<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1999
REGISTRATION NO. 333-87267
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
POET HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7372 94-3221778
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
999 BAKER WAY, SUITE 100
SAN MATEO, CALIFORNIA 94404
(650) 286-4640
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DIRK BARTELS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
POET HOLDINGS, INC.
999 BAKER WAY, SUITE 100
SAN MATEO, CALIFORNIA 94404
(650) 286-4640
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
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<S> <C> <C>
BRUCE M. MCNAMARA, ESQ. TOBIAS MULLER-DEKU WALTER A. LOONEY, ESQ.
WILSON SONSINI GOODRICH DR. CHRISTOPH L. GLESKE SIMPSON THACHER & BARTLETT
& ROSATI BRUCKHAUS WESTRICK 21ST FLOOR
PROFESSIONAL CORPORATION HELLER LOBER 99 BISHOPSGATE
650 PAGE MILL ROAD TAUNUSANLAGE 11 LONDON EC2M 3YH
PALO ALTO, CALIFORNIA 60329 FRANKFURT AM MAIN ENGLAND
94304-1050 GERMANY (44) 207 422 4000
(650) 493-9300 (49) 69 27 30 80
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, 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 number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE REGISTRATION FEE(1)
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Common Stock ($0.001 par value per share)................... $65,550,000 $18,223
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</TABLE>
(1) Registration fee previously paid. Estimated solely for the purpose
determining the registration fee pursuant to Rule 457(o) promulgated under
the Securities Act.
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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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable POET Holdings in connection with
the sale of Common Stock being registered. All amounts are estimates except the
SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $ 18,223
Printing and engraving costs................................ 150,000
Legal fees and expenses..................................... 400,000
Accounting fees and expenses................................ 300,000
Neuer Markt Listing Fee.....................................
Blue Sky fees and expenses.................................. 5,000
Transfer Agent and Registrar fees........................... 10,000
Reimbursed expenses of underwriters.........................
Miscellaneous expenses...................................... 315,000
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Total $1,300,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article Ninth of POET Holdings' Restated Certificate of Incorporation
provides for the indemnification of directors to the fullest extent permissible
under Delaware law.
Article VI of POET Holdings' Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of POET Holdings to the
fullest extent permissible under Delaware law.
POET Holdings intends to enter into indemnification agreements with its
directors and executive officers, in addition to the indemnification provided
for in POET Holdings' Bylaws, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, POET Holdings has issued unregistered
securities to a limited number of persons as described below.
1. On March 31, 1995, we issued 923,206 shares and 487,967 shares of
Series B Common Stock to Dirk Bartels and Jochen Witte, respectively, and
816,793 shares and 408,397 shares of Series A Preferred Stock to European
Technologies Holding and Compagnie Auxiliare Telecommunication (now
INNOVACOM), respectively, in exchange for all of the outstanding capital
stock of POET Software GmbH.
2. On April 7, 1995, we sold 1,686,049 shares of Series B Preferred
Stock for $2.15 per share to the following investors for an aggregate
purchase price of $3,625,005.35: Atlas Venture Europe Fund B.V., Lawrence
Owen Brown Family Trust (later transferred to Lawrence Owen Brown Family
LLC), El Dorado C&L Fund, L.P., El Dorado Ventures III, L.P., El Dorado
Technology IV, L.P., European Technologies Holding N.V., GC&H Investments,
Compagnie Auxiliare Telecommunications S.A., O'Brien Family Trust U/T/D
dated July 1, 1992, Sigma Associates III, Sigma Partners III, Sigma
Investors III and WS Investment Company 95A.
3. From inception through June 30, 1999, we granted stock options to
purchase 1,228,550 shares of our common stock at exercise prices ranging
from $0.22 to
II-1
<PAGE> 3
$11.50 per share $5.00 per share to employees, consultants, directors and
other service providers pursuant to our 1995 Stock Plan.
4. From inception through July 14, 1999, we issued and sold an
aggregate of 243,959 shares of our Series A Common Stock to employees,
consultants, directors and other service providers for an aggregate
purchase price of approximately $66,157.85 pursuant to exercises of options
granted under our 1995 Stock Plan.
5. On June 19, 1995, in connection with an equipment lease, we issued
a warrant to Lighthouse Capital Partners, L.P. to purchase 7,291 shares of
our Series B Preferred Stock at an exercise price of $2.15 per share.
6. On July 25, 1996, in connection with a loan, we issued a warrant to
Venture Lending, a division of Cupertino National Bank & Trust, to purchase
2,185 shares of Series C Preferred Stock at $5.72 per share.
7. On September 13, 1996, in connection with a loan, we issued a
warrant to Venture Lending, a division of Cupertino National Bank & Trust,
to purchase 4,370 shares of Series C Preferred Stock at $5.72 per share.
8. On November 8, 1996, we sold 1,143,886 shares of Series C Preferred
Stock for $5.72 per share to the following investors for an aggregate
purchase price of $6,543,027.92: Atlas Venture Europe Fund B.V., Lawrence
Owen Brown Family Trust, El Dorado C&L Fund, L.P., El Dorado Ventures III,
L.P., El Dorado Technology IV, L.P., European Technologies Holding N.V.,
GC&H Investments, Innovacom, Sigma Associates III, Sigma Partners III,
Sigma Investors III, WS Investment Company 96B and Novell, Inc.
9. On September 23, 1998, in connection with a note and warrant bridge
financing, we issued warrants to purchase an aggregate of 49,710 shares of
our Series D Preferred Stock at an exercise price of $7.04 per share to the
following investors: Atlas Venture Europe Fund B.V., the Lawrence Owen
Brown Family Trust, El Dorado C&L Fund, L.P., El Dorado Ventures III, L.P.,
El Dorado Technology IV, L.P., European Technologies Holding N.V.,
Innovacom, Sigma Associates III, Sigma Partners III and Sigma Investors
III.
10. On December 23, 1998, December 31, 1998 and April 23, 1999, we
sold an aggregate of 926,832 shares of Series D Preferred Stock for $7.04
per share to the following investors for an aggregate purchase price of
$6,524,897.28: Atlas Venture Europe Fund B.V., Lawrence Owen Brown Family
Trust, El Dorado C&L Fund, L.P., El Dorado Ventures III, L.P., El Dorado
Technology IV, L.P., European Technologies Holding N.V., Innovacom, Sigma
Associates III, Sigma Partners III, Sigma Investors III, Private Equity
Bridge Invest Ltd., Technologie Beteiligungs Gesellschaft, Innovationsfonds
Schleswig-Holstein & Hamburg GmbH and TH Fonds VC GmbH.
11. On January 20, 1999, in connection with a loan for $3,900,000 from
Technologie-Beteiligungsgesellschaft mbH der Deutschen Ausgleichsbank, we
issued a convertible subordinated promissory note, convertible into shares
of our Series A Common Stock.
12. On February 16, 1999, we issued a warrant to purchase up to 8,423
shares of our Series A Common Stock at an exercise price of $7.04 per share
to a technology search firm as in consideration for recruiting services.
13. On April 30, 1999, we issued a warrant to purchase up to 35,000
shares of our Series A Common Stock at an exercise price of $7.04 per share
to Ariba Technologies.
Except as indicated above, none of the foregoing transactions involved any
underwriters, underwriting discounts or commissions, or any public offering, and
POET Holdings believes that each transaction was exempt from the registration
requirements of the Securities Act by virtue of Section 4(2) thereof, Regulation
D promulgated thereunder or Rule 701 pursuant to compensatory benefit plans and
contracts relating to compensation as provided under such Rule 701. The
recipients in such transaction represented their intention 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 and instruments issued in such transactions. All recipients had
adequate access, through their relationships with POET Holdings and the
Predecessor, to information about POET Holdings.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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<S> <C>
1.1* Form of Underwriting Agreement.
3.1* Amended and Restated Certificate of Incorporation of the
Registrant.
3.2* Amended and Restated Bylaws of the Registrant.
4.1* Form of Registrant's Common Stock certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1 Change of Control Severance Agreement by and between the
Registrant and Jerry Wong, dated November 14, 1995.
10.2 Change of Control Severance Agreement by and between the
Registrant and Michael Hogan, dated April 2, 1997.
10.3 Change of Control Severance Agreement by and between the
Registrant and Carol Curry, dated August 1, 1997.
10.4.1 Employment Contract between POET Software GmbH and Jorg
Tewes, dated September 29, 1997.
10.4.2 English Summary of Exhibit 10.4.1.
10.5.1 Employment Contract between POET Software GmbH and Jochen
Witte, dated May 19, 1993.
10.5.2 English Summary of Exhibit 10.5.1.
10.6* Amended and Restated 1995 Stock Plan.
10.7* 1999 Director Option Plan.
10.8* 1999 Employee Stock Purchase Plan.
10.9* Form of Indemnification Agreement between the Registrant and
each of its directors and executive officers.
10.10 Second Amended and Restated Stockholder Rights Agreement,
dated December 23, 1998.
10.11 Warrant to purchase shares of Series A Common Stock of the
Registrant issued to Mark L. Gideon and Karen A Gideon,
Trustees U/A dated October 27, 1997 FBO Mark L. Gideon and
Karen A Gideon.
10.12 Warrant to purchase shares of Series A Common Stock of the
Registrant issued to Ariba, Inc., dated April 30, 1999.
10.13 Warrant to purchase shares of Series C Preferred Stock of
the Registrant issued to Venture Lending, a Division of
Cupertino National Bank & Trust, dated September 13, 1996.
10.14 Warrant to purchase shares of Series C Preferred Stock of
the Registrant issued to Venture Lending, a Division of
Cupertino National Bank & Trust, dated July 25, 1996.
10.15 Warrant to purchase shares of Series B Preferred Stock of
the Registrant issued to Lighthouse Capital Partners, L.P.,
dated June 19, 1995.
10.16 Form of warrant to purchase shares of Series D Preferred
Stock of the Registrant.
10.17 Lease Agreement, dated November 23, 1998, between Spieker
Properties, L.P., and the Registrant's wholly owned
subsidiary POET Software Corporation.
10.18.1* Office Lease Agreement between the Registrant's wholly owned
subsidiary POET Software GmbH and GBR
Petersen/Schroeder/Schmiel-Vemieter for office space in
Hamburg, Germany, dated May 29, 1997.
10.18.2* English Summary of Exhibit 10.18.1.
10.19*+ Agreement between POET Software Corporation and Ariba, Inc.,
dated April 30, 1999.
22.1 Subsidiaries of Registrant.
23.1** Consent of Deloitte & Touche LLP, independent auditors.
23.2* Consent of Counsel. Reference is made to Exhibit 5.1.
24.1** Power of Attorney (see page II-5).
27.1** Financial Data Schedule.
</TABLE>
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* To be filed by amendment.
** Previously filed.
+ Confidential treatment requested as to certain portions of this exhibit.
II-3
<PAGE> 5
(b) FINANCIAL STATEMENT SCHEDULES
Schedule II -- Valuation and Qualifying Accounts
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
We hereby undertake to provide to the underwriters at the closing specified
in the Underwriting Agreement certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to each
purchaser.
Insofar as indemnification by us for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons of us pursuant to the provisions referenced in Item 14 of this
Registration Statement or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by us of expenses incurred or paid by a director, officer, or
controlling person of POET Holdings in the successful defense of any action,
suit or proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered hereunder, we will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
We hereby undertake that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by us pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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<PAGE> 6
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SAN MATEO,
STATE OF CALIFORNIA, ON THE 29TH DAY OF SEPTEMBER, 1999.
POET HOLDINGS, INC.
By: /s/ DIRK BARTELS
------------------------------------
Dirk Bartels
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Dirk Bartels, Jochen Witte and
Jerry Wong, and each of them acting individually, as his true and lawful
attorneys-in-fact and agents, each with full power of substitution, for him in
any and all capacities, to sign any and all amendments to this Registration
Statement (including post-effective amendments or any abbreviated registration
statement and any amendments thereto filed pursuant to Rule 462(b) increasing
the number of securities for which registration is sought), and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, with full power of each to act alone, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully for all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or their substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
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SIGNATURE TITLE DATE
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/s/ DIRK BARTELS President and Chief Executive September 29, 1999
- --------------------------------------------- Officer and Chairman of the
Dirk Bartels Board
(Principal Executive Officer)
* Chief Financial Officer September 29, 1999
- --------------------------------------------- (Principal Financial Officer)
Jochen Witte
* (Principal Accounting Officer) September 29, 1999
- ---------------------------------------------
Jerry Wong
* Director September 29, 1999
- ---------------------------------------------
Shanda Bahles
* Director September 29, 1999
- ---------------------------------------------
Lawrence Owen Brown
* Director September 29, 1999
- ---------------------------------------------
J. Burgess Jamieson
* Director September 29, 1999
- ---------------------------------------------
Gert Kohler
* Director September 29, 1999
- ---------------------------------------------
Jerome Lecoeur
*By: /s/ DIRK BARTELS Attorney-in-fact September 29, 1999
--------------------------------------
Dirk Bartels
</TABLE>
II-5
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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<S> <C>
1.1* Form of Underwriting Agreement.
3.1* Amended and Restated Certificate of Incorporation of the
Registrant.
3.2* Amended and Restated Bylaws of the Registrant.
4.1* Form of Registrant's Common Stock certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1 Change of Control Severance Agreement by and between the
Registrant and Jerry Wong, dated November 14, 1995.
10.2 Change of Control Severance Agreement by and between the
Registrant and Michael Hogan, dated April 2, 1997.
10.3 Change of Control Severance Agreement by and between the
Registrant and Carol Curry, dated August 1, 1997.
10.4.1 Employment Contract between POET Software GmbH and Jorg
Tewes, dated September 29, 1997.
10.4.2 English Summary of Exhibit 10.4.1.
10.5.1 Employment Contract between POET Software GmbH and Jochen
Witte, dated May 19, 1993.
10.5.2 English Summary of Exhibit 10.5.1.
10.6* Amended and Restated 1995 Stock Plan.
10.7* 1999 Director Option Plan.
10.8* 1999 Employee Stock Purchase Plan.
10.9* Form of Indemnification Agreement between the Registrant and
each of its directors and executive officers.
10.10 Second Amended and Restated Stockholder Rights Agreement,
dated December 23, 1998.
10.11 Warrant to purchase shares of Series A Common Stock of the
Registrant issued to Mark L. Gideon and Karen A Gideon,
Trustees U/A dated October 27, 1997 FBO Mark L. Gideon and
Karen A Gideon.
10.12 Warrant to purchase shares of Series A Common Stock of the
Registrant issued to Ariba, Inc., dated April 30, 1999.
10.13 Warrant to purchase shares of Series C Preferred Stock of
the Registrant issued to Venture Lending, a Division of
Cupertino National Bank & Trust, dated September 13, 1996.
10.14 Warrant to purchase shares of Series C Preferred Stock of
the Registrant issued to Venture Lending, a Division of
Cupertino National Bank & Trust, dated July 25, 1996.
10.15 Warrant to purchase shares of Series B Preferred Stock of
the Registrant issued to Lighthouse Capital Partners, L.P.,
dated June 19, 1995.
10.16 Form of warrant to purchase shares of Series D Preferred
Stock of the Registrant.
10.17 Lease Agreement, dated November 23, 1998, between Spieker
Properties, L.P., and the Registrant's wholly owned
subsidiary POET Software Corporation.
10.18.1* Office Lease Agreement between the Registrant's wholly owned
subsidiary POET Software GmbH and GBR
Petersen/Schroeder/Schmiel-Vemieter for office space in
Hamburg, Germany, dated May 29, 1997.
10.18.2* English Summary of Exhibit 10.18.1.
10.19*+ Agreement between POET Software Corporation and Ariba, Inc.,
dated April 30, 1999.
22.1 Subsidiaries of Registrant.
23.1** Consent of Deloitte & Touche LLP, independent auditors.
23.2* Consent of Counsel. Reference is made to Exhibit 5.1.
24.1** Power of Attorney (see page II-5).
27.1** Financial Data Schedule.
</TABLE>
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* To be filed by amendment.
** Previously filed.
+ Confidential treatment requested as to certain portions of this exhibit.
<PAGE> 1
EXHIBIT 10.1
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is made and entered
into effective as of November 14, 1995 (the "Effective Date"), by and between
Jerry Wong (the "Employee") and POET Holdings, Inc., a Delaware corporation (the
"Company").
R E C I T A L S
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee and can cause the Employee to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the Company and its
shareholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its shareholders.
C. The Board believes that it is imperative to provide the Employee with certain
severance benefits upon the Employee's termination of employment following a
Change of Control or otherwise which provides the Employee with enhanced
financial security and provides sufficient incentive and encouragement to the
Employee to remain with the Company notwithstanding the possibility of a Change
of Control.
D. Certain capitalized terms used in the Agreement are defined in Section 5
below.
In consideration of the mutual covenants herein contained, and in consideration
of the continuing employment of Employee by the Company, the parties agree as
follows:
1. Duties and Scope of Employment.
(a) Position. The Company shall employ the Employee in the position of
Vice-President of Finance, with such duties, responsibilities and compensation
as in effect as of the Effective Date; provided, however, that the Board shall
have the right, prior to the occurrence of a Change of Control, to revise such
responsibilities and compensation from time to time as the Board may deem
necessary or appropriate.
(b) Obligations. The Employee shall devote his full business efforts and
time to the Company and its subsidiaries. The foregoing, however, shall not
preclude the Employee from engaging in such activities and services as do not
interfere or conflict with his responsibilities to the Company.
<PAGE> 2
2. At-Will Employment. The Company and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
practices or other agreements with the Company at the time of termination.
3. Severance Benefits.
(a) Termination Following A Change of Control. If the Employee's
employment terminates at any time within twelve (12) months following a Change
of Control as a result of Involuntary Termination other than for Cause, then
upon such termination and subject to Section 4, in addition to any severance
benefits payable under the Company's then existing severance and benefits plans
or policies and in addition to any portion of the Employee's stock options that
were vested and exercisable immediately prior to such termination, such options
shall become vested and exercisable as to an additional amount as though the
Employee had remained continuously employed for a period of twelve (12) months
following such Termination Date; provided, however, that if such potential
vesting acceleration would cause a contemplated Change of Control transaction
not to qualify for "pooling" accounting treatment under generally accepted
accounting principles, as determined by the Company's independent public
accountants (the "Accountants") prior to the Change of Control, Employee's stock
options and restricted stock shall not have their vesting so accelerated.
(b) Termination Apart from Change of Control. If, during the term of
this Agreement, the Employee's employment with the Company terminates, either
prior to the occurrence of a Change of Control or after the twelve (12)-month
period following a Change of Control, then the Employee shall not be entitled to
receive severance or other benefits except for those (if any) as may then be
established under the Company's then existing severance and benefits plans and
policies at the time of such termination.
(c) Voluntary Resignation; Termination For Cause; Termination on
Disability or Death. If, during the term of this Agreement, the Employee's
employment with the Company terminates, either prior to or after the occurrence
of a Change of Control, by reason of the Employee's voluntary resignation (and
is not an Involuntary Termination), or if the Employee is terminated for Cause
or as a result of the Employee's Disability or the death of the Employee, then
the Employee shall not be entitled to receive severance or other benefits except
for those (if any) as may then be established under the Company's then existing
severance and benefits plans and policies at the time of such termination.
4. Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to the Employee (i)
constitutes "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this
Section, would be subject to the excise tax imposed by Section 4999 of the Code,
then the Employee's severance benefits under Section 3 shall be payable either
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<PAGE> 3
(a) in full, or
(b) as to such lesser amount which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by the Employee on an after-tax basis, of the greatest amount of
severance benefits, notwithstanding that all or some portion of such severance
benefits may be taxable under Section 4999 of the Code. Unless the Company and
the Employee otherwise agree in writing, any determination required under this
Section 4 shall be made in writing by the Company's Accountants, whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section 4, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 4.
5. Definition of Terms. The following terms referred to in this Agreement shall
have the following meanings:
(a) Base Compensation. "Base Compensation" shall mean the Employee's
annual compensation as determined by the Board.
(b) Change of Control. "Change of Control" shall mean the occurrence of
any of the following events:
(i) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended), other than any
parent or wholly owned subsidiary of the Company or any company which is a
wholly owed subsidiary of any parent of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than 50% of the total
voting power represented by the Company's then outstanding voting securities; or
(ii) A change in the composition of the Board of Directors
of the Company occurring within a two-year period, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board of Directors
of the Company with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but shall not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company); or
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<PAGE> 4
(iii) 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.
(c) Involuntary Termination. "Involuntary Termination" shall mean (i) a
material reduction by the Company in the Base Compensation of the Employee as in
effect immediately prior to such reduction; (ii) a material reduction by the
Company in the kind or level of employee benefits to which the Employee is
entitled immediately prior to such reduction with the result that the Employee's
overall benefits package is significantly reduced; (iii) the relocation of the
Employee to a facility or a location more than 25 miles from the Employee's then
present location, without the Employee's express written consent; (iv) any
termination of the Employee by the Company which is not effected for Disability
or for Cause, or any purported termination for which the grounds relied upon are
not valid; or (v) the failure of the Company to obtain the assumption of this
agreement by any successors contemplated in Section 6 below. Except as expressly
set forth in this paragraph 5(c), no other circumstance or event shall
constitute an Involuntary Termination for purposes of this Agreement and
Employee shall not be entitled to benefits hereunder, notwithstanding the fact
that such other circumstance or event may constitute a constructive termination
of the Employee under California law.
(d) Cause. "Cause" shall mean (i) any act of personal dishonesty taken
by the Employee in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of the Employee, (ii) the
conviction of a felony which the Board reasonably believes had or will have a
material detrimental effect on the Company's reputation or business, (iii) a
willful act by the Employee which constitutes gross misconduct and which is
injurious to the Company, and (iv) continued failure by the Employee of his
duties or obligations in accordance with the standards and policies of the
Company or willful and deliberate violations of such obligations, in either case
after there has been delivered to the Employee a written demand for performance
from the Company which describes the basis for the Company's belief that the
Employee has not substantially performed his duties.
(e) Disability. "Disability" shall mean that the Employee has been
unable to perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such inability, at least 26
weeks after its commencement, is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the Employee
or the Employee's legal representative (such Agreement as to acceptability not
to be unreasonably withheld). Termination resulting from Disability may only be
effected after at least 30 days' written notice by the Company of its intention
to terminate the Employee's employment. In the event that the Employee resumes
the performance of substantially all of his duties hereunder before the
termination of his employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
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<PAGE> 5
(f) Termination Date. "Termination Date" shall mean (i) if this
Agreement is terminated by the Company for Disability, thirty (30) days after
notice of termination is given to the Employee (provided that the Employee shall
not have returned to the performance of the Employee's duties on a full-time
basis during such thirty (30) day period), (ii) if the Employee's employment is
terminated by the Company for any other reason, the date on which a notice of
termination is given, or (iii) if the Agreement is terminated by the Employee,
the date on which the Employee delivers the notice of termination to the
Company.
6. Successors.
(a) Company's Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights of
the Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
7. Term. This Agreement shall terminate upon the earlier of (i) the date that
all obligations of the parties hereunder have been satisfied, (ii) four (4)
years from the Effective Date (unless extended for an additional period or
periods by the Company and the Employee by mutual written agreement); or (ii)
thirteen (13) months after a Change of Control.
8. Notice.
(a) General. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for Cause or
by the Employee as a result of a voluntary resignation or an Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with Section 8 of this Agreement. Such notice shall
indicate the specific termination provision in this Agreement relied upon, shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination under the provision so indicated, and shall specify the
termination date (which shall be not more than 30 days after
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<PAGE> 6
the giving of such notice). The failure by the Employee to include in the notice
any fact or circumstance which contributes to a showing of Involuntary
Termination shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or circumstance in enforcing his rights
hereunder.
9. Arbitration. At the option of either party, any and all disputes or
controversies whether of law or fact and of any nature whatsoever arising from
or respecting this Agreement shall be decided by arbitration by the American
Arbitration Association in accordance with the rules and regulations of that
Association.
The arbitrator shall be selected as follows: in the event the Company
and the Employee agree on one arbitrator, the arbitration shall be conducted by
such arbitrator. In the event the Company and the Employee do not so agree, the
Company and the Employee shall each select one independent, qualified arbitrator
and the two arbitrators so selected shall select the third arbitrator. The
Company reserves the right to object to any individual arbitrator who shall be
employed by or affiliated with a competing organization.
Arbitration shall take place at San Mateo, California, or any other
location mutually agreeable to the parties. At the request of either party,
arbitration proceedings will be conducted in the utmost secrecy; in such case
all documents, testimony and records shall be received, heard and maintained by
the arbitrators in secrecy under seal, available for the inspection only of the
Company or the Employee and their respective attorneys and their respective
experts who shall agree in advance and in writing to receive all such
information confidentially and to maintain such information in secrecy until
such information shall become generally known. The arbitrator, who shall act by
majority vote, shall be able to decree any and all relief of an equitable
nature, including but not limited to such relief as a temporary restraining
order, a temporary and/or a permanent injunction, and shall also be able to
award damages, with or without an accounting and costs, provided that punitive
damages shall not be awarded. The decree or judgment of an award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
Reasonable notice of the time and place of arbitration shall be given to
all persons, other than the parties, as shall be required by law, in which case
such persons or those authorized representatives shall have the right to attend
and/or participate in all the arbitration hearings in such manner as the law
shall require.
10. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
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<PAGE> 7
(b) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
(e) No Assignment of Benefits. Except as set forth in Section 6(b), the
rights of any person to payments or benefits under this Agreement shall not be
made subject to option or assignment, either by voluntary or involuntary
assignment or by operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor's process, and any action in violation
of this subsection (e) shall be void.
(f) Assignment by Company. The Company may assign its rights under this
Agreement to an affiliate, and an affiliate may assign its rights under this
Agreement to another affiliate of the Company or to the Company. In the case of
any such assignment, the term "Company" when used in a section of this Agreement
shall mean the corporation that actually employs the Employee.
(g) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together will constitute
one and the same instrument.
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<PAGE> 8
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
COMPANY:
POET HOLDINGS, INC.
By: /s/ Dirk Bartels
----------------------------------------
Title: President
------------------------------------
EMPLOYEE:
/s/ Jerry Wong
------------------------------------
Jerry Wong
CHANGE OF CONTROL SEVERANCE AGREEMENT
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<PAGE> 1
EXHIBIT 10.2
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is made and entered
into effective as of April 2, 1997 (the "Effective Date"), by and between
Michael Hogan (the "Employee") and POET Holdings, Inc., a Delaware corporation
(the "Company").
R E C I T A L S
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee and can cause the Employee to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the Company and its
stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with certain
severance benefits upon the Employee's termination of employment following a
Change of Control or otherwise which provides the Employee with enhanced
financial security and provides sufficient incentive and encouragement to the
Employee to remain with the Company notwithstanding the possibility of a Change
of Control.
D. Certain capitalized terms used in the Agreement are defined in Section 5
below.
In consideration of the mutual covenants herein contained, and in consideration
of the continuing employment of Employee by the Company, the parties agree as
follows:
1. Duties and Scope of Employment.
(a) Position. The Company shall employ the Employee in the
position of Vice-President of Business Development, with such duties,
responsibilities and compensation as in effect as of the Effective Date;
provided, however, that the Board shall have the right, prior to the occurrence
of a Change of Control, to revise such responsibilities and compensation from
time to time as the Board may deem necessary or appropriate.
(b) Obligations. The Employee shall devote his full business
efforts and time to the Company and its subsidiaries. The foregoing, however,
shall not preclude the Employee from engaging in such activities and services as
do not interfere or conflict with his responsibilities to the Company.
<PAGE> 2
2. At-Will Employment. The Company and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
practices or other agreements with the Company at the time of termination.
3. Severance Benefits.
(a) Termination Following A Change of Control. If the Employee's
employment terminates at any time within twelve (12) months following a Change
of Control as a result of Involuntary Termination other than for Cause, then
upon such termination and subject to Section 4, in addition to any severance
benefits payable under the Company's then existing severance and benefits plans
or policies and in addition to any portion of the Employee's stock options that
were vested and exercisable immediately prior to such termination, such options
shall become vested and exercisable as to an additional amount as though the
Employee had remained continuously employed for a period of twelve (12) months
following such Termination Date; provided, however, that if such potential
vesting acceleration would cause a contemplated Change of Control transaction
not to qualify for "pooling" accounting treatment under generally accepted
accounting principles, as determined by the Company's independent public
accountants (the "Accountants") prior to the Change of Control, Employee's stock
options and restricted stock shall not have their vesting so accelerated.
(b) Termination Apart from Change of Control. If, during the term
of this Agreement, the Employee's employment with the Company terminates, either
prior to the occurrence of a Change of Control or after the twelve (12)-month
period following a Change of Control, then the Employee shall not be entitled to
receive severance or other benefits except for those (if any) as may then be
established under the Company's then existing severance and benefits plans and
policies at the time of such termination.
(c) Voluntary Resignation; Termination For Cause; Termination on
Disability or Death. If, during the term of this Agreement, the Employee's
employment with the Company terminates, either prior to or after the occurrence
of a Change of Control, by reason of the Employee's voluntary resignation (and
is not an Involuntary Termination), or if the Employee is terminated for Cause
or as a result of the Employee's Disability or the death of the Employee, then
the Employee shall not be entitled to receive severance or other benefits except
for those (if any) as may then be established under the Company's then existing
severance and benefits plans and policies at the time of such termination.
4. Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to the Employee (i)
constitutes "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) but for this
Section, would be subject to the excise tax imposed by Section 4999 of the Code,
then the Employee's severance benefits under Section 3 shall be payable either
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<PAGE> 3
(a) in full, or
(b) as to such lesser amount which would result in no portion of
such severance benefits being subject to excise tax under Section 4999 of the
Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by the Employee on an after-tax basis, of the greatest amount of
severance benefits, notwithstanding that all or some portion of such severance
benefits may be taxable under Section 4999 of the Code. Unless the Company and
the Employee otherwise agree in writing, any determination required under this
Section 4 shall be made in writing by the Company's Accountants, whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section 4, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 4.
5. Definition of Terms. The following terms referred to in this Agreement shall
have the following meanings:
(a) Base Compensation. "Base Compensation" shall mean the
Employee's annual compensation as determined by the Board.
(b) Change of Control. "Change of Control" shall mean the
occurrence of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended), other than any
parent or wholly owned subsidiary of the Company or any company which is a
wholly owed subsidiary of any parent of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than 50% of the total
voting power represented by the Company's then outstanding voting securities;
or
(ii) A change in the composition of the Board of
Directors of the Company occurring within a two-year period, as a result of
which fewer than a majority of the directors are Incumbent Directors. "Incumbent
Directors" shall mean directors who either (A) are directors of the Company as
of the date hereof, or (B) are elected, or nominated for election, to the Board
of Directors of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company); or
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<PAGE> 4
(iii) 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.
(c) Involuntary Termination. "Involuntary Termination" shall mean
(i) a material reduction by the Company in the Base Compensation of the Employee
as in effect immediately prior to such reduction; (ii) a material reduction by
the Company in the kind or level of employee benefits to which the Employee is
entitled immediately prior to such reduction with the result that the Employee's
overall benefits package is significantly reduced; (iii) the relocation of the
Employee to a facility or a location more than 25 miles from the Employee's then
present location, without the Employee's express written consent; (iv) any
termination of the Employee by the Company which is not effected for Disability
or for Cause, or any purported termination for which the grounds relied upon are
not valid; or (v) the failure of the Company to obtain the assumption of this
agreement by any successors contemplated in Section 6 below. Except as expressly
set forth in this paragraph 5(c), no other circumstance or event shall
constitute an Involuntary Termination for purposes of this Agreement and
Employee shall not be entitled to benefits hereunder, notwithstanding the fact
that such other circumstance or event may constitute a constructive termination
of the Employee under California law.
(d) Cause. "Cause" shall mean (i) any act of personal dishonesty
taken by the Employee in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of the Employee, (ii) the
conviction of a felony which the Board reasonably believes had or will have a
material detrimental effect on the Company's reputation or business, (iii) a
willful act by the Employee which constitutes gross misconduct and which is
injurious to the Company, and (iv) continued failure by the Employee of his
duties or obligations in accordance with the standards and policies of the
Company or willful and deliberate violations of such obligations, in either case
after there has been delivered to the Employee a written demand for performance
from the Company which describes the basis for the Company's belief that the
Employee has not substantially performed his duties.
(e) Disability. "Disability" shall mean that the Employee has
been unable to perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such inability, at least 26
weeks after its commencement, is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the Employee
or the Employee's legal representative (such Agreement as to acceptability not
to be unreasonably withheld). Termination resulting from Disability may only be
effected after at least 30 days' written notice by the Company of its intention
to terminate the Employee's employment. In the event that the Employee resumes
the performance of substantially all of his duties hereunder before the
termination of his employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
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<PAGE> 5
(f) Termination Date. "Termination Date" shall mean (i) if this
Agreement is terminated by the Company for Disability, thirty (30) days after
notice of termination is given to the Employee (provided that the Employee shall
not have returned to the performance of the Employee's duties on a full-time
basis during such thirty (30) day period), (ii) if the Employee's employment is
terminated by the Company for any other reason, the date on which a notice of
termination is given, or (iii) if the Agreement is terminated by the Employee,
the date on which the Employee delivers the notice of termination to the
Company.
6. Successors.
(a) Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the obligations under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) Employee's Successors. The terms of this Agreement and all
rights of the Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
7. Term. This Agreement shall terminate upon the earlier of (i) the date that
all obligations of the parties hereunder have been satisfied, (ii) four (4)
years from the Effective Date (unless extended for an additional period or
periods by the Company and the Employee by mutual written agreement); or (ii)
thirteen (13) months after a Change of Control.
8. Notice.
(a) General. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Employee,
mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be directed to the attention of its Secretary.
(b) Notice of Termination. Any termination by the Company for
Cause or by the Employee as a result of a voluntary resignation or an
Involuntary Termination shall be communicated by a notice of termination to the
other party hereto given in accordance with Section 8 of this Agreement. Such
notice shall indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated, and
shall specify the termination date (which shall be not more than 30 days after
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<PAGE> 6
the giving of such notice). The failure by the Employee to include in the notice
any fact or circumstance which contributes to a showing of Involuntary
Termination shall not waive any right of the Employee hereunder or preclude the
Employee from asserting such fact or circumstance in enforcing his rights
hereunder.
9. Arbitration. At the option of either party, any and all disputes or
controversies whether of law or fact and of any nature whatsoever arising from
or respecting this Agreement shall be decided by arbitration by the American
Arbitration Association in accordance with the rules and regulations of that
Association.
The arbitrator shall be selected as follows: in the event the
Company and the Employee agree on one arbitrator, the arbitration shall be
conducted by such arbitrator. In the event the Company and the Employee do not
so agree, the Company and the Employee shall each select one independent,
qualified arbitrator and the two arbitrators so selected shall select the third
arbitrator. The Company reserves the right to object to any individual
arbitrator who shall be employed by or affiliated with a competing organization.
Arbitration shall take place at San Mateo, California, or any
other location mutually agreeable to the parties. At the request of either
party, arbitration proceedings will be conducted in the utmost secrecy; in such
case all documents, testimony and records shall be received, heard and
maintained by the arbitrators in secrecy under seal, available for the
inspection only of the Company or the Employee and their respective attorneys
and their respective experts who shall agree in advance and in writing to
receive all such information confidentially and to maintain such information in
secrecy until such information shall become generally known. The arbitrator, who
shall act by majority vote, shall be able to decree any and all relief of an
equitable nature, including but not limited to such relief as a temporary
restraining order, a temporary and/or a permanent injunction, and shall also be
able to award damages, with or without an accounting and costs, provided that
punitive damages shall not be awarded. The decree or judgment of an award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
Reasonable notice of the time and place of arbitration shall be
given to all persons, other than the parties, as shall be required by law, in
which case such persons or those authorized representatives shall have the right
to attend and/or participate in all the arbitration hearings in such manner as
the law shall require.
10. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Employee and by an authorized officer of the
Company (other than the Employee). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.
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<PAGE> 7
(b) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(e) No Assignment of Benefits. Except as set forth in Section
6(b), the rights of any person to payments or benefits under this Agreement
shall not be made subject to option or assignment, either by voluntary or
involuntary assignment or by operation of law, including (without limitation)
bankruptcy, garnishment, attachment or other creditor's process, and any action
in violation of this subsection (e) shall be void.
(f) Assignment by Company. The Company may assign its rights
under this Agreement to an affiliate, and an affiliate may assign its rights
under this Agreement to another affiliate of the Company or to the Company. In
the case of any such assignment, the term "Company" when used in a section of
this Agreement shall mean the corporation that actually employs the Employee.
(g) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
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<PAGE> 8
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.
COMPANY:
POET HOLDINGS, INC.
By:
---------------------------------
Title:
------------------------------
EMPLOYEE:
/s/ Michael Hogan
-----------------------------
Michael Hogan
CHANGE OF CONTROL SEVERANCE AGREEMENT
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<PAGE> 1
EXHIBIT 10.3
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Change of Control Severance Agreement (the "Agreement") is made and
entered into effective as of August 1, 1997 (the "Effective Date"), by and
between Carol Kay Curry (the "Employee") and POET Holdings, Inc., a Delaware
corporation (the "Company").
R E C I T A L S
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Employee and can cause the Employee to
consider alternative employment opportunities. The Board has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the Company and its
stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Employee with certain
severance benefits upon the Employee's termination of employment following a
Change of Control or otherwise which provides the Employee with enhanced
financial security and provides sufficient incentive and encouragement to the
Employee to remain with the Company notwithstanding the possibility of a Change
of Control.
D. Certain capitalized terms used in the Agreement are defined in Section 5
below.
In consideration of the mutual covenants herein contained, and in consideration
of the continuing employment of Employee by the Company, the parties agree as
follows:
1. Duties and Scope of Employment.
(a) Position. The Company shall employ the Employee in the position of
Vice President of Marketing with such duties, responsibilities and compensation
as in effect as of the Effective Date; provided, however, that the Board shall
have the right, prior to the occurrence of a Change of Control, to revise such
responsibilities and compensation from time to time as the Board may deem
necessary or appropriate.
(b) Obligations. The Employee shall devote his full business efforts and
time to the Company and its subsidiaries. The foregoing, however, shall not
preclude the Employee from
<PAGE> 2
engaging in such activities and services as do not interfere or conflict with
his responsibilities to the Company.
2. At-Will Employment. The Company and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
practices or other agreements with the Company at the time of termination.
3. Severance Benefits.
(a) Termination Following A Change of Control. If the Employee's
employment terminates at any time within twelve (12) months following a Change
of Control as a result of Involuntary Termination other than for Cause, then
upon such termination and subject to Section 4, in addition to any severance
benefits payable under the Company's then existing severance and benefits plans
or policies and in addition to any portion of the Employee's stock options that
were vested and exercisable immediately prior to such termination, such options
shall become vested and exercisable as to an additional amount as though the
Employee had remained continuously employed for a period of twelve (12) months
following such Termination Date; provided, however, that if such potential
vesting acceleration would cause a contemplated Change of Control transaction
not to qualify for "pooling" accounting treatment under generally accepted
accounting principles, as determined by the Company's independent public
accountants (the "Accountants") prior to the Change of Control, Employee's stock
options and restricted stock shall not have their vesting so accelerated.
(b) Termination Apart from Change of Control. If, during the term of
this Agreement, the Employee's employment with the Company terminates, either
prior to the occurrence of a Change of Control or after the twelve (12)-month
period following a Change of Control, then the Employee shall not be entitled to
receive severance or other benefits except for those (if any) as may then be
established under the Company's then existing severance and benefits plans and
policies at the time of such termination.
(c) Voluntary Resignation; Termination For Cause; Termination on
Disability or Death. If, during the term of this Agreement, the Employee's
employment with the Company terminates, either prior to or after the occurrence
of a Change of Control, by reason of the Employee's voluntary resignation (and
is not an Involuntary Termination), or if the Employee is terminated for Cause
or as a result of the Employee's Disability or the death of the Employee, then
the Employee shall not be entitled to receive severance or other benefits except
for those (if any) as may then be established under the Company's then existing
severance and benefits plans and policies at the time of such termination.
4. Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to the Employee (i)
constitutes "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code") and
-2-
<PAGE> 3
(ii) but for this Section, would be subject to the excise tax imposed by Section
4999 of the Code, then the Employee's severance benefits under Section 3 shall
be payable either
(a) in full, or
(b) as to such lesser amount which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by the Employee on an after-tax basis, of the greatest amount of
severance benefits, notwithstanding that all or some portion of such severance
benefits may be taxable under Section 4999 of the Code. Unless the Company and
the Employee otherwise agree in writing, any determination required under this
Section 4 shall be made in writing by the Company's Accountants, whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes. For purposes of making the calculations required by this
Section 4, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 4.
5. Definition of Terms. The following terms referred to in this Agreement shall
have the following meanings:
(a) Base Compensation. "Base Compensation" shall mean the Employee's
annual compensation as determined by the Board.
(b) Change of Control. "Change of Control" shall mean the occurrence of
any of the following events:
(i) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended), other than any
parent or wholly owned subsidiary of the Company or any company which is a
wholly owed subsidiary of any parent of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing more than 50% of the total
voting power represented by the Company's then outstanding voting securities; or
(ii) A change in the composition of the Board of Directors
of the Company occurring within a two-year period, as a result of which fewer
than a majority of the directors are Incumbent Directors. "Incumbent Directors"
shall mean directors who either (A) are directors of the
-3-
<PAGE> 4
Company as of the date hereof, or (B) are elected, or nominated for election, to
the Board of Directors of the Company with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors to the Company); or
(iii) 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.
(c) Involuntary Termination. "Involuntary Termination" shall mean (i) a
material reduction by the Company in the Base Compensation of the Employee as in
effect immediately prior to such reduction; (ii) a material reduction by the
Company in the kind or level of employee benefits to which the Employee is
entitled immediately prior to such reduction with the result that the Employee's
overall benefits package is significantly reduced; (iii) the relocation of the
Employee to a facility or a location more than 25 miles from the Employee's then
present location, without the Employee's express written consent; (iv) any
termination of the Employee by the Company which is not effected for Disability
or for Cause, or any purported termination for which the grounds relied upon are
not valid; or (v) the failure of the Company to obtain the assumption of this
agreement by any successors contemplated in Section 6 below. Except as expressly
set forth in this paragraph 5(c), no other circumstance or event shall
constitute an Involuntary Termination for purposes of this Agreement and
Employee shall not be entitled to benefits hereunder, notwithstanding the fact
that such other circumstance or event may constitute a constructive termination
of the Employee under California law.
(d) Cause. "Cause" shall mean (i) any act of personal dishonesty taken
by the Employee in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of the Employee, (ii) the
conviction of a felony which the Board reasonably believes had or will have a
material detrimental effect on the Company's reputation or business, (iii) a
willful act by the Employee which constitutes gross misconduct and which is
injurious to the Company, and (iv) continued failure by the Employee of his
duties or obligations in accordance with the standards and policies of the
Company or willful and deliberate violations of such obligations, in either case
after there has been delivered to the Employee a written demand for performance
from the Company which describes the basis for the Company's belief that the
Employee has not substantially performed his duties.
(e) Disability. "Disability" shall mean that the Employee has been
unable to perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such
-4-
<PAGE> 5
inability, at least 26 weeks after its commencement, is determined to be total
and permanent by a physician selected by the Company or its insurers and
acceptable to the Employee or the Employee's legal representative (such
Agreement as to acceptability not to be unreasonably withheld). Termination
resulting from Disability may only be effected after at least 30 days' written
notice by the Company of its intention to terminate the Employee's employment.
In the event that the Employee resumes the performance of substantially all of
his duties hereunder before the termination of his employment becomes effective,
the notice of intent to terminate shall automatically be deemed to have been
revoked.
(f) Termination Date. "Termination Date" shall mean (i) if this
Agreement is terminated by the Company for Disability, thirty (30) days after
notice of termination is given to the Employee (provided that the Employee shall
not have returned to the performance of the Employee's duties on a full-time
basis during such thirty (30) day period), (ii) if the Employee's employment is
terminated by the Company for any other reason, the date on which a notice of
termination is given, or (iii) if the Agreement is terminated by the Employee,
the date on which the Employee delivers the notice of termination to the
Company.
6. Successors.
(a) Company's Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights of
the Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
7. Term. This Agreement shall terminate upon the earlier of (i) the date that
all obligations of the parties hereunder have been satisfied, (ii) four (4)
years from the Effective Date (unless extended for an additional period or
periods by the Company and the Employee by mutual written agreement); or (ii)
thirteen (13) months after a Change of Control.
8. Notice.
(a) General. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when
-5-
<PAGE> 6
mailed by U.S. registered or certified mail, return receipt requested and
postage prepaid. In the case of the Employee, mailed notices shall be addressed
to him at the home address which he most recently communicated to the Company in
writing. In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of
its Secretary.
(b) Notice of Termination. Any termination by the Company for Cause or
by the Employee as a result of a voluntary resignation or an Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with Section 8 of this Agreement. Such notice shall
indicate the specific termination provision in this Agreement relied upon, shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination under the provision so indicated, and shall specify the
termination date (which shall be not more than 30 days after the giving of such
notice). The failure by the Employee to include in the notice any fact or
circumstance which contributes to a showing of Involuntary Termination shall not
waive any right of the Employee hereunder or preclude the Employee from
asserting such fact or circumstance in enforcing his rights hereunder.
9. Arbitration. At the option of either party, any and all disputes or
controversies whether of law or fact and of any nature whatsoever arising from
or respecting this Agreement shall be decided by arbitration by the American
Arbitration Association in accordance with the rules and regulations of that
Association.
The arbitrator shall be selected as follows: in the event the Company
and the Employee agree on one arbitrator, the arbitration shall be conducted by
such arbitrator. In the event the Company and the Employee do not so agree, the
Company and the Employee shall each select one independent, qualified arbitrator
and the two arbitrators so selected shall select the third arbitrator. The
Company reserves the right to object to any individual arbitrator who shall be
employed by or affiliated with a competing organization.
Arbitration shall take place at San Mateo, California, or any other
location mutually agreeable to the parties. At the request of either party,
arbitration proceedings will be conducted in the utmost secrecy; in such case
all documents, testimony and records shall be received, heard and maintained by
the arbitrators in secrecy under seal, available for the inspection only of the
Company or the Employee and their respective attorneys and their respective
experts who shall agree in advance and in writing to receive all such
information confidentially and to maintain such information in secrecy until
such information shall become generally known. The arbitrator, who shall act by
majority vote, shall be able to decree any and all relief of an equitable
nature, including but not limited to such relief as a temporary restraining
order, a temporary and/or a permanent injunction, and shall also be able to
award damages, with or without an accounting and costs, provided that punitive
damages shall not be awarded. The decree or judgment of an award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
-6-
<PAGE> 7
Reasonable notice of the time and place of arbitration shall be given to
all persons, other than the parties, as shall be required by law, in which case
such persons or those authorized representatives shall have the right to attend
and/or participate in all the arbitration hearings in such manner as the law
shall require.
10. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(b) Whole Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(c) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
(e) No Assignment of Benefits. Except as set forth in Section 6(b), the
rights of any person to payments or benefits under this Agreement shall not be
made subject to option or assignment, either by voluntary or involuntary
assignment or by operation of law, including (without limitation) bankruptcy,
garnishment, attachment or other creditor's process, and any action in violation
of this subsection (e) shall be void.
(f) Assignment by Company. The Company may assign its rights under this
Agreement to an affiliate, and an affiliate may assign its rights under this
Agreement to another affiliate of the Company or to the Company. In the case of
any such assignment, the term "Company" when used in a section of this Agreement
shall mean the corporation that actually employs the Employee.
(g) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together will constitute
one and the same instrument.
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<PAGE> 8
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
COMPANY:
POET HOLDINGS, INC.
By: /s/Jerry Wong
---------------------------------------
Title: VP Finance
------------------------------------
EMPLOYEE:
/s/Carol Kay Curry
-------------------------------------------
Carol Kay Curry 7/9/97
-8-
<PAGE> 1
EXHIBIT 10.4.1
DIENSTVERTRAG
-------------
zwischen
POET Software GmbH
(im folgenden "Gesellschaft"
vertreten durch die Gesellschafterversammlung, diese vertreten durch alle
Gesellschafter)
und
Herrn Jorg Tewes, Ahrensburg
im folgenden "Geschaftsfuhrer"
SECTION 1
TATIGKEIT
1. Die Gesellschaft hat den Geschaftsfuhrer durch GesellschafterbeschluB
vom .............zum Geschaftsfuhrer bestellt. Diese Bestellung schlieBt
die Bestellung weiterer Geschaftsfuhrer nicht aus.
2. Der Geschaftsfuhrer hat die Geschafte der Gesellschaft mit der Sorgfalt
eines ordentlichen Kaufmanns gewissenhaft zu fuhren und ihm die durch
Gesetz, Satzung, Vertrag und gegebenenfalls allgemeine Richtlinien und
Geschaftsordnung ubertragenen Obliegenheiten verantwortungsbewuBt
wahrzunehmen. Insbesondere hat er auch die Grundsatze des Businessplans
der Gesellschaft zu beachten.
3. Die Haupttatigkeit des Geschaftsfuhrers besteht in der verantwortlichen
Fuhrung und Uberwachung der Gesellschaft insbesondere der Veranlassung,
Abstimmung und Durchfuhrung aller MaBnahmen.
4. Bei Bestellung weiterer Geschaftsfuhrer konnen die Aufgaben der
Geschaftsfuhrung durch die Gesellschafterversammlung festgelegt werden.
Der Geschaftsfuhrer hat sich bei seiner Tatigkeit mit den ubrigen
Geschaftsfuhrern kollegial abzustimmen.
SECTION 2
GESELLSCHAFTERBESCHLUSSE
1. Der Geschaftsfuhrer ist an Beschlusse der Gesellschafterversammlung
gebunden.
2. Die Gesellschafterversammlung kann insbesondere allgemeine Richtlinien
im Hinblick auf die Fuhrung der Geschafte festlegen.
3. Die Gesellschafterversammlung kann ferner eine verbindliche
Geschaftsordnung erlassen, aus der sich die Abgrenzung der
Tatigkeitsgebiete der Geschaftsfuhrer ergibt.
4. Vorbehaltlich weitergehender Weisungen der Gesellschafterversammlung
bedurfen die in der Anlage 1 aufgefuhrten GeschaftsfuhrungsmaBnahmen der
Zustimmung der Gesellschafterversammlung.
5. Die Zustimmung kann, auch fur einzelne Gruppen von Geschaften, bereits
im voraus erteilt werden. Die Aufnahme in das verabschiedete
Jahresbudget gilt als Genehmigung, soweit bei seiner Verabschiedung
diesbezuglich kein Vorbehalt gemacht wurde.
SECTION 3
DAUER
1. Dieser Dienstvertrag beginnt am 1. Oktober 1997 und ist auf unbestimmte
Dauer abgeschlossen.
2. Er endet spatestens mit Ablauf des Monats, in dem der Geschaftsfuhrer
das 60. Lebensjahr vollendet.
SECTION 4
KUNDIGUNG/ABBERUFUNG
1. Ordentliche Kundigung
Beide Parteien konnen diesen Vertrag mit einer Frist von 3 (drei)
Monaten zum Ende eines jeden Kalenderjahres kundigen.
Die gesellschafterrechtliche Abberufung des Geschaftsfuhrers, die
jederzeit erfolgen kann, ist im Zweifel als Kundigung dieses Vertrages
zum nachstmoglichen Zeitpunkt auszulegen.
1
<PAGE> 2
2. AuBerordentliche Kundigung
Die Kundigung dieses Vertrages aus wichtigem Grund bleibt unberuhrt. Ein
wichtiger Grund fur die Gesellschaft liegt insbesondere vor, wenn der
Geschaftsfuhrer gegen die Bestimmungen dieses Vertrages oder die ihm im
Innenverhaltnis auferlegten Beschrankungen hinsichtlich der
Geschaftsfuhrung verstoBt.
3. Freistellung
In jedem Fall der Kundigung kann die Gesellschaft den Geschaftsfuhrer
unabhangig von der Wirksamkeit der Kundigung und vorbehaltlich seiner
sonstigen Rechte von seiner Tatigkeit fur die Gesellschaft freistellen.
4. Die Kundigung des Vertrages bedarf der Schriftform.
SECTION 5
VERTRETUNGSBEFUGNIS
1. Der Geschaftsfuhrer vertritt die Gesellschaft (gegebenenfalls neben den
ubrigen Geschaftsfuhrern) gerichtlich und auBergerichtlich nach MaBgabe
seiner Bestellung und der Satzung.
2. Der Geschaftsfuhrer hat die ihm durch diesen Vertrag, die Satzung, das
Gesetz, eine Weisung oder einen BeschluB der Gesellschafterversammlung
auferlegten Beschrankungen zu beachten.
SECTION 6
VERGUTUNG
1. Der Geschaftsfuhrer erhalt als Vergutung fur seine Tatigkeit ein
Jahresbruttogehalt in Hohe von 150.000 DM zahlbar unter Einbehaltung der
gesetzlichen Abzuge in 12 gleichen Raten jeweils am Ende eines jeden
Kalendermonats.
2. Bei Beginn und Beendigung dieses Dienstvertrages wird die Vergutung pro
rata temporis gezahlt.
3. Eine Versorgungszusage besteht nicht.
4. Durch die Vergutung entsprechend dieser Bestimmung ist die gesamte
Tatigkeit des Geschaftsfuhrers, insbesondere gegebenenfalls auch eine
solche fur Tochter-, Beteiligungs- oder andere Gesellschaften oder an
Sonn- und Feiertagen abgegolten. Soweit der Geschaftsfuhrer fur
derartige Tatigkeiten unmittelbar Vergutungen von den betreffenden
Gesellschaften erhalt, werden diese auf die Vergutung nach diesem
Vertrag angerechnet, sofern nicht ausdrucklich etwas anderes vereinbart
wird.
SECTION 7
SONSTIGE LEISTUNGEN
1. Fur die Dauer dieses Vertrages wird dem Geschaftsfuhrer von der
Gesellschaft ein Firmen-PKW der gehobenen Mittelklasse zur Verfugung
gestellt, den dieser auch privat nutzen darf. Die Lohnsteuer auf den
geldwerten Vorteil der privaten Nutzung ist vom Geschaftsfuhrer zu
tragen. Section 12 gilt entsprechend.
2. Die Gesellschaft wird den Geschaftsfuhrern in gewohnlicher und
angemessener Hohe gegen Unfall versichern.
3. Die Gesellschaft ist dem Geschaftsfuhrer-gegebenenfalls nach den
internen Richtlinien der Gesellschaft-zum Ersatz notwendiger und
angemessener Auslagen, einschlieBlich Reise- und Bewirtungskosten,
verpflichtet. Die Auslagen sind im Einzelfalls nach den steuerlichen
Vorschriften zu belegen, sofern nicht nach den steuerlichen Vorschriften
zulassige Pauschalbetrage abgerechnet werden.
SECTION 8
URLAUB
1. Der Geschaftsfuhrer hat Anspruch auf einen jahrlichen Urlaub von 28
Arbeitstagen.
2. Der Zeitpunkt des Urlaubs ist gegebenenfalls mit den ubrigen
Geschaftsfuhrern und der Gesellschafterversammlung unter Wahrung der
Belange der Gesellschaft abzustimmen.
3. Der Urlaubsanspruch verfallt spatestens am 31. Marz des folgenden
Jahres. Ein Entschadigungsanspruch fur nicht beanspruchte Urlaubstage
besteht nicht.
SECTION 9
GEHALTSFORTZAHLUNG IM KRANKHEITSFALL
1. Im Falle der Erkrankung oder sonstigen unverschuldeten Verhinderung wird
die monatliche Vergutung (section 6 Abs. 1) fur die Dauer von 6 Monaten
fortgezahlt. Die Fortzahlung der Bezuge erfolgt langstens bis zur
Beendigung des Dienstvertrages.
2
<PAGE> 3
2. Auf die Leistungen der Gesellschaft werden etwaige Leistungen Dritter,
beispielsweise aufgrund von Haftpflichtanspruchen oder von
Krankenversicherungen, soweit angerechnet, als durch diese und die
Leistungen der Gesellschaft insgesamt die Nettobezuge uberschritten
werden, die der Geschaftsfuhrer gemaB section 6 Abs. 1 bis 3 haben
wurde, wenn er nicht arbeitsunfahig ware.
3. Stirbt der Geschaftsfuhrer wahrend der Dauer des Dienstvertrages, so
haben gegebenenfalls seine Witwe und seine ehelichen Kinder, soweit
diese das 25. Lebensjahr noch nicht vollendet haben und noch in der
Berufsausbildung stehen, als Gesamtglaubiger Anspruch auf Fortzahlung
der monatlichen Vergutung (section 6 Abs 1) fur den Sterbemonat und die
3 folgenden Monate. Absatz 2 gilt entsprechend.
SECTION 10
PFLICHTEN, NEBENTATIGKEITEN
1. Der Geschaftsfuhrer hat seine gesamte Arbeitskraft und deren Ergebnisse
sowie alle Erfahrungen und Kenntnisse allein der Gesellschaft zur
Verfugung zu stellen. Die Arbeitszeit richtet sich nach den anfallenden
Aufgaben und betragt mindestens 40 Wochenstunden.
2. Jede auf Erwerb gerichtete andere Beschaftigung bedarf der vorherigen
schriftlichen Zustimmung durch die Gesellschafterversammlung. Der
Geschaftsfuhrer verpflichtet sich, der Gesellschaft jede tatsachlich
oder moglicherweise zustimmungsbedurftige Nebenbeschaftigung im voraus
schriftlich anzuzeigen.
3. Der schriftlichen Zustimmung der Gesellschafterversammlung bedarf auch
die Ubernahme von Ehrenamtern, die einen nicht nur unwesentlichen
Arbeitsaufwand verursachen, sowie von Mandanten in einem Aufsichtsrat,
Verbandsgremium oder einer ahnlichen Institution. Dies gilt auch fur
eine wissenschaftliche, schriftstellerische, beratende oder ahnliche
Tatigkeit.
4. Die Gesellschafterversammlung darf ihre Zustimmung zu einer angezeigten
Nebentatigkeit nur versagen, oder, was jederzeit moglich ist,
widerrufen, wenn die betreffende Nebentatigkeit als solche oder in
Zusammenhang mit anderen Nebentatigkeiten eine Beeintrachtigung der
Tatigkeit des Geschaftsfuhrers fur die Gesellschaft oder sonstiger
Belange der Gesellschaft zu befurchten laBt.
5. Der Geschaftsfuhrer ist verpflichtet, bei Beendigung des
Dienstverhaltnisses-bzw. im Falle der vorzeitigen Freistellung zum
Zeitpunkt der Freistellung-auf BeschluB der Gesellschafterversammlung
alle Mandate niederzulegen, die er aufgrund seiner Tatigkeit oder im
Zusammenhang mit seiner Tatigkeit bei der Gesellschaft ubernommen bzw.
wahrgenommen hat.
SECTION 11
GESCHAFTS- UND BETRIEBSGEHEIMNISSE
Der Geschaftsfuhrer verpflichtet sich zur uneingeschrankten Geheimhaltung aller
Geschafts- und Betriebsgeheimnisse. Die Geheimhaltungspflicht des
Geschaftsfuhrers gilt uber die Beendigung des Vertragsverhaltnisses hinaus.
SECTION 12
HERAUSGABE VON UNTERLAGEN
Bei Beendigung dieses Dienstvertrages-bzw. im Falle der fruheren Freistellung im
Zeitpunkt der Freistellung-ist der Geschaftsfuhrer verpflichtet, alle
Unterlagen, Aufzeichnungen und sonstige Materialien, die mit seiner
Geschaftsfuhrertatigkeit im Zusammenhang stehen oder Angelegenheiten der
Gesellschaft betreffen, unverzuglich und unaufgefordert an die Gesellschaft
zuruckzugeben. Der Geschaftsfuhrer ist nicht berechtigt, an derartigen
Gegenstanden ein Zuruckbehaltungsrecht auszuuben.
SECTION 13
ERFINDUNGEN, URHEBERRECHTE
1. Der Geschaftsfuhrer wird der Gesellschaft vorab eine schriftliche
Aufstellung aller gewerblichen Schutzrechte und Urheberrechte zur
Verfugung stellen, die ihm gehoren oder an denen er eine
Verfugungsberechtignung (insbesondere eine Lizenz) oder ein
anderweitiges Interesse hat.
2. Urheberrechte und gewerbliche Schutzrechte, insbesondere Rechte an
Erfindungen oder technischen Verbesserungen, die der Geschaftsfuhrer
wahrend seiner Tatigkeit fur die Gesellschaft oder im Zusammenhang mit
seiner Tatigkeit fur die Gesellschaft oder aufgrund seiner Erfahrungen
aus seiner Tatigkeit fur die Gesellschaft oder aufgrund von Arbeiten der
Gesellschaft gemacht oder erarbeitet hat, stehen alleine der
Gesellschaft zu. Der Geschaftsfuhrer tritt bereits jetzt alle
entsprechenden Rechte an die Gesellschaft ab, die diese Abtretung
annimmt. Die Gesellschaft ist diesbezuglich zu keiner zusatzlichen
Vergutung verpflichtet. Das Arbeitnehmererfindergesetz findet mangels
Arbeitnehmereigenschaft des Geschaftsfuhrers keine Anwendung
3
<PAGE> 4
3. Dementsprechend ubertragt der Geschaftsfuhrer bereits jetzt die
unentgeltliche ausschlieBliche Nutzung etwa in seiner Person
entstehender Urheberrechte an in Zusammenhang mit seiner Tatigkeit oder
aufgrund seiner Erfahrungen aus seiner Tatigkeit fur die Gesellschaft
oder aufgrund von Arbeiten der Gesellschaft geschaffenen Werken auf die
Gesellschaft, die diese Ubertragung annimmt.
SECTION 14
SCHLUBBESTIMMUNGEN
1. Die Parteien setzen einvernehmlich und ohne weitere Prufung durch die
Gesellschaft die von dem Geschaftsfuhrer vorgelegten
Bewerbungsunterlagen als richtig und vollstandig voraus.
Dieser Vertrag enthalt alle Abreden der Parteien. Es bestehen, soweit
diese nicht gesondert erwahnt sind, keine Nebenabreden.
Vertragsanderungen bedurfen in jedem Fall der Schriftform, dies gilt
auch fur vorstehenden Halbsatz.
2. Sollten einzelne Bestimmungen dieses Vertrages unwirksam sein oder
werden, so beruhrt dies die Wirksamkeit der ubrigen Bestimmungen nicht.
Anstelle der unwirksamen Bestimmungen gilt diejenige Regelung als
vereinbart, die dem mit der unwirksamen Bestimmung angestrebten
wirtschaftlichen Zweck am nachsten kommt. Dasselbe gilt fur den Fall,
daB der Vertrag Lucken enthalt.
3. Erfullungsort und Gerichtsstand fur alle sich moglicherweise aus diesem
Vertrag ergebenden Streitigkeiten ist, soweit zulassig, der Sitz der
Gesellschaft.
4. Alle Willenserklarungen des Geschaftsfuhrers, die diesen Vertrag
betreffen, sind an die Gesellschafterversammlung zu richten. Alle in
diesem Vertrag der Gesellschafterversammlung vorbehaltenen Rechte konnen
gegebenenfalls durch einen Beirat wahrgenommen werden.
San Mateo, 22.9.97 /s/ Dirk Bartels
- -----------------------------------
Ort, Datum, POET Holdings Inc.
Hamburg, 26.9.97 /s/ Jorg Tewes
- -----------------------------------
Ort, Datum, Jorg Tewes
4
<PAGE> 5
ANLAGE 1: ZUSTIMMUNGSPFLICHTIGE GESCHAFTE:
* Einforderung von Einzahlungen auf Stammemlagen und Aufgeld
* Zustimmung zur Teilung von Geschaftsanteilen
* Bestellung und Abberufung von Prokuristen und Handlungsbevollmachtigten
zum gesamten Geschaftsbetrieb
* Einraumung und Beendigung jedweder Beteiligungen am Gewinn der
Gesellschaft, insbesondere von stillen Beteiligungen, partiarischen
Rechtsverhaltnissen und Tantiemen
* AbschluB und Beendigung von Betriebspacht-, Betriebsfuhrungs- und
Unternehmensvertragen und Vertragen, die eine wesentliche Einschrankung
potentieller unternehmerischer Aktivitaten der Gesellschaft zur Folge
haben konnen.
* VerauBerung des Gesellschaftsvermogens als Ganzes oder zu einem
wesentlichen Teil
* Grundung und Beendigung von Gesellschaften oder Unternehmen, Erwerb und
VerauBerung von Beteiligungen an anderen Unternehmen, AbschluB, Anderung
und Beendigung von Gesellschaftsvertragen
* Errichtung, Erwerb, SchlieBung und VerauBerung von Betrieben,
Teilbetrieben oder Zweigniederlassungen
* Erwerb, VerauBerung oder Belastung von Grundstucken und
grundstucksgleichen Rechten
* Verfugung uber gewerbliche Schutzrechte sowie AbschluB und Beendigung
von Patent-, Lizenz-, Knowhow- und Kooperationsvertragen
* AbschluB und Beendigung von Vertriebsvertragen und Eingehung von
Lieferbedingungen
* Aufnahme von Krediten uber (im Einzelfall oder insgesamt) DM 50.000
* Investitionen uber (im Einzelfall oder insgesamt) DM 50.000 sowie
Investitionen, die zu einer Uberschreitung des Budgets um (im Einzelfall
oder insgesamt) mehr als 10% fuhren
* Veranlassung von Entwicklungsprojekten mit einem Volumen von uber (im
Einzelfall oder insgesamt) 0,5% des Umsatzes jedoch mindestens DM 25.000
* Sicherheitsleistungen, Abgabe von Burgschaften und Garantien sowie
Eingehung von Wechselverpflichtungen, die (im Einzelfall oder insgesamt)
DM 100.000 ubersteigen; ausgenommen ist die ubliche Gewahrleistung fur
Produkte der Gesellschaft.
* Einstellung und Kundigung von Mitarbeitern, wenn deren Vergutung das
1,5-fache der jeweiligen Beitragsbemessungsgrenze in der
Rentenversicherung ubersteigt
* Zustimmung zu Nebentatigkeiten von Mitarbeitern, soweit sich die
Zustimmungsbedurftigkeit aus dem betreffenden Anstellungsverhaltnis
ergibt
* Erteilung von Ruhegeld- oder Pensionszusagen; eventuelle Pensionszusagen
fur Geschaftsfuhrer oder Gesellschafter werden mit ihren Kosten fur die
Gesellschaft wie ein Teil des Gehalts betrachtet
* AbschluB anderer Vertrage, durch die der Gesellschaft Aufwendungen oder
Verpflichtungen von uber (im Einzelfall oder insgesamt) DM 25.000
entstehen, mit Ausnahme von VerauBerungsgeschaften im Rahmen des
ublichen Geschaftsverkehrs
* interne Organisationsanderungen von wesentlicher Bedeutung
* Beschlusse uber Gegenstande, die im Ergebnis einem der vorgenannten
Punkte vergleichbar sind
5
<PAGE> 6
* alle sonstigen auBergewohnlichen GeschaftsfuhrungsmaBnahmen
Der erforderlichen Zustimmung bedurfen die vorstehenden MaBnahmen nicht, soweit
sie bereits in einem vorbehaltslos verabschiedeten Jahresbudget enthalten sind.
6
<PAGE> 7
Erganzung zum Geschaftsfuhrervertrag Jorg Tewes
Diese Vereinbarungen erganzen den Arbeitsvertrag zwischen der POET Software GmbH
und Jorg Tewes vom 22. September 1997.
1. Das monatliche Bruttogehalt wurde ab dem 1.7.1998 auf DM 13750 erhoht.
Ab dem 1.1.1999 erfolgt eine Erhohung auf DM 15000.
2. Herr Tewes erhalt, vorbehaltlich der Genehmnigung des Board of
Directors, 20000 weitere Aktienoptionen der POET Holdings, Inc. Das
Vesting der zusatzlichen Optionen soll vorbehaltlich der Genehmigung zum
1. Juli 1998 beginnen. Die Vesting Periode betraegt 4 Jahre, das Vesting
erfolgt in 48 gleichen Anteilen, jeweils zum Monatsende.
3. Die Kundigungsfrist betragt drei Monate zum Quartalsende.
San Mateo, den 5. Oktober 1998
/s/Dirk Bartels
Dirk Bartels
President & CEO, POET Holdings, Inc.
<PAGE> 1
EXHIBIT 10.4.2
English Summary of Exhibit 10.4.1
Parties: POET Software GmbH and Mr. Jorg Tewes
Date of Signature: 22/29 September 1997
Type of Services: Services as managing director of the company
Term: No fixed term, but the agreement expires without
termination at the end of the month in which Mr.
Tewes has his 60th birthday
Termination: Terminable by each party at the end of each calendar
year, by giving at least three months written
notice; in addition termination for important cause
possible, in particular when managing director
breaches duties under the agreement
Power of Representation: Mr. Tewes represents the company; internally his
authority is restricted by a catalogue of acts which
require shareholder approval
Remuneration: Gross annual salary of DM 180,000 payable in 12
equal installments, company car, life insurance,
accident insurance
Options: 20,000 options for shares of POET Holdings Inc.;
vesting period 4 years starting July 1, 1998 with
the same number of options vesting each month
(subject to board approval)
Pension: None
Paid Leave: 28 working days
Illness: Salary is paid for up to six months in case of
illness
Confidentiality: During term of agreement and thereafter
Intellectual Property: Managing director surrenders all intellectual
property that he acquires in this function to the
company
<PAGE> 1
EXHIBIT 10.5.1
DIENSTVERTRAG
-------------
zwischen
POET Software GmbH
(im folgenden "Gesellschaft"
vertreten durch die Gesellschafterversammlung, diese vertreten durch alle
Gesellschafter)
und
Herrn Jochen Witte
im folgenden "Geschaftsfuhrer"
SECTION 1
TATIGKEIT
1. Die Gesellschaft hat den Geschaftsfuhrer durch GesellschafterbeschluB
vom 19.5.93 zum Geschaftsfuhrer bestellt. Diese Bestellung schlieBt die
Bestellung weiterer Geschaftsfuhrer nicht aus.
2. Der Geschaftsfuhrer hat die Geschafte der Gesellschaft mit der Sorgfalt
eines ordentlichen Kaufmanns gewissenhaft zu fuhren und ihm die durch
Gesetz, Satzung, Vertrag und gegebenenfalls allgemeine Richtlinien und
Geschaftsordnung ubertragenen Obliegenheiten verantwortungsbewuBt
wahrzunehmen. Insbesondere hat er auch die Grundsatze des Businessplans
der Gesellschaft zu beachten.
3. Die Haupttatigkeit des Geschaftsfuhrers besteht in der verantwortlichen
Fuhrung and Uberwachung der Gesellschaft insbesondere der Veranlassung,
Abstimmung and Durchfuhrung aller MaBnahmen.
4. Bei Bestellung weiterer Geschaftsfuhrer konnen die Aufgaben der
Geschaftsfuhrung durch die Gesellschafterversammlung festgelegt werden.
Der Geschaftsfuhrer hat sich bei seiner Tatigkeit mit den ubrigen
Geschaftsfuhrern kollegial abzustimmen.
-1-
<PAGE> 2
SECTION 2
GESELLSCHAFTERBESCHLUSSE
1. Der Geschaftsfuhrer ist an Beschlusse der Gesellschafterversammlung
gebunden.
2. Die Gesellschafterversammlung kann insbesondere allgemeine Richtlinien
im Hinblick auf die Fuhrung der Geschafte festlegen.
3. Die Gesellschafterversammlung kann ferner eine verbindliche
Geschaftsordnung erlassen, aus der sich die Abgrenzung der
Tatigkeitsgebiete der Geschaftsfuhrer ergibt.
4. Vorbehaltlich weitergehender Weisungen der Gesellschafterversammlung
bedurfen die in der Anlage 1 aufgefuhrten GeschaftsfuhrungsmaBnahmen der
Zustimmung der Gesellschafterversammlung.
5. Die Zustimmung kann, auch fur einzelne Gruppen von Geschaften, bereits
im voraus erteilt werden. Die Aufnahme in das verabschiedete
Jahresbudget gilt als Genehmigung, soweit bei seiner Verabschiedung
diesbezuglich kein Vorbehalt gemacht wurde.
SECTION 3
DAUER
1. Dieser Dienstvertrag beginnt am 19.5.1993 und ist auf unbestimmte Dauer
abgeschlossen.
2. Er endet spatestens mit Ablauf des Monats, in dem der Geschaftsfuhrer
das 60. Lebensjahr vollendet.
SECTION 4
KUNDIGUNG/ABBERUFUNG
1. Ordentliche Kundigung
Beide Parteien konnen diesen Vertrag mit einer Frist von 3 (drei)
Monaten zum Ende eines jeden Kalenderquartales kundigen.
Die gesellschafterrechtliche Abberufung des Geschaftsfuhrers, die
jederzeit erfolgen kann, ist im Zweifel als Kundigung dieses Vertrages
zum nachstmoglichen Zeitpunkt auszulegen.
2. AuBerordentliche Kundigung
Die Kundigung dieses Vertrages aus wichtigem Grund bleibt unberuhrt.
-2-
<PAGE> 3
Ein wichtiger Grund fur die Gesellschaft liegt insbesondere vor, wenn
der Geschaftsfuhrer gegen die Bestimmungen dieses Vertrages oder die ihm
im Innenverhaltnis auferlegten Beschrankungen hinsichtlich der
Geschaftsfuhrung verstoBt.
3. Freistellung
In jedem Fall der Kundigung kann die Gesellschaft den Geschaftsfuhrer
unabhangig von der Wirksamkeit der Kundigung und vorbehaltlich seiner
sonstigen Rechte von seiner Tatigkeit fur die Gesellschaft freistellen.
4. Die Kundigung des Vertrages bedarf der Schriftform.
SECTION 5
VERTRETUNGSBEFUGNIS
1. Der Geschaftsfuhrer vertritt die Gesellschaft (gegebenenfalls neben den
ubrigen Geschaftsfuhrern) gerichtlich und auBergerichtlich nach MaBgabe
seiner Bestellung und der Satzung.
2. Der Geschaftsfuhrer hat die ihm durch diesen Vertrag, die Satzung, das
Gesetz, eine Weisung oder einen BeschluB der Gesellschafterversammlung
auferlegten Beschrankungen zu beachten.
SECTION 6
VERGUTUNG
1. Der Geschaftsfuhrer erhalt als Vergutung fur seine Tatigkeit ein
Jahresbruttogehalt in Hohe von DM 168.000,-- (in Worten:
einhundertachtundsechzigrausend Deutsche Mark), zahlbar unter
Einbehaltung der gesetzlichen Abzuge in 12 gleichen Raten jeweils am
Ende eines jeden Kalendermonats.
2. Bei Beginn und Beendigung dieses Dienstvertrages wird die Vergutung pro
rata temporis gezahlt.
3. Eine Versorgungszusage besteht nicht.
-3-
<PAGE> 4
4. Durch die Vergutung entsprechend dieser Bestimmung ist die gesamte
Tatigkeit des Geschaftsfuhrers, insbesondere gegebenenfalls auch eine
solche fur Tochter-, Beteiligungs- oder andere Gesellschaften oder an
Sonn- und Feiertagen abgegolten. Soweit der Geschaftsfuhrer fur
derartige Tatigkeiten unmittelbar Vergutungen von den betreffenden
Gesellschaften erhalt, werden diese auf die Vergutung nach diesem
Vertrag angerechnet, sofern nicht ausdrucklich etwas anderes vereinbart
wird.
SECTION 7
SONSTIGE LEISTUNGEN
1. Fur die Dauer dieses Vertrages wird dem Geschaftsfuhrer von der
Gesellschaft ein Firmen-PKW der gehobenen Mittelklasse zur Verfugung
gestellt, den dieser auch privat nutzen darf. Die Lohnsteuer auf den
geldwerten Vorteil der privaten Nutzung ist vom Geschaftsfuhrer zu
tragen. Section 12 gilt entsprechend.
2. Die Gesellschaft wird den Geschaftsfuhrern in gewohnlicher und
angemessener Hohe gegen Unfall versichern.
3. Die Gesellschaft ist dem Geschaftsfuhrer-gegebenenfalls nach den
internen Richtlinien der Gesellschaft-zum Ersatz notwendiger und
angemessener Auslagen, einschlieBlich Reise- und Bewirtungskosten,
verpflichtet. Die Auslagen sind im Einzelfalls nach den steuerlichen
Vorschriften zu belegen, sofern nicht nach den steuerlichen Vorschriften
zulassige Pauschalbetrage abgerechnet werden.
4. Der Geschaftsfuhrer hat Anspruch auf eine Kapitallebensversicherung
(Direktversicherung) nach MaBgabe von section 40 b EStG.
SECTION 8
URLAUB
1. Der Geschaftsfuhrer hat Anspruch auf einen jahrlichen Urlaub von 28
Arbeitstagen.
2. Der Zeitpunkt des Urlaubs ist gegebenenfalls mit den ubrigen
Geschaftsfuhrern und der Gesellschafterversammlung unter Wahrung der
Belange der Gesellschaft abzustimmen.
3. Der Urlaubsanspruch verfallt spatestens am 31. Marz des folgenden
Jahres. Ein Entschadigungsanspruch fur nicht beanspruchte Urlaubstage
besteht nicht.
-4-
<PAGE> 5
SECTION 9
GEHALTSFORTZAHLUNG IM KRANKHEITSFALL
1. Im Falle der Erkrankung oder sonstigen unverschuldeten Verhinderung wird
die monatliche Vergutung (section 6 Abs. 1) fur die Dauer von 6 Monaten
fortgezahlt. Die Fortzahlung der Bezuge erfolgt langstens bis zur
Beendigung des Dienstvertrages.
2. Auf die Leistungen der Gesellschaft werden etwaige Leistungen Dritter,
beispielsweise aufgrund von Haftpflichtanspruchen oder von
Krankenversicherungen, soweit angerechnet, als durch diese und die
Leistungen der Gesellschaft insgesamt die Nettobezuge uberschritten
werden, die der Geschaftsfuhrer gemaB section 6 Abs. 1 bis 3 haben
wurde, wenn er nicht arbeitsunfahig ware.
3. Stirbt der Geschaftsfuhrer wahrend der Dauer des Dienstvertrages, so
haben gegebenenfalls seine Witwe und seine ehelichen Kinder, soweit
diese das 25. Lebensjahr noch nicht vollendet haben und noch in der
Berufsausbildung stehen, als Gesamtglaubiger Anspruch auf Fortzahlung
der monatlichen Vergutung (section 6 Abs. 1) fur den Sterbemonat und die
3 folgenden Monate. Absatz 2 gilt entsprechend.
SECTION 10
PFLICHTEN, NEBENTATIGKEITEN
1. Der Geschaftsfuhrer hat seine gesamte Arbeitskraft und deren Ergebnisse
sowie alle Erfahrungen und Kenntnisse allein der Gesellschaft zur
Verfugung zu stellen. Die Arbeitszeit richtet sich nach den anfallenden
Aufgaben und betragt mindestens 40 Wochenstunden.
2. Jede auf Erwerb gerichtete andere Beschaftigung bedarf der vorherigen
schriftlichen Zustimmung durch die Gesellschafterversammlung. Der
Geschaftsfuhrer verpflichtet sich, der Gesellschaft jede tatsachlich
oder moglicherweise zustimmungsbedurftige Nebenbeschaftigung im voraus
schriftlich anzuzeigen.
3. Der schriftlichen Zustimmung der Gesellschafterversammlung bedarf auch
die Ubernahme von Ehrenamtern, die einen nicht nur unwesentlichen
Arbeitsaufwand verursachen, sowie von Mandanten in einem Aufsichtsrat,
Verbandsgremium oder einer ahnlichen Institution. Dies gilt auch fur
eine wissenschaftliche, schriftstellerische, beratende oder ahnliche
Tatigkeit.
4. Die Gesellschafterversammlung darf ihre Zustimmung zu einer angezeigten
Nebentatigkeit nur versagen, oder, was jederzeit moglich ist,
widerrufen, wenn die betreffende Nebentatigkeit als solche oder in
Zusammenhang mit anderen Nebentatigkeiten eine Beeintrachtigung der
Tatigkeit des Geschaftsfuhrers fur die Gesellschaft oder sonstiger
Belange der Gesellschaft zu befurchten laBt.
5. Der Geschaftsfuhrer ist verpflichtet, bei Beendigung des
Dienstverhaltnisses-bzw. im Falle der vorzeitigen Freistellung zum
Zeitpunkt der Freistellung-auf BeschluB der Gesellschafterversammlung
alle Mandate niederzulegen, die er aufgrund seiner Tatigkeit oder im
Zusammenhang mit seiner Tatigkeit bei der Gesellschaft ubernommen bzw.
wahrgenommen hat.
-5-
<PAGE> 6
SECTION 11
GESCHAFTS- UND BETRIEBSGEHEIMNISSE
Der Geschaftsfuhrer verpflichtet sich zur uneingeschrankten Geheimhaltung aller
Geschafts- und Betriebsgeheimnisse. Die Geheimhaltungspflicht des
Geschaftsfuhrers gilt uber die Beendigung des Vertragsverhaltnisses hinaus.
SECTION 12
HERAUSGABE VON UNTERLAGEN
Bei Beendigung dieses Dienstvertrages-bzw. im Falle der fruheren Freistellung im
Zeitpunkt der Freistellung-ist der Geschaftsfuhrer verpflichtet, alle
Unterlagen, Aufzeichnungen und sonstige Materialien, die mit seiner
Geschaftsfuhrertatigkeit im Zusammenhang stehen oder Angelegenheiten der
Gesellschaft betreffen, unverzuglich und unaufgefordert an die Gesellschaft
zuruckzugeben. Der Geschaftsfuhrer ist nicht berechtigt, an derartigen
Gegenstanden ein Zuruckbehaltungsrecht auszuuben.
SECTION 13
ERFINDUNGEN, URHEBERRECHTE
1. Der Geschaftsfuhrer wird der Gesellschaft vorab eine schriftliche
Aufstellung aller gewerblichen Schutzrechte und Urheberrechte zur
Verfugung stellen, die ihm gehoren oder an denen er eine
Verfugungsberechtignung (insbesondere eine Lizenz) oder ein
anderweitiges Interesse hat.
2. Urheberrechte und gewerbliche Schutzrechte, insbesondere Rechte an
Erfindungen oder technischen Verbesserungen, die der Geschaftsfuhrer
wahrend seiner Tatigkeit fur die Gesellschaft oder im Zusammenhang mit
seiner Tatigkeit fur die Gesellschaft oder aufgrund seiner Erfahrungen
aus seiner Tatigkeit fur die Gesellschaft oder aufgrund von Arbeiten der
Gesellschaft gemacht oder erarbeitet hat, stehen alleine der
Gesellschaft zu. Der Geschaftsfuhrer tritt bereits jetzt alle
entsprechenden Rechte an die Gesellschaft ab, die diese Abtretung
annimmt. Die Gesellschaft ist diesbezuglich zu keiner zusatzlichen
Vergutung verpflichtet. Das Arbeitnehmererfindergesetz findet mangels
Arbeitnehmereigenschaft des Geschaftsfuhrers keine Anwendung.
3. Dementsprechend ubertragt der Geschaftsfuhrer bereits jetzt die
unentgeltliche ausschlieBliche Nutzung etwa in seiner Person
entstehender Urheberrechte an in Zusammenhang mit seiner Tatigkeit oder
aufgrund seiner Erfahrungen aus seiner Tatigkeit fur die Gesellschaft
oder aufgrund von Arbeiten der Gesellschaft geschaffenen Werken auf die
Gesellschaft, die diese Ubertragung annimmt.
-6-
<PAGE> 7
SECTION 14
SCHLUBBESTIMMUNGEN
1. Die Parteien setzen einvernehmlich und ohne weitere Prufung durch die
Gesellschaft die von dem Geschaftsfuhrer vorgelegten
Bewerbungsunterlagen als richtig und vollstandig voraus.
Dieser Vertrag enthalt alle Abreden der Parteien. Es bestehen, soweit
diese nicht gesondert erwahnt sind, keine Nebenabreden.
Vertragsanderungen bedurfen in jedem Fall der Schriftform, dies gilt
auch fur vorstehenden Halbsatz.
2. Sollten einzelne Bestimmungen dieses Vertrages unwirksam sein oder
werden, so beruhrt dies die Wirksamkeit der ubrigen Bestimmungen nicht.
Anstelle der unwirksamen Bestimmungen gilt diejenige Regelung als
vereinbart, die dem mit der unwirksamen Bestimmung angestrebten
wirtschaftlichen Zweck am nachsten kommt. Dasselbe gilt fur den Fall,
daB der Vertrag Lucken enthalt.
3. Erfullungsort und Gerichtsstand fur alle sich moglicherweise aus diesem
Vertrag ergebenden Streitigkeiten ist, soweit zulassig, der Sitz der
Gesellschaft.
4. Alle Willenserklarungen des Geschaftsfuhrers, die diesen Vertrag
betreffen, sind an die Gesellschafterversammlung zu richten. Alle in
diesem Vertrag der Gesellschafterversammlung vorbehaltenen Rechte konnen
gegebenenfalls durch einen Beirat wahrgenommen werden.
Munchen, 19/5/93
/s/ Dirk Bartels
- -------------------------
POET Software GmbH
/s/ Jochen Witte
- -------------------------
Jochen Witte
-7-
<PAGE> 8
ANLAGE 1: ZUSTIMMUNGSPFLICHTIGE GESCHAFTE:
* Einforderung von Einzahlungen auf Stammeinlagen und Aufgeld
* Zustimmung zur Teilung von Geschaftsanteilen
* Bestellung und Abberufung von Prokuristen und Handlungsbevollmachtigten
zum gesamten Geschaftsbetrieb
* Einraumung und Beendigung jedweder Beteiligungen am Gewinn der
Gesellschaft, insbesondere von stillen Beteiligungen, partiarischen
Rechtsverhaltnissen und Tantiemen
* AbschluB und Beendigung von Betriebspacht-, Betriebsfuhrungs- und
Unternehmensvertragen und Vertragen, die eine wesentliche Einschrankung
potentieller unternehmerischer Aktivitaten der Gesellschaft zur Folge
haben konnen.
* VerauBerung des Gesellschaftsvermogens als Ganzes oder zu einem
wesentlichen Teil
* Grundung und Beendigung von Gesellschaften oder Unternehmen, Erwerb und
VerauBerung von Beteiligungen an anderen Unternehmen, AbschluB, Anderung
und Beendigung von Gesellschaftsvertragen
* Errichtung, Erwerb, SchlieBung und VerauBerung von Betrieben,
Teilbetrieben oder Zweigniederlassungen
* Erwerb, VerauBerung oder Belastung von Grundstucken und
grundstucksgleichen Rechten
* Verfugung uber gewerbliche Schutzrechte sowie AbschluB und Beendigung
von Patent-, Lizenz-, Knowhow- und Kooperationsvertragen
* AbschluB und Beendigung von Vertriebsvertragen und Eingehung von
Lieferbedingungen
* Aufnahme von Krediten uber (im Einzelfall oder insgesamt) DM 50.000
* Investitionen uber (im Einzelfall oder insgesamt) DM 50.000 sowie
Investitionen, die zu einer Uberschreitung des Budgets um (im Einzelfall
oder insgesamt) mehr als 10% fuhren
* Veranlassung von Entwicklungsprojekten mit einem Volumen von uber (im
Einzelfall oder insgesamt) 0,5% des Umsatzes jedoch mindestens DM 25.000
* Sicherheitsleistungen, Abgabe von Burgschaften und Garantien sowie
Eingehung von Wechselverpflichtungen, die (im Einzelfall oder insgesamt)
DM 100.000 ubersteigen; ausgenommen ist die ubliche Gewahrleistung fur
Produkte der Gesellschaft.
* Einstellung und Kundigung von Mitarbeitern, wenn deren Vergutung das
1,5-fache der jeweiligen Beitragsbemessungsgrenze in der
Rentenversicherung ubersteigt
* Zustimmung zu Nebentatigkeiten von Mitarbeitern, soweit sich die
Zustimmungsbedurftigkeit aus dem betreffenden Anstellungsverhaltnis
ergibt
* Erteilung von Ruhegeld- oder Pensionszusagen; eventuelle Pensionszusagen
fur Geschaftsfuhrer oder Gesellschafter werden mit ihren Kosten fur die
Gesellschaft wie ein Teil des Gehalts betrachtet
* AbschluB anderer Vertrage, durch die der Gesellschaft Aufwendungen oder
Verpflichtungen von uber (im Einzelfall oder insgesamt) DM 25.000
entstehen, mit Ausnahme von VerauBerungsgeschaften im Rahmen des
ublichen Geschaftsverkehrs
* interne Organisationsanderungen von wesentlicher Bedeutung
* Beschlusse uber Gegenstande, die im Ergebnis einem der vorgenannten
Punkte vergleichbar sind
-8-
<PAGE> 9
* alle sonstigen auBergewohnlichen GeschaftsfuhrungsmaBnahmen
Der erforderlichen Zustimmung bedurfen die vorstehenden MaBnahmen nicht, soweit
sie bereits in einem vorbehaltslos verabschiedeten Jahresbudget enthalten sind.
-9-
<PAGE> 10
ZUSATZ ZUM ARBEITSVERTRAG
zwischen
POET Software GmbH
Kattjahren 4-8
22359 Hamburg nachfolgend POET genannt
Tel.: 60 99 00
und
Jochen Witte
Buchenstieg 13 B
22359 Hamburg nachfolgend AN genannt
Tel.: 040 609 123 86
Der Arbeitsvertrag vom 19.5.1993 wird ruckwirkend zum 1. Juli 1998 wie folgt
erganzt und geandert:
ZU PARAGRAPH 1
Der AN ubernimmt neben seiner Tatigkeit als Geschaftsfuhrer auch die
Vertriebsverantwortung fur den Europaischen Raum.
ZU PARAGRAPH 6
Der AN erhalt ein Festgehalt von monatlich 13.333 DM. Zusatzlich erhalt der AN
auf samtliche Umsatze der deutschen GmbH (ausgenommen Innenumsatze innerhalb der
POET Holding) folgende Provisionen:
0,8% bis zur Erreichung von 75% der Zielvorgabe laut Businessplan
2,5 % ab Erreichung von 75 % der Zielvorgabe laut Businessplan.
Die Zielvorgabe betragt 1.588 TDM fur das dritte Quartal 1998 und 1.720 TDM fur
das vierte Quartal 1998.
Die bisher bestehende Vergutungsvereinbarung entfallt.
Hamburg, den 10 September 1998
/s/ /s/ Dirk Bartels /s/ Jochen Witte
(Arbeitnehmer) (POET Software GmbH)
1
<PAGE> 1
EXHIBIT 10.5.2
English Summary of Exhibit 10.5.1
Parties: POET Software GmbH and Mr. Jochen Witte
Date of Signature: May 19, 1993
Type of Services: Services as managing director of the company
Term: No fixed term, but the agreement expires without
termination at the end of the month in which Mr.
Witte has his 60th birthday
Termination: Terminable by each party at the end of each calendar
quarter, by giving at least three months written
notice; in addition termination for important cause
possible, in particular when managing director
breaches duties under the agreement
Power of Representation: Mr. Witte represents the company; internally his
authority is restricted by a catalogue of acts which
require shareholder approval
Remuneration: Gross annual salary of DM 168,000 payable in 12
equal installments, company car, life insurance,
accident insurance
Pension: None
Paid Leave: 28 working days
Illness: Salary is paid for up to six months in case of
illness
Confidentiality: During term of agreement and thereafter
Intellectual Property: Managing director surrenders all intellectual
property that he acquires in this function to the
company
<PAGE> 1
EXHIBIT 10.10
================================================================================
POET HOLDINGS, INC.
SECOND AMENDED AND RESTATED
STOCKHOLDER RIGHTS AGREEMENT
DATED DECEMBER 23, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Certain Definitions...................................................... 2
Restrictions on Transferability.......................................... 3
1. Restrictive Legends................................................. 4
2. Notice of Proposed Transfers........................................ 5
Registration Rights...................................................... 5
1. Requested Registration.............................................. 5
2. Company Registration................................................ 7
3. Expenses of Registration............................................ 8
4. Registration on Form S-3............................................ 8
5. Registration Procedures............................................. 9
6. Indemnification..................................................... 9
7. Information by Holder............................................... 12
8. Limitations on Registration of Issues of Securities................. 12
9. Rule 144 Reporting.................................................. 12
10. No-Action Letter or Opinion of Counsel in Lieu of Registration...... 13
11. Transfer or Assignment of Registration Rights....................... 13
12. "Market Stand-off" Agreement........................................ 13
13. Limitations on Registration Obligations............................. 13
Right of First Refusal................................................... 14
1. New Issuances....................................................... 14
Additional Covenants..................................................... 16
1. Key Person Insurance................................................ 16
2. Financial Information............................................... 16
3. Restriction on Increases in Founders' Salaries...................... 17
4. Compliance with Financing Documents................................. 17
5. Prompt Payment of Taxes, etc. ...................................... 17
6. Maintenance of Properties........................................... 18
7. Accounts and Records................................................ 18
8. Maintenance of Corporate Existence, etc. ........................... 18
9. Availability of Common Stock for Conversion......................... 18
10. Confidential Information and Invention Assignment Agreement......... 18
11. Observer Rights..................................................... 18
12. Termination of Additional Covenants................................. 19
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Miscellaneous............................................................ 19
1. Governing Law....................................................... 19
2. Entire Agreement.................................................... 19
3. Notices, Etc. ...................................................... 19
4. Amendments and Waivers.............................................. 20
5. Counterparts........................................................ 20
</TABLE>
ii
<PAGE> 4
POET HOLDINGS, INC.
SECOND AMENDED AND RESTATED
STOCKHOLDER RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED STOCKHOLDER RIGHTS AGREEMENT (the "Agreement"),
dated as of December 23, 1998, is entered into by and among POET HOLDINGS, INC.,
a Delaware corporation (the "Company"), EUROPEAN TECHNOLOGY HOLDINGS and
INNOVACOM (formerly, Compagnie Auxiliaire Telecommunication) (collectively the
"Series A Stockholders"), DIRK BARTELS and JOCHEN WITTE (collectively, the
"Founders"), the holders of Series B Common Stock of the Company listed on
Exhibit A attached hereto (the "Series B Common Stockholders"), the holders of
Series B Preferred Stock of the Company listed on Exhibit A attached hereto (the
"Series B Stockholders"), the holders of Series C Preferred Stock of the Company
listed on Exhibit A (the "Series C Stockholders"), LIGHTHOUSE CAPITAL PARTNERS,
L.P. ("Lighthouse"), VENTURE LENDING, a Division of Cupertino National Bank &
Trust ("Cupertino") and the Purchasers listed on Exhibit A (collectively, the
"Purchasers"). For purposes of this Agreement, the Series A Stockholders, the
Series B Stockholders, the Series C Stockholders and the Purchasers are
sometimes collectively referred to herein as the "Investors." This Agreement is
being entered into pursuant to that certain Series D Preferred Stock Purchase
Agreement of even date herewith between the Company and the Purchasers (the
"Series D Preferred Stock Purchase Agreement").
RECITALS
A. The Company, the Founders, the Series A Stockholders, the Series B
Stockholders, the Series C Stockholders, Lighthouse and Cupertino desire to
terminate that certain Amended and Restated Stockholder Rights Agreement dated
November 18, 1996 among the Company, the Founders, such Investors, Lighthouse
and Cupertino, as amended, (the "Prior Agreement"), waive all rights of first
refusal and notice rights set forth in the Prior Agreement which pertain to the
sale of the Series D Shares pursuant to the Series D Purchase Agreement and to
accept the rights created pursuant hereto in lieu of the rights granted to them
under the Prior Agreement.
B. The Purchasers and the Company are parties to the Series D Purchase
Agreement.
C. The execution of this Agreement is a condition to the closing of the
transactions contemplated by the Series D Purchase Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties to the Prior Agreement hereby agree that the
Prior Agreement shall be superseded and replaced in its entirety by this
Agreement and that all rights of first refusal and rights to notice set forth in
the Prior Agreement which pertain to the purchase of a pro rata share of the
Series D Preferred contemplated in the Series D Purchase Agreement are hereby
waived, and the parties hereto agree as follows:
<PAGE> 5
A. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"CLOSING DATE" shall mean the first date the Company sells the
Series D Shares to the Purchasers pursuant to the Series D Purchase Agreement.
"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 Series A Common Stock of the
Company or any undesignated Common Stock of the Company.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"FOUNDERS' SHARES" shall mean the shares of Series B Common Stock
held by the Founders as of the date hereof.
"HOLDER" shall mean any holder, or an assignee under Section
C(11) hereof, of outstanding Registrable Securities.
"INITIATING HOLDERS" shall mean any Holders who in the aggregate
are Holders of fifty percent (50%) or more of the Registrable Securities other
than the Founders' Shares.
"PUBLIC OFFERING" shall mean the initial offering to the public
of the Company's stock pursuant to a firm commitment registered underwriting for
the account of the Company.
The terms "REGISTER", "REGISTERED" and "REGISTRATION" shall refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRABLE SECURITIES" shall mean shares of Common Stock (i)
issued or issuable pursuant to the conversion of the Series B Common Shares, the
Series A Shares, the Series B Shares, the Series C Shares or the Series D Shares
(ii) issued in respect of securities issued pursuant to the conversion of the
Series B Common Shares, the Series A Shares, the Series B Shares, the Series C
Shares or the Series D Shares upon any stock split, stock dividend,
recapitalization, substitution, or similar event and (iii) for purposes of
Section C(2), issued or issuable pursuant to the conversion of the Founders'
Shares or issued in respect of securities issued pursuant to the conversion of
the Founders' Shares upon any stock split, stock dividend, recapitalization,
substitution or similar event, but only to the extent such shares are still held
by the Founders; provided, however, that Registrable Securities shall not
include any (a) shares of Common Stock which may be sold pursuant to an
effective registration statement, (b) shares of Common Stock which have
previously been sold to the public, or (c) securities which would otherwise be
Registrable Securities held by a Holder who is then permitted to sell all of
such securities within any three (3) month period following the Company's
initial public offering pursuant to Rule 144.
-2-
<PAGE> 6
"REGISTRATION EXPENSES" shall mean all expenses (excluding
underwriting discounts and selling commissions) incurred in connection with a
registration under Sections C (1), (2) or (4) hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such registration,
and the reasonable fees and expenses (not to exceed $25,000) of one counsel for
the selling stockholders (but excluding the compensation of regular employees of
the Company, which shall be paid in any event by the Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear or bearing the legend set forth in Section B(l) hereof.
"RULE 144" shall mean Rule 144 as promulgated by the Commission
under the Securities Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"SELLING EXPENSES" shall include all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities.
"SERIES A SHARES" shall mean the shares of Company's Series A
Preferred Stock held by the Series A Stockholders as of the date hereof.
"SERIES B COMMON SHARES" shall mean the Series B Common Stock
held by the Series B Common Stockholders as of the date hereof.
"SERIES B SHARES" shall mean shares of the Company's Series B
Preferred Stock held by the Series B Stockholders as of the date hereof and the
shares of the Company's Series B Preferred Stock issued or issuable upon
exercise of that certain Warrant dated as of June 12, 1995 held by Lighthouse.
"SERIES C SHARES" shall mean shares of the Company's Series C
Preferred Stock held by the Series C Stockholders as of the date hereof and the
shares of the Company's Series C Preferred Stock issued or issuable upon
exercise of those certain Warrants dated as of September 13, 1996 and July 25,
1996 held by Cupertino.
"SERIES D SHARES" shall mean shares of the Company's Series D
Preferred Stock issued or issuable pursuant to the Series D Preferred Stock
Purchase Agreement held by the Purchasers listed in Exhibit A hereto and the
shares of the Company's Series D Preferred Stock issued or issuable upon
exercise of those certain Warrants dated as of September 23, 1998, issued
pursuant to that certain Note and Warrant Purchase Agreement dated as of
September 23, 1998 held by the Purchasers listed in Exhibit A hereto.
B. Restrictions on Transferability. Except upon the conditions specified
in this Agreement, which conditions are intended to insure compliance with the
provisions of the Securities Act or, in the case of Section C(12) hereof, to
assist in an orderly distribution, the Restricted Securities shall not be
-3-
<PAGE> 7
transferred to entities or individuals other than to Holder's wholly owned
subsidiaries, Holder's parent company or parent company's wholly-owned
subsidiary, which, for the purposes of this Section B, shall include any
subsidiary in which the parent company has at least a ninety percent (90%)
ownership interest. Each holder of Restricted Securities will cause any proposed
transferee of Restricted Securities held by that holder to agree to take and
hold those securities subject to the provisions and upon the conditions
specified in this Agreement.
1. Restrictive Legends. Each certificate representing (i) the
Founders' Shares, the Series B Common Shares, the Series A Shares, the Series B
Shares, the Series C Shares and the Series D Shares and (ii) shares of the
Company's Common Stock issued upon conversion of the Founders' Shares, the
Series B Common Shares, the Series A Shares, the Series B Shares, the Series C
Shares or the Series D Shares and (iii) any other securities issued in respect
of the Founders' Shares, the Series B Common Shares, the Series A Shares, the
Series B Shares, the Series C Shares or the Series D Shares, or the Common Stock
issued upon conversion of the Founders' Shares, the Series B Common Shares, the
Series A Shares, the Series B Shares, the Series C Shares or the Series D Shares
upon any stock split, stock dividend, recapitalization, merger, consolidation or
similar event, shall (unless otherwise permitted or unless the securities
evidenced by such certificate shall have been registered under the Securities
Act) be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") OR ANY
STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT. COPIES OF THE AGREEMENTS COVERING THE
PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICE OF THE
CORPORATION.
Upon request of a holder of such a certificate, the Company shall
remove the foregoing legend from the certificate or issue to such holder a new
certificate therefor free of any transfer legend, if with such request, the
Company shall have received either the opinion referred to in Section B(2)(i) or
the "no-action" letter referred to in Section B(2)(ii) to the effect that any
transfer by such holder of the securities evidenced by such certificate will not
violate the Securities Act and applicable state securities laws, unless any such
transfer legend may be removed pursuant to Rule 144(k), in which case no such
opinion or "no-action" letter shall be required, and provided that the Company
shall not be obligated to remove any such legends prior to the date of the
Public Offering under the Securities Act.
-4-
<PAGE> 8
2. Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section B(2). Prior to any proposed
transfer of any Restricted Securities (other than under circumstances described
in Sections C (1), (2) and (4) hereof), the holder thereof shall give written
notice to the Company of such holder's intention to effect such transfer. Each
such notice shall describe the manner and circumstances of the proposed transfer
in sufficient detail, and shall be accompanied (except in transactions in
compliance with Rule 144(k) promulgated under the Securities Act or for a
transfer to a holder's spouse, ancestors, descendants or a trust for any of
their benefit, or in transactions involving the distribution without
consideration of Restricted Securities by a holder to any of its partners) or
retired partners or to the estate of any of its partners or retired partners by
either (i) a written opinion of legal counsel to the holder who shall be
reasonably satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act or (ii) a "no-action" letter from the
Commission to the effect that the distribution of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by such holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
above provided shall bear the restrictive legend set forth in Section B(1)
above, except that such certificate shall not bear such restrictive legend after
the date of the Company's Public Offering under the Securities Act if the
opinion of counsel or "no-action" letter referred to above expressly indicates
that such legend is not required in order to establish compliance with the
Securities Act or if such legend is no longer required pursuant to Rule 144(k).
C. Registration Rights.
1. Requested Registration.
a. Request for Registration. If the Company shall
receive from Initiating Holders a written request that the Company effect any
registration with respect to at least fifty percent (50%) of the Registrable
Securities (provided that such number of Registrable Securities would result in
an aggregate offering of at least $7,500,000), the Company will:
(i) promptly give written notice of the proposed
registration to all other Holders; and
(ii) as soon as practicable, use its diligent best
efforts to effect such registration (including without limitation, the execution
of an undertaking to file post effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act) as may
be so requested and as would permit or facilitate the sale and distribution of
all or such portion of such Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such request as are specified in a written request
delivered to the Company within fifteen (15) days after receipt of such written
notice from the Company.
-5-
<PAGE> 9
Subject to the limitations of Section C(13), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable, after receipt of the request or
requests of the Initiating Holders.
The registration statement filed pursuant to the request of the
Initiating Holders, may, subject to the provisions of Sections C(l)(b) and C(2)
below, include other securities of the Company which are held by officers or
directors of the Company or which are held by persons who, by virtue of
agreements with the Company, are entitled to include their securities in any
such registration, but the Company shall have no right to include any of its
securities in any such registration except as provided in Sections C(l)(b) and
C(2) below.
b. Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section C(l), and the Company shall include such information in the
written notice referred to in Section C(l)(a)(i) above. The right of any Holder
to registration pursuant to Section C(l) shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder with respect to
such participation and inclusion) to the extent provided herein. A Holder may
elect to include in such underwriting all or a part of the Registrable
Securities he holds.
If officers or directors of the Company shall request inclusion
of securities of the Company other than Registrable Securities in any
registration pursuant to Section C(l), or if holders of securities of the
Company who are entitled by contract with the Company to have securities
included in such a registration (such officers, directors, and other
stockholders being collectively referred to as the "Other Stockholders") request
such inclusion, the Initiating Holders shall, on behalf of all Holders, offer to
include the securities of such Other Stockholders in the underwriting and may
condition such offer on their acceptance of the further applicable provisions of
this Agreement. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company and Other Stockholders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the representative of the
underwriter or underwriters (the "Underwriter") selected for such underwriting
by sixty percent (60%) of the Initiating Holders and reasonably acceptable to
the Company. Notwithstanding any other provision of this Section C(l), if the
Underwriter determines that marketing factors require a limitation on the number
of shares to be underwritten, the Underwriter may (subject to the allocation
priority set forth below and after good faith discussions with the Initiating
Holders) limit the number of Registrable Securities to be included in the
registration and underwriting to not less than fifty percent (50%) of the
securities which Holders have requested be included therein. The Company shall
so advise all holders of securities requesting registration, and the number of
shares of securities that are entitled to be included in the registration and
underwriting shall be allocated in the following priority: first, among all
Holders of Registrable Securities to the extent of fifty percent (50%) of the
Registrable Securities (and pro rata among such Holders on the basis of all
Registrable Securities then held by such Holders); second, the Company shall be
able to include any securities which it desires to sell for its own account; and
third, among all Other Stockholders in proportion, as nearly as practicable, to
the respective amounts of securities which they
-6-
<PAGE> 10
had requested to be included in such registration at the time of filing the
registration statement. If any Holder or Other Stockholder disapproves of the
terms of any such underwriting, such holder may elect to withdraw therefrom by
written notice to the Company and the Underwriter. Any Registrable Securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
2. Company Registration.
a. If the Company shall determine to register any of
its securities either for its own account or for the account of a security
holder or holders exercising their respective demand registration rights, other
than a registration relating solely to employee benefit plans or a registration
relating solely to a Commission Rule 145 transaction or a registration on any
registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the Company
will:
(i) promptly give to each Holder, including each
Founder, (to the extent such Founders continue to hold Registrable Securities),
written notice thereof (which, to the extent then known, shall include a list of
the jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all of the Registrable Securities specified in a written
request or requests made by any Holder within fifteen (15) days after receipt of
the written notice from the Company described in clause (i) above, except as set
forth in Section C(2)(b) below. Such written request may specify all or a part
of a Holder's Registrable Securities.
b. Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section C(2)(a)(i). In such event the right of any
Holder to registration pursuant to Section C(2) shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the Other Stockholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the Underwriter selected for underwriting by the Company.
Notwithstanding any other provision of this Section C(2), if the Underwriter
determines that marketing factors require a limitation on the number of shares
to be underwritten, and (a) if such registration is the first registered
offering of the Company's securities to the public, the Underwriter may exclude
from such registration and underwriting some (subject to the allocation priority
set forth below and after good faith discussions with the Initiating Holders) or
all of the Registrable Securities and other securities held by Other
Stockholders which would otherwise be underwritten pursuant hereto, and (b) if
such registration is other than the first registered offering of the sale of the
Company's securities to the public, the Underwriter may (subject to the
allocation priority set forth below) limit the number of Registrable Securities
to be included in the secondary portion of the
-7-
<PAGE> 11
registration and underwriting to not less than thirty percent (30%) of the
Registrable Securities which Holders have requested be included therein. The
Company shall so advise all holders of securities requesting registration, and
the number of shares of Registrable Securities that are entitled to be included
in the registration and underwriting by persons other than the Company shall be
allocated in the following priority: first, to Holders of Registrable Securities
(except Cupertino) pro rata among such Holders on the basis of all Registrable
Securities then held by such Holders; and second, among all Other Stockholders
(for purposes of these allocation provisions set forth in this Section B(2)(b)
Other Stockholders shall include Cupertino) in proportion, as nearly as
practicable, to the respective amounts of securities which they had requested to
be included in such registration at the time of filing the registration
statement. If any Holder or Other Stockholder disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice to the
Company and the Underwriter. Any Registrable Securities, or other securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration.
3. Expenses of Registration. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
this Agreement shall be borne by the Company, and all Selling Expenses shall be
borne by the holders of the securities so registered pro rata on the basis of
the number of their shares so registered; provided, however, that the Company
shall not be required to pay any Registration Expenses if, as a result of the
withdrawal of a request for registration by Initiating Holders, the registration
statement does not become effective unless such withdrawal is a result of a
material adverse condition of the Company. If the Company is not required to pay
any Registration Expenses, then the Holders and Other Stockholders requesting
registration shall bear such Registration Expenses pro rata on the basis of the
number of their shares so included in the registration request, and such
registration shall not be considered a registration for purposes of Section
C(l)(a)(ii).
4. Registration on Form S-3. The Company shall use its best
efforts to qualify for registration on Form S-3, and to that end, the Company
shall comply with the reporting requirements of the Exchange Act within six (6)
months following the effective date of the first registration of any securities
of the Company for a registered public offering. After the Company has qualified
for the use of Form S-3, holders of at least 20% of the Registrable Securities
shall have the right to request one registration on Form S-3 in each 12-month
period (such requests shall be in writing and shall state the number of shares
of Registrable Securities to be disposed of and the intended method of
disposition of such shares by each such holder), subject only to the following
limitations:
a. The Company shall not be obligated to cause a
registration on Form S-3 to become effective prior to one hundred and eighty
(180) days following the effective date of a Company-initiated registration
(other than a registration effected solely to qualify an employee benefit plan
or to effect a business combination pursuant to Rule 145), and provided that the
Company shall use its best efforts to achieve such effectiveness promptly
following such one hundred and eighty (180) day period;
b. The Company shall not be obligated to cause a
registration on Form S-3 to become effective prior to expiration of one hundred
eighty (180) days following the effective date of the most recent registration
pursuant to a request by a holder of Registrable Securities under this
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<PAGE> 12
Agreement or pursuant to a request by a holder of registration rights under any
other agreement of the Company granting Form S-3 demand registration rights;
provided, however, that the Company shall use its best efforts to achieve such
effectiveness promptly following such one hundred eighty (180) day period;
c. The Company shall not be required to effect a
registration pursuant this Section C(4) unless the Holder or Holders requesting
registration propose to dispose of shares of Registrable Securities having an
aggregate disposition price (before deduction of underwriting discounts and
expenses of sale) of at least $1,500,000; and
d. The Company shall not be required to maintain and
keep any such registration on Form S-3 effective for a period exceeding ninety
(90) days from the effective date thereof. The Company shall give notice to all
Holders and a holders of registration rights under any other agreement of the
Company granting Form S-3 or similar demand registration rights of the receipt
of a request for registration pursuant to this Section C(4) and shall provide a
reasonable opportunity for all such other holders to participate in the
registration. Subject to the foregoing, the Company will use its best efforts to
effect promptly the registration of all shares of Registrable Securities on Form
S-3 to the extent requested by such holder or holders of Registrable Securities
for purposes of disposition. The Company, non-requesting Holders and Other
Stockholders shall have the right to participate in such registration as
provided in Section C(l) except that in the event the Underwriter determines
that market factors require a limitation on the number of shares to be
underwritten, then shares shall be excluded from such registration and
underwriting pursuant to the allocation method (and subject to any limitations)
described in Section C(l).
5. Registration Procedures. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep each
Holder advised in writing as to the initiation of such registration and as to
the completion thereof. At its expense, the Company will:
a. Keep such registration effective for a period of
ninety (90) days or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs; and
b. Furnish such number of prospectuses and other
documents incident thereto as a Holder from time to time may reasonably request;
and
c. In connection with any underwritten offering
pursuant to a registration statement filed pursuant to Section C(l) hereof, the
Company will enter into any underwriting agreement reasonably necessary to
effect the offer and sale of Common Stock, provided such underwriting agreement
contains customary underwriting provisions, and provided further that if the
underwriter so requests the underwriting agreement will contain customary
indemnification and contribution provisions, and provided further that the
Underwriter is reasonably acceptable to the Company.
6. Indemnification
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<PAGE> 13
a. To the extent permitted by law, the Company will
indemnify each Holder, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement,
against all expenses, claims, losses, damages and liabilities (or actions in
respect thereof) to which they may become subject under the Securities Act, or
the Exchange Act and other state securities laws, including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act, the Exchange Act or state
securities laws applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will reimburse each such Holder, and each person controlling
such Holder for any legal and any other expenses reasonably incurred, as such
expenses are incurred, in connection with investigating, preparing or defending
any such claim, loss, damage, liability or action, provided that the Company
will not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission or alleged untrue statement or omission, made in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein
provided, further, that the indemnity agreement contained in this Section
C(6)(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld).
b. To the extent permitted by law, each Holder will,
if Registrable Securities held by such Holder are included in the securities as
to which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers and its legal counsel
and independent accountants, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such other person within the meaning of Section 15 of the
Securities Act, and each other such Holder including shares of his Registrable
Securities against all claims, losses, damages and liabilities (or actions in
respect thereof) to which any of the foregoing persons may become subject under
the Securities Act, the Exchange Act and other state securities laws arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, and any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the Company, such
Holders, such directors, officers, legal counsel, independent accountants,
underwriters or control persons for any legal or any other expenses reasonably
incurred, as such expenses are incurred, in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written
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<PAGE> 14
information furnished to the Company by an instrument duly executed by such
Holder and stated to be specifically for use therein, provided, however, that
the indemnity agreement contained in this Section C(6)(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of a majority in interest of
the Holders, which consent shall not be unreasonably withheld and provided
further that each Holder's liability for indemnification hereunder shall be
limited to the net amount of any proceeds received by such Holder from the sale
of securities described in the first sentence of this Section C(6).
c. Each party entitled to indemnification under this
Section C(6) (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, including any legal fees incurred, and provided
further that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Agreement, except to the extent, but only to the extent, that the Indemnifying
Party's ability to defend against such claim or litigation is impaired as a
result of such failure to give notice. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
d. If the indemnification provided for in this Section
C(6) is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations; provided however, that the total amount paid or payable by a
Holder for any indemnification provided in this Section C(6)(d) shall be limited
to the net amount of any proceeds received by such Holder from the sale of
securities described in the first sentence of this Section C(6). The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
e. Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
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<PAGE> 15
f. The obligations of the Company and Holders under
this Section C(6) shall survive the completion of any offering of Registrable
Securities in a registration statement under Sections C(l), (2) and (4) of this
Agreement, and otherwise.
7. Information by Holder. Each Holder and each Other Stockholder
holding securities included in any registration shall furnish to the Company
such information regarding such Holder or Other Stockholder as the Company may
reasonably request in writing as shall be reasonably required in connection with
any registration, qualification or compliance referred to in this Agreement.
8. Limitations on Registration of Issues of Securities. From and
after the date of this Agreement, the Company shall not enter into any agreement
with any holder or prospective holder of any securities of the Company giving
such holder or prospective holder the right to require the Company to initiate
any registration of any securities of the Company, provided that this Section
C(8) shall not limit the right of the Company to enter into any agreements with
any holder or prospective holder of any securities of the Company giving such
holder or prospective holder the right to require the Company, upon any
registration of any of its securities, to include, among the securities which
the Company is then registering, securities owned by such holder. Any right
given by the Company to any holder or prospective holder of the Company's
securities in connection with the registration of securities shall be
conditioned such that it shall be consistent with the provisions of this
Agreement and with the rights of the Holders provided in this Agreement.
9. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit the
sale of the Restricted Securities to the public without registration, 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, at all
times from and after ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
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 at any time after it has become subject
to such reporting requirements;
c. So long as a stockholder owns any Restricted
Securities, furnish to the stockholder forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 (at any time from and after ninety (90) days following the effective
date of the first registration statement filed by the Company for an offering of
its securities to the general public), and of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as a stockholder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a stockholder to sell any such securities without
registration.
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<PAGE> 16
10. No-Action Letter or Opinion of Counsel in Lieu of
Registration. Notwithstanding anything in this Agreement to the contrary, if at
any time after the date of the Company's Public Offering under the Securities
Act the Company shall have obtained from the Commission a "no-action" letter in
which the Commission has indicated that it will take no action if, without
registration under the Securities Act, any Holder disposes of Registrable
Securities covered by any request for registration made under this Agreement in
the manner in which such Holder proposes to dispose of the Registrable
Securities included in such request, or if in the opinion of counsel for the
Company concurred in by counsel for such Holder no registration under the
Securities Act is required in connection with such disposition, the Registrable
Securities included in such request shall not be eligible for registration under
this Agreement; provided, however, with respect to any Holder who may deemed to
be an "affiliate," as that term is defined under Rule 144, if, notwithstanding
the opinion of such counsel, the Holder is unable to dispose of all of the
Registrable Securities included in his request in the manner in which such
Holder so proposes without registration, the Registrable Securities included in
such request shall be eligible for registration under this Agreement.
11. Transfer or Assignment of Registration Rights. The right to
cause the Company to register Common Stock issued or issuable pursuant to the
conversion of the Founder's Shares, or issued in respect of securities issued
pursuant to the conversion of the Founders' Shares, upon any stock split, stock
dividend, recapitalization, substitution, or similar event shall not be
transferable. Any other right to cause the Company to register Registrable
Securities granted to a Holder by the Company under Sections C(1), (2) and (4)
hereof may be transferred or assigned by Holder to (i) a transferee or assignee
of at least 10% of the Registrable Securities or (ii) to a subsidiary, parent,
general partner, limited partner or retired partner of a Holder, provided that
the Company is given written notice by the Holder within two (2) business days
of said transfer or assignment of such Registrable Securities, stating the name
and address of said transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned;
provided that the transferee or assignee of such rights is not deemed by the
Board of Directors of the Company, in its reasonable judgment, to be a
competitor of the Company; and provided further that the transferee or assignee
of such rights assumes in writing the obligations of such Holder under this
Agreement.
12. "Market Stand-off" Agreement. Each Holder agrees, if
requested by the Company and an underwriter of Common Stock (or other
securities) of the Company, not to sell or otherwise transfer or dispose of any
Common Stock (or other securities) of the Company held by such Holder during a
period of time determined by the Company and its underwriters (not to exceed 180
days) following the effective date of a registration statement of the Company
filed under the Securities Act with respect to the Company's initial public
offering, provided that all officers and directors of the Company who then hold
Common Stock (or other securities) of the Company enter into similar agreements.
Such agreement shall be in writing in a form satisfactory to the Company and
such underwriter. The Company may impose stop-transfer instructions with respect
to the shares (or securities) subject to the foregoing restriction until the end
of said period.
13. Limitations on Registration Obligations. The Company shall
not be obligated to effect, or to take any action to effect, any registration
qualification or compliance pursuant to Section C(l), (2) or (4):
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<PAGE> 17
a. In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act; or
b. With respect to a registration pursuant to Section
C(l), after the Company has effected two (2) such registrations pursuant to
Section C(l); or
c. More than seven (7) years following the closing of
the Public Offering, or
d. Prior to the earlier to occur of (a) two (2) years
from the Closing Date and (b) six (6) months following the closing of the Public
Offering, or
e. If the Company shall furnish to Holders following a
request for registration a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed on or before the time filing would
be required and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
once during any 12 month period for a period of not more than one hundred twenty
(120) days after receipt of the request of the Initiating Holders (it being
understood that the Company shall not have any obligation to take any action to
register Registrable Securities for which the Company receives notice pursuant
to Sections C(l)(a) or C(4) during such 120-day period).
D. Right of First Refusal.
1. New Issuances. The Company hereby grants to the Investors the
right of first refusal (the "Right of First Refusal") to purchase a pro rata
share of all (or any part) of any "New Securities" (as defined in this Section
D) that the Company may, from time to time propose to sell and issue. Such pro
rata share, for purposes of this right of first refusal, is the ratio of the
number of Series A Shares, Series B Shares, Series C Shares and Series D Shares
then owned by such Investor to the total number of shares of Common Stock
outstanding immediately prior to the issuance of New Securities, assuming for
such purpose the exercise of all outstanding options and warrants and the
conversion into Common Stock of all outstanding convertible securities,
including the Series A Shares, Series B Shares, Series C Shares and Series D
Shares. This right of first refusal shall be subject to the following
provisions:
a. "New Securities" shall mean any common stock and
preferred stock of the Company whether or not authorized on the date hereof, and
rights, options, or warrants to purchase common stock or preferred stock and
equity securities of any type whatsoever that are, or may become, convertible
into common stock or preferred stock; provided, however, that "New Securities"
does not include the following:
(i) issuances of (A) Series D Shares, (B) shares of
the Company's Common Stock issued upon conversion of the Founders' Shares,
Series B Common Shares, Series A
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<PAGE> 18
Shares, Series B Shares, Series C Shares, Series D Shares, and (C) any other
securities issued in respect of the Founders' Shares, Series B Common Shares,
Series A Shares, Series B Shares, Series C Shares, Series D Shares, the Note and
Warrant Conversion Stock, or the Common Stock issued upon conversion of the
Founders' Shares, Series B Common Shares, Series A Shares, Series B Shares,
Series C Shares, Series D Shares, upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event;
(ii) securities of the Company issued pursuant to
the acquisition of a business by the Company by merger, purchase of assets, or
other acquisition or reorganization approved by the Board of Directors;
(iii) securities of the Company issued in
connection with equipment lease financing transactions or bank financing
transactions approved by the Board of Directors;
(iv) shares of common stock, or options to purchase
shares of common stock, issued or granted to officers, directors, employees and
consultants of the Company pursuant to stock plans and option plans or other
arrangements unanimously approved by the Board of Directors;
(v) shares of common stock or preferred stock
issued in connection with any stock split, stock dividend, or recapitalization
by the Company; and
(vi) securities offered to the public pursuant to
the Public Offering.
b. In the event that the Company proposes to undertake
an issuance of New Securities, it shall give each Investor written notice of its
intention, describing the type of New Securities, the price, and the general
terms upon which the Company proposes to issue the same. Each Investor shall
have fifteen (15) business days after receipt of such notice to agree to
purchase its pro rata share of such New Securities at the price and upon the
terms specified in the notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased. If any Investor
fails to agree to purchase its full pro rata share within such fifteen (15)
business day period, the Company will give the Investors who did so agree (the
"Electing Stockholders") notice of the number of shares which were not
subscribed for. Such notice may be by telephone if followed by written
confirmation within two days. The Electing Stockholders shall have ten (10)
business days from the date of such notice to agree to purchase pro rata any or
all of the New Securities not purchased by such non-purchasing Investors.
c. In the event that the Investors fail to exercise in
full the right of first refusal within the fifteen (15) business plus ten (10)
business day period specified above, the Company shall have sixty (60) days
thereafter to sell (or enter into an agreement to sell) the New Securities
respecting which the rights of the Investors were not exercised at a price and
upon terms no more favorable to the purchasers thereof than specified in the
Company's notice. In the event the Company has not sold (or entered into an
agreement to sell) the New Securities within such sixty (60) day period the
Company shall not thereafter issue or sell any New Securities, without first
offering such New Securities to the Investors in the manner provided above.
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<PAGE> 19
d. The Right of First Refusal granted under this
Section D shall expire immediately prior to the effective date of the
registration statement for the Public Offering.
e. This Right of First Refusal may be transferred or
assigned by an Investor to a transferee or assignee of at least 10% of the
Series A Shares, 10% of the Series B Shares, 10% of the Series C Shares or 10%
of the Series D Shares, provided that the Company is given written notice by the
Investor within two (2) business days of said transfer or assignment of such
Series A Shares, Series B Shares, Series C Shares or Series D Shares, stating
the name and address of said transferee or assignee and identifying the
securities with respect to which such rights are being transferred or assigned;
provided that the transferee or assignee of such rights is not deemed by the
Board of Directors of the Company, in its reasonable judgment, to be a
competitor of the Company; and provided further that the transferee or assignee
of such rights assumes in writing the obligations of such Investor under this
Agreement.
f. This Right of First Refusal shall terminate as to
any Investor (or any transferee or assignee of such Investor) at such time as
such Investor ceases to own any Series A Shares, Series B Shares, Series C
Shares, Series D Shares or Common Stock issuable upon conversion of the Series A
Shares, Series B Shares, Series C Shares or Series D Shares.
E. Additional Covenants
1. Key Person Insurance. For so long as any Series B Shares,
Series C Shares or Series D Shares are outstanding, the Company shall maintain a
key person life insurance policy, payable to the Company and in the minimum
amount of $5,000,000 on the life of Dirk Bartels. If following the death of such
individual the holders of a majority of the then outstanding Series B Shares,
Series C Shares and Series D Shares, voting as a class, give notice to the
Company, the proceeds shall be used to redeem (at their respective initial
purchase prices, adjusted for stock splits, consolidations, reorganizations and
the like) outstanding Series B Shares, Series C Shares and Series D Shares to
the extent allowed by the laws of the Company's state of organization and by the
Company's charter documents, which redemption shall be in compliance with the
terms of the Company's Certificate of Incorporation. The Company shall not be
obligated to redeem fractional Series B Shares, Series C Shares or Series D
Shares.
2. Financial Information.
a. As long as any Investor is a holder of at least
25,000 of the Series A Shares, the Series B Shares, the Series C Shares or
Series D Shares, the Company will mail or otherwise deliver to each such person
who will agree to maintain such information in confidence with standard and
reasonable exceptions to such confidentiality:
(i) Within thirty (30) days following the end of
each month and quarter following April 30, 1999, monthly and quarterly,
respectively, financial statements, including an income statement, statement of
cash flow and balance sheet for the prior monthly period and quarterly period,
respectively, such statements will include year to date figures, a comparison of
such figures to
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<PAGE> 20
the Company's budget for each item (with any variances delineated), and a ratio
analysis reasonably satisfactory to the Investors.
(ii) As soon as practicable after the end of each
fiscal year, and in any event within 120 days thereafter, consolidated balance
sheets of the Company and its subsidiaries, if any, as of the end of such fiscal
year, and consolidated statements of income and consolidated statements of cash
flows of the Company and its subsidiaries, if any, for such year, prepared in
accordance with United States generally accepted accounting principles and
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and audited by independent public
accountants of national standing selected by the Company and approved by the
Board of Directors.
(iii) Within thirty (30) days before the end of
each fiscal year, a budget, including projected income statement, cash flow and
balance sheet, on a monthly basis, for the next succeeding fiscal year, together
with a brief qualitative description of the Company's plans for such year by the
Company's Chief Executive Officer.
(iv) Within ten days after discovery by the Company
of any material default in the terms of the Series B Purchase Agreement, Series
C Purchase Agreement, Series D Purchase Agreement or any other event which is
likely to have a material adverse effect on the business of the Company and its
subsidiaries, taken as a whole, a notice of such default.
(v) Deliver promptly after transmission or
occurrence (but, in any event, within ten days) any other reports, including
communications with stockholders or the financial community, filed by the
Company or its officers or directors (other than Forms 3, 4 and 5 and successor
forms thereto) on behalf of the Company with the Commission, which reports the
Company may, at its option, deliver using electronic mail.
3. Restriction on Increases in Founders' Salaries. The Company
agrees that until the Series B Shares are redeemed or converted in full, the
salaries of officers shall be determined by disinterested members of the
Company's Board of Directors.
4. Compliance with Financing Documents. The Company will comply
with all of the provisions of this Agreement, the Second Amended and Restated
Founders' Co-Sale and Restricted Stock Agreement of even date herewith, and the
Second Amended and Restated Voting Agreement of even date herewith.
5. Prompt Payment of Taxes, etc. The Company will promptly pay
and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon the
income, profits, property or business of the Company or any subsidiary;
provided, however, that any such tax, assessment, charge or levy need not be
paid if the validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto, and provided further, that the Company
will pay all such taxes, assessments, charges or levies forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefor.
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<PAGE> 21
6. Maintenance of Properties. The Company will keep its
properties and those of its subsidiaries in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needed and proper repairs, renewals, replacements, additions and improvements
thereto.
7. Accounts and Records. The Company will keep true records and
books of account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and affairs and such
records and books shall be kept in accordance with generally accepted accounting
principles applied on a consistent basis.
8. Maintenance of Corporate Existence, etc. The Company shall
maintain in full force and effect its corporate existence, rights and franchises
and all licenses and other rights to use patents, processes, licenses,
trademarks, trade names or copyrights owned or possessed by it or any subsidiary
and deemed by the Company to be material to the conduct of their business.
9. Availability of Common Stock for Conversion. The Company will
from time to time, in accordance with the laws of the State of Delaware,
increase the authorized amount of Series A Common Stock if at any time the
number of shares of Series A Common Stock remaining unissued and available for
issuance shall be insufficient to permit conversion of all the then outstanding
shares of Series B Common Stock, Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock.
10. Confidential Information and Invention Assignment Agreement.
The Company and each director, officer and key employee of the Company or its
subsidiaries has, and each person hereafter employed, directly or indirectly, in
any capacity by it or any subsidiary will upon employment by the Company, enter
into a Confidentiality and Proprietary Information Agreement in substantially
the form attached to the Series D Purchase Agreement.
11. Observer Rights. For as long as Atlas Venture Europe Fund
B.V. ("Atlas") owns at least 120,000 shares of Series B Stock, Atlas shall have
the right to have one of its representatives attend each Board Meeting, which
representative will agree, as a condition to such attendance, to keep any
information divulged in connection with such meetings confidential and to sign
any confidentiality agreements reasonably requested by the Company. For so long
as Novell, Inc. ("Novell") owns at least 120,000 shares of Series C Stock,
Novell shall have the right to have one of its representatives attend each Board
Meeting and to be provided with a copy of any actions taken by unanimous written
consent of the Board of Directors, which representative will agree, as a
condition to such rights, to keep any information divulged in connection with
such meetings and actions confidential and to sign any confidentiality
agreements reasonably requested by the Company; provided, however, that the
Board of Directors has the right to exclude such Novell representative from
Board Meetings or to refrain from sending or providing a copy of any actions
taken by unanimous written consent of the Board of Directors to Novell in which
the Board of Directors reasonably believes the deliberations or discussions of
such Board concerns (i) competitors of Novell or matters which are competitive
with Novell's business, (ii) relationships between the Company and Novell, (iii)
any company in which Novell owns a beneficial interest, or (iv) matters with
respect to which Novell otherwise has a conflict of interest. For so long as
-18-
<PAGE> 22
Technologie Beteiligungs Gesellschaft and Private Equity Bridge Invest Ltd. each
own at least 120,000 shares of Series D Stock, each shall have the right to have
one of its representatives attend each Board Meeting (the "Series D
Representatives") and to be provided with a copy of any actions taken by
unanimous written consent of the Board of Directors, which Series D
Representatives will agree, as a condition to such rights, to keep any
information divulged in connection with such meetings and actions confidential
and to sign any confidentiality agreements reasonably requested by the Company;
provided, however, that the Board of Directors has the right to exclude either
Series D Representative from Board Meetings or to refrain from sending or
providing a copy of any actions taken by unanimous written consent of the Board
of Directors to either Series D Representative in which the Board of Directors
reasonably believes the deliberations or discussions of such Board concerns (i)
competitors of such Series D Representative or matters which are competitive
with either Series D Representative's business, (ii) relationships between the
Company and such Series D Representative, (iii) any company in which such Series
D Representative owns a beneficial interest of at least fifteen percent (15%) of
the voting power of the outstanding shares of such company, or (iv) matters with
respect to which such Series D Representative otherwise has a conflict of
interest. Each such representative shall be notified of the Board meetings such
representative have the right to attend hereunder. The Company shall have no
obligation to pay any expenses associated with any such representative's
attendance at any meeting of the Company's Board of Directors.
12. Termination of Additional Covenants. The Company's
obligations under this Section E will terminate immediately prior to the Public
Offering.
F. Miscellaneous
1. Governing Law. This Agreement and the legal relations between
the parties arising hereunder shall be governed by and interpreted in accordance
with the laws of the State of California. The parties hereto agree to submit to
the jurisdiction of the federal and state courts of the State of California with
respect to the breach or interpretation of this Agreement or the enforcement of
any and all rights, duties, liabilities, obligations, powers, and other
relations between the parties arising under this Agreement.
2. Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties regarding the rights
described herein. 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.
3. Notices, Etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by telecopier and via
overnight courier, or otherwise delivered by hand or by messenger, addressed (a)
if to a Series B Common Stockholder, Series B Stockholder, Series C Stockholder
or Series D Stockholder, at the telecopier number and address set forth on
Exhibit A attached hereto, or at such other address as such stockholders shall
have furnished to the other parties hereto in writing, or (b) if to the Company,
at the address of its principal offices set forth on the signature page of this
Agreement, or at such other address as the Company shall have furnished to the
other parties hereto in writing, with a copy to Bruce M. McNamara, Wilson
Sonsini
-19-
<PAGE> 23
Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304, telecopier
(650) 493-6811 or (c) if to a Series A Stockholder or a Founder, at the
telecopier number and address of such person set forth on the signature page of
this Agreement, or at such other telecopier and address as such person shall
have furnished to the other parties hereto in writing, or (d) if to any other
holder of Founders' Shares, Series B Common Shares, Series A Shares, Series B
Shares, Series C Shares or Series D Shares (or Restricted Securities issued with
respect thereto), at such telecopier number and address as such holder shall
have furnished the other parties hereto in writing, or, until any such holder so
furnishes a telecopier number and an address to the Company, then to and at the
telecopier number and address of the last holder of such shares who has so
furnished an address to the Company.
4. Amendments and Waivers. Any term of this Agreement may be
amended or waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
Holders of at least two-thirds (2/3) of the Registrable Securities (other than
the Founders' Shares). Any amendment so effected shall be binding upon the
Company and all other persons having any rights hereunder.
5. Counterparts. This 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.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-20-
<PAGE> 24
POET HOLDINGS, INC.
SECOND AMENDED AND RESTATED
STOCKHOLDER RIGHTS AGREEMENT
IN WITNESS WHEREOF, the undersigned have hereunto set their hands.
INDIVIDUAL:
If you are signing as an individual,
please print your name and sign below.
- --------------------------------------------
Name of Individual (Please Print)
- --------------------------------------------
Signature
ENTITY:
If you are signing on behalf of an entity,
please print the name of the entity, your name
and title, and sign below.
- ----------------------------------------
Name of Entity (Please Print)
By:
-------------------------------------
Name of Signatory (Please Print)
- ----------------------------------------
Title
- ----------------------------------------
Signature
[Signature Page to Series D Preferred Stock Purchase Agreement]
<PAGE> 25
COMPANY: POET HOLDINGS, INC.
999 Baker Way, Suite 100
San Mateo, CA 94404
Telecopier: 650/286-4630
By:
--------------------------
Dirk Bartels, President
[Signature Page to Series D Preferred Stockholder Rights Agreement]
<PAGE> 26
EXHIBIT A
SERIES B COMMON STOCKHOLDERS
DIRK BARTELS
c/o POET Holdings, Inc.
999 Baker Way
Suite 100
San Mateo, CA 94404
JOCHEN WITTE
Ringstrasse 77A
Hamburg 22359
Germany
SERIES B COMMON STOCKHOLDERS/SERIES A STOCKHOLDERS/
SERIES B STOCKHOLDERS/SERIES C STOCKHOLDERS
EUROPEAN TECHNOLOGY HOLDING N.V.
Nivjerheldsweg 31C
NL-1851 NW Heiloo
The Netherlands
INNOVACOM
23, rue Royale
75008 Paris
France
SERIES B COMMON STOCKHOLDERS/SERIES B STOCKHOLDERS
BRADFORD C. O'BRIEN AND JUDITH MAYER O'BRIEN,
TRUSTEES OF THE O'BRIEN FAMILY TRUST
U/D/T DTD JULY 1, 1992
c/o Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
SERIES B STOCKHOLDERS
WS INVESTMENT 95A
650 Page Mill Road
Palo Alto, CA 94304
<PAGE> 27
SERIES B COMMON STOCKHOLDERS/SERIES C STOCKHOLDERS
WS INVESTMENT 95A
650 Page Mill Road
Palo Alto, CA 94304
SERIES B COMMON STOCKHOLDERS/SERIES B STOCKHOLDERS/
SERIES C STOCKHOLDERS
LAWRENCE OWEN BROWN, TRUSTEE
LAWRENCE OWEN BROWN FAMILY TRUST
U/D/T DTD 10/30/87
19753 Farwell Drive
Saratoga, CA 95070
GC&H INVESTMENTS
One Maritime Plaza, 20th Floor
San Francisco, CA 94111
ATLAS VENTURE EUROPE FUND B.V.
Naarderport 1
PO Box 5225
1410 AE Naarden
The Netherlands
EL DORADO VENTURES III, L.P.
2400 Sand Hill Road, #100
Menlo Park, CA 94025
EL DORADO C&L FUND, L.P.
2400 Sand Hill Road, #100
Menlo Park, CA 94025
EL DORADO TECHNOLOGY IV, L.P.
2400 Sand Hill Road, #100
Menlo Park, CA 94025
SIGMA PARTNERS III, L.P.
2884 Sand Hill Road, Suite 121
Menlo Park, CA 94025
<PAGE> 28
SIGMA ASSOCIATES III, L.P.
2884 Sand Hill Road, Suite 121
Menlo Park, CA 94025
SIGMA INVESTORS III, L.P.
2884 Sand Hill Road, Suite 121
Menlo Park, CA 94025
SERIES C STOCKHOLDERS
NOVELL, INC.
1555 N. Technology Way
A-331
Attn: Robb Taylor
Orem, Utah 84092
PURCHASERS
EUROPEAN TECHNOLOGY HOLDING N.V.
Nivjerheldsweg 31C
NL-1851 NW Heiloo
The Netherlands
INNOVACOM
23, rue Royale
75008 Paris
France
ATLAS VENTURE EUROPE FUND B.V.
Naarderport 1
PO Box 5225
1410 AE Naarden
The Netherlands
EL DORADO VENTURES III, L.P.
2400 Sand Hill Road, #100
Menlo Park, CA 94025
EL DORADO C&L FUND, L.P.
2400 Sand Hill Road, #100
Menlo Park, CA 94025
<PAGE> 29
EL DORADO TECHNOLOGY IV, L.P.
2400 Sand Hill Road, #100
Menlo Park, CA 94025
SIGMA PARTNERS III, L.P.
2884 Sand Hill Road, Suite 121
Menlo Park, CA 94025
SIGMA ASSOCIATES III, L.P.
2884 Sand Hill Road, Suite 121
Menlo Park, CA 94025
SIGMA INVESTORS III, L.P.
2884 Sand Hill Road, Suite 121
Menlo Park, CA 94025
LAWRENCE OWEN BROWN
TRUSTEE FOR THE LAWRENCE OWEN BROWN
FAMILY TRUST
19753 Farwell Drive
Saratoga, CA 95070
PRIVATE EQUITY BRIDGE INVEST LTD.
P.O. Box 30864 SMB
Grand Pavilion Commercial Centre
West Bay Road
Grand Cayman, Cayman Islands
British West Indies
TBG TECHNOLOGIE BETEILIGUNGS GESELLSCHAFT
Herrn Ernst G. Mayer
Ludwig Erhardt Platz 3
53179 Bonn
Germany
<PAGE> 30
INNOVATIONSFONDS SCHLESWIG-HOLSTEIN &
HAMBURG GMBH
Grosse Bleichen 8
20354 Hamburg
Germany
TH FONDS VC GMBH
Lenbachplatz 3
80333 Munich
Germany
<PAGE> 1
EXHIBIT 10.11
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFER RED, ASSIGNED
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT
SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
POET HOLDINGS, INC.
WARRANT TO PURCHASE SERIES A COMMON STOCK
EFFECTIVE DATE: FEBRUARY 16, 1999
Void After February 15, 2004
This certifies that, for value received, Mark L. Gideon and Karen A.
Gideon, Trustees U/A dated October 27, 1997 FBO Mark L. Gideon and Karen A.
Gideon (the "Holder") is entitled, subject to the terms set forth below, to
purchase from Poet Holdings, Inc., a Delaware corporation (the "Company"), 8,523
shares of the Series A Common Stock (the "Warrant Shares") of the Company, upon
surrender hereof, at the principal office of the Company referred to below, with
the subscription form attached hereto duly executed, and simultaneous payment
therefor in lawful money of the United States or otherwise as hereinafter
provided, at the Exercise Price as set forth in Section 2 below. The character
and Exercise Price of such shares of Series A Common Stock are subject to
determination and adjustment as provided below.
1. TERM OF WARRANT. Subject to the terms and conditions set forth
herein, this Warrant shall be exercisable, in whole or in part, during the
period beginning upon the Effective Date of this Warrant set forth above and
ending on 2004; provided, however, that this Warrant shall terminate upon (i)
the closing of a firm commitment underwritten public offering covering the offer
and sale of shares of Common Stock for the account of the Company to the public
at a price to the public of not less than $7.50 per share (subject to adjustment
for any consolidations, combinations, stock distributions, stock dividends,
stock splits or similar events effected after the date hereof) and an aggregate
gross offering price to the public of not less than $7,500,000, (ii) a merger or
consolidation of the Company with or into any other corporation or corporations
in which the stockholders of the Company shall own less than fifty percent (50%)
of the voting securities of the surviving corporation, or (iii) a sale of all or
substantially all of the assets of the Company.
<PAGE> 2
2. EXERCISE PRICE. The per share purchase price of the Series A Common
Stock (the "Exercise Price") for which this Warrant may be exercised shall be
equal to $7.04 per share, subject to adjustment as provided in Section 12 below.
3. EXERCISE OF WARRANT.
(a) Time of Exercise. The purchase rights represented by this
Warrant are exercisable by the Holder in whole or in part at any time, or from
time to time, during the term hereof as described in Section 1 above. Such
exercise shall be effected by (a) the surrender of this Warrant, (b) delivery of
the Notice of Exercise attached hereto as Exhibit A and (c) payment of the
Exercise Price in cash or by check acceptable to the Company.
(b) Effect of Exercise. This Warrant (or the portion thereof
exercised) shall be deemed to have been exercised immediately prior to the close
of business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Series A Common Stock issuable upon
such exercise shall be treated for all purposes as the holder of record of such
shares as of the close of business on such date. As promptly as practicable on
or after such date, the Company, at its expense, shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of shares issuable upon such exercise.
4. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
5. NO RIGHTS AS STOCKHOLDER. The Holder shall not be entitled to vote or
receive dividends or be deemed the holder of Series A Common Stock or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise, until the Warrant shall have been
exercised as provided herein.
6. TRANSFER OF WARRANT.
(a) Register. The Company will maintain a register (the "Warrant
Register") containing the name and address of the Holder. The Holder of this
Warrant may change his address as shown on the Warrant Register by written
notice to the Company requesting such change. Any notice or written
communication required or permitted to be given to the Holder may be delivered
or given by mail to the Holder as shown on the Warrant Register and at the
address shown on the Warrant Register. Until this Warrant is transferred on the
Warrant Register of the Company, the
-2-
<PAGE> 3
Company may treat the Holder as shown on the Warrant Register as the absolute
owner of this Warrant for all purposes, notwithstanding any notice to the
contrary.
(b) Non-transferability and Non-negotiability of Warrant. This
Warrant may not be transferred or assigned without the prior written consent of
the Company.
7. RESERVATION OF STOCK. The Company covenants that during the term this
Warrant is exercisable, the Company will reserve from its authorized and
unissued Series A Common Stock a sufficient number of shares to provide for the
issuance of Series A Common Stock upon the exercise of this Warrant, and, from
time to time, will take all steps necessary to amend its Certificate of
Incorporation to provide sufficient reserves of shares of Series A Common Stock
issuable upon exercise of the Warrant. The Company further covenants that all
shares that may be issued upon the exercise of rights represented by this
Warrant and payment of the Exercise Price, all as set forth herein, will be free
from all taxes, liens, and charges in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously or as otherwise
specified herein). The Company agrees that issuance of this Warrant shall
constitute full authority to the Company's officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for shares of Series A Common Stock and any other securities of the
Company upon the exercise of this Warrant.
8. INVESTMENT REPRESENTATIONS OF THE HOLDER. Holder hereby represents
and warrants to the Company with respect to the sale of the Warrants and the
issuance of securities upon the exercise of the Warrants (collectively, the
"Securities") as follows:
(a) Experience. Holder is experienced in evaluating and investing
in new, high technology companies such as the Company, and it has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Company and it is able to
bear the economic risk of that investment.
(b) Investment. Holder is acquiring the Securities for investment
for its own account and not with the view to, or for resale in connection with,
any distribution thereof. It understands that the Securities to be purchased
have not been registered under the Securities Act, by reason of a specific
exemption from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of the investment intent as
expressed herein.
(c) Tax Consequences. Holder understands and acknowledges that
any financing structured in the manner provided for herein involves certain tax
risks and therefore it has consulted its own tax advisors regarding all the
federal and state tax consequences of the transactions contemplated by this
Agreement.
(d) Rule 144. Holder acknowledges that the Securities must be
held indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. It is aware of the provisions of
Rule 144 promulgated under the Securities Act.
-3-
<PAGE> 4
(e) No Public Market. Holder understands that no public market
now exists for any of the securities issued by the Company and that there can be
no assurance that a public market will ever exist for the Securities.
(f) Access to Data. Holder has had an opportunity to discuss the
Company's business, management and financial affairs with its management and the
opportunity to review the Company's facilities. It understands that such
discussions, as well as any written information issued by the Company, were
intended to describe the aspects of the Company's business and prospects which
it believes to be material but were not necessarily a thorough or exhaustive
description.
(g) Accredited Investor. Holder represents that it is an
"accredited investor" within the meaning of Regulation D promulgated by the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Act.
9. AMENDMENTS. The Holder hereby agrees that the observance of any
provision of this Warrant may be amended, waived or modified only by written
agreement signed by the Holder and the Company.
10. LOST DOCUMENTS. Upon receipt by the Company of evidence and
indemnity satisfactory to it of the loss, theft, destruction or mutilation of,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
will make and deliver in lieu of this Warrant a new Warrant of the same series
and of like tenor of this Warrant.
11. ADJUSTMENTS. The number of shares purchasable hereunder are subject
to adjustment from time to time as follows:
(a) Reorganization, Reclassification, Consolidation, Merger or
Sale. If any capital reorganization or reclassification of the capital stock of
the Company or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that Holder of Series A Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for Series A Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provisions
shall be made whereby each holder of the Warrants shall thereafter have the
right to receive upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Series A Common Stock of the Company
immediately theretofore receivable upon the exercise of such Warrant or
Warrants, such shares of stock, securities or assets (including cash) as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Series A Common Stock equal to the number of shares of such stock
immediately theretofore so receivable, had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any such
case appropriate provision shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Exercise Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
exercise rights (including any immediate adjustment, by reason of such
consolidation or merger, of the Exercise Price to the value for the Series A
Common Stock reflected by the terms of such
-4-
<PAGE> 5
consolidation or merger if the value so reflected is less than the Exercise
Price in effect immediately prior to such consolidation or merger. In the event
of a merger or consolidation of the Company as a result of which a greater or
lesser number of shares of common stock of the surviving corporation are
issuable to holders of Series A Common Stock of the Company outstanding
immediately prior to such merger or consolidation, the Exercise Price in effect
immediately prior to such merger or consolidation shall be adjusted in the same
manner as though there were a subdivision or combination of the outstanding
shares of Series A Common Stock of the Company. The Company will not effect any
such consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume,
by written instrument executed and mailed or delivered to each warrantholder at
the last address of such holder appearing on the books of the Company, the
obligation to deliver to such holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such holder may be entitled to
receive.
(b) Split, Subdivision or Combination of Shares. If the Company
at any time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination and the number of the securities as to which purchaser
rights under this Warrant exist shall be increased or decreased proportionately
in accordance with such split subdivision or combination.
(c) No Impairment. The Company will not, by any 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 will at all times in good
faith assist in the carrying out of all the provisions of this Section 12 and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holders of this Warrant against impairment.
12. GENERAL PROVISIONS.
(a) Governing Law. This Warrant shall be governed by and
construed under the laws of the State of California, excluding that body of law
relating to conflict of laws.
(b) Expenses. Each party shall pay their respective expenses and
legal fees incurred in connection with the negotiation, execution and
consummation of this transaction.
(c) Severability. In the event that any provision of this Warrant
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, the terms of this Warrant shall continue in full force
and effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Warrant to any
party.
(d) Headings. Headings used herein are for reference purposes
only and shall not be deemed to have any substantive effect.
-5-
<PAGE> 6
IN WITNESS WHEREOF, POET HOLDINGS, INC. has caused the Warrant to be
executed by its officers thereunto duly authorized.
Dated: August 4, 1999
POET HOLDINGS, INC.
By: /s/Jerry Wong
-------------------------------------
Title: V.P. Finance
-------------------------------
Address: 999 Baker Way, Suite 100
San Mateo, CA 94404
ACCEPTED:
By: /s/ Mark L. Gideon
-------------------------
Title: Trustee
----------------------
Address: 26 Los Cerros
--------------------
Greenbrae, CA 94904
--------------------
Warrant to Purchase Series A Common Stock
-6-
<PAGE> 7
EXHIBIT A
NOTICE OF EXERCISE
TO: POET HOLDINGS, INC.
(1) The undersigned hereby elects to purchase 8523 shares of Series A
Common Stock of Poet Holdings, Inc. pursuant to the terms of the attached Series
A Common Stock and Warrant Purchase Agreement (the "Purchase Agreement"), and
tenders herewith payment of the Exercise Price for such shares in full.
(2) The undersigned hereby confirms and acknowledges that the
representations and warranties set forth in Section 8 of the Purchase Agreement
remain true and correct concerning the Holder as of the date hereof, that the
shares of Series A Common Stock are being acquired solely for the account of the
undersigned and not as a nominee for any other party, and for investment, and
that the undersigned will not offer, sell, or otherwise dispose of any such
shares of Series A Common Stock except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any state
securities laws or unless pursuant to Rule 144 of such Act.
(3) Please issue a certificate or certificates representing said shares
of Series A Common Stock in the name of the undersigned or in such other name as
is specified below:
Mark L. Gideon
-----------------------------------------
Print Name
/s/ Mark L. Gideon
-----------------------------------------
Signature
7/20/99
-----------------------------------------
Date
<PAGE> 1
EXHIBIT 10.12
ATTACHMENT B
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF SUCH REGISTRATION STATEMENT OR OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT. COPIES OF THE AGREEMENTS COVERING THE
PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS WARRANT TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICE OF THE
CORPORATION.
POET HOLDINGS, INC.
WARRANT TO PURCHASE SERIES A COMMON STOCK
EFFECTIVE DATE: APRIL 30, 1999
Void After April 30, 2004
This certifies that, for value received, Ariba, Inc. (the "Holder") is
entitled, subject to the terms set forth below, to purchase from Poet Holdings,
Inc., a Delaware corporation (the "Company"), up to a maximum of THIRTY-FIVE
THOUSAND FULLY PAID AND NON-ASSESSABLE shares of the Series A Common Stock of
the Company, upon surrender hereof, at the principal office of the Company
referred to below, with the subscription form attached hereto duly executed, and
simultaneous payment therefor in lawful money of the United States or otherwise
as hereinafter provided, at the Exercise Price as set forth in Section 2 below.
The number, character and Exercise Price of such shares of Series A Common Stock
are subject to determination and adjustment as provided below.
1. TERM OF WARRANT. Subject to the terms and conditions set forth herein,
this Warrant shall be exercisable, in whole or in part, during the period
beginning upon the Effective Date of this Warrant set forth above and ending on
April 30, 2004; provided, however, that this Warrant shall terminate upon (i) a
merger or consolidation of the Company with or into any other corporation or
corporations in which the stockholders of the Company as constituted immediately
prior to such merger or consolidation shall own less than fifty percent (50%) of
the voting securities of the surviving corporation, or (ii) a sale of all or
substantially all of the assets of the Company In the event of a proposed
transaction of the kind described above, the Company shall notify the holder of
the Warrant at least fifteen (15) days prior to the consummation of such event
or transaction.
Notwithstanding the provisions of Section 1, this Warrant shall automatically be
deemed to be exercised in full in the manner set forth in Section 4.3, without
any further action on behalf of the Holder immediately prior to: (a) a merger or
consolidation of the Company with or into any other corporation
<PAGE> 2
or corporations in which the stockholders of the Company as constituted
immediately prior to such merger or consolidation shall own less than fifty
percent (50%) of the voting securities of the surviving corporation, or (b) a
sale of all or substantially all of the assets of the Company.
2. EXERCISE PRICE. The per share purchase price of the Series A Common
Stock (the "Exercise Price") for which this Warrant may be exercised shall be
equal to $7.04 per share, subject to adjustment as provided in Section 12 below.
3. NUMBER OF SHARES. The number of shares of Series A Common Stock for
which this Warrant shall be exercisable (the "Warrant Shares") shall be
Thirty-Five Thousand (35,000) shares, subject to adjustment as provided in
Section 12 below.
4. EXERCISE OF WARRANT.
4.1 Time of Exercise. The purchase rights represented by this Warrant
are exercisable by the Holder in whole or in part at any time, or from time to
time, during the term hereof as described in Section 1 above. Such exercise
shall be effected by (1) (a) the surrender of this Warrant, (b) delivery of the
Notice of Exercise attached hereto as Exhibit A and (c) payment of the Exercise
Price in cash or by check acceptable to the Company, or (2) pursuant to Section
4.3 below.
4.2 Effect of Exercise. This Warrant (or the portion thereof
exercised) shall be deemed to have been exercised immediately prior to the close
of business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Series A Common Stock issuable upon
such exercise shall be treated for all purposes as the holder of record of such
shares as of the close of business on such date. As promptly as practicable on
or after such date, the Company, at its expense, shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the number of shares issuable upon such exercise and in any event within 30 days
of delivery of the subscription notice.
4.3 Net Exercise. In lieu of exercising this Warrant pursuant to
Section 4, the Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Series A Common Stock equal to the value
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder hereof a number
of shares of Series A Common Stock computed using the following formula:
Y (A - B)
---------
X = A
Where: X = The number of shares of Series A Common Stock to be
issued to the Holder pursuant to this net exercise
option;
Y = The number of Shares in respect of which the net issue
election is made;
<PAGE> 3
A = The fair market value of one share of the Series A
Common Stock at the time the net issue election is made;
B = The Exercise Price (as adjusted to the date of
the net issuance).
For purposes of this Section 4.3, the fair market value of one share of Series A
Common Stock as of a particular date shall be determined as follows: (i) if
traded on a securities exchange or through the Nasdaq National Market, the value
shall be deemed to be the average of the closing bid or sales prices whichever
is applicable of the securities on such exchange over the thirty (30) day period
ending three (3) days prior to the net exercise election; (ii) if traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever is applicable) over the thirty (30) day period ending
three (3) days prior to the net exercise; and (iii) if there is no active public
market, the value shall be the fair market value thereof, as determined in good
faith by the Board of Directors of the Company; provided, that, if the Warrant
is bing exercised upon the closing of the IPO, the value will be the initial
"Price to Public" of one share of such Series A Common Stock specified in the
final prospectus with respect to such offering.
5. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
6. NO RIGHTS AS STOCKHOLDER. The Holder shall not be entitled to vote or
receive dividends or be deemed the holder of Series A Common Stock or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise, until the Warrant shall have been
exercised as provided herein. However, nothing in this Section 6 shall limit the
right of the Holder to be provided the Notices required under this Warrant
7. TRANSFER OF WARRANT.
7.1 Register. The Company will maintain a register (the "Warrant
Register") containing the name and address of the Holder. The Holder of this
Warrant may change his address as shown on the Warrant Register by written
notice to the Company requesting such change. Any notice or written
communication required or permitted to be given to the Holder may be delivered
or given by mail to the Holder as shown on the Warrant Register and at the
address shown on the Warrant Register. Until this Warrant is transferred on the
Warrant Register of the Company, the Company may treat the Holder as shown on
the Warrant Register as the absolute owner of this Warrant for all purposes,
notwithstanding any notice to the contrary.
<PAGE> 4
7.2 Non-transferability and Non-negotiability of Warrant. Subject to
compliance with applicable federal and state securities laws, this Warrant and
all rights hereunder are transferable in whole by the Holder to any person or
entity upon written consent to the Company. The transfer shall be recorded on
the books of the Company upon the surrender of this Warrant, properly endorsed,
to the Company at its principal offices, and the payment to the Company of all
transfer taxes and other governmental charges imposed on such transfer.
8. RESERVATION OF STOCK. The Company covenants that during the term this
Warrant is exercisable, the Company will reserve from its authorized and
unissued Series A Common Stock a sufficient number of shares to provide for the
issuance of Series A Common Stock upon the exercise of this Warrant, and, from
time to time, will take all steps necessary to amend its Certificate of
Incorporation to provide sufficient reserves of shares of Series A Common Stock
issuable upon exercise of the Warrant. The Company further covenants that all
shares that may be issued upon the exercise of rights represented by this
Warrant and payment of the Exercise Price or pursuant to Section [Net Exercise
Provision], all as set forth herein, will be duly and validly issued, fully paid
and nonassessable and free from all taxes, liens, and charges in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously or as otherwise specified herein). The Company agrees that
issuance of this Warrant shall constitute full authority to the Company's
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for shares of Series A Common Stock
and any other securities of the Company upon the exercise of this Warrant.
9. INVESTMENT REPRESENTATIONS OF THE HOLDER. Holder hereby represents and
warrants to the Company with respect to the sale of the Warrants and the
issuance of securities upon the exercise of the Warrants (collectively, the
"Securities") as follows:
9.1 Experience. Holder is experienced in evaluating and investing in
new, high technology companies such as the Company, and it has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Company and it is able to
bear the economic risk of that investment.
9.2 Investment. Holder is acquiring the Securities for investment for
its own account and not with the view to, or for resale in connection with, any
distribution thereof. It understands that the Securities to be purchased have
not been registered under the Securities Act, by reason of a specific exemption
from the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent as expressed herein.
9.3 Tax Consequences. Holder understands and acknowledges that any
financing structured in the manner provided for herein involves certain tax
risks and therefore it has consulted its own tax advisors regarding all the
federal and state tax consequences of the transactions contemplated by this
Agreement.
9.4 Rule 144. Holder acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. It is aware of the provisions of
Rule 144 promulgated under the Securities Act.
<PAGE> 5
9.5 No Public Market. Holder understands that no public market now
exists for any of the securities issued by the Company and that there can be no
assurance that a public market will ever exist for the Securities.
9.6 Access to Data. Holder has had an opportunity to discuss the
Company's business, management and financial affairs with its management and the
opportunity to review the Company's facilities. It understands that such
discussions, as well as any written information issued by the Company, were
intended to describe the aspects of the Company's business and prospects which
it believes to be material but were not necessarily a thorough or exhaustive
description.
9.7 Accredited Investor. Holder represents that it is an "accredited
investor" within the meaning of Regulation D promulgated by the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Act.
10. Representations an Warranties of the Company The Company hereby
represents to the Holder as follows:
10.1 Organization and Standing. The Company is a corporation duly
organized and existing under the laws of the jurisdiction of its incorporation
and is in good standing under such laws. The Company has the requisite corporate
power and authority to own and operate in its properties and assets, and to
carry on its business as presently conducted and as proposed to be conducted.
The Compnay is duly qualified to do business as a foreign corporation in each
jurisdiction in which the conduct of its business requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on the business of the Company taken as a whole.
10.2 Corporate Power and Valid Issuance. The Company has all requisite
corporate power to execute and deliver this Warrant and to carry out and perform
its obligations under the terms of this Warrant. The Company has all requisite
corporate power to sell and issue the Warrant and to issue the capital stock of
the Company issuable upon exercise of the Warrant. The shares of Series A Common
Stock when issued pursuant to the terms hereof will be validly issued, fully
paid and non-assessable.
10.3 Capitalization. The authorized capital stock of the Company
consists of 11,411,173 shares of Common Stock, 10,000,000 shares of which are
designated Series A Common Stock, 236,566 of which are issued and outstanding as
of the date hereof, and 1,411,173 shares of which are designated Series B Common
Stock, 1,361,173 of which are issued and outstanding as of the date hereof, and
5,490,353 shares of Preferred Stock, 1,225,190 of which have been designated
Series A Preferred Stock, all of which were issued and outstanding as of the
date hereof; 1,865,163 of which are designated Series B Preferred Stock,
1,686,049 of which were issued and outstanding as of the date hereof; 1,400,000
of which are designated Series C Preferred Stock, 1,143,886 of which were issued
and outstanding as of the
<PAGE> 6
date hereof; and 1,000,000 of which have been designated Series D Preferred
Stock, 855,810 of which were issued and outstanding as of the date hereof.
11. AMENDMENTS. The Holder hereby agrees that the observance of any
provision of this Warrant may be amended, waived or modified only by written
agreement signed by the Holder and the Company.
12. LOST DOCUMENTS. Upon receipt by the Company of evidence and indemnity
satisfactory to it of the loss, theft, destruction or mutilation of, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver in lieu of this Warrant a new Warrant of the same series and of like
tenor of this Warrant.
13. ADJUSTMENTS. The number of shares purchasable hereunder are subject to
adjustment from time to time as follows:
13.1 Reorganization, Reclassification, Consolidation, Merger or Sale.
If any capital reorganization or reclassification of the capital stock of the
Company or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected in such a way that Holder of Series A Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Series A Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provisions
shall be made whereby the holder of this Warrant shall thereafter have the right
to receive upon the basis and upon the terms and conditions specified herein and
in lieu of or in addition to (as appropriate) the shares of Series A Common
Stock of the Company immediately theretofore receivable upon the exercise of
such Warrant , such shares of stock, securities or assets (including cash) as
may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Series A Common Stock equal to the number of shares
of such stock immediately theretofore so receivable, had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any such
case appropriate provision shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Exercise Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
exercise rights.
13.2 Split, Subdivision or Combination of Shares. If the Company at
any time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a combination and the number of the securities as to which purchaser
rights under this Warrant exist shall be increased or decreased proportionately
in accordance with such split subdivision or combination.
<PAGE> 7
13.3 Adjustments for Dividends in Stock or Other Securities or
Property. If while this Warrant, or any portion hereof, remains outstanding and
unexpired the holders of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive, without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the number of shares of the security receivable upon exercise of this
Warrant, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other
than cash) of the Company which such holder would hold on the date of such
exercise had it been the holder of record of the security receivable upon
exercise of this Warrant on the date hereof and had thereafter, during the
period from the date hereof to and including the date of such exercise, retained
such shares and all other additional stock available to it as stated above
during such period, giving effect to all adjustments called for during such
period by the provisions of this Section 12.
13.4 No Impairment. The Company will not, by any 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 will at all times in good
faith assist in the carrying out of all the provisions of this Section 12 and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holders of this Warrant against impairment.
13.5 Notice of Adjustment. When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the Warrant, or in
the Exercise Price, the Company shall promptly notify the holder of such event
and of the number of shares of Series A Common Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.
14. GENERAL PROVISIONS.
14.1 Governing Law. This Warrant shall be governed by and construed
under the laws of the State of California, excluding that body of law relating
to conflict of laws.
14.2 Expenses. Each party shall pay their respective expenses and
legal fees incurred in connection with the negotiation, execution and
consummation of this transaction.
14.3 Severability. In the event that any provision of this Warrant
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, the terms of this Warrant shall continue in full force
and effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Warrant to any
party.
14.4 Headings. Headings used herein are for reference purposes only
and shall not be deemed to have any substantive effect.
14.5 All notices required under this Warrant and shall be deemed to
have been given or made for all purposes (i) upon personal delivery, (ii) upon
confirmation receipt that the
<PAGE> 8
communication was successfully sent to the applicable number if sent by
facsimile; (iii) one day after being sent, when sent by professional overnight
courier service, or (iv) five days after posting when sent by registered or
certified mail. Notices to the Company shall be sent to the principal office of
the Company (or at such other place as the Company shall notify the Holder
hereof in writing). Notices to the Holder shall be sent to the address of the
Holder on the books of the Company (or at such other place as the Holder shall
notify the Company hereof in writing).
<PAGE> 9
IN WITNESS WHEREOF, POET HOLDINGS, INC., has caused the Warrant to be
executed by its officers thereunto duly authorized.
Dated: April 30, 1999
POET HOLDINGS, INC.
By: /s/ Dirk Bartels
-------------------------------------
Title: President & CEO
Address: 999 Baker Way, Suite 100
San Mateo, CA 94404
ACCEPTED:
ARIBA, INC.
By: Edward Kinsey
---------------------------------
Title: CFO
------------------------------
Address:
-----------------------------
Warrant to Purchase Series A Common Stock
<PAGE> 10
EXHIBIT A
NOTICE OF EXERCISE
TO: POET HOLDINGS, INC.
(1) The undersigned hereby elects to purchase ________ shares of Series A
Common Stock of Poet Holdings, Inc. pursuant to the terms of the attached
Warrant to Purchase Series A Common Stock (the "Warrant"), and tenders herewith
payment of the Exercise Price for such shares in full or hereby exercises the
Warrant for ________ shares of Series A Common Stock of Poet Holdings, Inc.
pursuant to the terms of Section 4.3.
(2) The undersigned hereby confirms and acknowledges that the
representations and warranties set forth in Section 9 of the Warrant remain true
and correct concerning the Holder as of the date hereof, that the shares of
Series A Common Stock are being acquired solely for the account of the
undersigned and not as a nominee for any other party, and for investment, and
that the undersigned will not offer, sell, or otherwise dispose of any such
shares of Series A Common Stock except under circumstances that will not result
in a violation of the Securities Act of 1933, as amended, or any state
securities laws or unless pursuant to Rule 144 of such Act.
(3) Please issue a certificate or certificates representing said shares of
Series A Common Stock in the name of the undersigned or in such other name as is
specified below:
-----------------------------------------
Print Name
-----------------------------------------
Signature
-----------------------------------------
Date
<PAGE> 1
EXHIBIT 10.13
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
<TABLE>
<S> <C>
Corporation: POET HOLDINGS, INC., a Delaware corporation
Number of Shares: 5,882
Class of Stock: Series B Preferred (subject to SECTION 1.7)
Initial Base Price: $4.25 per Share
Issue Date: September 13, 1996
Expiration Date: September 13, 2003 (subject to SECTION 4.1)
</TABLE>
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $100.00 and for
other good and valuable consideration, VENTURE LENDING, a Division of Cupertino
National Bank & Trust ("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 ARTICLES 1
and 2 of this Warrant, subject to the provisions and upon the terms and
conditions set forth of this Warrant.
ARTICLE 1. EXERCISE.
1.1 METHOD OF EXERCISE. Holder may exercise this Warrant by delivering a
duly executed Notice of Exercise in substantially the form attached as Appendix
1 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 SECTION 1.3.
1.3 FAIR MARKET VALUE. If the Shares are traded in a public market, the
fair market value of the Shares shall be the closing price of the Shares (or the
closing price of the Company's stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are
1.
<PAGE> 2
not 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 more than five percent (5%)
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.
1.4 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after Holder
exercises or converts this Warrant, 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.
1.5 REPLACEMENT OF WARRANTS. On 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, or 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.
1.6 REPURCHASE ON SALE, MERGER, OR CONSOLIDATION OF THE COMPANY.
1.6.1 "ACQUISITION". For the purpose of this Warrant, "Acquisition"
means any sale, license, or other disposition of all or substantially all of the
assets 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.
1.6.2 ASSUMPTION OF WARRANT. If upon the closing of any Acquisition
the successor entity assumes the obligations of this Warrant, then this Warrant
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.
1.6.3 NONASSUMPTION. If upon the closing of any Acquisition the
successor entity does not assume the obligations of this Warrant 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.
1.7 ADJUSTMENT TO SERIES C PREFERRED STOCK AND EXERCISE PRICE. If on or
before November 25, 1996, the Company sells and issues to any investors, Series
C Preferred Stock with aggregate gross proceeds to the Company of at least
$1,500,000, this Warrant shall
2.
<PAGE> 3
concurrent with the issuance of such shares of preferred stock automatically be
adjusted to instead be exercisable for shares of the same series and class and
bearing the same rights, preferences, and privileges, of such shares of
preferred stock (including the rights described on Exhibit B hereto), with the
Warrant Price hereunder adjusted to equal the per share purchase price of such
preferred stock, and the number of such shares subject to this Warrant adjusted
to equal (i) Twenty-five Thousand Dollars ($25,000), divided by (ii) such
modified per share Warrant 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 (or the Shares if the Shares are securities other
than common stock) payable in common stock, or other securities, subdivides the
outstanding common stock into a greater amount of common stock, or, if the
Shares are securities other than common stock, subdivides the Shares in a
transaction that increases the amount of common stock into which the Shares are
convertible, 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 Certificate 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 or, if the Shares are Preferred
Stock, the number of shares of common stock issuable upon conversion of the
Shares, shall be subject to adjustment, from time to time in the manner set
forth on EXHIBIT A hereto.
3.
<PAGE> 4
2.5 NO IMPAIRMENT. The Company shall not, by amendment of its Certificate
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 of 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 Section against impairment.
2.6 FRACTIONAL SHARES. No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder amount computed by
multiplying the factional interest by the fair market value of a full Share.
2.7 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) [intentionally deleted]
(b) All Shares which may be issued upon the exercise of the purchase
right represented by this Warrant, 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 RESERVATION OF SHARES. The Company covenants and agrees that at all
times it will have authorized and reserved a sufficient number of the Shares
(and the securities, including Common Stock, issuable, directly or indirectly,
upon conversion of the Shares) to provide for the exercise of the rights
represented by this Warrant.
3.3 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
4.
<PAGE> 5
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.
3.4 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 notices or other written communications to the
shareholders of the Company, (b) within one hundred twenty (120) 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.
3.5 INVESTOR RIGHTS. The Company agrees that the Shares or, if the Shares
are convertible into common stock of the Company, such common stock, shall be
subject to the registration rights and such other rights as are set forth on
EXHIBIT B hereto.
3.6 CONVERSION RATIO. The Company covenants and agrees that the conversion
ratio of the Series B Preferred Stock as converted to Common Stock of the
Company is currently no less than one common share for each share of Series B
Preferred Stock and the Series C Preferred Stock upon its authorization and
initial issuance will be no less than one common share for each share of Series
C Preferred Stock.
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:
5.
<PAGE> 6
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 the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by 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(e), 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 party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
6.
<PAGE> 7
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.
POET HOLDINGS, INC.
By: /s/ DIRK BARTELS
Name: DIRK BARTELS
-----------------------------------
(Print)
Title: Chairman of the Board,
President, or Vice President
By: /s/ Judith M. O'Brien
-------------------------------------
Name: Judith M. O'Brien
-----------------------------------
(Print)
Title: Chief Financial Officer,
Secretary, Assistant Treasurer,
or Assistant Secretary
7.
<PAGE> 8
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ______________ shares of the
Series ___ Preferred Stock of POET HOLDINGS, INC. pursuant to the terms of the
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 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.]
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:
----------------------------
(Name)
---------------------------
---------------------------
(Address)
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.
-----------------------------------------
(Signature)
- --------------------
(Date)
8.
<PAGE> 9
APPENDIX 2
NOTICE THAT WARRANT IS ABOUT TO EXPIRE
-------------------, -------
(Name of Holder)
(Address of Holder)
Attn: Chief Financial Officer
Dear ____________:
This is to advise you that the Warrant issued to you described below will
expire on _________________, 19__.
<TABLE>
<S> <C>
Issuer: POET HOLDINGS, INC.
Issue Date: September 13, 1996
Class of Security Issuable: Series ___ Preferred Stock
Exercise Price per Share:
Number of Shares Issuable:
Procedure for Exercise:
</TABLE>
Please contact [name of contact person at (phone number)] with any
questions you may have concerning exercise of the Warrant. This is your only
notice of pending expiration.
POET HOLDINGS, INC.
By: ___________________________________
Its: __________________________________
9.
<PAGE> 10
EXHIBIT A
ANTI-DILUTION PROVISIONS
In the event of the issuance by the Company, after the Issue Date of the
Warrant, of securities at a price per share less than the then current Warrant
Price (a "Diluting Issuance"), then the number of shares of common stock
issuable upon conversion of the Shares shall be adjusted in accordance with the
terms and conditions of the Bank's standard form of Anti-Dilution Agreement.
Under no circumstances shall the aggregate Warrant Price payable by the
Holder upon exercise of the Warrant increase as a result of any adjustment
arising from a Diluting Issuance.
10.
<PAGE> 11
EXHIBIT B
REGISTRATION RIGHTS
The Shares (if common stock), or the common stock issuable upon conversion
of the Shares, shall be deemed "Registrable Securities" for purposes of Section
C.2 of the following agreement (the "Agreement") between the Company and its
investor(s):
POET HOLDINGS, INC.
STOCKHOLDERS RIGHTS AGREEMENT, DATED APRIL 7, 1995;
provided, however, Holder shall be considered an "Other Shareholder" for
purposes of the allocation provisions described in C.2(b) therein.
Upon the earlier of (i) November __, 1996 or (ii) automatic conversion or
adjustment of the shares pursuant to SECTION 1.7 of the Warrant, the Shares
shall become "Registrable Securities" under the Agreement or any such substitute
Agreement entered into by the Company, its investors and the purchasers of its
Series C Preferred Stock substantially concurrently with such automatic
conversion, and Holder shall become a party to such Agreement or substitute
Agreement at that time.
The Company agrees that no amendments will be made to the Agreement or any
substitute Agreement which would have a material adverse impact on Holder's
registration rights thereunder without the consent of Holder.
11.
<PAGE> 1
EXHIBIT 10.14
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: POET HOLDINGS, INC., a Delaware corporation
Number of Shares: 2,941
Class of Stock: Series B Preferred (subject to SECTION 1.7)
Initial Base Price: $4.25 per Share
Issue Date: July 25, 1996
Expiration Date: July 25, 2003 (subject to SECTION 4.1)
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $100.00 and
for other good and valuable consideration, VENTURE LENDING, a Division of
Cupertino National Bank & Trust ("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 Articles 1
and 2 of this Warrant, subject to the provisions and upon the terms and
conditions set forth of this Warrant.
ARTICLE 1. EXERCISE.
1.1 METHOD OF EXERCISE. Holder may exercise this Warrant by delivering
a duly executed Notice of Exercise in substantially the form attached as
APPENDIX 1 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 SECTION 1.3.
1.3 FAIR MARKET VALUE. If the Shares are traded in a public market, the
fair market value of the Shares shall be the closing price of the Shares (or the
closing price of the Company's stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are
1.
<PAGE> 2
not 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 more than five percent (5%)
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.
1.4 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after Holder
exercises or converts this Warrant, 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.
1.5 REPLACEMENT OF WARRANTS. On 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, or 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.
1.6 REPURCHASE ON SALE, MERGER, OR CONSOLIDATION OF THE COMPANY.
1.6.1 "ACQUISITION". For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets 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.
1.6.2 ASSUMPTION OF WARRANT. If upon the closing of any
Acquisition the successor entity assumes the obligations of this Warrant, then
this Warrant 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.
1.6.3 NONASSUMPTION. If upon the closing of any Acquisition
the successor entity does not assume the obligations of this Warrant 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.
1.7 ADJUSTMENT TO SERIES C PREFERRED STOCK AND EXERCISE PRICE. If on or
before November ___, 1996, the Company sells and issues to any investors, Series
C Preferred Stock with aggregate gross proceeds to the Company of at least
$1,500,000, this Warrant shall
2.
<PAGE> 3
concurrent with the issuance of such shares of preferred stock automatically be
adjusted to instead be exercisable for shares of the same series and class and
bearing the same rights, preferences, and privileges, of such shares of
preferred stock (including the rights described on Exhibit B hereto), with the
Warrant Price hereunder adjusted to equal the per share purchase price of such
preferred stock, and the number of such shares subject to this Warrant adjusted
to equal (i) Twelve Thousand Five Hundred Dollars ($12,500), divided by (ii)
such modified per share Warrant 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 (or the Shares if the Shares are securities other
than common stock) payable in common stock, or other securities, subdivides the
outstanding common stock into a greater amount of common stock, or, if the
Shares are securities other than common stock, subdivides the Shares in a
transaction that increases the amount of common stock into which the Shares are
convertible, 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 Certificate 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 or, if the Shares are
Preferred Stock, the number of shares of common stock issuable upon conversion
of the Shares, shall be subject to adjustment, from time to time in the manner
set forth on Exhibit A hereto.
3.
<PAGE> 4
2.5 NO IMPAIRMENT. The Company shall not, by amendment of its
Certificate 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 of 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 Section against impairment.
2.6 FRACTIONAL SHARES. No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder amount computed by
multiplying the factional interest by the fair market value of a full Share.
2.7 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) [intentionally deleted]
(b) All Shares which may be issued upon the exercise of the
purchase right represented by this Warrant, 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 RESERVATION OF SHARES. The Company covenants and agrees that at all
times it will have authorized and reserved a sufficient number of the Shares
(and the securities, including Common Stock, issuable, directly or indirectly,
upon conversion of the Shares) to provide for the exercise of the rights
represented by this Warrant.
3.3 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
4.
<PAGE> 5
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.
3.4 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 notices or other written communications to the
shareholders of the Company, (b) within one hundred twenty (120) 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.
3.5 INVESTOR RIGHTS. The Company agrees that the Shares or, if the
Shares are convertible into common stock of the Company, such common stock,
shall be subject to the registration rights and such other rights as are set
forth on EXHIBIT B hereto.
3.6 CONVERSION RATIO. The Company covenants and agrees that the
conversion ratio of the Series B Preferred Stock as converted to Common Stock of
the Company is currently no less than one common share for each share of Series
B Preferred Stock and the Series C Preferred Stock upon its authorization and
initial issuance will be no less than one common share for each share of Series
C Preferred Stock.
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:
5.
<PAGE> 6
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 the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by 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(e), 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 party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
6.
<PAGE> 7
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.
POET HOLDINGS, INC.
By: /s/ DIRK BARTELS
Name: DIRK BARTELS
----------
(Print)
Title: Chairman of the Board,
President, or Vice President
By: /s/ Judith M. O'Brien
Name: Judith M. O'Brien, Secretary
----------------------------
(Print)
Title: Chief Financial Officer,
Secretary Assistant Treasurer,
or Assistant Secretary
7.
<PAGE> 8
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ________________ shares of
the Series ___ Preferred Stock of POET HOLDINGS, INC. pursuant to the terms of
the 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 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.]
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:
--------------------------
(Name)
--------------------------
--------------------------
(Address)
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.
---------------------------------
(Signature)
- ------------------
(Date)
8.
<PAGE> 9
APPENDIX 2
NOTICE THAT WARRANT IS ABOUT TO EXPIRE
________________ , _________________
(Name of Holder)
(Address of Holder)
Attn: Chief Financial Officer
Dear ________________:
This is to advise you that the Warrant issued to you described below
will expire on __________________, 19__.
Issuer: POET HOLDINGS, INC.
Issue Date: __________ ___, 199_
Class of Security Issuable: Series ____ Preferred Stock
Exercise Price per Share:
Number of Shares Issuable:
Procedure for Exercise:
Please contact [name of contact person at (phone number)] with any
questions you may have concerning exercise of the Warrant. This is your only
notice of pending expiration.
POET HOLDINGS, INC.
By: ______________________________
Its: _____________________________
9.
<PAGE> 10
EXHIBIT A
ANTI-DILUTION PROVISIONS
In the event of the issuance by the Company, after the Issue Date of
the Warrant, of securities at a price per share less than the then current
Warrant Price (a "Diluting Issuance"), then the number of shares of common stock
issuable upon conversion of the Shares shall be adjusted in accordance with the
terms and conditions of the Bank's standard form of Anti-Dilution Agreement.
Under no circumstances shall the aggregate Warrant Price payable by the
Holder upon exercise of the Warrant increase as a result of any adjustment
arising from a Diluting Issuance.
10.
<PAGE> 11
EXHIBIT B
REGISTRATION RIGHTS
The Shares (if common stock), or the common stock issuable upon
conversion of the Shares, shall be deemed "Registrable Securities" for purposes
of Section C.2 of the following agreement (the "Agreement") between the Company
and its investor(s):
POET HOLDINGS, INC.
STOCKHOLDERS RIGHTS AGREEMENT, DATED APRIL 7, 1995;
provided, however, Holder shall be considered an "Other Shareholder" for
purposes of the allocation provisions described in C.2(b) therein.
Upon the earlier of (i) November _____, 1996 or (ii) automatic
conversion or adjustment of the shares pursuant to Section 1.7 of the Warrant,
the Shares shall become "Registrable Securities" under the Agreement or any such
substitute Agreement entered into by the Company, its investors and the
purchasers of its Series C Preferred Stock substantially concurrently with such
automatic conversion, and Holder shall become a party to such Agreement or
substitute Agreement at that time.
The Company agrees that no amendments will be made to the Agreement or
any substitute Agreement which would have a material adverse impact on Holder's
registration rights thereunder without the consent of Holder.
11.
<PAGE> 1
EXHIBIT 10.15
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH
RESPECT THERETO.
PREFERRED STOCK PURCHASE WARRANT
WARRANT NO. 01 NUMBER OF SHARES 7,291
POET HOLDINGS, INC.
VOID AFTER MAY 31, 2002
1. ISSUANCE. In consideration of $100 and other valuable consideration,
receipt of which is hereby acknowledged, this Warrant is issued to Lighthouse
Capital Partners, L.P. by Poet Holdings, Inc., a Delaware corporation
(hereinafter with its successors called the "Company").
2. PURCHASE PRICE; NUMBER OF SHARES. The registered holder of this
Warrant (the "Holder"), commencing on the date hereof, is entitled upon
surrender of this Warrant with the subscription form annexed hereto duly
executed, at the principal office of the Company, to purchase from the Company
at a price per share (the "Purchase Price") of $2.15, seven thousand two hundred
ninety-one (7,291) fully paid and nonassessable shares of Series B Preferred
Stock, $0.001 par value, of the Company (the "Preferred Stock"). Until such time
as this Warrant is exercised in full or expires, the Purchase Price and the
securities issuable upon exercise of this Warrant are subject to adjustment as
hereinafter provided. The person or persons in whose name or names any
certificate representing shares of Preferred Stock is issued hereunder shall be
deemed to have become the holder of record of the shares represented thereby as
at the close of business on the date this Warrant is exercised with respect to
such shares, whether or not the transfer books of the Company shall be closed.
3. PAYMENT OF PURCHASE PRICE. The Purchase Price may be paid (i) in cash
or by check, (ii) by the surrender by the Holder to the Company of any
promissory notes or other obligations issued by the Company, with all such notes
and obligations so surrendered being credited against the Purchase Price in an
amount equal to the principal amount thereof plus accrued interest to the date
of surrender, or (iii) by any combination of the foregoing.
4. NET ISSUE ELECTION. The Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares of Preferred Stock
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 principal 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 of Preferred Stock to be issued to the Holder
pursuant to this Section 4.
Y = the number of shares of Preferred Stock covered by this Warrant in
respect of which the net issue election is made pursuant to this
Section 4.
1
<PAGE> 2
A = the fair market value of one share of Preferred Stock, as determined
in good faith by the Board, as at the time the net issue election is
made pursuant to this Section 4.
B = the Purchase Price in effect under this Warrant at the time the net
issue election is made pursuant to this Section 4.
5. PARTIAL EXERCISE. This Warrant may be exercised in part, and the
Holder shall be entitled to receive a new warrant, which shall be dated as of
the date of this Warrant, covering the number of shares in respect of which this
Warrant shall not have been exercised.
6. FRACTIONAL SHARES. In no event shall any fractional share of Preferred
Stock be issued upon any exercise of this Warrant. If, upon exercise of this
Warrant as an entirety, the Holder would, except as provided in this Section 6,
be entitled to receive a fractional share of Preferred Stock, then the Company
shall issue the next lower number of full shares of Preferred Stock. The Company
shall pay to the Holder upon exercise the fair market value of any fractional
shares of Preferred Stock otherwise issuable upon the exercise of this Warrant.
7. EXPIRATION DATE; AUTOMATIC EXERCISE. This Warrant shall expire at the
close of business on May 31, 2002, and shall be void thereafter. Notwithstanding
the foregoing, this Warrant shall automatically be deemed to be exercised in
full pursuant to the provisions of Section 4 hereof, without any further action
on behalf of the Holder, immediately prior to the time this Warrant would
otherwise expire pursuant to the preceding sentence.
8. VALID ISSUANCE. The Company covenants that it will at all times from
and after the date hereof reserve and keep available such number of its
authorized shares of Preferred Stock and any Common Stock issuable upon
conversion thereof $0.001 par value, of the Company (the "Common Stock"), free
from all preemptive or similar rights therein, as will be sufficient to permit,
respectively, the exercise of this Warrant in full and, if applicable, the
conversion into shares of Common Stock of all shares of Preferred Stock
receivable upon such exercise. The Company covenants that such shares of
Preferred Stock issued pursuant to exercise and/or conversion pursuant to
Section 4 of this Warrant will, upon issuance, be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issuance thereof.
9. STOCK SPLITS AND DIVIDENDS. If after the date hereof the Company shall
subdivide the Preferred Stock, by split-up or otherwise, or combine the
Preferred Stock, or issue additional shares of Preferred Stock in payment of a
stock dividend on the Preferred Stock, the number of shares of Preferred Stock
issuable on the exercise of this Warrant shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the Purchase Price shall forthwith
be proportionately decreased in the case of a subdivision or stock dividend, or
proportionately increased in the case of a combination.
10. MERGERS AND RECLASSIFICATIONS. If after the date hereof the Company
shall enter into any Reorganization (as hereinafter defined), then, this warrant
shall expire immediately prior to the effective date of such Reorganization, but
only if the Company shall have delivered a written notice to Holder at least
twenty (20) days before such expiration, specifying that immediate action by the
Holder is required. For the purposes of this Section 10, the term
"Reorganization" shall include without limitation any reclassification, capital
reorganization or change of the Preferred Stock (other than as a result of a
subdivision, combination or stock dividend provided for in Section 9 hereof), or
any consolidation of the Company with, or merger of the Company into, another
corporation or other business organization (other than a merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding Preferred Stock), or any sale or
conveyance to another corporation or other business organization of all or
substantially all of the assets of the Company.
2
<PAGE> 3
11. CERTIFICATE OF ADJUSTMENT. Whenever the Purchase Price is adjusted, as
herein provided, the Company shall promptly deliver to the Holder a certificate
of the Company's chief financial officer setting forth the Purchase Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.
12. NOTICES OF RECORD DATE, ETC. In the event of:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase, sell or otherwise acquire or dispose of any shares of
stock of any class or any other securities or property, or to receive any other
right;
(b) any reclassification of the capital stock of the Company, capital
reorganization of the Company, consolidation or merger involving the Company, or
sale or conveyance of all or substantially all of its assets; or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then and in each such event the Company will provide or cause to be provided to
the Holder a written notice thereof. Such notice shall be provided at least ten
(10) business days prior to the date specified in such notice on which any such
action is to be taken.
13. REPRESENTATIONS, WARRANTIES AND COVENANTS. This Warrant is issued and
delivered by the Company and accepted by each Holder on the basis of the
following representations, warranties and covenants made by the Company:
A. The Company has all necessary authority to issue, execute and
deliver this Warrant and to perform its obligations hereunder. This Warrant has
been duly authorized, issued, executed and delivered by the Company and is the
valid and binding obligation of the Company, enforceable in accordance with its
terms.
B. The shares of Preferred Stock issuable upon the exercise of this
Warrant have been duly authorized and reserved for issuance by the Company and,
when issued in accordance with the terms hereof, will be validly issued, fully
paid and nonassessable.
C. The issuance, execution and delivery of this Warrant do not, and
the issuance of the shares of Preferred Stock upon the exercise of this Warrant
in accordance with the terms hereof will not, (i) violate or contravene the
Company's Certificate of Incorporation or by-laws, or any law, statute,
regulation, rule, judgment or order applicable to the Company, (ii) violate,
contravene or result in a breach or default under any contract, agreement or
instrument to which the Company is a party or by which the Company or any of its
assets are bound or (iii) require the consent or approval of or the filing of
any notice or registration with any person or entity other than consents which
have already been obtained.
D. As long as this Warrant is, or any shares of Preferred Stock
issued upon exercise of this Warrant or any shares of Common Stock issued upon
conversion of such shares of Preferred Stock are, issued and outstanding, the
Company will provide to the Holder the financial information under clause (b) of
the definition of "Financial Statements" contained in that certain Lease Line
Schedule No. 01 to Master Equipment Lease Agreement No. 105 between Poet
Software Corporation and Lighthouse Capital Partners, L.P. dated as of May 10,
1995.
E. The Company shall use its best efforts to amend the Stockholder
Rights Agreement dated as of April 7, 1995, so that (i) the shares of Common
Stock issuable upon conversion of the shares of Preferred Stock issuable upon
exercise of this Warrant shall be Registrable Securities, and (ii) the Holder
shall be a Holder, for all purposes of such Stockholder Rights Agreement. Holder
shall execute such amendment agreeing to be a party thereto and to be bound by
the applicable terms thereof.
3
<PAGE> 4
14. AMENDMENT. The terms of this Warrant may be amended, modified or
waived only with the written consent of the Holder.
15. NOTICES, TRANSFERS, ETC.
A. Any notice or written communication required or permitted to be
given to the Holder may be given by mail or delivered to the Holder at the
address most recently provided by the Holder to the Company.
B. Subject to compliance with applicable federal and state
securities laws, this Warrant may be transferred by the Holder with respect to
any or all of the shares purchasable hereunder, provided however that this
Warrant may not be assigned or transferred more than twice during the term
hereof and provided further, that this Warrant may not be subdivided into more
than two (2) Warrants, and provided further that this Warrant shall not be
assigned or transferred to a direct competitor of the Company Upon surrender of
this Warrant to the Company, together with the assignment notice annexed hereto
duly executed, for transfer of this Warrant as an entirety by the Holder, the
Company shall issue a new warrant of the same denomination (or, if subdivided,
as provided above, the new denominations) to the assignee. Upon surrender of
this Warrant to the Company, together with the assignment hereof properly
endorsed, by the Holder for transfer with respect to a portion of the shares of
Preferred Stock purchasable hereunder, the Company shall issue a new warrant to
the assignee, in such denomination as shall be requested by the Holder hereof,
and shall issue to such Holder a new warrant covering the number of shares in
respect of which this Warrant shall not have been transferred.
C. In case this Warrant shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new warrant of like tenor and denomination
and deliver the same (i) in exchange and substitution for and upon surrender and
cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost,
stolen or destroyed, upon receipt of an affidavit of the Holder or other
evidence reasonably satisfactory to the Company of the loss, theft or
destruction of such Warrant.
16. NO IMPAIRMENT. The Company will not, by amendment of its Certificate
of Incorporation or through any reclassification, capital reorganization,
consolidation, merger, sale or conveyance of assets, dissolution, liquidation,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance of performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder.
17. GOVERNING LAW. The provisions and terms of this Warrant shall be
governed by and construed in accordance with the internal laws of the State of
California.
18. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon the
Company's successors and assigns and shall inure to the benefit of the Holder's
successors, legal representatives and permitted assigns.
19. BUSINESS DAYS. If the last or appointed day for the taking of any
action required or the expiration of any right granted herein shall be a
Saturday or Sunday or a legal holiday in California, then such action may be
taken or right may be exercised on the next succeeding day which is not a
Saturday or Sunday or such a legal holiday.
20. QUALIFYING PUBLIC OFFERING. If the Company shall effect a public
offering of shares of Common Stock which results in the conversion of the
Preferred Stock into Common Stock pursuant to the Company's Certificate of
Incorporation in effect immediately prior to such offering, then, effective upon
such conversion, this Warrant shall change from the right to purchase shares of
Preferred Stock to the right to purchase shares of Common Stock, and the Holder
shall thereupon have the right to purchase, at a total price equal to that
payable upon the exercise of this Warrant in full, the number of shares of
Common Stock which would have been
4
<PAGE> 5
receivable by the Holder upon the exercise of this Warrant for shares of
Preferred Stock immediately prior to such conversion of such shares of Preferred
Stock into shares of Common Stock, and in such event appropriate provisions
shall be made with respect to the rights and interest of the Holder to the end
that the provisions hereof (including, without limitation, provisions for the
adjustment of the Purchase Price and of the number of shares purchasable upon
exercise of this Warrant) shall thereafter be applicable to any shares of Common
Stock deliverable upon the exercise hereof.
21. VALUE. The Company and the Holder agree that the value of this
Warrant on the date of grant is $100.
22. INVESTOR REPRESENTATIONS. Holder agrees that upon exercise of the
Warrant, Holder shall execute the Investor Representation Statement attached
hereto as Exhibit A.
Dated: June 19, 1995
POET HOLDINGS, INC.
(Corporate Seal) By: /s/ Dirk Bartels
Name: Dirk Bartels
-----------------------------------
Title: President
----------------------------------
Attest:
/s/ [Illegible]
5
<PAGE> 6
Subscription
To: Date:
---------------------------------- -----------------------------------
The undersigned hereby subscribes for _____________ shares of Preferred
Stock covered by this Warrant. The certificate(s) for such shares shall be
issued in the name of the undersigned or as otherwise indicated below:
----------------------------------------
Signature
--------------------------------------
Name for Registration
--------------------------------------
Mailing Address
Net Issue Election Notice
To: Date:
---------------------------------- -----------------------------------
The undersigned hereby elects under Section 4 to surrender the right to
purchase ______ shares of Preferred Stock pursuant to this Warrant. The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.
----------------------------------------
Signature
--------------------------------------
Name for Registration
--------------------------------------
Mailing Address
6
<PAGE> 7
Assignment
For value received______________________________________hereby sells,
assigns and transfers unto _______
________________________________________________________________________________
[Please print or typewrite name and address of Assignee]
________________________________________________________________________________
the within Warrant, and does hereby irrevocably constitute and appoint
______________________ ______________________________ its attorney to transfer
the within Warrant on the books of the within named Company with full power of
substitution on the premises.
Dated:
--------------------------------
-----------------------------------------
In the Presence of:
- ---------------------------------------
7
<PAGE> 8
EXHIBIT A
INVESTMENT REPRESENTATION STATEMENT
PURCHASER: LIGHTHOUSE CAPITAL PARTNERS, L.P.
COMPANY: POET HOLDINGS INC.
SECURITY: COMMON STOCK
AMOUNT: ___________________
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
1. I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. By reason of
my business or financial experience, I have the capacity to protect my own
interests in connection with the purchase of the Securities hereunder and have
the ability to bear the economic risk (including the risk of total loss) of my
investment.
I am purchasing these Securities for my own account for
investment purposes only and not with a view to, or for the resale in connection
with, any "distribution" thereof for purposes of the Securities Act of 1933, as
amended (the "Securities Act").
2. I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein.
3. I further understand that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, I understand
that the Company is under no obligation to register the Securities. In addition,
I understand that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.
4. I am familiar with the provisions of Rule 144, promulgated under
the Securities Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions. The Securities may be resold in certain limited circumstances
subject to the provisions of Rule 144, which requires among other things: (1)
the availability of certain public information about the Company, (2) the resale
occurring not less than two years after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in
the case of an affiliate, or of a non-affiliate who has held the securities less
than three years, (3) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934) and the amount of
securities being sold during any three month period not exceeding the specified
limitations stated therein, if applicable. I understand that the current
information referred to above is not now available and the Company has no
present plans to make such information available.
5. I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for
<PAGE> 9
such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
6. I further covenant that I will not make any sale, transfer or
other disposition of the Securities in violation of the Securities Act, the
Securities and Exchange Act of 1934, as amended, or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.
LIGHTHOUSE CAPITAL PARTNERS, L.P.
By: LIGHTHOUSE MANAGEMENT
PARTNERS, L.P., its general partner
By: LIGHTHOUSE CAPITAL
PARTNERS, INC., its general partner
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE> 1
EXHIBIT 10.16
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF SUCH REGISTRATION STATEMENT OR OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT. COPIES OF THE AGREEMENTS COVERING THE
PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICE OF THE
CORPORATION.
POET HOLDINGS, INC.
WARRANT TO PURCHASE STOCK
This certifies that, for value received, ________________________________
(the "Holder") is entitled, subject to the terms set forth below, to purchase
from POET Holdings, Inc., a Delaware corporation (the "Company"), a number of
shares of the Company's capital stock with a price per share which will be
determined in accordance with the terms of Sections 2 and 3, respectively, of
this Warrant.
1. TERM OF WARRANT. Subject to the terms and conditions set forth herein,
this Warrant shall be exercisable, in whole or in part, during the period
beginning upon the closing by the Company of the earlier to occur of (i) the
Next Round of Financing, (ii) the Significant Event Date or (iii) the Default
Measurement Date and ending on the earlier to occur of (i) the date which is
five (5) years from start date and (ii) the date of a Significant Event.
2. TYPE AND NUMBER OF SHARES SUBJECT TO WARRANT. The number of shares the
Company's capital stock and the exercise price per share of such capital stock
subject to this Warrant will be determined based upon the first to occur of (i)
the closing by the Company of a Preferred Stock equity round of financing (the
"Next Round of Financing"), (ii) a Significant Event (as defined below) or (iii)
if neither a Next Round of Financing nor Significant Event occurs prior to
September 30, 2003, then September 30, 2003 (the "Default Measurement Date").
For purposes of this Warrant, a Significant Event shall mean any event as a
result of which the Company would be obligated to pay to the holders of the
Company's Preferred Stock the Liquidation Preferences described in Section 3 of
the Fourth Article of the Company's Certificate of Incorporation in effect on
the date hereof. For purposes hereof, "Significant Event Date" will be the
business day immediately preceding the date on which the Company is obligated to
pay such Liquidation Preference. This Warrant will entitle the Holder hereof to
purchase from the Company (i) in the case of a Next Round of Financing, a number
of shares of the series of Preferred Stock of the Company sold in the Next Round
of Financing equal to (a) 0.35 multiplied by (b) the aggregate principal amount
of Bridge Notes (as defined below) purchased by the Holder on the date hereof
and divided by (c) the price per share of such Preferred Stock in such next
<PAGE> 2
Round of Financing; ii) in the case of a Significant Event, a number of shares
of the Company's Series B Preferred Stock equal to (a) 0.35 multiplied by (b)
the aggregate principal amount of Bridge Notes purchased by the Holder on the
date hereof, divided by (c) $2.15; or (iii) in the event of the Default
Measurement Date, a number of shares of the Company's capital stock determined
in good faith by the Company and the Majority Warrant Holders (the stock
issuable upon exercise of this Warrant is hereinafter referred to as the
"Warrant Stock"). For purposes of this Warrant, "Bridge Notes" shall mean those
certain convertible subordinated promissory notes issued pursuant to that
certain Note and Warrant Purchase Agreement dated September 23, 1998 between the
Company and the Lenders (as defined therein) of which the Holder is one (the
"Purchase Agreement"). For purposes of this Warrant, "Majority Warrant Holders"
shall mean the Holders of Warrants which, upon the occurrence of a Significant
Event, would allow such Holders to purchase a majority of the shares of Series B
Preferred Stock issuable upon exercise of all of the then outstanding Warrants
issued in connection with the Bridge Notes.
3. EXERCISE PRICE. The per share purchase price of the Company's Capital
Stock (the "Exercise Price") for which this Warrant may be exercised shall be
(i) in the case of a Next Round of Financing, at the same price per share as the
shares of Preferred Stock sold in the Next Round of Financing; (ii) in the case
of a Significant Event, $2.15 per share; and (iii) in the case of a Default
Measurement Date, at the price per share agreed to by the Company and the
Majority Warrant Holders. In any event, the Exercise Price shall be subject to
adjustment as provided in Section 11 below.
4. EXERCISE OF WARRANT.
4.1 Time of Exercise. The purchase rights represented by this Warrant
are exercisable by the Holder, in whole or in part, at any time, or from time to
time, during the term hereof as described in Section 1 above. Such exercise
shall be effected by (i) the surrender of this Warrant, (ii) delivery of the
Notice of Exercise attached hereto as Exhibit A and (iii) payment of the
Exercise Price in cash or by check acceptable to the Company.
4.2 Effect of Exercise. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
shares of Warrant Stock shall be treated for all purposes as the holder of
record of such shares as of the close of business on such date. As promptly as
practicable on or after such date, the Company, at its expense, shall issue and
deliver to the person or persons entitled to receive the same a certificate or
certificates for the number of shares issuable upon such exercise.
4.3 Net Issue Exercise. Notwithstanding any provisions herein to the
contrary, if the Quoted Price (as defined in Section 11.3 hereof) of one share
of Warrant Stock is greater than the Exercise Price (at the date of calculation
as set forth below), in lieu of exercising this Warrant by payment with cash,
certified or cashier's check, the Holder may elect to make a cash-free exercise
of this Warrant and thereby to receive shares equal to the value (as determined
below) of this Warrant (or the portion thereof being canceled) by surrender of
this Warrant at the principal office of the Company together with the properly
endorsed Notice of Exercise and notice of such election, in which event the
<PAGE> 3
Company shall issue to the Holder a number of shares of Warrant Stock computed
using the following formula:
Y (A - B)
---------
X = A
Where: X = the number of shares of Warrant Stock to be issued to
the Holder
Y = the gross number of shares of Warrant Stock purchasable
under this Warrant or, if only a portion of this
Warrant is being exercised, the gross number of shares
of Warrant Stock purchased under this Warrant being
canceled (at the date of such calculation)
A = the Quoted Price (as defined under Section 11.3 hereof)
of one share of the Warrant Stock (at the date of such
calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
5. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
6. NO RIGHTS AS STOCKHOLDER. The Holder shall not be entitled to vote or
receive dividends or be deemed the holder of capital stock or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise, until the Warrant shall have been
exercised and the shares of capital stock or any other securities of the Company
purchasable upon the exercise or conversion hereof shall have been issued, as
provided herein.
7. TRANSFER OF WARRANT.
7.1 Register. The Company will maintain a register (the "Warrant
Register") containing the name and address of the Holder. The Holder may change
its address as shown on the Warrant Register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be delivered or given by mail to the
Holder as shown on the Warrant Register and at the address shown on the Warrant
Register. Until this Warrant is transferred on the Warrant Register of the
Company, the Company may treat the Holder as shown on the Warrant Register as
the absolute owner of this Warrant for all purposes, notwithstanding any notice
to the contrary.
<PAGE> 4
7.2 Non-transferability and Non-negotiability of Warrant. This
Warrant may not be transferred or assigned without the prior written consent of
the Company.
8. RESERVATION OF STOCK. The Company covenants that during the term in
which this Warrant is exercisable, the Company will reserve a sufficient number
of shares of the appropriate class of its capital stock to provide for the
issuance upon exercise of this Warrant, and, from time to time, will take all
reasonably commercial steps it deems necessary to amend its Certificate of
Incorporation to provide sufficient reserves of shares of such class of capital
stock issuable upon exercise of the Warrant. The Company further covenants that
all shares that may be issued upon the exercise of rights represented by this
Warrant, upon exercise of the rights represented by this Warrant and payment of
the Exercise Price, all as set forth herein, will be free from all taxes, liens,
and charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously or as otherwise specified herein). The
Company agrees that issuance of this Warrant shall constitute full authority to
the Company's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for shares of
capital stock and any other securities of the Company upon the exercise of this
Warrant.
9. AMENDMENTS. The Holder hereby agrees that the observance of any
provision of this Warrant may be amended, waived or modified in accordance with
Section 6.3 of the Purchase Agreement.
10. LOST DOCUMENTS. Upon receipt by the Company of evidence and indemnity
satisfactory to it of the loss, theft, destruction or mutilation of, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver in lieu of this Warrant a new Warrant of the same series and of like
tenor of this Warrant.
11. ADJUSTMENTS. The number of shares purchasable hereunder are subject to
adjustment from time to time as follows:
11.1 Reclassification, etc. If the Company at any time while this
Warrant, or any portion thereof, remains outstanding, exercisable and unexpired
shall, by reclassification of securities or otherwise, change any of the
securities as to which purchase rights under this Warrant exist into the same or
a different number of securities of any other class or classes, this Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change, and the Exercise
Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 11.
11.2 Split, Subdivision or Combination of Shares. If the Company at
any time while this Warrant, or any portion thereof, remains outstanding,
exercisable and unexpired shall split, subdivide or combine the securities as to
which purchase rights under this Warrant exist, into a different number of
securities of the same class, the Exercise Price for such securities shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination,
<PAGE> 5
and the number of the securities as to which purchase rights under this Warrant
exist shall be increased or decreased proportionately in accordance with such
split subdivision or combination.
11.3 Quoted Price. The "Quoted Price" of the Warrant Stock is the last
reported sales price of the Warrant Stock as reported by the Nasdaq National
Market ("NMS"), or the primary national securities exchange on which the Warrant
Stock is then quoted; provided, however, that if the Warrant Stock is neither
traded on the NMS nor on a national securities exchange, the price referred to
above shall be the price reflected on Nasdaq, or if the Warrant Stock is not
then traded on Nasdaq, the price reflected in the over-the-counter market as
reported by the National Quotation Bureau, Inc. or any organization performing a
similar function; and provided, further, that if the Warrant Stock is not
publicly traded, the Quoted Price of the Warrant Stock shall be the fair market
value as determined in good faith by the Board of Directors of the Company.
11.4 Adjustments for Dividends in Stock or Other Securities or
Property. If while this Warrant, or any portion hereof, remains outstanding,
exercisable and unexpired the holders of the securities as to which purchase
rights under this Warrant exist at the time shall have received, or, on or after
the record date fixed for the determination of eligible stockholders, shall have
become entitled to receive, without payment therefor, other or additional stock
or other securities or property (other than cash) of the Company by way of
dividend, then and in each case, this Warrant shall represent the right to
acquire, in addition to the number of shares of the security receivable upon
exercise of this Warrant, and without payment of any additional consideration
therefor, the amount of such other or additional stock or other securities or
property (other than cash) of the Company which such holder would hold on the
date of such exercise had it been the holder of record of the security
receivable upon exercise of this Warrant on the date hereof and had thereafter,
during the period from the date hereof to and including the date of such
exercise, retained such shares and all other additional stock available to it as
stated above during such period, giving effect to all adjustments called for
during such period by the provisions of this Section 11.
11.5 No Impairment. The Company will not, by any 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 will at all times in good
faith assist in the carrying out of all the provisions of this Section 11 and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holders of this Warrant against impairment.
12. GOVERNING LAW. This Warrant shall be governed by and construed under
the laws of the State of California, excluding that body of law relating to
conflict of laws.
13. MISCELLANEOUS.
13.1 Notices, etc. All notices and other communications required or
permitted hereunder or under the Notes shall be in writing and shall be mailed
by registered or certified mail, postage prepaid, with return receipt requested,
or otherwise delivered by hand, by messenger or by facsimile (with confirmation
of receipt), addressed (i) if to a lender, at such Lender's address set forth
<PAGE> 6
in the Schedule of Lenders, or at such other address as such Lender shall have
furnished to the Company in writing, or (ii) if to any other holder of any
Securities, at such address as such holder shall have furnished the Company in
writing, or, until any such holder so furnishes an address to the Company, then
to and at the address of the last holder of such Securities who has so furnished
an address to the Company, or (iii) if to the Company, at 999 Baker Way, Suite
100, San Mateo, California 94404, or at such other address as the Company shall
have furnished to the Lenders.
13.2 Expenses. Each party shall pay their respective expenses and
legal fees incurred in connection with the negotiation, execution and
consummation of this transaction.
13.3 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
13.4 Headings. Headings and the table of contents in this Agreement
are for reference purposes only and shall not be deemed to have any substantive
effect.
13.5 The terms of Section 6.3 of the Purchase Agreement are
incorporated herein by reference.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 7
IN WITNESS WHEREOF, POET HOLDINGS, INC. has caused the Warrant to be
executed by its officers thereunto duly authorized.
Dated: _______________, 1998
POET HOLDINGS, INC.
By:
--------------------------------------
Dirk Bartels, President and
Chief Executive Officer
Address: 999 Baker Way, Suite 100
San Mateo, CA 94404
ACCEPTED:
By:
---------------------------------
Name:
--------------------------------
(Please Print)
Title:
-------------------------------
Address:
-----------------------------
-----------------------------
Warrant to Purchase Stock
<PAGE> 1
EXHIBIT 10.17
BASIC LEASE INFORMATION
OFFICE NET
<TABLE>
<S> <C>
LEASE DATE: November 23, 1998
TENANT: Poet Software Corporation
a Massachusetts corporation
TENANT'S NOTICE ADDRESS: 999 Baker Way, Suite 100
San Mateo, CA 94404
TENANT'S BILLING ADDRESS: 999 Baker Way, Suite 100
San Mateo, CA 94404
TENANT CONTACT: Jerry Wong PHONE NUMBER: (650) 286-4640
Vice President of Finance FAX NUMBER: (650) 286-4630
LANDLORD: Spieker Properties, L.P., a California limited
partnership
LANDLORD'S NOTICE ADDRESS: 951 Mariner's Island Blvd., Suite 200
San Mateo, CA 94404
LANDLORD'S REMITTANCE ADDRESS: P.O. Box 45587
Department 12531
San Francisco, CA 94145-0670
PROJECT DESCRIPTION: San Mateo BayCenter III, a five story office
building located at 999
Baker Way, San Mateo, California
BUILDING DESCRIPTION: San Mateo BayCenter III, a five story office
building located at 999
Baker Way, San Mateo, California
PREMISES: Approximately 8,025 rentable square feet located
on the first floor of the Building, Suites
100, 105, 120, as outlined in red on Exhibit B
PERMITTED USE: General Office
OCCUPANCY DENSITY: 3.2/1,000 square feet
PARKING DENSITY: 3.2/1,000 square feet
PARKING 26 non-exclusive spaces
SCHEDULED TERM COMMENCEMENT DATE: January 1, 1999
SCHEDULED LENGTH OF TERM: 48 months
SCHEDULED TERM EXPIRATION DATE: December 31, 2002
RENT:
BASE RENT: Months 1 - 12 $20,948.00 per month
Months 13 - 24 $21,741.00 per month
Months 25 - 36 $22,553.00 per month
Months 37 - 48 $23,355.00 per month
ESTIMATED FIRST YEAR OPERATING EXPENSES: $6,337.00 per month
SECURITY DEPOSIT: Fourteen thousand and five hundred Dollars
($14,500)
TENANT'S PROPORTIONATE SHARE:
OF BUILDING: 13.8%
OF PROJECT: 13.8%
</TABLE>
The foregoing Basic Lease Information is incorporated into and made a part of
this Lease. Each reference in this Lease to any of the Basic Lease Information
shall mean the respective information above and shall be construed to
incorporate all of the terms provided under the particular Lease paragraph
pertaining to such information. In the event of any conflict between the Basic
Lease Information and the Lease, the latter shall control.
LANDLORD TENANT
<PAGE> 2
Spieker Properties, L.P., Poet Software Corporation
a California limited partnership a Massachusetts corporation
By: Spieker Properties, Inc.,
a Maryland corporation, By: /s/ Jerry Wong
its general partner Jerry Wong
Its: Vice President of Finance
By: /s/ Nancy Gille
Nancy Gille
Its: Vice President
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Basic Lease Information 1
Table of Contents 2
1. Premises 3
2. Possession and Lease Commencement 3
3. Term 3
4. Use 3
5. Rules and Regulations 4
6. Rent 4
7. Operating Expenses 5
8. Insurance and Indemnification 7
9. Waiver of Subrogation 8
10. Landlord's Repairs and Maintenance 8
11. Tenant's Repairs and Maintenance 8
12. Alterations 8
13. Signs 9
14. Inspection/Posting Notices 9
15. Services and Utilities 9
16. Subordination 10
17. Financial Statements 10
18. Estoppel Certificate 10
19. Security Deposit 10
20. Limitation of Tenant's Remedies 11
21. Assignment and Subletting 11
22. Authority of Tenant 12
23. Condemnation 12
24. Casualty Damage 12
25. Holding Over 13
26. Default 13
27. Liens 14
28.
29. Transfers by Landlord 15
30. Right of Landlord to Perform Tenant's Covenants 15
31. Waiver 15
32. Notices 15
33. Attorney's Fees 15
34. Successors and Assigns 15
35. Force Majeure 15
36. Surrender of Premises 16
37. Parking 16
38. Miscellaneous 16
39. Additional Provisions 17
40. Jury Trial Waiver 18
Signatures 18
Exhibits:
Exhibit A Rules and Regulations
Exhibit B Site Plan, Property Description
Exhibit C Tenant Improvements and Specifications
Additional Exhibits as Required
</TABLE>
2
<PAGE> 4
LEASE
THIS LEASE is made as of the 23rd day of November, 1998, by and between Spieker
Properties, L.P., a California limited partnership (hereinafter called
"LANDLORD"), and Poet Software Corporation, a Massachusetts corporation
(hereinafter called "TENANT").
1. PREMISES
Landlord leases to Tenant and Tenant leases from Landlord, upon the
terms and conditions hereinafter set forth, those premises (the "PREMISES")
outlined in red on EXHIBIT B and described in the Basic Lease Information. The
Premises shall be all or part of a building (the "BUILDING") and of a project
(the "PROJECT"), which may consist of more than one building and additional
facilities, as described in the Basic Lease Information. Landlord and Tenant
acknowledge that physical changes may occur from time to time in the Premises,
Building or Project, and that the number of buildings and additional facilities
which constitute the Project may change from time to time, which may result in
an adjustment in Tenant's Proportionate Share, as defined in the Basic Lease
Information, as provided in Paragraph 7.A.
2. POSSESSION AND LEASE COMMENCEMENT
A. EXISTING IMPROVEMENTS. If this Lease pertains to a Premises in which the
interior improvements have already been constructed ("EXISTING IMPROVEMENTS"),
the provisions of this Paragraph 2.A. shall apply and the term commencement date
("TERM COMMENCEMENT DATE") shall be the earlier of the date on which: (1) Tenant
takes possession of some or all of the Premises; or (2) Landlord notifies Tenant
that Tenant may occupy the Premises. If for any reason Landlord cannot deliver
possession of the Premises to Tenant on the scheduled Term Commencement Date,
Landlord shall not be subject to any liability therefore, nor shall Landlord be
in default hereunder nor shall such failure affect the validity of this Lease,
and Tenant agrees to accept possession of the Premises at such time as Landlord
is able to deliver the same, which date shall then be deemed the Term
Commencement Date. Tenant shall not be liable for any Rent (defined below) for
any period prior to the Term Commencement Date. Tenant acknowledges that Tenant
has inspected and accepts the Premises in their present condition, "as is," and
as suitable for, the Permitted Use (as defined below), and for Tenant's intended
operations in the Premises. Tenant agrees that the Premises and other
improvements are in good and satisfactory condition as of when possession was
taken. Tenant further acknowledges that no representations as to the condition
or repair of the Premises nor promises to alter, remodel or improve the Premises
have been made by Landlord or any agents of Landlord unless such are expressly
set forth in this Lease. Upon Landlord's request, Tenant shall promptly execute
and return to Landlord a "Start-Up Letter" in which Tenant shall agree, among
other things, to acceptance of the Premises and to the determination of the Term
Commencement Date, in accordance with the terms of this Lease, but Tenant's
failure or refusal to do so shall not negate Tenant's acceptance of the Premises
or affect determination of the Term Commencement Date.
B. CONSTRUCTION OF IMPROVEMENTS. If this Lease pertains to a Building to be
constructed or improvements to be constructed within a Building, the provisions
of this Paragraph 2.B. shall apply in lieu of the provisions of Paragraph 2.A.
above and the term commencement date ("TERM COMMENCEMENT DATE") shall be the
earlier of the date on which: (1) Tenant takes possession of some or all of the
Premises; or (2) the improvements to be constructed or performed in the Premises
by Landlord (if any) shall have been substantially completed in accordance with
the plans and specifications, if any, described on Exhibit C and Tenant's taking
of possession of the Premises or any part thereof shall constitute Tenant's
confirmation of substantial completion for all purposes hereof, whether or not
substantial completion of the Building or Project shall have occurred. If for
any reason Landlord cannot deliver possession of the Premises to Tenant on the
scheduled Term Commencement Date, Landlord shall not be subject to any liability
therefor, nor shall Landlord be in default hereunder nor shall such failure
affect the validity of this Lease, and Tenant agrees to accept possession of the
Premises at such time as such improvements have been substantially completed,
which date shall then be deemed the Term Commencement Date. Tenant shall not be
liable for any Rent for any period prior to the Term Commencement Date (but
without affecting any obligations of Tenant under any improvement agreement
appended to this Lease). In the event of any dispute as to substantial
completion of work performed or required to be performed by Landlord, the
certificate of Landlord's architect or general contractor shall be conclusive.
Substantial completion shall have occurred notwithstanding Tenant's submission
of a punchlist to Landlord, which Tenant shall submit, if at all, within three
(3) business days after the Term Commencement Date or otherwise in accordance
with any improvement agreement appended to this Lease. Upon Landlord's request,
Tenant shall promptly execute and return to Landlord a "Start-Up Letter" in
which Tenant shall agree, among other things, to acceptance of the Premises and
to the determination of the Term Commencement Date, in accordance with the terms
of this Lease, but Tenant's failure or
<PAGE> 5
refusal to do so shall not negate Tenant's acceptance of the Premises or affect
determination of the Term Commencement Date.
3. TERM
The term of this Lease (the "TERM") shall commence on the Term
Commencement Date and continue in full force and effect for the number of months
specified as the Length of Term in the Basic Lease Information or until this
Lease is terminated as otherwise provided herein. If the Term Commencement Date
is a date other than the first day of the calendar month, the Term shall be the
number of months of the Length of Term in addition to the remainder of the
calendar month following the Term Commencement Date.
4. USE
A. GENERAL. Tenant shall use the Premises for the permitted use specified in the
Basic Lease Information ("PERMITTED USE") and for no other use or purpose.
Tenant shall control Tenant's employees, agents, customers, visitors, invitees,
licensees, contractors, assignees and subtenants (collectively, "TENANT'S
PARTIES") in such a manner that Tenant and Tenant's Parties cumulatively do not
exceed the occupant density (the "OCCUPANCY DENSITY") or the parking density
(the "PARKING DENSITY") specified in the Basic Lease Information at any time.
Tenant shall pay the Parking Charge specified in the Basic Lease Information as
Additional Rent (as hereinafter defined) hereunder. So long as Tenant is
occupying the Premises, Tenant and Tenant's Parties shall have the nonexclusive
right to use, in common with other parties occupying the Building or Project,
the parking areas, driveways and other common areas of the Building and Project,
subject to the terms of this Lease and such rules and regulations as Landlord
may from time to time prescribe. Landlord reserves the right, without notice or
liability to Tenant, and without the same constituting an actual or constructive
eviction, to alter or modify the common areas from time to time, including the
location and configuration thereof, and the amenities and facilities which
Landlord may determine to provide from time to time.
B. LIMITATIONS. Tenant shall not permit any odors, smoke, dust, gas, substances,
noise or vibrations to emanate from the Premises or from any portion of the
common areas as a result of Tenant's or any Tenant's Party's use thereof, nor
take any action which would constitute a nuisance or would disturb, obstruct or
endanger any other tenants or occupants of the Building or Project or elsewhere,
or interfere with their use of their respective premises or common areas.
Storage outside the Premises of materials, vehicles or any other
3
<PAGE> 6
items is prohibited. Tenant shall not use or allow the Premises to be used for
any immoral, improper or unlawful purpose, nor shall Tenant cause or maintain or
permit any nuisance in, on or about the Premises. Tenant shall not commit or
suffer the commission of any waste in, on or about the Premises. Tenant shall
not allow any sale by auction upon the Premises, or place any loads upon the
floors, walls or ceilings which could endanger the structure, or place any
harmful substances in the drainage system of the Building or Project. No waste,
materials or refuse shall be dumped upon or permitted to remain outside the
Premises. Landlord shall not be responsible to Tenant for the non-compliance by
any other tenant or occupant of the Building or Project with any of the
above-referenced rules or any other terms or provisions of such tenant's or
occupant's lease or other contract.
C. COMPLIANCE WITH REGULATIONS. By entering the Premises, Tenant accepts the
Premises in the condition existing as of the date of such entry. Tenant shall at
its sole cost and expense strictly comply with all existing or future applicable
municipal, state and federal and other governmental statutes, rules,
requirements, regulations, laws and ordinances, including zoning ordinances and
regulations, and covenants, easements and restrictions of record governing and
relating to the particular use, occupancy or possession of the Premises, to
Tenant's use of the common areas, or to the use, storage, generation or disposal
of Hazardous Materials (hereinafter defined) (collectively "REGULATIONS").
Tenant shall at its sole cost and expense obtain any and all licenses or permits
necessary for Tenant's use of the Premises. Tenant shall at its sole cost and
expense promptly comply with the requirements of any board of fire underwriters
or other similar body now or hereafter constituted. Tenant shall not do or
permit anything to be done in, on, under or about the Project or bring or keep
anything which will in any way increase the rate of any insurance upon the
Premises, Building or Project or upon any contents therein or cause a
cancellation of said insurance or otherwise affect said insurance in any manner.
Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord),
protect and hold Landlord harmless from and against any loss, cost, expense,
damage, attorneys' fees or liability arising out of the failure of Tenant to
comply with any Regulation. Tenant's obligations pursuant to the foregoing
indemnity shall survive the expiration or earlier termination of this Lease.
D. HAZARDOUS MATERIALS. As used in this Lease, "HAZARDOUS MATERIALS" shall
include, but not be limited to, hazardous, toxic and radioactive materials and
those substances defined as "hazardous substances," "hazardous materials,"
"hazardous wastes," "toxic substances," or other similar designations in any
Regulation. Tenant shall not cause, or allow any of Tenant's Parties to cause,
any Hazardous Materials to be handled, used, generated, stored, released or
disposed of in, on, under or about the Premises, the Building or the Project or
surrounding land or environment in violation of any Regulations. Tenant must
obtain Landlord's written consent prior to the introduction of any Hazardous
Materials onto the Project. Notwithstanding the foregoing, Tenant may handle,
store, use and dispose of products containing small quantities of Hazardous
Materials for "general office purposes" (such as toner for copiers) to the
extent customary and necessary for the Permitted Use of the Premises; provided
that Tenant shall always handle, store, use, and dispose of any such Hazardous
Materials in a safe and lawful manner and never allow such Hazardous Materials
to contaminate the Premises, Building, or Project or surrounding land or
environment. Tenant shall immediately notify Landlord in writing of any
Hazardous Materials' contamination of any portion of the Project of which Tenant
becomes aware, whether or not caused by Tenant. Landlord shall have the right at
all reasonable times to inspect the Premises and to conduct tests and
investigations to determine whether Tenant is in compliance with the foregoing
provisions, the costs of all such inspections, tests and investigations to be
borne by Landlord, unless Tenant is found to not be in compliance with this
Paragraph 4.D., in which case such costs shall be borne by Tenant. Tenant shall
indemnify, defend (by counsel reasonably acceptable to Landlord), protect and
hold Landlord harmless from and against any and all claims, liabilities, losses,
costs, loss of rents, liens, damages, injuries or expenses (including attorneys'
and consultants' fees and court costs), demands, causes of action, or judgments
directly or indirectly arising out of or related to the use, generation,
storage, release, or disposal of Hazardous Materials by Tenant or any of
Tenant's Parties in, on, under or about the Premises, the Building or the
Project or surrounding land or environment, which indemnity shall include,
without limitation, damages for personal or bodily injury, property damage,
damage to the environment or natural resources occurring on or off the Premises,
losses attributable to diminution in value or adverse effects on marketability,
the cost of any investigation, monitoring, government oversight, repair,
removal, remediation, restoration, abatement, and disposal, and the preparation
of any closure or other required plans, whether such action is required or
necessary prior to or following the expiration or earlier termination of this
Lease. Neither the consent by Landlord to the use, generation, storage, release
or disposal of Hazardous Materials nor the strict compliance by Tenant with all
laws pertaining to
<PAGE> 7
Hazardous Materials shall excuse Tenant from Tenant's obligation of
indemnification pursuant to this Paragraph 4.D. Tenant's obligations pursuant to
the foregoing indemnity shall survive the expiration or earlier termination of
this Lease. Landlord shall indemnify, defend (by counsel reasonably acceptable
to Tenant) and hold tenant, its affiliates, their respective directors,
officers, employees and agents harmless from and against any and all claims,
judgments, damages, penalties, fines, costs, liabilities or losses and
attorneys' fees arising out of any Hazardous Material in, on or about the
Project or the Premises which was created, handled, placed, stored, used,
transported or disposed of by Landlord, excluding, however, any Hazardous
Material whose presence was caused by Tenant or its affiliates or their
respective agents. Notwithstanding the foregoing, if the Premises are
untenantable for a period exceeding 180 days following a Hazardous Material
release (if such release is not caused by Tenant or its affiliates or their
respective agents), the Rent payable hereunder during the period following the
180th day shall be abated until the Premises becomes fit for occupancy.
5. RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the building rules and
regulations attached hereto as Exhibit A and any other rules and regulations and
any modifications or additions thereto which Landlord may from time to time
prescribe in writing for the purpose of maintaining the proper care,
cleanliness, safety, traffic flow and general order of the Premises or the
Building or Project. Tenant shall cause Tenant's Parties to comply with such
rules and regulations. Landlord shall not be responsible to Tenant for the
non-compliance by any other tenant or occupant of the Building or Project with
any of such rules and regulations, any other tenant's or occupant's lease or any
Regulations.
6. RENT
A. BASE RENT. Tenant shall pay to Landlord and Landlord shall receive, without
notice or demand throughout the Term, Base Rent as specified in the Basic Lease
Information, payable in monthly installments in advance on or before the first
day of each calendar month, in lawful money of the United States, without
deduction or offset whatsoever, at the Remittance Address specified in the Basic
Lease Information or to such other place as Landlord may from time to time
designate in writing. If the obligation for payment of Base Rent commences on a
day other than the first day of a month, then Base Rent shall be prorated and
the prorated installment shall be paid on the first day of the calendar month
next succeeding the Term Commencement Date. The Base Rent payable by Tenant
hereunder is subject to adjustment as provided elsewhere in this Lease, as
applicable. As used herein, the term "Base Rent" shall mean the Base Rent
specified in the Basic Lease Information as it may be so adjusted from time to
time.
B. ADDITIONAL RENT. All monies other than Base Rent required to be paid by
Tenant hereunder, including, but not limited to, Tenant's Proportionate Share of
Operating Expenses, as specified in Paragraph 7 of this Lease, charges to be
paid by Tenant under Paragraph 15, the interest and late charge described in
Paragraphs 26.C. and D., and any monies spent by Landlord pursuant to Paragraph
30, shall be considered additional rent ("ADDITIONAL RENT"). "RENT" shall mean
Base Rent and Additional Rent.
4
<PAGE> 8
7. OPERATING EXPENSES
A. OPERATING EXPENSES. In addition to the Base Rent required to be paid
hereunder, Tenant shall pay as Additional Rent, Tenant's Proportionate Share of
the Building and/or Project (as applicable), as defined in the Basic Lease
Information, of Operating Expenses (defined below) in the manner set forth
below. Tenant shall pay the applicable Tenant's Proportionate Share of each such
Operating Expenses. Landlord and Tenant acknowledge that if the number of
buildings which constitute the Project increases or decreases, or if physical
changes are made to the Premises, Building or Project or the configuration of
any thereof, Landlord may at its discretion reasonably adjust Tenant's
Proportionate Share of the Building or Project to reflect the change. Landlord's
determination of Tenant's Proportionate Share of the Building and of the Project
shall be conclusive so long as it is reasonably and consistently applied.
"OPERATING EXPENSES" shall mean all expenses and costs of every kind and nature
which Landlord shall pay or become obligated to pay, because of or in connection
with the ownership, management, maintenance, repair, preservation, replacement
and operation of the Building or Project and its supporting facilities and such
additional facilities now and in subsequent years as may be determined by
Landlord to be necessary or desirable to the Building and/or Project (as
determined in a reasonable manner) other than those expenses and costs which are
specifically attributable to Tenant or which are expressly made the financial
responsibility of Landlord or specific tenants of the Building or Project
pursuant to this Lease. Operating Expenses shall include, but are not limited
to, the following:
(1) TAXES. All real property taxes and assessments, possessory
interest taxes, sales taxes, personal property taxes, business or
license taxes or fees, gross receipts taxes, service payments in lieu
of such taxes or fees, annual or periodic license or use fees, excises,
transit charges, and other impositions, general and special, ordinary
and extraordinary, unforeseen as well as foreseen, of any kind
(including fees "in-lieu" of any such tax or assessment) which are now
or hereafter assessed, levied, charged, confirmed, or imposed by any
public authority upon the Building or Project, its operations or the
Rent (or any portion or component thereof), or any tax, assessment or
fee imposed in substitution, partially or totally, of any of the above.
Operating Expenses shall also include any taxes, assessments,
reassessments, or other fees or impositions with respect to the
development, leasing, management, maintenance, alteration, repair, use
or occupancy of the Premises, Building or Project or any portion
thereof, including, without limitation, by or for Tenant, and all
increases therein or reassessments thereof whether the increases or
reassessments result from increased rate and/or valuation (whether upon
a transfer of the Building or Project or any portion thereof or any
interest therein or for any other reason). Operating Expenses shall not
include inheritance or estate taxes imposed upon or assessed against
the interest of any person in the Project, or taxes computed upon the
basis of the net income of any owners of any interest in the Project.
If it shall not be lawful for Tenant to reimburse Landlord for all or
any part of such taxes, the monthly rental payable to Landlord under
this Lease shall be revised to net Landlord the same net rental after
imposition of any such taxes by Landlord as would have been payable to
Landlord prior to the payment of any such taxes.
(2) INSURANCE. All insurance premiums and costs, including, but not
limited to, any deductible amounts, premiums and other costs of
insurance incurred by Landlord, including for the insurance coverage
set forth in Paragraph 8.A. herein.
(3) COMMON AREA MAINTENANCE.
(A) Repairs, replacements, and general maintenance of and for
the Building and Project and public and common areas and
facilities of and comprising the Building and Project,
including, but not limited to, the roof and roof membrane,
windows, elevators, restrooms, conference rooms, health club
facilities, lobbies; mezzanines, balconies, mechanical rooms,
building exteriors, alarm systems, pest extermination,
landscaped areas, parking and service areas, driveways,
sidewalks, loading areas, fire sprinkler systems, sanitary and
storm sewer lines, utility services, heating/ventilation/air
conditioning systems, electrical mechanical or other systems,
telephone equipment and wiring servicing, plumbing, lighting,
and any other items or areas which affect the operation or
appearance of the Building or Project, which determination
shall be at Landlord's discretion, except for: those items
expressly made the financial responsibility of Landlord
pursuant to Paragraph 10 hereof; those items to the extent
paid for by the proceeds of insurance; and those items
attributable solely or jointly to specific tenants of the
Building or Project.
<PAGE> 9
(B) Repairs, replacements, and general maintenance shall
include the cost of any capital improvements made to or
capital assets acquired for the Project or Building that in
Landlord's discretion may reduce any other Operating Expenses,
including present or future repair work, are reasonably
necessary for the health and safety of the occupants of the
Building or Project, or are required to comply with any
Regulation, such costs or allocable portions thereof to be
amortized over such reasonable period as Landlord shall
determine, together with interest on the unamortized balance
at the publicly announced "prime rate" charged by Wells Fargo
Bank, N.A. (San Francisco) or its successor at the time such
improvements or capital assets are constructed or acquired,
plus two (2) percentage points, or in the absence of such
prime rate, then at the U.S. Treasury six-month market note
(or bond, if so designated) rate as published by any national
financial publication selected by Landlord, plus four (4)
percentage points, but in no event more than the maximum rate
permitted by law, plus reasonable financing charges.
(C) Payment under or for any easement, license, permit,
operating agreement, declaration, restrictive covenant or
instrument relating to the Building or Project.
(D) All expenses and rental related to services and costs of
supplies, materials and equipment used in operating, managing
and maintaining the Premises, Building and Project, the
equipment therein and the adjacent sidewalks, driveways,
parking and service areas, including, without limitation,
expenses related to service agreements regarding security,
fire and other alarm systems, janitorial services, window
cleaning, elevator maintenance, Building exterior maintenance,
landscaping and expenses related to the administration,
management and operation of the Project, including without
limitation salaries, wages and benefits and management office
rent.
(E) The cost of supplying any services and utilities which
benefit all or a portion of the Premises, Building or Project,
including without limitation services and utilities provided
pursuant to Paragraph 15 hereof.
(F) Legal expenses and the cost of audits by certified public
accountants; provided, however, that legal expenses chargeable
as Operating Expenses shall not include the cost of
negotiating leases, collecting rents, evicting tenants nor
shall it include costs incurred in legal proceedings with or
against any tenant or to enforce the provisions of any lease.
(G) A management and accounting cost recovery fee equal to
five percent (5%) of the sum of the Project's base rents and
Operating Expenses (other than such management and accounting
fee).
If the rentable area of the Building and/or Project is not fully
occupied during any fiscal year of the Term as determined by Landlord, an
adjustment may be made in Landlord's reasonable discretion in computing the
Operating Expenses for such year so that Tenant pays an equitable portion of all
variable items (e.g., utilities, janitorial services and other component
expenses that are affected by variations in occupancy levels) of Operating
Expenses, as reasonably determined by Landlord; provided, however, that in no
event shall
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<PAGE> 10
Landlord be entitled to collect in excess of one hundred percent (100%) of the
total Operating Expenses from all of the tenants in the Building or Project, as
the case may be.
Operating Expenses shall not include the cost of providing tenant
improvements or other specific costs incurred for the account of, separately
billed to and paid by specific tenants of the Building or Project, the initial
construction cost of the Building, or debt service on any mortgage or deed of
trust recorded with respect to the Project other than pursuant to Paragraph
7.A.(3)(b) above. Notwithstanding anything herein to the contrary, in any
instance wherein Landlord, in Landlord's sole discretion, deems Tenant to be
responsible for any amounts greater than Tenant's Proportionate Share, Landlord
shall have the right to allocate costs in any manner Landlord reasonably deems
appropriate.
The above enumeration of services and facilities shall not be deemed to
impose an obligation on Landlord to make available or provide such services or
facilities except to the extent if any that Landlord has specifically agreed
elsewhere in this Lease to make the same available or provide the same. Without
limiting the generality of the foregoing, Tenant acknowledges and agrees that it
shall be responsible for providing adequate security for its use of the
Premises, the Building and the Project and that Landlord shall have no
obligation or liability with respect thereto, except to the extent if any that
Landlord has specifically agreed elsewhere in this Lease to provide the same.
Notwithstanding anything in the definition of Operating Expenses in
the Lease to the contrary, Operating Expenses shall not include the following:
(i) costs occasioned by the wrongful act, omission or violation of
any law by Landlord, any other occupant of the Project, or their
respective agents, employees, or contractors;
(ii) costs occasioned by the power of eminent domain;
(iii) costs to correct construction defects in the Premises or
Project;
(iv) insurance deductibles in which Tenant's prorata share is in
excess of $25,000.00;
(v) costs incurred in connection with the presence of Hazardous
Materials, except as specifically provided in paragraph 4.D;
(vi) costs, including permit, license and inspection costs, incurred
with respect to the installation of tenant or other occupant
improvements made for tenants or other occupants in the Building
or incurred in renovating or otherwise improving, decorating,
painting or redecorating vacant space for or the premises of
other tenants or other occupants of the Building.
B. PAYMENT OF ESTIMATED OPERATING EXPENSES, "ESTIMATED OPERATING EXPENSES" for
any particular year shall mean Landlord's estimate of the Operating Expenses for
such fiscal year made with respect to such fiscal year as hereinafter provided.
Landlord shall have the right from time to time to revise its fiscal year and
interim accounting periods so long as the periods as so revised are reconciled
with prior periods in a reasonable manner. During the last month of each fiscal
year during the Term, or as soon thereafter as practicable, Landlord shall give
Tenant written notice of the Estimated Operating Expenses for the ensuing fiscal
year. Tenant shall pay Tenant's Proportionate Share of the Estimated Operating
Expenses with installments of Base Rent for the fiscal year to which the
Estimated Operating Expenses applies in monthly installments on the first day of
each
<PAGE> 11
calendar month during such year, in advance. Such payment shall be construed to
be Additional Rent for all purposes hereunder. If at any time during the course
of the fiscal year, Landlord determines that Operating Expenses are projected to
vary from the then Estimated Operating Expenses by more than five percent (5%),
Landlord may, by written notice to Tenant, revise the Estimated Operating
Expenses for the balance of such fiscal year, and Tenant's monthly installments
for the remainder of such year shall be adjusted so that by the end of such
fiscal year Tenant has paid to Landlord Tenant's Proportionate Share of the
revised Estimated Operating Expenses for such year, such revised installment
amounts to be Additional Rent for all purposes hereunder.
C. COMPUTATION OF OPERATING EXPENSE ADJUSTMENT. "OPERATING EXPENSE ADJUSTMENT"
shall mean the difference between Estimated Operating Expenses and actual
Operating Expenses for any fiscal year determined as hereinafter provided.
Within one hundred twenty (120) days after the end of each fiscal year, or as
soon thereafter as practicable, Landlord shall deliver to Tenant a statement of
actual Operating Expenses for the fiscal year just ended, accompanied by a
computation of Operating Expense Adjustment. If such statement shows that
Tenant's payment based upon Estimated Operating Expenses is less than Tenant's
Proportionate Share of Operating Expenses, then Tenant shall pay to Landlord the
difference within twenty (20) days after receipt of such statement, such payment
to constitute Additional Rent for all purposes hereunder. If such statement
shows that Tenant's payments of Estimated Operating Expenses exceed Tenant's
Proportionate Share of Operating Expenses, then (provided that Tenant is not in
default under this Lease) Landlord shall pay to Tenant the difference within
twenty (20) days after delivery of such statement to Tenant. If this Lease has
been terminated or the Term hereof has expired prior to the date of such
statement, then the Operating Expense Adjustment shall be paid by the
appropriate party within twenty (20) days after the date of delivery of the
statement. Should this Lease commence or terminate at any time other than the
first day of the fiscal year, Tenant's Proportionate Share of the Operating
Expense Adjustment shall be prorated based on a month of 30 days and the number
of calendar months during such fiscal year that this Lease is in effect.
Notwithstanding anything to the contrary contained in Paragraph 7.A or 7.B,
Landlord's failure to provide any notices or statements within the time periods
specified in those paragraphs shall in no way excuse Tenant from its obligation
to pay Tenant's Proportionate Share of Operating Expenses.
D. NET LEASE. This shall be a triple net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses, except as specifically
provided to the contrary in this Lease. The provisions for payment of Operating
Expenses and the Operating Expense Adjustment are intended to pass on to Tenant
and reimburse Landlord for all costs and expenses of the nature described in
Paragraph 7.A. incurred in connection with the ownership, management,
maintenance, repair, preservation, replacement and operation of the Building
and/or Project and its supporting facilities and such additional facilities now
and in subsequent years as may be determined by Landlord to be necessary or
desirable to the Building and/or Project.
E. TENANT AUDIT. If Tenant shall dispute the amount set forth in any statement
provided by Landlord under Paragraph 7.B. or 7.C. above, Tenant shall have the
right, not later than twenty (20) days following receipt of such statement and
upon the condition that Tenant shall first deposit with Landlord the full amount
in dispute, to cause Landlord's books and records with respect to Operating
Expenses for such fiscal year to be audited by certified public accountants
selected by Tenant and subject to Landlord's reasonable right of approval. The
Operating Expense Adjustment shall be appropriately adjusted on the basis of
such audit. If such audit discloses a liability for a refund in excess of ten
percent (10%) of Tenant's Proportionate Share of the Operating Expenses
previously reported, the cost of such audit shall be borne by Landlord;
otherwise the cost of such audit shall be paid by Tenant. If Tenant shall not
request an audit in accordance with the provisions of this Paragraph 7.E. within
twenty (20) days after receipt of Landlord's statement provided pursuant to
Paragraph 7.B. or 7.C., such statement shall be final and binding for all
purposes hereof.
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<PAGE> 12
8. INSURANCE AND INDEMNIFICATION
A. LANDLORD'S INSURANCE. All insurance maintained by Landlord shall be for the
sole benefit of Landlord and under Landlord's sole control.
(1) PROPERTY INSURANCE. Landlord agrees to maintain property insurance
insuring the Building against damage or destruction due to risk
including fire, vandalism, and malicious mischief in an amount not less
than the replacement cost thereof, in the form and with deductibles and
endorsements as selected by Landlord. At its election, Landlord may
instead (but shall have no obligation to) obtain "All Risk" coverage,
and may also obtain earthquake, pollution, and/or flood insurance in
amounts selected by Landlord.
(2) OPTIONAL INSURANCE. Landlord, at Landlord's option, may also (but
shall have no obligation to) carry insurance against loss of rent, in
an amount equal to the amount of Base Rent and Additional Rent that
Landlord could be required to abate to all Building tenants in the
event of condemnation or casualty damage for a period of twelve (12)
months. Landlord may also (but shall have no obligation to) carry such
other insurance as Landlord may deem prudent or advisable, including,
without limitation, liability insurance in such amounts and on such
terms as Landlord shall determine. Landlord shall not be obligated to
insure, and shall have no responsibility whatsoever for any damage to,
any furniture, machinery, goods, inventory or supplies, or other
personal property or fixtures which Tenant may keep or maintain in the
Premises, or any leasehold improvements, additions or alterations
within the Premises.
B. TENANT'S INSURANCE.
(1) PROPERTY INSURANCE. Tenant shall procure at Tenant's sole cost and
expense and keep in effect from the date of this Lease and at all times
until the end of the Term, insurance on all personal property and
fixtures of Tenant and all improvements, additions or alterations made
by or for Tenant to the Premises on an "All Risk" basis, insuring such
property for the full replacement value of such property.
(2) LIABILITY INSURANCE. Tenant shall procure at Tenant's sole cost
and expense and keep in effect from the date of this Lease and at all
times until the end of the Term Commercial General Liability insurance
covering bodily injury and property damage liability occurring in or
about the Premises or arising out of the use and occupancy of the
Premises and the Project, and any part of either, and any areas
adjacent thereto, and the business operated by Tenant or by any other
occupant of the Premises. Such insurance shall include contractual
liability insurance coverage insuring all of Tenant's indemnity
obligations under this Lease. Such coverage shall have a minimum
combined single limit of liability of at least Two Million Dollars
($2,000,000.00), and a minimum general aggregate limit of Three Million
Dollars ($3,000,000.00), with an "Additional Insured - Managers or
Lessors of Premises Endorsement." All such policies shall be written to
apply to all bodily injury (including death), property damage or loss,
personal and advertising injury and other covered loss, however
occasioned, occurring during the policy term, shall be endorsed to add
Landlord and any party holding an interest to which this Lease may be
subordinated as an additional insured, and shall provide that such
coverage shall be "PRIMARY" and non-contributing with any insurance
maintained by Landlord, which shall be excess insurance only. Such
coverage shall also contain endorsements including employees as
additional insureds if not covered by Tenant's Commercial General
Liability Insurance. All such insurance shall provide for the
severability of interests of insureds; and shall be written on an
"occurrence" basis, which shall afford coverage for all claims based on
acts, omissions, injury and damage, which occurred or arose (or the
onset of which occurred or arose) in whole or in part during the policy
period.
(3) WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE. Tenant
shall carry Workers' Compensation Insurance as required by any
Regulation, throughout the Term at Tenant's sole cost and expense.
Tenant shall also carry Employers' Liability Insurance in amounts not
less than One Million Dollars ($1,000,000) each accident for bodily
injury by accident; One Million Dollars ($1,000,000) policy limit for
bodily injury by disease; and One Million Dollars ($1,000,000) each
employee for bodily injury by disease, throughout the Term at Tenant's
sole cost and expense.
(4) GENERAL INSURANCE REQUIREMENTS. All coverages described in this
Paragraph 8.B. shall be endorsed to (i) provide Landlord with thirty
(30) days' notice of cancellation or change in terms; and (ii) waive
all rights of subrogation by the insurance carrier against Landlord. If
at any time during the Term the amount or
<PAGE> 13
coverage of insurance which Tenant is required to carry under this
Paragraph 8.B. is, in Landlord's reasonable judgment, materially less
than the amount or type of insurance coverage typically carried by
owners or tenants of properties located in the general area in which
the Premises are located which are similar to and operated for similar
purposes as the Premises or if Tenant's use of the Premises should
change with or without Landlord's consent, Landlord shall have the
right to require Tenant to increase the amount or change the types of
insurance coverage required under this Paragraph 8.B. All insurance
policies required to be carried by Tenant under this Lease shall be
written by companies rated A X or better in "Best's Insurance Guide"
and authorized to do business in the State of California. In any event
deductible amounts under all insurance policies required to be carried
by Tenant under this Lease shall not exceed Five Thousand Dollars
($5,000.00) per occurrence. Tenant shall deliver to Landlord on or
before the Term Commencement Date, and thereafter at least thirty (30)
days before the expiration dates of the expired policies, certified
copies of Tenant's insurance policies, or a certificate evidencing the
same issued by the insurer thereunder; and, if Tenant shall fail to
procure such insurance, or to deliver such policies or certificates,
Landlord may, at Landlord's option and in addition to Landlord's other
remedies in the event of a default by Tenant hereunder, procure the
same for the account of Tenant, and the cost thereof shall be paid to
Landlord as Additional Rent.
C. INDEMNIFICATION. Tenant shall indemnify, defend by counsel reasonably
acceptable to Landlord, protect and hold Landlord harmless from and against any
and all claims, liabilities, losses, costs, loss of rents, liens, damages,
injuries or expenses, including reasonable attorneys' and consultants' fees and
court costs, demands, causes of action, or judgments, directly or indirectly
arising out of or related to: (1) claims of injury to or death of persons or
damage to property occurring or resulting directly or indirectly from the use or
occupancy of the Premises, Building or Project by Tenant or Tenant's Parties, or
from activities or failures to act of Tenant or Tenant's Parties; (2) claims
arising from work or labor performed, or for materials or supplies furnished to
or at the request or for the account of Tenant in connection with performance of
any work done for the account of Tenant within the Premises or Project; (3)
claims arising from any breach or default on the part of Tenant in the
performance of any covenant contained in this Lease; and (4) claims arising from
the negligence or intentional acts or omissions of Tenant or Tenant's Parties.
The foregoing indemnity by Tenant shall not be applicable to claims to the
extent arising from the gross negligence or willful misconduct of Landlord.
Landlord shall not be liable to Tenant and Tenant hereby waives all claims
against Landlord for any injury or damage to any person or property in or about
the Premises, Building or Project by or from any cause whatsoever (other than
Landlord's gross negligence or willful misconduct) and, without limiting the
generality of the foregoing, whether caused by water leakage of any character
from the roof, walls, basement or other portion of the Premises, Building or
Project, or caused by gas, fire, oil or electricity in, on or about the
Premises, Building or Project. The provisions of this Paragraph shall survive
the expiration or earlier termination of this Lease. Subject to the
aforementioned releases and waivers of subrogation contained in Paragraph 9 of
this Lease, Landlord shall indemnify, defend by counsel reasonably acceptable to
Tenant, protect and hold Tenant harmless from and against any and all claims,
liabilities, losses, costs, damages, injuries or expenses, including reasonable
7
<PAGE> 14
attorneys' and consultants' fees and court costs, demands, causes of action, or
judgments directly or indirectly arising out of or relating to the gross
negligence or willful misconduct of the Landlord. Notwithstanding the foregoing
or anything to the contrary contained in this Lease, Landlord shall in no event
be liable to Tenant and Tenant hereby waives all claims against Landlord for any
injury or damage to any person or property in or about the Premises, Building or
Project, including without limitation the common areas, by or from any cause
whatsoever (other than Landlord's gross negligence or willful misconduct) and,
without limiting the generality of the foregoing, whether caused by theft, fire,
rain or water leakage of any character from the roof, walls, plumbing,
sprinklers, pipes, basement or any other portion of the Premises, Building or
Project, or caused by gas, fire, oil or electricity in, on or about the
Premises, Building or Project, or from any other systems, or by acts of God
(including without limitation flood or earthquake), acts of a public enemy,
riot, strike, insurrection, war, court order, requisition or order of
governmental body or authority or for any damage or inconvenience which may
arise through repair, except as expressly otherwise provided in Paragraph 10 of
this Lease. In addition, Landlord shall in no event be liable for (i) injury to
Tenant's business or any loss of income or profit therefrom or from
consequential damages (other than Landlord's sole gross negligence or willful
misconduct), or (ii) sums up to the amount of insurance proceeds received by
Tenant. The foregoing indemnity by Landlord shall not be applicable to claims to
the extent arising from the negligence or willful misconduct of Tenant or
Tenant's parties.
9. WAIVER OF SUBROGATION
To the extent permitted by law and without affecting the coverage
provided by insurance to be maintained hereunder or any other rights or
remedies, Landlord and Tenant each waive any right to recover against the other
for: (a) damages for injury to or death of persons; (b) damages to property,
including personal property; (c) damages to the Premises or any part thereof;
and (d) claims arising by reason of the foregoing due to hazards covered by
insurance maintained or required to be maintained pursuant to this Lease to the
extent of proceeds recovered therefrom, or proceeds which would have been
recoverable therefrom in the case of the failure of any party to maintain any
insurance coverage required to be maintained by such party pursuant to this
Lease. This provision is intended to waive fully, any rights and/or claims
arising by reason of the foregoing, but only to the extent that any of the
foregoing damages and/or claims referred to above are covered or would be
covered, and only to the extent of such coverage, by insurance actually carried
or required to be maintained pursuant to this Lease by either Landlord or
Tenant. This provision is also intended to waive fully, and for the benefit of
each party, any rights and/or claims which might give rise to a right of
subrogation on any insurance carrier. Subject to all qualifications of this
Paragraph 9, Landlord waives its rights as specified in this Paragraph 9 with
respect to any subtenant that it has approved pursuant to Paragraph 21 but only
in exchange for the written waiver of such rights to be given by such subtenant
to Landlord upon such subtenant taking possession of the Premises or a portion
thereof. Each party shall cause each insurance policy obtained by it to provide
that the insurance company waives all right of recovery by way of subrogation
against either party in connection with any damage covered by any policy.
10. LANDLORD'S REPAIRS AND MAINTENANCE
Landlord shall at Landlord's sole expense maintain in good repair,
reasonable wear
<PAGE> 15
and tear excepted, the structural soundness of the roof, foundations, and
exterior walls of the Building. The term "exterior walls" as used herein shall
not include windows, glass or plate glass, doors, special store fronts or office
entries. Any damage caused by or repairs necessitated by any negligence or act
of Tenant or Tenant's Parties may be repaired by Landlord at Landlord's option
and Tenant's expense. Tenant shall immediately give Landlord written notice of
any defect or need of repairs in such components of the Building for which
Landlord is responsible, after which Landlord shall have a reasonable
opportunity and the right to enter the Premises at all reasonable times to
repair same. Landlord's liability with respect to any defects, repairs, or
maintenance for which Landlord is responsible under any of the provisions of
this Lease shall be limited to the cost of such repairs or maintenance, and
there shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant's business arising from the making of
repairs, alterations or improvements in or to any portion of the Premises, the
Building or the Project or to fixtures, appurtenances or equipment in the
Building, except as provided in Paragraph 24. By taking possession of the
Premises, Tenant accepts them "as is," as being in good order, condition and
repair and the condition in which Landlord is obligated to deliver them and
suitable for the Permitted Use and Tenant's intended operations in the Premises,
whether or not any notice of acceptance is given. Notwithstanding the foregoing,
Landlord shall use commercially reasonable efforts to remedy the water leak in
one private office of suite 120, and the air conditioning temperature controls
in suite 105.
11. TENANT'S REPAIRS AND MAINTENANCE
Tenant shall at all times during the Term at Tenant's expense maintain
all parts of the Premises and such portions of the Building as are within the
exclusive control of Tenant in a first-class, good, clean and secure condition
and promptly make all necessary repairs and replacements, as determined by
Landlord, with materials and workmanship of the same character, kind and quality
as the original. Notwithstanding anything to the contrary contained herein, but
subject to Paragraph 9, Tenant shall, at its expense, promptly repair any damage
to the Premises or the Building or Project resulting from or caused by any
negligence or act of Tenant or Tenant's Parties. Unless caused by the gross
negligence or willful misconduct of Tenant, Landlord shall perform and
construct, and Tenant shall have no responsibility to perform or construct, any
repair, maintenance, or improvements (a) occasioned by fire, acts of God, or
other casualty or by the exercise of the power of eminent domain, or (b) which
could be treated as a "capital improvement" in accordance with Paragraph 7
hereof.
12. ALTERATIONS
A. Tenant shall not make, or allow to be made, any alterations, physical
additions, improvements or built-in fixed wall partitions, including without
limitation the attachment of any fixtures or equipment, in, about or to the
Premises ("ALTERATIONS") without obtaining the prior written consent of
Landlord, which consent shall not be unreasonably withheld with respect to
proposed Alterations which: (a) comply with all applicable Regulations; (b) are,
in Landlord's opinion, compatible with the Building or the Project and its
mechanical, plumbing, electrical, heating/ventilation/air conditioning systems,
and will not cause the Building or Project or such systems to be required to be
modified to comply with any Regulations (including, without limitation, the
Americans With Disabilities Act); and (c) will not interfere with the use and
occupancy of any other portion of the Building or Project by any other tenant or
its invitees. Specifically, but without limiting the generality of the
foregoing, Landlord shall have the right of written consent for all plans and
specifications for the proposed Alterations, construction means and methods, all
appropriate permits and licenses, any contractor or subcontractor to be employed
on the work of Alterations, and the time for performance of such work, and may
impose rules and regulations for contractors and subcontractors performing such
work. Tenant shall also supply to Landlord any documents and information
reasonably requested by Landlord in connection with Landlord's consideration of
a request for approval hereunder. Tenant shall cause all Alterations to be
accomplished in a first-class, good and workmanlike manner, and to comply with
all applicable Regulations and Paragraph 27 hereof. Tenant shall at Tenant's
sole expense, perform any additional work required under applicable Regulations
due to the
<PAGE> 16
Alterations hereunder. No review or consent by Landlord of or to any proposed
Alteration or additional work shall constitute a waiver of Tenant's obligations
under this Paragraph 12, nor constitute any warranty or representation that the
same complies with all applicable Regulations, for which Tenant shall at all
times be solely responsible. Tenant shall reimburse Landlord for all costs which
Landlord may incur in connection with granting approval to Tenant for any such
Alterations, including any costs or expenses which Landlord may incur in
electing to have outside architects and engineers review said plans and
specifications, and shall pay Landlord an administration fee of seven percent
(7%) of the cost of the Alterations as Additional Rent hereunder. All such
Alterations shall remain the property
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<PAGE> 17
of Tenant until the expiration or earlier termination of this Lease, at which
time they shall be and become the property of Landlord; provided, however, that
Landlord may, at Landlord's option, require that Tenant, at Tenant's expense,
remove any or all Alterations made by Tenant and restore the Premises by the
expiration or earlier termination of this Lease, to their condition existing
prior to the construction of any such Alterations. All such removals and
restoration shall be accomplished in a first-class and good and workmanlike
manner so as not to cause any damage to the Premises or Project whatsoever. If
Tenant fails to remove such Alterations or Tenant's trade fixtures or furniture
or other personal property, Landlord may keep and use them or remove any of them
and cause them to be stored or sold in accordance with applicable law, at
Tenant's sole expense. In addition to and wholly apart from Tenant's obligation
to pay Tenant's Proportionate Share of Operating Expenses, Tenant shall be
responsible for and shall pay prior to delinquency any taxes or governmental
service fees, possessory interest taxes, fees or charges in lieu of any such
taxes, capital levies, or other charges imposed upon, levied with respect to or
assessed against its fixtures or personal property, on the value of Alterations
within the Premises, and on Tenant's interest pursuant to this Lease, or any
increase in any of the foregoing based on such Alterations. To the extent that
any such taxes are not separately assessed or billed to Tenant, Tenant shall pay
the amount thereof as invoiced to Tenant by Landlord.
Notwithstanding the foregoing, at Landlord's option (but without
obligation), all or any portion of the Alterations shall be performed by
Landlord for Tenant's account and Tenant shall pay Landlord's estimate of the
cost thereof (including a reasonable charge for Landlord's overhead and profit)
prior to commencement of the work. In addition, at Landlord's election and
notwithstanding the foregoing, however, Tenant shall pay to Landlord the cost of
removing any such Alterations and restoring the Premises to their original
condition such cost to include a reasonable charge for Landlord's overhead and
profit as provided above, and such amount may be deducted from the Security
Deposit or any other sums or amounts held by Landlord under this Lease.
B. In compliance with Paragraph 27 hereof, at least ten (10) business days
before beginning construction of any Alteration, Tenant shall give Landlord
written notice of the expected commencement date of that construction to permit
Landlord to post and record a notice of non-responsibility. Upon substantial
completion of construction, if the law so provides, Tenant shall cause a timely
notice of completion to be recorded in the office of the recorder of the county
in which the Building is located.
13. SIGNS
Tenant shall not place, install, affix, paint or maintain any signs,
notices, graphics or banners whatsoever or any window decor which is visible in
or from public view or corridors, the common areas or the exterior of the
Premises or the Building, in or on any exterior window or window fronting upon
any common areas or service area without Landlord's prior written approval which
Landlord shall have the right to withhold in its absolute and sole discretion;
provided that Tenant's name shall be included in any Building-standard door and
directory signage, if any, in accordance with Landlord's Building signage
program, including without limitation, payment by Tenant of any fee charged by
Landlord for maintaining such signage, which fee shall constitute Additional
Rent hereunder. Any installation of signs, notices, graphics or banners on or
about the Premises or Project approved by Landlord shall be subject to any
Regulations and to any other requirements imposed by Landlord. Tenant shall
remove all such signs or graphics by the expiration or any earlier termination
of this Lease. Such installations and removals shall be made in such manner as
to avoid injury to or defacement of the Premises, Building or Project and any
other improvements contained therein, and Tenant shall repair any injury or
defacement including without limitation discoloration caused by such
installation or removal.
14. INSPECTION/POSTING NOTICES
After reasonable notice, except in emergencies where no such notice
shall be required, Landlord and Landlord's agents and representatives, shall
have the right to enter the Premises to inspect the same, to clean, to perform
such work as may be permitted or required hereunder, to make repairs,
improvements or alterations to the Premises Building or Project or to other
tenant spaces therein, to deal with emergencies, to post such notices as may be
permitted or required by law to prevent the perfection of liens against
Landlord's interest in the Project or to exhibit the Premises to prospective
tenants, purchasers, encumbrancers or to others, or for any other purpose as
Landlord may deem necessary or desirable; provided, however, that Landlord shall
use reasonable efforts not to unreasonably interfere with Tenant's business
operations. Tenant shall not be entitled to any abatement of Rent by reason of
the exercise of any such right of entry. Tenant waives any claim for damages for
any injury or inconvenience to or interference with
<PAGE> 18
Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, and
any other loss occasioned thereby. Landlord shall at all times have and retain a
key with which to unlock all of the doors in, upon and about the Premises,
excluding Tenant's vaults and safes or special security areas (designated in
advance), and Landlord shall have the right to use any and all means which
Landlord may deem necessary or proper to open said doors in an emergency, in
order to obtain entry to any portion of the Premises, and any entry to the
Premises or portions thereof obtained by Landlord by any of said means, or
otherwise, shall not be construed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or an eviction, actual or constructive, of Tenant
from the Premises or any portions thereof. At any time within six (6) months
prior to the expiration of the Term or following any earlier termination of this
Lease or agreement to terminate this Lease, Landlord shall have the right to
erect on the Premises, Building and/or Project a suitable sign indicating that
the Premises are available for lease.
15. SERVICES AND UTILITIES
A. Provided Tenant shall not be in default hereunder, and subject to the
provisions elsewhere herein contained and to the rules and regulations of the
Building, Landlord shall furnish to the Premises during ordinary business hours
of generally recognized business days, to be determined by Landlord (but
exclusive, in any event, of Saturdays, Sundays and legal holidays), water for
lavatory and drinking purposes and electricity, heat and air conditioning as
usually furnished or supplied for use of the Premises for reasonable and normal
office use as of the date Tenant takes possession of the Premises as determined
by Landlord (but not including above-standard or continuous cooling for
excessive heat-generating machines, excess lighting or equipment), janitorial
services during the times and in the manner that such services are, in
Landlord's judgment, customarily furnished in comparable office buildings in the
immediate market area, and elevator service, which shall mean service either by
nonattended automatic elevators or elevators with attendants, or both, at the
option of Landlord. Tenant acknowledges that Tenant has inspected and accepts
the water, electricity, heat and air conditioning and other utilities and
services being supplied or furnished to the Premises as of the date Tenant takes
possession of the Premises, as being sufficient for use of the Premises for
reasonable and normal office use in their present condition, "as is," and
suitable for the Permitted Use, and for Tenant's intended operations in the
Premises. Landlord shall have no obligation to provide additional or after-hours
electricity, heating or air conditioning, but if Landlord elects to provide such
services at Tenant's request, Tenant shall pay to Landlord a reasonable charge
for such services as determined by Landlord. Tenant agrees to keep and cause to
be kept closed all window covering when necessary because of the sun's position,
and Tenant also agrees at all times to cooperate fully with Landlord and to
abide by all of the regulations and requirements which Landlord may prescribe
for the proper functioning and protection of electrical, heating, ventilating
and air conditioning systems. Wherever heat-generating machines, excess lighting
or equipment are used in the Premises which affect the temperature otherwise
maintained by the air conditioning system, Landlord reserves the right to
install supplementary air conditioning units in the Premises and the cost
thereof, including the cost of installation and the cost of operation and
maintenance thereof, shall be paid by Tenant to Landlord upon demand by
Landlord.
B. Tenant shall not without written consent of Landlord use any apparatus,
equipment or device in the Premises, including without limitation, computers,
electronic data processing machines, copying machines, and other machines, using
excess lighting or using electric current, water, or any other resource in
excess of or which will in any way increase the amount of electricity, water, or
any other resource
9
<PAGE> 19
being furnished or supplied for the use of the Premises for reasonable and
normal office use, in each case as of the date Tenant takes possession of the
Premises as determined by Landlord, or which will require additions or
alterations to or interfere with the Building power distribution systems; nor
connect with electric current, except through existing electrical outlets in the
Premises or water pipes, any apparatus, equipment or device for the purpose of
using electrical current, water, or any other resource. If Tenant shall require
water or electric current or any other resource in excess of that being
furnished or supplied for the use of the Premises as of the date Tenant takes
possession of the Premises as determined by Landlord, Tenant shall first procure
the written consent of Landlord which Landlord may refuse, to the use thereof,
and Landlord may cause a special meter to be installed in the Premises so as to
measure the amount of water, electric current or other resource consumed for any
such other use. Tenant shall pay directly to Landlord as an addition to and
separate from payment of Operating Expenses the cost of all such additional
resources, energy, utility service and meters (and of installation, maintenance
and repair thereof and of any additional circuits or other equipment necessary
to furnish such additional resources, energy, utility or service). Landlord may
add to the separate or metered charge a recovery of additional expense incurred
in keeping account of the excess water, electric current or other resource so
consumed. Landlord shall not be liable for any damages directly or indirectly
resulting from nor shall the Rent or any monies owed Landlord under this Lease
herein reserved be abated by reason of: (a) the installation, use or
interruption of use of any equipment used in connection with the furnishing of
any such utilities or services, or any change in the character or means of
supplying or providing any such utilities or services or any supplier thereof;
(b) the failure to furnish or delay in furnishing any such utilities or services
when such failure or delay is caused by acts of God or the elements, labor
disturbances of any character, or any other accidents or other conditions beyond
the reasonable control of Landlord or because of any interruption of service due
to Tenant's use of water, electric current or other resource in excess of that
being supplied or furnished for the use of the Premises as of the date Tenant
takes possession of the Premises; (c) the inadequacy, limitation, curtailment,
rationing or restriction on use of water, electricity, gas or any other form of
energy or any other service or utility whatsoever serving the Premises or
Project, whether by Regulation or otherwise; or (d) the partial or total
unavailability of any such utilities or services to the Premises or the
Building, whether by Regulation or otherwise; otherwise; nor shall any such
occurrence constitute an actual or constructive eviction of Tenant. Landlord
shall further have no obligation to protect or preserve any apparatus, equipment
or device installed by Tenant in the Premises, including without limitation by
providing additional or after-hours heating or air conditioning. Landlord shall
be entitled to cooperate voluntarily and in a reasonable manner with the efforts
of national, state or local governmental agencies or utility suppliers in
reducing energy or other resource consumption. The obligation to make services
available hereunder shall be subject to the limitations of any such voluntary,
reasonable program. In addition, Landlord reserves the right to change the
supplier or provider of any such utility or service from time to time. Tenant
shall have no right to contract with or otherwise obtain any electrical or other
such service for or with respect to the Premises or Tenant's operations therein
from any supplier or provider of any such service. Tenant shall cooperate with
Landlord and any supplier or provider of such services designated by Landlord
from time to time to facilitate the delivery of such services to Tenant at the
Premises and to the Building and Project, including without limitation allowing
Landlord and Landlord's suppliers or providers, and their respective agents and
contractors, reasonable access to the Premises for the purpose of installing,
maintaining, repairing, replacing or upgrading such service or any equipment or
machinery associated therewith.
C. Tenant shall pay, upon demand, for all utilities furnished to the Premises,
or if not separately billed to or metered to Tenant, Tenant's Proportionate
Share of all charges jointly serving the Project in accordance with Paragraph 7.
All sums payable under this Paragraph 15 shall constitute Additional Rent
hereunder.
16. SUBORDINATION
Without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination, this Lease shall be and is
hereby declared to be subject and subordinate at all times to: (a) all ground
leases or underlying leases which may now exist or hereafter be executed
affecting the Premises and/or the land upon which the Premises and Project are
situated, or both; and (b) any mortgage or deed of trust which may now exist or
be placed upon the Building, the Project and/or the land upon which the Premises
or the Project are situated, or said ground leases or underlying leases, or
Landlord's interest or estate in any of said items which is specified as
security. Notwithstanding the foregoing, Landlord shall have the right to
subordinate or cause to be subordinated any such ground leases or underlying
leases or any such liens to this Lease. If any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason,
<PAGE> 20
Tenant shall, notwithstanding any subordination, attorn to and become the Tenant
of the successor in interest to Landlord provided that Tenant shall not be
disturbed in its possession under this Lease by such successor in interest so
long as Tenant is not in default under this Lease. Within ten (10) days after
request by Landlord, Tenant shall execute and deliver any additional documents
evidencing Tenant's attornment or the subordination of this Lease with respect
to any such ground leases or underlying leases or any such mortgage or deed of
trust, in the form requested by Landlord or by any ground landlord, mortgagee,
or beneficiary under a deed of trust, subject to such nondisturbance
requirement. If requested in writing by Tenant, Landlord shall use commercially
reasonable efforts to obtain a subordination, nondisturbance and attornment
agreement for the benefit of Tenant reflecting the foregoing from any ground
landlord, mortgagee or beneficiary, at Tenant's expense, subject to such other
terms and conditions as the ground landlord, mortgagee or beneficiary may
require.
17. FINANCIAL STATEMENTS
At the request of Landlord from time to time, Tenant shall provide to
Landlord Tenant's and any guarantor's current financial statements or other
information discussing financial worth of Tenant and any guarantor, which
Landlord shall use solely for purposes of this Lease and in connection with the
ownership, management, financing and disposition of the Project.
18. ESTOPPEL CERTIFICATE
Tenant agrees from time to time, within ten (10) days after request of
Landlord, to deliver to Landlord, or Landlord's designee, an estoppel
certificate stating that this Lease is in full force and effect, that this Lease
has not been modified (or stating all modifications, written or oral, to this
Lease), the date to which Rent has been paid, the unexpired portion of this
Lease, that there are no current defaults by Landlord or Tenant under this Lease
(or specifying any such defaults), that the leasehold estate granted by this
Lease is the sole interest of Tenant in the Premises and/or the land at which
the Premises are situated, and such other matters pertaining to this Lease as
may be reasonably requested by Landlord or any mortgagee, beneficiary, purchaser
or prospective purchaser of the Building or Project or any interest therein.
Failure by Tenant to execute and deliver such certificate shall constitute an
acceptance of the Premises and acknowledgment by Tenant that the statements
included are true and correct without exception. Tenant agrees that if Tenant
fails to execute and deliver such certificate within such ten (10) day period,
Landlord may execute and deliver such certificate on Tenant's behalf and that
such certificate shall be binding on Tenant. Landlord and Tenant intend that any
statement delivered pursuant to this Paragraph may be relied upon by any
mortgagee, beneficiary, purchaser or prospective purchaser of the Building or
Project or any interest therein. The parties agree that Tenant's obligation to
furnish such estoppel certificates in a timely fashion is a material inducement
for Landlord's execution of this Lease, and shall be an event of default
(without any cure period that might be provided under Paragraph 26.A(3) of this
Lease) if Tenant fails to fully comply or makes any material misstatement in any
such certificate.
19. SECURITY DEPOSIT
Tenant agrees to deposit with Landlord upon execution of this Lease, a
security deposit as stated in the Basic Lease Information (the "SECURITY
DEPOSIT"), which sum shall be held and owned by Landlord, without obligation to
pay interest, as security for the performance
10
<PAGE> 21
of Tenant's covenants and obligations under this Lease. The Security Deposit is
not an advance rental deposit or a measure of damages incurred by Landlord in
case of Tenant's default. Upon the occurrence of any event of default by Tenant,
Landlord may from time to time, without prejudice to any other remedy provided
herein or by law, use such fund as a credit to the extent necessary to credit
against any arrears of Rent or other payments due to Landlord hereunder, and any
other damage, injury, expense or liability caused by such event of default, and
Tenant shall pay to Landlord, on demand, the amount so applied in order to
restore the Security Deposit to its original amount. Although the Security
Deposit shall be deemed the property of Landlord, any remaining balance of such
deposit shall be returned by Landlord to Tenant at such time after termination
of this Lease that all of Tenant's obligations under this Lease have been
fulfilled, reduced by such amounts as may be required by Landlord to remedy
defaults on the part of Tenant in the payment of Rent or other obligations of
Tenant under this Lease, to repair damage to the Premises, Building or Project
caused by Tenant or any Tenant's Parties and to clean the Premises. Landlord may
use and commingle the Security Deposit with other funds of Landlord.
20. LIMITATION OF TENANT'S REMEDIES
The obligations and liability of Landlord to Tenant for any default by
Landlord under the terms of this Lease are not personal obligations of Landlord
or of the individual or other partners of Landlord or its or their partners,
directors, officers, or shareholders, and Tenant agrees to look solely to
Landlord's interest in the Project for the recovery of any amount from Landlord,
and shall not look to other assets of Landlord nor seek recourse against the
assets of the individual or other partners of Landlord or its or their partners,
directors, officers or shareholders. Any lien obtained to enforce any such
judgment and any levy of execution thereon shall be subject and subordinate to
any lien, mortgage or deed of trust on the Project. Under no circumstances shall
Tenant have the right to offset against or recoup Rent or other payments due and
to become due to Landlord hereunder except as expressly provided in Paragraph
23.B. below, which Rent and other payments shall be absolutely due and payable
hereunder in accordance with the terms hereof.
21. ASSIGNMENT AND SUBLETTING
A. (1) GENERAL. This Lease has been negotiated to be and is granted as an
accommodation to Tenant. Accordingly, this Lease is personal to
Tenant, and Tenant's rights granted hereunder do not include the right
to assign this Lease or sublease the Premises, or to receive any
excess, either in installments or lump sum, over the Rent which is
expressly reserved by Landlord as hereinafter provided, except as
otherwise expressly hereinafter provided. Tenant shall not assign or
pledge this Lease or sublet the Premises or any part thereof, whether
voluntarily or by operation of law, or permit the use or occupancy of
the Premises or any part thereof by anyone other than Tenant, or
suffer or permit any such assignment, pledge, subleasing or occupancy,
without Landlord's prior written consent except as provided herein. If
Tenant desires to assign this Lease or sublet any or all of the
Premises, Tenant shall give Landlord written notice (the "TRANSFER
NOTICE") at least thirty (30) days prior to the anticipated effective
date of the proposed assignment or sublease, which shall contain all
of the information reasonably requested by Landlord to address
Landlord's decision criteria specified hereinafter. Landlord shall
then have a period of fifteen (15) business days following receipt of
the Transfer Notice to notify Tenant in writing that Landlord elects
either: (i) to terminate this Lease as to the space so affected as of
the date so requested by Tenant; or (ii) to consent to the proposed
assignment or sublease, subject, however, to Landlord's prior written
consent of the proposed assignee or subtenant and of any related
documents or agreements associated with the assignment or sublease. If
Landlord should fail to notify Tenant in writing of such election
within said period, Landlord shall be deemed to have waived option (i)
above, but written consent by Landlord of the proposed assignee or
subtenant shall still be required. If Landlord does not exercise
option (i) above, Landlord's consent to a proposed assignment or
sublease shall not be unreasonably withheld. Consent to any assignment
or subletting shall not constitute consent to any subsequent
transaction to which this Paragraph 21 applies.
(2) CONDITIONS OF LANDLORD'S CONSENT. Without limiting the other
instances in which it may be reasonable for Landlord to withhold
Landlord's consent to an assignment or subletting, Landlord and Tenant
acknowledge that it shall be reasonable for Landlord to withhold
Landlord's consent in the following instances: if the proposed
assignee does not agree to be bound by and assume the obligations of
Tenant under this Lease in form and substance satisfactory to
Landlord; the use of the Premises by such proposed assignee or
subtenant would not be a Permitted Use or would violate any
exclusivity or other arrangement which Landlord has with any other
tenant or occupant
<PAGE> 22
or any Regulation or would increase the Occupancy Density or Parking
Density of the Building or Project, or would otherwise result in an
undesirable tenant mix for the Project as determined by Landlord; the
proposed assignee or subtenant is not of sound financial condition as
determined by Landlord in Landlord's sole discretion; the proposed
assignee or subtenant is a governmental agency; the proposed assignee
or subtenant does not have a good reputation as a tenant of property
or a good business reputation; the proposed assignee or subtenant is a
person with whom Landlord is negotiating to lease space in the Project
or is a present tenant of the Project; the assignment or subletting
would entail any Alterations which would lessen the value of the
leasehold improvements in the Premises or use of any Hazardous
Materials or other noxious use or use which may disturb other tenants
of the Project; or Tenant is in default of any obligation of Tenant
under this Lease, or Tenant has defaulted under this Lease on three
(3) or more occasions during any twelve (12) months preceding the date
that Tenant shall request consent. Failure by or refusal of Landlord
to consent to a proposed assignee or subtenant shall not cause a
termination of this Lease. Upon a termination under Paragraph
21.A.(1)(i), Landlord may lease the Premises to any party, including
parties with whom Tenant has negotiated an assignment or sublease,
without incurring any liability to Tenant. At the option of Landlord,
a surrender and termination of this Lease shall operate as an
assignment to Landlord of some or all subleases or subtenancies.
Landlord shall exercise this option by giving notice of that
assignment to such subtenants on or before the effective date of the
surrender and termination. In connection with each request for
assignment or subletting, Tenant shall pay to Landlord Landlord's
standard fee for approving such requests, as well as all costs
incurred by Landlord or any mortgagee or ground lessor in approving
each such request and effecting any such transfer, including, without
limitation, reasonable attorneys' fees.
B. BONUS RENT. Any Rent or other consideration realized by Tenant under any such
sublease or assignment in excess of the Rent payable hereunder, after
amortization of a reasonable brokerage commission, tenant improvements, and
direct legal fees incurred by Tenant, shall be divided and paid, fifty percent
(50%) to Tenant, fifty percent (50%) to Landlord. In any subletting or
assignment undertaken by Tenant, Tenant shall diligently seek to obtain the
maximum rental amount available in the marketplace for comparable space
available for primary leasing.
C. CORPORATION. Notwithstanding the provisions of this Paragraph 21, Tenant may
assign this Lease or sublet any portion of the Premises to any corporation which
controls, is controlled by or is under common control with Tenant (each, a
"PERMITTED TENANT AFFILIATE"), provided that the Permitted Tenant Affiliate
assumes, in full, the obligations of Tenant under this Lease (or assumes, in the
case of a sublease of a portion of the Term or the Premises, the obligations of
Tenant with respect to such portion) and has a net worth at least equal to
Tenant's net worth immediately before the assignment or subletting. If Tenant is
a corporation, a dissolution of the corporation or a transfer (by one (1) or
more transactions) of a majority of the voting stock of Tenant shall be deemed
to be an assignment of this Lease subject to the provisions of this Paragraph
21,
11
<PAGE> 23
provided, however, that the provisions of this sentence shall not apply to
transactions with a corporation into or with which Tenant is merged or
consolidated or to which substantially all of Tenant's assets are transferred
(each, a "surviving corporation") where (i) the surviving corporation has a net
worth at least equal to Tenant's net worth immediately before the merger,
consolidation or asset transfer and (ii) the surviving corporation assumes, in
full, the obligations of Tenant under this Lease (or assumes, in the case of a
sublease of a portion of the Term or the Premises, the obligations of Tenant
with respect to such portion).
D. UNINCORPORATED ENTITY. If Tenant is a partnership, joint venture,
unincorporated limited liability company or other unincorporated business form,
a transfer of the interest of persons, firms or entities responsible for
managerial control of Tenant by sale, assignment, bequest, inheritance,
operation of law or other disposition, so as to result in a change in the
present control of said entity and/or of the underlying beneficial interests of
said entity and/or a change in the identity of the persons responsible for the
general credit obligations of said entity shall constitute an assignment for all
purposes of this Lease.
E. LIABILITY. No assignment or subletting by Tenant, permitted or otherwise,
shall relieve Tenant of any obligation under this Lease or alter the primary
liability of the Tenant named herein for the payment of Rent or for the
performance of any other obligations to be performed by Tenant, including
obligations contained in Paragraph 25 with respect to any assignee or subtenant.
Landlord may collect rent or other amounts or any portion thereof from any
assignee, subtenant, or other occupant of the Premises, permitted or otherwise,
and apply the net rent collected to the Rent payable hereunder, but no such
collection shall be deemed to be a waiver of this Paragraph 21, or the
acceptance of the assignee, subtenant or occupant as tenant, or a release of
Tenant from the further performance by Tenant of the obligations of Tenant under
this Lease. Any assignment or subletting which conflicts with the provisions
hereof shall be void.
22. AUTHORITY
Landlord represents and warrants that it has full right and authority
to enter into this Lease and to perform all of Landlord's obligations hereunder
and that all persons signing this Lease on its behalf are authorized to do.
Tenant and the person or persons, if any, signing on behalf of Tenant, jointly
and severally represent and warrant that Tenant has full right and authority to
enter into this Lease, and to perform all of Tenant's obligations hereunder, and
that all persons signing this Lease on its behalf are authorized to do so.
23. CONDEMNATION
A. CONDEMNATION RESULTING IN TERMINATION. If the whole or any substantial part
of the Premises should be taken or condemned for any public use under any
Regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with the Permitted
Use of the Premises, either party shall have the right to terminate this Lease
at its option. If any material portion of the Building or Project is taken or
condemned for any public use under any Regulation, or by right of eminent
domain, or by private purchase in lieu thereof, Landlord may terminate this
Lease at its option. In either of such events, the Rent shall be abated during
the unexpired portion of this Lease, effective when the physical taking of said
Premises shall have occurred.
B. CONDEMNATION NOT RESULTING IN TERMINATION. If a portion of the Project of
which the Premises are a part should be taken or condemned for any public use
under any Regulation, or by right of eminent domain, or by private purchase in
lieu thereof, and the taking prevents or materially interferes with the
Permitted Use of the Premises, and this Lease is not terminated as provided in
Paragraph 23.A. above, the Rent payable hereunder during the unexpired portion
of this Lease shall be reduced, beginning on the date when the physical taking
shall have occurred, to such amount as may be fair and reasonable under all of
the circumstances, but only after giving Landlord credit for all sums received
or to be received by Tenant by the condemning authority. Notwithstanding
anything to the contrary contained in this Paragraph, if the temporary use or
occupancy of any part of the Premises
<PAGE> 24
shall be taken or appropriated under power of eminent domain during the Term,
this Lease shall be and remain unaffected by such taking or appropriation and
Tenant shall continue to pay in full all Rent payable hereunder by Tenant during
the Term; in the event of any such temporary appropriation or taking, Tenant
shall be entitled to receive that portion of any award which represents
compensation for the use of or occupancy of the Premises during the Term, and
Landlord shall be entitled to receive that portion of any award which represents
the cost of restoration of the Premises and the use and occupancy of the
Premises.
C. AWARD. Landlord shall be entitled to (and Tenant shall assign to Landlord)
any and all payment, income, rent, award or any interest therein whatsoever
which may be paid or made in connection with such taking or conveyance and
Tenant shall have no claim against Landlord or otherwise for any sums paid by
virtue of such proceedings, whether or not attributable to the value of any
unexpired portion of this Lease, except as expressly provided in this Lease.
Notwithstanding the foregoing, any compensation specifically and separately
awarded Tenant for Tenant's personal property and moving costs, shall be and
remain the property of Tenant.
D. WAIVER OF CCP SECTION 1265.130. Each party waives the provisions of
California Civil Code Procedure Section 1265.130 allowing either party to
petition the superior court to terminate this Lease as a result of a partial
taking.
24. CASUALTY DAMAGE
A. GENERAL. If the Premises or Building should be damaged or destroyed by fire,
tornado, or other casualty (collectively, "CASUALTY"), Tenant shall give
immediate written notice thereof to Landlord. Within thirty (30) days after
Landlord's receipt of such notice, Landlord shall notify Tenant whether in
Landlord's reasonable estimation material restoration of the Premises can
reasonably be made within one hundred eighty (180) days from the date of such
notice and receipt of required permits for such restoration. Landlord's
reasonable determination shall be binding on Tenant.
B. WITHIN 180 DAYS. If the Premises or Building should be damaged by Casualty to
such extent that material restoration can in Landlord's estimation be reasonably
completed within one hundred eighty (180) days after the date of such notice and
receipt of required permits for such restoration, this Lease shall not
terminate. Provided that insurance proceeds are received by Landlord to fully
repair the damage, Landlord shall proceed to rebuild and repair the Premises in
the manner determined by Landlord, except that Landlord shall not be required to
rebuild, repair or replace any part of the Alterations which may have been
placed on or about the Premises by Tenant. If the Premises are untenantable in
whole or in part following such damage, the Rent payable hereunder during the
period in which they are untenantable shall be abated proportionately, but only
to the extent of rental abatement insurance proceeds received by Landlord during
the time and to the extent the Premises are unfit for occupancy.
C. GREATER THAN 180 DAYS. If the Premises or Building should be damaged by
Casualty to such extent that rebuilding or repairs cannot in Landlord's
estimation be reasonably completed within one hundred eighty (180) days after
the date of such notice and receipt of required permits for such rebuilding or
repair, then Landlord shall have the option of either: (1) terminating this
Lease effective upon the date of the occurrence of such damage, in which event
the Rent shall be abated during the unexpired portion of this Lease; or (2)
electing to rebuild or repair the Premises diligently and in the manner
determined by Landlord. Landlord shall notify Tenant of its election within
thirty (30) days after Landlord's receipt of notice of the damage or
destruction. However, if in Landlord's estimation such repairs cannot be
reasonably completed within two hundred ten (210) days after the date of such
notice and receipt of required permits for such
12
<PAGE> 25
rebuilding or repair, then Tenant may terminate this Lease thirty (30) days
after delivering written notice to Landlord. Tenant shall deliver notice to
Landlord of its intent to terminate the Lease within thirty (30) days of receipt
of Landlord's estimation to complete repairs. Notwithstanding the above,
Landlord shall not be required to rebuild, repair or replace any part of any
Alterations which may have been placed, on or about the Premises by Tenant. If
the Premises are untenantable in whole or in part following such damage, the
Rent payable hereunder during the period in which they are untenantable shall be
abated proportionately, but only to the extent of rental abatement insurance
proceeds received by Landlord during the time and to the extent the Premises are
unfit for occupancy.
D. TENANT'S FAULT. Notwithstanding anything herein to the contrary, if the
Premises or any other portion of the Building are damaged by Casualty resulting
from the fault, negligence, or breach of this Lease by Tenant or any of Tenant's
Parties, Base Rent and Additional Rent shall not be diminished during the repair
of such damage and Tenant shall be liable to Landlord for the cost and expense
of the repair and restoration of the Building caused thereby to the extent such
cost and expense is not covered by insurance proceeds.
E. INSURANCE PROCEEDS. Notwithstanding anything herein to the contrary, if the
Premises or Building are damaged or destroyed and are not fully covered by the
insurance proceeds received by Landlord or if the holder of any indebtedness
secured by a mortgage or deed of trust covering the Premises requires that the
insurance proceeds be applied to such indebtedness, then in either case Landlord
shall have the right to terminate this Lease by delivering written notice of
termination to Tenant within thirty (30) days after the date of notice to
Landlord that said damage or destruction is not fully covered by insurance or
such requirement is made by any such holder, as the case may be, whereupon this
Lease shall terminate.
F. WAIVER. This Paragraph 24 shall be Tenant's sole and exclusive remedy in the
event of damage or destruction to the Premises or the Building. As a material
inducement to Landlord entering into this Lease, Tenant hereby waives any rights
it may have under Sections 1932, 1933(4), 1941 or 1942 of the Civil Code of
California with respect to any destruction of the Premises, Landlord's
obligation for tenantability of the Premises and Tenant's right to make repairs
and deduct the expenses of such repairs, or under any similar law, statute or
ordinance now or hereafter in effect.
G. TENANT'S PERSONAL PROPERTY. In the event of any damage or destruction of the
Premises or the Building, under no circumstances shall Landlord be required to
repair any injury or damage to, or make any repairs to or replacements of,
Tenant's personal property.
25. HOLDING OVER
Unless Landlord expressly consents in writing to Tenant's holding over,
Tenant shall be unlawfully and illegally in possession of the Premises, whether
or not Landlord accepts any rent from Tenant or any other person while Tenant
remains in possession of the Premises without Landlord's written consent. If
Tenant shall retain possession of the Premises or any portion thereof without
Landlord's consent following the expiration of this Lease or sooner termination
for any reason, then Tenant shall pay to Landlord for each day of such retention
double the amount of daily rental as of the last month prior to the date of
expiration or earlier termination. Tenant shall also indemnify, defend, protect
and hold Landlord harmless from any loss, liability or cost, including
consequential and incidental damages and reasonable attorneys' fees, incurred by
Landlord resulting from delay by Tenant in surrendering the Premises, including,
without limitation, any claims made by the succeeding tenant founded on such
delay. Acceptance of Rent by Landlord following expiration or earlier
termination of this Lease, or following demand by Landlord for possession of the
Premises, shall not constitute a renewal of this Lease, and nothing contained in
this Paragraph 25 shall waive Landlord's right of reentry or any other right.
Additionally, if upon expiration or earlier termination of this Lease, or
following demand by Landlord for possession of the Premises, Tenant has not
fulfilled its obligation with respect to repairs and cleanup of the Premises or
any other Tenant obligations as set forth in this Lease, then Landlord shall
have the right to perform any such obligations as it deems necessary at Tenant's
sole cost and expense, and any time required by Landlord to complete such
obligations shall be considered a period of holding over and the terms of this
Paragraph 25 shall apply. The provisions of this Paragraph 25 shall survive any
expiration or earlier termination of this Lease.
<PAGE> 26
26. DEFAULT
A. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an event of default on the part of Tenant:
(1) ABANDONMENT. Abandonment of the Premises for a continuous period
in excess of five (5) days. Tenant waives any right to notice Tenant
may have under Section 1951.3 of the Civil Code of the State of
California, the terms of this Paragraph 26.A. being deemed such notice
to Tenant as required by said Section 1951.3.
(2) NONPAYMENT OF RENT. Failure to pay any installment of Rent or any
other amount due and payable hereunder within three (3) days of
receiving written notice from Landlord of the delinquency, as to which
time is of the essence.
(3) OTHER OBLIGATIONS. Failure to perform any obligation, agreement or
covenant under this Lease other than those matters specified in
subparagraphs (1) and (2) of this Paragraph 26.A., such failure
continuing for fifteen (15) days after written notice of such failure,
or such longer period as may be required provided Tenant has commenced
to cure and is diligently pursuing the cure of such failure, as to
which time is of the essence.
(4) GENERAL ASSIGNMENT. A general assignment by Tenant for the benefit
of creditors.
(5) BANKRUPTCY. The filing of any voluntary petition in bankruptcy by
Tenant, or the filing of an involuntary petition by Tenant's creditors,
which involuntary petition remains undischarged for a period of thirty
(30) days. If under applicable law, the trustee in bankruptcy or Tenant
has the right to affirm this Lease and continue to perform the
obligations of Tenant hereunder, such trustee or Tenant shall, in such
time period as may be permitted by the bankruptcy court having
jurisdiction, cure all defaults of Tenant hereunder outstanding as of
the date of the affirmance of this Lease and provide to Landlord such
adequate assurances as may be necessary to ensure Landlord of the
continued performance of Tenant's obligations under this Lease.
(6) RECEIVERSHIP. The employment of a receiver to take possession of
substantially all of Tenant's assets or Tenant's leasehold of the
Premises, if such appointment remains undismissed or undischarged for a
period of fifteen (15) days after the order therefor.
(7) ATTACHMENT. The attachment, execution or other judicial seizure of
all or substantially all of Tenant's assets or Tenant's leasehold of
the Premises, if such attachment or other seizure remains undismissed
or undischarged for a period of fifteen (15) days after the levy
thereof.
(8) INSOLVENCY. The admission by Tenant in writing of its inability to
pay its debts as they become due.
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<PAGE> 27
B. REMEDIES UPON DEFAULT.
(1) TERMINATION. In the event of the occurrence of any event of
default, Landlord shall have the right to give a written termination
notice to Tenant, and on the date specified in such notice, Tenant's
right to possession shall terminate, and this Lease shall terminate
unless on or before such date all Rent in arrears and all costs and
expenses incurred by or on behalf of Landlord hereunder shall have been
paid by Tenant and all other events of default of this Lease by Tenant
at the time existing shall have been fully remedied to the satisfaction
of Landlord. At any time after such termination, Landlord may recover
possession of the Premises or any part thereof and expel and remove
therefrom Tenant and any other person occupying the same, including any
subtenant or subtenants notwithstanding Landlord's consent to any
sublease, by any lawful means, and again repossess and enjoy the
Premises without prejudice to any of the remedies that Landlord may
have under this Lease, or at law or equity by any reason of Tenant's
default or of such termination. Landlord hereby reserves the right, but
shall not have the obligation, to recognize the continued possession of
any subtenant. The delivery or surrender to Landlord by or on behalf of
Tenant of keys, entry codes, or other means to bypass security at the
Premises shall not terminate this Lease.
(2) CONTINUATION AFTER DEFAULT. Even though an event of default may
have occurred, this Lease shall continue in effect for so long as
Landlord does not terminate Tenant's right to possession under
Paragraph 26.B.(1) hereof, and Landlord may enforce all of Landlord's
rights and remedies under this Lease and at law or in equity, including
without limitation, the right to recover Rent as it becomes due, and
Landlord, without terminating this Lease, may exercise all of the
rights and remedies of a landlord under Section 1951.4 of the Civil
Code of the State of California or any successor code section. Acts of
maintenance, preservation or efforts to lease the Premises or the
appointment of a receiver under application of Landlord to protect
Landlord's interest under this Lease or other entry by Landlord upon
the Premises shall not constitute an election to terminate Tenant's
right to possession.
(3) INCREASED SECURITY DEPOSIT. If Tenant is in default under
Paragraph 26.A.(2) hereof and such default remains uncured for ten (10)
days after such occurrence or such default occurs more than three times
in any twelve (12) month period, Landlord may require that Tenant
increase the Security Deposit to the amount of three times the current
month's Rent at the time of the most recent default.
C. DAMAGES AFTER DEFAULT. Should Landlord terminate this Lease pursuant to the
provisions of Paragraph 26.B.(1) hereof, Landlord shall have the rights and
remedies of a Landlord provided by Section 1951.2 of the Civil Code of the State
of California, or any successor code sections. Upon such termination, in
addition to any other rights and remedies to which Landlord may be entitled
under applicable law or at equity, Landlord shall be entitled to recover from
Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts
which had been earned at the time of termination, (2) the worth at the time of
award of the amount by which the unpaid Rent and other amounts that would have
been earned after the date of termination until the time of award exceeds the
amount of such Rent loss that Tenant proves could have been reasonably avoided;
(3) the worth at the time of award of the amount by which the unpaid Rent and
other amounts for the balance of the Term after the time of award exceeds the
amount of such Rent loss that the Tenant proves could be reasonably avoided; and
(4) any other amount and court costs necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease or which, in the ordinary course of things, would be likely to
result therefrom. The "worth at the time of award" as used in (1) and (2) above
shall be computed at the Applicable Interest Rate (defined below). The "worth at
the time of award" as used in (3) above shall be computed by discounting such
amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco
at the time of award plus one percent (1%). If this Lease provides for any
periods during the Term during which Tenant is not required to pay Base Rent or
if Tenant otherwise receives a Rent concession, then upon the occurrence of an
event of default, Tenant shall owe to Landlord the full amount of such Base Rent
or value of such Rent concession, plus interest at the Applicable Interest Rate,
calculated from the date that such Base Rent or Rent concession would have been
payable.
D. LATE CHARGE. In addition to its other remedies, Landlord shall have the right
without notice or demand to add to the amount of any payment required to be made
by Tenant hereunder, and which is not paid and received by Landlord on or before
the first day of each calendar month, an amount equal to ten percent (10%) of
the delinquency for each month or portion thereof that the delinquency remains
outstanding to compensate Landlord for the loss of the use of the amount not
paid and the administrative costs caused by the delinquency, the parties
agreeing that Landlord's damage by virtue of such delinquencies
<PAGE> 28
would be extremely difficult and impracticable to compute and the amount stated
herein represents a reasonable estimate thereof. Any waiver by Landlord of any
late charges or failure to claim the same shall not constitute a waiver of other
late charges or any other remedies available to Landlord.
E. INTEREST. Interest shall accrue on all sums not paid when due hereunder at
the lesser of eighteen percent (18%) per annum or the maximum interest rate
allowed by law ("APPLICABLE INTEREST RATE") from the due date until paid.
F. REMEDIES CUMULATIVE. All rights, privileges and elections or remedies of the
parties are cumulative and not alternative, to the extent permitted by law and
except as otherwise provided herein.
27. LIENS
Tenant shall at all times keep the Premises and the Project free from
liens arising out of or related to work or services performed, materials or
supplies furnished or obligations incurred by or on behalf of Tenant or in
connection with work made, suffered or done by or on behalf of Tenant in or on
the Premises or Project. If Tenant shall not, within ten (10) days following the
imposition of any such lien, cause the same to be released of record by payment
or posting of a proper bond, Landlord shall have, in addition to all other
remedies provided herein and by law, the right, but not the obligation, to cause
the same to be released by such means as Landlord shall deem proper, including
payment of the claim giving rise to such lien. All sums paid by Landlord on
behalf of Tenant and all expenses incurred by Landlord in connection therefor
shall be payable to Landlord by Tenant on demand with interest at the Applicable
Interest Rate as Additional Rent. Landlord shall have the right at all times to
post and keep posted on the Premises any notices permitted or required by law,
or which Landlord shall deem proper, for the protection of Landlord, the
Premises, the Project and any other party having an interest therein, from
mechanics' and materialmen's liens, and Tenant shall give Landlord not less than
ten (10) business days prior written notice of the commencement of any work in
the Premises or Project which could lawfully give rise to a claim for mechanics'
or materialmen's liens to permit Landlord to post and record a timely notice of
non-responsibility, as Landlord may elect to proceed or as the law may from time
to time provide, for which purpose, if Landlord shall so determine, Landlord may
enter the Premises. Tenant shall not remove any such notice posted by Landlord
without Landlord's consent, and in any event not before completion of the work
which could lawfully give rise to a claim for mechanics' or materialmen's liens.
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<PAGE> 29
29. TRANSFERS BY LANDLORD
In the event of a sale or conveyance by Landlord of the Building or a
foreclosure by any creditor of Landlord, the same shall operate to release
Landlord from any liability upon any of the covenants or conditions, express or
implied, herein contained in favor of Tenant, to the extent required to be
performed after the passing of title to Landlord's successor-in-interest. In
such event, Tenant agrees to look solely to the responsibility of the
successor-in-interest of Landlord under this Lease with respect to the
performance of the covenants and duties of "Landlord" to be performed after the
passing of title to Landlord's successor-in-interest. This Lease shall not be
affected by any such sale and Tenant agrees to attorn to the purchaser or
assignee. Landlord's successor(s)-in-interest shall not have liability to Tenant
with respect to the failure to perform any of the obligations of "Landlord," to
the extent required to be performed prior to the date such successor(s)-in-
interest became the owner of the Building.
30. RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS
All covenants and agreements to be performed by Tenant under any of the
terms of this Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of Rent. If Tenant shall fail to pay any sum
of money, other than Base Rent, required to be paid by Tenant hereunder or shall
fail to perform any other act on Tenant's part to be performed hereunder,
including Tenant's obligations under Paragraph 11 hereof, and such failure shall
continue for fifteen (15) days after notice thereof by Landlord, in addition to
the other rights and remedies of Landlord, Landlord may make any such payment
and perform any such act on Tenant's part. In the case of an emergency, no prior
notification by Landlord shall be required. Landlord may take such actions
without any obligation and without releasing Tenant from any of Tenant's
obligations. All sums so paid by Landlord and all incidental costs incurred by
Landlord and interest thereon at the Applicable Interest Rate, from the date of
payment by Landlord, shall be paid to Landlord on demand as Additional Rent.
31. WAIVER
If either Landlord or Tenant waives the performance of any term,
covenant or condition contained in this Lease, such waiver shall not be deemed
to be a waiver of any subsequent breach of the same or any other term, covenant
or condition contained herein, or constitute a course of dealing contrary to the
expressed terms of this Lease. The acceptance of Rent by Landlord shall not
constitute a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease, regardless of Landlord's knowledge of such preceding
breach at the time Landlord accepted such Rent. Failure by Landlord to enforce
any of the terms, covenants or conditions of this Lease for any length of time
shall not be deemed to waive or decrease the right of Landlord to insist
thereafter upon strict performance by Tenant. Waiver by Landlord of any term,
covenant or condition contained in this Lease may only be made by a written
document signed by Landlord, based upon full knowledge of the circumstances.
32. NOTICES
Each provision of this Lease or of any applicable governmental laws,
ordinances, regulations and other requirements with reference to sending,
mailing, or delivery of any notice or the making of any payment by Landlord or
Tenant to the other shall be deemed to be complied with when and if the
following steps are taken:
A. RENT. All Rent and other payments required to be made by Tenant to Landlord
hereunder shall be payable to Landlord at Landlord's Remittance Address set
forth in the Basic Lease Information, or at such other address as Landlord may
specify from time to time by written notice delivered in accordance herewith.
Tenant's obligation to pay Rent and any other amounts to Landlord under the
terms of this Lease shall not be deemed satisfied until such Rent and other
amounts have been actually received by Landlord.
B. OTHER. All notices, demands, consents and approvals which may or are required
to be given by either party to the other hereunder shall be in writing and
either personally delivered, sent by commercial overnight courier, mailed,
certified or registered, postage prepaid or sent by facsimile with confirmed
receipt (and with an original sent by commercial overnight courier), and in each
case addressed to the party to be notified at the Notice Address for such party
as specified in the Basic Lease Information or to such other place as the party
to be notified may from time to time designate by at least fifteen (15) days
notice to the notifying party. Notices shall be deemed served upon receipt or
refusal to accept delivery. Tenant appoints as its agent to receive the service
of all default notices and notice of commencement of unlawful detainer
proceedings the person in charge of occupying the Premises at the time, and, if
there is no such person, then such
<PAGE> 30
service may be made by attaching the same on the main entrance of the Premises.
C. REQUIRED NOTICES. Tenant shall immediately notify Landlord in writing of any
notice of a violation or a potential or alleged violation of any Regulation that
relates to the Premises or the Project, or of any inquiry, investigation,
enforcement or other action that is instituted or threatened by any governmental
or regulatory agency against Tenant or any other occupant of the Premises, or
any claim that is instituted or threatened by any third party that relates to
the Premises or the Project.
33. ATTORNEYS' FEES
If Landlord places the enforcement of this Lease, or any part thereof,
or the collection of any Rent due, or to become due hereunder, or recovery of
possession of the Premises in the hands of an attorney, Tenant shall pay to
Landlord, upon demand, Landlord's reasonable attorneys' fees and court costs,
whether incurred without trial, at trial, appeal or review. In any action which
Landlord or Tenant brings to enforce its respective rights hereunder, the
unsuccessful party shall pay all costs incurred by the prevailing party
including reasonable attorneys' fees, to be fixed by the court, and said costs
and attorneys' fees shall be a part of the judgment in said action.
34. SUCCESSORS AND ASSIGNS
This Lease shall be binding upon and inure to the benefit of Landlord,
its successors and assigns, and shall be binding upon and inure to the benefit
of Tenant, its successors, and to the extent assignment is approved by Landlord
as provided hereunder, Tenant's assigns.
35. FORCE MAJEURE
If performance by a party of any portion of this Lease is made
impossible by any prevention, delay, or stoppage caused by strikes, lockouts,
labor disputes, acts of God, inability to obtain services, labor, or materials
or reasonable substitutes for those items, government actions, civil commotions,
fire or other casualty, or other causes beyond the reasonable control of the
party obligated to perform,
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<PAGE> 31
performance by that party for a period equal to the period of that prevention,
delay, or stoppage is excused. Tenant's obligation to pay Rent, however, is not
excused by this Paragraph 35.
36. SURRENDER OF PREMISES
Tenant shall, upon expiration or sooner termination of this Lease,
surrender the Premises to Landlord in the same condition as existed on the date
Tenant originally took possession thereof, including, but not limited to, all
interior walls cleaned, all holes in walls repaired, all carpets shampooed and
cleaned, and all floors cleaned, and reasonably free of any Tenant-introduced
marking or painting, all to the reasonable satisfaction of Landlord. Tenant
shall remove all of its debris from the Project. At or before the time of
surrender, Tenant shall comply with the terms of Paragraph 12.A. hereof with
respect to Alterations to the Premises and all other matters addressed in such
Paragraph. If the Premises are not so surrendered at the expiration or sooner
termination of this Lease, the provisions of Paragraph 25 hereof shall apply.
All keys to the Premises or any part thereof shall be surrendered to Landlord
upon expiration or sooner termination of the Term. Tenant shall give written
notice to Landlord at least thirty (30) days prior to vacating the Premises and
shall meet with Landlord for a joint inspection of the Premises at the time of
vacating, but nothing contained herein shall be construed as an extension of the
Term or as a consent by Landlord to any holding over by Tenant. In the event of
Tenant's failure to give such notice or participate in such joint inspection,
Landlord's inspection at or after Tenant's vacating the Premises shall
conclusively be deemed correct for purposes of determining Tenant's
responsibility for repairs and restoration. Any delay caused by Tenant's failure
to carry out its obligations under this Paragraph 36 beyond the term hereof,
shall constitute unlawful and illegal possession of Premises under Paragraph 25
hereof.
37. PARKING
So long as Tenant is occupying the Premises, Tenant and Tenant's
Parties shall have the right to use up to the number of parking spaces, if any,
specified in the Basic Lease Information on an unreserved, nonexclusive, first
come, first served basis, for passenger-size automobiles, in the parking areas
in the Project designated from time to time by Landlord for use in common by
tenants of the Building.
Tenant may request additional parking spaces from time to time and if
Landlord in its sole discretion agrees to make such additional spaces available
for use by Tenant, such spaces shall be provided on a month-to-month unreserved
and nonexclusive basis (unless otherwise agreed in writing by Landlord), and
subject to such parking charges as Landlord shall determine, and shall otherwise
be subject to such terms and conditions as Landlord may require.
Tenant shall at all times comply and shall cause all Tenant's Parties
and visitors to comply with all Regulations and any rules and regulations
established from time to time by Landlord relating to parking at the Project,
including any keycard, sticker or other identification or entrance system, and
hours of operation, as applicable.
Landlord shall have no liability for any damage to property or other
items located in the parking areas of the Project, nor for any personal injuries
or death arising out of the use of parking areas in the Project by Tenant or any
Tenant's Parties. Without limiting the foregoing, if Landlord arranges for the
parking areas to be operated by an independent contractor not affiliated with
Landlord, Tenant acknowledges that Landlord shall have no liability for claims
arising through acts or omissions of such independent contractor. In all events,
Tenant agrees to look first to its insurance carrier and to require that
Tenant's Parties look first to their respective insurance carriers for payment
of any losses sustained in connection with any use of the parking areas.
Landlord reserves the right to assign specific spaces, and to reserve
spaces for visitors, small cars, disabled persons or for other tenants or
guests, and Tenant shall not park and shall not allow Tenant's Parties to park
in any such assigned or reserved spaces. Tenant may validate visitor parking by
such method as Landlord may approve, at the validation rate from time to time
generally applicable to visitor parking. Landlord also reserves the right to
alter, modify, relocate or close all or any portion of the parking areas in
order to make repairs or perform maintenance service, or to restripe or renovate
the parking areas, or if required by casualty, condemnation, act of God,
Regulations or for any other reason deemed reasonable by Landlord.
Tenant shall pay to Landlord (or Landlord's parking contractor, if so directed
in writing by Landlord), as Additional Rent hereunder, the monthly charges
established from
<PAGE> 32
time to time by Landlord for parking in such parking areas (which shall
initially be the charge specified in the Basic Lease Information, as
applicable). Such parking charges shall be payable in advance with Tenant's
payment of Basic Rent. No deductions from the monthly parking charge shall be
made for days on which the Tenant does not use any of the parking spaces
entitled to be used by Tenant.
38. MISCELLANEOUS
A. GENERAL. The term "Tenant" or any pronoun used in place thereof shall
indicate and include the masculine or feminine, the singular or plural number,
individuals, firms or corporations, and their respective successors, executors,
administrators and permitted assigns, according to the context hereof.
B. TIME. Time is of the essence regarding this Lease and all of its provisions.
C. CHOICE OF LAW. This Lease shall in all respects be governed by the laws of
the State of California.
D. ENTIRE AGREEMENT. This Lease, together with its Exhibits, addenda and
attachments and the Basic Lease Information, contains all the agreements of the
parties hereto and supersedes any previous negotiations. There have been no
representations made by the Landlord or understandings made between the parties
other than those set forth in this Lease and its Exhibits, addenda and
attachments and the Basic Lease Information.
E. MODIFICATION. This Lease may not be modified except by a written instrument
signed by the parties hereto. Tenant accepts the area of the Premises as
specified in the Basic Lease Information as the approximate area of the Premises
for all purposes under this Lease, and acknowledges and agrees that no other
definition of the area (rentable, usable or otherwise) of the Premises shall
apply. Tenant shall in no event be entitled to a recalculation of the square
footage of the Premises, rentable, usable or otherwise, and no recalculation, if
made, irrespective of its purpose, shall reduce Tenant's obligations under this
Lease in any manner, including without limitation the amount of Base Rent
payable by Tenant or Tenant's Proportionate Share of the Building and of the
Project.
F. SEVERABILITY. If, for any reason whatsoever, any of the provisions hereof
shall be unenforceable or ineffective, all of the other provisions shall be and
remain in full force and effect.
G. RECORDATION. Tenant shall not record this Lease or a short form memorandum
hereof.
H. EXAMINATION OF LEASE. Submission of this Lease to Tenant does not constitute
an option or offer to lease and this Lease is not effective otherwise until
execution and delivery by both Landlord and Tenant.
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<PAGE> 33
I. ACCORD AND SATISFACTION. No payment by Tenant of a lesser amount than the
total Rent due nor any endorsement on any check or letter accompanying any check
or payment of Rent shall be deemed an accord and satisfaction of full payment of
Rent, and Landlord may accept such payment without prejudice to Landlord's right
to recover the balance of such Rent or to pursue other remedies. All offers by
or on behalf of Tenant of accord and satisfaction are hereby rejected in
advance.
J. EASEMENTS. Landlord may grant easements on the Project and dedicate for
public use portions of the Project without Tenant's consent; provided that no
such grant or dedication shall materially interfere with Tenant's Permitted Use
of the Premises. Upon Landlord's request, Tenant shall execute, acknowledge and
deliver to Landlord documents, instruments, maps and plats necessary to
effectuate Tenant's covenants hereunder.
K. DRAFTING AND DETERMINATION PRESUMPTION. The parties acknowledge that this
Lease has been agreed to by both the parties, that both Landlord and Tenant have
consulted with attorneys with respect to the terms of this Lease and that no
presumption shall be created against Landlord because Landlord drafted this
Lease. Except as otherwise specifically set forth in this Lease, with respect to
any consent, determination or estimation of Landlord required or allowed in this
Lease or requested of Landlord, Landlord's consent, determination or estimation
shall be given or made solely by Landlord in Landlord's good faith opinion,
whether or not objectively reasonable.
L. EXHIBITS. The Basic Lease Information, and the Exhibits, addenda and
attachments attached hereto are hereby incorporated herein by this reference and
made a part of this Lease as though fully set forth herein.
M. NO LIGHT, AIR OR VIEW EASEMENT. Any diminution or shutting off of light, air
or view by any structure which may be erected on lands adjacent to or in the
vicinity of the Building shall in no way affect this Lease or impose any
liability on Landlord.
N. NO THIRD PARTY BENEFIT. This Lease is a contract between Landlord and Tenant
and nothing herein is intended to create any third party benefit.
O. QUIET ENJOYMENT. Upon payment by Tenant of the Rent, and upon the observance
and performance of all of the other covenants, terms and conditions on Tenant's
part to be observed and performed, Tenant shall peaceably and quietly hold and
enjoy the Premises for the term hereby demised without hindrance or interruption
by Landlord or any other person or persons lawfully or equitably claiming by,
through or under Landlord, subject, nevertheless, to all of the other terms and
conditions of this Lease. Landlord shall not be liable for any hindrance,
interruption, interference or disturbance by other tenants or third persons, nor
shall Tenant be released from any obligations under this Lease because of such
hindrance, interruption, interference or disturbance.
P. COUNTERPARTS. This Lease may be executed in any number of counterparts, each
of which shall be deemed an original.
Q. MULTIPLE PARTIES. If more than one person or entity is named herein as
Tenant, such multiple parties shall have joint and several responsibility to
comply with the terms of this Lease.
R. PRORATIONS. Any Rent or other amounts payable to Landlord by Tenant hereunder
for any fractional month shall be prorated based on a month of 30 days. As used
herein, the terms "fiscal year" shall mean the calendar year or such other
fiscal year as Landlord may deem appropriate.
39. ADDITIONAL PROVISIONS
None
17
<PAGE> 34
40. JURY TRIAL WAIVER
EACH PARTY HERETO (WHICH INCLUDES ANY ASSIGNEE, SUCCESSOR HEIR OR PERSONAL
REPRESENTATIVE OF A PARTY) SHALL NOT SEEK A JURY TRIAL, HEREBY WAIVES TRIAL BY
JURY, AND HEREBY FURTHER WAIVES ANY OBJECTION TO VENUE IN THE COUNTY IN WHICH
THE BUILDING IS LOCATED, AND AGREES AND CONSENTS TO PERSONAL JURISDICTION OF THE
COURTS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IN ANY ACTION OR
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER ON ANY
MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES,
OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY
STATUTE, EMERGENCY OR OTHERWISE, WHETHER ANY OF THE FOREGOING IS BASED ON THIS
LEASE OR ON TORT LAW. EACH PARTY REPRESENTS THAT IT HAS HAD THE OPPORTUNITY TO
CONSULT WITH LEGAL COUNSEL CONCERNING THE EFFECT OF THIS PARAGRAPH 40. THE
PROVISIONS OF THIS PARAGRAPH 40 SHALL SURVIVE THE EXPIRATION OR EARLIER
TERMINATION OF THIS LEASE.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and the year first above written.
LANDLORD
Spieker Properties, L.P.,
a California limited partnership
By: Spieker Properties, Inc.,
a Maryland corporation,
its general partner
By: /s/ Nancy Gille
Nancy Gille
Its: Vice President
Date: 11/24/98
TENANT
Poet Software Corporation
a MASSACHUSETTS corporation
By: /s/ Jerry Wong
Jerry Wong
Its: Vice President of Finance
Date:
-----------------------------
18
<PAGE> 35
EXHIBIT A
RULES AND REGULATIONS
1. Driveways, sidewalks, halls, passages, exits, entrances, elevators,
escalators and stairways shall not be obstructed by tenants or used by
tenants for any purpose other than for ingress to and egress from their
respective premises. The driveways, sidewalks, halls, passages, exits,
entrances, elevators and stairways are not for the use of the general
public and Landlord shall in all cases retain the right to control and
prevent access thereto by all persons whose presence, in the judgment of
Landlord, shall be prejudicial to the safety, character, reputation and
interests of the Building, the Project and its tenants, provided that
nothing herein contained shall be construed to prevent such access to
persons with whom any tenant normally deals in the ordinary course of such
tenant's business unless such persons are engaged in illegal activities. No
tenant, and no employees or invitees of any tenant, shall go upon the roof
of any Building, except as authorized by Landlord. No tenant, and no
employees or invitees of any tenant shall move any common area furniture
without Landlord's consent.
2. No sign, placard, banner, picture, name, advertisement or notice, visible
from the exterior of the Premises or the Building or the common areas of
the Building shall be inscribed, painted, affixed, installed or otherwise
displayed by Tenant either on its Premises or any part of the Building or
Project without the prior written consent of Landlord in Landlord's sole
and absolute discretion. Landlord shall have the right to remove any such
sign, placard, banner, picture, name, advertisement, or notice without
notice to and at the expense of Tenant, which were installed or displayed
in violation of this rule. If Landlord shall have given such consent to
Tenant at any time, whether before or after the execution of Tenant's
Lease, such consent shall in no way operate as a waiver or release of any
of the provisions hereof or of the Lease, and shall be deemed to relate
only to the particular sign, placard, banner, picture, name, advertisement
or notice so consented to by Landlord and shall not be construed as
dispensing with the necessity of obtaining the specific written consent of
Landlord with respect to any other such sign, placard, banner, picture,
name, advertisement or notice.
All approved signs or lettering on doors and walls shall be printed,
painted, affixed or inscribed at the expense of Tenant by a person or
vendor approved by Landlord and shall be removed by Tenant at the time of
vacancy at Tenant's expense.
3. The directory of the Building or Project will be provided exclusively for
the display of the name and location of tenants only and Landlord reserves
the right to charge for the use thereof and to exclude any other names
therefrom.
4. No curtains, draperies, blinds, shutters, shades, screens or other
coverings, awnings, hangings or decorations shall be attached to, hung or
placed in, or used in connection with, any window or door on the Premises
without the prior written consent of Landlord. In any event with the prior
written consent of Landlord, all such items shall be installed inboard of
Landlord's standard window covering and shall in no way be visible from the
exterior of the Building. All electrical ceiling fixtures hung in offices
or spaces along the perimeter of the Building must be fluorescent or of a
quality, type, design, and bulb color approved by Landlord. No articles
shall be placed or kept on the window sills so as to be visible from the
exterior of the Building. No articles shall be placed against glass
partitions or doors which Landlord considers unsightly from outside
Tenant's Premises.
5. Landlord reserves the right to exclude from the Building and the Project,
between the hours of 6 p.m. and 8 a.m. and at all hours on Saturdays,
Sundays and legal holidays, all persons who are not tenants or their
accompanied guests in the Building. Each tenant shall be responsible for
all persons for whom it allows to enter the Building or the Project and
shall be liable to Landlord for all acts of such persons.
Landlord and its agents shall not be liable for damages for any error
concerning the admission to, or exclusion from, the Building or the Project
of any person.
During the continuance of any invasion, mob, riot, public excitement or
other circumstance rendering such action advisable in Landlord's opinion,
Landlord reserves the right (but shall not be obligated) to prevent access
to the Building and the Project during the continuance of that event by any
means it considers appropriate for the safety of tenants and protection of
the Building, property in the Building and the Project.
6. All cleaning and janitorial services for the Building and the Premises
shall be
<PAGE> 36
provided exclusively through Landlord. Except with the written consent of
Landlord, no person or persons other than those approved by Landlord shall
be permitted to enter the Building for the purpose of cleaning the same.
Tenant shall not cause any unnecessary labor by reason of Tenant's
carelessness or indifference in the preservation of good order and
cleanliness of its Premises. Landlord shall in no way be responsible to
Tenant for any loss of property on the Premises, however occurring, or for
any damage done to Tenant's property by the janitor or any other employee
or any other person.
7. Tenant shall see that all doors of its Premises are closed and securely
locked and must observe strict care and caution that all water faucets or
water apparatus, coffee pots or other heat-generating devices are entirely
shut off before Tenant or its employees leave the Premises, and that all
utilities shall likewise be carefully shut off, so as to prevent waste or
damage. Tenant shall be responsible for any damage or injuries sustained by
other tenants or occupants of the Building or Project or by Landlord for
noncompliance with this rule. On multiple-tenancy floors, all tenants shall
keep the door or doors to the Building corridors closed at all times except
for ingress and egress.
8. Tenant shall not use any method of heating or air-conditioning other than
that supplied by Landlord. As more specifically provided in Tenant's lease
of the Premises, Tenant shall not waste electricity, water or
air-conditioning and agrees to cooperate fully with Landlord to assure the
most effective operation of the Building's heating and air-conditioning,
and shall refrain from attempting to adjust any controls other than room
thermostats installed for Tenant's use.
9. Landlord will furnish Tenant free of charge with two keys to each door in
the Premises. Landlord may make a reasonable charge for any additional
keys, and Tenant shall not make or have made additional keys. Tenant shall
not alter any lock or access device or install a new or additional lock or
access device or bolt on any door of its Premises, without the prior
written consent of Landlord. If Landlord shall give its consent, Tenant
shall in each case furnish Landlord with a key for any such lock. Tenant,
upon the termination of its tenancy, shall deliver to Landlord the keys for
all doors which have been furnished to Tenant, and in the event of loss of
any keys so furnished, shall pay Landlord therefor.
Exhibit A - Page 1
<PAGE> 37
10. The restrooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown into them. The
expense of any breakage, stoppage, or damage resulting from violation of
this rule shall be borne by the tenant who, or whose employees or invitees,
shall have caused the breakage, stoppage, or damage.
11. Tenant shall not use or keep in or on the Premises, the Building or the
Project any kerosene, gasoline, or inflammable or combustible fluid or
material.
12. Tenant shall not use, keep or permit to be used or kept in its Premises any
foul or noxious gas or substance. Tenant shall not allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or
other occupants of the Building by reason of noise, odors and/or vibrations
or interfere in any way with other tenants or those having business
therein, nor shall any animals or birds be brought or kept in or about the
Premises, the Building, or the Project.
13. No cooking shall be done or permitted by any tenant on the Premises, except
that use by the tenant of Underwriters' Laboratory (UL) approved equipment,
refrigerators and microwave ovens may be used in the Premises for the
preparation of coffee, tea, hot chocolate and similar beverages, storing
and heating food for tenants and their employees shall be permitted. All
uses must be in accordance with all applicable federal, state and city
laws, codes, ordinances, rules and regulations and the Lease.
14. Except with the prior written consent of Landlord, Tenant shall not sell,
or permit the sale, at retail, of newspapers, magazines, periodicals,
theater tickets or any other goods or merchandise in or on the Premises,
nor shall Tenant carry on, or permit or allow any employee or other person
to carry on, the business of stenography, typewriting or any similar
business in or from the Premises for the service or accommodation of
occupants of any other portion of the Building, nor shall the Premises be
used for the storage of merchandise or for manufacturing of any kind, or
the business of a public barber shop, beauty parlor, nor shall the Premises
be used for any illegal, improper, immoral or objectionable purpose, or any
business or activity other than that specifically provided for in such
Tenant's Lease. Tenant shall not accept hairstyling, barbering, shoeshine,
nail, massage or similar services in the Premises or common areas except as
authorized by Landlord.
15. If Tenant requires telegraphic, telephonic, telecommunications, data
processing, burglar alarm or similar services, it shall first obtain, and
comply with, Landlord's instructions in their installation. The cost of
purchasing, installation and maintenance of such services shall be borne
solely by Tenant.
16. Landlord will direct electricians as to where and how telephone, telegraph
and electrical wires are to be introduced or installed. No boring or
cutting for wires will be allowed without the prior written consent of
Landlord. The location of burglar alarms, telephones, call boxes and other
office equipment affixed to the Premises shall be subject to the prior
written approval of Landlord.
17. Tenant shall not install any radio or television antenna, satellite dish,
loudspeaker or any other device on the exterior walls or the roof of the
Building, without Landlord's consent. Tenant shall not interfere with radio
or television broadcasting or reception from or in the Building, the
Project or elsewhere.
18. Tenant shall not mark, or drive nails, screws or drill into the partitions,
woodwork or drywall or in any way deface the Premises or any part thereof
without Landlord's consent. Tenant may install nails and screws in areas of
the Premises that have been identified for those purposes to Landlord by
Tenant at the time those walls or partitions were installed in the
Premises. Tenant shall not lay linoleum, tile, carpet or any other floor
covering so that the same shall be affixed to the floor of its Premises in
any manner except as approved in writing by Landlord. The expense of
repairing any damage resulting from a violation of this rule or the removal
of any floor covering shall be borne by the tenant by whom, or by whose
contractors, employees or invitees, the damage shall have been caused.
19. No furniture, freight, equipment, materials, supplies, packages,
merchandise or other property will be received in the Building or carried
up or down the elevators except between such hours and in such elevators as
shall be designated by Landlord.
Tenant shall not place a load upon any floor of its Premises which exceeds
the load per square foot which such floor was designed to carry or which is
allowed by law. Landlord shall have the right to prescribe the weight, size
and position of all
<PAGE> 38
safes, furniture or other heavy equipment brought into the Building. Safes
or other heavy objects shall, if considered necessary by Landlord, stand on
wood strips of such thickness as determined by Landlord to be necessary to
properly distribute the weight thereof. Landlord will not be responsible
for loss of or damage to any such safe, equipment or property from any
cause, and all damage done to the Building by moving or maintaining any
such safe, equipment or other property shall be repaired at the expense of
Tenant.
Business machines and mechanical equipment belonging to Tenant which cause
noise or vibration that may be transmitted to the structure of the Building
or to any space therein to such a degree as to be objectionable to Landlord
or to any tenants in the Building shall be placed and maintained by Tenant,
at Tenant's expense, on vibration eliminators or other devices sufficient
to eliminate noise or vibration. The persons employed to move such
equipment in or out of the Building must be acceptable to Landlord.
20. Tenant shall not install, maintain or operate upon its Premises any vending
machine without the written consent of Landlord.
21. There shall not be used in any space, or in the public areas of the Project
either by Tenant or others, any hand trucks except those equipped with
rubber tires and side guards or such other material handling equipment as
Landlord may approve. Tenants using hand trucks shall be required to use
the freight elevator, or such elevator as Landlord shall designate. No
other vehicles of any kind shall be brought by Tenant into or kept in or
about its Premises.
22. Each tenant shall store all its trash and garbage within the interior of
the Premises. Tenant shall not place in the trash boxes or receptacles any
personal trash or any material that may not or cannot be disposed of in the
ordinary and customary manner of removing and disposing of trash and
garbage in the city, without violation of any law or ordinance governing
such disposal. All trash, garbage and refuse disposal shall be made only
through entry-ways and elevators provided for such purposes and at such
times as Landlord shall designate. If the Building has implemented a
building-wide recycling program for tenants, Tenant shall use good faith
efforts to participate in said program.
Exhibit A - Page 2
<PAGE> 39
23. Canvassing, soliciting, distribution of handbills or any other written
material and peddling in the Building and the Project are prohibited and
each tenant shall cooperate to prevent the same. No tenant shall make
room-to-room solicitation of business from other tenants in the Building or
the Project, without the written consent of Landlord.
24. Landlord shall have the right, exercisable without notice and without
liability to any tenant, to change the name and address of the Building and
the Project.
25. Landlord reserves the right to exclude or expel from the Project any person
who, in Landlord's judgment, is under the influence of alcohol or drugs or
who commits any act in violation of any of these Rules and Regulations.
26. Without the prior written consent of Landlord, Tenant shall not use the
name of the Building or the Project or any photograph or other likeness of
the Building or the Project in connection with, or in promoting or
advertising, Tenant's business except that Tenant may include the
Building's or Project's name in Tenant's address.
27. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
28. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
29. The requirements of Tenant will be attended to only upon appropriate
application at the office of the Building by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside of
their regular duties unless under special instructions from Landlord, and
no employees of Landlord will admit any person (tenant or otherwise) to any
office without specific instructions from Landlord.
30. Landlord reserves the right to designate the use of the parking spaces on
the Project. Tenant or Tenant's guests shall park between designated
parking lines only, and shall not occupy two parking spaces with one car.
Parking spaces shall be for passenger vehicles only; no boats, trucks,
trailers, recreational vehicles or other types of vehicles may be parked in
the parking areas (except that trucks may be loaded and unloaded in
designated loading areas). Vehicles in violation of the above shall be
subject to tow-away, at vehicle owner's expense. Vehicles parked on the
Project overnight without prior written consent of the Landlord shall be
deemed abandoned and shall be subject to tow-away at vehicle owner's
expense. No tenant of the Building shall park in visitor or reserved
parking areas. Any tenant found parking in such designated visitor or
reserved parking areas or unauthorized areas shall be subject to tow-away
at vehicle owner's expense. The parking areas shall not be used to provide
car wash, oil changes, detailing, automotive repair or other services
unless otherwise approved or furnished by Landlord. Tenant will from time
to time, upon the request of Landlord, supply Landlord with a list of
license plate numbers of vehicles owned or operated by its employees or
agents.
31. No smoking of any kind shall be permitted anywhere within the Building,
including, without limitation, the Premises and those areas immediately
adjacent to the entrances and exists to the Building, or any other area as
Landlord elects. Smoking in the Project is only permitted in smoking areas
identified by Landlord, which may be relocated from time to time.
32. If the Building furnishes common area conferences rooms for tenant usage,
Landlord shall have the right to control each tenant's usage of the
conference rooms, including limiting tenant usage so that the rooms are
equally available to all tenants in the Building. Any common area amenities
or facilities shall be provided from time to time at Landlord's discretion.
33. Tenant shall not swap or exchange building keys or cardkeys with other
employees or tenants in the Building or the Project.
34. Tenant shall be responsible for the observance of all of the foregoing
Rules and Regulations by Tenant's employees, agents, clients, customers,
invitees and guests.
35. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify, alter or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of any premises in the
Project.
<PAGE> 40
36. Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by Landlord
shall be construed as a waiver of such Rules and Regulations in favor of
any other tenant or tenants, nor prevent Landlord from thereafter enforcing
any such Rules and Regulations against any or all tenants of the Building.
37. Landlord reserves the right to make such other and reasonable rules and
regulations as in its judgment may from time to time be needed for safety
and security, for care and cleanliness of the Building and the Project and
for the preservation of good order therein. Tenant agrees to abide by all
such Rules and Regulations herein stated and any additional rules and
regulations which are adopted.
Exhibit A - Page 3
<PAGE> 41
EXHIBIT B
[FLOOR PLAN]
<PAGE> 42
EXHIBIT C
TENANT IMPROVEMENTS
-------------------
1. In consideration of the mutual covenants contained in the Lease of
which this Exhibit C is a part, Landlord agrees to perform the following initial
tenant improvement work in the Premises ("Tenant Improvements")
*Shampoo carpets throughout Suites
*Touch-up paint as necessary throughout Suites
*Repair damaged carpet at Suite 100 entrance
2. All the Tenant Improvements described above shall be performed by
Landlord at its cost and expense using Building Standard materials and in the
Building Standard manner. As used herein, "Building Standard" shall mean the
standards for a particular item selected from time to time by Landlord for the
Building or such other standards as may be mutually agreed upon between Landlord
and Tenant in writing.
3. Without limiting the "as-is" provisions of the Lease, Tenant accepts
the Premises in its "as-is" condition and acknowledges that Landlord has no
obligation to make any changes or improvements to the Premises or to pay any
costs expended or to be expended in connection with any such changes or
improvements, other than the Tenant Improvements specified in Paragraph 1 of
this EXHIBIT C.
4. Tenant shall not perform any work in the Premises (including,
without limitation, cabling, wiring, fixturization, painting, carpeting,
replacements or repairs) except in accordance with Paragraphs 12 and 27 of the
Lease.
<PAGE> 1
EXHIBIT 22.1
SUBSIDIARIES OF REGISTRANT
Name Jurisdiction of Incorporation
- ---- -----------------------------
POET Software GmbH Germany
POET Software Corporation Massachusetts
