not to assign, charge or underlet any part of parts (as distinct from the whole) of the Demised Premises save as provided for in the following clauses; (b) For the purposes of Section 19(IA) of the Landlord and Tenant Act 1927 it is agreed that the Landlord may withhold its consent to an assignment of the whole of the premises if there are any material outstanding breaches of the Tenant's obligations under this Lease, (c) For the purposes of Section 19(IA) of the Landlord and Tenant Act 1927 it is further agreed that any consent of the Landlord to an assignment of the whole of the Premises may be subject to & condition that the Tenant shall, prior to the proposed assignment being completed, execute and deliver to the Landlord a deed which shall be prepared by the Landlord's solicitors containing covenants on the part of the Tenant in the form of those contained in the Third Schedule. (d) Without prejudice to the foregoing the Tenant shall not assign the whole of the Premises without the prior written consent of the Landlord such consent not be unreasonably withheld or delayed. The parties agree that in considering whether or not the Landlord is reasonably withholding such consent due and proper regard shall be had to the provisions and effect of the Landlord and Tenant (Covenants) Act 1995. 4.21.2 (a) Not underlet the whole of the Premises other than on condition that the underlease incorporates an agreement, authorised beforehand by the Court, excluding sections 24 to 28 of the Landlord and Tenant Act 1954 in relation to such underlease (b) Not to underlet the whole of the Demised Premises at a fine or premium or at a rent less than the open market rental value of the Demised Premises at the time of such underlease; (c) Prior to any permitted underlease, to procure that the undertenant enters into direct covenants with the Landlord as follows:- (i) an unqualified covenant by the undertenant that the undertenant shall not assign charge or underlet the whole of any part at parts of the premises to be thereby Demised nor part with possession or share the occupation of the whole or any part of the premises to be hereby Demised nor permit any person to occupy the same; (ii) an unqualified covenant by the undertenant that the undertenant shall not underlet the whole or any part or puts of the premises to be thereby Demised nor (save by way of an assignment of the whole of the premises) part with possession Or share the occupation of the whole or any part of the premises to be thereby Demised or permit any person to occupy the same; a covenant by the undertenant that the undertenant shall not assign or charge the whole of the premises to be thereby demised without obtaining the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed; (iii) a covenant by the undertenant to perform and observe all the tenant's covenants and die other provisions contained in this Lease (other thin the payment Of the rents) so far as the same are applicable to the premises to be thereby Demised (d) Every permitted underlease shall contain:- (i) a covenant by the undertenant (which the Tenant hereby covenants to enforce) prohibiting the undertenant from doing or suffering any act or thing upon or in relation, to the premises underlet inconsistent with, or in breach of, the provisions of this Lease; (ii) a condition for re-entry on breach of any covenant by the undertenant; (iii) the same restrictions as to assignment, underletting, charging, parting with or sharing the possession or occupation of the premises underlet and the same provisions for direct covenants and registration as are in this Lease (mutatis mutandis); (e) To enforce the performance and observance by every such undertenant of the covenants, provisions and conditions of the underlease and not, at any time, either expressly or by implication, to waive any breach of the same; (f) Without prejudice to the foregoing provisions, not to assign, charge or underlet the whole of the Demised Premises without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed; (g) Not to vary the terms of any permitted underlease without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed; (h) The procure that the rent reserved by any permitted underlease shall not be commuted or payable more than one quarter in advance, and not cc permit the reduction of any rent reserved by any such underlease 4.22 REGISTRATION OF DISPOSITIONS Within twenty-one (21) days of every assignment, transfer, assent, underlease, assignment of underlease, mortgage, charge or any other disposition, whether mediate or immediate, of or relating to the Demised Premises to produce to and leave with the Landlord or its Solicitors a certified copy of the deed, instrument or other document evidencing or effecting such disposition and on each occasion to pay to the Landlord or its Solicitors a fee of Twenty-five Pounds (L25.00) or such larger sum as May be reasonable 4.23 DISCLOSURE OF INFORMATION Upon making any application or request in connection with the Demised Premises or this Lease to disclose to the Landlord such information as the Landlord may reasonably require and, whenever the Landlord shall reasonably request, to supply full particulars of all occupations and derivative interests in the Demised Premises, however remote or inferior 4.24 LANDLORD'S COSTS To pay on written demand and indemnify the Landlord against all reasonable costs, fees, charges, disbursements and expenses properly incurred by the Landlord, including, but not limited to, those payable to solicitors, counsel, architects, surveyors and bailiffs: (a) in relation to or in contemplation of the preparation and service of a notice under Section 146 of the Law of Property Act 1925 and of any proceedings under Section 146 or 147 of that Act (whether or not any right of re-entry or forfeiture has been waived by the Landlord or a notice served under Section 146 is complied with by the Tenant or the Tenant has been relieved under the provisions of the Act and nothwithstanding forfeiture is avoided otherwise than by relief granted by the Court); (b) in relation to or in contemplation of the preparation and service of all notices and schedules relating to wants of repair to the Demised Premises, whether served during or after the expiration of the Term (but relating in all cases only to such wants of repair that accrued not later than the expiration or sooner determination of the Term); (c) in connection with the recovery or attempted recovery of arrears of rent or other sums due from the Tenant, or in procuring the remedying of the breach of any covenant by the Tenant; (d) in relation to any application for consent required or made necessary by this Lease (such costs to include reasonable management fees and expenses properly incurred) whether or not the same is granted (except in ewes where the Landlord is obliged not to unreasonably withhold its consent and the withholding of its consent is held to be unreasonable). or whether the application be withdrawn 4.25 STATUTORY REQUIREMENTS (a) At the Tenant's own expense, m comply in all respects with the provisions of the Offices, Shops and Railway Premises Act 1963, the Fire Precautions Act 1971, the Defective Premises Act 1972 and the Health and Safety at Work etc. Act 1974 and every other statute now in force or which may hereafter be in force and any other obligations imposed by law relating to the Demised Premises or the user thereof, (b) To execute all works and provide and maintain all arrangements upon of in respect of the Demised Premises or the user thereof, which are directed or 'required (whether by the landlord, tenant or occupier) by any statute now in force or which may hereafter be in force or by any government department. Local or other competent authority or duly authorised officer or court of competent jurisdiction acting under or in pursuance of any statute and to indemnify and keep the Landlord indemnified against all costs, charges, fees and expenses of or incidental to the execution of any works or the provision or maintenance of any arrangements so directed or required; (c) Not to do or omit to be done in or near the Demised Premises, any act or thing by reason of which the Landlord may, under any statute, incur cc have imposed upon it or become liable to pay any penalty, damages, compensation, costs, charges or expenses 4.26 PLANNING ACTS (a) To comply with the provisions and requirements of the Planning Acts and of any planning permissions relating to or affecting the Demised Premises and to indemnify and keep the Landlord indemnified against all actions, proceedings, claim, demands, losses, costs, expenses, damages and liability whatsoever in respect of any non-compliance; (b) Not to make any application for planning permission in respect of the Demised Premises without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed; (c) At the expense of the Tenant, to obtain and, if appropriate, to renew all planning permissions and any other consents and to serve all necessary notices required for the carrying out by the Tenant of any operations or the commencement or continuance of any use on die Demised Premises which may constitute Development; (d) To pay and satisfy any charge or levy imposed under the Planning Acts in respect of any development by the Tenant on the Demised Premises, (e) Not to implement any planning permission. before it has been produced to and approved in writing by the Landlord, such approval not to be unreasonably withheld or delayed; (f) Unless the Landlord shall otherwise direct in writing, to carry out and complete before the expiration or sooner determination of the Term;- (i) any works required to be carried out to the Demised Premises as a condition of any planning permission granted during the Term and implemented by the Tenant whether or not the date by which the planning permission requires such works to be carried out is within the Term; and (ii) any Development begun upon the Demised Premises in respect of which the Landlord shall or may be or become liable for any charge or levy under the Planning Acts, (g) To produce to the Landlord within, 21 days of receipt of a written demand a plans, documents and other evidence as the Landlord may reasonably require in order to satisfy itself that the provisions of this clause have been complied with; 4.27 STATUTORY NOTICES Within fourteen. (14) days of receipt of the same (or sooner if requisite having regard to the requirements of the notice or order in question or the time limits stated therein) to produce to the Landlord a true copy and any further particulars reasonably required by the Landlord of any notice or order or proposal for the same given to the Tenant and relevant to the Demised Premises or the occupier thereof by any government department or local or public authority, and. without delay, to take all necessary steps to comply with the notice or order so far as the same is the responsibility of the Tenant, and, at the request of the Landlord but at the cost of the Tenant, to make or join with the Landlord in making such objection or representation against or in respect of any such notice, order or proposal as the Landlord shall deem expedient 4.28 FIRE PRECAUTIONS AND EQUIPMENT (a) To comply with the requirements and recommendations of the fire authority and the insurers of the Estate and the reasonable requirements and recommendations of the Landlord in relation to the precautions affecting the Demised Premises; (b) To keep the Demised Premises supplied and equipped with such fire fighting and extinguishing appliances as shall be required by any statute, the fire authority or the insurers of the Estate, of as shall be reasonably required by the Landlord and such appliances shall be open to inspection and shall be maintained to the reasonable satisfaction of the Landlord; (c) Not to obstruct the access to or mews of working any fire fighting and extinguishing appliances or the means of escape from the Demised Premises or the Estate in case of fire or other emergency 4.29 DEFECTIVE PREMISES Forthwith upon becoming aware of the same, to give written notice to the Landlord of any defect in the Demised Premises which might give rise to an obligation on the Landlord to do or refrain from doing any act or thing so as to comply with the duty of care imposed on the Landlord pursuant to the Demised Premises Act 1972, and at the Landlord's cost to display and maintain in the Demised Premises all notices which the Landlord may, from time to time, reasonably require to be displayed in relation thereto 4.30 ENCROACHMENTS AND EASEMENTS Not to stop up or obstruct any of the windows or lights belonging to the Demised Premises and not to permit any new window, light, opening, doorway, passage, Conduit or other encroachment or easement to be made or acquired into, upon or over the Demised Premises or any part thereof, and in case any person shall attempt to make or acquire any encroachment or easement whatsoever, to give written notice thereof to the landlord immediately the same shall come to the notice of the Tenant, and, at the request of the Landlord, to adopt such means as may be reasonably required by Landlord for preventing any such encroachment or the acquisition of any such easement 4.31 RELETTING NOTICES To permit the Landlord at all reasonable times during the last six (6) months of the Term to enter upon the Demised Premises and affix and retain without interference upon any suitable parts of the exterior of the Demised Premises (but not so as materially to affect the access of light and air to the Demised Premises) notices for reletting the same and not to remove or obscure the said notices and to permit all persons with the written authority of the Landlord to view the Demised. Premises at all reasonable hours in the daytime, upon prior appointment having been made 4.32 INDEMNITY To keep the Landlord duly indemnified from and against all actions, proceedings, claims, demands, losses, costs, expenses, damages and liability arising in any way directly or indirectly out of any act, omission or negligence of the Tenant or any persons in the Demised Premises expressly or impliedly with the Tenant's authority or any breach of the Tenant's covenants and the conditions and other provisions contained in this Lease 4.33 LANDLORD'S REGULATIONS To comply with all reasonable regulations made by the Landlord from time to time and notified to the Tenant in writing for the general management and security of the Building, the Estate, the Common Areas, the Common Parts and other areas used or to be used in common with others 4.34 TAXATION Notwithstanding anything contained in this Lease, not to do on or in relation to the Demised Promises or any part thereof or in relation to any interest of the Tenant therein my act or thing (other than the payment of the rents reserved by this Lease) which shall render the Landlord liable for any additional tax, levy, charge or other fiscal imposition of whatsoever nature, and not to dispose of or deal with this Lease in such a way that the Landlord shall be or become liable for any such tax, levy, charge or fiscal imposition 4.25 VALUE ADDED TAX Where by virtue of any of the provisions of this Lease the Tenant is required to pay, repay or reimburse to the Landlord or any person or persons any rents, premium, cost, fee, charge, insurance premium, expense or other sum or amount whatsoever in respect of the supply of any goods and/or services by the Landlord or any other person or persons the Tenant shall also be required in addition to pay or (as the case may be) keep the Landlord indemnified against:- (a) The amount of any Value Added Tax which may be chargeable in respect of such supply to the Tenant (b) The amount of Value Added Tax chargeable on say other person (or chargeable on the Landlord in the; case of supplies which the Landlord is deemed to make to itself) in respect to of supplies the cost of which is included in the calculation of the sums which the Tenant is required to pay, repay or reimburse to the Landlord, save to the extent that such Value Added Tax is recoverable by the Landlord by virtue of the supply by the Landlord of any goods and/or services in respect of this Lease being subject to Value Added and, in default of payment, the same shall be recoverable as rent in arrear 4.36 COVENANTS AFFECTING REVERSION To perform and observe the agreements, covenants, restrictions and stipulations referred to in the Deeds and documents listed in the Sixth Schedule, so far as any of the same are still. subsisting and capable of taking effect and relate to the Demised Premises, and to keep the Landlord indemnified against all actions, claims, demands, costs, expenses, damages and liability in any way relating thereto 5. LANDLORD'S COVENANTS THE Landlord HEREBY COVENANT with the Tenant as follows:- 5.1 QUIET ENJOYMENT That the Tenant paying the rents reserved by this Lease and performing and observing the covenants an the part of the Tenant herein contained shall and may peaceably hold and enjoy the Demised Premises during the Term without any interruption by the Landlord or any person lawfully claiming through, under, or in trust for it or any person claiming by title paramount. 5.2 PROVISION OF SERVICES Subject to the Tenant paying the Service Charge, to provide the following services in accordance with the principles of good estate management:- (a) REPAIRS So far as may be necessary for the reasonable use and enjoyment by the Tenant of the Demised Premises and the Building, to keep the Retained Parts in good repair and condition, (b) COMMON AREAS (i) To keep clean and maintained in a proper manner, the Common Parts including the windows thereof and to keep the same adequately lighted, where appropriate, during the Business Hours; (ii) To repair and maintain and keep clean the Common Areas and to keep the same adequately lighted, where appropriate during Business Hours; (c) COMMON PARTS To provide and maintain at the Landlord's reasonable discretion, such plants, shrubs, trees or garden or grassed areas in the Common Areas as may be appropriate and, to keep the same planted, free from weeds and the grass cut; (d) LIFTS During the Business Hours, to provide a lift service by the operation of the lifts now installed, (e) HOT AND COLD WATER During the Business Hours, to provide an adequate supply of hot and cold water to any existing wash basins in the Demised Premises; (f) HEATING During the Business Hours, to provide heating to the Demised Premises and the Common Parts to such temperatures as the Landlord may, from time to time, reasonably consider adequate and for such periods of the year as the Landlord shall, reasonably deem desirable; (g) AIR CONDITIONING During the Business Hours. to provide air conditioning to the Demised Premises to such a standard as the air conditioning system was designed to achieve; (h) STAFF To employ such staff as the Landlord may, in its reasonable discretion, deem necessary to enable it to provide all or any of the services on the Estate and for the general management and security of the Estate in accordance with the principles of good estate management; (i) NAME BOARDS To provide and install name boards of such size and design as the Landlord may, in its reasonable discretion, determine in the main entrance to the Building and at the entrance to the Estate; and at such other locations as the Landlord may reasonably consider desirable; (j) OPEN ARMS To repair and maintain those parts of the Estate which are not Lettable Areas and to keep the same adequately lit at such times as the Landlord shall determine, and clear of all rubbish and free from weeds and to provide and maintain, at the Landlord's discretion, such plants, shrubs, trees or garden or grassed areas as may be appropriate and to keep the same planted, free from weeds and the grass cut 5.3 PERSONS EXERCISING RIGHTS (a) Without prejudice to the generality of sub-clause 5.3(b) the Landlord shall procure that in the instances where the Surveyor or any other person or persons shall exercise rights on its behalf pursuant to the provisions of this Lease and is or are obliged to act reasonably or properly under the terms of this Lease such Surveyor, person or persons shall act reasonably or properly (b) The Landlord shall procure that the Surveyor or any other person or persons who shall exercise rights on its behalf shall comply wide every condition which applies to him or them 6. INSURANCE 6.1 LANDLORD TO INSURE THE Landlord shall' insure and keep insured with some publicly quoted insurance company of good repute in the United Kingdom or with Lloyds' Underwriters and through such agency as the Landlord may from time to time reasonably determine (a) the Building (including plate glass (if any)) subject to such exclusions, excesses and limitations as may be imposed by the insurers in the full reimbursement cost of the Building against loss or damage by the Insured Risks, including architects, surveyors, and other professional fees (and value added tax thereon) and expenses incidental thereto, the cost of shoring up, demolition and site clearance and similar expenses; (b) the loss of rent and the Service Charge from time to time payable, or reasonably estimated to be payable under this Lease, taking account of any review of the rent which may become due under this Lease, for three (3) years; (c) explosion of any engineering and electrical plant and machinery to the extent that the same is not covered by paragraph (a) of this clause; (d) property owner's liability and such other insurances as the Landlord may, from time to time, reasonably deem necessary to effect 6.2 LANDLORD'S FIXTURES The Tenant shall notify the Landlord in writing of the full reinstatement cost of any fixtures and fittings installed at any time by the Tenant and which may become landlord's fixtures and fittings for the purpose of enabling the Landlord to effect adequate insurance cover for the same 6.3 LANDLORD TO PRODUCE EVIDENCE OF INSURANCE At the request of the Tenant, the Landlord shall produce to the Tenant reasonable written evidence from the insurers of the terms of the insurance policy and the fact that the policy is subsisting and in effect and that all premiums have been paid up to date 6.4 NOTING ON INSURANCE POLICY The Landlord shall forthwith:- (a) Procure that the interests of the Tenant, any permitted undertenant and their respective mortgages are noted on the insurance policy (b) Where noting is impracticable procure that notice of the interest of the Tenant, any permitted undertenant and their respective mortgagees is given to the insurers 6.5 DESTRUCTION OF THE BUILDING If the or any part thereof is destroyed or damaged or rendered inaccessible by any of the Insured Risks so as to render the Demised Promises unfit for use or occupation or inaccessible then:- (a) unless payment of the insurance moneys shall be refused in whole or in part by reason of any act or default of the Tenant or any undertenant or any person under its or their control and the Tenant has not reimbursed the amount of the insurance moneys refused in accordance with sub-clause 6.8; and (b) subject to the Landlord being able to obtain any necessary planning permission and all other necessary licenses, approvals and consents in respect of which the Landlord shall use all reasonable endeavours to obtain but shall not be obliged to institute any appeals; and (c) subject to the necessary labour and materials being and remaining available in respect of which the Landlord shall use all reasonable endeavours to obtain as soon as practicable the Landlord shall (subject to clause 6.5) lay out the net proceeds of such insurance, other than any in respect of loss of rent, in the rebuilding and reinstatement of the premises so destroyed or damaged substantially as the same were prior to any such destruction or damage (but not so as to provide accommodation identical in layout if it would not be reasonably practical to do so) and shall make up any shortfall out of its own monies 6.6 OPTION TO DETERMINE If, during the last three (3) years of the Term, the Demised Premises, the Building, or the Estate shall be so destroyed or damaged by any of the Insured Risks as to render the Demised Premises, the Building or the Estate completely unfit for use or occupation or inaccessible either party may determine this Lease by giving to the other not less than six (6) months' written notice to be given at any time within twelve (12) months after such destruction or damage and such determination shall be without prejudice cc any claim by either party against the other in respect of any antecedent breach of covenant Provided that if this Lease shall be determined then the Landlord shall not be required to lay cut the net proceeds of such insurance and shall be solely entitled to all the insurance moneys 6.7 WHERE REINSTATEMENT IS PREVENTED If, for any reason whatsoever, the Landlord is prevented from rebuilding or reinstating the Demised Premises, the Building or the Estate, the Landlord shall be relieved from such obligation and shall be solely entitled to all the insurance moneys and if such rebuilding and reinstatement shall not be completed three (3) years after the date of the destruction or damage and this Lease has act been terminated by frustration, either party may at any time after the expiry of such three (3) years by written notice given to the other determine this demise but without prejudice to any claim by either party against the other in respect of any antecedent breach of covenant 6.8 PAYMENT OF INSURANCE MONEYS REFUSED If the payment of any insurance moneys is refused as a result of some act or default of the Tenant or any undertenant or any person under its or their control, the Tenant shall pay the Landlord, on receipt of a written demand, the amount so refused with interest thereon at the Prescribed Rate 6.9 CESSER OF RENT In case the Demised Premises, the Building or the Estate or any part thereof shall be destroyed or damaged by any of the Insured Risks so as to render the Demised Premises unfit for use or occupation or inaccessible and to the extent that the insurance has not been vitiated or payment of the policy moneys refused as a result of some act or default of the Tenant or any undertenant or any person under its or their control, them the rent first reserved by this Lease and the Service Charge or a fair proportion thereof, according to the nature and extent of the damage sustained, shall be suspended, until the Demised Premises or the part destroyed or damaged shall be again rendered fit for use and occupation and accessible or until the expiration of three (3) years from the date of the destruction or damage (whichever is the earlier) and any dispute regarding the cesser of rent shall be referred to a single arbitrator to be appointed, in default of agreement, upon the application of either party. by or on behalf of the President for the time being of the Royal Institution of Chartered Surveyors in accordance with the provisions of the Arbitration Acts 1950 to 1979 6.10 BENEFIT OF OTHER INSURANCES If the Tenant shall become entitled to the benefit of any insurance an the Demised premises which is not affected or maintained in pursuance of the obligations herein contained, then the Tenant shall apply all moneys received from such insurance (in so far as the same shall extend) in making good the loss or damage in respect of which the same shall have been received 6.11 INSURANCE BECOMING VOID The Tenant shall not do or omit to do anything that could cause any policy of insurance in respect of or covering the Demised. Premises, the Building, the Estate or any Adjoining Property owned by the Landlord to become void or voidable wholly or in part nor (unless the Tenant has previously notified the Landlord and agreed to pay the increased premium) anything whereby any abnormal or loaded premium may become payable and the Tenant shall, on receipt of a written demand, pay to the Landlord all reasonable expenses properly incurred by the Landlord in renewing any such policy 6.12 REQUIREMENTS OF INSURERS The Tenant shall, at all times, comply with all the requirements of the insurers so far as such requirements are known by the Tenant 6.13 NOTICE BY TENANT The Tenant shall give notice to the Landlord as soon as reasonably practicable upon the happening of any event; or thing which might affect any insurance policy relating to the Demised Premises or the Building 7. PROVISOS PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED as follows:- 7.1 FORFEITURE Without prejudice to any other right, remedy or power herein contained or otherwise available to the Landlord:- (a) if the rents reserved by this Lease or any part thereof shall be unpaid the twenty-one (21) days after becoming payable (whether formally demanded or not); or (b) if any of the covenants by the Tenant contained in this Lease shall not be performed and observed; or (c) if the Tenant and/or the Guarantor (if any) (being a body corporate) has a winding-up petition or petition for an administration order presented against it provided that such petitions shall not be vexatious or frivolous or passes a winding-up resolution (other than in connection with a members' voluntary winding up for the purposes of an amalgamation or reconstruction) or calls a meeting of its creditors for the purposes of considering a resolution that it be wound up voluntarily or resolves to present its own winding-up petition or is wound-up (whether in England or elsewhere) or the directors or shareholders of the Tenant or the Guarantor resolve to present a petition for an administration order in respect of the Tenant or the Guarantor (as the case may be) or an Administrative Receiver or a Receiver or a Receiver and Manager is appointed in respect of the property or any part thereof of the Tenant or the Guarantor; or (d) if the Tenant and/or the Guarantor (if any) (being a body corporate) calls or a nominee calls on its behalf a meeting of its creditors or any of them or makes an application to the Court under Section 425 of the Companies Act 1985 or submits to its creditors or any of them a proposal pursuant to Part I of the Insolvency Act 1986 or enters into any arrangement, scheme, compromise, moratorium or composition with its creditors or any of them (whether pursuant to Part I of the Insolvency Act 1986 or otherwise) or suffers any distress or execution to be levied on the Demised Premises; or (e) if the Tenant and/or the Guarantor (if any) (being an individual, or if more than one individual, then any one of them) makes an application to the Court for an interim order under Pan VIII of the Insolvency ACE 1986 or convenes a meeting of his creditors or any of them or enters into any arrangement, scheme, compromise, moratorium or composition with his creditors or any of them (whether pursuant to Part VIII of the Insolvency Act 1986 or otherwise) or has a bankruptcy petition presented against him (provided that such petition shall not be vexatious or frivolous) or is adjudged bankrupt (whether in England or elsewhere) or suffers any distress or execution to be levied on the Demised. Premises THEN, and in any such case, the Landlord may at any time thereafter re-enter the Demised Premises or any part thereof in the name of the whole and thereupon the Term shall absolutely cease and determine but without prejudice to any rights or remedies which may then have accrued to the Landlord against the Tenant in respect of any an antecedent breach of any of the covenants contained in this Lease 7.2 NO IMPLIED EASEMENTS Nothing herein contained shall impliedly confer upon or grant to the Tenant any easement, right or privilege other than those expressly granted by this Lease 7.3 EXCLUSION OF WARRANTY AS TO USER (a) Nothing contained in this Lease or in any consent granted by the Landlord under this Lease shall imply or warrant that the Demised Premises may be used under the Planning Acts for the purpose herein authorised or any purpose subsequently authorised and the Tenant hereby acknowledges and admits that the Landlord has not given or made at any time any representation or warranty that any such use is or will be or will remain a permitted use under the Planing Acts; (b) Notwithstanding that any such use might not be a permitted use under the Planning Acts, the Tenant shall remain my bound and liable to the Landlord in respect of the obligations undertaken by the Tenant in this Lease without being entitled to any compensation, recompense or relief of any kind whatsoever 7.4 REPRESENTATIONS The Tenant acknowledges that this Lena has not been entered into in reliance wholly or partly on any statement or representation made by or on behalf of the Landlord. Except such statement or representation that is expressly set out in this Lease or any written reply to preliminary inquiries or in any correspondence from the Landlord's solicitors to the Tenant's solicitors 7.5 USE OF PREMISES OUTSIDE BUSINESS HOURS If the Tenant shall desire, from time to time, to use the Demised Promises outside the Business Hours, then the Tenant shall be entitled to use and occupy the Demised Premises and have access thereto on the following terms and conditions:- (a) the Tenant and shall comply with any reasonable requirements as to the use and occupation of the Demised Premises and the means of access thereto, (b) the Tenant shall pay to the Landlord, on demand, the whole of the reasonable costs and expenses properly attributable to the provision of any necessary staff, services and security; (c) the Landlord shall not 'be obliged to provide any service to the Demised Premises or the Estate if the Landlord shall, at any time in its reasonable discretion, consider it impractical m do so 7.6 FAILURE BY LANDLORD TO PROVIDE SERVICES The Landlord shall not be liable to the Tenant in respect of any failure by the Landlord to perform any of the services referred to in this Lease, whether express or implied, unless and until the Tenant has notified the Landlord of such failure and the Landlord has failed within a reasonable time to remedy the same 7.7 EXCLUSION OR LANDLORD'S LIABILITY The Landlord shall nor, in any circumstances, incur any liability for any failure or interruption in any of the services provided by the Landlord or for any inconvenience or injury to person or property arising from such failure or interruption due to mechanical breakdown, failure or malfunction, overhauling, maintenance, repair or replacement, strikes, labour disputes or shortages or any cause or circumstance beyond the control of the Landlord but the Landlord shall use its reasonable endeavours to cause the service in question to be reinstated with the minimum of delay 7.8 COVENANTS RELATING TO ADJOINING PROPERTY Nothing contained in or implied by this Lease shall give the Tenant the benefit of or the right to enforce or to prevent the release or modification of any, covenant, agreement or condition entered into by any tenant of the Landlord in respect of any property not comprised in this Lease 7.9 EFFECT OF WAIVER Each of the Tenant's covenants shall remain in full force both at law and in equity notwithstanding that the Landlord shall have waived or released temporarily any such covenant, or waived or released temporarily or permanently. revocably or irrevocably a similar covenant or similar covenants affecting other property belonging to the Landlord 7.10 EXCLUSION OF STATUTORY COMPENSATION Except where any statutory provision prohibits or modifies the right of the Tenant to compensation being reduced or excluded by agreement, neither the Tenant nor any undertenant (whether immediate or not) shall be entitled, on quitting the Demised Premises or any put thereof, to claim any compensation from the Landlord under the Landlord and Tenant Act 1954 7.11 EXCLUSION OF LANDLORD AND TENANT ACT 1954 Having been authorised to do so by Order of the Mayors & City of London, County Court made on 28 January 1997 under the provisions of Section 38(4) of the Landlord and Tenant Act 1954 (as amended by Section 5 of the Law of Property Act 1969), the Landlord and Tenant agree that the provisions of Section 24 to 28 of that Act shall be excluded in relation to the tenancy created by this Lease 7.12 NOTICES (a) Any demand or notice required m be made, given to, at saved on the Tenant or the Guarantor (if any) under this Lease shall be duly and validly made, given or served if addressed to the Tenant or the Guarantor respectively (and, if there shall be more than one of them, then any one of them) and delivered personally, or sew by pre-paid registered or recorded delivery mail, or sent by telex or telegraphic facsimile transmission addressed (in the case of a company) to its registered office, or (whether a company or individual) its last known address, or (in the case of a notice to the Tenant) the Demised Premises; (b) Any notice required to be given to or served an the Landlord shall be duly and validly given or served if sent by pre-paid registered or recorded delivery mail, or sent by te1ex or telegraphic facsimile transmission addressed to the Landlord at its registered office 7.13 DISPUTES WITH ADJOINING OCCUPIERS Any dispute arising between the Tenant and the other tenants or occupiers of the Estate as to any easement, quasi-easement, right, privilege or Conduit in connection with the Demised Premises or the Estate shall be fairly and reasonably determined by the Landlord unless the Landlord shall be a party to the dispute 7.14 TENANT'S OPTION TO DETERMINE (a) The Tenant shall be entitled to determine this Lease on 29 December 1999 by giving to the Landlord not less than six (6) months' written notice and on the expiration of such notice this Lease shall cease and determine but without prejudice to any claim which either party may have against the other in respect of any antecedent breach of any of the covenants in this Lease (b) The Tenant's right to determine the Lease as set out in sub-clause (a) above is subject to the Tenant paying to the Landlord El 8,648 on the service of the notice mentioned above 7.15 CONDITIONS AND RIGHTS OF ENTRY Notwithstanding any other provision of this Lease any entry into or upon the Demised. Premises by the Landlord any person or persons acting on their behalf shall only be effected subject to the following terms and conditions; (a) Such entry shall only be effected where the works or other matters or things to be done may not reasonably be done without such entry (b) The Landlord shall use reasonable endeavours to procure that any such entry shall be effected at reasonable times in a reasonable manner causing a little damage to the Demised Premises or disturbance or inconvenience to the Tenant any permitted undertenant or any other lawful occupier for its or their businesses as possible (c) Reasonable prior written notice shall be given save in cases of emergency where as much notice as possible shall be given (d) The Landlord shall make good without delay any damage caused to the Demised Promises and any fixtures, fittings and materials therein of the Tenant, any permitted undertenant: or any other lawful occupier as a result of such entry 8. SERVICE CHARGE 8.1 FOR the purpose of this Lease, the following expressions shall have the following meanings: (a) "ESTATE SERVICE CHARGE" means the service charge percentage calculated as follows: A due proportion of those items of Expenditure attributable to the Estate and set out in PART `B' of the FIFTH SCHEDULE to be reasonably and properly determined by the Landlord or the Surveyor and to be calculated according to the ratio which the Gross Internal Area of the Demised Premises bears to the Gross Internal Area of the Lettable Areas of the Estate (subject to Clause 8.8); (b) "BUILDING SERVICE CHARGE" means the service charge percentages calculated as follows:- A due proportion of those items of Expenditure attribute to the Building and set out in Part "A" of the Fifth Schedule to be reasonably and properly determined by the Landlord of the Surveyor and to be calculated according to the ratio which the Gross Internal Area of the Demised Premises bears to the aggregate of the Gross Internal Area of the Lettable Areas of the Building (subject to Clause 8.8): (c) "EXPENDITURE" means:- (i) the aggregate of all reasonable costs, fees, expenses, and outgoings whatsoever incurred by. the Landlord in complying with its obligations in clause 5.2 and in respect of the items set out in Parts "A" and "B" of the Fifth Schedule (whether or not the Landlord is obliged by this Lease to incur the same) in accordance with the principles of good estate management; (ii) such sums as the Landlord shall, in its reasonable discretion, consider desirable to set aside from time to time for the purpose of providing the periodically recurring Items of expenditure, whether recurring at regular or irregular intervals; (iii) Such provision for anticipated expenditure in respect of any of the services to be provided by the Landlord or any of the items referred to in Parts "A" and "B" of the Fifth Schedule as the Landlord shall, in its reasonable discretion, consider fair and reasonable in the circumstances; (d) "Financial Year" means the period from the 25th day of December in every year to the 24th day of December of the following year or such other period as the Landlord may, in its absolute discretion, from time to time reasonably determine; (e) "Estimated Expenditure" means for any Financial Year during the Term, such sum as the Landlord shall (acting reasonably), from time to time, specify as being, in its reasonable discretion, a fair and reasonable. estimate of the Expenditure for the current Financial Year based upon a budge; prepared by the Landlord and submitted to the Tenant Provided That the Landlord may from time to time during any Financial Year, as appropriate, submit to the Tenant revised budgets with respect to its estimate of the Expenditure for that Financial Year whereupon appropriate adjustments shall be made to such sum to reflect the revised budget(s); "Accountant" (f) "Accountant" means any person appointed by the Landlord (including an employee of the Landlord or a Group Company) to perform the function of an accountant in relation to the Expenditure; (g) "Service Charge Cap" means the service charge percentage calculated as follows: (i) in respect of the Financial Year expiring on 24 December 1991 the lower of. (a) the sum of L12,820.50 per annum; or (b) the relevant proportion of the Expenditure attributable to the Tenant (ii) as from the first day of each subsequent: Financial Year until the Financial Year ending 24 December 1999 (each such date being hereinafter called a "Variation Date") there shall be substituted for the sum referred to in (i) above a sum which bears the same proportion to the sum L12,820.50 as the Retail Prim Index published in the month immediately preceding such Variation Date bears to (being the Retail Prices Index published in the month immediately 154.4 preceding the commencement of the Term hereby granted) 8.2 The Landlord shall, as soon as reasonably practicable after the and of each Financial Year, prepare an account showing the Expenditure for that Financial Year and containing a fair summary of the various items comprising the Expenditure and, upon such account being certified by the Accountant (a copy of which shall be supplied to the Tenant), the same shall be conclusive evidence, for the purposes of this Lease, of all arrears of fact referred to in the account 8.3 The Tenant shall on request be entitled to inspect the receipts vouchers and other relevant documents in relation to the Expenditure and to take copies of such receipts, vouchers and other relevant documents 8.4 The Tenant shall pay to the Landlord on account of the Service Charge for the period commencing on the Service Charge Commencement Date down to the end of the following Financial Year and thereafter during each subsequent Financial Year during the Term the respective Service Charge percentages of the Estimated Expenditure ("the Advance Payment") to be made by equal quarterly payments in advance (subject to adjustment if the Estimated Expenditure is revised as contemplated by the definition thereof) Provided That the first Advance Payment, being a proportionate sum of the Provisional Quarterly Service Charge Payment from and including the Service Charge Commencement Date to the day before the quarter day following the Service Charge Commencement Date, shall be made on the execution hereof 8.5 If the Service Charge for any Financial Year shall:- (a) exceed the Advance Payment for that Financial Year, the excess shall be paid by the Tenant to the Landlord on receipt of a written demand; or be less than the Advance Payment for that Financial Year, the overpayment shall be credited to the Tenant against the next quarterly payment of the Service Charge 8.6.1 The Service Charge shall not exceed the Service Charge Cap attributable to the relevant Financial Year up to and including the Financial Year ending 24 December 1999 PROVIDED THAT if the avoidance of doubt there shall be no service charge cap beyond this date. 8.6.2. If the Retail Prices Index shall cease to be published or its base shall be changed or if for any reason it is impossible or impracticable to implement the provisions for calculating the Service Charge Cap there shall be substituted such other provisions for calculating the Service Charge Cap (being as equivalent as may be to the provisions hereof) as shall be agreed or in default of agreement shall be determined by an arbitrator to be appointed by the President far the time being of the Royal Institution of Chartered Surveyors 8.6.3 In no circumstances shall the Service Charge Cap applying to any Financial Year be less than the Service Charge Cap applying to the immediately preceding Financial Year and accordingly if a decrease in the Retail Prices Index would (but for this paragraph) have resulted in the revised Service Charge Cap being less than the Service Charge Cap applying to the immediately preceding Financial Year then the Service Charge Cap applying to the relevant Financial Year shall be the Service Charge Cap applying to the immediately preceding Financial Year 8.7 Any omission by the Landlord to include in any Financial Year a sum expended or a liability incurred in that Financial Year shall not preclude the Landlord from including such sum or the amount of such liability in any subsequent Financial Year, as the Landlord shall reasonably determine 8.8 In performing its obligations contained in clause 5.2, the Landlord shall (acting reasonably be entitled, at its discretion. to employ suitably qualified agents, contractors and such other persons as it may think fit and to delegate its duties and powers to them and their fees and expenses including VAT shall form part of the Expenditure 8.9 If, at any time during the Term, the Net Internal Area of the Lettable Areas shall change or other circumstances shall arise making the calculation of the Service Charge percentages on the basis specified in the Particulars (whether or not relating to individual items of Expenditure) unreasonable or inequitable, the Landlord shall be entitled to after either or both of the Service Charge percentages to such other percentage which is fair and reasonable in all the circumstances 8.10 The Landlord (acting reasonably) may, at its discretion, Withhold, add to, extend, vary or make any alterations to any of the services from time to time if; the Landlord shall reasonably deem it desirable to do so in accordance with the principles of good estate management for the more efficient management, security and operation of the Building or the Estate, or for the comfort of the tenants in the Building or on the, Estate 8.11 The provisions of this clause shall continue to apply notwithstanding the expiration or sooner determination of the Term, but only in respect of the period down to such expiration: or sooner determination, the Service Charge for that Financial Year being apportioned for the said period on a daily basis 9. AGREEMENT FOR LEASE THE parties herein certify that there is no agreement for lease to which this Lease gives effect I N W I T N E S S whereof this deed has been executed by the parties hereto and is intended to be and is hereby delivered on the date first above written FIRST SCHEDULE RIGHTS AND EASEMENTS GRANTED 1. The right for the Tenant and all persons expressly or by implication authorised by the Tenant (in common with the Landlord and all persons having a like right) but subject to any existing or future regulations reasonably made by the Landlord and notified in writing to the Tenant:- (a) to use the Common Areas and the Common Parts for all proper purposes in connection with the use and enjoyment of the Demised Premises; (b) to use the passenger lifts in the Building for the purpose only of obtaining access to and egress from the Demised Premises 2. The free passage and running of the Utilities (subject to temporary Interruption for repair, alteration or replacement) to and from the Demised Premises through the Conduits which are now laid or (within a period of 80 years from the daze hereof) shall be laid in, under, or through other parts of the Building, so far as any of the same are necessary for the reasonable use and enjoyment of the Demised Premises; 3. The right of support shelter and protection for the benefit of the Demised Premises as is now enjoyed from all other parts of the Building; 4. The right for the Tenant and the occupiers and other bona fide users of the Demised Premises to use 21 car parking spaces in the car park coloured yellow on Plan 2 for the parking of private motor cars and for no other purpose together with all necessary rights to access and egress to and from Cranford Lane over such route as the Landlord may, from time to time, reasonably determine subject to any existing or future regulations made by the Landlord and to the right of the Landlord from time to time, on giving to the Tenant not less than one month's written notice, to alter the position of the space or spaces and designate some other equivalent space or spaces as the Landlord may, in its reasonable discretion, determine SECOND SCHEDULE EXCEPTIONS AND RESERVATIONS The following rights and easements are excepted and reserved out of the Demised Premises to the Landlord and the tenants and occupiers of the Estate and the Adjoining Property and all other persons authorized by the Landlord or having the like rights and easements:- 1. The free and uninterrupted passage and running of the Utilities through the Conduits which are now, or may it any time be in, under, or passing through or over the Demised Premises; 2. Subject to the provisions of Clause 7.15 the right to enter the Demised Premises in order to:- (a) inspect, cleanse, maintain, repair, connect, remove, lay, or (where necessary) renew, relay, replace with others, alter or execute any works whatever to or in connection with the Conduits (b) execute repairs and decorations, alterations and any ocher works, and to make installations to the Demised Premises, the Estate or the Adjoining Property or to do anything whatsoever which the Landlord may or must do under this Lease where such matters cannot reasonably be carried out without gaining access to the Demised Promises PROVIDED THAT the Landlord or the person exercising the foregoing rights shall cause as little inconvenience as possible to the Demised Premises and shall make good, without delay, any damage thereby caused to the Demised Premises; 3. The right to erect scaffolding for the minimum period reasonably necessary for the purpose of repairing or cleaning the Building and any buildings now or hereafter erected on the Estate or the Adjoining Property or in connection with the exercise of any of the rights mentioned in this Schedule notwithstanding that such scaffolding may temporarily restrict the access to or enjoyment and use of the Demised Premises, 4. The rights of light, air, support, protection and shelter and all other easements and rights now or hereafter belonging to or enjoyed by other parts of the Estate or the Adjoining Property; 5. Full right and liberty at any time hereafter to raise the height of, or make any alterations or additions or execute any other works to the Building or any buildings on the Estate or on the Adjoining Property, or to erect any now buildings of any height on the Estate or on the Adjoining Property in such a manner as the Landlord or the person exercising the right (in either case acting reasonably) shall think fit provided that the same shall not obstruct, affect or interfere with the amenity of, or access to, the Demised Premises or the passage of light and air to the Demised Premises or so that the Tenant's use and occupation thereof is materially affected; 6. The right to enter the Demised Promises (in times of emergency or during fire-drills) for the purpose of obtaining access to, or using, any of the fire escapes or routes of escape in the Estate, whether or not in existence at the date hereof. 7. The right to affix to, and thereafter maintain upon, the Demised Premises, but not so as to interfere with the business of the occupier of the, Demised Premises, lighting equipment reasonably necessary for the purpose of illuminating the Common Parts PROVIDED THAT any rights or easements excepted and reserved in this Schedule over anything which is act in being at the date hereof shall be effective only in relation to any such thing which comes into being before the expiry of eighty (80) years from the date hereof (which shall be the perpetuity period applicable hereto) THIRD SCHEDULE AUTHORIZED GUARANTEE AGREEMENT TO BE GIVEN BY TENANT PURSUANT TO CLAUSE 22(c)(1) T H I S D E E D is made the day of 19 B E T W E E N:- (1) [ ] whose registered office is at [ ] (registered number: ) (the "Present Tenant') [and] (2) [ ] whose registered office is at [ ] (registered number: ) (the "Landlord") [and] (3) [ ] whose registered office is at [ ] (registered number: ) (the "Guarantor")]] W H E R E A S: (A) This Agreement is made pursuant to the lease dated [ ] and made between [ ] (the "Lease") which expression shall include (where the context so admits) all deeds and documents supplemental to it (whether expressed to be so or not) relating to the premises at [ ] (the "Premises"). (B) The Present Tenant holds the Premises under the Lease and wishes to assign the Lease to [ ] (the "Assignee"), and pursuant to the Lease the Landlord's consent is required to such assignment (the "Assignment") and such consent is given subject to a condition that the Present Tenant [and the Guarantor) [is/are] to enter into a deed in the form of this Deed NOW THIS DEED WITNESSES as follows:- 1. Authorized Guarantee Pursuant to the condition referred to above, the Present Tenant covenants with the Landlord, as a primary obligation, that the Assignee or the Present Tenant shall, at all times during the period (the "Guarantee Period") from the completion of the Assignment until the Assignee shall have ceased to be bound by the tenant covenants (which in this Deed shall have the meaning attributed by section 28(1) of the Landlord and Tenant (Covenants) Act 1995 (the "1995 Act")) contained in the Lease (including the payment of the rents and all, other sums payable under the Lease in the manner and at the times specified in the Lease), duly perform and observe the tenant covenants. 2. PRESENT TENANT'S LIABILITY 2.1 The Present Tenant agrees that the Landlord, in the enforcement of its rights under this Deed, may proceed against the Present Tenant as if the Present Tenant were the sole or principal debtor in respect of the tenant, covenant in question. 2.2 For the avoidance of doubt, notwithstanding the termination of the Guarantee Period the Present Tenant shall remain liable under this Deed in respect of any liabilities which may have accrued prior to such termination. 2.3 For the avoidance of doubt the Present Tenant shall be liable under this Deed for any reasonable costs and expenses properly incurred by the Landlord in enforcing the Present Tenant's obligations under this Deed. 3. DISCLAIMER OF LEASE The Present Tenant further covenant with the Landlord that if the Crown or a liquidator or trustee in bankruptcy shall disclaim the Lease during the Guarantee Period the Present Tenant shall, if the Landlord by notice in writing given to the Present Tenant within three (3) months after such disclaimer, accept from, and execute and deliver to, the Landlord a counterpart of a new lease of the Premises for a term commencing on the date of the disclaimer and continuing for the residue then remaining unexpired of the term of the Lease, such new least to be at the same rents and subject to the same covenants and provisions as are contained in the Lease Provided always that if the disclaimer shall arise prior to 29 December 1999 if the Present Tenant shall so choose the term shall expire on 29 December 1999 subject to payment of L18,648 on or before that date 4. SUPPLEMENTARY PROVISIONS By way of provision incidental or supplemental to clauses 1, 2 and 3 of this Deed:- 4.1 POSTPONEMENT OF PARTICIPATION BY PRESENT TENANT IN SECURITY The Present Tenant shall not be entitled to participate in any security held by the Landlord in respect of the Assignee's obligations to the Landlord under the Lease or to stand in the place of the Landlord in respect of any such security until all the obligations of the Present Tenant or the Assignee to the Landlord under the Lease have been performed or discharged. 4.2 NO RELEASE OF PRESENT TENANT None of the following, or any combination of them, shall release, determine, discharge or in any way lessen or affect the liability of the Present Tenant as principal obligor under this Deed or otherwise prejudice or affect the right of the Landlord to recover from the Present Tenant to the full extent of this guarantee:- 4.2.1 any refusal by the Landlord to accept rent tendered by or on behalf of the Assignee at a time when the Landlord was entitled (or would after the service of a notice under Section 146 of the Law of Property Act 1925 have been entitled) to re-enter the Premises; 4.2.2 any extension of time given by the Landlord to the Assignee; 4.2.3 any change in the constitution, structure or powers of either the Present Tenant, the Assignee or the Landlord or the liquidation, administration or bankruptcy (as the case may be) of either the Present Tenant or the Assignee; 4.2.4 any legal limitation, or any immunity, disability or incapacity of the Assignee (whether or not known to the Landlord) or the fact that any dealings with the Landlord by the Assignee may be outside, or in excess 8f, the powers of the Assignee; 4.3 COSTS OF NEW LEASE The Landlord's reasonable costs in connection with any new lease granted pursuant to clause 3 of this Deed shall be borne by the Present Tenant and paid to the Landlord (together with Value Added Tax) upon completion of such new lease. 5. GUARANTEE [IF THERE IS A GUARANTOR, REPEAT THE PROVISIONS SET OUT IN PARAGRAPH 1 TO 9 (INCLUSIVE) OF SCHEDULE 4]. 6. GUARANTOR TO JOIN IN NEW LEASE If the Present Tenant shall be required to take up a new lease pursuant to clause 3 of this Deed, the Guarantor shall join in, and execute and deliver to the Landlord a counterpart of, such new lease in order to guarantee the obligations of the Present Tenant under it in the terms of Schedule 4 to the Lease.] I N W I T N E S S whereof this deed has been executed by the Present Tenant and is intended to be and is hereby delivered on the date first above written. FOURTH SCHEDULE COVENANTS BY THE GUARANTOR 1.1 COVENANT AND INDEMNITY BY GUARANTOR The Guarantor hereby covenants with the Landlord, as a primary obligation, that the Tenant or the Guarantor shall at all times during the Term duly perform and observe all the covenants on the part of the Tenant contained in this Lease, including the payment of the rents and all other sums payable under this Lease in the manner and at the times herein specified, and the Guarantor hereby indemnifies the Landlord against all claims, demands, losses, damages, liability, costs, fees and expenses whatsoever sustained by the Landlord by reason of or arising in any way directly or indirectly out of any default by the Tenant in the performance and observance of any of its obligations or the payment of any rent and other sums 1.2 GUARANTOR JOINTLY AND SEVERALLY LIABLE WITH TENANT The Guarantor hereby further covenants with the Landlord chat the Guarantor is jointly and severally liable with the Tenant (whether before or after any disclaimer by a liquidator or trustee in bankruptcy) for the fulfillment of all the obligations of the Tenant under this Lease and agrees that the Landlord, in the enforcement of its rights hereunder, may proceed against the Guarantor as i~ the Guarantor was named as the Tenant in this Lease 1.3 WAIVER BY GUARANTOR The Guarantor hereby waives any right M require the Landlord to proceed against the Tenant or to pursue any other remedy whatsoever which may be available to the Landlord before proceeding against the Guarantor 1.4 POSTPONEMENT OF CLAIMS BY GUARANTOR AGAINST TENANT The Guarantor hereby further covenants with the Landlord that the Guarantor shall not claim in any liquidation, bankruptcy, composition or arrangement of the Tenant in competition with the Landlord and shall remit to the Landlord the proceeds of all judgments and all distributions it may receive from any liquidator, trustee in bankruptcy or supervisor of the Tenant and shall hold for the benefit of the Landlord all security and rights the Guarantor may have over assets of the Tenant whilst any liabilities of the Tenant or the Guarantor to the Landlord remain outstanding 1.5 POSTPONEMENT OF PARTICIPATION BY GUARANTOR IN SECURITY The Guarantor shall not be permitted to participate in any security held by the Landlord in respect of the Tenant's obligations to the Landlord under this Lease or to stand in the place of the Landlord in respect of any such security until all the obligations of the Tenant or the Guarantor to the Landlord under this Lease have been performed or discharged 1.6 NO RELEASE OF GUARANTOR None of the following, or any combination thereof, shall release, determine, discharge or in any way lessen or affect the liability of the Guarantor as principal debtor under this Lease or otherwise prejudice or affect the right of the Landlord to recover from the Guarantor to the full extent of this guarantee:- (a) any neglect, delay or forbearance of the Landlord in endeavouring to obtain payment of the rents or the amounts required to be paid by the Tenant or in enforcing the performance or observance of any of the obligations of the Tenant under this Lease; (b) any refusal by the Landlord to accept rent tendered by or on behalf of the Tenant at a time when the Landlord was entitled (or would after the service of a notice under Section 146 of the Law of Property Act 1925 have been entitled) to re-enter the Demised Premises; (c) any extension of time given by the Landlord to the Tenant; (d) any variation of the terms of this Lease (including any reviews of the rent payable under this Lease) or the transfer of the Landlord's reversion or the assignment of this Lease; (e) any change in the constitution, structure or powers of either the Tenant, the Guarantor or the Landlord or the liquidation, administration or bankruptcy (as the case may be) of either the Tenant or the Guarantor; (f) any legal limitation, or any immunity, disability or incapacity of the Tenant (whether or not known to the Landlord) or the fact that any dealings with the Landlord by the Tenant may be outside or in excess of the powers of the Tenant; (g) any other act, omission, matter or thing whatsoever whereby, but for this provision, the Guarantor would be exonerated either wholly or in part (other than a release under seal given by the Landlord) 1.7 DISCLAIMER OR LEASE (a) The Guarantor hereby further covenants with the Landlord that:- (i) if a liquidator or trustee in bankruptcy shall disclaim this Lease; or (ii) if the Tenant shall cease to exist THEN the Guarantor shall, if the Landlord by notice in writing given to the Guarantor within three (3) months after such disclaimer or if the Tenant shall cease to exist, accept from and execute and deliver to the Landlord a counterpart of a new lease of the Demised Premises for a term commencing on the date of the disclaimer or other event and continuing for the residue then remaining unexpired of the Term, such new lease to be at the cost of the Guarantor and to be at the same cents and subject to the same covenants, conditions and provisions as are contained in this Lease; (b) if the Landlord shall not require the Guarantor to take a new lease, the Guarantor shall nevertheless upon demand pay cc the Landlord a sum equal to the rents and other sums that would have been payable under this Lease but for the disclaimer or the Tenant ceasing to exist in respect of the period from and including the date of such disclaimer or the Tenant ceasing to exist until the expiration of six (6) months therefrom or until the Landlord shall have granted a lease of the Demised Premises to a third party (whichever shall first occur) 1.8 BENEFIT OF GUARANTEE This guarantee shall enure for the benefit of the successors and assigns of the Landlord under this Lease without the necessity for any assignment thereof FIFTH SCHEDULE ITEMS OF EXPENDITURE AS REFERRED TO IN CLAUSE 8 PART `A'-BUILDING 1. REPAIRS AND MAINTENANCE Repairing, maintaining, decorating and (where appropriate) cleaning, washing down, lighting, heating, servicing, furnishing, carpeting and equipping the Building 2. PLANT AND MACHINERY Maintaining, repairing, operating, inspecting, servicing, overhauling, cleaning, lighting and (as and when necessary) renewing or replacing all plant, machinery, apparatus and equipment within the Building (other than in the Lettable Areas thereto) from time to time and all fuel and electricity for the same and any necessary maintenance contracts and insurance in respect: thereof 3. SECURITY AND EMERGENCY SYSTEMS Maintaining, repairing, operating, inspecting, servicing, overhauling, cleaning and (as and when necessary) renewing or replacing all security and emergency systems for the Building, including, but not limited to, alarm systems, internal telephone and television, systems, generators, emergency lighting, fire detection and prevention systems any fire escapes for the Building and all fire fighting and fire prevention equipment and appliances (other then those for which a tenant is responsible) 4. STAFF The provision of staff (including such direct or indirect labour as the Landlord reasonably deems appropriate) for the day-to-day running of the installations and plant and the provision of other services to the Building and for the general management, operation and security of the Building and all other incidental expenditure, including, but not limited to:- (a) insurance, health, pension, welfare, severance and other payments, contributions and premiums; (b) the provision of uniforms, working clothes, tools, appliances, materials and equipment (including telephones) for the proper performance of the duties of any such staff but only to the extent that all such staff shall be employed for the purpose of performing obligations on behalf of the Landlord herein and providing services specified in this Lease 5. SIGNS ETC. Maintaining and renewing name boards and signs in the main entrance halls, lift lobby areas and any other parts of the Building and all directional signs, fire regulation notices, advertisements and street furniture and furnishing and any flags, flag poles and television and radio aerials 6. REFUSE Providing and maintaining any receptacles for refuse for the Building and the cost of collecting, storing and disposing of refuse 7. MISCELLANEOUS ITEMS Leasing or hiring at commercial rates any of the items referred to in this Part of this Schedule; 8. STATUTORY REQUIREMENTS Carrying out any works to the Building required to comply with any statute (other than works for which any tenant or occupier is responsible) 9. MANAGEMENT (a) The proper and reasonable fees, costs, charges, expenses and disbursements (including any VAT payable thereon) of the Surveyor, the Accountant and any other person properly employed or retained by the Landlord where necessary for or in connection with surveying and accounting functions, the collection of rents, the performance of the services and any other duties in and about the Building or any part of it relating to the general management, administration, security, maintenance, protection and cleanliness of the Building; (b) The proper and reasonable fees and expenses (including any VAT payable thereon) of the Landlord or a Group Company in connection with the management of the Building and any of the functions and duties referred to in paragraph (a) that may be undertaken by the Landlord or a Group Company, such fees and expenses to include overheads and profits commensurate with the current market practice-of property companies providing management services 10. VALUE ADDED TAX Value Added Tax at the rate for the time being in force chargeable in respect of any item of expenditure referred to in this Part of this Schedule to the extent not otherwise recoverable reclaimable or capable of set off by the Landlord 11. GENERALLY Any reasonable costs and expenses (not referred to above) which the Landlord may properly, incur in providing such other services and in carrying out such other works as the Landlord may reasonably deem desirable or necessary for the benefit of the Building or any part of it or the tenants or occupiers thereof, or for securing or enhancing any amenity of or within the Building, or in the interest of good estate management 12. EXCLUSION FROM SERVICE CHARGE Notwithstanding the above there shall be excluded from the Expenditure:- (a) initial capital costs of the construction and development of the Building and any part thereof and all expenditure relating thereto and of the provision of all plant, machinery, fixtures and equipment including leasing and hiring costs incurred prior to the date hereof to be used in carrying out the services pursuant to this Lease; (b) the costs of remedying the disrepair, damage or destruction caused by any of the risks against which the Landlord covenants to insure; (c) the cost of reinstating or rebuilding the Demised Premises; (d) any cost or fees incurred in relation to the grant, regrant or renewal of any other last of part of the Building and any costs or fees incurred in relation to the collection of rents and any other sums or the review of the rent or mats payable under subleases. (e) the costs arising directly at indirectly out of any defects in or damage caused to the Building or any pan thereof prior to the date hereof and apparent at the dam hereof; (f) the costs incurred in relation to the marketing, maintenance, repair or decoration of those Lettable Areas which are from time to time unlet; (g) the costs incurred in connection with the advertising and: promotion of the Building. ------------------------------ PART `B' - ESTATE 1. REPAIRS AND MAINTENANCE Repairing, maintaining, decorating and (where appropriate) cleaning, washing down, lighting, heating, servicing, furnishing, equipping the Retained Parts 2. SECURITY AND EMERGENCY SYSTEMS Maintaining, repairing, operating, inspecting, servicing, overhauling, cleaning and (as and when necessary) renewing or replacing all security and emergency systems for the Retained Parts, including, but not limited to, alarm systems, internal telephone and television systems, generators, emergency lighting, fire detection and prevention systems any fire escapes for the Retained Parts and all fire fighting and fire prevention equipment and appliances (other than those for which a tenant is responsible) and any traffic barriers, car park and traffic control and security systems 3. STAFF The provision of staff (including such direct or indirect labour as the Landlord reasonably deems appropriate) for the day-to-day running of the. installations and plant and the provision of other services to the Retained Parts and for the general management, operation and security of the Retained Parts (including traffic control and policing) and all other reasonable incidental expenditure, including, but not limited to:- (a) insurance, health, pension, welfare, severance and other payments, contributions and premiums; (b) the provision of uniforms, working clothes, tools, appliances, materials and equipment (including telephones) for the proper performance of the duties of any such staff; (c) providing, maintaining, repairing, decorating and lighting any accommodation and facilities for staff, and all rates, gas and electricity charges in respect thereof but only to the extent that all such staff shall be employed for the purpose of performing obligations on behalf of the Landlord herein and providing services specified in this Lease. 4. SIGNS ETC. Maintaining and renewing name boards and signs at the entrances and any other parts of the Retained Parts and all directional signs, fire regulation notices, advertisements and street furniture and furnishing and any flags, flag poles and television and radio aerials 5. LANDSCAPING Providing and maintaining floodlighting (if any) and any plants, shrubs, trees or garden or grassed areas in the Common Areas and any other landscaping features 6. MISCELLANEOUS ITEMS Leasing or hiring at commercial rams any of the items referred to in this Part of this Schedule; 7. INSURANCE (a) periodic valuations of the Estate for insurance purposes provided that such valuations shall not be carried out more than once in every three years; (b) works required to the Estate in order to satisfy the requirements of the insurers of the Estate; (c) property owner's liability, third party liability and employer's liability and such other insurances as the Landlord may, in its reasonable discretion from time to time, determine; (d) any amount which may be deducted or disallowed by the insurers pursuant to any new provision in the insurance policy upon settlement any claim by the Landlord 8. COMMON FACILITIES Repairing, maintaining, decorating, cleansing and lighting, as the case may be, any roads, ways, forecourts, passages, pavements, party walls or fences, party structures, conduits or other conveniences and easements whatsoever which may belong to, or be capable of being used or enjoyed by the Estate in common with any Adjoining Property 9. OUTGOINGS All existing and future rates (including water rates) taxes, duties, charges, assessments, impositions and outgoings whatsoever (whether parliamentary, parochial, local or of any other description and whether or not of a capital or non-recurring nature or of a wholly novel character) payable by the Landlord in respect of the Retained Farm or any part thereof 10. STATUTORY REQUIREMENTS Carrying out any works to the Estate required to comply with any statute (other than works for which any tenant or occupier is responsible) 11. REPRESENTATIONS Taking any steps two reasonably deemed desirable or expedient by the Landlord for complying with, making representations against, or otherwise contesting the incidence of the provisions of any statute concerning town planning, public health, highways, streets, drainage and all other matters relating or alleged to relate to the Estate or any part of it for which any tenant is not directly responsible 12. MANAGEMENT (a) The proper and reasonable fees, costs, charges, expenses and disbursements (including any VAT payable thereon) of the Surveyor, the Accountant and any other person properly employed or retained by the Landlord where necessary for or in connection with surveying and accounting functions, the performance of the services and any other duties in and about the Retained Parts or any part of them relating to the general management, administration, security, maintenance, protection and cleanliness of the Retained Parts; (b) The proper and reasonable fees and expenses (including any VAT payable thereon) of the Landlord or a Group Company in connection with the management of the Retained Parts and any of the functions and duties referred to in paragraph (a) that may be undertaken by the Landlord or a Group Company, such fees and expenses to include overheads and profits commensurate with the current market practice of property companies providing management services 13. VALUE ADDED TAX Value Added Tax at the rate for the time being in force chargeable in respect of any item of expenditure referred to in this Part of this Schedule to the extent not otherwise recoverable reclaimable or capable of set-off by the Landlord 14. GENERALLY Any reasonable costs and expenses (nor referred as above) which the Landlord may properly incur in providing such other services and in carrying out such other works as the Landlord may reasonably deem desirable or necessary for the benefit of the Estate or any part of it or the tenants or occupiers thereof, or for securing or enhancing any amenity of or within the Estate, or in the interest of good estate management 15. EXCLUSION FROM SERVICE CHARGE Notwithstanding the above there shall be excluded from the Expenditure:- (a) initial capital costs of the construction and development of the Estate and any part thereof and all expenditure relating thereto and of the provision of all plant, machinery, fixtures and equipment including leasing and hiring costs incurred prior to the date hereof to be used in carrying out the services pursuant to this Lease, (b) the cost of remedying any disrepair, damage or construction caused by any of the risks against which the Landlord covenants to insure; (c) any cost or fees incurred in relation to the grunt, regrant or renewal of any other lease of part of the Estate and any costs or fees incurred in relation to the collection of rents and any ocher sums or the review of the rent or rents payable under such leases; (d) the costs arising directly or indirectly out of any defects in or damage caused to the Estate or any part thereto prior to the date hereof and apparent at the date hereof; (e) the costs incurred in relation to the marketing, maintenance, repair or decoration of those Lettable Areas which are from time to time unlet; (f) the costs incurred in connection with the advertising and promotion of the Estate. SIXTH SCHEDULE DEEDS AND DOCUMENTS CONTAINING MATTERS TO WHICH THE DEMISED PREMISES ARE SUBJECT 1. Title Number MX352739 The entries in the Property Register and the entries numbered 2-8 in the Charges Register 2. The Lease dated 21 August 1992 made between the Landlord (1) and Southern Electronic plc (2) The Common Seal of GENERAL ) ACCIDENT LIFE ASSURANCE ) LIMITED was hereunto affixed in ) the presence of.-- Authorised Signatory Authorised Signatory EX-10.6 10 ex-10_6.txt EXHIBIT 10.6 EXHIBIT 10.6 SUBLEASE AGREEMENT THIS SUBLEASE AGREEMENT (Sublease") is made and entered into as of the day of May, 2000, between Zurn Industries, Inc., a Pennsylvania corporation (hereinafter called "Sublessor"), and Viewlocity, Inc. (hereinafter called "Sublessee"): ARTICLE I PRIME LEASE 1.01 SUBLEASE SUBJECT TO PRIME LEASE. This Sublease is subject and subordinate to that certain Lease Agreement entered into with an "Effective Date" as of June 10, 1997 and executed by and between AGF 14801 Quorum, Ltd., a Texas limited partnership (hereinafter called the "Prime Lessor"), as landlord, and Sublessor, as tenant, as amended pursuant to that certain First Amendment To Lease dated November 13, 1997 entered into and executed by and between the Prime Lessor, as landlord, and Sublessor, as tenant (said Lease Agreement, as amended, hereinafter called the "Prime Lease") a copy of which (except for Riders No 1 and No 2 thereto, which are inapplicable hereto) is attached hereto as EXHIBIT A and made a part hereof for all purposes as if fully set forth herein. 1.02 COMPLIANCE WITH PRIME LEASE. With the exception of the obligation to pay the Base Rental and to pay the Operating Expenses in the form of Adjustment of Base Rental pursuant to the Prime Lease, Sublessee hereby covenants and agrees to comply with and perform all obligations of Sublessor as tenant under the Prime Lease with respect to the Subleased Premises including, without limitation, all repair obligations, all insurance obligations, all obligations to pay utility charges and taxes, and all indemnification obligations of Sublessor thereunder, and any liability accruing from failure to pay same when due thereunder. Sublessee agrees that whenever the consent of Prime Lessor is required under the terms of the Prime Lease with respect to any action, Sublessee shall obtain the consent of Sublessor and of Prime Lessor prior to taking such action. Sublessee hereby covenants and agrees to promptly deliver to Sublessor copies of any and all notices or other correspondence received by Sublessee from Prime Lessor that might affect Sublessor in any manner and further agrees, notwithstanding Section 9.04 to the contrary, to so deliver same in the manner most appropriate to insure that Sublessor will be able to respond to any of such notices or other correspondence from the Prime Lessor within any time periods set forth in the Prime Lease. 1.03 SERVICES. Sublessee hereby acknowledges and agrees that the only services, amenities and rights to which Sublessee is entitled under this Sublease are those to which Sublessor is entitled under the Prime Lease (subject to all the provisions, restrictions and conditions imposed of the Prime Lease). Sublessor shall in no event be liable to Sublessee for Prime Lessor's failure to provide any such services, amenities and rights nor shall any such failure be construed as a breach hereof by Sublessor or an eviction of Sublessee or entitle Sublessee to an abatement of any of the rentals under this Sublease, except and only to the extent that Sublessor receives an abatement under the Prime Lease with respect thereto. 1.04 EXERCISE OF RIGHTS AND REMEDIES UNDER PRIME LEASE. Sublessee shall not have the right to exercise any of Sublessor's options or elections permitted or authorized under the Prime Lease, or to institute any action or proceeding against Prime Lessor for the enforcement of the Prime Lease. If Prime Lessor shall default in the performance of any of its obligations under the Prime Lease, Sublessor shall, upon the written request of Sublessee and at Sublessee's sole cost and expense, use its diligent good faith efforts to enforce the Prime Lease and obtain Prime Lessor's compliance with its obligations thereunder. 1.05 OBLIGATIONS REQUIRED OF PRIME LESSOR UNDER THE PRIME LEASE. With respect to facilities, work, services, maintenance, repairs and restoration or the performance of other obligations required of the Prime Lessor under the Prime Lease, Sublessor's sole obligation, with respect thereto, shall be to request the same from Prime Lessor, upon request in writing from Sublessee, and to use reasonable efforts to obtain the same from the Prime Lessor. Sublessee shall have the right to request the same directly from Prime Lessor, and to conduct such proceedings (in court or elsewhere), as may be required, to obtain from the Prime Lessor any such facilities, work, services, maintenance, repairs and restoration or the performance of such obligation (such proceedings may be, at Sublessee's option, in its own name or in Sublessor's name, Sublessor agrees to cooperate with Sublessee in connection therewith and to execute such documents as may be required in connection therewith, and Sublessee agrees to reimburse Sublessor for any reasonable legal or other expenses incurred by Sublessor at the direction of the Sublessee in any such court or other proceeding). 1.06 ALTERATIONS AND IMPROVEMENTS. In connection with any alterations and improvements (as used in the Prime Lease) desired to be made by Sublessee, the terms of the Prime Lease shall be applicable to this Sublease. The Sublessee shall also obtain the Sublessor's written consent to the making of any such alterations and improvements prior to the undertaking thereof, which consent the Sublessor agrees not to unreasonably withhold, and if the consent of Sublessor is obtained, Sublessee shall contact the Prime Lessor directly for the Prime Lessor's consent. Sublessee shall be solely responsible for all costs involved in the design and construction of alterations and improvements to the Subleased Premises. Sublessee shall pay any and all costs associated with Prime Lessor's review of any proposed alterations and improvements desired to be made by Sublessee. 1.07 PARKING. Sublessee shall be entitled to utilize the parking privileges provided to Sublessor pursuant to Section 2(b) of the Prime Lease only to the extent of three (3) parking space per one thousand (1000) square feet of the square footage of the Subleased Premises actually occupied and for which rent is actually paid. 1.08 SECURITY BY LETTER OF CREDIT. Upon execution of this Sublease, Sublessee shall provide to Sublessor an irrevocable letter of credit in form and substance satisfactory to Sublessor in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00) issued by a bank acceptable to Sublessor as security for the performance by Sublessee of provisions of this Sublease. Such security shall at all times during the Term hereof be maintained in full force and effect by Sublessee, If Sublessee is in default, Sublessor can draw upon the letter of credit, or any portion of it, to cure the default or to compensate Sublessor for all damage sustained by Sublessor resulting from Sublessee's default. Sublessee shall immediately on demand provide a replacement irrevocable letter of credit in the amount that the letter of credit is drawn upon by Sublessor as provided in this paragraph so as to maintain the amount of security by letter(s) of credit in the amount initially provided to Sublessor. Notwithstanding the foregoing, such letter of credit security may be reduced to One Hundred Thousand Dollars ($100,000.00) at the end of the first two years of the Term hereof provided Sublessee is not then in default under the terms of this Sublease. ARTICLE II DEMISE AND DESCRIPTION 2.01 DEMISE OF SUBLEASED PREMISES. Subject to and upon the terms and conditions set forth herein, Sublessor hereby subleases to Sublessee, and Sublessee hereby subleases from Sublessor for the term herein set forth, all of Sublessor's right, title and interest in and to the use and occupancy of A PORTION OF the premises leased by Sublessor under the Prime Lease, same being fourteen thousand three hundred thirty eight (14,338) square feet of the rentable area located on the sixth floor in the building located at 14801 Quorum Drive, Addison, Texas, as shown outlined on EXHIBIT B a copy of which is attached hereto and made a part hereof for all purposes as if fully set forth herein. (herein called the "Subleased Premises"). The Subleased Premises shall be increased to include any portion of the remaining rentable area located on the sixth floor in said building at the time of the first use thereof by Sublessee, and in any event on November 1, 2000 the Subleased Premises shall be increased to include all of the rentable area located on the sixth floor in said building amounting to 18,479 square feet total (including the aforementioned 14,338 square feet). 2.02. CONDITION OF THE SUBLEASED PREMISES. Tenant acknowledges and agrees that it has inspected the Subleased Premises and agrees to accept same in its present condition, "AS IS" and "WITH ALL FAULTS". Not withstanding the foregoing Sublessor, at its cost, shall reprogram the existing building security system to restrict access to the Subleased Premises (by means of the buildings elevators) to all unauthorized persons. 2.03 DISCLAIMER OF WARRANTIES. SUBLESSEE ACKNOWLEDGES THAT NEITHER SUBLESSOR NOR PRIME LESSOR HAS MADE OR WILL MAKE ANY WARRANTIES TO SUBLESSEE WITH RESPECT TO THE QUALITY OF CONSTRUCTION OF ANY LEASEHOLD IMPROVEMENTS OR TENANT FINISH WITHIN THE SUBLEASED PREMISES OR AS TO THE CONDITION OF THE SUBLEASED PREMISES, EITHER EXPRESS OR IMPLIED, AND THAT SUBLESSOR AND PRIME LESSOR EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE SUBLEASED PREMISES ARE OR WILL BE SUITABLE FOR SUBLESSEE'S INTENDED COMMERCIAL PURPOSES. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 1.04 HEREOF, SUBLESSEE'S OBLIGATION TO PAY RENTALS UNDER THIS SUBLEASE IS NOT DEPENDENT UPON THE CONDITION OF THE SUBLEASED PREMISES OR THE BUILDING (NOW OR IN THE FUTURE) OR THE PERFORMANCE BY PRIME LESSOR OF ITS OBLIGATIONS UNDER THE PRIME LEASE, AND SUBLESSEE SHALL CONTINUE TO PAY THE RENTALS HEREUNDER WITHOUT ABATEMENT, SETOFF OR DEDUCTION NOTWITHSTANDING ANY BREACH BY SUBLESSOR OF ITS DUTIES OR OBLIGATIONS HEREUNDER OR BY PRIME LESSOR OF ITS DUTIES OR OBLIGATIONS UNDER THE PRIME LEASE, WHETHER EXPRESS OR IMPLIED. 2.04 ADDITIONAL SPACE. Commencing on May 1, 2001, Sublessor herein grants unto the Sublessee a Right of First Refusal on any space that shall be and/or becomes available in the building during the remaining Term of this Sublease. Prior to May 1, 2001 and thereafter prior to the first day of May of any calendar year during the remaining Term hereof, Sublessor shall notify Sublessee by written notice of the availability of any such space in the building. Should Sublessee desire to exercise its Right of First Refusal and sublease such available space, Sublessee must notify Sublessor in writing of its desire to sublease the available space within seven (7) calendar days of Sublessee's receipt of Landlord's notice of availability. Within thirty (30) days of the receipt of Sublessee's notice exercising the right to sublease such available space, Sublessee and Sublessor shall enter into an amendment of this agreement setting forth the terms under which the additional space is subleased to Sublessee. The Base Rental shall be at a rental mutually agreed between Sublessee and Sublessor. Failure by Sublessee to exercise its Right of First Refusal within said seven (7) calendar day period, or if exercised, failure to enter into an amendment of this agreement within thirty (30) days of Sublessor's receipt of Sublessee's notice, shall be deemed a waiver of such right and Sublessor shall thereafter be free of any obligation under this Article 2.04 for a period of 12 months. Any exercise by Sublessee of this Right of First Refusal shall be for a minimum of 5,000 rental square feet. ARTICLE III TERM; SURRENDER OF POSSESSION 3.01 TERM. Unless the Prime Lease is terminated sooner pursuant to the terms thereof, the term of this Sublease ("Term") shall be for the period commencing on May 1, 2000 and ending November 13, 2007, which is one day before the date of expiration of the Prime Lease. Notwithstanding the foregoing and subject to this Sublease being fully executed by all parties prior to the commencement of the Term as defined herein, Sublessee will be granted access to the space prior to the commencement date to prepare the space for its occupancy. Such preparation shall include the installation of furniture, voice, data, telephone and computer wiring and the installation of telephone and computer equipment. 3.02 SURRENDER OF THE SUBLEASED PREMISES. At the termination of this Sublease, by lapse of time or otherwise, Sublessee shall deliver up the Subleased Premises to Sublessor in as good condition as existed on the date of possession by Sublessee, ordinary wear and tear only excepted. Upon such termination of this Sublease, Sublessor shall have the right to re-enter and resume possession of the Subleased Premises. 3.03 RIGHT TO TERMINATE SUBLEASE. Sublessee shall have the right to terminate this Sublease at the end of the forty-eighth month hereof provided: a) Sublessee makes payment to Sublessor of the amount equivalent to six months Base Rental plus six months of escalation payments resulting from Operating Expenses, b) Sublessee gives Sublessor written notice thereof prior to the end of the thirty-sixth month hereof, and c) Sublessee is not then in default hereunder. ARTICLE IV RENT 4.01 BASE RENTAL. Sublessee hereby agrees to pay a monthly base rental of Twenty Two Thousand One Hundred Four and Forty Two One Hundredths Dollars ($22,104.42) to Sublessor monthly, in advance, notice or demand and without abatement, deduction, or setoff of any amount whatsoever for the first six months of the Term hereof. Sublessee hereby agrees to pay a monthly base rental of Twenty Eight Thousand Four Hundred Eighty Eight and Forty Six One Hundredths Dollars ($28,488.46) to Sublessor monthly, in advance, without notice or demand and without abatement, deduction, or setoff of any amount whatsoever, beginning with the seventh month of the Term hereof or at such earlier time as Sublessee first uses or occupies any rentable area on such 6th floor of such building other than the 14,338 square feet shown outlined on Exhibit B attached hereto, and continuing each and every month thereafter during the Term hereof. 4.02 ADDITIONAL RENTAL. Beginning on January 1, 2001, Sublessee shall also pay to Sublessor monthly as additional rental the amount of any Operating Expenses in the form of Adjustment of Base Rental charged to Sublessor pursuant to Section 4 of the Prime Lease for any month during the Term with respect to the Subleased Premises, to the extent such Operating expenses exceed the actual Operating Expenses for calendar year 2000. Upon request of Sublessee, Sublessor will provide Sublessee with copies of statements received by Sublessor from Prime Lessor with respect to the payment of Operating Expenses in the form of Adjustment of Base Rental under the Prime Lease. Within thirty (30) days following Sublessor's receipt from Prime Lessor of the final reconciliation of the annual Operating Expenses in the form of Adjustment of Base Rental pursuant to Section 4 of the Prime Lease for each year during the Term, Sublessor and Sublessee shall likewise reconcile the additional rental payable by Sublessee pursuant to this Section 4.02 so that Sublessee shall pay the amount, and only the amount, of the actual Operating Expenses in the form of Adjustment of Base Rental charged to Sublessor for such year with respect to the Subleased Premises. 4.03 PAYMENT OF RENTALS. Each monthly installment of base rental and additional rental due to Sublessor under this Sublease shall be payable by Sublessee on the first day of each calendar month at Sublessor's address herein set forth or at such other place as Sublessor shall designate in writing from time to time. If less than all of any calendar month or year occurs during the Term, rents for such partial month or year shall be prorated based on the actual number of days during such month or year occurring within the Term. 4.04 ELECTRICITY. Sublessee shall promptly pay to Sublessor all electrical expenses attributable to the Subleased Premises in accordance with paragraph 5 of the Prime Lease. ARTICLE V QUIET ENJOYMENT 5.01 COVENANT OF QUIET ENJOYMENT. Provided Sublessee has performed all of the terms, covenants, agreements and conditions of this Sublease, including the payment of rental and all other sums due hereunder, Sublessee shall peaceably and quietly hold and enjoy the Subleased Premises against Sublessor and all persons claiming by, through or under Sublessor, for the term herein described, subject to the provisions and conditions of this Sublease and of the Prime Lease. 5.02 LIMITATION. It is understood and agreed that the provision of Section 5.01 and any and all other covenants of Sublessor contained in this Sublease shall be binding upon Sublessor and its successors only with respect to breaches occurring during its and their respective ownership of the Sublessor's interest hereunder. This Sublease is subject to and subordinate to all matters of public record in Dallas, Texas. ARTICLE VI ASSIGNMENT AND SUBLETTING 6.01 RESTRICTION. Sublessee shall not, without the prior written consent of Prime Lessor and Sublessor, assign, transfer, mortgage, pledge, hypothecate or encumber this Sublease or any interest herein or sublet the Subleased Premises or any part thereof, or permit the use of the Subleased Premises by any party other than Sublessee. Any such assignment or subletting without such consent by Prime Lessor and Sublessor shall be void. Any such consent by Sublessor to any such assignment or subletting shall not release Sublessee from any of Sublessee's obligations hereunder or be deemed to be a consent to any subsequent assignment, subletting, occupation or use by another person. 6.02 CONSENT DISCRETIONARY. Sublessor's consent to any proposed assignment or subletting may be withheld at the sole and absolute discretion of Sublessor, and if given, be subject to the further consent of Prime Lessor. ARTICLE VII INDEMNIFICATION AND EXCULPATION 7.01 INDEMNITY. Sublessee shall indemnify Sublessor for and hold Sublessor harmless from and against all costs, expenses (including reasonable attorneys' fees), fines, suits, claims, demands, liabilities, judgments and causes of action of every kind and character whatsoever arising in favor of any person or entity, resulting from any breach, violation or nonperformance of any covenant or condition hereof or arising out of or incident to the use or occupancy of the Subleased Premises by Sublessee or Sublessee's employees, agents, contractors, licensees and invitees, including any such costs, expenses, fines, suits, claims, demands, liabilities and actions which are attributable in whole or in part to the negligence of Sublessor, its employees, agents, contractors, licensees or invitees. It is the clear and unequivocal intent of the parties hereto that Sublessee's obligation to defend, protect, and save harmless Sublessor shall be full and complete for Sublessee's use of the Leased Premises or any activities carried on by Sublessee, its customers, agents and designees thereon or in connection with this Sublease or any activities arising therefrom, including, but not limited to any condition of the Leased Premises, or any condition of the Premises, the Building or the Land as such terms are defined in the Prime Lease, or Sublessor's negligence with respect thereto. 7.02 EXCULPATION. Sublessor shall not be liable to Sublessee or Sublessee's employees, agents, contractors, licensees or invitees for any damage to person or property resulting from any act or omission of any visitor to the Subleased Premises except as Sublessor's own negligence may be the sole cause thereof. ARTICLE VIII DEFAULTS AND REMEDIES 8.01 DEFAULT BY SUBLESSEE: REMEDIES OF SUBLESSOR. In case of any breach hereof by Sublessee, in addition to all other rights of Sublessor hereunder or available to Sublessor at law or equity, Sublessor shall have all the rights against Sublessee as would be available to the Prime Lessor against Sublessor under the Prime Lease if such breach were by Sublessor thereunder. Furthermore, If Sublessee shall default in fulfilling any of the terms, covenants or agreements hereof, or of the Prime Lease as herein incorporated, Sublessor may give Sublessee notice of such default and, if Sublessee does not cure any default in the payment of rent within three (3) days, or any other default within five (5) days, after the receipt of such notice by Sublessee, then Sublessor may, at its option, pursue any of the remedies of Prime Lessor set forth in the Prime Lease or otherwise available at law or in equity, including, without limitation, the right to accelerate any remaining rental payments or to terminate this Sublease. If Sublessee defaults in the performance of any of the terms and provisions hereof and Sublessor places the enforcement of this Sublease in the hands of an attorney, Sublessee agrees to reimburse Sublessor for all reasonable expenses incurred by Sublessor as a result thereof including, but not limited to, reasonable attorneys' fees. ARTICLE IX MISCELLANEOUS 9.01 AMENDMENT. No amendment, modification or alteration of the terms hereof shall be binding unless the same shall be in writing, dated subsequent to the date hereof and duly executed by the parties hereto. 9.02 HEADINGS; INTERPRETATION. Descriptive headings are for convenience only and shall not control or affect the meaning or construction of any provision of this Sublease. Whenever the context of this Sublease requires, words used in the singular shall be construed to include the plural and vice versa and pronouns of whatsoever gender shall be deemed to include and designate the masculine, feminine or neuter gender. 9.03 COUNTERPARTS. For the convenience of the parties, any number of counterparts of this Sublease may be executed by one or more parties hereto and each such executed counterpart shall be, and shall be deemed to be, an original instrument. 9.04 NOTICES. Subject to Article 1.02 hereof, all notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard hereto shall be validly given, made or served, if in writing and delivered personally or sent by United States certified or registered mail, postage prepaid, return receipt requested, if to: Sublessor: Zurn Industries, Inc. c/o USI Properties, Inc. 945 East Paces Ferry Road Suite 2515 Atlanta, Georgia 30326-1125 Attention: Tom L. Green, President Sublessee: Viewlocity, Inc. 400 Perimeter Center Terrace Suite 320 Atlanta, Georgia 30346 Attention: Jack P. Scott, Vice President or to such other addresses as any party hereto may, from time to time, designate in writing delivered in a like manner. 9.05 SUCCESSORS AND ASSIGNS. This Sublease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns in accordance with the terms of this Sublease. 9.06 TIME OF THE ESSENCE. Time is of the essence in the performance by Sublessee of its obligations hereunder. 9.07 BROKERAGE COMMISSIONS. Sublessor has agreed to pay a brokerage commission to CB Richard Ellis, Inc. ("Broker") pursuant to a separate agreement between Sublessor and Broker. Sublessor and Sublessee hereby represent and warrant each to the other that they have not employed any agents, brokers or other such parties in connection with this Sublease other than Broker, and each agrees that they shall hold the other harmless from and against any and all claims of all other agents, brokers or other such parties claiming by, through or under the respective indemnifying party. 9.08 WAIVER OF LIEN BY SUBLESSEE. Sublessee shall have no right, and Sublessee hereby waives and relinquishes all rights which Sublessee might otherwise have, to claim any nature of lien against the Subleased Premises or to withhold, deduct from or offset against any Rent or other sums to be paid to Sublessor by Sublessee, except as expressly provided under this Sublease. 9.09 REMEDIES CUMULATIVE; APPLICABLE LAW. All rights and remedies of Sublessor under this Sublease shall be cumulative and none shall exclude any other rights or remedies allowed by law; and this Sublease is declared to be a Texas contract, and all of the terms thereof shall be construed according to the laws of the State of Texas. 9.10 ENTIRE AGREEMENT. The terms and provisions of all Schedules and Exhibits described herein and attached hereto are hereby made a part hereof for all purposes. This Sublease constitutes the entire agreement of the parties with respect to the subject matter hereof, and all prior correspondence, memoranda, agreements or understandings (written or oral) with respect hereto are merged into and superseded by this Sublease. 9.11 AUTHORITY. Sublessee warrants, represents and covenants that (a) it is a duly organized and existing legal entity under the laws of the state in which it is organized, and in good standing in the State of Texas, (b) it has full right and authority to execute, deliver and perform this Sublease, (c) the person executing this Sublease on behalf of Sublessee was authorized to do so and (d) upon request of Sublessor, Sublessee will deliver to Sublessor satisfactory evidence of the due authorization, execution and delivery of this Sublease by Sublessee. 9.12 SEVERABILITY. If any term or provision of this Sublease, or the application thereof to any person or circumstance, shall to any extent be invalid or unenforceable, the remainder of this Sublease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Sublease shall be valid and shall be enforceable to the extent permitted by law. 9.13 NO RECORDING. This Sublease (including any Exhibits hereto) shall not be recorded without the prior written consent of Sublessor. 9.14 PRIME LESSOR'S CONSENT REQUIRED. Sublessee acknowledges that, pursuant to the provisions of the Prime Lease, Sublessor is required to obtain Prime Lessor's written consent to this Sublease, and accordingly, that the obligations of Sublessor hereunder are expressly subject to Sublessor obtaining such consent. If Prime Lessor's written consent to this Sublease is not obtained by 5:00 p.m. Central Time on MAY 15, 2000, this Sublease agreement shall automatically terminate and be of no further force and effect. 9.15 Signage. Subject to Sublessee complying with all codes, restrictions, covenants, regulations and laws and obtaining the approval of the Prime Lessor, Sublessee shall have the right, at Sublessee's cost and expense, to install its corporate logo on the existing monument sign in the front of the Building. Sublessor will install at its cost, a tenant directory in the main lobby of the Building. Sublessor will thereupon, at its cost, list Sublessee's company name and location. 9.16 CARD KEY ACCESS. Sublessor shall provide Sublessee with one (1) building entry/elevator access card for each 300 rentable square feet of space in the Subleased Premises, for a total of 61 access cards. Additional and/or replacement access cards will be available to Sublessee, at Sublessee's cost (currently $10.00 per card). IN WITNESS WHEREOF, the undersigned Sublessor and Sublessee have executed this Sublease effective as of the date and year first written above. "Sublessor" Zurn Industries, Inc. _______________________________ By: USI Properties, Inc., Agent Name: Tom L. Green Title: President Date:__________________________ "Sublessee" Viewlocity, Inc. _______________________________ By:____________________________ Name:__________________________ Title: ________________________ Date: _________________________ EX-10.9 11 ex-10_9.txt EXHIBIT 10.9 EXHIBIT 10.9 ARCTIC, INC. 4 LANDMARK SQUARE STAMFORD, CT 06901 March 3, 1999 Mr. Greg Cronin 2751 Long Grove Drive Marietta, GA 30062 Dear Greg: On behalf of the Board of Directors, we are pleased to offer you the position of Chief Executive Officer and member of the Board of Directors of Arctic Inc., the new corporation ("the Company") being formed from Frontec AMT. In making this offer, we are expressing our enthusiastic support for your leadership skills and abilities. You bring a skill set to this Company that is essential to achieving our goals, both short and long term. In addition, we expect that your base of experiences and contacts will enable you to significantly impact and influence the strategic direction of the organization. The purpose of this letter is to detail the terms of your employment. - - JOB TITLE: Chief Executive Officer - - STARTING DATE: As soon as possible, but no later than Thursday, March 11, 1999 - - SALARY: $200,000 per year, payable monthly, according to the compensation plan of the Company - - BONUS: In addition to your base compensation, you will participate in an annual incentive bonus program determined by the Board of Directors under which you will be entitled to earn incentive compensation of up to $150,000. This incentive portion of your compensation will be based upon the satisfaction of certain performance goals and for the first twelve months will be divided into two separate bonuses of $75,000, the first of which will be after the completion of your first six months and the second after the completion of your first full year. The performance objectives will be determined by the Company's Board of Directors, and will concern such matters as revenue, profitability/cash control, executive hiring and other specific management goals to be mutually agreed upon. For the first full year you will receive a minimum bonus payment of at least $75,000. - - STOCK: You will be given the opportunity to purchase 2,575,275 shares (representing approximately 5% of the fully diluted outstanding shares of the Company) in the form of stock options or restricted stock available for purchase. If you choose to purchase the stock, the Company will loan you the money at a market rate of interest. The exercise price of the options or the purchase price of the restricted stock will be the Mr. Greg Cronin March 3, 1999 Page 2 of 4 fair market price of the common shares as determined by the Board of Directors, which is $0.25 per share. These restricted shares or options will be subject to a four (4) year vesting schedule. You will vest 321,905 shares immediately upon beginning employment. Starting on December 31, 1999, you will begin vesting 160,955 shares per quarter for the next 14 quarters, subject to your continued employment. You are eligible to be granted additional stock either in the form of restricted stock or stock options at some time in the future, at the sole discretion of the Board of Directors, assuming outstanding performance on your part. IN THE EVENT YOU ARE INVOLUNTARILY TERMINATED BY THE COMPANY WITHOUT "CAUSE" (AS DEFINED BELOW) OR IF A "CHANGE OF CONTROL" (AS DEFINED BELOW) OCCURS, IN EITHER CASE PRIOR TO SIX (6) MONTHS AFTER THE COMMENCEMENT OF YOUR EMPLOYMENT WITH THE COMPANY, ONE-HALF (1/2) OF YOUR RESTRICTED STOCK OR OPTIONS WILL IMMEDIATElY BECOME VESTED. IF AT ANY TIME FOLLOWING THE SIX MONTH ANNIVERSARY OF YOUR EMPLOYMENT A "CHANGE OF CONTROL" OCCURS WHERE YOU ARE NOT OFFERED THE OPPORTUNITY TO REMAIN EMPLOYED AS THE CEO, GENERAL MANAGER OF THE ARCTIC DIVISION OR A COMPARABLE POSITION, THE VESTING SCHEDULE FOR YOUR SHARES WILL BE ACCELERATED SO THAT 1/2 OF YOUR NON-VESTED SHARES WOULD VEST IMMEDIATELY UPON "CHANGE OF CONTROL". IN ALL OTHER CASES YOUR SHARES WILL VEST AS OUTLINED IN THE PREVIOUS PARAGRAPH. For the purpose of this letter agreement, "Change of Control" shall mean the occurrence of the following event: the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. - - BENEFITS: The Company will provide you and your family major medical, dental, 401(k), etc. benefits as commonly provided to all Company employees, and your rights under such benefit plans will be determined under the provisions of such plans. You will be subject to the Company's standard vacation and sick leave policies, and if for any reason you need additional time, it will be negotiated and subject to approval by the Company's Board of Directors. - - CONFIDENTIAL INFORMATION: As an employee of the Company, you will have access to confidential information. Moreover, you may, during the course of your employment, develop certain information or inventions that will be the property of the Company. Mr. Greg Cronin March 3, 1999 Page 3 of 4 To protect the interest of the Company, we will ask that you sign the Company's standard Nondisclosure and Developments Agreement and non-competition agreement as conditions of your employment. We wish to impress upon you that we do not wish you to bring with you any confidential or proprietary material of any former employer or to violate any other obligation to your former employers. - - EMPLOYMENT AT WILL: Your employment with the Company is "at will", meaning you are not obligated to remain employed at the Company for any specific period of time. Likewise, the Company is not obligated to employ you for any specific period. In the event the Company terminates your employment without "cause," as defined below, or your employment is terminated as a result of disability as determined by the Board of Directors, then upon execution of a release you will be entitled to severance pay consisting of continuation of your then current base salary (excluding bonus), payable in accordance to company practices, as well as paid medical benefits, for a period of nine (9) months. Stock options and restricted stock will not continue to vest during this nine-month severance period following your termination. If you accept any other employment during this nine-month period then your base salary and medical benefits will cease at that time. For purposes of this severance provision, "cause" means a determination by the Board of Directors that shall be conclusive that you have (a) engaged in acts in violation of law or in other conduct which is unbecoming of a CEO of a major company or is otherwise detrimental to the Company; (b) breached your Nondisclosure and Developments Agreement, your fiduciary duty to the Company, or your duties of loyalty and/or care to the Company; or (c) disobeyed the good faith, lawful policies or instructions of the Board of Directors. Your employment shall also be deemed to be terminated without "cause" if, within one week after you are informed that the Company plans to relocate outside Atlanta or change your job responsibilities so that you are no longer the Company's CEO, you notify the Board of Directors that you intend to resign and thereafter the Company follows through with such relocation or change and you resign within one week thereafter. - - RESTRICTIVE COVENANTS: You agree that, for a period of one year following any termination of your employment, you will not directly or indirectly solicit the services of any Company employee for another activity, or otherwise induce or attempt to induce such employee to leave the employment of the Company. - - OTHER: The Company will make such deductions, withholdings, and other payments from all sums payable to you that you request or that are required by law for taxes and other charges. This agreement may not be changed or modified except by agreement in writing, signed by you and an appropriate designee of the Board of Directors. You hereby acknowledge that you are not a party to any agreement that in any way Mr. Greg Cronin March 3, 1999 Page 4 of 4 prohibits or imposes any restriction on your employment with the Company, and your acceptance hereof will not breach any agreement to which you are a party. You will provide the Company with copies of any relevant employment-related agreements with your current employer, such as non-compete agreements, etc. This agreement shall be governed, construed and enforced in accordance with the laws of Georgia without regard to principles of conflict or law. Should any provision of this agreement, or portion thereof, be found invalid and unenforceable, the remaining provisions shall continue in force and effect. - - TERMS OF OFFER: This offer will remain open until the end of business on Friday, March 5, 1999. When you do accept, and all of us sincerely hope you will, please sign the enclosed copy of this letter and return it via fax to me with a copy to Scott Tobin, with the original to follow. Greg, we are excited to have you join us and are enthused at the prospect of tackling a very promising future together. We look forward to a long and mutually rewarding relationship. Sincerely yours, Bengt Wallentin Chairman Enclosure Agreed to, accepted and acknowledged: /s/ Greg Cronin 3-3-99 - --------------------------------------- ------------------------- Greg Cronin Date EX-10.10 12 ex-10_10.txt EXHIBIT 10.10 EXHIBIT 10.10 May 6, 1999 Mr. Stan F. Stoudenmire 9140 Nesbit Lakes Drive Alpharetta, GA 30022 Dear Stan: I am pleased to offer you the position of Senior Vice President, Chief Financial Officer of Arctic Inc., the new corporation ("the Company") being formed from Frontec AMT. in making this offer, I am expressing my enthusiastic support for your leadership skills and abilities, You bring an extraordinary capability to this Company that is essential in achieving our goals, both short and long term. In addition, we expect that your bass of experience and contacts Will enable you to significantly impact and influence the overall organization and strategic direction of the company. The purpose of this letter is to detail the terms of your employment. - - JOB TITLE; Senior Vice President, Chief Financial Officer responsible the overall financial well being of the company, - - STARTING DATE: Monday, May 10, 1999. - - SALARY; $150,000 per year, payable monthly, according to the compensation plan of the Company. - - BONUS., In addition to your base compensation, you will participate in an annual incentive bonus program under which you will be entitled to earn targeted incentive compensation of $35,000 upon achievement of your plan at the completion of your first year of employment. The Company's Board of Directors will base this incentive portion of your compensation upon the satisfaction of certain performance goals that will be determined by me and subject to approval. - - STOCK: You will be given the opportunity to purchase 255,000 shares in the form of stock options or restricted stock available for purchase. If you choose to purchase the stock, the Company will loan you the money at a market rate of interest. The exercise price of the options or the purchase price of the restricted stock will be the fair market price of the common shares as determined by the Board of Directors, which is currently $0.25 per Mr. Stan F. Stoudenmire May 6, 1999 Page 2 of 4 share. These restricted shares or options will be subject to the following vesting schedule. 26,250 shares will vest immediately upon beginning employment and 26,250 will vest on your first anniversary date of employment and the remaining shares will vest at the rate of 5,625 shares per month over the succeeding 36 months subject to your continued employment, It is agreed that an excellerated vesting plan will be established based on metrics to be described in your employment contract with a cap of an additional one-fourth percent (1/4%) based on the then current fair market price, In addition, you will be eligible to be granted additional shares at some time in the future, based upon achievement of company milestones to be determined by the Board and me. In the event you are involuntarily terminated by the Company Without "Cause" (as defined below) or if a "Change of Control" (as defined below) occurs, in either case prior to six (6) months after the commencement of your employment with the Company, one-half (1/2) of your restricted stock or options will immediately become vested. If at any time following the six month anniversary of your employment a it change of control" occurs where you are not offered the opportunity to remain employed as the Senior Vice President, Chief Financial Officer of the Artic Division, or a comparable position, the vesting schedule for your shares will be accelerated so that one-half (1/2) of your non-vested shares would vest immediately upon "change of control." In all other cases your shares will vest as outlined in the previous paragraph. For the purpose of this letter agreement, "Change of Control" shall mean the occurrence of the following event: the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. - - BENEFITS: The Company will provide you and your family major medical, dental, 401 (k), etc. benefits as commonly provided to all Company employees, and your rights under such benefit plans will be determined under the provisions of such plans. You will be subject to the Company's standard vacation and sick leave policies, and if for any reason you need additional time, it will be negotiated and subject to approval by the Company's Board of Directors. - - CONFIDENTIAL INFORMATION: As an employee of the Company, you will have access to confidential information. Moreover, you may, during the course of your employment, develop certain information or inventions that will be the property of the Company. To protect the interest of the Company, we will ask that you sign the Company's standard Nondisclosure and Developments Agreement and non-competition agreement as conditions of your employment. We wish to impress upon you that we do not wish you to Mr. Stan F. Stoudenmire May 6, 1999 Page 3 of 4 bring with you any confidential or proprietary material of any former employer or to violate any other obligation to your former employers. - - EMPLOYMENT AT WILL: Your employment with the Company is "at will", meaning you are not obligated to remain employed at the Company for any specific period of time. Likewise, the Company is not obligated to employ you for any specific period. In the event the Company terminates your employment without "cause," as defined below, or your employment is terminated as a result of disability as determined by the Board of Directors, then upon execution of a release you will be entitled to severance pay consisting of continuation of your then current base salary (excluding bonus), payable in accordance to company practices, as well as paid medical benefits, for a period of six (6) months. Stock options and restricted stock will not continue to vast during this six-month severance period following your termination. If you accept any other employment during this six-month period then your base salary and medical benefits will cease at that time. For purposes of this severance provision, "cause" means a determination by the Board of Directors that shall be conclusive that you have (a) engaged in acts in violation of law or in other conduct which is unbecoming of a Senior Vice President/ Officer of a major company or is otherwise detrimental to the Company; (b) breached your Nondisclosure and Developments Agreement, your fiduciary duty to the Company, or your duties of loyalty and/or care to the Company; or (c) disobeyed the good faith, lawful policies or instructions of the Board of Directors. - - RESTRICTIVE COVENANTS: You agree that, for a period of one year following any termination of your employment, you will not directly or indirectly solicit the services of any Company employee for another activity, or otherwise induce or attempt to induce such employee to leave the employment of the Company. - - OTHER: The Company will make such deductions, withholdings, and other payments from all sums payable to you that you request or that are required by law for taxes and other charges. This agreement may not be changed or modified except by agreement in writing, signed by you and an appropriate designee of the Board of Directors. You hereby acknowledge that you are riot a party to any agreement that in any way prohibits or imposes any restriction on your employment with the Company, and your acceptance hereof will not breach any agreement to which you are a party. You will provide the Company with copies of any relevant employment-related agreements with your current employer, such as non-compete agreements, etc. This agreement shall be governed, construed and enforced in accordance with the laws of Georgia without regard to principles of conflict or law. Should any provision of this agreement, or portion thereof, be found invalid and unenforceable, the remaining provisions shall continue in force and effect. - - TERMS OF OFFER: This offer will remain open until the end of business on Friday, May 7, 1999, When you do accept, and all of us sincerely hope you will, please sign the enclosed copy of this letter and return it to me. Mr. Stan F. Stoudenmire May 6, 1999 Page 4 of 4 Stan, we are excited to have you join us and are enthused at the prospect of tackling a very promising future together. Sincerely yours, /s/ GREGORY CRONIN --------------------------------------- Gregory Cronin Chief Executive Officer GC/ja Enclosure Agreed to, accepted and acknowledged: /s/ STAN F. STOUDENMIRE 5-10-99 --------------------------------------- ------------------------- Stan F. Stoudenmire Date EX-10.11 13 ex-10_11.txt EXHIBIT 10.11 EXHIBIT 10.11 ARCTIC, INC. 4 LANDMARK SQUARE STAMFORD, CT 06901 March 19, 1999 Mr. Jeff Cashman W305N1796 Silverwood Lane Delafield, WI 53018 Dear Jeff: I am pleased to offer you the position of Senior Vice President, International Marketing and Business Development of Arctic Inc., the new corporation ("the Company") being formed from Frontec AMT. In making this offer, I am expressing my enthusiastic support for your leadership skills and abilities. You bring an extraordinary capability to this Company that Is essential in achieving our goals, both short and long term. In addition, we expect that your base of experience and contacts will enable you to significantly impact and influence the overall organization and strategic direction of the company. The purpose of this letter is to detail the terms of your employment. - - JOB TITLE: Senior Vice President, International Marketing & Business Development, responsible for relationships with technology analysts, systems integrators, and channel partners. - - STARTING DATE, As soon as possible, but no later than Monday, April 5, 1999, - - SALARY: $200,000 per year, payable monthly, according to the compensation plan of the Company. - - SIGNING BONUS: $25,000 - - BONUS: In addition to your base compensation, you will participate in an annual incentive bonus program under which you will be entitled to earn targeted incentive compensation of $100,000 upon achievement of your plan to be divided into two separate bonuses of $50,000 each, The first of which will be after the completion of your first six months and the second after completion of your first full year. The Company's Board of Directors will base this incentive portion of your compensation upon the satisfaction of certain performance goals that will be determined by me and subject to approval. - - STOCK: You will be given the opportunity to purchase 772,582 shares (representing approximately 1.5% of the fully diluted outstanding shares of the Company) in the form of stock options or restricted stock available for Mr. Jeff Cashman March 19, 1999 Page 2 of 4 purchase. If you choose to purchase the stock, the Company will loan you the money at a market rate of interest. The exercise price of the options or the purchase price of the restricted stock will be the fair market price of the common shares as determined by the Board of Directors, which is currently $0.25 per share. These restricted shares or options will be subject to the following vesting schedule. Twenty-five percent (25%) of the shares or 193,162 shares, half of these shares will vest immediately upon beginning employment and the balance will vest on your first anniversary date of employment and the remaining shares will vest at the rate of 16,095 shares per month over the succeeding 36 months subject to your continued employment, It is agreed that an excellerated vesting plan will be established based on metrics to be described in your employment contract with a cap of an additional one-half percent (1/2%) based on the then current fair market price. In addition, you will be eligible to be granted additional shares at some time in the future, based upon achievement of company milestones to be determined by the Board and me. In the event you are involuntarily terminated by the Company without "Cause" (as defined below) or if a "Change of Control" (as defined below) occurs, in either case prior to six (6) months after the commencement of your employment with the Company, one-half (Y2) of your restricted stock or options will immediately become vested. If at any time following the six month anniversary of your employment a "change of control" occurs where you are not offered the opportunity to remain employed as the Senior Vice President, International Marketing and Business Development of the Artic Division, or a comparable position, the vesting schedule for your shares will be accelerated so that one-half (Y2) of your non-vested shares would vest immediately upon 'change of control," In all other cases your shares will vest as outlined in the previous paragraph. For the purpose of this letter agreement, "Change of Control" shall mean the occurrence of the following event: the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities' of the Company outstanding Immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. - - BENEFITS: The Company will provide you and your family major medical, dental, 401(k), etc. benefits as commonly provided to all Company employees, and your rights under such benefit plans will be determined under Mr. Jeff Cashman March 19, 1999 Page 3 of 4 the provisions of such plans. You will be subject to the Company's standard vacation and sick leave policies, and if for any reason you need additional time, it will be negotiated and subject to approval by the Company's Board of Directors. - - CONFIDENTIAL INFORMATION: As an employee of the Company, you will have access to confidential information. Moreover, you may, during the course of your employment, develop certain information or inventions that will be the property of the Company. To protect the interest of the Company, we will ask that you sign the Company's standard Nondisclosure and Developments Agreement and noncompetition agreement as conditions of your employment. We wish to impress upon you that we do not wish you to bring with you any confidential or proprietary material of any former employer or to violate any other obligation to your former employers. - - EMPLOYMENT AT WILL Your employment with the Company is "at will", meaning you are not obligated to remain employed at the Company for any specific period of time. Likewise, the Company is not obligated to employ you for any specific period. In the event the Company terminates your employment without "cause," as defined below, or your employment is terminated as a result of disability as determined by the Board of Directors, then upon execution of a release you will be entitled to severance pay consisting of continuation of your then current base salary (excluding bonus), payable in accordance to company practices, as well as paid medical benefits, for a period of six (6) months. Stock options and restricted stock will not continue to vest during this six-month severance period following your termination. If you accept any other employment during this six-month period then your base salary and medical benefits will cease at that time. For purposes of this severance provision. "cause" means a determination by the Board of Directors that shall be conclusive that you have (a) engaged in acts in violation of law or in other conduct which is unbecoming of a Senior Vice President/ Officer of a major company or is otherwise detrimental to the Company; (b) breached your Nondisclosure and Developments Agreement, your fiduciary duty to the Company, or your duties of loyalty and/or care to the Company; or (c) disobeyed the good faith, lawful policies or instructions of the Board of Directors. - - RESTRICTIVE COVENANTS: You agree that, for a period of one year following any termination of your employment, you will not directly or indirectly solicit the services of any Company employee for another activity, or otherwise Induce or attempt to induce such employee to leave the employment of the Company. Mr. Jeff Cashman March 19, 1999 Page 4 of 4 - - EXECUTIVE RELOCATION: As described in Attachment A. - - OTHER: The Company will make such deductions, withholdings, and other payments from all sums payable to you that you request or that are required by law for taxes and other charges. This agreement may not be changed or modified except by agreement in writing, signed by you and an appropriate designee of the Board of Directors. You hereby acknowledge that you are not a party to any agreement that in any way prohibits or imposes any restriction on your employment with the Company, and your acceptance hereof will not BREACH any agreement to which you are a party. You will provide the Company with copies of any relevant employment-related agreements with your current employer, such as non-compete agreements, etc. This agreement shall be governed, construed and enforced in accordance with the laws of Georgia without regard to principles of conflict or law. Should any provision of this agreement, or portion thereof, be found invalid and unenforceable, the remaining provisions shall continue in force and effect. - - TERMS OF OFFER: This offer will remain open until the end of business on Friday, March 26, 1999. When you do accept, and all of us sincerely hope you will, please sign the enclosed copy of this letter and return it to me. Jeff, we are excited to have you join us and are enthused at the prospect of tackling a very promising future together. We look forward to a long and mutually rewarding relationship. Sincerely yours, /s/ GREGORY CRONIN - --------------------------------------- Gregory Cronin Chief Executive Officer GC/ja Enclosure Agreed to, accepted and acknowledged: /s/ JEFFREY B. CASHMAN 3-30-99 - --------------------------------------- ------------------------- Jeff Cashman Date ATTACHMENT A Company shall provide Executive with the following Executive Relocation expenses: Full cost of moving Executive's household goods and personal effects from Delafield, Wisconsin by a carrier approved by Company to include Insurance protection and up to ninety (90) days temporary storage. All reasonable expenses associated with up to four (4) trips for Executive and Executive's family to Atlanta to locate suitable housing. For Executive's trip to Atlanta to report to work, Company will either (i) pay the airfare for Executive and Executive's family, or (ii) automobile mileage will be reimbursed at .29 cents per mile and Executive will receive an allowance of $55.00 for each 450 miles traveled, or fraction thereof. If. after arriving In Atlanta, Executive is unable to move directly into his now residence, Executive will receive a daily allowance of $150.00 for up to sixty (60) days if necessary. This temporary living allowance may be extended or modified in the event Executive's home has not sold within the next sixty (60) days. Company will pay for reasonable closing costs involved with the sale of Executive's home in Delafield, Wisconsin and will reimburse you for the real estate commission incurred In that sale (at the locally prevailing rate but not to exceed seven (7%) percent) if it is within one year of Executive's hire date. Company will reimburse Executive for the closing costs associated with the purchase of a home in the Atlanta area (to include up to three (3) points for a competitive loan by a large lending institution) if Executive purchases the home within one year of his hire date. Executive will receive a miscellaneous relocation payment of $5,000 (taxable, 28% Federal, 7.65% FICA) to be paid within three weeks of Executive's first day of employment. All taxable relocation expenses will be "grossed-up." Signed by: /s/ JEFFREY B. CASHMAN 3-30-99 - --------------------------------------- ------------------------- Jeff Cashman Date Signed by: /s/ GREGORY CRONIN 3-26-99 - --------------------------------------- ------------------------- Gregory Cronin, Chief Executive Officer Date Arctic, Inc. Mr. Jeff Cashman March 19, 1999 EX-10.12 14 ex-10_12.txt EXHIBIT 10.12 EXHIBIT 10.12 ARCTIC, INC. 4 LANDMARK SQUARE STAMFORD, CT 06901 March 25, 1999 Mr. Paul Leiske 1007 Riverview Drive Marietta, GA 30067 Dear Paul: I am pleased to offer you the position of Senior Vice President, International Customer Services of Arctic Inc., the new corporation ("the Company") being formed from Frontec AMT. In making this offer, I am expressing my enthusiastic support for your leadership skills and abilities. You bring an extraordinary capability to this Company that is essential in achieving our goals, both short and long term. In addition, we expect that your base of experience and contacts will enable you to significantly impact and influence the overall organization and strategic direction of the company. The purpose OF this letter is to detail the terms of your employment. - - JOB TITLE: Senior Vice President International Customer Services responsible for customer relations, user community, support, account management, training, and possibly quality assurance, - - STARTING DATE: As soon as possible, but no later than Monday, April 20, 1999. - - SALARY: $185,000 per year, payable monthly, according to the compensation plan of the Company. - - BONUS: In addition to your base compensation, you will participate in an annual incentive bonus program under which you will be entitled to earn targeted incentive compensation of $82,500 upon achievement of your plan at the completion of your first year of employment. The Company's Board of Directors will base this incentive portion of your compensation upon the satisfaction of certain performance goals that will be determined by me and subject to approval. - - STOCK: You will be given the opportunity to purchase 382,500 shares (representing approximately .75% of the fully diluted outstanding shares of the Company) in the form of stock options or restricted stock available for purchase. If you choose to purchase the stock, the Company will loan you the money at a market rate of interest. The exercise price of the options or the purchase price of the restricted stock will be the fair market price of the common shares as determined by the Board of Directors, which is currently $0.25 per share. These restricted shares or options will be subject to the following vesting schedule. Twenty-five percent (25%) of the shares or 95,625 shares, half of these shares will vest immediately upon beginning Mr. Paul Leiske May 2, 2000 Page 2 employment and the balance will vest on your first anniversary date of employment and the remaining shares will vest at the rate of 7,968.75 shares per month over the succeeding 36 months subject to your continued employment. It is agreed that an excellerated vesting plan will be established based on metrics to be described in your employment contract with a cap of an additional one-fourth percent (1/4%) based on the then current fair market price. In addition, you will be eligible to be granted additional shares at some time in the future, based upon achievement of company milestones to be determined by the Board and me. In the event you are involuntarily terminated by the Company without "Cause" (as defined below) or if a "Change of Control" (as defined below) occurs, in either case prior to six (6) months after the commencement of your employment with the Company, one-half (1/2) of your restricted stock or options will immediately become vested. If at any time following the six month anniversary of your employment a It "change of control" occurs where you are not offered the opportunity to remain employed as the Senior Vice President, International Customer Services of the Artic Division, or a comparable position, the vesting schedule for your shares will be accelerated so that one-half (1/2) of your non-vested shares would vest immediately upon "change of control." In all other cases your shares will vest as outlined in the previous paragraph. For the purpose of this letter agreement, "Change of Control" shall mean the occurrence of the following event: the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. - - BENEFITS: The Company will provide you and your family major medical, dental, 401 (k), etc. benefits as commonly provided to all Company employees, and your rights under such benefit plans will be determined under the provisions of such plans. You will be subject to the Company's standard vacation and sick leave policies, and if for any reason you need additional time, it will be negotiated and subject to approval by the Company's Board of Directors. - - CONFIDENTIAL INFORMATION: As an employee of the Company, you will have access to confidential information. Moreover, you may, during the course of your employment, develop certain information or inventions that will be the property of the Company. To protect the interest of the Company, we will ask that you sign the Mr. Paul Leiske May 2, 2000 Page 3 Company's standard Nondisclosure and Developments Agreement and non-competition agreement as conditions of your employment. We wish to impress upon you that we do not wish you to bring with you any confidential or proprietary material of any former employer or to violate any other obligation to your former employers. - - EMPLOYMENT AT WILL: Your employment with the Company is "at will", meaning you are not obligated to remain employed at the Company for any specific period of time. Likewise, the Company is not obligated to employ you for any specific period. In the event the Company terminates your employment without "cause," as defined below, or your employment is terminated as a result of disability as determined by the Board of Directors, then upon execution of a release you will be entitled to severance pay consisting of continuation of your then current base salary (excluding bonus), payable in accordance to company practices, as well as paid medical benefits, for a period of six (6) months. Stock options and restricted stock will not continue to vest during this six-month severance period following your termination. If you accept any other employment during this six-month period then your base salary and medical benefits will cease at that time. For purposes of this severance provision, "cause" means a determination by the Board of Directors that shall be conclusive that you have (a) engaged in acts in violation of law or in other conduct which is unbecoming of a Senior Vice President/ Officer of a major company or is otherwise detrimental to the Company; (b) breached your Nondisclosure and Developments Agreement, your fiduciary duty to the Company, or your duties of loyalty and/or care to the Company; or (c) disobeyed the good faith, lawful policies or instructions of the Board of Directors. - - RESTRICTIVE COVENANTS: You agree that, for a period of one year following any termination of your employment, you will not directly or indirectly solicit the services of any Company employee for another activity, or otherwise induce or attempt to induce such employee to leave the employment of the Company. - - OTHER: The Company will make such deductions, withholdings, and other payments from all sums payable to you that you request or that are required by law for taxes and other charges. This agreement may not be changed or modified except by agreement in writing, signed by you and an appropriate designee of the Board of Directors. You hereby acknowledge that you are not a party to any agreement that in any way prohibits or imposes any restriction on your employment with the Company, and your acceptance hereof will not breach any agreement to which you are a party. You will provide the Company with copies of any relevant employment-related agreements with your current employer, such as non-compete agreements, etc. This agreement shall be governed, construed and enforced in accordance with the laws of Georgia without regard to principles of conflict or law. Should any Mr. Paul Leiske May 2, 2000 Page 4 provision of this agreement, or portion thereof, be found invalid and unenforceable, the remaining provisions shall continue in force and effect. - - TERMS OF OFFER: This offer will remain open until the end of business on Friday, March 26, 1999. When you do accept, and all of us sincerely hope you will, please sign the enclosed copy of this letter and return it to me. Paul, we are excited to have you join us and are enthused at the prospect of tackling a very promising future together. We look forward to a long and mutually rewarding relationship. Sincerely yours, Gregory Cronin Chief Executive Officer GC/ja Enclosure Agreed to, accepted and acknowledged: /s/ Paul Leiske 3-29-99 - -------------------------------- --------------------- Paul Leiske Date EX-10.13 15 ex-10_13.txt EXHIBIT 10.13 EXHIBIT 10.13 VIEWLOCITY October 27,1999 Mr. Maurice Trebuchon 1320 Wayne Avenue NE Atlanta, GA 30306 RE: REVISED OFFER LETTER Dear Moe: I am pleased to offer you the position of Executive Vice President and Chief Operations Officer with Viewlocity, Inc. (the "Company"). In making this offer, I am expressing my enthusiastic support for your leadership skills and abilities. You bring an extraordinary capability to this Company that is essential in achieving our goals, both short and long term. In addition, we expect that your base of experience and contacts will enable you to significantly impact and influence the overall organization and strategic direction of the company. The purpose of this letter is to communicate the terms of this offer. - - JOB TITLE: Executive Vice President and Chief Operations Officer. In this position you will have reporting to you the following functions: Sales, PSO (Professional Services Organization), Business Development and Product Development. For the time being the Area Vice Presidents (Michael Lantz, Anders Berglund and Cynthia Szuma) will continue to report to me. In the future their reporting arrangement will change to report in to you. The timing of this change will be coordinated between us. - - REPORTING TO: The President and Chief Executive Officer - - START DATE: As mutually agreed upon by the Company and you, based upon the transition plan established with your current employer. - - SALARY: $250,000.00 per year, payable bi-weekly, according to the regular payroll practice of the Company. Your salary will remain at this minimum level for a period of two (2) years. At the Company's discretion your salary may be increased during this two (2) year period. After the initial two (2) years, your salary may be increased or decreased depending upon the Company's discretion and/or your individual work performance. - - SIGNING BONUS: $50,000.00 (To be repaid to the Company if employment ceases, voluntarily or for cause, within 12 months of start date.) In the event that within one (1) year of commencing employment with Viewlocity you die or are physically disabled to the extent that you cannot perform your job responsibilities the repayment of this signing bonus will be waived. - - BONUS: In addition to your base compensation, you will participate in an annual incentive bonus program under which you will be entitled to earn targeted incentive compensation of $250,000.00 annually. This incentive portion of your compensation will be based on the achievement of specific goals to be set and agreed upon by you and the Chief Executive Officer in writing within thirty (30) days from the date of this Revised Offer Letter and every six (6) months thereafter. These goals may be based on revenue generation, profitability, customer satisfaction, quality of customer relationships and contribution to the teamwork between the functional areas of Viewlocity. The payment of your bonus will be reviewed and paid every six months. Payment of all bonus awards will be made within ninety (90) days of completion of the six (6) month review period. This bonus program will remain in tact for a minimum of two (2) years. - - STOCK: You will be given the opportunity to purchase 892,500 shares in the form of stock options or restricted stock available for purchase. If you choose to purchase the stock, the Company will loan you the money at a market rate of interest. The exercise price of the options or the purchase price of the restricted stock will be the current fair market price determined by the Board of Directors, which is $1.00 per share. These options will be subject to following vesting schedule: one quarter will vest (6) months after commencement of your employment the remaining will vest in equal increments over the succeeding 42 months. All vesting will cease immediately upon termination of your employment for any reason. All options shares will be subject to the provisions of the Company's Stock Incentive Plan. All shares will be offered in a form that allows you to receive the advantage of a long-term capital gains tax rate (once IRS holding periods have been satisfied) upon sale or transfer of shares with taxation occurring at time of sale or transfer. In order to clarify the foregoing paragraph, you are hereby granted the option to purchase 892,500 shares of common stock of the Company. Six (6) months after the date you start your employment with the Company, you shall be fully "vested" in the right to purchase 223,125 shares of common stock of the Company. Each month thereafter, you shall accumulate the right to purchase an additional 15,937.50 shares of common stock of the Company. In order to elect to exercise your right to purchase shares (which you may do at any time and from time to time, in whole or in part, after the vesting of such right), you shall advise the Company in writing of such election at the Company's business address, together with the delivery of a fully executed promissory note for the purchase price of the stock in form and substance reasonably acceptable to the Company, which shall bear interest at the Prime Rate of interest as announced by The Wall Street Journal on the date of such exercise and shall be due and payable upon your sale of the stock purchased by such exercise. You may not transfer the option to purchase granted hereunder without first obtaining the Company's prior written approval, which may be granted or withheld in the Company's sole discretion. Notwithstanding the foregoing sentence, you may, without the Company's prior written approval, but by providing the Company with prior written notice, transfer the option to purchase granted hereunder to a trust or limited liability company established for estate planning purposes. In the event you are terminated by the Company without "Cause" (as defined below) or if a "Change of Control" (as defined below) occurs, in either case prior to six (6) months after the commencement of your employment with the company, one-half (1/2) of your restricted stock or options will immediately become vested. If at any time following the six month anniversary of your employment a "change of control" occurs where you are not offered the opportunity to remain employed as the Executive Vice President, Chief Operations Officer of Viewlocity, or a comparable position, the vesting schedule for your shares will be accelerated so the one-half (1/2) of your non-vested shares would vest immediately upon "change of control". In all other cases, your shares will vest as outlined in the previous paragraph. For purposes of this Letter, a Change of Control shall be deemed to have occurred if the Company (i) agrees to sell or transfer (a) more than fifty percent (50%) of its capital stock, or (b) eighty percent (80%) or more of its assets (as reflected on the Company's most recent audited balance sheet) and substantially all material customer agreements, for cash or property (including stock), or for a combination of cash and property (including stock), or (ii) agrees to any merger, consolidation, reorganization, division or other transaction in which more than fifty percent (50%) of the issued and outstanding shares of the Company's common stock are converted into another security or into the right to receive securities or property, or (iii) Gregory Cronin ceases to fill the Company role of President and Chief Executive Officer. - - BENEFITS: The Company will provide you and your family major medical, dental, 401(k), etc. benefits as commonly provided to all Company employees, and your rights and costs for such benefit plans will be determined under the provisions of such plans. Highlights of these benefits are as follows: COMPREHENSIVE MEDICAL VIEWLOCITY offers a comprehensive medical plan with eligibility being immediate at hire. The plan covers the cost of prescriptions less a $10.00 co-pay per prescription. The current associate contributions for this plan are $10.00 per pay period for single coverage, $20.00 for associate and spouse and $30.00 for family coverage. DENTAL Dental coverage is $1,000/year per person after satisfying the deductible. Cost for this coverage is included in the associate contribution detailed in the medical section. LIFE INSURANCE VIEWLOCITY provides group life insurance equal to one times your annual salary. An equal amount of AD&D (Accidental Death & Dismemberment) will also be provided. The maximum life insurance provided is $200,000. SHORT TERM DISABILITY For the first 26 weeks of a short-term disability you will be provided 66 2/3% of your salary up to a maximum of $1,500/week. LONG TERM DISABILITY VIEWLOCITY provides salary continuation of 60% of your base salary to a maximum of $12,000 per month. Long-term disability becomes effective after 180 days of disability. 401(K) SAVINGS PLAN You will be eligible to enroll in our 401 (k) Savings Plan. The Plan allows you to defer from 2-18% of your compensation on a pretax basis up to a maximum of $10,000 per year. If you are currently in a 401 (k) plan, you may be eligible to roll over any contributions into our plan. Additional benefits shall include reimbursement of expenses promoting the Company, reimbursement of continuing education expenses, and mobile phone monthly charges. The benefits described in this letter are provided for informational purposes only. At the discretion of Viewlocity, policies and benefits may be changed at any time, and you do not have any vested rights in benefits by virtue of this letter, although the Company will, at a minimum, provide you with substantially similar benefits to those set forth hereinabove throughout the term of your employment. Employment benefits are governed by the actual plan documents that are kept in the Human Resources department. If you have any questions about benefits, you should refer to the actual plan document. - - VACATION: You will be eligible for four (4) weeks paid vacation and the Company's standard sick leave policy. If for any reason you need additional time, it will be negotiated and subject to approval by the Company's Board of Directors. - - TRADE SECRETS/CONFIDENTIAL INFORMATION AND NON-COMPETE: As an employee of the Company, you will have access to confidential information. Moreover, you may, during the course of your employment, develop certain information or inventions that will be the property of the Company. To protect the interest of the Company, we will ask that you sign the Company's standard Employment Covenants Agreement as conditions of your employment. We wish to impress upon you that we do not wish you to bring with you any trade secrets, confidential or proprietary material of any former employer or to violate any other obligation to your former employers. You hereby acknowledge that your acceptance hereof will not breach any agreement to which you are a party. - - EMPLOYMENT AT WILL: Subject to the terms of this Revised Offer Letter, at either Your option or Viewlocity's option, your employment may be terminated at any time, with or without cause or notice. No Viewlocity representative, other than the President, has any authority to enter into any agreement for employment for any specific period of time. Gregory Cronin hereby represents and warrants that he is the President and Chief Executive Officer of the Company and has the power and authority to bind the Company to its obligations set forth herein and in the Employment Covenants Agreement. - - SEPARATION PAY: In the event the Company terminates your employment without "cause," as defined below, or your employment is terminated as a result of disability as determined by the Board of Directors, then, upon execution of a Separation Pay Release Agreement drafted by the Company and reasonably acceptable to you, the Company will continue your current base salary (excluding bonus), payable in accordance with the Company's normal payroll practices, as well as paid medical benefits, for a period of nine (9) months. Stock options and restricted stock will not continue to vest during this separation period following your termination. If you accept and receive compensate for any other employment during this nine (9) month period then your base salary and medical benefits will cease at that time. For purposes of this separation pay provision only "cause" means a determination by the Board of Directors, in its reasonable discretion, that you have (a) engaged in acts in violation of law; (b) breached your Nondisclosure and Developments Agreement, your fiduciary duty to the Company, or your duties of loyalty and/or care to the Company; or (c) disobeyed the good faith, lawful policies or instructions of the Board of Directors, if you have not cured such disobedience within fifteen (15) days of your receipt of written notice thereof. - - TERMS OF OFFER: This offer will remain open until the end of business on October 29, 1999. When you do accept, and all of us sincerely hope you will, please sign the enclosed copy of this letter and return it to me. Moe, please keep the contents of this letter confidential. We are excited to have you join us and are enthused at the prospect of tackling a very promising future together. Sincerely yours, /s/ Gregory Cronin - ----------------------- Greg Cronin President, Chief Executive Officer Agreed to, accepted and acknowledged: /s/ Maurice Trebuchon 10-27-99 - ---------------------- ------------------- Maurice Trebuchon Date EX-10.14 16 ex-10_14.txt EXHIBIT 10.14 EXHIBIT 10.14 VIEWLOCITY, INC. RESTRICTED STOCK AGREEMENT THIS AGREEMENT is made and entered into effective as of the __ day of _______, ____ (the "Effective Date"), by and between Viewlocity, Inc., a Delaware corporation (the "Company"), and ____________________ ("Employee"). BACKGROUND A. The Board of Directors of the Company (the "Board") has authorized the issuance to Employee of an award of shares of the Company's common stock (the "Common Stock") pursuant to the Company's Stock Incentive Plan (the "Plan"), subject to certain restrictions as described herein. B. The Company and Employee wish to confirm herein the terms, conditions and restrictions of such award. For and in consideration of the premises, the mutual covenants contained herein, and other good and valuable consideration, the parties hereto agree: SECTION 1 PURCHASE OF SHARES 1.1 PURCHASE OF SHARES. Subject to the terms, restrictions, limitations, and conditions stated herein and in the Plan, the Company hereby awards to Employee ___ shares of Common Stock (the "Shares"), subject to the terms and conditions set forth herein. 1.2 VESTING OF SHARES. Employee shall become vested in the Shares as described in the Vesting Schedule set forth on Schedule I hereto, except that the Company's Board of Directors may, in its sole discretion, waive the Vesting Schedule, in which case all Shares shall become fully vested. The Shares which have become vested pursuant to the Vesting Schedule or by virtue of waiver of the Vesting Schedule by the Board are herein referred to as the "Vested Shares" and all of the Shares which are not Vested Shares are sometimes herein referred to as the "Unvested Shares." 1.3 RIGHTS AS STOCKHOLDER. Except as expressly set forth herein, Employee shall have all rights as a stockholder of the Company with respect to the Shares, regardless of whether they are Vested Shares or Unvested Shares. 1.4 INVESTMENT REPRESENTATIONS. Employee hereby represents, warrants, covenants, and agrees with the Company as follows: (a) The Shares being acquired by Employee will be acquired for Employee's own account without the participation of any other person, with the intent of holding the Shares for investment and without the intent of participating, directly or indirectly, in a distribution of the Shares and not with a view to, or for resale in connection with, any distribution of the Shares, nor is Employee aware of the existence of any distribution of the Shares; (b) Employee is not acquiring the Shares based upon any representation, oral or written, by any person with respect to the future value of, or income from, the Shares but rather upon an independent examination and judgment as to the prospects of the Company; (c) The Shares were not offered to Employee by means of publicly disseminated advertisements or sales literature, nor is Employee aware of any offers made to other persons by such means; (d) Employee is able to bear the economic risks of the investment in the Shares, including the risk of a complete loss of his investment therein; (e) Employee understands and agrees that the Shares will be issued and sold to Employee without registration under any state law relating to the registration of securities for sale, and will be issued and sold in reliance on the exemptions from registration under the Securities Act of 1933 (the "1933 Act"), provided by Sections 3(b) and/or 4(2) thereof and the rules and regulations promulgated thereunder; (f) The Shares cannot be offered for sale, sold or transferred by Employee other than pursuant to: (A) an effective registration under the 1933 Act or in a transaction otherwise in compliance with the 1933 Act; and (B) evidence satisfactory to the Company of compliance with the applicable securities laws of other jurisdictions. The Company shall be entitled to rely upon an opinion of counsel satisfactory to it with respect to compliance with the above laws; (g) The Company will be under no obligation to register the Shares or to comply with any exemption available for sale of the Shares without registration or filing, and the information or conditions necessary to permit routine sales of securities of the Company under Rule 144 of the 1933 Act are not now available and no assurance has been given that it or they will become available. The Company is under no obligation to act in any manner so as to make Rule 144 available with respect to the Shares; (h) Employee has and has had complete access to and the opportunity to review and make copies of all material documents related to the business of the Company, including, but not limited to, contracts, financial statements, tax returns, leases, deeds, and other books and records. Employee has examined such of these documents as Employee has wished and is familiar with the business and affairs of the Company. Employee realizes that the purchase of the Shares is a speculative investment and that any possible profit therefrom is uncertain; (i) Employee has had the opportunity to ask questions of and receive answers from the Company and any person acting on its behalf and to obtain all material information reasonably available with respect to the Company and its affairs. Employee has received all information and data with respect to the Company which Employee has -2- requested and which Employee has deemed relevant in connection with the evaluation of the merits and risks of Employee's investment in the Company; (j) Employee has such knowledge and experience in financial and business matters that Employee is capable of evaluating the merits and risks of the purchase of the Shares hereunder and Employee is able to bear the economic risk of such purchase; and (k) The agreements, representations, warranties, and covenants made by Employee herein extend to and apply to all of the Shares of the Company issued to Employee pursuant to this Agreement and the award documented hereby. Acceptance by Employee of a certificate representing such Shares shall constitute a confirmation by Employee that all such agreements, representations, warranties, and covenants made herein shall be true and correct at that time. SECTION 2 RESTRICTIONS ON SHARES 2.1 RESTRICTIONS ON UNVESTED SHARES. (a) FORFEITURE UPON TERMINATION OF EMPLOYMENT. Notwithstanding anything to the contrary herein, upon termination of Employee's employment with the Company for any reason, including Employee's death or disability, all Unvested Shares shall be automatically forfeited, effective as of the effective date of termination of employment, without any consideration payable to Employee. (b) RESTRICTIONS ON TRANSFER OF UNVESTED SHARES. Unvested Shares shall not be transferable by Employee for any reason or in any manner, including by will or intestacy. 2.2 RESTRICTIONS ON VESTED SHARES. The parties hereto acknowledge that the transferability of Vested Shares shall be governed by that certain Shareholders Agreement of the Company dated March 12, 1999 or such other shareholders agreement as governs the transferability of Common Stock as of the date of vesting. 2.3 SECURITIES LAWS. Notwithstanding anything herein to the contrary, no transfer of Vested Shares will be permitted unless the Company is satisfied that such transfer will not violate any applicable state and federal securities laws. SECTION 3 GENERAL PROVISIONS 3.1 CHANGE IN CAPITALIZATION. If the number of outstanding shares of the Company is increased or decreased by a change in par value, split-up, stock split, reverse stock split, reclassification, distribution of a stock dividend, or other similar capital adjustment, an appropriate adjustment shall be made by the Board in the number and kind of Shares, such that Employee's proportionate interest shall be maintained as before the occurrence of the event. No fractional shares shall be issued in making such adjustment. All adjustments made by the Board under this Section shall be final, binding, and conclusive. -3- 3.2 LEGENDS. Each certificate representing the Shares shall be endorsed with the following legend and Employee shall not make any transfer of the Shares without first complying with the restrictions on transfer described in such legend: TRANSFER IS RESTRICTED THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL AND OTHER RESTRICTIONS ON TRANSFER SET FORTH IN A RESTRICTED STOCK AGREEMENT DATED _____________ _________, 1999, A COPY OF WHICH IS AVAILABLE FROM THE COMPANY. THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR HYPOTHECATED UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION UNDER SUCH ACT COVERING SUCH SECURITIES, (2) THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR (3) THE ISSUER RECEIVES AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT. Employee agrees that the Company may also endorse any other legends required by applicable federal or state securities laws. The Company need not register a transfer of the Shares, and may also instruct its transfer agent, if any, not to register the transfer of the Shares unless the conditions specified in the foregoing legends are satisfied. 3.3 Removal of Legend and Transfer Restrictions. (a) Any legend endorsed on a certificate pursuant to Section 3.2 and the stop transfer instructions with respect to the Shares shall be removed and the Company shall issue a certificate without such legend to the holder thereof if such Shares are registered under the Securities Act and a prospectus meeting the requirements of Section 10 of the Securities Act is available. (b) The restrictions described in the second sentence of the legend set forth in Section 3.2 may be removed at such time as permitted by Rule 144(k) promulgated under the Securities Act. 3.4 GOVERNING LAWS. This Agreement shall be construed, administered and enforced according to the laws of the State of Georgia; provided, however, no Shares shall be issued except, in the reasonable judgment of the Board, in compliance with exemptions under applicable state securities laws of the state in which Employee resides, and/or any other applicable securities laws. 3.5 SUCCESSORS. This Agreement shall be binding upon and inure to the benefit of the heirs, legal representatives, successors, and permitted assigns of the parties. -4- 3.6 NOTICE. Except as otherwise specified herein, all notices and other communications under this Agreement shall be in writing and shall be deemed to have been given if personally delivered or if sent by registered or certified United States mail, return receipt requested, postage prepaid, addressed to the proposed recipient at the last known address of the recipient. Any party may designate any other address to which notices shall be sent by giving notice of the address to the other parties in the same manner as provided herein. 3.7 SEVERABILITY. In the event that any one or more of the provisions or portion thereof contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Agreement, and this Agreement shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein. 3.8 ENTIRE AGREEMENT. This Agreement, the Employment Agreement and the attachments thereto express the entire understanding and agreement of the parties with respect to the subject matter. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. 3.9 VIOLATION. Any transfer, pledge, sale, assignment, or hypothecation of the Shares or any portion thereof shall be a violation of the terms of this Agreement and shall be void and without effect. 3.10 HEADINGS. Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Agreement. 3.11 SPECIFIC PERFORMANCE. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. 3.12 NO EMPLOYMENT RIGHTS CREATED. The award of Shares hereunder shall not be construed as giving Employee the right to continued employment with the Company. 3.13 TAX CONSEQUENCES. Employee acknowledges that he is not relying on the Company for tax advice with respect to this award or vesting of the Shares. Employee agrees to consult his individual tax Employee regarding the advisability of filing an election under Section 83 of the Internal Revenue Code of 1986, as amended. 3.14 ADDITIONAL CONDITION TO SHARES. In order to not forfeit the Shares, Employee must deliver to the Company, within ten (10) days following notice by the Company, a certified check payable to the Company in the amount of all withholding tax obligations (whether federal, state or local), imposed on the Company by reason of the award or the vesting of the Shares. -5- IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on the day and year first set forth above. VIEWLOCITY, INC. By: ----------------------------------------- Name: --------------------------------------- Title: -------------------------------------- -------------------------------------------- -6- SCHEDULE I TO VIEWLOCITY, INC. RESTRICTED STOCK AGREEMENT VESTING SCHEDULE ---------------- -7- EX-10.15 17 ex-10_15.txt EXHIBIT 10.15 EXHIBIT 10.15 PROMISSORY NOTE $ __________________ ________________, ____ Atlanta, Georgia FOR VALUE RECEIVED, the undersigned, _________________ ("Borrower"), promises to pay to the order of VIEWLOCITY, INC., a Delaware corporation (the "Lender"), in lawful money of the United States of America constituting legal tender in payment of all debts and dues, public and private, the principal amount of ____________________________________ ($__________). 1. INTEREST. From and after the date hereof (until maturity or default as hereinafter provided), interest on the principal amount outstanding shall accrue at the fixed rate equal to compounded annually and computed on the basis of a 365-day year. 2. PAYMENT. (a) Interest on the outstanding principal balance of the indebtedness evidenced hereby shall be payable monthly with the initial payment due on or before ___________________________. (b) On ________________________ (the "Maturity Date"), the entire outstanding principal balance of the indebtedness evidenced hereby shall be due and payable in full. (c) Notwithstanding anything herein to the contrary, the entire outstanding principal balance of the indebtedness evidenced hereby and all accrued but unpaid interest shall be due and payable in full upon the first to occur of the following: (i) The Maturity Date; (ii) Twelve (12) months following the sale of common stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission (other than a registration statement solely covering an employee benefit plan or corporate reorganization); (iii) Ninety (90) days following the effective date of termination of Borrower's employment with the Company. 3. PREPAYMENT. This Note may be prepaid in whole or in part without penalty, provided that any partial prepayment shall be in integral multiples of $1,000.00. 4. SECURITY. The indebtedness evidenced by this Note and the obligations created hereby are secured by those certain shares of common stock of Lender purchased by Borrower pursuant to a Restricted Stock Agreement of even date herewith. 5. EVENT OF DEFAULT. If the Borrower fails to make any payment of principal or interest as the same becomes due and payable, and such failure is not cured within five (5) business days after written notice thereof or at any time thereafter during the continuance of any such event, the holder may, with or without notice to the Borrower, declare this Note and the indebtedness evidenced hereby to be forthwith due and payable, whereupon this Note and the indebtedness evidenced hereby shall become forthwith due and payable, without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived. 6. RECOURSE. Borrower shall be personally liable for the obligations evidenced hereby. 7. PAYMENT IN SHARES. Borrower may make any payment due and payable or otherwise permitted hereunder by delivery of shares of Lender's common stock owned (and fully vested) to Lender that have been owned (and fully paid for) for at least six (6) months. For purposes of payments hereunder, any shares of Lender's common stock shall be valued at the then fair market value (as determined by the Board). 8. WAIVERS. Borrower hereby waives demand, presentment for payment, notice of dishonor, protest, and notice of protest and diligence in collection or bringing suit and agree that the holder hereof may accept partial payment, or release or exchange security or collateral, without discharging or releasing any unreleased collateral or the obligations evidenced hereby. Borrower further waives any and all rights of exemption, both as to personal and real property, under the constitution or laws of the United States or the State of Georgia. 9. ATTORNEYS' FEES. Borrower agrees to pay reasonable attorneys' fees and costs actually incurred by the holder hereof in collecting on this Note, whether by suit or otherwise. 10. UNCONDITIONAL PAYMENT. Borrower is and shall be obligated to pay principal and any and all other amounts which become payable hereunder absolutely and unconditionally and without any abatement, postponement, diminution or deduction and without any reduction for counterclaim or setoff. In the event that at any time any payment received by Lender hereunder shall be deemed by a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief law, then the obligation to make such payment shall survive any cancellation or satisfaction of this Note or return thereof to Borrower and shall not be discharged or satisfied with any prior payment thereof or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and such payment shall be immediately due and payable upon demand. 11. TRANSFER OF SECURITIES. Borrower hereby acknowledges that the Securities will not be transferable pursuant to Rule 144 promulgated under the Securities Exchange Act of 1933 until the entire principal balance of this Note is paid in full. 12. MISCELLANEOUS. As used herein, the terms "Borrower," "Lender" and "holder" shall be deemed to include their respective successors, legal representatives and assigns, whether by voluntary action of the parties or by operation of law. This Note is given under the seal of the party hereto, and it is intended that this Note is and shall constitute and have the effect of a sealed instrument according to law. This Note has been negotiated, and is being executed and delivered in the State of Georgia, or if executed elsewhere, shall become effective upon the Lender's receipt and acceptance of the executed original of this Note in the State of Georgia; provided, however, that the Lender shall have no obligation to give, nor shall Borrower be entitled to receive, any notice of such acceptance for this Note to become a binding obligation of Borrower. Borrower hereby submits to jurisdiction in the State of Georgia. This Note shall be governed by and be construed in accordance with the laws of the State of Georgia. It is intended, and the Borrower and the holder hereof specifically agree, that the laws of the State of Georgia governing interest shall apply to this Note and to this transaction. This Note may not be modified except by written agreement signed by the Borrower and the holder hereof, or by their respective successors or assigns. 13. TIME OF ESSENCE. TIME IS OF THE ESSENCE in connection with this Note. -2- IN WITNESS WHEREOF, Borrower has caused this Note to be executed and delivered as of the date first set forth above. BORROWER: ________________________________ _______________________________________ Witness _______________________________________ -3- EXHIBIT A EX-10.16 18 ex-10_16.txt EXHIBIT 10.16 EXHIBIT 10.16 - -------------------------------------------------------------------------------- VIEWLOCITY, INC. FRONTEC AMT, INC. VIEWLOCITY AB LOAN AND SECURITY AGREEMENT - -------------------------------------------------------------------------------- This LOAN AND SECURITY AGREEMENT is entered into as of November 26, 1999, by and between IMPERIAL BANK ("Bank") and VIEWLOCITY, INC. ("Viewlocity"), FRONTEC AMT, INC., AND VIEWLOCITY AB ( individually, a "Borrower" and collectively, the "Borrowers"). RECITALS Borrowers wish to obtain credit from time to time from Bank, and Bank desires to extend credit to Borrowers. This Agreement sets forth the terms on which Bank will advance credit to Borrowers, and Borrowers will repay the amounts owing to Bank. AGREEMENT The parties agree as follows: 1. DEFINITIONS AND CONSTRUCTION. 1.1 DEFINITIONS. As used in this Agreement, the following terms shall have the following definitions: "Accounts" means all presently existing and hereafter arising accounts, contract rights, and all other forms of obligations owing to a Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or the rendering of services by a Borrower, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by a Borrower and Borrower's Books relating to any of the foregoing. "Advance" or "Advances" means a cash advance or cash advances under the Revolving Facility. "Affiliate" means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person's senior executive officers, directors, and partners. "Bank Expenses" means all: reasonable costs or expenses (including reasonable attorneys' fees and expenses) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees which shall not exceed $5,000 per calendar quarter; and Bank's reasonable attorneys' fees and expenses incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought. "Borrower's Books" means all of a Borrower's books and records including: ledgers; records concerning a Borrower's assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information. "Borrowing Base" means an amount equal to eighty percent (80%) of Eligible Accounts, as determined by Bank with reference to the most recent Borrowing Base Certificate delivered by Borrowers. "Business Day" means any day that is not a Saturday, Sunday, or other day on which banks in the State of California or Massachusetts are authorized or required to close. "Change in Control" shall mean a transaction in which any "person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of a Borrower ordinarily entitled to vote in the election of directors, empowering such "person" or "group" to elect a majority of the Board of Directors of a Borrower, who did not have such power before such transaction. 1 "Closing Date" means the date of this Agreement. "Code" means the California Uniform Commercial Code. "Collateral" means the property described on EXHIBIT A attached hereto. "Committed Revolving Line" means a credit extension of up to Two Million Six Hundred Thousand Dollars ($2,600,000). "CommVest Lease Financing" means that Master Lease Agreement dated November ____, 1999 by and between Viewlocity, Inc. as Lessee and CommVest, LLC as Lessor. "Contingent Obligation" means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term "Contingent Obligation" shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement. "Copyrights" means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held. "Credit Extension" means each Advance, Equipment Advance, or any other extension of credit by Bank for the benefit of Borrowers hereunder. "Daily Balance" means the amount of the Obligations owed at the end of a given day. "Debt Service Coverage" means, as of any date of determination, a ratio of (a) the sum of (i) earnings after tax annualized for the preceding three (3) months plus interest and non-cash (i.e., depreciation and amortization) expenses, annualized for the preceding (3) three months to (b) the sum of (i) current portion of long term debt and capitalized leases plus (ii) interest expense, annualized for the preceding three months. "Eligible Accounts" means those Accounts that arise in the ordinary course of Viewlocity's business in the United States and in the United Kingdom that comply with all of Borrowers' representations and warranties to Bank set forth in Section 5.4; provided, that standards of eligibility may be fixed and revised from time to time by Bank as a consequence of any Collateral audits done pursuant to Section 6.3 in Bank's reasonable judgment and upon notification thereof to Agent in accordance with the provisions hereof. Unless otherwise agreed to by Bank, Eligible Accounts shall not include the following: (a) Accounts that the account debtor has failed to pay within ninety (90) days of invoice date; (b) Accounts with respect to an account debtor, twenty-five percent (25%) of whose Accounts the account debtor has failed to pay within ninety (90) days of invoice date; 2 (c) Accounts with respect to which the account debtor is an officer, employee, or agent of a Borrower; (d) Accounts with respect to which goods are placed on consignment, guaranteed sale, sale or return, sale on approval, bill and hold, or other terms by reason of which the payment by the account debtor may be conditional; (e) Accounts with respect to which the account debtor is an Affiliate of Viewlocity; (f) Accounts with respect to which the account debtor does not have its principal place of business in the United States or the United Kingdom, except for Eligible Foreign Accounts; (g) Accounts with respect to which the account debtor is the United States or any department, agency, or instrumentality of the United States; (h) Accounts with respect to which Viewlocity is liable to the account debtor for goods sold or services rendered by the account debtor to a Viewlocity, but only to the extent of any amounts owing to the account debtor against amounts owed to a Borrower; (i) Accounts with respect to an account debtor, including Subsidiaries and Affiliates of such account debtor, whose total obligations to Viewlocity exceed twenty-five percent (25%) of all Accounts, to the extent such obligations exceed the aforementioned percentage, except as approved in writing by Bank; (j) Accounts with respect to which the account debtor disputes liability or makes any claim with respect thereto as to which Bank believes, in its sole discretion, that there may be a basis for dispute (but only to the extent of the amount subject to such dispute or claim), or is subject to any Insolvency Proceeding, or becomes insolvent, or goes out of business; and (k) Accounts the collection of which Bank reasonably determines to be doubtful. "Eligible Foreign Accounts" means Accounts with respect to which the account debtor does not have its principal place of business in the United States and that (i) are supported by one or more letters of credit in an amount and of a tenor, and issued by a financial institution, acceptable to Bank, or (ii) that Bank approves on a case-by-case basis. "Equipment" means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which a Borrower has any interest. "Equity Event" means the receipt by Viewlocity following the Closing Date of proceeds from investors acceptable to Bank of not less than Ten Million Dollars ($10,000,000) from the sale or issuance in one or more transactions of its equity securities. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder. "Event of Default" has the meaning assigned in Article 8. "GAAP" means generally accepted accounting principles as in effect from time to time. "Indebtedness" means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations and (d) all Contingent Obligations. 3 "Insolvency Proceeding" means any proceeding commenced by or against any person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. "Intellectual Property Collateral" means all of a Borrower's right, title, and interest in and to the following: (a) Copyrights, Trademarks and Patents; (b) Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or held; (c) Any and all design rights which may be available to a Borrower now or hereafter existing, created, acquired or held; (d) Any and all claims for damages by way of past, present and future infringement of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above; (e) All licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from such use to the extent permitted by such license or rights; (f) All amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents; and (g) All proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing. "Inventory" means all present and future inventory in which a Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or at any time hereafter owned by or in the custody or possession, actual or constructive, of a Borrower, including such inventory as is temporarily out of its custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower's Books relating to any of the foregoing. "Investment" means any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person. "IRC" means the Internal Revenue Code of 1986, as amended, and the regulations thereunder. "Lien" means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. "Loan Documents" means, collectively, this Agreement, any note or notes executed by Borrowers, and any other agreement entered into between Borrowers and Bank in connection with this Agreement, all as amended or extended from time to time. "Material Adverse Effect" means a material adverse effect on (i) the business operations or condition (financial or otherwise) of a Borrower and its Subsidiaries taken as a whole or (ii) the ability of a Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents. 4 "Negotiable Collateral" means all of a Borrower's present and future letters of credit of which it is a beneficiary, notes, drafts, instruments, securities, documents of title, and chattel paper, and Borrower's Books relating to any of the foregoing. "Obligations" means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrowers pursuant to this Agreement or any other agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from a Borrower to others that Bank may have obtained by assignment or otherwise. "Patents" means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same. "Periodic Payments" means all installments or similar recurring payments that Borrowers may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrowers and Bank. "Permitted Indebtedness" means: (a) Indebtedness of Borrowers in favor of Bank arising under this Agreement or any other Loan Document; (b) Indebtedness existing on the Closing Date and disclosed in the Schedule; (c) Indebtedness secured by a lien described in clause (c) of the defined term "Permitted Liens," provided such Indebtedness does not exceed the lesser of the cost or fair market value of the equipment financed with such Indebtedness; and (d) Subordinated Debt. "Permitted Investment" means: (a) Investments existing on the Closing Date disclosed in the Schedule; and (b) (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one (1) year from the date of acquisition thereof, (ii) commercial paper maturing no more than one (1) year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor's Corporation or Moody's Investors Service, (iii) certificates of deposit maturing no more than one (1) year from the date of investment therein issued by Bank and (iv) Bank's money market accounts. "Permitted Liens" means the following: (a) Any Liens existing on the Closing Date and disclosed in the Schedule or arising under this Agreement or the other Loan Documents; (b) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no priority over any of Bank's security interests; (c) Liens (i) upon or in any equipment acquired or held by a Borrower or any of its Subsidiaries to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition of such equipment, or (ii) existing on such equipment at the time of its acquisition, 5 provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment; (d) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase. "Person" means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency. "Prime Rate" means the variable rate of interest, per annum, most recently announced by Bank, as its "prime rate," whether or not such announced rate is the lowest rate available from Bank. "Responsible Officer" means each of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer and the Controller of a Borrower. "Revolving Facility" means the facility under which Agent may request Bank to issue Advances, as specified in Section 2.1(a) hereof. "Revolving Maturity Date" means November 25, 2000. "Schedule" means the schedule of exceptions attached hereto, if any. "Subordinated Debt" means any debt incurred by one or more Borrowers that is subordinated to the debt owing by Borrowers to Bank on terms reasonably acceptable to Bank (and identified as being such by Borrowers and Bank). "Subsidiary" means any corporation or partnership in which (i) any general partnership interest or (ii) more than 50% of the stock of which by the terms thereof ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by a Borrower, either directly or through an Affiliate. "Tangible Net Worth" means at any date as of which the amount thereof shall be determined, the sum of the capital stock and additional paid-in capital plus retained earnings (or minus accumulated deficit) of Viewlocity and its Subsidiaries minus capitalized software, goodwill, and intangible assets, plus Subordinated Debt, on a consolidated basis determined in accordance with GAAP. "Total Liabilities" means at any date as of which the amount thereof shall be determined, all obligations that should, in accordance with GAAP be classified as liabilities on the consolidated balance sheet of Viewlocity, including in any event all Indebtedness. "Trademarks" means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of a Borrower connected with and symbolized by such trademarks. 1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein shall be construed in accordance with GAAP and all calculations made hereunder shall be made in accordance with GAAP. When used herein, the terms "financial statements" shall include the notes and schedules thereto. 2. LOAN AND TERMS OF PAYMENT. 2.1 CREDIT EXTENSIONS. 6 Borrowers promise to pay to the order of Bank, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrowers hereunder. Borrowers shall also pay interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof. (a) REVOLVING ADVANCES. (i) Subject to and upon the terms and conditions of this Agreement, Agent may request Advances in an aggregate amount not to exceed the lesser of the (i) Committed Revolving Line, and (ii) the amount required to pay off Borrower's debt to Handelsbanken. Notwithstanding the foregoing and subject to the conditions set forth below, beginning on January 1, 2000, subject to and upon the terms and conditions of this Agreement, Agent may request Advances in an aggregate outstanding amount not to exceed the lesser of (i) the Committed Revolving Line or (ii) the Borrowing Base. Notwithstanding the foregoing, upon the earlier of (i) January 1, 2000, and (ii) the occurrence of the Equity Event, and continuing until the occurrence of the IP Transfer set forth in Section 6.14(a) hereof, Borrowers shall pay down the outstanding principal and accrued interest under the Committed Revolving Line so that the aggregate outstanding Advances plus the face amount of the Letter of Credit (or if drawn, the unreimbursed amount of the Letter of Credit) do not exceed the amount specified in that certain Floating Charge Agreement dated November 26, 1999, by and between Bank and Viewlocity AB to the extent Bank has a valid perfected security interest in the property described therein. Subject to the terms and conditions of this Agreement, amounts borrowed pursuant to this Section 2.1(a) may be repaid and reborrowed at any time prior to the Revolving Maturity Date, at which time all Advances under this Section 2.1(a) shall be immediately due and payable. Borrowers may prepay any Advances without penalty or premium. (ii) Whenever Borrowers desire an Advance, Agent will notify Bank by facsimile transmission or telephone no later than 3:00 p.m. Pacific time, on the Business Day that the Advance is to be made. Each such notification shall be promptly confirmed by a Payment/Advance Form in substantially the form of EXHIBIT B hereto. Bank is authorized to make Advances under this Agreement, based upon instructions received from a Responsible Officer or a designee of a Responsible Officer, or without instructions if in Bank's discretion such Advances are necessary to meet Obligations which have become due and remain unpaid. Bank shall be entitled to rely on any telephonic notice given by a person who Bank reasonably believes to be a Responsible Officer or a designee thereof, and Borrowers shall indemnify and hold Bank harmless for any damages or loss suffered by Bank as a result of such reliance. Bank will credit the amount of Advances made under this Section 2.1(a) to Agent's deposit account. (b) TAX GROSS UP. Borrowers agree that all payments made hereunder shall be made free and clear of, and without deduction for, any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by Bank's net income or receipts (such non-excluded items the "Taxes"). If any withholding or deduction from any payment by Borrowers hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then Borrowers shall (i) pay directly to the relevant authority the full amount required to be so withheld or deducted; (ii) promptly forward to Bank an official receipt or other documentation satisfactory to Bank evidencing such payment to such authority; and (iii) pay to Bank such additional amount or amounts needed to ensure that the net amount Bank actually receives equals the full amount Bank would have received had no such withholding or deduction been required. Moreover, if any Taxes are directly asserted against Bank with respect to any payment it receives hereunder, Bank may pay such Taxes and Borrowers shall promptly pay such additional amounts (including any penalties, interest or expenses) needed so that the net amount Bank received after the payment of such Taxes (including any Taxes on such additional amount) equals the amount Bank would have received had not such Taxes been asserted. If Borrowers fail to pay any Taxes when due to the appropriate taxing authority or fails to remit to Bank the required receipts or other required documentary evidence, Borrowers shall indemnify Bank for any incremental Taxes, interest or penalties that may become payable by Bank as a result of any such failure. Without prejudice to the survival of any other agreement of Borrowers hereunder, the agreements and obligations of Borrowers contained in this Section shall survive the payment in full of all amounts owing under this Agreement and the termination of this Agreement. 7 (c) CURRENCY CONVERSION. Borrowers agree that if, for the purposes of obtaining a judgment in any court, it is necessary to convert a sum due hereunder in United States Dollars into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures Bank could purchase United States Dollars with such other currency on the business day preceding that on which final judgment is given. Borrowers' obligation in respect of any sum it owes to Bank shall, notwithstanding any judgment in a currency other than United States Dollars, be discharged only to the extent that on the business day following Bank's receipt of any sum adjudged to be so due in such other currency Bank may, in accordance with normal banking procedures, purchase United States Dollars with such other currency; if the United States Dollars so purchased are less than the sum originally due to Bank in United States Dollars, Borrowers, as a separate obligation and notwithstanding any such judgment, shall indemnify and hold harmless Bank against such loss, and if the United States Dollars so purchased exceed the sum originally due to Bank in United States Dollars, Bank shall remit such excess to Agent. (d) LETTER OF CREDIT. Viewlocity, Inc. and Bank have entered into that certain Application for Standing Letter of Credit and Security Agreement, and the Addendum thereto, each dated October 26, 1999 ("Letter of Credit Agreement"), under which Bank has issued a letter of credit for the account of Viewlocity, Inc. in the face amount of $1,212,468 (the "Letter of Credit"). Such Letter of Credit shall expire on November 5, 2000. 2.2 OVERADVANCES. If the aggregate amount of the outstanding Advances exceeds the lesser of the Committed Revolving Line or the Borrowing Base on or after January 1, 2000, Borrowers shall immediately pay to Bank, in cash, the amount of such excess. 2.3 INTEREST RATES, PAYMENTS, AND CALCULATIONS. (a) INTEREST RATES. (i) ADVANCES. Except as set forth in Section 2.3(b), the Advances shall bear interest, on the outstanding daily balance thereof, at a rate equal to two percent (2.00%) above the Prime Rate. Notwithstanding the foregoing, following the occurrence of an Equity Event, and Bank's receipt of written notice thereof and any evidence thereof that Bank reasonably requires, such rate shall be reduced to one percent (1.00%) above the Prime Rate. (b) LATE FEE; DEFAULT RATE. If any payment is not made within ten (10) days after the date such payment is due, Borrowers shall pay Bank a late fee equal to the lesser of (i) five percent (5%) of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law. All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to five (5) percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default. (c) PAYMENTS. Interest hereunder shall be due and payable on the first (1st) calendar day of each month during the term hereof. Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrowers' deposit accounts or against the Committed Revolving Line, in which case those amounts shall thereafter accrue interest at the rate then applicable hereunder. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder. (d) COMPUTATION. In the event the Prime Rate is changed from time to time hereafter, the applicable rate of interest hereunder shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in the Prime Rate. All interest chargeable under the Loan Documents shall be computed on the basis of a three hundred sixty (360) day year for the actual number of days elapsed. 2.4 CREDITING PAYMENTS. Prior to the occurrence of an Event of Default, Bank shall credit a wire transfer of funds, check or other item 8 of payment to such deposit account or Obligation as Agent specifies. After the occurrence of an Event of Default, the receipt by Bank of any wire transfer of funds, check, or other item of payment shall be immediately applied to conditionally reduce Obligations, but shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank after 12:00 noon Pacific time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension. 2.5 FEES. Borrowers shall pay to Bank the following: (a) FACILITY FEE. On the Closing Date, a Facility Fee equal to $2,500, which shall be nonrefundable; (b) BANK EXPENSES. On the Closing Date, all Bank Expenses incurred through the Closing Date, including reasonable attorneys' fees and expenses and, after the Closing Date, all Bank Expenses, including reasonable attorneys' fees and expenses, as and when they become due. 2.6 ADDITIONAL COSTS. In case any law, regulation, treaty or official directive or the interpretation or application thereof by any court or any governmental authority charged with the administration thereof or the compliance with any guideline or request of any central bank or other governmental authority (whether or not having the force of law): (a) subjects Bank to any tax with respect to payments of principal or interest or any other amounts payable hereunder by Borrowers or otherwise with respect to the transactions contemplated hereby (except for taxes on the overall net income of Bank imposed by the United States of America or any political subdivision thereof); (b) imposes, modifies or deems applicable any deposit insurance, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans by, Bank; or (c) imposes upon Bank any other condition with respect to its performance under this Agreement, and the result of any of the foregoing is to increase the cost to Bank, reduce the income receivable by Bank or impose any expense upon Bank with respect to the Obligations, Bank shall notify Agent thereof. Borrowers agree to pay to Bank the amount of such increase in cost, reduction in income or additional expense as and when such cost, reduction or expense is incurred or determined, upon presentation by Bank of a statement of the amount and setting forth Bank's calculation thereof, all in reasonable detail, which statement shall be deemed true and correct absent manifest error. 2.7 TERM. This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in full force and effect for a term ending on the Revolving Maturity Date. Notwithstanding the foregoing, Bank shall have the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default. Notwithstanding termination, Bank's Lien on the Collateral shall remain in effect for so long as any Obligations are outstanding. 3. CONDITIONS OF LOANS. 3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. The obligation of Bank to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, the following: (a) this Agreement; 9 (b) certificates of the Secretary of each Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement; (c) financing statements (Form UCC-1) from Viewlocity, Inc. Frontec AMT, Inc., and Viewlocity AB (or within ten (10) days of the Initial Credit Extension for the UCC-1's for Viewlocity AB or an Event of Default shall have occurred) for filing in Georgia and Connecticut which Borrowers represent are the only states in the United States in which the Borrowers have assets; (d) intellectual property security agreements from Viewlocity, Inc., Frontec AMT, Inc., and Viewlocity AB; (e) guaranty and security agreement, board resolutions to guarantee and pledge assets from Frontec AMT Limited, together with a legal opinion (U.K.) related thereto (or within three (3) days of the Initial Credit Extension for the legal opinion or an Event of Default shall have occurred); (f) agreement to provide insurance; (g) payment of the fees and Bank Expenses then due specified in Section 2.5 hereof; (h) security agreement, board resolutions to borrow and pledge assets from Viewlocity AB, together with a legal opinion (Sweden) related thereto; (i) a warrant to purchase the capital stock of Viewlocity, Inc. (j) an audit of the Collateral, the results of which shall be satisfactory to Bank; and (k) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate. 3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. The obligation of Bank to make each Credit Extension, including the initial Credit Extension, is further subject to the following conditions: (a) timely receipt by Bank of the Payment/Advance Form as provided in Section 2.1; and (b) the representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of the date of such Payment/Advance Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date). The making of each Credit Extension shall be deemed to be a representation and warranty by Borrowers on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2. 4. CREATION OF SECURITY INTEREST. Each Borrower represents and warrants as follows: 4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to Bank a continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt repayment of any and all Obligations and in order to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. Except as set forth in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in Collateral acquired after the date hereof. 10 4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower shall from time to time execute and deliver to Bank, at the request of Bank, all Negotiable Collateral, all financing statements and other documents that Bank may reasonably request, in form satisfactory to Bank, to perfect and continue perfected Bank's security interests in the Collateral and in order to fully consummate all of the transactions contemplated under the Loan Documents. 4.3 RIGHT TO INSPECT. Bank (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower's usual business hours but no more than once a year (unless an Event of Default has occurred and is continuing), to inspect Borrower's Books and to make copies thereof and to check, test, and appraise the Collateral in order to verify Borrower's financial condition or the amount, condition of, or any other matter relating to, the Collateral. 5. REPRESENTATIONS AND WARRANTIES. Each Borrower represents and warrants as follows: 5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each Subsidiary is a corporation duly existing under the laws of its jurisdiction of incorporation and qualified and licensed to do business in any jurisdiction in which the conduct of its business or its ownership of property requires that it be so qualified. 5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and performance of the Loan Documents are within Borrower's powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower's Articles of Incorporation, Bylaws, or other charter documents nor will they constitute an event of default under any material agreement to which Borrower is a party or by which Borrower is bound. Borrower is not in default under any agreement to which it is a party or by which it is bound, which default could have a Material Adverse Effect. 5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible title to the Collateral, free and clear of Liens, except for Permitted Liens. 5.4 BONA FIDE ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide existing obligations. The property giving rise to such Eligible Accounts has been delivered to the account debtor or to the account debtor's agent for immediate shipment to and unconditional acceptance by the account debtor. Borrower has not received notice of actual or imminent Insolvency Proceeding of any account debtor that is included in any Borrowing Base Certificate as an Eligible Account. 5.5 MERCHANTABLE INVENTORY. All Inventory is in all material respects of good and marketable quality, free from all material defects, except for Inventory for which adequate reserves have been made. 5.6 INTELLECTUAL PROPERTY COLLATERAL. Borrower is the sole owner of the Intellectual Property Collateral, except for non-exclusive licenses granted by Borrower to its customers in the ordinary course of business. Each of the Patents is valid and enforceable, and no part of the Intellectual Property Collateral has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual Property Collateral violates the rights of any third party. Except as set forth in the Schedule, Borrower's rights as a licensee of intellectual property do not give rise to more than five percent (5%) of its gross revenue in any given month, including without limitation revenue derived from the sale, licensing, rendering or disposition of any product or service. 5.7 NAME; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as disclosed in the Schedule, Borrower has not done business under any name other than that specified on the signature page hereof. The chief executive office of Borrower is located at the address below its signature hereto indicated in Section 10 hereof. 5.8 LITIGATION. Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency in which an adverse 11 decision could have a Material Adverse Effect, or a material adverse effect on Borrower's interest or Bank's security interest in the Collateral. 5.9 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All consolidated financial statements related to Borrower and any Subsidiary that are delivered by Borrower to Bank fairly present in all material respects Borrower's consolidated financial condition as of the date thereof and Borrower's consolidated results of operations for the period then ended. There has not been a material adverse change in the consolidated financial condition of Borrower since the date of the most recent of such financial statements submitted to Bank. 5.10 SOLVENCY, PAYMENT OF DEBTS. Borrower is solvent and able to pay its debts (including trade debts) as they mature. 5.11 REGULATORY COMPLIANCE. Borrower and each Subsidiary which is subject to ERISA have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. No event has occurred resulting from Borrower's failure to comply with ERISA that is reasonably likely to result in Borrower's incurring any liability that could have a Material Adverse Effect. Borrower is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of the important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has complied with all the provisions of the Federal Fair Labor Standards Act. Borrower has not violated any statutes, laws, ordinances or rules applicable to it, violation of which could have a Material Adverse Effect. 5.12 ENVIRONMENTAL CONDITION. Except as disclosed in the Schedule, none of Borrower's or any Subsidiary's properties or assets has ever been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by previous owners or operators, in the disposal of, or to produce, store, handle, treat, release, or transport, any hazardous waste or hazardous substance other than in accordance with applicable law; to the best of Borrower's knowledge, none of Borrower's properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a hazardous waste or hazardous substance disposal site, or a candidate for closure pursuant to any environmental protection statute; no lien arising under any environmental protection statute has attached to any revenues or to any real or personal property owned by Borrower or any Subsidiary; and neither Borrower nor any Subsidiary has received a summons, citation, notice, or directive from the Environmental Protection Agency or any other federal, state or other governmental agency concerning any action or omission by Borrower or any Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste or hazardous substances into the environment. 5.13 TAXES. Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein. 5.14 SUBSIDIARIES. Borrower does not own any stock, partnership interest or other equity securities of any Person, except for Permitted Investments. 5.15 GOVERNMENT CONSENTS. Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower's business as currently conducted, the failure to obtain which could have a Material Adverse Effect. 5.16 YEAR 2000. Borrower and its Subsidiaries have reviewed the areas within their operations and business which could be adversely affected by, and have developed or are developing a program to address on a timely basis, the Year 2000 Problem and have made related appropriate inquiry of material suppliers and vendors, and based on such review and program, the Year 2000 Problem will not have a Material Adverse Effect upon its financial condition, operations or business as now conducted. "Year 2000 Problem" means the possibility that any computer applications or equipment used by Borrower may be unable to recognize and properly perform date sensitive functions involving certain dates prior to and any dates on or after December 31, 1999. 12 5.17 FULL DISCLOSURE. No representation, warranty or other statement made by Borrower in any certificate or written statement furnished to Bank contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading. 6. AFFIRMATIVE COVENANTS. Each Borrower covenants and agrees that, until payment in full of all outstanding Obligations, and for so long as Bank may have any commitment to make a Credit Extension hereunder, such Borrower shall do all of the following: 6.1 GOOD STANDING. Borrower shall maintain its and each of its Subsidiaries' corporate existence in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could have a Material Adverse Effect. Borrower shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which could have a Material Adverse Effect. 6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could have a Material Adverse Effect, or a material adverse effect on the Collateral or the priority of Bank's Lien on the Collateral. 6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Viewlocity shall deliver to Bank: (a) as soon as available, but in any event within twenty-five (25) days after the end of each calendar month, a company prepared consolidated balance sheet and income statement covering Viewlocity's consolidated operations during such period, in a form acceptable to Bank and certified by a Responsible Officer; (b) as soon as available, but in any event within ninety (90) days after the end of Viewlocity's fiscal year, audited consolidated financial statements of Viewlocity prepared in accordance with GAAP, consistently applied, together with an unqualified opinion on such financial statements of an independent certified public accounting firm reasonably acceptable to Bank; (c) if applicable, copies of all statements, reports and notices sent or made available generally by Viewlocity to its security holders or to any holders of Subordinated Debt and all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission; (d) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened against Viewlocity or any Subsidiary that could result in damages or costs to Viewlocity or any Subsidiary of Fifty Thousand Dollars ($50,000) or more; (e) such budgets, sales projections, operating plans or other financial information as Bank may reasonably request from time to time generally prepared by Viewlocity in the ordinary course of business; and (f) within thirty (30) days of the last day of each fiscal quarter, a report signed by Viewlocity, in form reasonably acceptable to Bank, listing any applications or registrations that any Borrower has made or filed in respect of any Patents, Copyrights or Trademarks and the status of any outstanding applications or registrations, as well as any material change in any Borrower's intellectual property, including but not limited to any subsequent ownership right of any Borrower in or to any Trademark, Patent or Copyright not specified in EXHIBITS A, B, and C of the Intellectual Property Security Agreement delivered to Bank by a Borrower in connection with this Agreement. Within twenty-five (25) days after the last day of each month, Viewlocity shall deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in substantially the form of EXHIBIT C hereto, together with aged listings of accounts receivable and accounts payable. Viewlocity shall deliver to Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer in substantially the form of EXHIBIT D hereto. Bank shall have a right from time to time hereafter to audit a Borrower's Accounts and appraise Collateral at Borrowers' expense, provided that such audits will be conducted no more often than every twelve (12) months unless an Event of Default has occurred and is continuing. 13 6.4 INVENTORY; RETURNS. Borrower shall keep all Inventory in good and marketable condition, free from all material defects except for Inventory for which adequate reserves have been made. Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower, as they exist at the time of the execution and delivery of this Agreement. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims, where the return, recovery, dispute or claim involves more than Fifty Thousand Dollars ($50,000). 6.5 TAXES. Borrower shall make, and shall cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, and will execute and deliver to Bank, on demand, appropriate certificates attesting to the payment or deposit thereof; and Borrower will make, and will cause each Subsidiary to make, timely payment or deposit of all material tax payments and withholding taxes required of it by applicable laws, including, but not limited to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Bank with proof satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or deposits; provided that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower. 6.6 INSURANCE. (a) Borrower, at its expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, as ordinarily insured against by other owners in similar businesses conducted in the locations where Borrower's business is conducted on the date hereof. Borrower shall also maintain insurance relating to Borrower's ownership and use of the Collateral in amounts and of a type that are customary to businesses similar to Borrower's. (b) All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank. All such policies of property insurance shall contain a lender's loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee thereof, and all liability insurance policies shall show the Bank as an additional insured and shall specify that the insurer must give at least twenty (20) days notice to Bank before canceling its policy for any reason. Upon Bank's request, Borrower shall deliver to Bank certified copies of such policies of insurance and evidence of the payments of all premiums therefor. All proceeds payable under any such policy shall, at the option of Bank, be payable to Bank to be applied on account of the Obligations. 6.7 YEAR 2000 COMPLIANCE. Borrower shall perform all acts reasonably necessary to ensure that (a) Borrower and any business in which Borrower holds a substantial interest, and (b) all customers, suppliers and vendors that are material to Borrower's business, become Year 2000 Compliant in a timely manner. Such acts shall include, without limitation, performing a comprehensive review and assessment of all Borrower's systems and adopting a detailed plan, with itemized budget, for the remediation, monitoring and testing of such systems. As used in this paragraph, "Year 2000 Compliant" shall mean, in regard to any entity, that all software, hardware, firmware, equipment, goods or systems utilized by or material to the business operations or financial condition of such entity, will properly perform date sensitive functions before, during and after the year 2000. Borrower shall, immediately upon request, provide to Bank such certifications or other evidence of Borrower's compliance with the terms of this paragraph as Bank may from time to time require. 6.8 PRINCIPAL DEPOSITORY. Viewlocity, Inc. shall maintain its principal depository and operating accounts with Bank. 6.9 TOTAL LIABILITIES-TANGIBLE NET WORTH. Beginning January 1, 2000 (and measured at the end of the month), Viewlocity, Inc. shall maintain, as of the last day of each calendar month, a ratio of Total Liabilities to Tangible Net Worth of not more than 1.00 to 1.00. 6.10 REVENUES. Beginning January 1, 2000 (and measured at the end of the month), measured as of the last day of each calendar month, Viewlocity, Inc.'s revenues shall increase on a rolling 12-month basis. 14 6.11 EQUITY EVENT. The Equity Event shall have occurred on or prior to December 15, 1999. Notwithstanding the foregoing, on or prior to December 31, 1999, Viewlocity, Inc. shall have received proceeds from investors acceptable to Bank following the Closing Date of not less than Twenty Million Dollars ($20,000,000) from the sale or issuance in one or more transactions of its equity securities. Viewlocity, Inc. shall keep no less than seventy percent (70%) of the remaining cash proceeds from the sale or issuance of its equity securities in accounts located in the United States. Upon Bank's request from time to time, Viewlocity shall deliver to Bank a listing in detail reasonably satisfactory to Bank of such accounts. 6.12 LIQUIDITY. Beginning January 1, 2000 (and measured at the end of the month), Viewlocity, Inc. shall maintain a balance of unrestricted cash and cash equivalents plus the Borrowing Base equal to the greater of (i) an amount equal to three months Cash Burn ("Cash Burn" shall be defined as prior period cash and cash equivalents less current period cash and cash equivalents, that have been adjusted for any net changes in financial debt, equity, minority interests, acquisitions, and non-financed capital expenditures), and (ii) two (2) times the outstanding balance of all outstanding debt (including the face amount of the Letter of Credit) of Borrowers' to Bank. 6.13 RENEWAL ON MAINTENANCE CONTRACTS. Beginning January 1, 2000 (and measured at the end of the month), on a rolling twelve-month basis, not less than ninety percent (90%) of the support contracts to which Viewlocity, Inc. is a party as supplier or billing on behalf of a third party supplier that are renewable during such period shall be renewed on terms substantially similar to those in place prior to the scheduled expiration date. 6.14 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. (a) Viewlocity AB shall use its best efforts to transfer all of the Intellectual Property Collateral in which it has an interest to Viewlocity, Inc. within ninety (90) days following the Closing Date (the "IP Transfer"). Viewlocity AB shall not otherwise convey, sell, lease, transfer or otherwise dispose of the Intellectual Property Collateral except as provided herein. (b) Borrower shall register or cause to be registered on an expedited basis (to the extent not already registered) with the United States Patent and Trademark Office or the United States Copyright Office, as applicable: (i) those intellectual property rights listed on EXHIBITS A, B and C to the Intellectual Property Security Agreement delivered to Bank by Borrower in connection with this Agreement, within thirty (30) days of the date of this Agreement, (ii) all registerable intellectual property rights Borrower has developed as of the date of this Agreement but heretofore failed to register, within thirty (30) days of the date of this Agreement, and (iii) those additional intellectual property rights developed or acquired by Borrower from time to time in connection with any product, prior to the sale or licensing of such product to any third party, and prior to Borrower's use of such product (including without limitation major revisions or additions to the intellectual property rights listed on such EXHIBITS A, B and C). Borrower shall give Bank notice of all such applications or registrations. (c) Borrower shall execute and deliver such additional instruments and documents from time to time as Bank shall reasonably request to perfect Bank's security interest in the Intellectual Property Collateral. (d) Borrower shall (i) protect, defend and maintain the validity and enforceability of the Trademarks, Patents and Copyrights, (ii) use its best efforts to detect infringements of the Trademarks, Patents and Copyrights and promptly advise Bank in writing of material infringements detected and (iii) not allow any material Trademarks, Patents or Copyrights to be abandoned, forfeited or dedicated to the public without the written consent of Bank, which shall not be unreasonably withheld. (e) Bank may audit Borrower's Intellectual Property Collateral to confirm compliance with this Section 6.14, provided such audit may not occur more often than once per year, unless an Event of Default has occurred and is continuing. Bank shall have the right, but not the obligation, to take, at Borrower's sole expense, any actions that Borrower is required under this Section 6.14 to take but which Borrower fails to take, after fifteen (15) days' notice to Borrower. Borrower shall reimburse and indemnify Bank for all reasonable costs and reasonable expenses incurred in the reasonable exercise of its rights under this Section 6.14. 15 6.15 FURTHER ASSURANCES. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement. 7. NEGATIVE COVENANTS. Each Borrower covenants and agrees that, so long as any credit hereunder shall be available and until payment in full of the outstanding Obligations or for so long as Bank may have any commitment to make any Credit Extensions, such Borrower will not do any of the following: 7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, other than: (i) Transfers of Inventory in the ordinary course of business; (ii) Transfers of non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries; or (iii) Transfers of surplus, worn-out or obsolete Equipment. 7.2 CHANGE IN BUSINESS; CHANGE IN CONTROL OR EXECUTIVE OFFICE. Engage in any business, or permit any of its Subsidiaries to engage in any business, other than the businesses currently engaged in by Borrower and any business substantially similar or related thereto (or incidental thereto). Borrower will not have a Change in Control and will not, without thirty (30) days prior written notification to Bank, relocate its chief executive office. 7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, unless (i) no Event of Default has occurred, is continuing or would exist after giving effect to the transaction(s), and (ii) Viewlocity or such other Subsidiary that is also a Borrower shall remain the surviving entity following such transaction or, if Viewlocity or such other Subsidiary that is also a Borrower will not be the surviving entity, then all Obligations shall be repaid by Borrowers and Bank's obligations to make Credit Extensions to Borrowers shall terminate prior to such transaction, or (iii) if a Subsidiary of Borrower that is not also a Borrower will be the surviving entity (and no Borrower is being acquired, merged or consolidated in the transaction), provided the Bank is granted a security interest in and a first lien position on such Subsidiary's assets within thirty (30) days from the date of such transaction. 7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness. 7.5 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien with respect to any of its property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens. 7.6 DISTRIBUTIONS. Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, except that Borrower may repurchase the stock of former employees pursuant to stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase. 7.7 INVESTMENTS. Directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments or Investments not to exceed $1,000,000 in the aggregate; provided however that this Section 7.7 shall not limit Borrower's ability to consummate mergers or acquistions in accordance with Section 7.3. 7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower's business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm's length transaction with a non-affiliated Person. 16 7.9 SUBORDINATED DEBT. Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision contained in any documentation relating to the Subordinated Debt without Bank's prior written consent. 7.10 INVENTORY AND EQUIPMENT. Store the Inventory or the Equipment with a bailee, warehouseman, or similar party unless Bank has received a pledge of the warehouse receipt covering such Inventory. Except for Inventory sold in the ordinary course of business and except for such other locations as Bank may approve in writing, Borrower shall keep the Inventory and Equipment only at the location set forth in Section 10 hereof and such other locations of which Borrower gives Bank prior written notice and as to which Borrower signs and files a financing statement where needed to perfect Bank's security interest. 7.11 COMPLIANCE. Become an "investment company" or be controlled by an "investment company," within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or carrying margin stock, or use the proceeds of any Credit Extension for such purpose. Fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the Federal Fair Labor Standards Act or violate any law or regulation, which violation could have a Material Adverse Effect, or a material adverse effect on the Collateral or the priority of Bank's Lien on the Collateral, or permit any of its Subsidiaries to do any of the foregoing. 7.12 INTELLECTUAL PROPERTY AGREEMENTS. Without Bank's prior written approval, which shall not be unreasonably withheld, Borrower shall not permit the inclusion in any material contract to which it becomes a party of any provisions that could or might in any way prevent the creation of a security interest in Borrower's rights and interests in any property included within the definition of the Intellectual Property Collateral acquired under such contracts. 8. EVENTS OF DEFAULT. Any one or more of the following events shall constitute an Event of Default under this Agreement: 8.1 PAYMENT DEFAULT. If Borrowers fail to pay, when due, any of the Obligations; 8.2 COVENANT DEFAULT. If a Borrower fails to perform any obligation under Article 6 or violates any of the covenants contained in Article 7 of this Agreement, or fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between such Borrower and Bank and as to any default under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure such default within ten (10) days after such Borrower receives notice thereof or any officer of such Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by such Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then such Borrower shall have an additional reasonable period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default (provided that no Credit Extensions will be required to be made during such cure period); 8.3 MATERIAL ADVERSE CHANGE. If there occurs a material adverse change in a Borrower's business or financial condition, or if there is a material impairment of the prospect of repayment of any portion of the Obligations or a material impairment of the value or priority of Bank's security interests in the Collateral; 8.4 ATTACHMENT. If any material portion of any of a Borrower's assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) days, or if any Borrower is enjoined, restrained, or in any way 17 prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of any Borrower's assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of any Borrower's assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten (10) days after any Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by such Borrower (provided that no Credit Extensions will be required to be made during such cure period); 8.5 INSOLVENCY. If a Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by a Borrower, or if an Insolvency Proceeding is commenced against a Borrower and is not dismissed or stayed within thirty (30) days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding); 8.6 OTHER AGREEMENTS. If there is a default in any agreement to which a Borrower is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Fifty Thousand Dollars ($50,000) or that could have a Material Adverse Effect; 8.7 SUBORDINATED DEBT. If a Borrower makes any payment on account of Subordinated Debt, except to the extent such payment is allowed under any subordination agreement entered into with Bank; 8.8 JUDGMENTS. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) shall be rendered against a Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment); or 8.9 MISREPRESENTATIONS. If any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document. 8.10 GUARANTY. If any guaranty of all or a portion of the Obligations ceases for any reason to be in full force and effect, or any guarantor fails to perform any obligation under any guaranty of all or a portion of the Obligations, or any guarantor revokes or purports to revoke any guaranty of the Obligations, or any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth in any guaranty of all or a portion of the Obligations or in any certificate delivered to Bank in connection with such guaranty. 9. BANK'S RIGHTS AND REMEDIES. 9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrowers: (a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.5, all Obligations shall become immediately due and payable without any action by Bank); (b) Cease advancing money or extending credit to or for the benefit of Borrowers under this Agreement or under any other agreement between Borrowers and Bank; (c) Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable; 18 (d) Make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Each Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Each Borrower authorizes Bank to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank's determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect to any of a Borrower's owned premises, and Borrower hereby grants Bank a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of Bank's rights or remedies provided herein, at law, in equity, or otherwise; (e) Set off and apply to the Obligations any and all (i) balances and deposits of any Borrower held by Bank, or (ii) indebtedness at any time owing to or for the credit or the account of any Borrower held by Bank; (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, any Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank's exercise of its rights under this Section 9.1, any Borrower's rights under all licenses and all franchise agreements shall inure to Bank's benefit; (g) Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including any Borrower's premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate; (h) Bank may credit bid and purchase at any public sale; and (i) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrowers. 9.2 POWER OF ATTORNEY. Effective only upon the occurrence and during the continuance of an Event of Default, Borrowers hereby irrevocably appoint Bank (and any of Bank's designated officers, or employees) as Borrowers' true and lawful attorney to: (a) send requests for verification of Accounts or notify account debtors of Bank's security interest in the Accounts; (b) endorse any Borrower's name on any checks or other forms of payment or security that may come into Bank's possession; (c) sign any Borrower's name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims under and decisions with respect to any Borrower's policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable; (g) to modify, in its sole discretion, any intellectual property security agreement entered into between any Borrower and Bank without first obtaining such Borrower's approval of or signature to such modification by amending EXHIBITS A, B, and C, thereof, as appropriate, to include reference to any right, title or interest in any Copyrights, Patents or Trademarks acquired by such Borrower after the execution hereof or to delete any reference to any right, title or interest in any Copyrights, Patents or Trademarks in which such Borrower no longer has or claims to have any right, title or interest; (h) to file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without the signature of such Borrower where permitted by law; and (i) to transfer the Intellectual Property Collateral into the name of Bank or a third party to the extent permitted under the California Uniform Commercial Code; provided Bank may exercise such power of attorney to sign the name of such Borrower on any of the documents described in Section 4.2 regardless of whether an Event of Default has occurred. The appointment of Bank as Borrowers' attorney in fact, and each and every one of Bank's rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully repaid and performed and Bank's obligation to provide advances hereunder is terminated. 19 9.3 ACCOUNTS COLLECTION. At any time during the term of this Agreement, Bank may notify any Person owing funds to any Borrower of Bank's security interest in such funds and verify the amount of such Account. Borrowers shall collect all amounts owing to Borrowers for Bank, receive in trust all payments as Bank's trustee, and immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements for deposit. 9.4 BANK EXPENSES. If any Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Agent: (a) make payment of the same or any part thereof; (b) set up such reserves under the Revolving Facility as Bank deems necessary to protect Bank from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.6 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement. 9.5 BANK'S LIABILITY FOR COLLATERAL. So long as Bank complies with reasonable banking practices, Bank shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of loss, damage or destruction of the Collateral shall be borne by Borrowers. 9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Borrowers' part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given. 9.7 DEMAND; PROTEST. Borrowers waive demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Bank on which Borrowers may in any way be liable. 10. NOTICES. Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Agent or to Bank, as the case may be, at its addresses set forth below: If to Agent on c/o Viewlocity, Inc. behalf of Borrowers: 400 Perimeter Center Terrace, Suite 320 Atlanta, GA 30346 Attn: Stan Stoudenmire, Chief Financial Officer FAX: (770) 512-8902 If to Bank: Imperial Bank 226 Airport Parkway San Jose, CA 95110-1024 Attn: Corporate Banking Center FAX: (408) 451-8586 20 with a copy to: Imperial Bank 225 Franklin Street, Suite 2730 Boston, MA 02110 Attn: Oscar Jazdowski/Suzanne Smetana FAX: (617) 956-0557 The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other. 11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts of law. Each of the Borrowers and Bank hereby submits to the exclusive jurisdiction of the state and Federal courts located in the County of Santa Clara, State of California. BORROWERS AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 12. GENERAL PROVISIONS. 12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrowers without Bank's prior written consent, which consent may be granted or withheld in Bank's sole discretion. Bank shall have the right without the consent of or notice to Borrowers to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank's obligations, rights and benefits hereunder. 12.2 INDEMNIFICATION. Borrowers shall defend, indemnify and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrowers whether under this Agreement, or otherwise (including without limitation reasonable attorneys fees and expenses), except for losses caused by Bank's gross negligence or willful misconduct. 12.3 TIME OF ESSENCE. Time is of the essence for the performance of all obligations set forth in this Agreement. 12.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 12.5 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot be amended or terminated orally. Except for the Letter of Credit Agreement and the Unconditional Guaranty executed in connection therewith, which shall remain in effect following the Closing Date, all prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement, if any, are merged into this Agreement and the Loan Documents. 21 12.6 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. 12.7 SURVIVAL. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding. The obligations of Borrowers to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run. 12.8 SUBROGATION AND SIMILAR RIGHTS. Notwithstanding any other provision of this Agreement or any other Loan Document, each Borrower irrevocably waives all rights that it may have at law or in equity (including, without limitation, any law subrogating the Borrower to the rights of Bank under the Loan Documents) to seek contribution, indemnification, or any other form of reimbursement from any other Borrower, or any other Person now or hereafter primarily or secondarily liable for any of the Obligations, for any payment made by the Borrower with respect to the Obligations in connection with the Loan Documents or otherwise and all rights that it might have to benefit from, or to participate in, any security for the Obligations as a result of any payment made by the Borrower with respect to the Obligations in connection with the Loan Documents or otherwise. Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this Section 12.8 shall be null and void. If any payment is made to a Borrower in contravention of this Section 12.8, such Borrower shall hold such payment in trust for Bank and such payment shall be promptly delivered to Bank for application to the Obligations, whether matured or unmatured. 12.9 WAIVERS OF NOTICE. Each Borrower waives notice of acceptance hereof; notice of the existence, creation or acquisition of any of the Obligations; notice of an Event of Default; notice of the amount of the Obligations outstanding at any time; notice of intent to accelerate; notice of acceleration; notice of any adverse change in the financial condition of any other Borrower or of any other fact that might increase the Borrower's risk; presentment for payment; demand; protest and notice thereof as to any instrument; default; and all other notices and demands to which the Borrower would otherwise be entitled. Each Borrower waives any defense arising from any defense of any other Borrower, or by reason of the cessation from any cause whatsoever of the liability of any other Borrower. Bank's failure at any time to require strict performance by any Borrower of any provision of the Loan Documents shall not waive, alter or diminish any right of Bank thereafter to demand strict compliance and performance therewith. Nothing contained herein shall prevent Bank from foreclosing on the Lien of any deed of trust, mortgage or other security instrument, or exercising any rights available thereunder, and the exercise of any such rights shall not constitute a legal or equitable discharge of any Borrower. Each Borrower also waives any defense arising from any act or omission of Bank that changes the scope of the Borrower's risks hereunder. Each Borrower hereby waives any right to assert against Bank any defense (legal or equitable), setoff, counterclaim, or claims that such Borrower individually may now or hereafter have against another Borrower or any other Person liable to Bank with respect to the Obligations in any manner or whatsoever. 12.10 SUBROGATION DEFENSES. Each Borrower hereby waives any defense based on impairment or destruction of its subrogation or other rights against any other Borrower and waives all benefits which might otherwise be available to it under California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850, 2899, and 3433 and California Code of Civil Procedure Sections 580a, 580b, 580d and 726, as those statutory provisions are now in effect and hereafter amended, and under any other similar statutes now and hereafter in effect. 12.11 RIGHT TO SETTLE, RELEASE. (i) The liability of Borrowers hereunder shall not be diminished by (i) any agreement, understanding or representation that any of the Obligations is or was to be guaranteed by another Person or secured by other property, or (ii) any release or unenforceability, whether partial or total, of rights, if any, which Bank may now or hereafter have against any other Person, including another Borrower, or property with respect to any of the Obligations. (ii) Without notice to any Borrower and without affecting the liability of any Borrower hereunder, Bank may (i) compromise, settle, renew, extend the time for payment, change the manner 22 or terms of payment, discharge the performance of, decline to enforce, or release all or any of the Obligations with respect to a Borrower, (ii) grant other indulgences to a Borrower in respect of the Obligations, (iii) modify in any manner any documents relating to the Obligations with respect to a Borrower, (iv) release, surrender or exchange any deposits or other property securing the Obligations, whether pledged by a Borrower or any other Person, or (v) compromise, settle, renew, or extend the time for payment, discharge the performance of, decline to enforce, or release all or any obligations of any guarantor, endorser or other Person who is now or may hereafter be liable with respect to any of the Obligations. 12.12 PRIMARY OBLIGATION. This Agreement is a primary and original obligation of each Borrower and shall remain in effect notwithstanding future changes in conditions, including any change of law or any invalidity or irregularity in the creation or acquisition of any Obligations or in the execution or delivery of any agreement between Bank and any Borrower. Each Borrower shall be liable for existing and future Obligations as fully as if all of the Credit Extensions were advanced to such Borrower. Bank may rely on any certificate or representation made by any Borrower as made on behalf of, and binding on, all Borrowers, including without limitation Advance Request Forms, Borrowing Base Certificates and Compliance Certificates. 12.13 SUBORDINATION. Except for Subordinated Debt, all indebtedness of a Borrower now or hereafter arising held by another Borrower is subordinated to the Obligations and the Borrower holding the indebtedness shall take all actions reasonably requested by Bank to effect, to enforce and to give notice of such subordination. 12.14 ENFORCEMENT OF RIGHTS. Borrowers are jointly and severally liable for the Obligations and Bank may proceed against one or more of the Borrowers to enforce the Obligations without waiving its right to proceed against any of the other Borrowers. 12.15 VIEWLOCITY, INC. AS AGENT. Each Borrower appoints Viewlocity, Inc. as its agent with all necessary power and authority to give and receive notices, certificates or demands for and on behalf of both Borrowers, to act as disbursing agent for receipt of any Advances on behalf of each Borrower and to apply to Bank on behalf of each Borrower for Advances, any waivers and any consents. This authorization cannot be revoked, and Bank need not inquire as to Viewlocity, Inc.'s authority to act for or on behalf of Borrower. 13. JUDICIAL REFERENCE. (a) Other than (i) nonjudicial foreclosure and all matters in connection therewith regarding security interests in real or personal property; or (ii) the appointment of a receiver, or the exercise of other provisional remedies (any and all of which may be initiated pursuant to applicable law), each controversy, dispute or claim between the parties arising out of or relating to this document, which controversy, dispute or claim is not settled in writing within thirty (30) days after the "CLAIM DATE" (defined as the date on which a party subject to this Agreement gives written notice to all other parties that a controversy, dispute or claim exists), will be settled by a reference proceeding in California in accordance with the provisions of Section 638 ET SEQ. of the California Code of Civil Procedure, or their successor section ("CCP"), which shall constitute the exclusive remedy for the settlement of any controversy, dispute or claim concerning this Agreement, including whether such controversy, dispute or claim is subject to the reference proceeding and except as set forth above, the parties waive their rights to initiate any legal proceedings against each other in any court or jurisdiction other than Santa Clara County (the "COURT"). The referee shall be a retired Judge of the Court selected by mutual agreement of the parties, and if they cannot so agree within forty-five (45) days after the Claim Date, the referee shall be promptly selected by the Presiding Judge of the Court (or his representative). The referee shall be appointed to sit as a temporary judge, with all of the powers for a temporary judge, as authorized by law, and upon selection should take and subscribe to the oath of office as provided for in Rule 244 of the California Rules of the Court (or any subsequently enacted Rule). Each party shall have one peremptory challenge pursuant to CCP Section 170.6. The referee shall (a) be requested to set the matter for hearing within sixty (60) days after the date of selection of the referee and (b) try any and all issues of law or fact and report a statement of decision upon them, if possible, within ninety (90) days of the Claim Date. Any decision rendered by the referee will be final, binding and conclusive and judgment shall be entered pursuant to CCP Section 644 in any court in the State of California having jurisdiction. Any party may apply for a reference proceeding at any time after thirty (30) days following notice to any other party of the nature of the controversy, dispute or claim, by filing a petition for a hearing and/or trial. All discovery permitted by this Agreement shall be completed no later than 23 fifteen (15) days before the first hearing date established by the referee. The referee may extend such period in the event of a party's refusal to provide requested discovery or unavailability of a witness due to absence or illness. No party shall be entitled to "priority" in conducting discovery. Depositions may be taken by either party upon seven (7) days written notice, and request for production or inspection of documents which cannot be resolved by the parties shall be submitted to the referee as provided herein, the Superior Court is empowered to issue temporary and/or provisions remedies, as appropriate. (b) Except as expressly set forth in this Agreement, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of all hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding. All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court reporter except that when any party so requests, a court reporter will be used at any hearing conducted before the referee. The party making such a request shall have the obligation to arrange for and pay for the court reporter. The costs of the court reporter at the trial shall be borne equally by the parties. (c) The referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California. The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding. The referee shall be empowered to enter equitable as well as legal relief, to provide all temporary and/or provisional remedies and to enter equitable orders that will be binding upon the parties. The referee shall issue a single judgment at the close of the reference proceeding which shall dispose of all of the claims of the parties that are the subject of the reference. The parties hereto expressly reserve the right to contest or appeal from the final judgment or any appealable order or appealable judgment entered by the referee. The parties hereto expressly reserve the right to findings of fact, conclusions of laws, a written statement of decision, and the right to move for a new trial or a different judgment, which new trial, if granted, is also to be a reference proceeding under this provision. (d) In the event that the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by the reference procedure herein described will be resolved and determined by arbitration. The arbitration will be conducted by a retired judge of the Court, in accordance with the California Arbitration Act, Section 1280 through Section 1294.2 of the CCP as amended from time to time. The limitations with respect to discovery as set forth hereinabove shall apply to any such arbitration proceeding. 24 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. VIEWLOCITY, INC. By: /s/ STAN F. STOUDENMIRE --------------------------------- Title: SR. V.P. & C.F.O. ------------------------------ FRONTEC AMT, INC. By: /s/ STAN F. STOUDENMIRE --------------------------------- Title: SR. V.P. & C.F.O. ------------------------------ VIEWLOCITY AB By: /s/ STAN F. STOUDENMIRE --------------------------------- Title: DIRECTOR ------------------------------ IMPERIAL BANK By: /s/ OSCAR JANDOWSKI --------------------------------- Title: SENIOR VICE PRESIDENT ------------------------------ 25 DEBTOR: VIEWLOCITY, INC., FRONTEC AMT, INC., AND VIEWLOCITY AB SECURED PARTY: IMPERIAL BANK EXHIBIT A COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT All personal property of each Borrower (herein referred to as a "Borrower" or "Debtor") whether presently existing or hereafter created, written, produced or acquired, including, but not limited to: (i) all accounts receivable, accounts, chattel paper, contract rights (including, without limitation, royalty agreements, license agreements and distribution agreements), documents, instruments, money, deposit accounts and general intangibles, including, without limitation, returns, repossessions, books and records relating thereto, and equipment containing said books and records, all investment property, including securities and securities entitlements; (ii) all software, computer source codes and other computer programs (collectively, the "Software Products"), and all common law and statutory copyrights and copyright registrations, applications for registration, now existing or hereafter arising, United States of America and foreign, obtained or to be obtained on or in connection with the Software Products, or any parts thereof or any underlying or component elements of the Software Products together with the right to copyright and all rights to renew or extend such copyrights and the right (but not the obligation) of Bank (herein referred to as "Bank" or "Secured Party") to sue in its own name and/or the name of the Debtor for past, present and future infringements of copyright; (iii) all goods, including, without limitation, equipment (other than equipment subject to the CommVest Lease Financing) and inventory (including, without limitation, all export inventory); (iv) all guarantees and other security therefor; (v) all trademarks, service marks, trade names and service names and the goodwill associated therewith; (vi) (a) all patents and patent applications filed in the United States Patent and Trademark Office or any similar office of any foreign jurisdiction, and interests under patent license agreements, including, without limitation, the inventions and improvements described and claimed therein, (b) licenses pertaining to any patent whether Debtor is licensor or licensee, (c) all income, royalties, damages, payments, accounts and accounts receivable now or hereafter due and/or payable under and with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (d) the right (but not the obligation) to sue for past, present and future infringements thereof, (e) all rights corresponding thereto throughout the world in all jurisdictions in which such patents have been issued or applied for, and (f) the reissues, divisions, continuations, renewals, extensions and continuations-in-part with any of the foregoing (all of the foregoing patents and applications and interests under patent license agreements, together with the items described in clauses (a) through (f) in this paragraph are sometimes herein individually and collectively referred to as the "Patents"); and (vii) all products and proceeds, including, without limitation, insurance proceeds, of any of the foregoing. 26 EXHIBIT B LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T. TO: IMPERIAL BANK DATE: ____________ FAX #: (617) 956-0557 TIME: ____________ - -------------------------------------------------------------------------------- FROM: VIEWLOCITY, INC., FRONTEC AMT, INC., AND VIEWLOCITY AB --------------------------------------------------------------------------- CLIENT NAME (BORROWERS) REQUESTED BY: ------------------------------------------------------------------- AUTHORIZED SIGNER'S NAME AUTHORIZED SIGNATURE: ----------------------------------------------------------- PHONE NUMBER: ------------------------------------------------------------------- FROM ACCOUNT # TO ACCOUNT # ----------------------- --------------------------- REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT - -------------------------- --------------------- $_______________________________ PRINCIPAL INCREASE (ADVANCE) $_______________________________ PRINCIPAL PAYMENT (ONLY) $_______________________________ INTEREST PAYMENT (ONLY) $_______________________________ PRINCIPAL AND INTEREST (PAYMENT) $_______________________________ OTHER INSTRUCTIONS: ____________________________________________________________ ________________________________________________________________________________ All representations and warranties of Borrowers stated in the Loan and Security Agreement are true, correct and complete in all material respects as of the date of the telephone request for an Advance confirmed by this Borrowing Certificate; provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- BANK USE ONLY TELEPHONE REQUEST: The following person is authorized to request the loan payment transfer/loan advance on the advance designated account and is known to me. - --------------------------------------------- --------------------------------- Authorized Requester Phone # - --------------------------------------------- --------------------------------- Received By (Bank) Phone # --------------------------------------------- Authorized Signature (Bank) - -------------------------------------------------------------------------------- 27 EXHIBIT C BORROWING BASE CERTIFICATE - -------------------------------------------------------------------------------- Borrowers: Viewlocity, Inc., Frontec AMT, Inc., Lender: Imperial Bank and Viewlocity AB Commitment Amount: $2,600,000 - -------------------------------------------------------------------------------- ACCOUNTS RECEIVABLE 1. Accounts Receivable Book Value as of ___ $______ 2. Additions (please explain on reverse) $______ 3. TOTAL ACCOUNTS RECEIVABLE $______ ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication) 4. Amounts over 90 days due $______ 5. Balance of 25% over 90 day accounts $______ 6. Concentration Limits 7. Foreign Accounts $______ 8. Governmental Accounts $______ 9. Contra Accounts $______ 10. Demo Accounts $______ 11. Intercompany/Employee Accounts $______ 12. Other (please explain on reverse) $______ 13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $______ 14. Eligible Accounts (#3 minus #13) $______ 15. LOAN VALUE OF ACCOUNTS (80% of #14) $______ BALANCES 16. Maximum Loan Amount $______ 17. Total Funds Available [Lesser of #16 or #15] $______ 18. Present balance owing on Line of Credit $______ 19. Outstanding under Sublimits (if any) $______ 20. RESERVE POSITION (#17 minus #18 and #19) $______ THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE FOREGOING IS TRUE, COMPLETE AND CORRECT, AND THAT THE INFORMATION REFLECTED IN THIS BORROWING BASE CERTIFICATE COMPLIES WITH THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THE LOAN AND SECURITY AGREEMENT BETWEEN THE UNDERSIGNED AND IMPERIAL BANK. VIEWLOCITY, INC. By: ____________________________________ Authorized Signer 28 EXHIBIT D COMPLIANCE CERTIFICATE TO: IMPERIAL BANK FROM: VIEWLOCITY, INC., FRONTEC AMT, INC., AND VIEWLOCITY AB The undersigned authorized officer of VIEWLOCITY, INC. hereby certifies that in accordance with the terms and conditions of the Loan and Security Agreement between Borrowers and Bank (the "Agreement"), (i) Borrowers are in complete compliance for the period ending _______________ with all required covenants except as noted below and (ii) all representations and warranties of Borrowers stated in the Agreement are true and correct in all material respects as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes. PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES ------------------ -------- -------- Monthly financial statements Monthly within 25 days Yes No Annual (CPA Audited) FYE within 90 days Yes No 10K and 10Q (as applicable) Yes No A/R & A/P Agings, Borrowing Base Cert. Monthly within 25 days Yes No A/R Audit Initial and Annual Yes No IP Report Quarterly within 30 days Yes No FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES ------------------ -------- ------ -------- Maintain on a Monthly Basis: Maximum Debt-TNW 1.00:1.00 _____:1.00 Yes No Revenues (1) Yes No Equity Event (2) Yes No Minimum Liquidity (3) 2.00:1.00 (3) _____:1.00 Yes No Renewal on Maintenance Contracts (4) Yes No
(1) REVENUES. Beginning January 1, 2000, measured as of the last day of each calendar month, Viewlocity, Inc.'s revenues shall increase on a rolling 12-month basis. (2) EQUITY EVENT. The Equity Event shall have occurred on or prior to December 15, 1999. Notwithstanding the foregoing, on or prior to December 31, 1999, Viewlocity, Inc. shall have received proceeds from investors acceptable to Bank following the Closing Date of not less than Twenty Million Dollars ($20,000,000) from the sale or issuance in one or more transactions of its equity securities. Viewlocity, Inc. shall keep no less than seventy percent (70%) of the remaining cash proceeds from the sale or issuance of its equity securities in accounts located in the United States. Upon Bank's request from time to time, Viewlocity shall deliver to Bank a listing in detail reasonably satisfactory to Bank of such accounts. (3) LIQUIDITY. Beginning January 1, 2000, Viewlocity, Inc. shall maintain a balance of unrestricted cash and cash equivalents plus the Borrowing Base equal to the greater of (i) an amount equal to three months Cash Burn ("Cash Burn" shall be defined as prior period cash and cash equivalents less current period cash and cash equivalents, that have been adjusted for any net changes in financial debt, equity, minority interests, acquisitions, and non-financed capital expenditures), and (ii) two (2) times the outstanding balance of all outstanding debt (including the face amount of the Letter of Credit) of Borrowers' to Bank. (4) RENEWAL ON MAINTENANCE CONTRACTS. Beginning January 1, 2000, on a rolling twelve-month basis, not less than ninety percent (90%) of the support contracts to which Viewlocity, Inc. is a party as supplier or billing on behalf of a third party supplier that are renewable during such period shall be renewed on terms substantially similar to those in place prior to the scheduled expiration date. COMMENTS REGARDING EXCEPTIONS: ------------------------------------- See Attached. BANK USE ONLY Received by:_________________________ Sincerely, AUTHORIZED SIGNER Date: _______________________________ _______________________________ Verified:____________________________ SIGNATURE AUTHORIZED SIGNER _______________________________ Date:________________________________ TITLE Compliance Status Yes No _______________________________ DATE ------------------------------------- 29 SCHEDULE OF EXCEPTIONS PERMITTED INDEBTEDNESS (Section 1.1) None. PERMITTED INVESTMENTS (Section 1.1) Borrower's ownership of 100% of the stock of Frontec Integra, AB (Sweden). PERMITTED LIENS (Section 1.1) None. PRIOR NAMES (Section 5.7) Viewlocity, Inc.- formerly known as Arctic, Inc. Viewlocity AB- formerly known as Frontec AMT AB Frontec AMT, Inc.- formerly known as IRIX, inc. and AMTRIX, INC. LITIGATION (Section 5.8) None. 30 CORPORATE RESOLUTIONS TO BORROW - -------------------------------------------------------------------------------- BORROWER: VIEWLOCITY, INC. - -------------------------------------------------------------------------------- I, the undersigned Secretary or Assistant Secretary of VIEWLOCITY, INC. (the "Corporation"), HEREBY CERTIFY that the Corporation is organized and existing under and by virtue of the laws of the State of Delaware. I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and complete copies of the Articles of Incorporation, as amended, and the Restated Bylaws of the Corporation, each of which is in full force and effect on the date hereof. I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly called and held, at which a quorum was present and voting (or by other duly authorized corporate action in lieu of a meeting), the following resolutions were adopted. BE IT RESOLVED, that any one (1) of the following named officers, employees, or agents of this Corporation, whose actual signatures are shown below: NAMES POSITION ACTUAL SIGNATURES ----- -------- ----------------- - -------------------------- ------------------------ -------------------------- - -------------------------- ------------------------ -------------------------- - -------------------------- ------------------------ -------------------------- - -------------------------- ------------------------ -------------------------- - -------------------------- ------------------------ -------------------------- acting for and on behalf of this Corporation and as its act and deed be, and they hereby are, authorized and empowered: BORROW MONEY. To borrow from time to time from Imperial Bank ("Bank"), on such terms as may be agreed upon between the officers, employees, or agents of the Corporation and Bank, such sum or sums of money as in their judgment should be borrowed, without limitation, including such sums as are specified in that certain Loan and Security Agreement dated as of November 26, 1999 (the "Loan Agreement"). EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank the Loan Agreement and any other agreement entered into between Corporation and Bank in connection with the Loan Agreement, all as amended or extended from time to time (collectively, with the Loan Agreement, the "Loan Documents"), and also to execute and deliver to Bank one or more renewals, extensions, modifications, refinancings, consolidations, or substitutions for the Loan Documents, or any portion thereof. GRANT SECURITY. To grant a security interest to Bank in the Collateral described in the Loan Documents, which security interest shall secure all of the Corporation's Obligations, as described in the Loan Documents. NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts, trade acceptances, promissory notes, or other evidences of indebtedness payable to or belonging to the Corporation or in which the Corporation may have an interest, and either to receive cash for the same or to cause such proceeds to be credited to the account of the Corporation with Bank, or to cause such other disposition of the proceeds derived therefrom as they may deem advisable. WARRANTS. To issue a warrant to purchase the Corporation's capital stock. LETTERS OF CREDIT; FOREIGN EXCHANGE. To execute letters of credit applications, foreign exchange agreements and other related documents pertaining to Bank's issuance of letters of credit and foreign exchange contracts. FURTHER ACTS. In the case of lines of credit, to designate additional or alternate individuals as being authorized to request advances thereunder, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as they may in their discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions. 1 BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, that these Resolutions shall remain in full force and effect and Bank may rely on these Resolutions until written notice of their revocation shall have been delivered to and received by Bank. Any such notice shall not affect any of the Corporation's agreements or commitments in effect at the time notice is given. I FURTHER CERTIFY that the officers, employees, and agents named above are duly elected, appointed, or employed by or for the Corporation, as the case may be, and occupy the positions set forth opposite their respective names; that the foregoing Resolutions now stand of record on the books of the Corporation; and that the Resolutions are in full force and effect and have not been modified or revoked in any manner whatsoever. IN WITNESS WHEREOF, I have hereunto set my hand on November 26, 1999 and attest that the signatures set opposite the names listed above are their genuine signatures. CERTIFIED AND ATTESTED BY: X_______________________________________ 2 CORPORATE RESOLUTIONS TO BORROW - -------------------------------------------------------------------------------- BORROWER: FRONTEC AMT, INC. - -------------------------------------------------------------------------------- I, the undersigned Secretary or Assistant Secretary of FRONTEC AMT, INC. (the "Corporation"), HEREBY CERTIFY that the Corporation is organized and existing under and by virtue of the laws of the State of Delaware. I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and complete copies of the Articles of Incorporation, as amended, and the Restated Bylaws of the Corporation, each of which is in full force and effect on the date hereof. I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly called and held, at which a quorum was present and voting (or by other duly authorized corporate action in lieu of a meeting), the following resolutions were adopted. BE IT RESOLVED, that any one (1) of the following named officers, employees, or agents of this Corporation, whose actual signatures are shown below: NAMES POSITION ACTUAL SIGNATURES ----- -------- ----------------- GREGORY CRONIN PRESIDENT & CEO /s/ GREGORY CRONIN - -------------------------- ------------------------ -------------------------- STAN F. STOUDENMIRE SR. VP & CFO /s/ STAN F. STOUDENMIRE - -------------------------- ------------------------ -------------------------- - -------------------------- ------------------------ -------------------------- - -------------------------- ------------------------ -------------------------- - -------------------------- ------------------------ -------------------------- acting for and on behalf of this Corporation and as its act and deed be, and they hereby are, authorized and empowered: BORROW MONEY. To borrow from time to time from Imperial Bank ("Bank"), on such terms as may be agreed upon between the officers, employees, or agents of the Corporation and Bank, such sum or sums of money as in their judgment should be borrowed, without limitation, including such sums as are specified in that certain Loan and Security Agreement dated as of November 26, 1999 (the "Loan Agreement"). EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank the Loan Agreement and any other agreement entered into between Corporation and Bank in connection with the Loan Agreement, all as amended or extended from time to time (collectively, with the Loan Agreement, the "Loan Documents"), and also to execute and deliver to Bank one or more renewals, extensions, modifications, refinancings, consolidations, or substitutions for the Loan Documents, or any portion thereof. GRANT SECURITY. To grant a security interest to Bank in the Collateral described in the Loan Documents, which security interest shall secure all of the Corporation's Obligations, as described in the Loan Documents. NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts, trade acceptances, promissory notes, or other evidences of indebtedness payable to or belonging to the Corporation or in which the Corporation may have an interest, and either to receive cash for the same or to cause such proceeds to be credited to the account of the Corporation with Bank, or to cause such other disposition of the proceeds derived therefrom as they may deem advisable. WARRANTS. To issue a warrant to purchase the Corporation's capital stock. LETTERS OF CREDIT; FOREIGN EXCHANGE. To execute letters of credit applications, foreign exchange agreements and other related documents pertaining to Bank's issuance of letters of credit and foreign exchange contracts. FURTHER ACTS. In the case of lines of credit, to designate additional or alternate individuals as being authorized to request advances thereunder, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver such other documents and agreements as they may in their discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions. 1 BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, that these Resolutions shall remain in full force and effect and Bank may rely on these Resolutions until written notice of their revocation shall have been delivered to and received by Bank. Any such notice shall not affect any of the Corporation's agreements or commitments in effect at the time notice is given. I FURTHER CERTIFY that the officers, employees, and agents named above are duly elected, appointed, or employed by or for the Corporation, as the case may be, and occupy the positions set forth opposite their respective names; that the foregoing Resolutions now stand of record on the books of the Corporation; and that the Resolutions are in full force and effect and have not been modified or revoked in any manner whatsoever. IN WITNESS WHEREOF, I have hereunto set my hand on November 26, 1999 and attest that the signatures set opposite the names listed above are their genuine signatures. CERTIFIED AND ATTESTED BY: /s/ STAN F. STOUDENMIRE ----------------------- 2 IMPERIAL BANK MEMBER FDIC ITEMIZATION OF AMOUNT FINANCED DISBURSEMENT INSTRUCTIONS (REVOLVER) Name(s): VIEWLOCITY, INC., FRONTEC AMT, INC., Date: November 26, 1999 AND VIEWLOCITY AB $ credited to deposit account No. ___________ when Advances are requested or disbursed to Borrowers by cashiers check or wire transfer Amounts paid to others on your behalf: $ 2,500 to Imperial Bank for Loan Fee $ to Imperial Bank for Document Fee $ to Imperial Bank for accounts receivable audit (estimate) $ to Bank counsel fees and expenses $ to _______________ $ to _______________ $ TOTAL (AMOUNT FINANCED) Upon consummation of this transaction, this document will also serve as the authorization for Imperial Bank to disburse the loan proceeds as stated above. ____________________________________ ___________________________________ Signature Signature AGREEMENT TO PROVIDE INSURANCE TO: IMPERIAL BANK Date: November 26, 1999 c/o Hibernia Mitchel Insurance Services Post Office Box 8061 Walnut Creek, CA 94596-8061 Borrowers: Viewlocity, Inc., Frontec AMT, Inc., and Viewlocity AB
In consideration of a loan in the amount of $3,812,458, secured by all tangible personal property including inventory and equipment. I/We agree to obtain adequate insurance coverage to remain in force during the term of the loan. I/We also agree to advise the below named agent to add Imperial Bank as lender's loss payable on the new or existing insurance policy, and to furnish Bank at above address with a copy of said policy/endorsements and any subsequent renewal policies. I/We understand that the policy must contain: 1. Fire and extended coverage in an amount sufficient to cover: (a) The amount of the loan, OR (b) All existing encumbrances, whichever is greater, But not in excess of the replacement value of the improvements on the real property. 2. Lender's "Loss Payable" Endorsement Form 438 BFU in favor of Imperial Bank, or any other form acceptable to Bank. INSURANCE INFORMATION Insurance Co./Agent Telephone No.: Agent's Address: Signature of Obligor:___________________________ Signature of Obligor:___________________________ - -------------------------------------------------------------------------------- - ------------------------------------------------ FOR BANK USE ONLY INSURANCE VERIFICATION: Date:___________________ Person Spoken to:_______________________________ Policy Number:__________________________________ Effective From:______________To:________________ Verified by:____________________________________ - ------------------------------------------------ - -------------------------------------------------------------------------------- IMPERIAL BANK CALIFORNIA'S BUSINESS BANKS AUTOMATIC DEBIT AUTHORIZATION MEMBER FDIC - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- To: IMPERIAL BANK Re: LOAN # ___________________________________ You are hereby authorized and instructed to charge account No. ______________ in the name of VIEWLOCITY, INC., FRONTEC AMT, INC., AND VIEWLOCITY AB - -------------------------------------------------------------------------------- for principal and interest payments due on above referenced loan as set forth below and credit the loan referenced above. ____ Debit each interest payment as it becomes due according to the terms of the note and any renewals or amendments thereof. ____ Debit each principal payment is at becomes due according to the terms of the note and any renewals or amendments thereof. This Authorization is to remain in full force and effect until revoked in writing. - -------------------------------------------------------------------------------- - ---------------------------------------------------- --------------------------- Agent Signature Date - ---------------------------------------------------- --------------------------- - ---------------------------------------------------- --------------------------- - ---------------------------------------------------- --------------------------- IMPERIAL BANK/BOSTON OFFICE Phone: (800) 413-4624 CLIENT AUTHORIZATION Fax (617) 956-0557 - -------------------------------------------------------------------------------- GENERAL AUTHORIZATION I hereby authorize Imperial Bank to use my company name, logo, and information relating to our banking relationship in its marketing and advertising campaigns which is intended for Imperial Bank's customers, prospects and shareholders. Imperial Bank will forward any advertising or article including client for prior review and approval. - ------------------------------------------------------ Signature - ------------------------------------------------------ Printed Name Title VIEWLOCITY, INC., FRONTEC AMT, INC., AND VIEWLOCITY AB - ------------------------------------------------------ Company - ------------------------------------------------------ Mailing Address - ------------------------------------------------------ City, State, Zip Code - ------------------------------------------------------ Phone Number - ------------------------------------------------------ Fax Number - ------------------------------------------------------ E-Mail - ------------------------------------------------------ Date YEAR 2000 QUESTIONNAIRE FOR CUSTOMERS OF IMPERIAL BANK Customer Name: Viewlocity, Inc., Frontec AMT, Inc., Date: November 26, 1999 and Viewlocity AB Relationship Manager: Oscar Jazdowski/Suzanne Smetana Please complete the questionnaire based on responses from the customer. If necessary, comment in the space provided or attach additional information to this form. Any "NO" responses require appropriate follow-up with the customer on a periodic basis. Please retain a copy of this form in the credit file.
- --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- YES NO N/A - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 1. Has the company developed a comprehensive plan for Year 2000 compliance? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 2. Is someone in the company specifically responsible for managing the Year 2000 plan: Name: Phone: - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 3. Has senior management and the board of directors reviewed and approved the plan? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 4. Has the company completely inventoried its software, hardware and telecommunications? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 5. Has the company identified all equipment with date-sensitive operating controls such as elevators, HVAC, security systems, manufacturing equipment, etc.? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 6. Has the company verified that vendor-supplied systems will be Year 2000 compliant? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 7. Has the company verified Year 2000 compliance of outside data-processing companies and established a testing time frame? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 8. Has the company budgeted sufficient resources (both financial and personnel) to accomplish its Year 2000 mission? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 9. Has the plan been reviewed by the company's external auditors? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 10. Does the company's plan call for remediation and preliminary testing of critical systems to be largely completed by 12/31/99? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 11. Will the company have contingency plans for mission critical systems in place by 12/31/99? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 12. Does the company have any ongoing or long-term contracts that could subject it to liability if it failed to perform as a result of Year 2000 compliance failure? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 13. Has the company discussed potential legal ramifications or expenses with its attorney? - --------- ---------------------------------------------------------------------------------------- ---------- --------- -------- 14. Has the company discussed potential losses from Year 2000 problems with insurers to determine coverage of any losses? - --------- ---------------------------------------------------------------------------------------- ---------- --------- --------
Comments: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DEBTOR: VIEWLOCITY, INC. FRONTEC AMT, INC. SECURED PARTY: IMPERIAL BANK EXHIBIT A TO UCC-1 All personal property of each Borrower (herein referred to as a "Borrower" or "Debtor") whether presently existing or hereafter created, written, produced or acquired, including, but not limited to: (i) all accounts receivable, accounts, chattel paper, contract rights (including, without limitation, royalty agreements, license agreements and distribution agreements), documents, instruments, money, deposit accounts and general intangibles, including, without limitation, returns, repossessions, books and records relating thereto, and equipment containing said books and records, all investment property, including securities and securities entitlements; (ii) all software, computer source codes and other computer programs (collectively, the "Software Products"), and all common law and statutory copyrights and copyright registrations, applications for registration, now existing or hereafter arising, United States of America and foreign, obtained or to be obtained on or in connection with the Software Products, or any parts thereof or any underlying or component elements of the Software Products together with the right to copyright and all rights to renew or extend such copyrights and the right (but not the obligation) of Bank (herein referred to as "Bank" or "Secured Party") to sue in its own name and/or the name of the Debtor for past, present and future infringements of copyright; (iii) all goods, including, without limitation, equipment (other than equipment subject to the CommVest Lease Financing) and inventory (including, without limitation, all export inventory); (iv) all guarantees and other security therefor; (v) all trademarks, service marks, trade names and service names and the goodwill associated therewith; (vi) (a) all patents and patent applications filed in the United States Patent and Trademark Office or any similar office of any foreign jurisdiction, and interests under patent license agreements, including, without limitation, the inventions and improvements described and claimed therein, (b) licenses pertaining to any patent whether Debtor is licensor or licensee, (c) all income, royalties, damages, payments, accounts and accounts receivable now or hereafter due and/or payable under and with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (d) the right (but not the obligation) to sue for past, present and future infringements thereof, (e) all rights corresponding thereto throughout the world in all jurisdictions in which such patents have been issued or applied for, and (f) the reissues, divisions, continuations, renewals, extensions and continuations-in-part with any of the foregoing (all of the foregoing patents and applications and interests under patent license agreements, together with the items described in clauses (a) through (f) in this paragraph are sometimes herein individually and collectively referred to as the "Patents"); and (vii) all products and proceeds, including, without limitation, insurance proceeds, of any of the foregoing. EX-10.17 19 ex-10_17.txt EXHIBIT 10.17 EXHIBIT 10.17 THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THIS SECURITY, IS SUBJECT TO RESTRICTIONS ON TRANSFER AND MAY NOT BE SOLD, EXCHANGED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT DATED AS OF MARCH 8,1999, A COPY OF WHICH THE COMPANY WILL FURNISH TO THE HOLDER OF THIS SECURITY UPON REQUEST AND WITHOUT CHARGE. Right to Purchase 3,450,207 Shares of Series B Convertible Preferred Stock of Arctic, Inc. No. B-1 ARCTIC, INC. SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT Arctic, Inc., a Delaware corporation (the "Company"), hereby certifies that, for value received, Battery Ventures IV, L.P. (the "Holder"), or its successors or registered assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:00 p.m., Boston, Massachusetts time, on the Expiration Date (as hereinafter defined), Three Million Four Hundred Fifty Thousand Two Hundred Seven fully paid and nonassessable shares of Series B Convertible Preferred Stock, par value $.01 per share, of the Company (the "Preferred Stock"), at a purchase price per share of $1.82 (the "Purchase Price"). The number of such shares of Preferred Stock and the Purchase Price are subject to adjustment as provided in this Warrant. This Warrant is issued pursuant to a certain Preferred Stock and Preferred Stock Warrant Purchase Agreement (the "Agreement"), dated as of February 25, 1999, by and among the Company and the persons named therein, a copy of which is on file at the principal office of the Company and the holder of this Warrant shall be entitled to the benefits of the Agreement, as provided therein. This Warrant is one of several warrants (the "Purchaser Warrants") representing the right to purchase up to an aggregate of 7,005,495 shares of Series B Convertible Preferred Stock issuable pursuant to the Agreement. As used herein the following terms, unless the context otherwise requires, have the following respective meanings: (a) The term "Company" shall include Arctic, Inc., a Delaware corporation, and any corporation that shall succeed to or assume the obligations of Arctic, Inc. hereunder. (b) The term "Expiration Date" refers to the earlier of March 8, 2004 or the date on which the Company consummates an "Initial Public Offering" (as defined in, Section 50 of the Company's Certificate of Designations filed with the Secretary of State of the State of Delaware on February 26, 1999 (the "Certificate of Designations")). (c) The term "Stockholders Agreement" shall mean that certain Stockholders Agreement of the Company dated March 8, 1999, and attached to the Agreement as EXHIBIT 2.03F. 1. (a) EXERCISE OF WARRANT. This Warrant may be exercised in full or in part at any time or from time to time until the Expiration Date by the holder hereof by surrender of this Warrant and the subscription form annexed hereto (duly executed) by such holder, to the Company at its principal office, accompanied by payment, in cash or by certified or official bank check payable to the order of the Company in the amount obtained by multiplying (a) the number of shares of Preferred Stock designated by the holder in the subscription form by (b) the Purchase Price then in effect (or in accordance with the provisions of Section 1(b) below). On any partial exercise, the Company at its expense will forthwith issue and deliver to, or upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes and subject to applicable securities laws) may request, providing in the aggregate on the face or faces thereof for the number of shares of Preferred Stock for which such Warrant or Warrants may still be exercised. (b) NET ISSUE ELECTION. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula: Y(A-B) X = ---------- A
where X = the number of shares to be issued to the Holder pursuant to this Section 1(b). Y = the number of shares covered by this Warrant in respect of which the net issue election is made pursuant to this Section 1(b). A = the Fair Market Value (as hereinafter defined) of one share of Series B Preferred Stock, as at the time the net issue election is made pursuant to this Section 1(b). B = the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section l(b). The Board shall promptly respond in writing to an inquiry by the Holder as to the fair market value of one share of Series B Preferred Stock. 2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as practicable after the exercise of this Warrant, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue or stamp taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes and subject to applicable securities laws) may direct, a certificate or certificates for the number of fully paid and nonassessable shares of Preferred Stock to which such holder shall be entitled on such exercise, in such denominations as may be requested by such holder, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then current market value (as determined in good faith by the Board of Directors) of one full share, together with any other stock or other securities and property (including cash, where applicable) to which such holder is entitled upon such exercise pursuant to Section 1 or otherwise. 3. COVENANTS AS TO PREFERRED STOCK AND COMMON STOCK. The Company covenants and agrees that all shares of Preferred Stock which may be issued upon the exercise of this Warrant, and all shares of Common Stock, par value $.01 per share (the "Common Stock"), of the Company, which may be issued upon the conversion of the Preferred Stock, will, upon issuance, be validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. Without limiting the generality of the foregoing, the Company covenants that it will from time to time take all such actions as may be requisite to assure that the stated or par value per share of Preferred Stock is at all times equal to or less than the then effective Purchase Price per share of Preferred Stock issuable upon exercise of this Warrant. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Preferred Stock to provide for the exercise of this Warrant and shares of Common Stock to provide for the conversion of the Preferred Stock. If and so long as the Preferred Stock issuable upon the exercise of this Warrant or the Common Stock issuable upon conversion of the Preferred Stock is listed on any national securities exchange, -2- the Company will, if permitted by the rules of such exchange, list and keep listed on such exchange, upon official notice of issuance, all such shares of capital stock that are so listed. 4. NO AMENDMENT OF CERTIFICATE OF INCORPORATION; ETC. The Company shall not, without the written consent of the holders of at least a majority in interest of the Purchaser Warrants, (i) amend, alter or repeal the provisions of the Certificate of Designations as in existence on the date hereof, insofar as they relate to the rights, preferences and privileges of the Preferred Stock, or (ii) authorize or effect any stock dividend payable in shares of Preferred Stock or any other. class or series of preferred stock of the Company or any subdivision, split-up or combination of any outstanding shares of Preferred Stock or any other class or series of preferred stock of the Company. 5. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company. 6. RESTRICTIONS ON TRANSFER RIGHTS UNDER PURCHASE AGREEMENTS, ETC. The holder of this Warrant by acceptance hereof agrees that the transfer of this Warrant, the shares of Preferred Stock issuable upon the exercise of all or any portion of this Warrant and the shares of Common Stock issuable upon conversion of such shares of Preferred Stock are subject to the provisions of the Agreement, the Stockholders Agreement and this Warrant, the shares of Preferred Stock issuable upon exercise of all or any portion of this Warrant, and the shares of Common Stock issuable upon conversion of such shares of Preferred Stock shall be entitled to all rights and benefits accorded thereto in the Agreement and the Stockholders Agreement, and the applicable provisions of the Agreement and the Stockholders Agreement are hereby incorporated herein by reference. 7. TRANSFER OF WARRANT. Subject to the provisions of the Stockholders Agreement and subject to applicable securities laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the agency or office of the Company referred to in Section 1, by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant properly endorsed. Subject to the provisions of the Stockholders Agreement and subject to applicable securities laws, each taker and holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed, in blank, shall be deemed negotiable, and, when so endorsed the holder hereof may be treated by the Company and all other persons dealing with this Warrant as the absolute owner hereof for any purposes and as the person entitled to exercise the rights represented by this Warrant, or to the transfer hereof on the books of the Company, any notice to the contrary notwithstanding; but until each transfer on such books, the Company may treat the registered holder hereof as the owner hereof for all purposes. 8. REORGANIZATIONS, ETC. In case of any capital reorganization, of any reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any change in the Preferred Stock) or of the sale of all or substantially all the properties and assets of the Company as an entirety to any other corporation, this Warrant shall, after such reorganization, reclassification, consolidation, merger or sale, be exercisable for the kind and number of shares of stock or other securities or property of the Company or of the corporation resulting from such consolidation or surviving such merger or to which such properties and assets shall have been sold or of such other person to which such holder would have been entitled if he had held the Preferred Stock issuable upon the exercise hereof immediately prior to such reorganization, reclassification, consolidation, merger or sale. 9. EXCHANGE OF WARRANT. This Warrant is exchangeable upon the surrender hereof by the holders hereof at the office or agency of the Company designated in Section 1 hereof, for new Warrants of like tenor representing in the aggregate the rights to subscribe for and purchase the number of shares which may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by said holders hereof at the time of such surrender. 10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may in its discretion impose (which -3- shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute a contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone. 11. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by, and construed in accordance with, the internal laws of the State of Connecticut. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. This Warrant is being executed as an instrument under seal. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. 12. NOTICE PRIOR TO PUBLIC OFFERING. The Company shall give each Holder at least twenty (20) days prior written notice of the effectiveness of any registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -4- IN WITNESS WHEREOF, this Warrant has been executed this 12th day of March, 1999. ARCTIC, INC. [Corporate Seal] Attest: By: /s/ OLOF ENGLUND By: /s/ OLOF ENGLUND ------------------------- ------------------------- Title: Title: ---------------------- ----------------------
FORM OF SUBSCRIPTION (To be signed only on exercise of Warrant) TO ARCTIC, INC. The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for, and to purchase thereunder, ___________ shares of Series B Convertible Preferred Stock of ARCTIC, INC. and herewith makes payment of $____________________ therefor in cash, or elects to surrender the right to purchase _____ shares of Series B Convertible Preferred Stock pursuant to Section 1(b) of this Warrant, and requests that the certificates for such shares be issued in the name of, and delivered to __________________ whose address is _____________________________________________________________. Dated: ____________________________ (Signature must conform to name of holder as specified on the face of the Warrant) ________________________________________ ________________________________________ (Address) ________________________________________ FORM OF ASSIGNMENT (To be signed only on transfer of Warrant) For value received, the undersigned hereby sells, assigns, and transfers unto ________________ the right represented by the within Warrant to purchase ___________ shares of Series B Convertible Preferred Stock of ARCTIC, INC. to which the within Warrant relates, and appoints _____________________________as its Attorney to transfer such right on the books of ARCTIC, INC. with full power of substitution in the premises. Dated: _____________________________ (Signature must conform to name of holder as specified on the face of the Warrant) ________________________________________ ________________________________________ Signed in the presence of: ___________________________________ EX-10.18 20 ex-10_18.txt EXHIBIT 10.18 EXHIBIT 10.18 THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER AND MAY NOT BE SOLD, EXCHANGED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT DATED AS OF MARCH 8,1999, A COPY OF WHICH THE COMPANY WILL FURNISH TO THE HOLDER OF THIS SECURITY UPON REQUEST AND WITHOUT CHARGE. Right to Purchase 52,541 Shares of Series B Convertible Preferred Stock of Arctic, Inc. No. B-2 ARCTIC, INC. SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT Arctic, Inc., a Delaware corporation (the "Company"), hereby certifies that, for value received, Battery Investment Partners IV, LLC (the "Holder"), or its successors or registered assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:00 p.m., Boston, Massachusetts time, on the Expiration Date (as hereinafter defined), Fifty-Two Thousand Five Hundred Forty-One fully paid and nonassessable shares of Series B Convertible Preferred Stock, par value $.01 per share, of the Company (the "Preferred Stock), at a purchase price per share of $1.82 (the "Purchase Price). The number of such shares of Preferred Stock and the Purchase Price are subject to adjustment as provided in this Warrant. This Warrant is issued pursuant to a certain Preferred Stock and Preferred Stock Warrant Purchase Agreement (the "Agreement"), dated as of February 25, 1999, by and among the Company and the persons named therein, a copy of which is on file at the principal office of the Company and the holder of this Warrant shall be entitled to the benefits of the Agreement, as provided therein. This Warrant is one of several warrants (the Purchaser Warrants) representing the right to purchase up to an aggregate of 7,005,495 shares of Series B Convertible Preferred Stock issuable pursuant to the Agreement. As used herein the following terms, unless the context otherwise requires, have the following respective meanings: (a) The term "Company" shall include Arctic, Inc., a Delaware corporation, and any corporation that shall succeed to or assume the obligations of Arctic, Inc. hereunder. (b) The term "Expiration Date" refers to the earlier of March 8, 2004 or the date on which the Company consummates an "Initial Public Offering" (as defined in, Section 50 of the Company's Certificate of Designations filed with the Secretary of State of the State of Delaware on February 26, 1999 (the "Certificate of Designations")). (c) The term "Stockholders Agreement" shall mean that certain Stockholders Agreement of the Company dated March 8, 1999, and attached to the Agreement as EXHIBIT 2.03F. 1. (a) EXERCISE OF WARRANT. This Warrant may be exercised in full or in part at any time or from time to time until the Expiration Date by the holder hereof by surrender of this Warrant and the subscription form annexed hereto (duly executed) by such holder, to the Company at its principal office, accompanied by payment, in cash or by certified or official bank check payable to the order of the Company in the amount obtained by multiplying (a) the number of shares of Preferred Stock designated by the holder in the subscription form by (b) the Purchase Price then in effect (or in accordance with the provisions of Section I (b) below). On any partial exercise, the Company at its expense will forthwith issue and deliver to or upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes and subject to applicable securities laws) may request, providing in the aggregate on the face or faces thereof for the number of shares of Preferred Stock for which such Warrant or Warrants may still be exercised. (b) NET ISSUE ELECTION. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula: Y(A-B) X = -------- A
where X = the number of shares to be issued to the Holder pursuant to this Section 1(b). Y = the number of shares covered by this Warrant in respect of which the net issue election is made pursuant to this Section 1(b). A = the Fair Market Value (as hereinafter defined) of one share of Series B Preferred Stock, as at the time the net issue election is made pursuant to this Section 1(b). B = the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section l(b). The Board shall promptly respond in writing to an inquiry by the Holder as to the fair market value of one share of Series B Preferred Stock. 2. DELIVERY OF STOCK CERTIFICATES, ETC. ON EXERCISE. As soon as practicable after the exercise of this Warrant, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue or stamp taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes and subject to applicable securities laws) may direct, a certificate or certificates for the number of fully paid and nonassessable shares of Preferred Stock to which such holder shall be entitled on such exercise, in such denominations as may be requested by such holder, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then current market value (as determined in good faith by the Board of Directors) of one full share, together with any other stock or other securities and property (including cash, where applicable) to which such holder is entitled upon such exercise pursuant to Section I or otherwise. 3. COVENANTS AS TO PREFERRED STOCK AND COMMON STOCK. The Company covenants and agrees that all shares of Preferred Stock which may be issued upon the exercise of this Warrant, and all shares of Common Stock, par value $.01 per share (the "Common Stock"), of the Company, which may be issued upon the conversion of the Preferred Stock, will, upon issuance, be validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. Without limiting the generality of the foregoing, the Company covenants that it will from time to time take all such actions as may be requisite to assure that the stated or par value per share of Preferred Stock is at all times equal to or less than the then effective Purchase Price per share of Preferred Stock issuable upon exercise of this Warrant. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Preferred Stock to provide for the exercise of this Warrant and shares of Common Stock to provide for the conversion of the Preferred Stock. If and so long as the Preferred Stock issuable upon the exercise of this Warrant or the Common Stock issuable upon conversion of the Preferred Stock is listed on any national securities exchange, -2- the Company will, if permitted by the rules of such exchange, list and keep listed on such exchange, upon official notice of issuance, all such shares of capital stock that are so listed. 4. AMENDMENT OF CERTIFICATE OF INCORPORATION; ETC. The Company shall not, without the written consent of the holders of at least a majority in interest of the Purchaser Warrants, (i) amend, alter or repeal the provisions of the Certificate of Designations as in existence on the date hereof, insofar as they relate to the rights, preferences and privileges of the Preferred Stock, or (ii) authorize or effect any stock dividend payable in shares of Preferred Stock or any other class or series of preferred stock of the Company or any subdivision, split-up or combination of any outstanding shares of Preferred Stock or any other class or series of preferred stock of the Company. 5. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company. 6. RESTRICTIONS ON TRANSFER, RIGHTS UNDER PURCHASE AGREEMENT; ETC. The holder of this Warrant by acceptance hereof agrees that the transfer of this Warrant, the shares of Preferred Stock issuable upon the exercise of all or any portion of this Warrant and the shares of Common Stock issuable upon conversion of such shares of Preferred Stock are subject to the provisions of the Agreement, the Stockholders. Agreement and this Warrant, the shares of Preferred Stock issuable upon exercise of all or any portion of this Warrant, and the shares of Common Stock issuable upon conversion of such shares of Preferred Stock shall be entitled to all rights and benefits accorded thereto in the Agreement and the Stockholders Agreement, and the applicable provisions of the Agreement and the Stockholders Agreement are hereby incorporated herein by reference. 7. TRANSFER OF WARRANT. Subject to the provisions of the Stockholders Agreement and subject to applicable securities laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the agency or office of the Company referred to in Section 1, by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant properly endorsed. Subject to the provisions of the Stockholders Agreement and subject to applicable securities laws, each taker and holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed, in blank, shall be deemed negotiable, and, when so endorsed the holder hereof may be treated by the Company and all other persons dealing with this Warrant as the absolute owner hereof for any purposes and as the person entitled to exercise the rights represented by this Warrant, or to the transfer hereof on the books of the Company, any notice to the contrary notwithstanding; but until each transfer on such books, the Company may treat the registered holder hereof as the owner hereof for all purposes. 8. REORGANIZATIONS, ETC. In case of any capital reorganization, of any reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any change in the Preferred Stock) or of the sale of all or substantially all the properties and assets of the Company as an entirety to any other corporation, this Warrant shall, after such reorganization, reclassification, consolidation, merger or sale, be exercisable for the kind and number of shares of stock or other securities or property of the Company or of the corporation resulting from such consolidation or surviving such merger or to which such properties and assets shall have been sold or of such other person to which such holder would have been entitled if he had held the Preferred Stock issuable upon the exercise hereof immediately prior to such reorganization, reclassification, consolidation, merger or sale. 9. EXCHANGE OF WARRANT. This Warrant is exchangeable upon the surrender hereof by the holders hereof at the office or agency of the Company designated in Section I hereof, for new Warrants of like tenor representing in the aggregate the rights to subscribe for and purchase the number of shares which may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by said holders hereof at the time of such surrender. 10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may in its discretion impose (which -3- shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute a contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant, shall be at any time enforceable by anyone. 11. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by, and construed in accordance with, the internal laws of the State of Connecticut. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. This Warrant is being executed as an instrument under seal. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. 12. NOTICE PRIOR TO PUBLIC OFFERING. The Company shall give each Holder at least twenty (20) days prior written notice of the effectiveness of any registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -4- IN WITNESS WHEREOF, this Warrant has been executed this 12th day of March, 1999. ARCTIC, INC. [Corporate Seal] Attest: By: /s/ OLOF ENGLUND By: /s/ OLOF ENGLUND ------------------------- ------------------------- Title: Title: ---------------------- ----------------------
FORM OF SUBSCRIPTION (To be signed only on exercise of Warrant) TO ARCTIC, INC. The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for, and to purchase thereunder, ___________ shares of Series B Convertible Preferred Stock of ARCTIC, INC. and herewith makes payment of $____________________ therefor in cash, or elects to surrender the right to purchase _____ shares of Series B Convertible Preferred Stock pursuant to Section 1(b) of this Warrant, and requests that the certificates for such shares be issued in the name of, and delivered to __________________ whose address is _____________________________________________________________. Dated: __________________________ (Signature must conform to name of holder as specified on the face of the Warrant) _________________________________________ _________________________________________ (Address) _________________________________________ FORM OF ASSIGNMENT (To be signed only on transfer of Warrant) For value received, the undersigned hereby sells, assigns, and transfers unto ________________ the right represented by the within Warrant to purchase ___________ shares of Series B Convertible Preferred Stock of ARCTIC, INC. to which the within Warrant relates, and appoints _____________________________as its Attorney to transfer such right on the books of ARCTIC, INC. with full power of substitution in the premises. Dated: __________________________ (Signature must conform to name of holder as specified on the face of the Warrant) _________________________________________ _________________________________________ Signed in the presence of: ________________________________ EX-10.19 21 ex-10_19.txt EXHIBIT 10.19 EXHIBIT 10.19 THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ) AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT ORAN EXEMPTION FROM REGISTRATION IS AVAILABLE. THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER AND MAY NOT BE SOLD, EXCHANGED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT DATED AS OF MARCH 12,1999, A COPY OF WHICH THE COMPANY WILL FURNISH TO THE HOLDER OF THIS SECURITY UPON REQUEST AND WITHOUT CHARGE. Right to Purchase 3,450,206 Shares of Series B Convertible Preferred Stock of Arctic, Inc. No. B-3 ARCTIC, INC. SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT Arctic, Inc., a Delaware corporation (the "Company"), hereby certifies that, for value received, Battery Ventures IV, L.P. (the "Holder"), or its successors or registered assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:00 p.m., Boston, Massachusetts time, on the Expiration Date (as hereinafter defined), Three Million Four Hundred Fifty Thousand Two Hundred Six fully paid and nonassessable shares of Series B Convertible Preferred Stock, par value $.O1 per share, of the Company (the "Preferred Stock"), at a purchase price per share of $1.82 (the "Purchase Price"). The number of such shares of Preferred Stock and the Purchase Price are subject to adjustment as provided in this Warrant. This Warrant is issued pursuant to a certain Preferred Stock and Preferred Stock Warrant Purchase Agreement (the "Agreement), dated as of February 25, 1999, by and among the Company and the persons named therein, a copy of which is on file at the principal office of the Company and the holder of this Warrant shall be entitled to the benefits of the Agreement, as provided therein. This Warrant is one of several warrants (the "Purchaser Warrants) representing the right to purchase up to an aggregate of 7,005,495 shares of Series B Convertible Preferred Stock issuable pursuant to the Agreement. As used herein the following terms, unless the context otherwise requires, have the following respective meanings: Series B Convertible Preferred Stock Purchase Warrant -- Page 2 (a) The term "Company" shall include Arctic, Inc., a Delaware corporation, and any corporation that shall succeed to or assume the obligations of Arctic, Inc. hereunder. (b) The term "Expiration Date" refers to the earlier of March 12, 2004 or the date on which the Company consummates an "Initial Public Offering" (as defined in, Section 50 of the Company's Certificate of Designations filed with the Secretary of State of the State of Delaware on February 26, 1999 (the "Certificate of Designations")). (c) The term "Stockholders Agreement 'shall mean that certain Stockholders Agreement of the Company dated March 12, 1999, and attached to the Agreement as EXHIBIT 2.0' )F. 1. (a) EXERCISE OF WARRANT. This Warrant may be exercised in full or in part at any time or from time to time until the Expiration Date by the holder hereof by surrender of this Warrant and the subscription form annexed hereto (duly executed) by such holder, to the Company at its principal office, accompanied by payment, in cash or by certified or official bank check payable to the order of the Company in the amount obtained by multiplying (a) the number of shares of Preferred Stock designated by the holder in the subscription form by (b) the Purchase Price then in effect (or in accordance with the provisions of Section I (b) below). On any partial exercise, the Company at its expense will forthwith issue and deliver to or upon the order of the holder hereof a new Warrant or Warrants of. like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes and subject to applicable securities laws) may request, providing in the aggregate on the face or faces thereof for the number of shares of Preferred Stock for which such Warrant or Warrants may still be exercised. (b) NET ISSUE ELECTION. The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula: X = Y (A-B) -------- A
where X = the number of shares to be issued to the Holder pursuant to this Section I (b). Y = the number of shares covered by this Warrant in respect of which the net issue election is made pursuant to this Section I (b). A = the Fair Market Value (as hereinafter defined) of one share of Series B Preferred Stock, as at the time the net issue election is made pursuant to this Section I (b). B = the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section I (b). Series B Convertible Preferred Stock Purchase Warrant - Page 3 The Board shall promptly respond in writing to an inquiry by the Holder as to the fair market value of one share of Series B Preferred Stock. 2. DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. As soon as practicable after the exercise of this Warrant, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue or stamp taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes and subject to applicable securities laws) may direct. a certificate or certificates for the number of fully paid and nonassessable shares of Preferred Stock to which such holder shall be entitled on such exercise, in such denominations as may be requested by such holder, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then current market value (as determined in. good faith by the Board of Directors) of one full share, together with any other stock or other securities and property (including cash, where applicable) to which such holder is entitled upon such exercise pursuant to Section I or otherwise. 3. COVENANTS AS TO PREFERRED STOCK AND COMMON STOCK. The Company covenants and agrees that all shares of Preferred Stock which may be issued upon the exercise of this Warrant, and all shares of Common Stock, par value $.01 per share (the "Common Stock"), of the Company, which may be issued upon the conversion of the Preferred Stock, will, upon issuance, be validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. Without limiting the generality of the foregoing, the Company covenants that it will from time to time take all. such actions as may be requisite to assure that the stated or par value per share of Preferred Stock is at all times equal to or less than the then effective Purchase Price per share of Preferred Stock -issuable upon exercise of this Warrant. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Preferred Stock to provide for the exercise of this Warrant and shares of Common Stock to provide for the conversion of the Preferred Stock. If and so long as the Preferred Stock issuable upon the exercise of this Warrant or the Common Stock issuable upon conversion of the Preferred Stock is listed on any national securities exchange, the Company will, if permitted by the rules of such exchange, list and keep listed on such exchange, upon official notice of issuance, all such shares of capital stock that are so listed. 4. NO AMENDMENT OF CERTIFICATE of INCORPORATION ETC. The Company shall not without the written consent of the holders of at least a majority in interest of the Purchaser Warrants, (i) amend, alter or repeal the provisions of the Certificate of Designations as in existence on the date hereof, insofar as they relate to the rights, preferences and privileges of the Preferred Stock, or (ii) authorize or effect any stock dividend payable in shares of Preferred Stock or any other class or series of preferred stock of the Company or any subdivision, split-up or combination of any outstanding shares of Preferred Stock or any other class or series of preferred stock of the Company. 5. NO STOCKHOLDER RIGHTS This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company. Series B Convertible Preferred Stock Purchase Warrant -- Page 4 6. RESTRICTIONS ON TRANSFER RIGHTS UNDER PURCHASE AGREEMENT: ETC. The holder of this Warrant by acceptance hereof agrees that the transfer of this Warrant, the shares of Preferred Stock issuable upon the exercise of all or any portion of this Warrant and the shares of Common Stock issuable upon conversion of such shares of Preferred Stock are subject to the provisions of the Agreement, the Stockholders Agreement and this Warrant, the shares of Preferred Stock issuable upon exercise of all or any portion of this Warrant, and the shares of Common Stock issuable upon conversion of such shares of Preferred Stock shall be entitled to all rights and benefits accorded thereto in the Agreement and the Stockholders Agreement, and the applicable provisions of the Agreement and the Stockholders Agreement are hereby incorporated herein by reference. 7. TRANSFER OF WARRANT. Subject to the provisions of the Stockholders Agreement and subject to applicable securities laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the agency or office of the Company referred to in Section 1, by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant properly endorsed. Subject to the provisions of the Stockholders Agreement and subject to applicable securities laws, each taker and holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed, in blank, shall be deemed negotiable, and, when so endorsed the holder hereof may be treated by the Company and all other persons dealing -with this Warrant as the absolute owner hereof for any purposes and as the person entitled to exercise the rights represented by this Warrant, or to the transfer hereof on the books of the Company, any notice to the contrary notwithstanding; but until each transfer on such books, the Company. may treat the registered holder hereof as the owner hereof for all purposes. 8. REORGANIZATIONS ETC. In case of any capital reorganization, of any reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation . and which does not result in any change in the Preferred Stock) or of the sale of all or substantially all the properties and assets of the Company as an entirety to any other corporation, this Warrant shall, after such reorganization, reclassification, consolidation, merger or sale, be exercisable for the kind and number of shares of stock or other securities or property of the Company or of the corporation resulting from such consolidation or surviving such merger or to which such properties and assets shall have been sold or of such other person to which such holder would have been entitled if he had held the Preferred Stock issuable upon the exercise hereof immediately prior to such reorganization, reclassification, consolidation, merger or sale. 9. EXCHANGE OF WARRANT. This Warrant is exchangeable upon the surrender hereof by the holders hereof at the office or agency of the Company designated in Section I hereof, for new Warrants of like tenor representing in the aggregate the rights to subscribe for and purchase the number of shares which may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by said holders hereof at the time of such surrender. Series B Convertible Preferred Stock Purchase Warrant -- Page 5 10. LOST. STOLEN. MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may in its discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute a contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at an), time enforceable by anyone. 11 . MISCELLANEOUS. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed in accordance with the General Corporation Law of the State of 9 Delaware as to matters within the scope thereof, and as to all other matters shall be governed by, and construed in accordance with, the internal laws of the State of Connecticut. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. This Warrant is being executed as an instrument UNDER SEAT. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. 12. NOTICE PRIOR TO PUBLIC OFFERING The Company shall give each Holder at least twenty (20) days prior written notice of the effectiveness of any registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Series B Convertible Preferred Stock Purchase Warrant -- Page 6 IN WITNESS WHEREOF. this Warrant has been executed this 9th day of April, 1999. ARCTIC, INC. [Corporate Seal] By: /s/ OLOF ENGLUND ------------------------------ Title: Attest: By: _____________________ Title: ___________________
FORM OF SUBSCRIPTION (To be signed only on exercise of Warrant) TO ARCTIC, INC. The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for, and to purchase thereunder, ______________ shares of Series B Convertible Preferred Stock of ARCTIC, INC. and herewith makes payment of $______________________ therefor in cash, or elects to surrender the right to purchase shares of Series B Convertible Preferred Stock pursuant to Section I (b) of this Warrant, and requests that the certificates for such shares be issued in the name of, and delivered to _____________________________ whose address is ____________________________________________________________. Dated: _______________________ ___________________________ (Signature must conform to name of holder as specified on the face of the Warrant) ___________________________ ___________________________ (Address)
FORM OF ASSIGNMENT (To be signed only on transfer of Warrant) For value received, the undersigned hereby sells, assigns, and transfers unto _____________________ the right represented by the within Warrant to Purchase __________shares of Series B Convertible Preferred Stock of ARCTIC, INC. to which the within Warrant relates, and appoints _______________________ as its Attorney to transfer such right on the books of ARCTIC, INC. with full power of substitution in the premises. Dated: _______________________ _____________________________ (Signature must conform to name of holder as specified on the face of the Warrant) ___________________________ ___________________________
Signed in the presence of: ____________________________ EX-10.20 22 ex-10_20.txt EXHIBIT 10.20 EXHIBIT 10.20 THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER AND MAY NOT BE SOLD, EXCHANGED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL THE TERMS AND CONDITIONS OF A CERTAIN STOCKHOLDERS AGREEMENT DATED AS OF MARCH 12,1999, A COPY OF WHICH THE COMPANY WILL FURNISH TO THE HOLDER OF THIS SECURITY UPON REQUEST AND WITHOUT CHARGE. Right to Purchase 52,541 Shares of Series B Convertible Preferred Stock of Arctic, Inc. No. B-4 ARCTIC, INC. SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT Arctic, Inc., a Delaware corporation (the "Company"), hereby certifies that, for value received, Battery Investment Partners IV, LLC (the "Holder"), or its successors or registered assigns, is entitled, subject to the terms set forth below, to purchase -from the Company at any time or from time to time before 5:00 p.m., Boston, Massachusetts time, on the Expiration Date (as hereinafter defined), Fifty-Two Thousand Five Hundred Forty-One fully paid and nonassessable shares of Series B Convertible Preferred Stock, par value $.O1 per share, of the Company (the "Preferred Stocks"), at a purchase price per share of $1.82 (the "Purchase Price"). The number of such shares of Preferred Stock and the Purchase Price are subject to adjustment as provided in this Wan-ant. This Warrant is issued pursuant to a certain Preferred Stock and Preferred Stock Warrant Purchase Agreement (the "Agreement"), dated as of February 25, 1999, by and among the Company and the persons named therein, a copy of which is on file at the principal office of the Company and the holder of this Warrant shall be entitled to the benefits of the Agreement, as provided therein. This Warrant is one of several warrants (the "Purchaser Warrants') representing the right to purchase up to an aggregate of 7,005,495 shares of Series B Convertible Preferred Stock issuable pursuant to the Agreement. As used herein the following terms, unless the context otherwise requires, have the following respective meanings: Series B Convertible Preferred Stock Purchase Warrant -- Page 2 (a) The term "Company " shall include Arctic, Inc., a Delaware corporation, and any corporation that shall succeed to or assume the obligations of Arctic, Inc. hereunder. (b) The term "Expiration Date" refers to the earlier of March 12, 2004 or the date on which the Company consummates an "Initial Public Offering" (as defined in, Section 50 of the Company's Certificate of Designations filed with the Secretary of State of the State of Delaware on February 26, 1999 (the "Certificate of Designations")). (c) The term "Stockholders Agreement 'shall mean that certain Stockholders Agreement of the Company dated March 12, 1999, and attached to the Agreement as EXHIBIT 2.03F. 1. (a) EXERCISE OF WARRANT. This Warrant may be exercised in full or in part at an), time or from time to time until the Expiration Date by the holder hereof by surrender of this Warrant and the subscription form annexed hereto (duly executed) by such holder, to the Company at its principal office, accompanied by payment, in cash or by certified or official bank check payable to the order of the Company in the amount obtained by multiplying (a) the number of shares of Preferred Stock designated by the holder in the subscription form by (b) the Purchase Price then in effect (or in accordance with the provisions of Section I(b) below). On any partial exercise, the Company at its expense will forthwith issue and deliver to or upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes and subject to applicable securities laws) may request, providing in the aggregate on the face or faces thereof for the number of shares of Preferred Stock for which such Warrant or Warrants may still be exercised. (b) NET ISSUE ELECTION. The Holder may elect to. receive, without the payment by the Holder of any additional consideration, shares equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the office of the Company. Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula: X = Y (A-B) ------- A
where X = the number of shares to be issued to the Holder pursuant to this Section I (b). Y = the number of shares covered by this Warrant in respect of which the net issue election is made pursuant to this Section I (b). A = the Fair Market Value (as hereinafter defined) of one share of Series B Preferred Stock, as at the time the net issue election is made pursuant to this Section I (b). B = the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section I (b). Series B Convertible Preferred Stock Purchase Warrant -- Page 3 The Board shall promptly respond in writing to an inquiry by the Holder as to the fair market value of one share of Series B Preferred Stock. 2. DELIVER, OF STOCK CERTIFICATES. etc., on Exercise. As soon as practicable after the exercise of this Warrant, and in any event within 10 days thereafter, the Company at its expense (including the payment by it of any applicable issue or stamp taxes) will cause to be issued in the name of and delivered to the holder hereof, or as such holder (upon payment by such holder of any applicable transfer taxes and subject to applicable securities laws) may direct, a certificate or certificates for the number of fully paid and nonassessable shares of Preferred Stock to which such holder shall be entitled on such exercise, in such denominations as may be requested by such holder, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then current market value (as determined in good faith by the Board of Directors) of one full share, together with any other stock or other securities and property (including cash, where applicable) to which such holder is entitled upon such exercise pursuant to Section I or otherwise. 3. COVENANTS AS TO PREFERRED STOCK AND COMMON STOCK. The Company covenants and agrees that all shares of Preferred Stock which may be issued upon the exercise of this Warrant, and all shares of Common Stock, par value $.01 per share (the "Common Stock"), of the Company, which may be issued upon the conversion of the Preferred Stock, will, upon issuance, be validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. Without limiting the generality of the foregoing, the Company covenants that it will from time to time take all such actions as may be requisite to assure that the stated or par value per share of Preferred Stock is at all times equal to or less than the then effective Purchase Price per share of Preferred Stock issuable upon exercise of this Warrant. The Company further covenants and agrees that the Company will at all times have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Preferred Stock to provide for the exercise of this Warrant and shares of Common Stock to provide for the conversion of the Preferred Stock. If and so long as the Preferred Stock issuable, upon the exercise of this Warrant or the Common Stock issuable upon conversion of the Preferred Stock is listed on any national securities exchange, the Company will, if permitted by the rules of such exchange, list and keep listed on such exchange, upon official notice of issuance, all such shares of capital stock that are so listed. 4. NO AMENDMENT OF CERTIFICATE OF INCORPORATION, ETC. The Company -shall not, without the written consent of the holders of at least a majority in interest of the Purchaser Warrants, (i) amend, alter or repeal the provisions of the Certificate of Designations as in existence on the date hereof, insofar as they relate to the rights, preferences and privileges of the Preferred Stock, or (ii) authorize or effect any stock dividend payable in shares of Preferred Stock or any other class or series of preferred stock of the Company or any subdivision, split-up or combination of any outstanding shares of Preferred - -Stock or any other class or series of preferred stock of the Company. 5. NO STOCKHOLDER RIGHTS . This Warrant shall not entitle the holder hereof to any voting -rights or other rights as a stockholder of the Company. Series B Convertible Preferred Stock Purchase Warrant -- Page 4 6. RESTRICTIONS ON TRANSFER. RIGHTS UNDER PURCHASE AGREEMENT; Etc. The holder of this Warrant by acceptance hereof agrees that the transfer of this Warrant, the shares of Preferred Stock issuable upon the exercise of all or any portion of this Warrant and the shares of Common Stock issuable upon conversion of such shares of Preferred Stock are subject to the provisions of the Agreement, the Stockholders Agreement and this Warrant, the shares of Preferred Stock issuable upon exercise of all or any portion of this Warrant, and the shares of Common Stock issuable upon conversion of such shares of Preferred Stock shall be entitled to all rights and benefits accorded thereto in the Agreement and the Stockholders Agreement, and the applicable provisions of the Agreement and the Stockholders Agreement are hereby incorporated herein by reference. 7. TRANSFER OF WARRANT. Subject to the provisions of the Stockholders Agreement and subject to applicable securities laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the agency or office of the Company referred to in Section 1, by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant properly endorsed. Subject to the provisions of the Stockholders Agreement and sub . etc to applicable securities laws, each taker and holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed, in blank, shall be deemed negotiable, and, when so endorsed the holder hereof may be treated -by the Company and all other persons dealing with this Warrant as the absolute owner hereof for any purposes and as the person entitled to exercise the rights represented by this Wan-ant, or to the transfer hereof on the books of the Company, any notice to the contrary notwithstanding; but until each transfer on such books, the Company may treat the registered holder hereof as the owner hereof for all purposes. 8. REORGANIZATIONS, Etc. In case of any capital reorganization, of any reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to -par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any change in the Preferred Stock) or of the sale of all or substantially all the properties and assets of the Company as an entirety to any other corporation, this Warrant shall, after such reorganization, reclassification, consolidation, merger or sale, be exercisable for the kind and number of shares of stock or other securities or property of the Company or of the corporation resulting from such consolidation or surviving such merger or to which such properties and assets shall have been sold or of such other person to which such holder would have been entitled if he had held the Preferred Stock issuable upon the exercise hereof immediately prior to such reorganization, reclassification, consolidation, merger or sale. 9. EXCHANGE OF WAN-ANT. This Warrant is exchangeable upon the surrender hereof by the holders hereof at the office or agency of the Company designated in Section I hereof, for new Warrants of like tenor representing in the aggregate the rights to subscribe for and purchase the number of shares which may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by said holders hereof at the time of such surrender. Series B Convertible Preferred Stock Purchase Warrant -- Page 5 10. LOST. STOLEN. MUTILATED OR DESTROYED WARRANT - If this Wan-ant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may in its discretion impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute a contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone. 11. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by, and construed in accordance with, the internal laws of the State of Connecticut. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. This Warrant is being executed as an instrument under seat. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. 12. NOTICE PRIOR TO PUBLIC OFFERING. The Company shall give each Holder at least twenty (20) days prior written notice of the effectiveness of any registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Series B Convertible Preferred Stock Purchase Warrant -- Page 6 IN WITNESS WHEREOF, this Warrant has been executed this 9th day of April, 1999. ARCTIC, INC. By: /s/ OLOF ENGLUND [Corporate Seal] ---------------------------- Title: ________________________
Attest: _______________________ By: _________________________ Title: ________________________ FORM OF SUBSCRIPTION (To be signed only on exercise of Warrant) TO ARCTIC. INC. The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant for. and to purchase thereunder, _________________ shares of Series B Convertible Preferred Stock of ARCTIC, INC. and herewith makes payment of $________________________ therefor in cash, or elects to surrender the right to purchase ____shares of Series B Convertible Preferred Stock pursuant to Section I (b) of this Warrant, and requests that the certificates for such shares be issued in the name of, and delivered to _______________________________________ whose address is _________________________________________________________________. Dated: _____________________ ________________________________ (Signature must conform to name of holder as specified on the face of the Warrant) ________________________________ ________________________________ (Address)
FORM OF ASSIGNMENT (To be signed only on transfer of Warrant) For value received, the undersigned hereby sells, assigns, and transfers unto _______________________ the right represented by the within Warrant to purchase ____ shares of Series B Convertible Preferred Stock of ARCTIC, INC. to which the within Warrant relates, and appoints ______________as its Attorney to transfer such right on the books of ARCTIC, INC. with full power of substitution in the premises. Dated: ________________________ ________________________________ (Signature must conform to name of holder as specified on the face of the Warrant)
Signed in the presence of ________________________________ EX-10.21 23 ex-10_21.txt EXHIBIT 10.21 Exhibit 10.21 VIEWLOCITY, INC. FIRST AMENDMENT TO SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT This FIRST AMENDMENT TO SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT is made as of May 24, 2000, by and between VIEWLOCITY, INC., a Delaware corporation (the "Company"), and Battery Investment Partners IV, LLC (the "Holder"). RECITALS: WHEREAS, the Company previously issued to Holder that certain Series B Convertible Preferred Stock Purchase Warrant numbered B-2, dated as of March 12, 1999 (the "Warrant"), pursuant to a certain Preferred Stock and Preferred Stock Warrant Purchase Agreement, dated as of February 25, 1999, by and among the Company and the persons named therein; WHEREAS, the Company and Holder desire to amend certain terms of the Warrant as set forth herein; NOW, THEREFORE, the Company and Holder hereby amend the Warrant as follows: 1. The definition of "Expiration Date" shall be amended and replaced in its entirety as follows: The term "Expiration Date" refers to the earlier of March 8, 2004 or upon the closing of an "Initial Public Offering" (as defined in, Section 5O of the Company's Certificate of Designations filed with the Secretary of State of the State of Delaware on February 26, 1999, and any amendments thereto (the "Certificate of Designations")) by the Company. 2. The following shall be inserted at the end of Section 1(b) of the Warrant as follows: The term "Fair Market Value" shall mean (a) if a net issue election is made pursuant to this Section 1(b) with respect to the exercise of this warrant to be effective within 30 days prior to the closing of an Initial Public Offering, the price paid by the public in the Initial Public Offering, and (b) if a net issue election is made pursuant to this Section 1(b) with respect to the exercise of this warrant to be effective more than 30 days prior to the closing of an Initial Public Offering, "Fair Market Value" as defined in Section 9(c) of the Certificate of Designations. 3. The Warrant is hereby amended wherever necessary to reflect the changes described above. Except to the extent set forth hereinabove, all terms of the Warrant shall remain unchanged and in full force and effect, and are hereby restated, ratified, reaffirmed and renewed by the Company. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Company and Holder have caused this Amendment to be executed as of the date first above written. VIEWLOCITY, INC. By: /s/ Stan F. Stoudenmire _________________________________________ Title: Sr. VP and Secretary ________________________________________ [Corporate Seal] Attest: By: _________________________________________ Title: ________________________________________ BATTERY INVESTMENT PARTNERS IV, LLC By: /s/ Oliver D. Curme _________________________________________ Title: Member Manager ________________________________________ EX-10.22 24 ex-10_22.txt EXHIBIT 10.22 EXHIBIT 10.22 VIEWLOCITY, INC. FIRST AMENDMENT TO SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT This FIRST AMENDMENT TO SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT is made as of May 24, 2000, by and between VIEWLOCITY, INC., a Delaware corporation (the "Company"), and Battery Investment Partners IV, LLC (the "Holder"). RECITALS: WHEREAS, the Company previously issued to Holder that certain Series B Convertible Preferred Stock Purchase Warrant numbered B-2, dated as of March 12, 1999 (the "Warrant"), pursuant to a certain Preferred Stock and Preferred Stock Warrant Purchase Agreement, dated as of February 25, 1999, by and among the Company and the persons named therein; WHEREAS, the Company and Holder desire to amend certain terms of the Warrant as set forth herein; NOW, THEREFORE, the Company and Holder hereby amend the Warrant as follows: 1. The definition of "Expiration Date" shall be amended and replaced in its entirety as follows: The term "Expiration Date" refers to the earlier of March 8, 2004 or upon the closing of an "Initial Public Offering" (as defined in, Section 5O of the Company's Certificate of Designations filed with the Secretary of State of the State of Delaware on February 26, 1999, and any amendments thereto (the "Certificate of Designations")) by the Company. 2. The following shall be inserted at the end of Section 1(b) of the Warrant as follows: The term "Fair Market Value" shall mean (a) if a net issue election is made pursuant to this Section 1(b) with respect to the exercise of this warrant to be effective within 30 days prior to the closing of an Initial Public Offering, the price paid by the public in the Initial Public Offering, and (b) if a net issue election is made pursuant to this Section 1(b) with respect to the exercise of this warrant to be effective more than 30 days prior to the closing of an Initial Public Offering, "Fair Market Value" as defined in Section 9(c) of the Certificate of Designations. 3. The Warrant is hereby amended wherever necessary to reflect the changes described above. Except to the extent set forth hereinabove, all terms of the Warrant shall remain unchanged and in full force and effect, and are hereby restated, ratified, reaffirmed and renewed by the Company. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Company and Holder have caused this Amendment to be executed as of the date first above written. VIEWLOCITY, INC. By: /s/ Stan F. Stoudenmire _________________________________________ Title: Sr. VP and Secretary ________________________________________ [Corporate Seal] Attest: By: _________________________________________ Title: ________________________________________ BATTERY INVESTMENT PARTNERS IV, LLC By: /s/ Oliver D. Curme _________________________________________ Title: Member Manager ________________________________________ EX-10.23 25 ex-10_23.txt EXHIBIT 10.23 EXHIBIT 10.23 VIEWLOCITY, INC. FIRST AMENDMENT TO SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT This FIRST AMENDMENT TO SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT is made as of May 24, 2000, by and between VIEWLOCITY, INC., a Delaware corporation (the "Company"), and Battery Ventures IV, L.P. (the "Holder"). RECITALS: WHEREAS, the Company previously issued to Holder that certain Series B Convertible Preferred Stock Purchase Warrant numbered B-3, dated as of April 9, 1999 (the "Warrant"), pursuant to a certain Preferred Stock and Preferred Stock Warrant Purchase Agreement, dated as of February 25, 1999, by and among the Company and the persons named therein; WHEREAS, the Company and Holder desire to amend certain terms of the Warrant as set forth herein; NOW, THEREFORE, the Company and Holder hereby amend the Warrant as follows: 1. The definition of "Expiration Date" shall be amended and replaced in its entirety as follows: The term "Expiration Date" refers to the earlier of March 12, 2004 or upon the closing of an "Initial Public Offering" (as defined in, Section 5O of the Company's Certificate of Designations filed with the Secretary of State of the State of Delaware on February 26, 1999, and any amendments thereto (the "Certificate of Designations")) by the Company. 2. The following shall be inserted at the end of Section 1(b) of the Warrant as follows: The term "Fair Market Value" shall mean (a) if a net issue election is made pursuant to this Section 1(b) with respect to the exercise of this warrant to be effective within 30 days prior to the closing of an Initial Public Offering, the price paid by the public in the Initial Public Offering, and (b) if a net issue election is made pursuant to this Section 1(b) with respect to the exercise of this warrant to be effective more than 30 days prior to the closing of an Initial Public Offering, "Fair Market Value" as defined in Section 9(c) of the Certificate of Designations. 3. The Warrant is hereby amended wherever necessary to reflect the changes described above. Except to the extent set forth hereinabove, all terms of the Warrant shall remain unchanged and in full force and effect, and are hereby restated, ratified, reaffirmed and renewed by the Company. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Company and Holder have caused this Amendment to be executed as of the date first above written. VIEWLOCITY, INC. By: /s/ Stan F. Stoudenmire ______________________________________ Title: Sr. VP and Secretary ______________________________________ [Corporate Seal] Attest: By: ______________________________________ Title: ______________________________________ BATTERY VENTURES IV, L.P. By: BATTERY PARTNERS IV, LLC, ITS GENERAL PARTNER By: /s/ Oliver D. Curme ______________________________________ Title: Member Manager ______________________________________ EX-10.24 26 ex-10_24.txt EXHIBIT 10.24 EXHIBIT 10.24 VIEWLOCITY, INC. FIRST AMENDMENT TO SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT This FIRST AMENDMENT TO SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE WARRANT is made as of May 24, 2000, by and between VIEWLOCITY, INC., a Delaware corporation (the "Company"), and Battery Investment Partners IV, LLC (the "Holder"). RECITALS: WHEREAS, the Company previously issued to Holder that certain Series B Convertible Preferred Stock Purchase Warrant numbered B-4, dated as of April 9, 1999 (the "Warrant"), pursuant to a certain Preferred Stock and Preferred Stock Warrant Purchase Agreement, dated as of February 25, 1999, by and among the Company and the persons named therein; WHEREAS, the Company and Holder desire to amend certain terms of the Warrant as set forth herein; NOW, THEREFORE, the Company and Holder hereby amend the Warrant as follows: 1. The definition of "Expiration Date" shall be amended and replaced in its entirety as follows: The term "Expiration Date" refers to the earlier of March 12, 2004 or upon the closing of an "Initial Public Offering" (as defined in, Section 5O of the Company's Certificate of Designations filed with the Secretary of State of the State of Delaware on February 26, 1999, and any amendments thereto (the "Certificate of Designations")) by the Company. 2. The following shall be inserted at the end of Section 1(b) of the Warrant as follows: The term "Fair Market Value" shall mean (a) if a net issue election is made pursuant to this Section 1(b) with respect to the exercise of this warrant to be effective within 30 days prior to the closing of an Initial Public Offering, the price paid by the public in the Initial Public Offering, and (b) if a net issue election is made pursuant to this Section 1(b) with respect to the exercise of this warrant to be effective more than 30 days prior to the closing of an Initial Public Offering, "Fair Market Value" as defined in Section 9(c) of the Certificate of Designations. 3. The Warrant is hereby amended wherever necessary to reflect the changes described above. Except to the extent set forth hereinabove, all terms of the Warrant shall remain unchanged and in full force and effect, and are hereby restated, ratified, reaffirmed and renewed by the Company. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Company and Holder have caused this Amendment to be executed as of the date first above written. VIEWLOCITY, INC. By: /s/ Stan F. Stoudenmire _____________________________________ Title: Sr. VP and Secretary _____________________________________ [Corporate Seal] Attest: By: _____________________________________ Title: _____________________________________ BATTERY INVESTMENT PARTNERS IV, LLC By: BATTERY PARTNERS IV, LLC, ITS GENERAL PARTNER By: /s/ Oliver D. Curme _____________________________________ Title: Member Manager _____________________________________ EX-10.25 27 ex-10_25.txt EXHIBIT 10.25 EXHIBIT 10.25 May 24, 2000 Viewlocity, Inc. 3475 Piedmont Road Atlanta, GA 30305 Attn: Gregory Cronin Dear Greg: Reference is made to that certain Series B Convertible Preferred Stock Purchase Warrant numbed B-1, dated as of March 12, 1999, by and between Viewlocity, Inc. ("Viewlocity") and Battery Ventures IV, L.P. ("Battery Ventures"), as amended by the First Amendment to Series B Convertible Preferred Stock Purchase Warrant, dated as of May __, 2000, by and between Viewlocity and Battery Ventures (the "Warrant"). Battery Ventures hereby irrevocably covenants and agrees that immediately prior to the closing of an Initial Public Offering by Viewlocity, Battery Ventures will exercise the Warrant in full in accordance with the terms of the Warrant. Battery Ventures hereby exercises its net issue election pursuant to Section 1(b) of the Warrant with the fair market value for purposes of such election being equal to the price to the public in the Initial Public Offering. All capitalized terms used but not otherwise defined in this letter agreement shall have the meanings assigned to them in the Agreement. Sincerely, Battery Ventures IV, L.P. By: Battery Partners IV, LLC, its General Partner By: /s/ Oliver D. Curme _____________________________________ Name: Oliver D. Curme _____________________________________ Title: Member Manager _____________________________________ Accepted and Agreed: Viewlocity, Inc. By: /s/ Stan F. Stoudenmire _________________________________ Title: Sr. VP and Secretary _______________________________ EX-10.26 28 ex-10_26.txt EXHIBIT 10.26 EXHIBIT 10.26 May 24_, 2000 Viewlocity, Inc. 3475 Piedmont Road Atlanta, GA 30305 Attn: Gregory Cronin Dear Greg: Reference is made to that certain Series B Convertible Preferred Stock Purchase Warrant numbed B-2, dated as of March 12, 1999, by and between Viewlocity, Inc. ("Viewlocity") and Battery Investment Partners IV, LLC ("Battery Investment Partners"), as amended by the First Amendment to Series B Convertible Preferred Stock Purchase Warrant, dated as of May __, 2000, by and between Viewlocity and Battery Ventures (the "Warrant"). Battery Investment Partners hereby irrevocably covenants and agrees that immediately prior to the closing of an Initial Public Offering by Viewlocity, Battery Investment Partners will exercise the Warrant in full in accordance with the terms of the Warrant. Battery Investment Partners hereby exercises its net issue election pursuant to Section 1(b) of the Warrant with the fair market value for purposes of such election being equal to the price to the public in the Initial Public Offering. All capitalized terms used but not otherwise defined in this letter agreement shall have the meanings assigned to them in the Agreement. Sincerely, Battery Investment Partners IV, LLC By: /s/ Oliver D. Curme ________________________________ Name: Oliver D. Curme _____________________________ Title: Member Manager _____________________________ Accepted and Agreed: Viewlocity, Inc. By: /s/ Stan F. Stoudenmire __________________________ Title: Sr. VP and Secretary _______________________ EX-10.27 29 ex-10_27.txt EXHIBIT 10.27 EXHIBIT 10.27 May 24, 2000 Viewlocity, Inc. 3475 Piedmont Road Atlanta, GA 30305 Attn: Gregory Cronin Dear Greg: Reference is made to that certain Series B Convertible Preferred Stock Purchase Warrant numbed B-3, dated as of April 9, 1999, by and between Viewlocity, Inc. ("Viewlocity") and Battery Ventures IV, L.P. ("Battery Ventures"), as amended by the First Amendment to Series B Convertible Preferred Stock Purchase Warrant, dated as of May __, 2000, by and between Viewlocity and Battery Ventures (the "Warrant"). Battery Ventures hereby irrevocably covenants and agrees that immediately prior to the closing of an Initial Public Offering by Viewlocity, Battery Ventures will exercise the Warrant in full in accordance with the terms of the Warrant. Battery Ventures hereby exercises its net issue election pursuant to Section 1(b) of the Warrant with the fair market value for purposes of such election being equal to the price to the public in the Initial Public Offering. All capitalized terms used but not otherwise defined in this letter agreement shall have the meanings assigned to them in the Agreement. Sincerely, Battery Ventures IV, L.P. By: Battery Partners IV, LLC, its General Partner By: /s/ Oliver D. Curme _____________________________________ Name: Oliver D. Curme _____________________________________ Title: Member Manager _____________________________________ Accepted and Agreed: Viewlocity, Inc. By: /s/ Stan F. Stoudenmire _______________________________ Title: Sr. VP and Secretary _______________________________ EX-10.28 30 ex-10_28.txt EXHIBIT 10.28 EXHIBIT 10.28 May 24, 2000 Viewlocity, Inc. 3475 Piedmont Road Atlanta, GA 30305 Attn: Gregory Cronin Dear Greg: Reference is made to that certain Series B Convertible Preferred Stock Purchase Warrant numbed B-4, dated as of April 9, 1999, by and between Viewlocity, Inc. ("Viewlocity") and Battery Investment Partners IV, LLC ("Battery Investment Partners"), as amended by the First Amendment to Series B Convertible Preferred Stock Purchase Warrant, dated as of May __, 2000, by and between Viewlocity and Battery Ventures (the "Warrant"). Battery Investment Partners hereby irrevocably covenants and agrees that immediately prior to the closing of an Initial Public Offering by Viewlocity, Battery Investment Partners will exercise the Warrant in full in accordance with the terms of the Warrant. Battery Investment Partners hereby exercises its net issue election pursuant to Section 1(b) of the Warrant with the fair market value for purposes of such election being equal to the price to the public in the Initial Public Offering. All capitalized terms used but not otherwise defined in this letter agreement shall have the meanings assigned to them in the Agreement. Sincerely, Battery Investment Partners IV, LLC By: /s/ Oliver D. Curme _______________________________ Name: Oliver D. Curme ______________________________ Title: Member Manager _____________________________ Accepted and Agreed: Viewlocity, Inc. By: /s/ Stan F. Stoudenmire _________________________ Title: Sr. VP and Secretary ______________________ EX-10.29 31 ex-10_29.txt EXHIBIT 10.29 EXHIBIT 10.29 THIS WARRANT IS A CONTINGENT WARRANT AND IS EXERCISABLE ONLY UNDER THE CONDITIONS SPECIFIED IN SECTION 1 HEREOF THE WARRANT EVIDENCED HEREBY, AND THE SECURITIES ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES HAVE BEEN ACQUIRED NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND SHALL NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED DISPOSITION IS THE SUBJECT OF A CURRENTLY EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SEE SECTION 6. VIEWLOCITY CONTINGENT WARRANT FOR PURCHASE OF COMMON SHARES For value received, Viewlocity, Inc.(the "Company"), a Delaware corporation, hereby certifies that William Street Associates II, LLC, a Massachusetts limited liability company or the permitted assign(s) of such entity (collectively, "Holder") is entitled to purchase from the Company, shares of the capital common stock of the Company, fully-paid and nonassessable, at any time or from time to time, but prior to 5:00 p.m. on October 27, 2004 ("Expiration Date"), which shall be no later than sixty (60) months after the execution of this Warrant. The price per share for each such share purchased pursuant to an exercise of this Warrant ("Exercise Price") shall be calculated as follows: (A) The "Aggregate Purchase Price" of the "Common Shares" hereunder is $393,750.00. (B) The Holder may purchase Common Shares at an exercise price of $1.00 per share, subject to adjustment as hereinafter provided. (Hereinafter: the term "Common Shares" shall refer to all shares of the capital common stock of the Company issued and outstanding at any time during the term of this Warrant, together with any other equity securities that the Company may issue in substitution for such shares other than Warrants; the term "Warrants" shall refer to this Warrant and all warrants issued in exchange or substitution for this Warrant; the term "Warrant Shares" shall refer to the Common Shares purchasable under Warrants; the term "Aggregate Exercise Price" shall refer to the aggregate purchase price payable under Warrants for the Warrant Shares; and the term "Per Warrant Share Price" shall refer to the price payable under this Warrant for each of the Warrant Shares. 1. EXERCISE OF WARRANT. (A) Provided that (i) the Minimum Series D Issuance (as defined in the the Convertible Subordinated Debenture Purchase Agreement dated October ___, 1999 ("Debenture Purchase Agreement") by and among Company, William Street Associates II, LLC and Holder) has not occurred on or prior to December 15, 1999, and (ii) the principal indebtedness of the Convertible Subordinated Debenture ("Debenture") of even date herewith issued by Company to Holder in connection with the Debenture Purchase Agreement has not been converted into shares of the Company's Series D Convertible Preferred Stock, the Holder may exercise this Warrant as follows: (B) CONTINGENT EXERCISE OF WARRANT IN WHOLE. Provided that the conditions set forth in Section 1(A) above have been satisfied, the Holder may exercise this Warrant in full at any time by surrendering it (with the subscription form at the end of this Warrant duly executed and indicating the whole number of Warrant Shares with respect to which the Holder shall then be exercising the Warrant) at the principal office of the Company at the time of exercise currently (400 Perimeter Center Terrace, Atlanta, Georgia, 30346) together with a certified, registered or bank cashier's check drawn upon Boston clearinghouse funds in the amount of the Aggregate Exercise Price payable to the order of the Company (hereinafter, the term "Payment" shall mean payment in this manner). Upon such exercise of this Warrant in full, the Holder shall receive: (i) a certificate or certificates in the name of the Holder for the largest number of whole Warrant Shares to which the Holder shall then be entitled; (ii) cash equal in value to any fractional share to which the Holder shall then be entitled (with the amount of such cash to be calculated in such reasonable manner as the board of directors of the Company shall determine); and (iii) the other securities and properties, if any, receivable pursuant to the provisions of this Warrant. No fractional shares shall be issued to the Holder in respect of exercise of this Warrant. (C) CONTINGENT EXERCISE OF WARRANT IN PART. Provided that the conditions set forth in Section 1(A) above have been satisfied, the Holder may exercise this Warrant in part at any time and from time to time prior to 5:00 p.m. on the Expiration Date, by surrendering it (with the subscription form at the end of this Warrant duly executed and indicating the whole number of Warrant Shares with respect to which the Holder shall then be exercising the Warrant) at the principal office of the Company at the time of exercise, together with Payment of that portion of the Aggregate Exercise Price that shall bear the same ratio to the total Aggregate Exercise Price as the number of Warrant Shares in respect of which this Warrant is then being exercised shall bear to the total number of Warrant Shares subject to this Warrant. If this Warrant shall be exercised in part, it must be exercised for a whole number of Warrant Shares; and, upon such partial exercise, the Holder shall receive: (i) a new Warrant for the number of Warrant Shares in respect of which this Warrant has not been exercised ("Remaining Shares"), which new Warrant shall set forth the Aggregate Exercise Price applicable to the Remaining Shares; and (ii) the applicable proportion of the other securities and properties, if any, receivable pursuant to the provisions of this Warrant. -2- 2. CONVERSION RIGHT. (A) In lieu of the payment of the Exercise Price, the Holder shall have the right (but not the obligation), to require the Company to convert this Warrant, in whole or in part, into shares of Common Shares (the "Conversion Right") as provided for in this Section 2. Upon exercise of the Conversion Right, the Company shall deliver to the Holder (without payment by the Holder of any of the Exercise Price; PROVIDED, HOWEVER, that the Holder shall be required to pay the par value for any shares of Common Shares so delivered) that number of shares of Common Shares equal to the quotient obtained by dividing (x) the value of the Warrant at the time the Conversion Right is exercised, by (y) the Fair Market Value of one share of Common Shares immediately prior to the exercise of the Conversion Right. For purposes of this Section, the "value" of the Warrant shall be determined by subtracting the aggregate Exercise Price in effect immediately prior to the exercise of the Conversion Right from the aggregate Fair Market Value of the Warrant immediately prior to the exercise of the Conversion Right. (B) The Conversion Right may be exercised by the Holder on any Business Day prior to the Expiration Date by delivering the Warrant, with a duly executed Exercise Form with the conversion section completed to the Company, exercising the Conversion Right and specifying the total number of shares of Common Shares the Holder will be issued pursuant to such conversion. (C) Fair Market Value of a share of Common Shares as of a particular date (the "Determination Date") shall mean: (i) If the Common Shares are listed on a national securities exchange, then the Fair Market Value shall be the average of the last ten "daily sales prices" of the Common Shares on the national securities exchange on which the Common Shares is listed or admitted for trading on the last ten Business Days prior to the Determination Date, or if not listed or traded on any such exchange, then the Fair Market Value shall be the average of the last ten "daily sales prices" of the Common Shares on the National Market or Small Cap Market of the National Association of Securities Dealers Automated Quotations System ("NASDAQ") on the last ten business days prior to the Determination Date. The "daily sales price" shall be the closing price of the Common Shares at the end of each day; or (ii) If the Common Shares are not so listed or admitted to unlisted trading privileges or if no such sale is made on at least nine of such days, then the Fair Market Value shall be the higher of (x) the Book Value per share, and (y) the fair value as reasonably determined in good faith by the Company's Board of Directors or a duly appointed committee of the Board (which determination shall be reasonably described in the written notice delivered to the Holder together with the certificates for the Common Shares). -3- 3. RESERVATION OF WARRANT SHARES. The Company agrees that the Company shall, at all times during the term of this Warrant, have the Warrant Shares and other securities and properties, if any, as from time to time shall be receivable upon the exercise of this Warrant authorized, in reserve, and available solely for issuance or delivery upon exercise of this Warrant, free and clear of all restrictions upon sale or transfer, except (a) such as may exist under the Company's Articles of Organization and By-Laws as constituted on the date of this Warrant; or (b) such as may exist or arise under agreements between the Holder, on the one hand, and the Company or others, on the other hand, with respect to the securities of the Company; and (c) such as may be imposed by applicable securities laws of any state, nation or political subdivision. 4. PROTECTION AGAINST DILUTION. The rights of the Holder shall be subject to the following terms and conditions: (A) ADJUSTMENTS TO EXERCISE PRICE FOR DILUTING ISSUES. (i) SPECIAL DEFINITIONS. For purposes of this Section 4, the following definitions shall apply: (1) "OPTION" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Shares or Convertible Securities. (2) "ORIGINAL ISSUE DATE" shall mean the date of this original Warrant. (3) "STOCK PURCHASE WARRANT" shall mean this Warrant issued by the Company. (4) "CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness, shares (other than Common Shares) or other securities directly or indirectly convertible into or exchangeable for Common Shares. (5) "ADDITIONAL SHARES OF COMMON SHARES" shall mean all shares of Common Shares issued (or, pursuant to Subsection 4(A)(iii), deemed to be issued) by the Company after the Original Issue Date. (ii) NO ADJUSTMENT TO EXERCISE PRICE. Except as set forth in Subsection 4(B), no adjustment in the Exercise Price for which this Warrant is exercisable shall be made unless the consideration per share for an Additional Share of Common Shares issued or deemed to be issued by the Company is less than the Exercise Price in effect on the date of, and immediately prior to, the issue of such Additional Share of Common Shares. The following transactions will be disregarded for purposes of this Section 4: (1) the issuance of any shares of Common Shares on -4- exercise of this Warrant, (2) the issusance of up to 10,713,000 shares of Common shares under the Company's current stock option plan (3) the conversion of any Convertible Securities issued and outstanding on the date hereof. (iii) ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON SHARES. (1) OPTIONS AND CONVERTIBLE SECURITIES. In the event the Company at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Shares issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Shares issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that Additional Shares of Common Shares shall not be deemed to have been issued unless the consideration per share (determined pursuant to Subsection 4(A)(v) hereof) of such Additional Shares of Common Shares would be less than the Exercise Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Shares are deemed to be issued: (a) no further adjustment in the Exercise Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Shares upon the exercise of such Options or conversion or exchange of such Convertible Securities if any adjustment shall have been previously made upon the issuance of such securities as herein provided; (b) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Company, or increase or decrease in the number of shares of Common Shares issuable, upon the exercise, conversion or exchange thereof, the Exercise Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; (c) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Exercise Price computed upon the original issue thereof (or upon the -5- occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if: (i) in the case of Convertible Securities or Options for Common Shares the only Additional Shares of Common Shares issued were the shares of Common Shares, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Company upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Company upon such conversion or exchange; and (ii) in the case of Options for Convertible Securities only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Company for the Additional Shares of Common Shares deemed to have been then issued was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Company (determined pursuant to Subsection 4(A)(v)) upon the issue of the Convertible Securities with respect to which such Options were actually exercised; (d) no readjustment pursuant to clause (b) or (c) above shall have the effect of increasing the Exercise Price to an amount which exceeds the lower of (i) the Exercise Price on the original adjustment date, or (ii) the Exercise Price that would have resulted from any issuance of Additional Shares of Common Shares between the original adjustment date and such readjustment date; (e) in the case of any Options which expire by their terms not more than 30 days after the date of issue thereof, no adjustment of the Exercise Price shall be made until the expiration or exercise of all such Options, whereupon such adjustment shall be made in the same manner provided in clause (c) above; and (f) if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the Exercise Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the Exercise Price shall be adjusted pursuant to this Subsection 4(A)(iii) as of the actual date of their issuance. (iv) ADJUSTMENT TO EXERCISE PRICE UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON SHARES. -6- (1) ADJUSTMENT FORMULA. The Exercise Price shall be subject to adjustment from time to time as set forth below. Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall (until another such adjustment) thereafter be entitled to purchase at the Exercise Price the number of shares obtained by dividing (a) the product of the number of Shares multiplied by the initial Exercise Price by (b) the adjusted Exercise Price. (2) ADJUSTMENT OF THE EXERCISE PRICE. In the event that at any time or from time to time after the Original Issue Date the Company shall issue Additional Shares of Common Shares (including, without limitation, Additional Shares of Common Shares deemed to be issued pursuant to Subsection 4(A)(iii), but excluding shares issued upon a stock subdivision or combination as provided in Subsection 4(B)), without consideration or for a consideration per share less than the applicable Exercise Price in effect on the date of and immediately prior to such issue, then and in such event, such Exercise Price shall be reduced concurrently with such issue, to a price (calculated to the nearest cent) determined in accordance with the following formula: P1 Q1 + P2 Q2 Exercise Price = ---------------- Q1 + Q2 where: Exercise Price = New Exercise Price P1 = Exercise Price in effect immediately prior to new issue. Q1 = Number of shares of Common Shares outstanding immediately prior to such issue (assuming conversion of all then outstanding Convertible Securities of the Company). P2 = Average price per share received by the Company upon such issue. Q2 = Number of shares of Common Shares issued, or deemed to have been issued, in the subject transaction. PROVIDED THAT the applicable Exercise Price shall not be so reduced at any time if the amount of such reduction would be an amount less than $.01, but any such amount shall be carried forward and reduction with respect thereto made at the time of and together with any subsequent reduction which, together with such amount and any other amount or amounts so carried forward, shall aggregate $.01 or more. -7- (v) DETERMINATION OF CONSIDERATION. For purposes of this Subsection 4(A), the consideration received by the Company for the issue of any Additional Shares of Common Shares shall be computed as follows: (1) CASH AND PROPERTY: Such consideration shall: (a) insofar as it consists of cash, be computed at the aggregate amounts of cash received by the Company; (b) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board of Directors; and (c) in the event Additional Shares of Common Shares are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors. (2) OPTIONS AND CONVERTIBLE SECURITIES. The consideration per share received by the Company for Additional Shares of Common Shares deemed to have been issued pursuant to Subsection 4(A)(iii)(1), relating to Options and Convertible Securities, shall be determined by dividing (x) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (y) the maximum number of shares of Common Shares (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (B) ADJUSTMENT TO EXERCISE PRICE FOR SUBDIVISION OR COMBINATION. If the Company at any time or from time to time after the issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) the outstanding shares of the class of securities issuable upon exercise hereof into a greater number of shares, the Exercise Price in effect immediately before that subdivision shall be proportionately decreased. If the Company at any time or from time to time after the issuance of this Warrant combines (by reverse stock split or otherwise) the outstanding shares of the class of securities issuable upon exercise hereof, the Exercise Price in effect immediately before the combination shall be proportionately increased. Any adjustment -8- under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective. (C) ADJUSTMENT IN THE NUMBER OF SHARES FOR DILUTING ISSUES, SUBDIVISIONS OR COMBINATIONS. Whenever the Exercise Price is adjusted pursuant to Subsection 4(A)(iv) or 4(B), the number of shares of the class of securities issuable upon exercise hereof also shall be adjusted pursuant to the formula set forth in Subsection 4(A)(iv)(1). (D) ADJUSTMENTS FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event that at any time or from time to time after the Original Issue Date the Company shall make or issue, or fix a record date for the determination of holders of the class of securities issuable upon exercise hereof who are entitled to receive a dividend or other distribution payable in securities of the Company, then and in each such event, unless such dividend or distribution results in an adjustment of the Exercise Price pursuant to Subsections 4(A) or 4(B), provision shall be made so that the Holder of this Warrant shall receive upon exercise hereof in addition to the securities receivable hereupon, the amount of securities of the Company that he would have received had this Warrant been exercised on the date of such event and had he thereafter, during the period from the date of such event to and including the exercise date, retained such securities receivable by him as aforesaid during such period, giving application during such period to all adjustments called for herein. (E) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. In the event that at any time or from time to time after the Original Issue Date, the class of securities issuable upon the exercise of this Warrant shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a merger, consolidation, or sale of assets provided for below), then and in each such event the Holder of this warrant shall have the right thereafter to exercise this Warrant for the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of the class of securities into which such warrant might have been exercisable for immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein. (F) ADJUSTMENT FOR MERGER CONSOLIDATION OR SALE OF ASSETS. In the event that at any time or from time to time after the Original Issue Date, the Company shall merge or consolidate with or into another entity or sell all or substantially all of its assets, this Warrant shall thereafter be exercisable for the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of the class of securities of the Company deliverable upon exercise of this Warrant would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 4 with respect to the -9- rights and interest thereafter of the Holder of this Warrant, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Exercise Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of this Warrant. (G) NO IMPAIRMENT. The Company shall not, by amendment of its Articles of Orgnization, as in effect on the date hereof, or By-Laws or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but shall at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Warrant against impairment. (H) NOTICE OF ADJUSTMENT OF NUMBER OF SHARES. Upon any adjustment, readjustment or other change relating to the number of shares purchasable upon exercise of this Warrant or to the Exercise Price, then, and in each such case, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of such Holder as shown on the books of the Company, which notice shall state the Exercise Price resulting from such adjustment and the increase or decrease in the number of shares (or other denominations of securities) purchasable at the Exercise Price upon the exercise of this Warrant setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. (I) NOTICE. In case at any time: (1) the Company shall pay any dividend or make any distribution (other than regular cash dividends from earnings or earned surplus paid at an established rate) to the holders of the class of securities issuable upon exercise of this Warrant; (2) the Company shall offer for subscription pro rata to the holders of the class of securities issuable upon exercise of this Warrant any additional shares of stock of any class or other rights; (3) there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with or sale of all or substantially all of its assets to another corporation; or (4) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall give written notice, by first class mail, postage prepaid, addressed to the Holder at the address of such Holder as shown on the books of the Company of the date on which (a) the books of the Company shall close or a record date shall be fixed for determining the shareholders entitled to such dividend, distribution or subscription rights, or (b) such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up shall take place, as the case may be. Such notice shall also provide reasonable details of the proposed transaction and specify the date as of which the holders of record of the class of securities issuable upon exercise of this Warrant shall -10- participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their securities for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. Such written notice shall be given at least 10 days prior to the action in question and not less than 10 days prior to the record date or the date on which the Company's transfer books are closed in respect thereto. (J) VOTING RIGHTS. This Warrant shall not entitle the Holder to any voting rights or any other rights as a stockholder of the Company but upon presentation of this Warrant with the subscription form annexed duly executed and the tender of Payment of the Exercise Price at the office of the Company pursuant to the provisions of this Warrant the Holder shall forthwith be deemed a stockholder of the Company in respect of the securities so subscribed and paid for. (K) NO CHANGE NECESSARY. The form of this Warrant need not be changed because of any adjustment in the Exercise Price or in the number of shares issuable upon its exercise. A Warrant issued after any adjustment on any partial exercise or upon replacement may continue to express the same Exercise Price and the same number of shares (appropriately reduced in the case of partial exercise) as are stated on this Warrant as initially issued, and that Exercise Price and that number of shares shall be considered to have been so changed as of the close of business on the date of adjustment. 5. FULLY-PAID SHARES; TAXES. The Company covenants that the Common Shares represented by each and every certificate for Warrant Shares delivered upon exercise of this Warrant shall, at the time of such delivery, be duly authorized, validly-issued and outstanding, and fully-paid and nonassessable, and that the Company shall take any and all such actions as may be necessary to ensure that the par value or stated value, if any, of each Warrant Share is at all times equal to or less than the then Per Share Warrant Price; and that it will pay when due and payable any and all stamp, original issue or similar taxes that may be payable in respect of issuance of any Warrant Shares or certificates for Warrant Shares. 6. SECURITIES RESTRICTIONS UPON TRANSFER. Each holder of this Warrant acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act of 1933, as now in force or hereafter amended, or any successor legislation (the "ACT"), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Shares issued upon its exercise in the absence of (a) an effective registration statement under the Act as to this Warrant or such Warrant Shares and registration or qualification of this Warrant or such Warrant Shares under any applicable Blue Sky or state securities law then in effect, or (b) an opinion of counsel, satisfactory to the Company, that such registration and qualification are not required. -11- Without limiting the generality of the foregoing, unless the offering and sale of the Warrant Shares to be issued upon the particular exercise of the Warrant shall have been effectively registered under the Act, the Company shall be under no obligation to issue the shares covered by such exercise unless and until the Holder shall have executed an investment letter in form and substance satisfactory to the Company, including a warranty at the time of such exercise that it is acquiring such shares for its own account, for investment and not with a view to, or for sale in connection with, the distribution of any such shares, in which event the Holder shall be bound by the provisions of the following legend or a legend in substantially similar form which shall be endorsed upon the certificate(s) evidencing the exercised Warrant pursuant to such exercise: The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or any state securities laws, have been acquired for investment, and may not be sold, pledged, hypothecated or otherwise transferred unless a registration statement under the Act and applicable state law is in effect with regard thereto or unless an exemption from such registration is available. In addition, without limiting the generality of the foregoing, the Company may delay issuance of the Warrant Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or "blue sky" laws). 7. STOCKHOLDER AGREEMENT. Each Holder of this Warrant agrees that upon the exercise in whole or in part of this Warrant, that Holder shall execute and become a party to a stockholder agreement. Further, Holder agrees that the Company shall be under no obligation to issue the shares covered by such exercise unless and until the Holder shall have executed a stockholder agreement in form and substance satisfactory to the Company, containing provisions restricting the transfer of the shares received by exercising this warrant, including placing a transfer restriction legend on the shares evidencing the exercise of this Warrant. 8. NO DISTRIBUTION. The Holder of this Warrant, by acceptance hereof, represents and warrants that this Warrant has been acquired without a view to, or for sale in connection with, a distribution thereof and not with a view to its resale, and that this Warrant has been acquired for the Holder's own account and not with a view to its division among others, and that no other person has any direct or indirect beneficial interest in this Warrant. Notwithstanding the foregoing, the Company agrees that the Holder shall have the right to grant participation interests in the Warrant. 9. REGISTRATION RIGHTS. The Holder shall be entitled, with respect to (i) its Warrant Shares and other securities issued or issuable upon exercise of this Warrant and (ii) any securities issued or issuable with respect to any Common Shares or other -12- securities referred to in subdivision (i) by way of a stock dividend or stock split or in connection with a combination or other reorganization or otherwise, the piggy back registration rights as set forth in that certain Registration Rights Agreement dated March 12, 1999 (the "Registration Rights Agreement"), by and among Company, the Investors (as defined therein) and the __________ (as defined therein). Holder shall not be entitled to other registration rights included in the Registration Rights Agreement. Except as may be otherwise provided in the Registration Rights Agreement governing such rights, the right to have the Company register such securities pursuant to such agreement shall be automatically assigned to transferees or assignees of this Warrant or such securities, provided that immediately following such transfer or assignment, the further disposition of such securities by the transferee or assignee would be subject to restrictions under the Act. 10. BOOKS OF THE COMPANY. The Company may treat the Holder of this Warrant as appearing on the Company's books at any time as the Holder for all purposes. Upon written request, the Company shall permit any Holder or the duly authorized attorney of such Holder, during ordinary business hours, to inspect and copy or make extracts from the books showing the Holders of Warrants. 11. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. If this Warrant shall be lost, stolen, destroyed, or mutilated, the Company shall execute and deliver to the Holder a replacement warrant of like date, tenor, and denomination upon receipt by the Company of (a) evidence satisfactory to the Company of the occurrence of such event, (b) reimbursement of the Company's reasonably incidental expenses, and (c) (i) in the event of mutilation, upon surrender and cancellation of this Warrant, or (ii) in the event of loss, theft, or destruction of this Warrant, of indemnity reasonably satisfactory to the Company. 12. WARRANT HOLDER NOT SHAREHOLDER. Except as may otherwise be expressly provided in this Warrant, this Warrant does not, prior to its exercise, confer upon the Holder any right to vote, or to consent, or to receive notice, or otherwise to act, as a shareholder of the Company in respect of any matters whatsoever, or confer or impose upon the Holder any other rights or liabilities of a shareholder of the Company. 13. NOTICES AND OTHER COMMUNICATIONS. Any notice or other communication under this Warrant shall be effective and shall be deemed to have been given if, and only if, the same shall have been given in writing and mailed by first-class mail, postage prepaid, addressed to: (A) the Company at the address set forth in Section 1(A) above, or such other address as the Company may designate in writing to the Holder, or (B) the Holder at 20 William Street, Wellesley, MA 02481, or such other address as the Holder may designate in writing to the Company. -13- 14. HEADINGS. The headings contained in this Warrant have been inserted as a matter of convenience, do not form part, and shall not affect construction of, this Warrant. 15. APPLICABLE LAW. This Warrant shall be governed by and construed in accordance with the laws of The State of Georgia applicable to contracts wholly made, accepted and performed within that jurisdiction, without application of principles of conflict of laws. THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK. -14- ____________________________ has caused this Warrant to be executed by its President and attested by its Secretary or Assistant Secretary this 27th day of October, 1999. ATTEST: Viewlocity, Inc. /s/ STAN F. STOUDENMIRE By: /s/ GREGORY CRONIN - -------------------------------- --------------------------------- Secretary or Assistant Secretary President [Corporate Seal] -15- SUBSCRIPTION Date: ____________________ To: Viewlocity, Inc. 400 Perimeter Center Terrace Suite 320 Atlanta, GA 30346 The undersigned, pursuant to the provisions set forth in the attached Warrant hereby irrevocably elects to purchase _____ shares of the Common Shares (the "COMMON SHARES") covered by such Warrant and herewith makes payment of $_________, representing the full purchase price for such shares at the price per share provided for in such Warrant. The undersigned is aware that the Common Shares have not been registered under the Securities Act of 1933, as amended (the "1933 ACT") or any state securities laws. The undersigned understands that the reliance by the Company on exemptions under the 1933 Act is predicated in part upon the truth and accuracy of the statements of the undersigned in this Subscription. The undersigned represents and warrants that (1) it has been furnished with all information which it deems necessary to evaluate the merits and risks of the purchase of the Common Shares; (2) it has had the opportunity to ask questions concerning the Common Shares and the Company and all questions posed have been answered to its satisfaction; (3) it has been given the opportunity to obtain any additional information it deems necessary to verify the accuracy of any information obtained concerning the Common Shares and the Company; (4) it is an "Accredited Investor" as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act, and (5) it has such knowledge and experience in financial and business matters that it is able to evaluate the merits and risks of purchasing the Common Shares and to make an informed investment decision relating thereto. The undersigned hereby represents and warrants that it is purchasing the Common Shares for its own account and not with a view to the sale or distribution of all or any part of the Common Shares. The undersigned understands that because the Common Shares have not been registered under the 1933 Act, it must continue to bear the economic risk of the investment for an indefinite time and the Common Shares cannot be sold unless the Common Shares are subsequently registered under applicable federal and state securities laws or an exemption from such registration is available. -16- The undersigned agrees that it will in no event sell or distribute or otherwise dispose of all or any part of the Common Shares unless (1) there is an effective registration statement under the 1933 Act and applicable state securities laws covering any such transaction involving the Common Shares or (2) the Company receives an opinion of legal counsel to the undersigned (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration. The undersigned consents to the placing of a legend on its certificate for the Common Shares stating that the Common Shares have not been registered and setting forth the restriction on transfer contemplated hereby and to the placing of a stop transfer order on the books of the Company and with any transfer agents against the Common Shares until the Common Shares may be legally resold or distributed without restriction. The undersigned has considered the Federal and state income tax implications of the exercise of the Warrant and the purchase and subsequent sale of the Common Shares. -------------------------------------- Signature Print name: -------------------------- Date: -------------------------------- -17- EX-10.30 32 ex-10_30.txt EXHIBIT 10.30 EXHIBIT 10.30 THE WARRANT EVIDENCED HEREBY, AND THE SECURITIES ISSUABLE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES HAVE BEEN ACQUIRED NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND SHALL NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED DISPOSITION IS THE SUBJECT OF A CURRENTLY EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SEE SECTION 6. VIEWLOCITY For value received, Viewlocity, Inc.(the "Company"), a Delaware corporation, hereby certifies that CommVest, LLC or the permitted assign(s) of such entity (collectively, "Holder") is entitled to purchase from the Company, shares of the capital common stock of the Company, fully-paid and nonassessable, at any time or from time to time, but prior to 5:00 p.m. on November 12, 2004 ("Expiration Date"), which shall be no later than sixty (60) months after the execution of this Warrant. The price per share for each such share purchased pursuant to an exercise of this Warrant ("Exercise Price") shall be calculated as follows: (A) The "Aggregate Purchase Price" of the "Common Shares" hereunder is $150,000. (B) The Holder may purchase Common Shares at an exercise price of $1.00 per share, subject to adjustment as hereinafter provided. (Hereinafter: the term "Common Shares" shall refer to all shares of the capital common stock of the Company issued and outstanding at any time during the term of this Warrant, together with any other equity securities that the Company may issue in substitution for such shares other than Warrants; the term "Warrants" shall refer to this Warrant and all warrants issued in exchange or substitution for this Warrant; the term "Warrant Shares" shall refer to the Common Shares purchasable under Warrants; the term "Aggregate Exercise Price" shall refer to the aggregate purchase price payable under Warrants for the Warrant Shares; and the term "Per Warrant Share Price" shall refer to the price payable under this Warrant for each of the Warrant Shares. 1. EXERCISE OF WARRANT. (A) EXERCISE OF WARRANT IN WHOLE. The Holder may exercise this Warrant in full at any time by surrendering it (with the subscription form at the end of this Warrant duly executed and indicating the whole number of Warrant Shares with respect to which the Holder shall then be exercising the Warrant) at the principal office of the Company at the time of exercise currently (400 Perimeter Center Terrace, Atlanta, Georgia, 30346) together with a certified, registered or bank cashier's check drawn upon Boston clearinghouse funds in the amount of the Aggregate Exercise Price payable to the order of the Company (hereinafter, the term "Payment" shall mean payment in this manner). Upon such exercise of this Warrant in full, the Holder shall receive: (i) a certificate or certificates in the name of the Holder for the largest number of whole Warrant Shares to which the Holder shall then be entitled; (ii) cash equal in value to any fractional share to which the Holder shall then be entitled (with the amount of such cash to be calculated in such reasonable manner as the board of directors of the Company shall determine); and (iii) the other securities and properties, if any, receivable pursuant to the provisions of this Warrant. No fractional shares shall be issued to the Holder in respect of exercise of this Warrant. (B) EXERCISE OF WARRANT IN PART. The Holder may exercise this Warrant in part at any time and from time to time prior to 5:00 p.m. on the Expiration Date, by surrendering it (with the subscription form at the end of this Warrant duly executed and indicating the whole number of Warrant Shares with respect to which the Holder shall then be exercising the Warrant) at the principal office of the Company at the time of exercise, together with Payment of that portion of the Aggregate Exercise Price that shall bear the same ratio to the total Aggregate Exercise Price as the number of Warrant Shares in respect of which this Warrant is then being exercised shall bear to the total number of Warrant Shares subject to this Warrant. If this Warrant shall be exercised in part, it must be exercised for a whole number of Warrant Shares; and, upon such partial exercise, the Holder shall receive: (i) a new Warrant for the number of Warrant Shares in respect of which this Warrant has not been exercised ("Remaining Shares"), which new Warrant shall set forth the Aggregate Exercise Price applicable to the Remaining Shares; and (ii) the applicable proportion of the other securities and properties, if any, receivable pursuant to the provisions of this Warrant. 2. CONVERSION RIGHT. (A) In lieu of the payment of the Exercise Price, the Holder shall have the right (but not the obligation), to require the Company to convert this Warrant, in whole or in part, into shares of Common Shares (the "Conversion Right") as provided for in this Section 2. Upon exercise of the Conversion Right, the Company shall deliver to the Holder (without payment by the Holder of any of the Exercise Price; PROVIDED, HOWEVER, that the Holder shall be required to pay the par value for any shares of Common Shares so delivered) that number of shares of Common Shares equal to the quotient obtained by dividing (x) the value of the Warrant at the time the Conversion Right is exercised, by (y) the Fair Market Value of one share of Common Shares immediately prior to the exercise of the Conversion Right. For purposes of this Section, the "value" of the Warrant shall be determined by subtracting the aggregate Exercise Price in effect immediately prior to the exercise of the Conversion Right from the aggregate Fair Market Value of the Warrant immediately prior to the exercise of the Conversion Right. -2- (B) The Conversion Right may be exercised by the Holder on any Business Day prior to the Expiration Date by delivering the Warrant, with a duly executed Exercise Form with the conversion section completed to the Company, exercising the Conversion Right and specifying the total number of shares of Common Shares the Holder will be issued pursuant to such conversion. (C) Fair Market Value of a share of Common Shares as of a particular date (the "Determination Date") shall mean: (i) If the Common Shares are listed on a national securities exchange, then the Fair Market Value shall be the average of the last ten "daily sales prices" of the Common Shares on the national securities exchange on which the Common Shares is listed or admitted for trading on the last ten Business Days prior to the Determination Date, or if not listed or traded on any such exchange, then the Fair Market Value shall be the average of the last ten "daily sales prices" of the Common Shares on the National Market or Small Cap Market of the National Association of Securities Dealers Automated Quotations System ("NASDAQ") on the last ten business days prior to the Determination Date. The "daily sales price" shall be the closing price of the Common Shares at the end of each day; or (ii) If the Common Shares are not so listed or admitted to unlisted trading privileges or if no such sale is made on at least nine of such days, then the Fair Market Value shall be the higher of (x) the Book Value per share, and (y) the fair value as reasonably determined in good faith by the Company's Board of Directors or a duly appointed committee of the Board (which determination shall be reasonably described in the written notice delivered to the Holder together with the certificates for the Common Shares). 3. RESERVATION OF WARRANT SHARES. The Company agrees that the Company shall, at all times during the term of this Warrant, have the Warrant Shares and other securities and properties, if any, as from time to time shall be receivable upon the exercise of this Warrant authorized, in reserve, and available solely for issuance or delivery upon exercise of this Warrant, free and clear of all restrictions upon sale or transfer, except (a) such as may exist under the Company's Articles of Organization and By-Laws as constituted on the date of this Warrant; or (b) such as may exist or arise under agreements between the Holder, on the one hand, and the Company or others, on the other hand, with respect to the securities of the Company; and (c) such as may be imposed by applicable securities laws of any state, nation or political subdivision. 4. PROTECTION AGAINST DILUTION. The rights of the Holder shall be subject to the following terms and conditions: -3- (A) ADJUSTMENTS TO EXERCISE PRICE FOR DILUTING ISSUES. (i) SPECIAL DEFINITIONS. For purposes of this Section 4, the following definitions shall apply: (1) "OPTION" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Shares or Convertible Securities. (2) "ORIGINAL ISSUE DATE" shall mean the date of this original Warrant. (3) "STOCK PURCHASE WARRANT" shall mean this Warrant issued by the Company. (4) "CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness, shares (other than Common Shares) or other securities directly or indirectly convertible into or exchangeable for Common Shares. (5) "ADDITIONAL SHARES OF COMMON SHARES" shall mean all shares of Common Shares issued (or, pursuant to Subsection 4(A)(iii), deemed to be issued) by the Company after the Original Issue Date. (ii) NO ADJUSTMENT TO EXERCISE PRICE. Except as set forth in Subsection 4(B), no adjustment in the Exercise Price for which this Warrant is exercisable shall be made unless the consideration per share for an Additional Share of Common Shares issued or deemed to be issued by the Company is less than the Exercise Price in effect on the date of, and immediately prior to, the issue of such Additional Share of Common Shares. The following transactions will be disregarded for purposes of this Section 4: (1) the issuance of any shares of Common Shares on exercise of this Warrant, (2) the issusance of up to $10,713,000 shares of Common shares under the Company's current stock option plan (3) the conversion of any Convertible Securities issued and outstanding on the date hereof. (iii) ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON SHARES. (1) OPTIONS AND CONVERTIBLE SECURITIES. In the event the Company at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Shares issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common -4- Shares issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that Additional Shares of Common Shares shall not be deemed to have been issued unless the consideration per share (determined pursuant to Subsection 4(A)(v) hereof) of such Additional Shares of Common Shares would be less than the Exercise Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Shares are deemed to be issued: (a) no further adjustment in the Exercise Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Shares upon the exercise of such Options or conversion or exchange of such Convertible Securities if any adjustment shall have been previously made upon the issuance of such securities as herein provided; (b) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Company, or increase or decrease in the number of shares of Common Shares issuable, upon the exercise, conversion or exchange thereof, the Exercise Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; (c) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Exercise Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if: (i) in the case of Convertible Securities or Options for Common Shares the only Additional Shares of Common Shares issued were the shares of Common Shares, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Company upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Company upon such conversion or exchange; and (ii) in the case of Options for Convertible Securities only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Company for the Additional Shares of Common Shares deemed to have been then -5- issued was the consideration actually received by the Company for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Company (determined pursuant to Subsection 4(A)(v)) upon the issue of the Convertible Securities with respect to which such Options were actually exercised; (d) no readjustment pursuant to clause (b) or (c) above shall have the effect of increasing the Exercise Price to an amount which exceeds the lower of (i) the Exercise Price on the original adjustment date, or (ii) the Exercise Price that would have resulted from any issuance of Additional Shares of Common Shares between the original adjustment date and such readjustment date; (e) in the case of any Options which expire by their terms not more than 30 days after the date of issue thereof, no adjustment of the Exercise Price shall be made until the expiration or exercise of all such Options, whereupon such adjustment shall be made in the same manner provided in clause (c) above; and (f) if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the Exercise Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the Exercise Price shall be adjusted pursuant to this Subsection 4(A)(iii) as of the actual date of their issuance. (iv) ADJUSTMENT TO EXERCISE PRICE UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON SHARES. (1) ADJUSTMENT FORMULA. The Exercise Price shall be subject to adjustment from time to time as set forth below. Upon each adjustment of the Exercise Price pursuant to this Section, the Holder shall (until another such adjustment) thereafter be entitled to purchase at the Exercise Price the number of shares obtained by dividing (a) the product of the number of Shares multiplied by the initial Exercise Price by (b) the adjusted Exercise Price. (2) ADJUSTMENT OF THE EXERCISE PRICE. In the event that at any time or from time to time after the Original Issue Date the Company shall issue Additional Shares of Common Shares (including, without limitation, Additional Shares of Common Shares deemed to be issued pursuant to Subsection 4(A)(iii), but excluding shares issued upon a stock subdivision or combination as provided in Subsection 4(B)), without consideration or for a consideration per share less than the applicable Exercise Price in effect on the date of and immediately prior to such issue, then and in such event, such Exercise Price shall be reduced concurrently with such issue, to a price (calculated to the nearest cent) determined in accordance with the following formula: P1 Q1 + P2 Q2 Exercise Price = ------------- Q1 + Q2 -6- where: Exercise Price = New Exercise Price P1 = Exercise Price in effect immediately prior to new issue. Q1 = Number of shares of Common Shares outstanding immediately prior to such issue (assuming conversion of all then outstanding Convertible Securities of the Company). P2 = Average price per share received by the Company upon such issue. Q2 = Number of shares of Common Shares issued, or deemed to have been issued, in the subject transaction. PROVIDED THAT the applicable Exercise Price shall not be so reduced at any time if the amount of such reduction would be an amount less than $.01, but any such amount shall be carried forward and reduction with respect thereto made at the time of and together with any subsequent reduction which, together with such amount and any other amount or amounts so carried forward, shall aggregate $.01 or more. (v) DETERMINATION OF CONSIDERATION. For purposes of this Subsection 4(A), the consideration received by the Company for the issue of any Additional Shares of Common Shares shall be computed as follows: (1) CASH AND PROPERTY: Such consideration shall: (a) insofar as it consists of cash, be computed at the aggregate amounts of cash received by the Company; (b) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board of Directors; and (c) in the event Additional Shares of Common Shares are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors. -7- (2) OPTIONS AND CONVERTIBLE SECURITIES. The consideration per share received by the Company for Additional Shares of Common Shares deemed to have been issued pursuant to Subsection 4(A)(iii)(1), relating to Options and Convertible Securities, shall be determined by dividing (x) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (y) the maximum number of shares of Common Shares (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (B) ADJUSTMENT TO EXERCISE PRICE FOR SUBDIVISION OR COMBINATION. If the Company at any time or from time to time after the issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) the outstanding shares of the class of securities issuable upon exercise hereof into a greater number of shares, the Exercise Price in effect immediately before that subdivision shall be proportionately decreased. If the Company at any time or from time to time after the issuance of this Warrant combines (by reverse stock split or otherwise) the outstanding shares of the class of securities issuable upon exercise hereof, the Exercise Price in effect immediately before the combination shall be proportionately increased. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective. (C) ADJUSTMENT IN THE NUMBER OF SHARES FOR DILUTING ISSUES, SUBDIVISIONS OR COMBINATIONS. Whenever the Exercise Price is adjusted pursuant to Subsection 4(A)(iv) or 4(B), the number of shares of the class of securities issuable upon exercise hereof also shall be adjusted pursuant to the formula set forth in Subsection 4(A)(iv)(1). (D) ADJUSTMENTS FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event that at any time or from time to time after the Original Issue Date the Company shall make or issue, or fix a record date for the determination of holders of the class of securities issuable upon exercise hereof who are entitled to receive a dividend or other distribution payable in securities of the Company, then and in each such event, unless such dividend or distribution results in an adjustment of the Exercise Price pursuant to Subsections 4(A) or 4(B), provision shall be made so that the Holder of this Warrant shall receive upon exercise hereof in addition to the securities receivable hereupon, the amount of securities of the Company that he would have received had this Warrant been exercised on the date of such event and had he thereafter, during the period from the date of such event to and including the exercise date, retained such securities receivable by him as -8- aforesaid during such period, giving application during such period to all adjustments called for herein. (E) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. In the event that at any time or from time to time after the Original Issue Date, the class of securities issuable upon the exercise of this Warrant shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a merger, consolidation, or sale of assets provided for below), then and in each such event the Holder of this warrant shall have the right thereafter to exercise this Warrant for the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of the class of securities into which such warrant might have been exercisable for immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein. (F) ADJUSTMENT FOR MERGER CONSOLIDATION OR SALE OF ASSETS. In the event that at any time or from time to time after the Original Issue Date, the Company shall merge or consolidate with or into another entity or sell all or substantially all of its assets, this Warrant shall thereafter be exercisable for the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of the class of securities of the Company deliverable upon exercise of this Warrant would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 4 with respect to the rights and interest thereafter of the Holder of this Warrant, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Exercise Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of this Warrant. (G) NO IMPAIRMENT. The Company shall not, by amendment of its Articles of Organization, as in effect on the date hereof, or By-Laws or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but shall at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Warrant against impairment. (H) NOTICE OF ADJUSTMENT OF NUMBER OF SHARES. Upon any adjustment, readjustment or other change relating to the number of shares purchasable upon exercise of this Warrant or to the Exercise Price, then, and in each such case, the Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the Holder at the address of such Holder as shown on the books of the Company, -9- which notice shall state the Exercise Price resulting from such adjustment and the increase or decrease in the number of shares (or other denominations of securities) purchasable at the Exercise Price upon the exercise of this Warrant setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. (I) NOTICE. In case at any time: (1) the Company shall pay any dividend or make any distribution (other than regular cash dividends from earnings or earned surplus paid at an established rate) to the holders of the class of securities issuable upon exercise of this Warrant; (2) the Company shall offer for subscription pro rata to the holders of the class of securities issuable upon exercise of this Warrant any additional shares of stock of any class or other rights; (3) there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with or sale of all or substantially all of its assets to another corporation; or (4) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall give written notice, by first class mail, postage prepaid, addressed to the Holder at the address of such Holder as shown on the books of the Company of the date on which (a) the books of the Company shall close or a record date shall be fixed for determining the shareholders entitled to such dividend, distribution or subscription rights, or (b) such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up shall take place, as the case may be. Such notice shall also provide reasonable details of the proposed transaction and specify the date as of which the holders of record of the class of securities issuable upon exercise of this Warrant shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their securities for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. Such written notice shall be given at least 10 days prior to the action in question and not less than 10 days prior to the record date or the date on which the Company's transfer books are closed in respect thereto. (J) VOTING RIGHTS. This Warrant shall not entitle the Holder to any voting rights or any other rights as a stockholder of the Company but upon presentation of this Warrant with the subscription form annexed duly executed and the tender of Payment of the Exercise Price at the office of the Company pursuant to the provisions of this Warrant the Holder shall forthwith be deemed a stockholder of the Company in respect of the securities so subscribed and paid for. (K) NO CHANGE NECESSARY. The form of this Warrant need not be changed because of any adjustment in the Exercise Price or in the number of shares issuable upon its exercise. A Warrant issued after any adjustment on any partial exercise or upon replacement may continue to express the same Exercise Price and the same number of shares (appropriately reduced in the case of partial exercise) as are stated on this Warrant as initially issued, and that Exercise Price and that number of shares shall be -10- considered to have been so changed as of the close of business on the date of adjustment. 5. FULLY-PAID SHARES; TAXES. The Company covenants that the Common Shares represented by each and every certificate for Warrant Shares delivered upon exercise of this Warrant shall, at the time of such delivery, be duly authorized, validly-issued and outstanding, and fully-paid and nonassessable, and that the Company shall take any and all such actions as may be necessary to ensure that the par value or stated value, if any, of each Warrant Share is at all times equal to or less than the then Per Share Warrant Price; and that it will pay when due and payable any and all stamp, original issue or similar taxes that may be payable in respect of issuance of any Warrant Shares or certificates for Warrant Shares. 6. SECURITIES RESTRICTIONS UPON TRANSFER. Each holder of this Warrant acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act of 1933, as now in force or hereafter amended, or any successor legislation (the "ACT"), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Shares issued upon its exercise in the absence of (a) an effective registration statement under the Act as to this Warrant or such Warrant Shares and registration or qualification of this Warrant or such Warrant Shares under any applicable Blue Sky or state securities law then in effect, or (b) an opinion of counsel, satisfactory to the Company, that such registration and qualification are not required. Without limiting the generality of the foregoing, unless the offering and sale of the Warrant Shares to be issued upon the particular exercise of the Warrant shall have been effectively registered under the Act, the Company shall be under no obligation to issue the shares covered by such exercise unless and until the Holder shall have executed an investment letter in form and substance satisfactory to the Company, including a warranty at the time of such exercise that it is acquiring such shares for its own account, for investment and not with a view to, or for sale in connection with, the distribution of any such shares, in which event the Holder shall be bound by the provisions of the following legend or a legend in substantially similar form which shall be endorsed upon the certificate(s) evidencing the exercised Warrant pursuant to such exercise: The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or any state securities laws, have been acquired for investment, and may not be sold, pledged, hypothecated or otherwise transferred unless a registration statement under the Act and applicable state law is in effect with regard thereto or unless an exemption from such registration is available. In addition, without limiting the generality of the foregoing, the Company may delay issuance of the Warrant Shares until completion of any action or obtaining of any -11- consent, which the Company deems necessary under any applicable law (including without limitation state securities or "blue sky" laws). 7. STOCKHOLDER AGREEMENT. Each Holder of this Warrant agrees that upon the exercise in whole or in part of this Warrant, that Holder shall execute and become a party to a stockholder agreement. Further, Holder agrees that the Company shall be under no obligation to issue the shares covered by such exercise unless and until the Holder shall have executed a stockholder agreement in form and substance satisfactory to the Company, containing provisions restricting the transfer of the shares received by exercising this warrant, including placing a transfer restriction legend on the shares evidencing the exercise of this Warrant. 8. NO DISTRIBUTION. The Holder of this Warrant, by acceptance hereof, represents and warrants that this Warrant has been acquired without a view to, or for sale in connection with, a distribution thereof and not with a view to its resale, and that this Warrant has been acquired for the Holder's own account and not with a view to its division among others, and that no other person has any direct or indirect beneficial interest in this Warrant. Notwithstanding the foregoing, the Company agrees that the Holder shall have the right to grant participation interests in the Warrant. 9. REGISTRATION RIGHTS. The Holder shall be entitled, with respect to (i) its Warrant Shares and other securities issued or issuable upon exercise of this Warrant and (ii) any securities issued or issuable with respect to any Common Shares or other securities referred to in subdivision (i) by way of a stock dividend or stock split or in connection with a combination or other reorganization or otherwise, the piggy back registration rights as set forth in that certain Registration Rights Agreement dated March 12, 1999 (the "Registration Rights Agreement"), by and among Company and the Purchasers (as defined therein). Holder shall not be entitled to other registration rights included in the Registration Rights Agreement. Except as may be otherwise provided in the Registration Rights Agreement governing such rights, the right to have the Company register such securities pursuant to such agreement shall be automatically assigned to transferees or assignees of this Warrant or such securities, provided that immediately following such transfer or assignment, the further disposition of such securities by the transferee or assignee would be subject to restrictions under the Act. 10. BOOKS OF THE COMPANY. The Company may treat the Holder of this Warrant as appearing on the Company's books at any time as the Holder for all purposes. Upon written request, the Company shall permit any Holder or the duly authorized attorney of such Holder, during ordinary business hours, to inspect and copy or make extracts from the books showing the Holders of Warrants. 11. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. If this Warrant shall be lost, stolen, destroyed, or mutilated, the Company shall execute and deliver to the Holder a replacement warrant of like date, tenor, and denomination upon receipt by the Company of (a) evidence satisfactory to the Company of the occurrence of such event, (b) -12- reimbursement of the Company's reasonably incidental expenses, and (c) (i) in the event of mutilation, upon surrender and cancellation of this Warrant, or (ii) in the event of loss, theft, or destruction of this Warrant, of indemnity reasonably satisfactory to the Company. 12. WARRANT HOLDER NOT SHAREHOLDER. Except as may otherwise be expressly provided in this Warrant, this Warrant does not, prior to its exercise, confer upon the Holder any right to vote, or to consent, or to receive notice, or otherwise to act, as a shareholder of the Company in respect of any matters whatsoever, or confer or impose upon the Holder any other rights or liabilities of a shareholder of the Company. 13. NOTICES AND OTHER COMMUNICATIONS. Any notice or other communication under this Warrant shall be effective and shall be deemed to have been given if, and only if, the same shall have been given in writing and mailed by first-class mail, postage prepaid, addressed to: (A) the Company at the address set forth in Section 1(A) above, or such other address as the Company may designate in writing to the Holder, or (B) the Holder at 20 William Street, Wellesley, MA 02481, or such other address as the Holder may designate in writing to the Company. 14. HEADINGS. The headings contained in this Warrant have been inserted as a matter of convenience, do not form part, and shall not affect construction of, this Warrant. 15. APPLICABLE LAW. This Warrant shall be governed by and construed in accordance with the laws of the State of Georgia applicable to contracts wholly made, accepted and performed within that jurisdiction, without application of principles of conflict of laws. THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK. -13- STAN F. STOUDENMIRE has caused this Warrant to be executed by its President and attested by its Secretary or Assistant Secretary this 12th day of November, 1999. ATTEST: Viewlocity, Inc. /s/ STAN F. STOUDENMIRE By: /s/ GREGORY CRONIN - ------------------------------------ -------------------------------- Secretary or Assistant Secretary President [Corporate Seal] -14- SUBSCRIPTION Date: ____________________ To: Viewlocity, Inc. 400 Perimeter Center Terrace Suite 320 Atlanta, GA 30346 The undersigned, pursuant to the provisions set forth in the attached Warrant hereby irrevocably elects to purchase _____ shares of the Common Shares (the "COMMON SHARES") covered by such Warrant and herewith makes payment of $_________, representing the full purchase price for such shares at the price per share provided for in such Warrant. The undersigned is aware that the Common Shares have not been registered under the Securities Act of 1933, as amended (the "1933 ACT") or any state securities laws. The undersigned understands that the reliance by the Company on exemptions under the 1933 Act is predicated in part upon the truth and accuracy of the statements of the undersigned in this Subscription. The undersigned represents and warrants that (1) it has been furnished with all information which it deems necessary to evaluate the merits and risks of the purchase of the Common Shares; (2) it has had the opportunity to ask questions concerning the Common Shares and the Company and all questions posed have been answered to its satisfaction; (3) it has been given the opportunity to obtain any additional information it deems necessary to verify the accuracy of any information obtained concerning the Common Shares and the Company; (4) it is an "Accredited Investor" as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act, and (5) it has such knowledge and experience in financial and business matters that it is able to evaluate the merits and risks of purchasing the Common Shares and to make an informed investment decision relating thereto. The undersigned hereby represents and warrants that it is purchasing the Common Shares for its own account and not with a view to the sale or distribution of all or any part of the Common Shares. The undersigned understands that because the Common Shares have not been registered under the 1933 Act, it must continue to bear the economic risk of the investment for an indefinite time and the Common Shares cannot be sold unless the Common Shares are subsequently registered under applicable federal and state securities laws or an exemption from such registration is available. -15- The undersigned agrees that it will in no event sell or distribute or otherwise dispose of all or any part of the Common Shares unless (1) there is an effective registration statement under the 1933 Act and applicable state securities laws covering any such transaction involving the Common Shares or (2) the Company receives an opinion of legal counsel to the undersigned (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration. The undersigned consents to the placing of a legend on its certificate for the Common Shares stating that the Common Shares have not been registered and setting forth the restriction on transfer contemplated hereby and to the placing of a stop transfer order on the books of the Company and with any transfer agents against the Common Shares until the Common Shares may be legally resold or distributed without restriction. The undersigned has considered the Federal and state income tax implications of the exercise of the Warrant and the purchase and subsequent sale of the Common Shares. --------------------------------- Signature --------------------------------- Print name: --------------------------------- Date: -16- EX-10.31 33 ex-10_31.txt EXHIBIT 10.31 EXHIBIT 10.31 THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. WARRANT TO PURCHASE STOCK Corporation: Viewlocity, Inc., a Delaware Corporation Number of Shares: 52,000 (subject to Section 1.9) Class of Stock: Common Stock Initial Exercise Price: S5.00 per share subject to Section 1.9) Issue Date: November 26, 1999 Expiration Date: November 26, 2006 (Subject to Article 4. 1) THIS WARRANT CERTIFIES THAT, in consideration of the payment of $ 1.00 and for other good and valuable consideration, IMPERIAL BANCORP or registered assignee ("Holder is entitled to purchase the number of fully paid and nonassessable shares of the class of securities (the "Shares") of the corporation (the "Company") at the initial exercise price per Share (the "Warrant Price") all as set forth above and as adjusted pursuant to Article 2 of this Warrant subject to the provisions and upon the terms and conditions set forth in this Wan-ant. ARTICLE 1. EXERCISE. 1.1 METHOD OF Exercise. Holder may exercise this Warrant by delivering this Warrant and a duly executed Notice of Exercise in substantially the form attached as Appendix I to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased. 1.2 CONVERSION RIGHT In lieu of exercising this Warrant as specified in Section 1.1, Holder may from time to time convert this Warrant in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share. The fair market value of the Shares shall be determined pursuant to Section 1.5. 1.3 [intentionally Omitted). 1.4 [Intentionally Omitted). 1.5 FAIR MARKET VALUE. If the Shares are traded regularly in a public market, the fair market value of the Shares shall be the average of the closing price of the Shares on the national securities exchange on which the Shares are listed or admitted for trading on the last ten business days prior to the date on which Holder delivers its Notice to Exercise to the Company. If the Shares are not regularly traded in a public market, the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment. The foregoing notwithstanding, if Holder advises the Board of Directors in writing that Holder disagrees with such determination, then the Company and Holder shall promptly agree upon a reputable investment banking firm to undertake such valuation. If the valuation of such investment banking firm is greater than that determined by the Board of Directors, then all fees and expenses of such investment banking firm shall be paid by the Company. In all other circumstances, such fees and expenses shall be paid by Holder. 1.6 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after Holder exercises or converts this Wan-ant, the Company shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired, a new Warrant representing the Shares not so acquired. 1.7 REPLACEMENT OF Warrants. Oil receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor. 1.8 Repurchase on Sale, Merger. or Consolidation of the Company. 1.8.1 "ACQUISITION." For the purpose of this Warrant, "Acquisition" means any sale, license, or other disposition of all or substantially all of the assets (including intellectual property) of the Company, or any reorganization, consolidation, or merger of the Company where the holders of the Company's securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction. 1.8.2 ASSUMPTION OF Wan-ant. If upon the closing of any Acquisition the successor entity assumes the obligations of this Warrant then this Wan-ant shall be exercisable for the same securities, cash, and property as would be payable for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing. The Warrant Price shall be adjusted accordingly. The Company shall use reasonable efforts to cause the surviving corporation to assume the obligations of this Warrant. 1.8.3 NONASSUMPTION. If upon the closing of any Acquisition the successor entity does not assume the obligations of this Wan-ant and Holder has not otherwise exercised this Warrant in full, then the unexercised portion of this Warrant shall be deemed to have been automatically converted pursuant to Section 1.2 and thereafter Holder shall participate in the Acquisition on the same terms as other holders of the same class of securities of the Company. 1.8.4 PURCHASE RIGHT. Notwithstanding the foregoing, at the election of Holder, the Company shall purchase the unexercised portion of this Wan-ant for cash upon the closing of any Acquisition for an amount equal to (a) the fair market value of any consideration that would have been received by Holder in consideration of the Shares had Holder exercised the unexercised portion of this Warrant immediately before the record date for determining the shareholders entitled to participate in the proceeds of the Acquisition, less (b) the aggregate Warrant Price of the Shares, but in no event less than zero. 1.9 Exercise PRICE. Holder may purchase the Shares subject to this Warrant at a per Share exercise price ("Exercise Price") equal to the per share price of the Company's preferred stock which is sold and issued to investors in a private placement offering with aggregate gross proceeds to the Company of at least $ 10,000,000 ("PREFERRED OFFERING"). IF THE PREFERRED OFFERING DOES NOT OCCUR, THE EXERCISE PRICE SHALL be $5.00 per share. The number of such shares subject to this Warrant shall be equal to (i) Two Hundred Sixty Thousand Dollars ($260,000), divided by (ii) the Exercise Price. ARTICLE 2. ADJUSTMENTS TO THE SHARES. 2.1 STOCK DIVIDENDS, SPLITS, ETC. If the Company declares or pays a dividend on its common stock payable in common *stock, or other securities, subdivides the outstanding common stock into a greater amount of common stock, then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend or subdivision occurred. 2.2 RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon exercise or conversion of this Warrant the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. Such an event shall include any automatic conversion of the outstanding or issuable securities of the Company of the same class or series as the Shares to common stock pursuant to the terms of the Company's Articles of Incorporation upon the closing of a registered public offering of the Company's common stock. The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property. The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events. 2.3 ADJUSTMENTS FOR COMBINATIONS, ETC. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased. 2.4 ADJUSTMENTS FOR DILUTING ISSUANCES. The Warrant Price and the number of Shares issuable upon exercise of this Warrant shall be subject to adjustment, from time to time, in the manner set forth on EXHIBIT A, if attached, in the event of Diluting Issuances (as defined on EXHIBIT A). 2.5 NO IMPAIRMENT. The Company shall not by amendment of its Articles of Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect Holder's rights under this Article against impairment. If the Company takes any action affecting the Shares or its common stock other than as described above that adversely affects Holder's rights under this Warrant the Wan-ant Price shall be adjusted downward and the number of Shares issuable upon exercise of this Warrant shall be adjusted upward in such a manner that the aggregate Warrant Price of this Wan-ant is unchanged. 2.6 CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date thereof and the series of adjustments leading to such Warrant Price. ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY. 3.1 REPRESENTATIONS AND WARRANTIES. The Company hereby represents and warrants to the Holder as follows: (a) The initial Warrant Price (subject to Section 1.9) referenced on the first page of this Warrant is not greater than the fair market value of the Shares as of the date of this Warrant. (b) All Shares which may be issued upon the exercise of the purchase right represented by this Wan-ant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. 3.2 NOTICE OF CERTAIN EVENTS. If the Company proposes at any time (a) to declare any dividend or distribution upon its common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) to effect any reclassification or recapitalization of common stock; (d) to merge or consolidate with or into any other corporation, or sell, lease, license, or convey all or substantially all of its assets, or to liquidate, dissolve or wind up; or (e) offer holders of registration rights the opportunity to participate in an underwritten public offering of the company's securities for cash, then, in connection with each such event, the Company shall give Holder (1) at least 20 days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of common stock will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (c) and (d) above; (2) in the case of the matters referred to in (c) and (d) above at least 20 days prior written notice of the date when the same will take place (and specifying the date on which the holders of common stock will be entitled to exchange their common stock for securities or other property deliverable upon the occurrence of such event); and (3) in the case of the matter referred to in (e) above, the same notice as is given to the holders of such registration rights. 3.3 INFORMATION RIGHTS. So long as the Holder holds this Warrant and/or any of the Shares, the Company shall deliver to the Holder (a) promptly after mailing, copies of all communiques to the shareholders of the Company, (b) within ninety (90) days after the end of each fiscal year of the Company, the annual audited financial statements of the Company certified by independent public accountants of recognized standing and (c) within forty-five (45) days after the end of each of the first three quarters of each fiscal year, the Company's quarterly, unaudited financial statements. 3.4 REGISTRATION UNDER SECURITIES ACT OF 1933, AS amended. The Company agrees that the Shares shall be subject to the registration rights set forth on EXHIBIT B. ARTICLE 4. MISCELLANEOUS. 4.1 Term: NOTICE OF EXPIRATION. This Warrant is exercisable, in whole or in part, at any time and from time to time on or before the Expiration Date set forth above. The Company shall give Holder written notice of Holder's right to exercise this Warrant in the form attached as Appendix 2 not more than 90 days and not less than 30 days before the Expiration Date. If the notice is not so given, the Expiration Date shall automatically be extended until 30 days after the date the Company delivers the notice to Holder. 4.2 LEGENDS. This Warrant and the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. 4.3 COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. This Warrant and the Shares issuable upon exercise this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and die transferee (including, without limitation, the delivery of investment representation letter-s and legal opinions .. reasonably satisfactory to the Company). The Company shall not require Holder to. provide an opinion of counsel if the transfer is to an affiliate of Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company-is provided with a copy of Holder's notice of proposed sale. 4.4 TRANSFER PROCEDURE. Subject to the provisions of Section 4.3, Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) by giving the Company notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder, if applicable). Unless the Company is filing financial information with the SEC pursuant to the Securities Exchange Act of 1934, the Company shall have the right to refuse to transfer any portion of this Warrant to any person who directly competes with the Company. 4.5 NOTICES All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first-class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or such Holder from time to time. 4.6 WAIVER. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. 4.7 ATTORNEYS' FEES. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the parry prevailing in such dispute shall be entitled to collect. from the other party all costs incurred in such dispute, including reasonable attorneys' fees. 4.8 GOVERNING LAW. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law. VIEWLOCITY, INC. By: /s/ GREGORY CRONIN ------------------------------ Name: GREGORY CRONIN Title: PRESIDENT & CEO By: /s/ STAN F. STOUDENMIRE ------------------------------ Name: STAN F. STOUDENMIRE Title: SR. V.P. & CFO APPENDIX I NOTICE OF EXERCISE 1. The undersigned hereby elects to purchase ______ shares of the Common Stock of Viewlocity, Inc. pursuant to the terms of die attached Warrant, and tenders herewith payment of the purchase price of such shares in full. 1. The undersigned hereby elects to convert the attached Warrant into Shares/cash (strike one in the manner specified in the Warrant. This conversion is exercised with respect to _______ of the Shares covered by the Warrant. [Strike paragraph that does not apply.1 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below: Chief Financial Officer Controllers Department Imperial Bancorp P.O. Box 92991 Los Angeles, CA 90009 Or Registered Assignee 3. The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws. IMPERIAL BANCORP or a Registered Assignee (Signature) (Date) APPENDIX 2 NOTICE THAT WARRANT IS ABOUT TO EXPIRE Chief Financial Officer Controllers Department Imperial Bancorp P.O. Box 92991 Los Angeles, CA 90009 Or Registered Assignee Gentleperson: This is to advise you that the Warrant issued to you described below will expire on Date. Issuer. Issue Date: Class of Security Issuable: Common Exercise Price Per Share: S Number of Shares Issuable: Procedure for Exercise: Please contact --------------------------- (name) at ---------------------------------------- (phone number) with any questions you may have concerning exercise of the Warrant. This is your only notice of pending expiration. (COMPANY NAME) By: Its: EXHIBIT A ANTIDILUTION AGREEMENT (Weighted Average Antidilution Protection) This Antidilution Agreement is entered into as of November 26, 1999, by and between Imperial Bancorp ("Purchaser") and Viewlocity, Inc. ("the Company"). RECITALS A. Concurrently with the execution of this Antidilution Agreement, the Purchaser is purchasing from the Company a Warrant to Purchase Stock (the "Warrant) pursuant to which Purchaser has the right to acquire from the Company the Shares (as defined in the Warrant). B. By this Antidilution Agreement, the Purchaser and the Company desire to set forth the adjustment in the number of Shares issuable upon exercise of the Warrant as a result of a Diluting Issuance (as defined below). C. Capitalized terms used herein shall have the same meaning as set forth in the Warrant. NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions hereinafter set forth, the parties hereto mutually agree as follows: I . Definitions. As used in this Antidilution Agreement, the following terms have the followir.0respective meanings: (a) "Option" means any right, option or warrant to subscribe for, purchase or otherwise acquire common stock or Convertible Securities. (b) "Convertible Securities" means any evidences of indebtedness, shares of stock or other securities directly or indirectly convertible into or exchangeable for common stock. (c) "Issue" means to grant, issue, sell, assume or fix a record date for determining persons entitled to receive any security (including Options), whichever of the foregoing is the first to occur. (d) "Additional Common Shares" means all common stock (including reissued shares) Issued (or deemed to be issued pursuant to Section 2) after the date of the Warrant. Additional Common Shares does not include, however, any common stock Issued in a transaction described in Sections 2.1 and 2.2 of the Warrant; any common stock Issued upon conversion of preferred stock outstanding on the date of the Warrant; the Shares; or common stock Issued as incentive or in a nonfinancing transaction to employees, officers, directors or consultants to the Company. (e) The. shares of common stock ultimately Issuable upon exercise of an Option (including the shares of common stock ultimately Issuable upon conversion or exercise of a Convertible Security Issuable pursuant to an Option) are deemed to be Issued when the Option is Issued. The shares of common stock ultimately Issuable upon conversion or exercise of a Convertible Security (other than a Convertible Security Issued pursuant to an Option) shall be deemed Issued upon Issuance of the Convertible Security. 2. Deemed Issuance of Additional Common Shares. The shares of common stock ultimately Issuable upon exercise of an Option (including the shares of common stock ultimately Issuable upon conversion or exercise of a Convertible Security Issuable pursuant to an Option) are deemed to be Issued when the Option is Issued. The shares of common stock ultimately issuable upon conversion or exercise of a Convertible Security (other than a Convertible Security Issued pursuant to an Option) shall be deemed Issued upon Is . issuance of the Convertible Security. The maximum amount of common stock Issuable is determined without regard to any future adjustments permitted under the instrument creating the Options or Convertible Securities. 3. ADJUSTMENT OF WARRANT PRICE FOR DILUTING ISSUANCES. 3.1 WEIGHTED AVERAGE ADJUSTMENT. If the Company issues Additional Common Shares after the date of the Warrant and the consideration per Additional Common Share (determined pursuant to Section 9) is less than the Warrant Price in effect immediately before such Issue (a "Diluting Issuance"), the Warrant Price in effect immediately before such Issue shall be reduced, concurrently with such Issue, to a price (calculated to the nearest hundredth of a cent) determined by multiplying the Warrant Price by a fraction: (a) the numerator of which is. the amount of common stock outstanding immediately before such Issue plus the amount of common stock that the aggregate consideration received by Company for the Additional Common Shares would purchase at the Warrant Price in effect immediately before such Issue, and (b) the denominator of which is the amount of common stock outstanding immediately before such Issue plus the number of such Additional Shares. 3.2 ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the Wan-ant Price, the number of Shares Issuable upon exercise of the Warrant shall be increased to equal the quotient obtained by dividing (a) the product resulting from multiplying (i) the number of Shares issuable upon exercise of the Warrant and (ii) the Warrant Price, in each case as in effect immediately before such adjustment, by (b) the adjusted Wan-ant Price. 3.3 SECURITIES DEEMED OUTSTANDING . For the purpose of this Section 3, all securities Issuable upon exercise of any outstanding Convertible Securities or Options, Warrants, or other rights to acquire securities of the Company shall be deemed to be outstanding. 4. No ADJUSTMENT FOR ISSUANCES FOLLOWING DEEMED Issuances. No adjustment to the Warrant Price shall be made upon the exercise of Options or conversion of Convertible Securities. 5. ADJUSTMENT FOLLOWING CHANGES IN TERMS OF OPTIONS OR CONVERTIBLE SECURITIES. If the consideration payable to, or the amount of common stock Issuable by, the Company increases or decreases, respectively, pursuant to the terms of any outstanding Options or Convertible Securities, the Warrant Price shall be recomputed to reflect such increase or decrease. The recomputation shall be made as of the time of the Issuance of the Options or Convertible Securities. Any changes in the Warrant Price that occurred after such Issuance because other Additional Common Shares were Issued or deemed Issued shall also be recomputed. 6. RECOMPUTATION UPON EXPIRATION OF OPTIONS OR CONVERTIBLE SECURITIES. The Warrant Price computed upon the original Issue of any Options or Convertible Securities, and any subsequent adjustments based thereon, shall be recomputed when any Options or rights of conversion under Convertible Securities expire without having been exercised. For the case of Convertible Securities or Options for common stock, the Warrant Price shall be recomputed as if the only Additional Common Shares Issued were the shares of common stock actually Issued upon the exercise of such securities, if any, and as if the only consideration received therefor was the consideration actually received upon the Issue, exercise or conversion of the Options or Convertible Securities. In the case of Options for Convertible Securities, the Warrant Price shall be recomputed as if the only Convertible Securities Issued were the Convertible Securities actually Issued upon the exercise thereof, if any, and as if the only consideration received therefor was the consideration actually received by the Company (determined pursuant to Section 9), if any, upon the Issue of the Options. for the Convertible Securities. 7. Limit ON READJUSTMENTS. No readjustment of the Warrant Price pursuant to Sections 5 or 6 shall increase the Warrant Price more than the amount of any decrease made in respect of the Issue of any Options or Convertible Securities. 8. 30 DAY OPTIONS. In the case of any Options that expire by their terms not more than 30 days after the date of Issue thereof, no adjustment of the Warrant Price shall be made until the expiration or exercise of all such Options. 9. COMPUTATION OF CONSIDERATION. The consideration received by the Company for the Issue of any Additional Common Shares shall be computed as follows: (a) Cash shall be valued at the amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest or accrued dividends. (b) PROPERTY. Property, other than cash, shall be computed at the fair market value thereof at the time of the Issue as determined in good faith by the Board of Directors of the Company. (c) MIXED CONSIDERATION. The consideration for Additional Common Shares Issued together with other property of the Company for consideration that covers both shall be determined in good faith by the Board of Directors. (d) OPTIONS AND CONVERTIBLE SECURITIES. The consideration per Additional Common Share for Options and Convertible Securities shall be determined by dividing: (i) the total amount, if any, received or receivable by the Company for the Issue of the Options or Convertible Securities, plus the minimum amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon exercise of the Options or conversion of the Convertible Securities, by (ii) the maximum amount of common stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) ultimately Issuable upon the exercise of such Options or the conversion of such Convertible Securities. 10. GENERAL. 10.1 GOVERNING LAW. This Antidilution Agreement shall be governed in all respects by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within California. 10.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. 10.3 Entire AGREEMENT. Except as set forth below, this Antidilution Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. 10.4 NOTICES, ETC. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by first class mail, postage prepaid, certified or registered mail, return receipt requested, addressed (a) if to Purchaser at Purchaser's address as set forth below, or at such other address as Purchaser shall have furnished to the Company in writing, or (b) if to the Company, at the Company's address set forth below, or at such other address as the Company shall have furnished to the Purchaser in writing. 10.5 SEVERABILITY. In case any provision of this Antidilution Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Antidilution Agreement shall not in any way be affected or impaired thereby. 10.6 TITLES AND SUBTITLES. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Antidilution Agreement. 10.7 COUNTERPARTS. This Antidilution Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. PURCHASER ISSUER IMPERIAL BANCORP VIEWLOCITY, INC. By: /s/ OSCAR JANDOWSKI By: /s/ GREGORY CRONIN ----------------------------- ------------------------------ Name: OSCAR JANDOWSKI Name: GREGORY CRONIN Title: SENIOR VICE PRESIDENT Title: PRESIDENT & CEO Address: Address: By: /s/ STAN F. STOUDENMIRE ----------------------------- Name: STAN F. STOUDENMIRE Title: SR. V.P. & CFO Address: EXHIBIT B REGISTRATION RIGHTS The Shares shall be deemed -registerable securities" or otherwise entitled to "piggy back" registration rights in accordance with the terms of the following agreement (the "Agreement') between the Company and its investor(s): Registration Rights Agreement dated March 12, 1999 between Company (formerly known as Arctic, Inc.) and Battery Ventures IV, L.P. and Battery Investment Partners IV LLC The Company agrees that no amendments will be made to the Agreement which would have an adverse impact on Holder's registration thereunder without the consent of Holder. By acceptance of the Warrant to which this Exhibit B is attached, Holder shall not be deemed to be a party to the Agreement but solely entitled to the registration rights created thereby. If no Agreement exists, then the Company and the Holder shall enter into Holder's standard form of Registration Rights Agreement as in effect on the Issue Date of the Warrant. 10.7 COUNTERPARTS. This Antidilution Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. PURCHASER ISSUER IMPERIAL BANCORP VIEWLOCITY, INC. By: By: ----------------------------- ------------------------------ Name: Name: Title: Title: Address: Address: By: ----------------------------- Name: Title: Address: l0.7 COUNTERPARTS. This Antidilution Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. PURCHASER ISSUER IMPERIAL BANCORP VIEWLOCITY, INC. By: By: ----------------------------- ------------------------------ Name: Name: Title: Title: Address: Address: By: ----------------------------- Name: Title: Address: 10.7 COUNTERPARTS. This Antidilution Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. PURCHASER ISSUER IMPERIAL BANCORP VIEWLOCITY, INC. By: By: ----------------------------- ------------------------------ Name: Name: Title: Title: Address: Address: By: ----------------------------- Name: Title: Address: EX-10.32 34 ex-10_32.txt EXHIBIT 10.32 EXHIBIT 10.32 THIRD AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT June 22, 2000 To each of the several Purchasers named in EXHIBIT A to the Series E Convertible Preferred Stock Purchase Agreement of even date herewith and each of the several Purchasers named in EXHIBIT A to the Series E Convertible Preferred Stock Purchase Agreement dated April 14, 2000 (collectively, the "Series E Purchasers"), each of the several Purchasers named in EXHIBIT A to the Series D Convertible Preferred Stock Purchase Agreement dated December 30, 1999, as amended (the "Series D Purchasers") and each of the Several Purchasers named in Exhibit 1.01 to the Preferred Stock and Preferred Stock Warrant Purchase Agreement dated February 25, 1999, as amended (together with the Series E Purchasers and Series D Purchasers, collectively the "Purchasers") Dear Sirs: This will confirm that in consideration of the Series E Purchasers' agreement on the date hereof to purchase 1,487,805 shares (the "Series E Preferred Shares") of Series E Convertible Preferred Stock, par value $.01 per share ("Series E Preferred Stock"), of Viewlocity, Inc., a Delaware corporation (the "Company"), pursuant to and as set forth in the Series E Convertible Preferred Stock Purchase Agreement dated as of June 22, 2000 ("Second Series E Purchase Agreement") by and among the Company and the Series E Purchasers listed on Exhibit A to the Second Series E Purchase Agreement, and as an inducement to the Series E Purchasers to consummate the transactions contemplated by the Second Series E Purchase Agreement, the Company covenants and agrees with each of the Purchasers included on the signature pages hereto as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: "COMMISSION" shall mean the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act. "COMMON STOCK" shall mean the Common Stock, par value $.01 per share, of the Company, as constituted as of the date of this Agreement. "COMMVEST WARRANT" shall mean that certain Warrant to purchase 150,000 Common Shares dated November 12, 1999, issued by the Corporation to CommVest, LLC. "CONTINGENT WARRANT" shall mean that certain Contingent Warrant to purchase 393,750 Common Shares dated October 27, 1999, issued by the Corporation to William Street Associates II, LLC. Registration Rights Agreement - Page 2 "CONVERSION SHARES" shall mean shares of Common Stock issued or issuable upon conversion of the Preferred Shares, and any shares of capital stock received in respect thereof. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "FIRST SERIES E PURCHASE AGREEMENT" shall mean that certain Series E Convertible Preferred Stock Purchase Agreement of the Company dated April 14, 2000. "IMPERIAL BANK WARRANT" shall mean that certain Warrant to purchase 52,000 Common Shares dated November 26, 1999, issued by the Corporation to Imperial Bancorp. "PREFERRED SHARES" shall mean all Series A Preferred Shares, Series B Preferred Shares, Series D Preferred Shares, and Series E Preferred Shares. "PREFERRED STOCK" shall mean the Series A Preferred Stock, the Series B Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock. "PRIOR PURCHASE AGREEMENT" shall mean the Preferred Stock and Preferred Stock Warrant Purchase Agreement of the Company dated February 25, 1999, as amended on March 12, 1999. "REGISTRATION EXPENSES" shall mean the expenses so described in Section 8. "RESTRICTED STOCK" shall mean (1) the Conversion Shares, excluding Conversion Shares which have been (a) registered under the Securities Act pursuant to an effective registration statement filed thereunder and are eligible to be disposed of pursuant to an effective "shelf" registration statement or have been disposed of in accordance with the registration statement covering them or (b) publicly sold pursuant to Rule 144 under the Securities Act, and (2) solely for purposes of Section 5 hereof, any shares of Common Stock issued or issuable upon the exercise of the Contingent Warrant, the CommVest Warrant, and/or the Imperial Bank Warrant, excluding any such shares which have been (a) registered under the Securities Act pursuant to an effective registration statement filed thereunder and are eligible to be disposed of pursuant to an effective "shelf" registration statement or have been disposed of in accordance with the registration statement covering them or (b) publicly sold pursuant to Rule 144 under the Securities Act. "SECURITIES ACT" shall mean the Securities Act of 1933 or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "SERIES A PREFERRED SHARES" shall mean shares of Series A Preferred Stock. "SERIES A PREFERRED STOCK" shall mean the Series A Convertible Preferred Stock, $.01 par value per share, of the Company. "SERIES D PURCHASE AGREEMENT" shall mean that certain Series D Convertible Preferred Stock Purchase Agreement of the Company dated December 30, 1999. Registration Rights Agreement - Page 3 "SELLING EXPENSES" shall mean the expenses so described in Section 8. "SERIES B PREFERRED SHARES" shall mean shares of Series B Preferred Stock issued or issuable upon exercise of the Warrants. "SERIES B PREFERRED STOCK" shall mean the Series B Convertible Preferred Stock, $.01 par value per share, of the Company. "SERIES D PREFERRED STOCK" shall mean the Series D Convertible Preferred Stock, $.01 par value per share, of the Company. "WARRANTS" shall mean those certain Series B Preferred Stock Purchase Warrants issued to Battery Ventures IV, L.P. and Battery Investment Partners IV, LLC on March 12, 1999 and April 9, 1999. 2. RESTRICTIVE LEGEND. Each certificate representing Preferred Shares, Conversion Shares or Restricted Stock shall, except as otherwise provided in this Section 2 or in Section 3, be stamped or otherwise imprinted with a legend substantially in the following form: "The securities represented by this certificate have not been registered under the Securities Act of 1933 or applicable state securities laws. These securities have been acquired for investment and not with a view to distribution or resale, and may not be sold mortgaged, pledged, hypothecated or otherwise transferred without an effective registration statement for such securities under the Securities Act of 1933 and applicable state securities laws, or the availability of an exemption from the registration provisions of the Securities Act of 1933 and applicable state securities laws." A certificate shall not bear such legend if in the written opinion of counsel reasonably satisfactory to the Company (it being agreed that either Testa, Hurwitz & Thibeault, LLP or Mayer, Brown & Platt shall be satisfactory) the securities being sold thereby may be publicly sold without registration under the Securities Act. 3. NOTICE OF PROPOSED TRANSFER. Prior to any proposed transfer of any Preferred Shares, Conversion Shares or Restricted Stock (other than under the circumstances described in Sections 4, 5 or 6), the holder thereof shall give written notice to the Company of its intention to effect such transfer. Each such notice shall describe the manner of the proposed transfer and, if requested by the Company, shall be accompanied by a written opinion of counsel reasonably satisfactory to the Company (it being agreed that either Testa, Hurwitz & Thibeault, LLP or Mayer, Brown & Platt shall be satisfactory) to the effect that the proposed transfer may be effected without registration under the Securities Act, whereupon the holder of such stock shall be entitled to transfer such stock in accordance with the terms of its notice; PROVIDED, HOWEVER, that no such opinion of counsel shall be required for a transfer to one or more partners of the transferor Registration Rights Agreement - Page 4 (in the case of a transferor that is a partnership), to one or more members of the transferor (in the case of a transferor that is a limited liability company) or to an affiliated corporation (in the case of a transferor that is a corporation); PROVIDED, FURTHER, HOWEVER, that any transferee other than a partner or affiliate of the transferor shall execute and deliver to the Company a representation letter in form reasonably satisfactory to the Company's counsel to the effect that the transferee is acquiring Restricted Stock for its own account, for investment purposes and without any view to distribution thereof. Each certificate for Preferred Shares or Conversion Shares transferred as above provided shall bear the legend set forth in Section 2, except that such certificate shall not bear such legend if (i) such transfer is in accordance with the provisions of Rule 144 (or any other rule permitting public sale without registration under the Securities Act) or (ii) the opinion of counsel referred to above is to the further effect that the transferee and any subsequent transferee (other than an affiliate of the Company) would be entitled to transfer such securities in a public sale without registration under the Securities Act. The restrictions provided for in this Section 3 shall not apply to securities which are not required to bear the legend prescribed by Section 2 in accordance with the provisions of that Section. 4. Required Registration. (a) The holders of Restricted Stock constituting at least twenty percent (20%) in interest of the total shares of Restricted Stock then outstanding may request the Company to register under the Securities Act all or any portion of the shares of Restricted Stock held by such requesting holder or holders for sale in the manner specified in such notice. For purposes of this Section 4 and Sections 5, 6, 13(a) and 13(d), the term "Restricted Stock" shall be deemed to include the number of shares of Restricted Stock which would be issuable to a holder of Preferred Shares upon conversion of all shares of Preferred Stock and upon exercise of all Warrants held by such holder at such time; PROVIDED, HOWEVER, that the only securities which the Company shall be required to register pursuant hereto shall be shares of Common Stock; PROVIDED, FURTHER, HOWEVER, that, in any underwritten public offering contemplated by this Section 4 or Sections 5 and 6, the holders of Preferred Shares or Warrants shall be entitled to sell such Preferred Shares or Warrants to the underwriters for conversion and sale of the shares of Common Stock issued upon conversion or exercise and conversion, as applicable, thereof. Notwithstanding anything to the contrary contained herein, no request may be made under this Section 4 within 180 days after the effective date of a registration statement filed by the Company covering a firm commitment underwritten public offering in which the holders of Restricted Stock shall have been entitled to join pursuant to Sections 5 or 6. (b) Following receipt of any notice under this Section 4, the Company shall immediately notify all holders of Restricted Stock and Preferred Shares from whom notice has not been received and such holders shall then be entitled within 30 days thereafter to request the Company to include in the requested registration all or any portion of their shares of Restricted Stock. The Company shall use its best efforts to register under the Securities Act, for public sale in accordance with the method of disposition described in paragraph (a) above, the number of shares of Restricted Stock specified in such notice (and in all notices received by the Company from other holders within 30 days after the giving of such notice by the Company). Registration Rights Agreement - Page 5 The Company shall be obligated to register Restricted Stock pursuant to this Section 4 on two occasions only; PROVIDED, HOWEVER, that such obligation shall be deemed satisfied only when a registration statement covering all shares of Restricted Stock specified in notices received as aforesaid for sale in accordance with the method of disposition specified by the requesting holders shall have, become effective or if such registration statement has been withdrawn prior to the consummation of the offering at the request of the holders of Restricted Stock (other than as a result of a material adverse change in the business or condition, financial or otherwise, of the Company) and, if such method of disposition is a firm commitment underwritten public offering, all such shares shall have been sold pursuant thereto (not including shares eligible for sale pursuant to the underwriters' over-allotment option). (c) The Company shall be entitled to include in any registration statement referred to in this Section 4 shares of Common Stock to be sold by the Company for its own account, except as and to the extent that, in the opinion of the managing underwriter, such inclusion would adversely affect the marketing of the Restricted Stock to be sold. Except for registration statements on Form S-4, S-8 or any successor thereto, the Company will not file with the Commission any other registration statement with respect to its Common Stock, whether for its own account or that of other stockholders, from the date of receipt of a notice from requesting holders requesting sale pursuant to an underwritten offering pursuant to this Section 4 until the completion of the period of distribution of the registration contemplated thereby. (d) If in the opinion of the managing underwriter the inclusion of all of the Restricted Stock requested to be registered under this Section would adversely affect the marketing of such shares, shares to be sold by the holders of Restricted Stock, if any, shall be excluded only after any shares to be sold by the Company have been excluded and in such manner that the shares to be sold shall be allocated among the selling holders pro rata based on their ownership of Restricted Stock. 5. INCIDENTAL REGISTRATION. If the Company at any time (other than pursuant to Section 4 or Section 6) proposes to register any of its securities under the Securities Act for sale to the public, whether for its own account or for the account of other security holders or both (except with respect to registration statements on Forms S-4, S-8 or another form not available for registering the Restricted Stock for sale to the public), each such time it will give written notice to all holders of outstanding Restricted Stock of its intention so to do. Upon the written request of any such holder, received by the Company within 30 days after the giving of any such notice by the Company, to register any of its Restricted Stock, the Company will use its best efforts to cause the Restricted Stock as to which registration shall have been so requested to be included in the securities to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to permit the sale or other disposition by the holder (in accordance with its written request) of such Restricted Stock so registered. In the event that any registration pursuant to this Section 5 shall be, in whole or in part, an underwritten public offering of Common Stock, the number of shares of Restricted Stock to be included in such an underwriting may be reduced (pro rata among the requesting holders based upon the number of shares of Restricted Stock held by such requesting holders) if and to the extent that the managing Registration Rights Agreement - Page 6 underwriter shall be of the opinion that such inclusion would adversely affect the marketing of the securities to be sold by the Company therein; PROVIDED, HOWEVER, that such number of shares of Restricted Stock shall not be reduced if any shares are to be included in such underwriting for the account of any person other than the Company or requesting holders of Restricted Stock; PROVIDED, FURTHER, HOWEVER, that in no event shall the number of shares of Restricted Stock included in the offering be reduced below the lesser of (a) twenty percent (20%) of the total number of shares of Common Stock included in such offering or (b) all of the shares of Restricted Stock requested to be registered, unless the offering is the Company's initial public offering of the Company's securities in which case the number of shares of Restricted Stock to be included by the holders may be reduced or eliminated entirely as set forth above. Notwithstanding the foregoing provisions, the Company may withdraw any registration statement referred to in this Section 5 without thereby incurring any liability to the holders of Restricted Stock. 6. REGISTRATION ON FORM S-3. (a) If at any time (i) a holder or holders of Restricted Stock then outstanding request that the Company file a registration statement on Form S-3 or any successor thereto for a public offering of all or any portion of the shares of Restricted Stock held by such requesting holder or holders, the reasonably anticipated aggregate price to the public of which would exceed $500,000, and (ii) the Company is a registrant entitled to use Form S-3 or any successor thereto to register such shares, then the Company shall use its reasonable best efforts to register under the Securities Act on Form S-3 or any successor thereto, for public sale in accordance with the method of disposition specified in such notice, the number of shares of Restricted Stock specified in such notice. Whenever the Company is required by this Section 6 to use its best efforts to effect the registration of Restricted Stock, each of the procedures and requirements of Section 4 (including but not limited to the requirement that the Company notify all holders of Restricted Stock from whom notice has not been received and provide them with the opportunity to participate in the offering) shall apply to such registration; PROVIDED, HOWEVER, that there shall be no limitation on the number of registrations on Form S-3 which may be requested and obtained under this Section 6. (b) Notwithstanding anything to the contrary set forth in this Agreement, the Company's obligation under this Agreement to register Restricted Stock under the Securities Act on registration statements ("Registration Statements") may, upon the reasonable determination of the Board of Directors made only once during any six (6) month period, be suspended in the event and during such period as unforeseen circumstances (including without limitation (i) an underwritten primary offering by the Company (which includes no secondary offering) if the Company is advised in writing by its underwriters that the registration of the Restricted Stock would have a material adverse effect on the Company's offering, or (ii) pending negotiations relating to, or consummation of, a transaction or the occurrence of an event which would require additional disclosure of material information by the Company in Registration Statements or such other filings, as to which the Company has a bona fide business purpose for preserving confidentiality or which renders the Company unable to comply with Commission requirements) exist (such unforeseen circumstances being hereinafter referred to as a "Suspension Event") Registration Rights Agreement - Page 7 which would make it impractical or unadvisable for the Company to file the Registration Statements or such other filings or to cause such to become effective. Such suspension shall continue only for so long as such event is continuing but in no event for a period longer than ninety (90) days. The Company shall notify the Purchasers of the existence and nature of any Suspension Event. 7. REGISTRATION PROCEDURES. If and whenever the Company is required by the provisions of Sections 4, 5 or 6 to use its best efforts to effect the registration of any shares of Restricted Stock under the Securities Act, the Company will, promptly: (a) prepare and file with the Commission a registration statement (which, in the case of an underwritten public offering pursuant to Section 4, shall be on Form S-1 or other form satisfactory to the managing underwriter selected as therein provided) with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby (determined as hereinafter provided); (b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period specified in paragraph (a) above and comply with the provisions of the Securities Act with respect to the disposition of all Restricted Stock covered by such registration statement in accordance with the sellers' intended method of disposition set forth in such registration statement for such period; (c) furnish without charge to each seller of Restricted Stock and to each underwriter such number of copies of the registration statement, each such amendment and supplement thereto (in each case including all exhibits and all documents incorporated therein by reference) and the prospectus included therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the public sale or other disposition of the Restricted Stock covered by such registration statement; (d) use its best efforts to register or qualify the Restricted Stock covered by such registration statement under the securities or "blue sky" laws of such jurisdictions as the sellers of Restricted Stock or, in the case of an underwritten public offering, the managing underwriter reasonably shall request; PROVIDED, HOWEVER, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction; (e) (i) use its best efforts to list the Restricted Stock covered by such registration statement with any securities exchange on which the Common Stock of the Company is then listed, if the listing of such Restricted Stock is then permitted under the rules of such exchange, or (ii) if no similar securities are then so listed, to either cause all such Restricted Stock to be listed on a national securities exchange or to secure designation of all such Restricted Stock as a National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") "national market system security" within the meaning of Rule 11Aa2-1 of the Commission or, failing that, secure NASDAQ authorization for such shares and, without limiting the generality Registration Rights Agreement - Page 8 of the foregoing, take all actions that may be required by the Company as the issuer of such Restricted Stock in order to facilitate the managing underwriter's arranging for the registration of at least two market makers as such with respect to such shares with the National Association of Securities Dealers, Inc. (the "NASD"), provided, however, the Company shall not be required to cause the Restricted Stock to be listed on any national securities exchange or to secure designation of the Restricted Stock as a NASDAQ national market system security or on any other inter-dealer quotation system if at that time the Company does not satisfy the criteria for such listing or designation established by such exchange or inter-dealer quotation system; (f) immediately notify each seller of Restricted Stock and each underwriter under such registration statement, (i) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare and furnish without charge to such seller a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Restricted Stock, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (ii) when the registration statement, any pre-effective amendment to the registration statement, the prospectus or any prospectus supplement related thereto or post-effective amendment to the registration statement has been filed and, with respect to the registration statement or any post-effective amendment, when the same has become effective; (iii) of any request by the Commission or state securities authority for amendments or supplements to the registration statement or the prospectus related thereto or for additional information; (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose; and (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Restricted Stock for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose; (g) if the offering is underwritten and at the request of any seller of Restricted Stock, use its best efforts to furnish on the date that Restricted Stock is delivered to the underwriters for sale pursuant to such registration: (i) an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters and to such seller, to such effect as reasonably may be requested by counsel for the underwriters, and (ii) a letter dated such date from the independent public accountants retained by the Company, addressed to the underwriters and to such seller, stating that they are independent public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements of the Company included in the registration statement or the prospectus, or any amendment or supplement thereof, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five business days prior to the date of such letter) with respect to such registration as such underwriters reasonably may request; Registration Rights Agreement - Page 9 (h) make available for inspection by each seller of Restricted Stock, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by such seller or underwriter, reasonable access to all financial and other records, pertinent corporate documents and properties of the Company, as such parties may reasonably request, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; (i) cooperate with the selling holders of Restricted Stock and the managing underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Restricted Stock to be sold, such certificates to be in such denominations and registered in such names as such holders or the managing underwriters may request at least two business days prior to any sale of Restricted Stock; and permit any holder of Restricted Stock which holder, in the sole and exclusive judgment, exercised in good faith, of such holder, might be deemed to be a controlling person of the Company, to participate in good faith in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included, subject to review by the Company and its counsel after consultation with such holder. For purposes of Section 7(a) and 7(b) and of Section 4(c), the period of distribution of Restricted Stock in a firm commitment underwritten public offering shall be deemed to extend until each underwriter has completed the distribution of all securities purchased by it, and the period of distribution of Restricted Stock in any other registration shall be deemed to extend until the earlier of the sale of all Restricted Stock covered thereby and 180 days after the effective date thereof. (j) in the case of an underwritten offering, enter into such customary agreements (including an underwriting agreement) and take such other actions as the holders of a majority of the shares of Restricted Stock participating in such offering shall reasonably request in order to facilitate the disposition of such Restricted Stock. The holders of the shares of Restricted Stock which are to be distributed by such underwriters shall be parties to such underwriting agreement and may, at their option, require that the Company make to and for the benefit of such holders the representations, warranties and covenants of the Company which are being made to and for the benefit of such underwriters and which are of the type customarily provided to institutional investors in secondary offerings; (k) use its reasonable best efforts to obtain promptly the withdrawal of any order suspending the effectiveness of the registration statement; (l) provide a CUSIP number for all Restricted Stock, not later than the effective date of the registration statement; and (m) make reasonably available its employees and personnel and otherwise provide reasonable assistance to the underwriters (taking into account the needs of the Company's business and the requirements of the marketing process) in the marketing of Restricted Stock in any underwritten offering. Registration Rights Agreement - Page 10 In connection with each registration hereunder, the sellers of Restricted Stock will furnish to the Company in writing such information requested by the Company with respect to themselves and the proposed distribution by them as reasonably shall be necessary in order to assure compliance with federal and applicable state securities laws and to make the registration statement correct, accurate and complete in all respects with respect to such sellers; provided, however, that this requirement shall not be deemed to limit any disclosure obligation arising out of any seller's relationship to the Company if one of such seller's agents or affiliates is an officer, director or control person of the Company. In addition, the sellers shall, if requested by the Company, execute such other agreements, which are reasonably satisfactory to them and which shall contain such provisions as may be customary and reasonable in order to accomplish the registration of the Restricted Stock. In connection with each registration pursuant to Sections 4, 5 or 6 covering an underwritten public offering, the Company and each seller agree to enter into a written agreement with the managing underwriter selected in the manner herein provided in such form and containing such provisions as are customary in the securities business for such an arrangement between such underwriter and companies of the Company's size and investment stature. 8. EXPENSES. All expenses incurred by the Company in complying with Sections 4, 5 and 6, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including counsel fees) incurred in connection with complying with state securities or "blue sky" laws, fees and expenses of one counsel for the selling holders of Restricted Stock in connection with the registration of Restricted Stock, fees of the National Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of any insurance which might be obtained by the Company, but excluding any Selling Expenses, are called "Registration Expenses." All underwriting discounts and selling commissions applicable to the sale of Restricted Stock and the fees and expenses of more than one counsel for the selling holders of Restricted Stock in connection with the registration of Restricted Stock are called "Selling Expenses." The Company will pay all Registration Expenses in connection with each registration statement under Sections 4, 5 or 6. All Selling Expenses in connection with each registration statement under Sections 4, 5 or 6 shall be borne by the participating sellers in proportion to the number of shares sold by each, or by such participating sellers other than the Company (except to the extent the Company shall be a seller) as they may agree. 9. INDEMNIFICATION. (a) In the event of a registration of any of the Restricted Stock under the Securities Act pursuant to Sections 4, 5 or 6, the Company will indemnify and hold harmless each holder of Restricted Stock, its partners, members, stockholders, affiliates, officers and directors, each underwriter of such Restricted Stock thereunder and each other person, if any, who controls such seller or underwriter within the meaning of the Securities Act, against any losses, claims, Registration Rights Agreement - Page 11 damages or liabilities, joint or several, to which such holder, partner, member, stockholder, affiliate, officer, director, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Restricted Stock was registered under the Securities Act pursuant to Sections 4, 5 or 6, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Restricted Stock under the securities laws thereof (any such application, document or information herein called a "Blue Sky Application"), (iii) the omission or alleged omission to state in any document referred to in clause (i) or (ii), together with any document incorporated by reference therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (iv) any violation by the Company or its agents of any rule or regulation promulgated under the Securities Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration, or (v) any failure to register or qualify the Restricted Stock in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company (the undertaking of any underwriter chosen by the Company being attributed to the Company) will under-take such registration or qualification on the seller's behalf (provided that in such instance the Company shall not be so liable if it has undertaken its best efforts to so register or qualify the Restricted Stock) and will reimburse each such holder, partner, member, stockholder, affiliate, and such officer and director, each such underwriter and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by any such seller, any such underwriter or any such controlling person in writing specifically for use in such registration statement, prospectus or Blue Sky Application. (b) In the event of a registration of any of the Restricted Stock under the Securities Act pursuant to Sections 4, 5 or 6, each seller of such Restricted Stock thereunder, severally and not jointly, will indemnify and hold harmless the Company, each person, if any, who controls the Company within the meaning of the Securities Act, each officer of the Company who signs the registration statement, each director of the Company, each other holder of Restricted Stock (including its partners, members, stockholders and affiliates), each underwriter and each person who controls any underwriter within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such officer, director, other seller, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which such Restricted Stock was registered under the Securities Act pursuant to Sections 4, 5 or 6, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or any Blue Sky Application or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not Registration Rights Agreement - Page 12 misleading, and will reimburse the Company and each such officer, director, other seller, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that such seller will be liable hereunder in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such seller, as such, furnished in writing to the Company by such seller specifically for use in such registration statement, prospectus or Blue Sky Application; and PROVIDED, FURTHER, HOWEVER, that the liability of each seller hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the public offering price of the shares sold by such seller under such registration statement bears to the total public offering price of all securities sold thereunder, but not in any event to exceed the proceeds received by such seller from the sale of Restricted Stock covered by such registration statement. (c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this Section 9 and shall only relieve it from any liability which it may have to such indemnified party under this Section 9 if and to the extent the indemnifying party is prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 9 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; PROVIDED, HOWEVER, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified party shall have the right to select a separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. (d) If for any reason the foregoing indemnity is unavailable or is insufficient to hold harmless an indemnified party under Sections 9(a) or (b), then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any and losses, claims, damages and liabilities ("Claims") in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, with respect to such offering of securities. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, Registration Rights Agreement - Page 13 access to information and opportunity to correct or prevent such untrue statement or omission. If, however, the allocation provided in the second preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 9(d) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding sentences of this Section 9(d). The amount paid or payable in respect of any Claim shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim. No person guilty of fraudulent misrepresentation (within the meaning of section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything in this section 9(d) to the contrary, no indemnifying party (other than the Company) shall be required pursuant to this section 9(d) to contribute any amount in excess of the net proceeds received by such indemnifying party from the sale of Restricted Stock in the offering to which the losses, claims, damages or liabilities of the indemnified parties relate, less the amount of any indemnification payment made by such indemnifying party pursuant to Sections 9(b). (e) The indemnities provided in this Section 9 shall survive the transfer of any Restricted Stock by such holder. (f) The indemnities provided in this Section 9 shall be for the exclusive benefit of the Company and the holders of Restricted Stock and shall not be deemed to benefit any third party who has not otherwise become a party hereto. 10. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often as, there is any change in the Common Stock or the Preferred Stock by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Common Stock or the Preferred Stock as so changed. 11. RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Stock to the public without registration, at all times after 90 days after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; (b) use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and Registration Rights Agreement - Page 14 (c) furnish to each holder of Restricted Stock forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of such Rule 144 and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as such holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such holder to sell any Restricted Stock without registration. 12. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to you as follows: (a) The execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite corporate action and will not violate any provision of law, any order of any court or other agency of government, the certificate of incorporation or By-laws of the incorporation or any provision of any indenture, agreement or other instrument to which it or any or its properties or assets is bound, conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Company. (b) This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except to the extent the indemnification provisions herein may be deemed not enforceable. 13. MISCELLANEOUS. (a) All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including without limitation valid transferees of any Preferred Shares or Restricted Stock), whether so expressed or not; PROVIDED, HOWEVER, that registration rights conferred herein on the holders of Preferred Shares or Restricted Stock shall only inure to the benefit of a transferee of Preferred Shares or Restricted Stock if (i) there is transferred to such transferee at least 1,000,000 shares of Restricted Stock (appropriately adjusted for any subdivision or combination) or such lesser number of shares of Restricted Stock as may have been originally issued pursuant to the First Series E Purchase Agreement, the Series D Purchase Agreement, the Prior Purchase Agreement, the CommVest Warrant, the Contingent Warrant, or the Imperial Bank Warrant to the direct or indirect transferor of such transferee or (ii) such transferee is a partner, shareholder or affiliate of a party hereto. (b) All notices, requests, consents and other communications hereunder shall be in writing and shall be mailed by overnight courier service, certified or registered mail, return receipt requested, postage prepaid, or telexed, in the case of non-U.S. residents, addressed as follows: if to the Company or any other party hereto, at the address of such party set forth in the Purchase Agreement or in a certain Stockholders Agreement by and among the parties hereto dated as of the date hereof with a copy to the Company's counsel as indicated therein; Registration Rights Agreement - Page 15 if to any subsequent holder of Preferred Shares or Restricted Stock, to it at such address as may have been furnished to the Company in writing by such holder; or, in any case, at such other address or addresses as shall have been furnished in writing to the Company (in the case of a holder of Preferred Shares or Restricted Stock) or to the holders of Preferred Shares or Restricted Stock (in the case of the Company) in accordance with the provisions of this paragraph. (c) This Agreement shall be governed by and construed and enforced under the Delaware General Corporation Law as to matters within the scope thereof and as to all other matters shall be governed by and construed and enforced under the laws of the State of Georgia, in each case without regard to its conflicts of law provisions. (d) This Agreement may not be amended or modified, and no provision hereof may be waived, without the written consent of the Company and the holders of at least sixty percent (60%) in interest of the outstanding shares of Restricted Stock. Notwithstanding the foregoing, no such amendment or modification shall be effective if and to the extent that such amendment or modification either (i) creates any additional affirmative obligations to be complied with by any or all of the holders of Restricted Stock or (ii) grants to any one or more Purchasers any rights more favorable than any rights granted to all other Purchasers or otherwise treats any one or more Purchasers differently than all other Purchasers, unless the consent of all Purchasers is obtained. (e) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Unless earlier satisfied as set forth herein, the obligations of the Company to register shares of Restricted Stock under Sections 4, 5 or 6 shall terminate five years after completion of an underwritten public offering of shares of Common Stock in which the net proceeds received by the Company shall be at least $30 million and the per share price paid by the public for such shares shall be at least $6.17 (appropriately adjusted to reflect any subdivision or combination). (g) If requested in writing by the underwriters for the initial underwritten public offering of securities of the Company, each holder of Restricted Stock who is a party to this Agreement shall agree not to sell publicly any shares of Restricted Stock or any other shares of Common Stock (other than shares of Restricted Stock or other shares of Common Stock being registered in such offering), without the consent of such underwriters, for a period of not more than 180 days following the consummation of such initial public offering; PROVIDED, HOWEVER, that all persons entitled to registration rights with respect to shares of Common Stock who are not parties to this Agreement and all executive officers and directors of the Company shall also have agreed not to sell publicly their Common Stock under the circumstances and pursuant to the terms set forth in this Section 13(g). (h) The Company shall not grant to any third party any registration rights comparable to or more favorable than any of those contained herein, so long as any of the registration rights Registration Rights Agreement - Page 16 under this Agreement remains in effect; PROVIDED, HOWEVER, that the Company may grant to a third party incidental registration rights upon the approval of such grant by the Board of Directors of the Company. (i) If any provision of this Agreement shall be held to be illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render illegal, invalid or unenforceable any other provision of this Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable provision were not contained herein. (j) This Agreement supercedes and amends the Second Amended and Restated Registration Rights Agreement dated April ___, 2000 ("Second Amended Registration Rights Agreement") by and among the Company and the Purchasers of the Company's Series A Convertible Preferred Stock, Purchase Warrants for Series B Convertible Preferred Stock, Series D Convertible Preferred Stock, Series E Convertible Preferred Stock, CommVest, LLC, and Imperial Bancorp. Accordingly, the Second Amended Registration Rights Agreement (x) shall be of no further force or effect, (y) shall be deemed cancelled in its entirety, and (z) shall be deemed amended and restated by this Agreement, all upon effectiveness hereof. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] Registration Rights Agreement - Signature Pages Please indicate your acceptance of the foregoing by signing and returning the enclosed counterpart of this letter, whereupon this Agreement shall be a binding agreement between the Company and you. Very truly yours, VIEWLOCITY, INC. By: /s/ Stan F. Stoudenmire _________________________________ Name: Stan F. Stoudenmire _______________________________ Title: Sr. VP & Secretary ______________________________ AGREED TO AND ACCEPTED as of the date first above written. Registration Rights Agreement - Signature Pages NEW SERIES E PURCHASERS: SANDS BROTHERS VENTURE CAPITAL, L.L.C. By: /s/ Martin Sands ________________________________ Name: Martin Sands Title: Manager, SB Venture Capital Management LLC, Manager 280 VENTURES, L.L.C. By: /s/ Steven Sands ________________________________ Name: Steven Sands Title: Director, 280 Ventures Management LLC, Manager SB CONTENT ASSOCIATES, L.L.C. By: /s/ Steven Sands ________________________________ Name: Steven Sands Title: Manager, SB Content Management Associates LLC, Manager SB SYNCHRONIZED ASSOCIATES, L.L.C. By: /s/ Steven Sands ________________________________ Name: Steven Sands Title: Manager Registration Rights Agreement - Signature Pages S K GLOBAL AMERICA, INC. By: /s/ J.H. Lew _________________________________ Name: J.H. Lew Title: President Registration Rights Agreement - Signature Pages J & M VENTURE CAPITAL, LLC By: /s/ Brian H. Fenn _____________________________ Name: Brian H. Fenn Title: Member Manager Registration Rights Agreement - Signature Pages INITIAL SERIES E PURCHASERS: DEUTSCHE POST INTERNATIONAL B.V. By: /s/ Joachim Schlusener _______________________________ Name: Joachim Schlusener Title: Managing Director By: /s/ Rudiger Krenkel _______________________________ Name: Rudiger Krenkel Title: Director MARCONI CAPITAL LIMITED By: /s/ Mark Aslett ______________________________ Name: Mark Aslett Title: VP Corporate Development SINGTEL VENTURES (SINGAPORE) PTE LTD. By: /s/ Andrew Buay _______________________________ Name: Andrew Buay Title: Director Corporate Development DHL INTERNATIONAL LIMITED By: /s/ Robert Kuijpers _______________________________ Name: Robert Kuijpers Title: Attorney-in-fact B2B CAPITAL II, LLC By: /s/ Brooks W. Binder _______________________________ Name: Brooks W. Binder Title: Manager Registration Rights Agreement - Signature Pages SERIES A, B AND D PURCHASERS: BCI GROWTH V, L.P. By: Glen Pointe Associates V, LLC By: /s/ Mark E. Hastings ________________________________ Mark E. Hastings Managing Member BCI INVESTORS, LLC By: /s/ Mark E. Hastings _________________________________ Name: Mark E. Hastings Title: Managing Member Registration Rights Agreement - Signature Pages BANCBOSTON CAPITAL, INC. By: /s/ Peter R. Roberts _______________________________ Name: Peter R. Roberts Title: VP & MD THE BEACON GROUP III - FOCUS VALUE FUND, L.P. By: Beacon Focus Value Investors, L.L.C. By: Focus Value GP, Inc. By: /s/ Thomas G. Mendell ________________________________ Name: Thomas G. Mendell Title: Managing Director BATTERY VENTURES IV, L.P. By: Battery Partners IV, LLC, its general partner By: /s/ Oliver D. Curme _______________________________ Name: Oliver D. Curme Title: Member Manager BATTERY INVESTMENT PARTNERS IV, LLC By: /s/ Oliver D. Curme _______________________________ Name: Oliver D. Curme Title: Member Manager Registration Rights Agreement - Signature Pages COMMVEST PARTNERS I COMPANY By: /s/ Dennis P. Cameron ________________________________ Name: Dennis P. Cameron Title: Attorney-in-fact WILLIAM STREET ASSOCIATES II, LLC By: /s/ Douglas R. Brian ________________________________ Name: Douglas R. Brian Title: Executive VP HAMBRECHT & QUIST, LLC By: /s/ Norman D. Colbert ________________________________ Name: Norman D. Colbert Title: Managing Director Registration Rights Agreement - Signature Pages COMMVEST, LLC By: /s/ Douglas R. Brian ________________________________ Name: Douglas R. Brian Title: Executive VP IMPERIAL BANCORP By: /s/ Laura Blakely ________________________________ Name: Laura Blakely Title: Assistant Secretary WILLIAM STUEK /s/ William Stuek ____________________________________ William Stuek, Individually Registration Rights Agreement - Signature Pages SERIES D ADDITIONAL PURCHASERS: /s/ Gregory Cronin ____________________________________ Greg Cronin /s/ Maurice Trebuchon ____________________________________ Maurice Trebuchon /s/ Jeff Cashman ____________________________________ Jeff Cashman /s/ Paul Leiske ____________________________________ Paul Leiske /s/ Stan F. Stoudenmire ____________________________________ Stan F. Stoudenmire /s/ Anders Berglund ____________________________________ Anders Berglund /s/ Christer Wahlander ____________________________________ Christer Wahlander /s/ Michael Lantz ____________________________________ Michael Lantz EX-10.33 35 ex-10_33.txt EXHIBIT 10.33 EXHIBIT 10.33 VIEWLOCITY, INC. INDEMNIFICATION AGREEMENT THIS INDEMNIFICATION AGREEMENT is made on this ___ day of _______________, 2000, between VIEWLOCITY, INC., a Delaware corporation (the "Company"), and ________________ ("Indemnitee"): W I T N E S S E T H: WHEREAS, Indemnitee is an officer and/or director of the Company and in such capacity performs or will perform a valuable service for the Company; WHEREAS, the Company's Bylaws (the "Bylaws") authorize the Company to indemnify its officers and directors in accordance with the Delaware General Corporation Law (the "DGCL"); WHEREAS, Section 145 of the DGCL (the "Statute") provides that the indemnification provided under the Statute is not exclusive of any other rights in respect to indemnification or otherwise to which those seeking indemnification may be entitled under the Company's Certificate of Incorporation, the Company's Bylaws, a general or specific action of the Company's Board of Directors, or contract to the extent the provisions of such instruments or contract are consistent with the Statute; WHEREAS, the Statute thus contemplates that contracts may be entered into between the Company and the Company's directors and officers with respect to indemnification of such individuals; and WHEREAS, in order to encourage Indemnitee to begin or to continue to serve as an officer or a member of the Board of Directors of the Company, and to perform other designated services for the Company at its request, the Company has determined and agreed to enter into this Agreement with Indemnitee; NOW, THEREFORE, in consideration of Indemnitee's continued service as an officer and/or director of the Company, and the performance of such other services as requested by the Company, the parties hereby agree as follows: 1. STATUTORY INDEMNITY OF INDEMNITEE. Except as expressly set forth herein and subject to the provisions of this Agreement, the Company shall defend, hold harmless and indemnify Indemnitee to the full extent authorized or permitted by the provisions of the Statute, as currently in effect, or by any amendment thereof or other statutory provision authorizing or permitting such indemnification adopted after the date hereof that has the effect of broadening (but not narrowing) the scope of indemnification provided under the Statute as it exists as of the date hereof. 2. GENERAL INDEMNITY. Except as expressly set forth herein and subject to the provisions of this Agreement, in addition to any other indemnification to which Indemnitee may be entitled pursuant to the Statute, the Company's Certificate of Incorporation or Bylaws, or otherwise, the Company shall defend, hold harmless and indemnify Indemnitee in the event Indemnitee was, is, or is threatened to be made a named defendant or respondent, in any threatened, pending or completed dispute, action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal, by reason of the fact that Indemnitee is or was an officer, director, employee or agent of the Company, or is or was serving at the request of the Company as an officer, director, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against any obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employment benefit plan), expenses (including attorneys' fees), and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with such dispute, action, suit or proceeding. For purposes of this Section 2, Indemnitee shall be considered to be serving an employee benefit plan at the request of the Company if Indemnitee's duties to the Company also impose duties on, or otherwise involve services by, Indemnitee to the plan or to participants in or beneficiaries of the plan. 3. LIMITATIONS ON GENERAL INDEMNITY. A. The Company shall not be liable under this Agreement to make any payment of amounts otherwise subject to indemnification hereunder if and to the extent Indemnitee has otherwise actually received such payment under directors' and officers' liability insurance carried by the Company, or pursuant to any other insurance policy, contract, agreement or otherwise. B. No indemnity pursuant to Section 2 of this Agreement shall be paid by the Company to the extent of any liability incurred in a proceeding in which Indemnitee is adjudged liable to the Company or is subjected to injunctive relief in favor of the Company: (1) for any appropriation, in violation of Indemnitee's duties, of any business opportunities of the Company; (2) for acts or omissions which involve intentional misconduct or a knowing violation of law; (3) for any transaction from which Indemnitee received any improper personal benefit; or (4) for matters as to which indemnification would be in contravention of the laws of the State of Delaware or of the United States of America, whether as a matter of policy or pursuant to statutory provision. 4. NOTIFICATION AND DEFENSE OF CLAIM. A. Promptly after receipt by Indemnitee of notice of the commencement of any action, suit or proceeding, Indemnitee will, if a claim in respect thereto is to be made against the Company under this Agreement, notify the Company of the commencement thereof, but the failure to so notify the Company will not relieve the Company from any liability which it may have to Indemnitee otherwise under this Agreement. With respect to any such action, suit or proceeding as to which Indemnitee so notifies the Company: (1) the Company will be entitled to participate therein at its own expense; and (2) except as otherwise provided below, to the extent that it may desire, the Company may assume the defense thereof. -2- B. After notice from the Company to Indemnitee of the Company's election to assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ counsel of Indemnitee's choosing in such action, suit or proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized in writing by the Company, (ii) the Company and Indemnitee shall reasonably conclude that there may be a conflict of interest between the Company and Indemnitee in the conduct of the defense of such action, or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the reasonable fees and expenses of Indemnitee's counsel shall be paid by the Company. C. The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any threatened or pending action, suit or proceeding without the Company's prior written consent. The Company shall not settle any such action, suit or proceeding in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee's prior written consent. Neither the Company nor Indemnitee will unreasonably withhold consent to any proposed settlement. 5. PREPAYMENT OF EXPENSES. Unless Indemnitee otherwise elects, expenses incurred in defending any civil or criminal action, suit or proceeding will be paid by the Company in advance of the final disposition of such action, suit or proceeding if: (i) Indemnitee furnishes the Company a written affirmation of Indemnitee's good faith belief that Indemnitee's conduct does not constitute behavior of the kind described in subsection B of Section 3 of this Agreement; and (ii) Indemnitee furnishes the Company a written undertaking to repay any advances if it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company under this Agreement. 6. ENFORCEMENT. A. The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve or to continue to serve as a director and/or officer of the Company and/or a subsidiary or other affiliate of the Company, and acknowledges that Indemnitee is relying upon this Agreement in agreeing to serve or to continue to serve in such capacity. B. In the event Indemnitee is required to bring any action to enforce Indemnitee's rights or to collect monies due under this Agreement and is successful in such action, the Company shall promptly reimburse Indemnitee for all of Indemnitee's reasonable fees and expenses in bringing and pursuing such action, including reasonable attorneys' fees, court costs and other related expenses. 7. SEVERABILITY: REFORMATION. Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable in whole or in part for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof. In the event that all or any portion of this Agreement is ever held void or unenforceable by a court of competent jurisdiction, then the parties hereto expressly authorize such court to modify any provision(s) held void or unenforceable to the extent, and only to the extent, necessary to render it valid and enforceable. 8. NOTICES. All notices, demands and other communications required or permitted hereunder ("Notices") shall be in writing and shall be deemed to have been duly given (i) if delivered personally, -3- upon receipt of delivery; or (ii) if mailed by certified mail, return receipt requested, with proper postage prepaid, on the fifth (5th) business day after mailing. All Notices shall be delivered or addressed as follows: If to the Company: Viewlocity, Inc. _______________________ _______________________ _______________________ If to the Indemnitee: _______________________ _______________________ _______________________ _______________________ Any party may change its address for Notices by giving a Notice hereunder specifically setting forth such new address. If receipt of any Notice is refused, such Notice shall be deemed to have been given on the date of such refusal to accept receipt. 10. GOVERNING LAW: ASSIGNMENT: BINDING EFFECT; AMENDMENT; TERMINATION; USAGE. A. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. B. Neither this Agreement nor any rights or obligations hereunder shall be assigned or transferred by Indemnitee. C. This Agreement shall be binding upon Indemnitee and upon the Company, and their respective successors and assigns, including successors by merger or consolidation, and shall inure to the benefit of Indemnitee, his or her heirs and personal representatives, and to the benefit of the Company, its successors and assigns. D. No amendment, modification or termination of this Agreement shall be effective unless in writing signed by both parties hereto. E. Whenever the masculine, feminine or neuter gender is used in this Agreement, it shall, where appropriate and the context so requires, include the other genders as well, and the plural shall include the singular and the singular the plural where appropriate and the context so requires. F. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. G. The provisions of this Agreement shall cover claims, actions, suits and proceedings, whether now pending or hereafter commenced, and shall be retroactive to cover acts or omissions or alleged acts or omissions that heretofore have taken place. -4- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written. _________________________________ _________________________________ VIEWLOCITY, INC. By: ____________________________ _______________ , __________ -5- EX-10.34 36 ex-10_34.txt EXHIBIT 10.34 EXHIBIT 10.34 STOCK CONTRIBUTION AGREEMENT THIS STOCK CONTRIBUTION AGREEMENT (hereinafter "Agreement"), is made as of February 23, 1999, by and between Frontec AB ("Frontec"), a Swedish corporation (Org. No. 556272-5092), on the one hand, and Arctic, INC., a Delaware corporation ("Arctic"), on the other hand. W I T N E S S E T H : WHEREAS, Frontec Integra AB, a Swedish corporation, ("Integra" or the "Contributed Company") is a wholly-owned subsidiary of Frontec; and WHEREAS, Frontec owns all of the common shares (the "Transferred Shares") of Integra; and WHEREAS, Frontec wishes to contribute to Arctic the Transferred Shares in consideration for the issuance to Frontec of all of the capital stock of Arctic, consisting of 34,062,058 shares of Common Stock of Arctic, as more particularly set forth herein. NOW,THEREFORE, the parties hereto, intending to be bound hereby, agree as follows: Section 1. ISSUANCE OF STOCK Upon the terms and subject to the conditions of this Agreement and effective as of the date hereof, Frontec shall make a contribution (the "Contribution") to the capital of Arctic of the Transferred Shares of Integra. In consideration for the contribution of the Transferred Shares by Frontec to Arctic, which Transferred Shares constitute all of the issued and outstanding capital stock of Integra, Arctic hereby agrees to issue to Frontec 34,062,058 shares of common stock of Arctic, constituting all of the issued and outstanding capital stock of Arctic. Section 2. REPRESENTATIONS OF FRONTEC Frontec hereby represents and warrants to Arctic as follows: 2.1 ORGANIZATION AND GOOD STANDING. Frontec and Integra are companies duly organized, validly existing, and in good standing under the laws of Sweden. 2.2 AUTHORITY. This Agreement constitutes the legal, valid, and binding obligation of Frontec, enforceable against Frontec in accordance with its terms. Frontec has the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and to perform its obligations under this Agreement. Neither the execution and delivery of this Agreement by Frontec nor the consummation or performance of any of the transactions contemplated hereby or thereby will contravene, conflict with, or result in a violation of (A) any provision of the organizational documents of Frontec, (B) any resolution adopted by the members, managers, board of directors or the stockholders of Frontec or (C) any law, statute, regulation, decree, license, material agreement, order, or other restriction applicable to Frontec, the Contributed Company or the Transferred Shares. 2.3 CAPITALIZATION. The Transferred Shares represent all of the issued and outstanding equity securities of the Contributed Company. Frontec is the record and beneficial owner and holder of all such Transferred Shares, free and clear of all encumbrances. All of such Transferred Shares have been duly authorized and validly issued and are fully paid and non-assessable. 2.4 FINANCIAL STATEMENTS. Frontec has delivered to Integra a pro forma, consolidated balance sheet of the Contributed Companies, as defined in that certain Stock Contribution Agreement dated February 21, 1999, by and between Frontec and Integra, as if they existed at December 31, 1998 (the "Balance Sheet") and related Report of Factual Findings of Ohrlings Coopers & Lybrand AB, copies of which are attached hereto as EXHIBIT A. Subject to certain inter-company adjustments which are in each case and in the aggregate not material, at the date hereof, the Contributed Company or its subsidiaries, as the case may be, own (a) all the assets reflected on their books and records (except for assets sold or otherwise disposed of since the date of the Balance Sheet in the ordinary course of business), and (b) all the assets purchased or otherwise acquired since the date of the Balance Sheet and used primarily in the AMTrix business (except for assets acquired and sold or otherwise disposed of since the date of the Balance Sheet in the ordinary course of business). 2.5 OWNERSHIP OF SUBSIDIARIES. The Frontec AB is the record and beneficial owner and holder of all of the issued and outstanding equity securities of the Contributed Company. Frontec AB holds the shares in the Contributed Company free and clear of all claims, liens, encumbrances, voting agreements or rights of any nature of any third party (each an "Encumbrance"). All of such shares of the Contributed Company have been duly authorized and validly issued and are fully paid and non-assessable. 2.6 TRANSFER OF TRANSFERRED SHARES. Frontec owns all right, title and interest in and to the Transferred Shares, free and clear of any Encumbrances. Upon consummation of the transactions contemplated hereby, Arctic will have acquired good and valid title in and to the Transferred Shares, free and clear of any Encumbrances. Section 3. MISCELLANEOUS 3.1. GOVERNING LAW. All questions concerning the validity, operation, interpretation, and construction of this Agreement will be governed by and determined in accordance with the laws of the State of Delaware, without giving effect to its conflicts of laws principles. 3.2 ENTIRE AGREEMENT: AMENDMENT. The parties hereto acknowledge this Agreement is the complete and exclusive statement of their agreement relating to the subject matter hereof and supersedes all understandings, representations, conditions, warranties, covenants, and other communications, between the parties relating hereto. This Agreement may be amended only by a -2- subsequent writing that specifically refers to this Agreement and is signed by all parties and no other act, document, usage, or custom shall be deemed to amend this Agreement. 3.3 SEVERABILITY. Whenever possible, each provision of this Agreement shall be interpreted in such manner so as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement. If any provision contained in this Agreement is determined to be invalid, illegal or unenforceable as written, a court of competent jurisdiction shall, at any party's request, reform the terms of this Agreement to the extent necessary to cause such otherwise invalid provisions to be enforceable under applicable law. 3.4 SECTION HEADINGS. The captions to the Sections in this Agreement are for reference only and shall not affect the meaning or interpretation hereof. 3.5 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall constitute an original and all of which shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized representatives as of the date first above written. FRONTEC AB ARTIC, INC. By: _______________________________ By: ____________________________ Olof Englund Olof Englund By: _______________________________ Jan Westlund -3- EX-21.1 37 ex-21_1.txt EXHIBIT 21.1 EXHIBIT 21.1 SUBSIDIARIES OF VIEWLOCITY, INC. Nexstep, Inc., a Delaware corporation and wholly-owned subsidiary of Viewlocity, Inc. SC21 Pte, Ltd., a Singaporian corporation and wholly-owned subsidiary of Viewlocity, Inc. Frontec Integra AB, a Swedish corporation ("Integra") and wholly-owned subsidiary of Viewlocity, Inc. Viewlocity Australia Pty Ltd., an Australian corporation and wholly-owned subsidiary of Integra. Viewlocity France SA, a French corporation and wholly-owned subsidiary of Integra. Viewlocity GmbH, a German corporation and wholly-owned subsidiary of Integra. Viewlocity BV, a Netherlands corporation and wholly-owned subsidiary of Integra. Frontec Norge AS, a Norwegian corporation and wholly-owned subsidiary of Integra. Viewlocity Asia & Pacific Pte Ltd., a Singaporian corporation and wholly-owned subsidiary of Integra. Viewlocity AB, a Swedish corporation and wholly-owned subsidiary of Integra. Viewlocity Limited, a U.K. corporation and wholly-owned subsidiary of Integra. Viewlocity Holding France, SARL, a French corporation ("Viewlocity Holding France") and wholly-owned subsidiary of Integra. Electronic Data Transfer-EDT, SA, a French corporation and wholly-owned subsidiary of Viewlocity Holding France. EX-23.1 38 ex-23_1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in this Registration Statement on Form S-1 of our reports dated July 28, 2000 relating to the financial statements and financial statement schedules of Viewlocity, Incorporated, which appear in such Registration Statement. We also consent to the references to us under the headings "Experts" and "Selected Financial Data" in such Registration Statement. /s/ PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers LLP Atlanta, GA August 7, 2000 EX-23.2 39 ex-23_2.txt EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in this Registration Statement on Form S-1 of our reports dated April 4, 2000 relating to the financial statements and financial statement schedules of NexStep, Incorporated, which appear in such Registration Statement. We also consent to the references to us under the headings "Experts" and "Selected Financial Data" in such Registration Statement. /s/ PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers LLP Atlanta, GA August 7, 2000 EX-27.1 40 ex-27_1.txt EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM [TO COME] ANS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS YEAR YEAR YEAR DEC-31-2000 DEC-31-1999 DEC-31-1998 DEC-31-1997 JAN-01-2000 JAN-01-1999 JAN-01-1998 JAN-01-1997 MAR-31-2000 DEC-31-1999 DEC-31-1998 DEC-31-1997 6,923 9,316 1,597 1,422 0 0 0 0 8,157 5,050 5,479 4,594 276 223 156 39 0 0 0 0 16,468 15,376 7,601 6,351 5,731 4,161 3,639 3,218 1,945 1,778 2,224 1,535 26,247 19,110 9,898 8,616 13,432 15,232 7,859 4,184 0 0 0 0 41,999 23,751 0 0 0 0 0 0 361 341 0 0 (30,932) (21,127) (12,922) (12,119) 26,247 19,110 9,898 8,616 0 0 0 0 6,473 19,448 13,664 11,694 0 0 0 0 3,169 11,184 6,339 4,264 19,099 28,604 16,794 17,073 0 0 0 0 0 0 0 0 (15,716) (20,319) (9,675) (9,417) 30 94 (45) 244 (15,746) (20,413) (9,630) (9,661) 0 0 0 0 0 0 0 0 0 0 0 0 (15,746) (20,413) (9,630) (9,661) (0.51) (0.60) (0.28) (0.28) (0.51) (0.60) (0.28) (0.28)
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