<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 1999
REGISTRATION NO. 333-76987
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
COMMERCE ONE, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 7372 68-0322810
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
----------------
1600 RIVIERA AVENUE
WALNUT CREEK, CALIFORNIA 94596
(925) 941-6000
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
----------------
MARK B. HOFFMAN
CHIEF EXECUTIVE OFFICER
1600 RIVIERA AVENUE
WALNUT CREEK, CALIFORNIA 94596
(925) 941-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
COPIES TO:
DAVID J. SEGRE STEVEN M. SPURLOCK
N. ANTHONY JEFFRIES ANTHONY J. MCCUSKER
LINDA M. CUNY JOHN F. DIETZ
ELIZABETH C. HEWITT Gunderson Dettmer Stough
Wilson Sonsini Goodrich & Rosati Villeneuve Franklin & Hachigian, LLP
Professional Corporation 155 Constitution Drive
650 Page Mill Road Menlo Park, California 94025
Palo Alto, California 94304 (650) 321-2400
(650) 493-9300
----------------
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, 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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a),
MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
The purpose of this Amendment No. 4 is solely to file certain exhibits to
the Registration Statement as set forth below as in Item 16(a) of Part II.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<C> <S>
1.1* Form of Underwriting Agreement.
2.1** Agreement and Plan of Reorganization by and among the
Registrant, Blackhawk Acquisition Corporation, VEO Systems,
Inc., the Shareholders named therein, and U.S. Bank Trust,
N.A., dated November 25, 1998.
3.1** Restated Certificate of Incorporation of the Registrant to be
in effect after the closing of the offering made under this
Registration Statement.
3.2** Bylaws of the Registrant to be in effect after the closing of
the offering made under this Registration Statement.
4.1** Specimen Common Stock Certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1** Form of Indemnification Agreement between the Registrant and
each of its directors and officers.
10.2** Form of 1997 Incentive Stock Option Plan and form of
agreements thereunder.
10.3** Form of 1999 Employee Stock Purchase Plan and form of
agreements thereunder.
10.4** Amended and Restated 1995 Stock Option Plan and form of
agreement thereunder.
10.5** Form of 1999 Director Option Plan and form of agreements
thereunder.
10.6** VEO Systems, Inc. Option Plan and form of agreement
thereunder.
10.7+** Master Software License and Services Agreement between the
Registrant and Nippon Telegraph and Telephone Corporation
dated April 16, 1999.
10.8+** Governance Agreement between the Registrant and British
Telecommunications, plc., dated March 26, 1999.
10.9+** Marketing Agreement between the Registrant and British
Telecommunications, plc., dated March 26, 1999.
10.10+** MarketSite License Agreement between the Registrant and
British Telecommunications, plc., dated March 25, 1999.
10.11+** Amended and Restated Trading Agreement between the Registrant
and British Telecommunications, plc., dated March 25, 1999.
10.12+** Marketing Agreement between the Registrant and MCI Systemhouse
Corporation dated August 4, 1998.
10.13+** Agreement between the Registrant and PricewaterhouseCoopers
LLP dated September 2, 1998.
10.14+ OEM Software License and Distribution Agreement between the
Registrant and PeopleSoft, Inc., dated June 5, 1999.
10.15+ Joint Development Agreement between the Registrant and
PeopleSoft, Inc., dated June 5, 1999.
10.16 Stock Purchase and Master Strategic Relationship Agreement
between the Registrant and PeopleSoft, Inc., dated June 5,
1999.
10.17 Stock Purchase and Master Strategic Relationship Agreement
between the Registrant and SingTel Ventures (Cayman) Pte.
Limited, dated June 1999.
10.18 Stock Purchase and Master Strategic Relationship Agreement
between the Registrant and Nippon Telegraph and Telephone
Company, dated June 1999.
23.1** Consent of Ernst & Young LLP, Independent Auditors.
23.2** Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<C> <S>
23.3* Consent of Wilson Sonsini Goodrich & Rosati (see Exhibit 5.1).
24.1** Power of Attorney (see page II-6).
27.1** Financial Data Schedule.
</TABLE>
- --------------
+ Certain portions of this exhibit have been granted confidential treatment by
the Commission. The omitted portions have been separately filed with the
Commission.
* To be filed by amendment.
** Previously filed.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 3 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Walnut Creek, State of California, on the 14th day of June, 1999.
<TABLE>
<S> <C> <C>
COMMERCE ONE, INC.
By: /s/ MARK B. HOFFMAN
-----------------------------------------
MARK B. HOFFMAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 3 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
President, Chief Executive
/s/ MARK B. HOFFMAN Officer and Chairman of
- ------------------------------ the Board (Principal June 14, 1999
MARK B. HOFFMAN Executive Officer)
Vice President and Chief
* Financial Officer
- ------------------------------ (Principal Financial June 14, 1999
PETER F. PERVERE Officer)
*
- ------------------------------ Director June 14, 1999
ASIM ABDULLAH
*
- ------------------------------ Director June 14, 1999
JOHN V. BALEN
*
- ------------------------------ Director June 14, 1999
WILLIAM B. ELMORE
*
- ------------------------------ Director June 14, 1999
KENNETH C. GARDNER
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
- ------------------------------ Director
THOMAS GONZALES
*
- ------------------------------ Director June 14, 1999
WILLIAM J. HARDING
- ------------------------------ Director
JOHN SWINGEWOOD
*
- ------------------------------ Director June 14, 1999
JAY M. TENENBAUM
*
- ------------------------------ Director June 14, 1999
JEFFREY T. WEBBER
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ MARK B. HOFFMAN
-------------------------
MARK B. HOFFMAN
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<C> <S>
1.1* Form of Underwriting Agreement.
2.1** Agreement and Plan of Reorganization by and among the
Registrant, Blackhawk Acquisition Corporation, VEO Systems,
Inc., the Shareholders named therein, and U.S. Bank Trust,
N.A., dated November 25, 1998.
3.1** Restated Certificate of Incorporation of the Registrant to be
in effect after the closing of the offering made under this
Registration Statement.
3.2** Bylaws of the Registrant to be in effect after the closing of
the offering made under this Registration Statement.
4.1** Specimen Common Stock Certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1** Form of Indemnification Agreement between the Registrant and
each of its directors and officers.
10.2** Form of 1997 Incentive Stock Option Plan and form of
agreements thereunder.
10.3** Form of 1999 Employee Stock Purchase Plan and form of
agreements thereunder.
10.4** Amended and Restated 1995 Stock Option Plan and form of
agreement thereunder.
10.5** Form of 1999 Director Option Plan and form of agreements
thereunder.
10.6** VEO Systems, Inc. Option Plan and form of agreement
thereunder.
10.7+** Master Software License and Services Agreement between the
Registrant and Nippon Telegraph and Telephone Corporation
dated April 16, 1999.
10.8+** Governance Agreement between the Registrant and British
Telecommunications, plc., dated March 26, 1999.
10.9+** Marketing Agreement between the Registrant and British
Telecommunications, plc., dated March 26, 1999.
10.10+** MarketSite License Agreement between the Registrant and
British Telecommunications, plc., dated March 25, 1999.
10.11+** Amended and Restated Trading Agreement between the Registrant
and British Telecommunications, plc., dated March 25, 1999.
10.12+** Marketing Agreement between the Registrant and MCI Systemhouse
Corporation dated August 4, 1998.
10.13+** Agreement between the Registrant and PricewaterhouseCoopers
LLP dated September 2, 1998.
10.14+ OEM Software License and Distribution Agreement between the
Registrant and PeopleSoft, Inc., dated June 5, 1999.
10.15+ Joint Development Agreement between the Registrant and
PeopleSoft, Inc., dated June 5, 1999.
10.16 Stock Purchase and Master Strategic Relationship Agreement
between the Registrant and PeopleSoft, Inc., dated June 5,
1999.
10.17 Stock Purchase and Master Strategic Relationship Agreement
between the Registrant and SingTel Ventures (Cayman) Pte.
Limited, dated June 1999.
10.18 Stock Purchase and Master Strategic Relationship Agreement
between the Registrant and Nippon Telegraph and Telephone
Company, dated June 1999.
23.1** Consent of Ernst & Young LLP, Independent Auditors.
23.2** Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
23.3* Consent of Wilson Sonsini Goodrich & Rosati (see Exhibit 5.1).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<C> <S>
24.1** Power of Attorney (see page II-6).
27.1** Financial Data Schedule.
</TABLE>
- --------------
+ Certain portions of this exhibit have been granted confidential treatment by
the Commission. The omitted portions have been separately filed with the
Commission.
* To be filed by amendment.
** Previously filed.
<PAGE>
CONFIDENTIAL
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
OEM SOFTWARE LICENSE AND DISTRIBUTION AGREEMENT
This OEM Software License and Distribution Agreement ("Agreement") is
entered into on this 5th day of June, 1999 ("Effective Date") by and between
Commerce One, a California corporation ("Commerce One"), with principal offices
at 1600 Riviera Ave, Walnut Creek, California, 94596 and PeopleSoft, Inc., a
Delaware corporation ("PeopleSoft"), with principal offices at 4460 Hacienda
Drive, Pleasanton, California 94588-8615.
BACKGROUND
A. PeopleSoft markets and distributes certain software products; and
B. Commerce One wishes to grant to PeopleSoft rights to distribute certain
of Commerce One's products, both as standalone products and as integrated within
certain of PeopleSoft's products, and PeopleSoft desires to obtain such rights,
all as more particularly described below, in accordance with the terms and
conditions of this Agreement; and
C. Each of Commerce One and PeopleSoft agree to grant certain exclusivity
in consideration for the rights and obligations set forth herein; and
D. The parties are concurrently entering into a Joint Development Agreement
under which Commerce One and PeopleSoft have agreed to perform certain
development activities as further set forth therein.
In consideration of the mutual covenants contained herein, the parties
agree to the following terms and conditions, which set forth the rights, duties,
and obligations of the parties.
ARTICLE 1.
CONSTRUCTION
All references in this Agreement to "ARTICLES," "ARTICLE," "ATTACHMENTS,"
"SECTION" and "SECTIONS" refer to the articles, sections and exhibits of this
Agreement. As used in this Agreement, neutral pronouns and any variations
thereof shall be deemed to include the feminine and masculine and all terms used
in the singular shall be deemed to include the plural, and vice versa, as the
context may require. The words "HEREOF," "HEREIN" and "HEREUNDER" and other
words of similar import refer to this Agreement as a whole, as the same may from
time to time be amended or supplemented, and not to any subdivision contained in
this Agreement. The word "INCLUDING" when used herein is not intended to be
exclusive and means "INCLUDING, WITHOUT LIMITATION." The words "SELL" or "SOLD"
when used herein is not intended as a sale of goods pursuant to the terms of the
U.N. Convention on Contracts for the International Sale of Goods and when used
with respect to software shall be considered a license and no transfer of title
to software shall be implied thereby.
<PAGE>
ARTICLE 2.
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
Section 2.1. "ATTACHMENT(S)" means the attachments to this Agreement which are
attached hereto and incorporated herein.
Section 2.2. "BUY SITE PRODUCT(S)" means the computer software products listed
or described in Attachment A, Major and Minor Updates thereof, and Connectors.
BuySite Products shall also include the associated documentation which shall
include the software user manuals, reference manuals and installation guides, or
portions thereof, delivered by Commerce One under this Agreement and which
Commerce One may update from time to time as to the general customer base.
Section 2.3. "CODE" means computer programming code. "Object Code" means the
binary machine-executable form of Code, including object files, libraries,
executable program, scripts, and HTML pages. "Source Code" means the
human-readable form of Code including but not limited to annotations, flow
charts, use cases, ERDs and design guides
Section 2.4. "CONNECTOR" means the interfaces developed pursuant to the Joint
Development Agreement.
Section 2.5. "DERIVATIVE WORK(S)" means a revision, modification, translation,
abridgment, condensation or expansion of a BuySite Product, PeopleSoft Product
or any form in which a BuySite Product or PeopleSoft Product may be recast,
transferred, or adapted, and which, if prepared without the consent of Commerce
One or PeopleSoft, as the case may be, would be a copyright infringement.
Section 2.6. "DISTRIBUTE" or "DISTRIBUTION" means selling, sublicensing,
transmitting, marketing, or otherwise distributing the Products or the
MarketSite Services. For the avoidance of doubt, where applicable, PeopleSoft
shall be enabled to operate a hosted version of the BuySite Product either
directly or indirectly.
Section 2.7. "DISTRIBUTOR" means any entity that acquires or reproduces the
BuySite Products or PeopleSoft Products for Distribution by such entity directly
to End Users and not for such entity's own use.
Section 2.8. "END USER" means any third party licensed to use, but not to
further Distribute, the BuySite Products and/or the PeopleSoft Products.
Section 2.9. "JOINT DEVELOPMENT AGREEMENT" means the Joint Development Agreement
entered into by the parties of even date herewith.
Section 2.10. "MAJOR AND MINOR UPDATES" mean updates, if any, to the BuySite
Products to the general customer base. Major Updates include additions of
substantial functionality while Minor
-2-
<PAGE>
Updates do not. Major Updates are designated by a change in the number to the
left of the decimal point of the number appearing after the product name, while
Minor Updates are designated by a change in such number to the right of the
decimal point. Commerce One is the sole determiner of the availability and
designation of an update as a Major or Minor Update. Major Updates exclude
software releases which are reasonably designated by Commerce One as new
products. Where used herein "Updates" shall mean Major Updates or Minor Updates
interchangeably.
Section 2.11. "MARKETSITE DIRECT SERVICES" means any MRO Portal electronic
commerce service operated by Commerce One.
Section 2.12. "MARKETSITE INDIRECT SERVICES" means a MarketSite electronic
commerce service hosted by a third party licensee of Commerce One's MarketSite
software.
Section 2.13. "MARKETSITE SERVICES" means the MarketSite Direct Services and
MarketSite Indirect Services.
Section 2.14. "MRO PORTAL" means a multisupplier and multiproduct line merchant
portal designed to facilitate trading for operating resources (goods or services
which are used to operate a business, excluding goods or services which are
primarily used to directly contribute to products, services or other revenue
generating activities which a business provides to its customers). Operating
resources shall include, but not be limited to, industrial parts and supplies,
computer equipment and peripherals, goods and services required to maintain
plant, property and equipment, and contract and temporary employment services.
Without limiting the foregoing, such multisupplier and multiproduct line
merchant portal shall not include any and all portals which are not: (1)
multisupplier; (2) multiproduct line; (3) do not offer both (a) goods; and (b)
services for the purposes set forth above; and (4) directed to government
markets.
Section 2.15. "NAMED ACCOUNTS" means the list of named accounts as described on
Attachment G being "Commerce One Named Account," "PeopleSoft Named Accounts" (to
be provided within fourteen (14) days of the Effective Date) and "Telco Named
Accounts."
Section 2.16. "PEOPLESOFT DISTRIBUTION CHANNELS" means the list of Distributors
designated within two (2) weeks of the Effective Date, attached hereto as
Attachment J and as existing as of the Effective Date. Future Distribution
Channels require Commerce One's prior written approval.
Section 2.17. "PEOPLESOFT PRODUCT(S)" or "PEOPLESOFT PSBN PRODUCT" means
PeopleSoft's software product, as described in Attachment F which product may
include any or all of the BuySite Product Source Code.
Section 2.18. "PRODUCTS" means the BuySite Products and the PeopleSoft Products
collectively.
Section 2.19. "PROGRAM ERRORS" means one or more reproducible deviations in the
BuySite Products from the applicable specifications shown in the associated
documentation.
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<PAGE>
Section 2.20. "SPECIFIED COMPANIES" means the list of entities as set out on
Attachment H. "Commerce One Specified Company" means the list of entities as set
forth in Attachment H as Commerce One Specified Companies. "PeopleSoft Specified
Companies" means the list of entities as set forth in Attachment H as PeopleSoft
Specified Companies.
Section 2.21. "TELCO INDUSTRY" means only those entities which carry out
business in the telecommunication industry sub-segments as set forth with SIC
code number 4813 (telecommunications) as they exist on the Effective Date. The
named sub-segments shall be limited to facilities-based telecommunication
carriers (except wireless), local telephone carriers (except wireless),
long-distance telephone carriers (except wireless), telecommunications carriers
(wired), telecommunications networks (wired) and telephone carriers facilities
based (except wireless).
Section 2.22. "UPGRADE" means the right to use BuySite or the PeopleSoft PSBN
Product on a designated computer with increased processing power or an increase
in the number of users to the next pricing increment and generally in each case
a requirement for a payment of applicable Upgrade fees to PeopleSoft.
ARTICLE 3.
GRANT OF LICENSES AND RIGHTS TO PEOPLESOFT
Section 3.1. LICENSES.
(a) BUYSITE PRODUCTS (ENTERPRISE) LICENSE. Subject to the terms and
conditions of this Agreement, Commerce One hereby grants and PeopleSoft hereby
accepts, a non-exclusive (except as set forth herein), nontransferable,
worldwide right and license to (i) reproduce, without change, the BuySite
Product (in Object Code only) including all Major and Minor Updates (except as
set forth herein) and (ii) Distribute directly or by sublicense, through the
PeopleSoft Distribution Channels to End Users for use in either direct or
indirect procurement of goods and services.
(b) BUYSITE PRODUCTS (HOSTED) LICENSE. Subject to the terms and conditions
of this Agreement, Commerce One hereby grants and PeopleSoft hereby accepts, a
non-exclusive (except as set forth herein), nontransferable, worldwide right and
license to (i) reproduce, without change, the hosted BuySite Products (in Object
Code only) and (ii) Distribute directly or by sublicense through the PeopleSoft
Distribution Channels only for use by End Users who will use such hosted BuySite
Products to provide purchasing capabilities for direct or indirect goods and
services.
(c) BUYSITE PRODUCTS (SOURCE CODE) LICENSE. Subject to the terms and
conditions of this Agreement, Commerce One hereby grants and PeopleSoft hereby
accepts, a non-exclusive (except as set forth herein), nontransferable,
worldwide right and license to (i) reproduce, use, modify and create Derivative
Works of the BuySite Products including all Major and Minor Updates (in Object
and Source Code) and (ii) Distribute by sublicense such BuySite Product copies
including all Major and Minor Updates to Distributors and End Users only as part
of and integrated into a PeopleSoft Product. PeopleSoft may grant Distributors
the right to grant further sublicenses to Distribute (but not reproduce) such
copies of the BuySite Products integrated into PeopleSoft Products to other
-4-
<PAGE>
Distributors regardless of tier and PeopleSoft and all Distributors shall have
the right to Distribute such BuySite Products to End Users.
(d) SOURCE CODE FREEZE. Commencing on the effective date of termination of
the Joint Development Agreement, PeopleSoft's right and license to the Source
Code to the BuySite Products under Section 3.1(c) shall be limited to the
commercial release or version of BuySite Products that is commercially available
as of the effective date of termination of the Joint Development Agreement and
Minor Updates thereof and such right and license to the Source Code shall be
limited to use only for support, maintenance and development of the PeopleSoft
Products. As of the effective date of termination of the Joint Development
Agreement, Commerce One shall be relieved of its obligations to deliver any
further Source Code for Major and Minor Updates of the BuySite Products which
may become commercially available after the effective date of termination of the
Joint Development Agreement. For the avoidance of doubt, PeopleSoft shall
continue to have the right and license granted in Section 3.1(c) as modified by
this Section 3.1(d) to the Source Code of the BuySite Products, including all
Major and Minor Updates and Derivative Works thereof made solely by PeopleSoft,
up to and including the release or version of BuySite Products that is
commercially available as of the effective date of termination of the Joint
Development Agreement and any Minor Updates to such release or version of
BuySite Products.
(e) LOCALIZED CODE. Subject to the terms and conditions of this Agreement,
Commerce One hereby grants and PeopleSoft hereby accepts, a non-exclusive
(except as set forth herein), nontransferable worldwide right and license to (i)
reproduce, use, modify and create Derivative Works of any localized version of
BuySite Products (in Object and Source Code) and (ii) Distribute by sublicense
such localized version of BuySite Product copies to Distributors and End Users
only as part of and integrated into a PeopleSoft Product. PeopleSoft may grant
Distributors the right to grant further sublicenses to Distribute such copies of
the localized version of BuySite Products integrated into PeopleSoft Products to
other Distributors regardless of distribution tier, and all Distributors shall
have the right to Distribute such localized version of BuySite Products to End
Users.
(f) COMMERCE ONE RESELLERS. During the term of the Agreement, Commerce One
shall ensure that all reseller agreements entered into between Commerce One and
a third party reseller, on or after the Effective Date shall exclude a grant of
any right or license to Distribute the BuySite Product to the PeopleSoft Named
Accounts consistent with Section 5.1 of this Agreement. Notwithstanding the
foregoing and the provisions of Section 5.1 of this Agreement, any reseller
agreements entered into between Commerce One and a third party reseller (a
"Grandfathered Reseller") prior to the Effective Date shall not be required to
exclude a grant of any right or license to Distribute the BuySite Product to the
PeopleSoft Named Accounts. Notwithstanding Section 5.1 of this Agreement,
Grandfathered Resellers shall have the right to Distribute the BuySite Products
to PeopleSoft Named Accounts; provided, however, that Commerce One shall attempt
to amend any reseller agreement with a Grandfathered Reseller to eliminate such
distribution rights to PeopleSoft Named Accounts if it is both reasonable and
practical to do so. Commerce One shall designate to PeopleSoft all Grandfathered
Resellers within two (2) weeks of the Effective Date as existing as of the
Effective Date.
-5-
<PAGE>
(g) COMMERCE ONE MARKETSITE DIRECT SERVICES (ACCESS) LICENSE. Subject to
the terms and conditions of this Agreement, Commerce One hereby grants and
PeopleSoft and its Distributors hereby accepts, a non-exclusive (except as set
forth herein), nontransferable worldwide right and license to Distribute
subscriptions for access to MarketSite Direct Services during the term, to
Distributors and End Users for use in procurement of either direct or indirect
goods and services. During the period of eighteen (18) months from the Effective
Date, Commerce One agrees that it shall be a condition of any MarketSite
Indirect Service provider agreement that PeopleSoft shall be granted equally
favorable reseller rights as those granted to Commerce One by the MarketSite
Indirect Service provider. Additionally, throughout the term of the Agreement,
Commerce One will negotiate in good faith with any and all subsequent MarketSite
Indirect Service operators to provide PeopleSoft with the ability to resell
access to such MarketSite Indirect Service.
(h) COMMERCE ONE MARKETSITE LICENSE. Upon written request by PeopleSoft,
Commerce One agrees to negotiate in good faith to grant PeopleSoft a license to
Distribute the MarketSite software (in Object Code) provided that the further
terms of such license shall be negotiated in good faith. If the parties do not
enter into a definitive agreement within ninety (90) days after PeopleSoft's
requests, subject to Section 18.13(c), neither party shall have any further
obligations under this Section 3.1(h).
Section 3.2. REPRODUCTION RIGHTS. PeopleSoft shall notify Commerce One, in
writing, of the name and address of all Distributors granted the right to
reproduce the BuySite Product and PeopleSoft shall ensure that all such
Distributors are required to provide PeopleSoft with a report of the number of
copies of BuySite Product made or licensed, which report shall include the
information as set forth in Section 8.4 of this Agreement. Such reproduction
shall occur only at the location of Distributor's principal office unless an
alternate location is otherwise specified in writing to Commerce One. PeopleSoft
shall require such Distributors to authorize PeopleSoft, or Commerce One on
PeopleSoft's behalf, to audit its records which audit rights shall be consistent
with the rights set forth in Section 8.5 of this Agreement. PeopleSoft shall
require such Distributors to provide a warranty to PeopleSoft and its licensors
that the copies made are free from defects and to provide indemnification of
PeopleSoft and its licensors for any breach of such warranty.
Section 3.3. NO RESTRICTIONS. Subject to the terms of Article 5 of this
Agreement, Commerce One reserves all rights not expressly granted in this
Agreement in and to the BuySite Products and the MarketSite Services.
ARTICLE 4.
GRANT OF LICENSES AND RIGHTS TO COMMERCE ONE
Section 4.1. LICENSE.
(a) PEOPLESOFT PSBN PRODUCT LICENSE. Upon written request by Commerce One
within ninety (90) days of commercial availability of the PeopleSoft PSBN
Product, PeopleSoft agrees to negotiate in good faith to grant Commerce One a
license to Distribute the PeopleSoft PSBN Product provided that the further
terms of such license shall be negotiated in good faith between the parties.
-6-
<PAGE>
If the parties do not enter into a definitive agreement within ninety (90) days
after Commerce One's request, subject to Section 18.13(c), neither party shall
have any further obligations under this Section 4.1(a).
(b) NO RESTRICTIONS. Subject to the terms of Article 5 of this Agreement,
PeopleSoft reserves all rights not expressly granted in this Agreement in and to
the PeopleSoft Products.
ARTICLE 5.
EXCLUSIVITY
Section 5.1. PEOPLESOFT EXCLUSIVITY. For a period commencing on the Effective
Date and ending on January 1, 2001, PeopleSoft shall not enter into an agreement
with Commerce One Specified Companies to Distribute or develop products similar
to the BuySite Products, the MarketSite Services and the associated software.
PeopleSoft shall use the MarketSite Services as its exclusive MRO Portals and
PeopleSoft shall not Distribute or develop any other hosted MRO Portals or enter
into any agreement with any third party with respect to any MRO Portal during
the period of this exclusivity. For the term of this Agreement, PeopleSoft shall
not provide a Source Code or Object Code license to the BuySite Products to a
Commerce One Specified Company. If, at any time commencing on the Effective Date
and ending on January 1, 2001 , PeopleSoft is in breach of the exclusivity
provisions of this Section 5.1 or assigns this Agreement through operation of
law, merger or acquisition of all or substantially all of its assets to a
Commerce One Specified Company, without limiting any other rights or remedies of
Commerce One, Commerce One shall be entitled to change the exclusivity set forth
in Sections 5.1 (a) and 5.3 below to non-exclusive by providing PeopleSoft with
written notice thereof. Nothing in this Section 5.1 shall be construed as
terminating this Agreement or the licenses granted herein.
(a) PEOPLESOFT EXCLUSIVE ACCOUNTS. During the term of the Agreement and
subject to Section 5.3(a) and (b) below, PeopleSoft shall have the sole and
exclusive right, (except as to Grandfathered Resellers) to market and Distribute
the Products to the PeopleSoft Named Accounts other than PeopleSoft Named
Accounts within the Telco Industry.
Section 5.2. PEOPLESOFT MINIMUMS. Commencing on the Effective Date, and subject
to the potential extended period under Section 5.6 below, PeopleSoft shall enter
into licenses for the Products either directly or indirectly through
Distributors, with the projected cumulative sales targets set forth on
Attachment I (the "Minimum Targets"). For the purpose of this Section 5.2, any
license entered into by PeopleSoft or Commerce One with a Commerce One Named
Account pursuant to Section 5.3(a) below shall be considered a license by
PeopleSoft for the purpose of calculating the Total Customers as defined in
Attachment B. In the event that the Total Customers are not, at a minimum, equal
to the cumulative Minimum Target for any two consecutive calendar quarters,
Commerce One shall be entitled to demand and receive a change to the grant of
exclusivity set forth in Section 5.1(a) above to non-exclusive by written notice
to PeopleSoft; provided, however, that PeopleSoft shall first have the
opportunity to cure the possible loss of exclusivity as follows:
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If PeopleSoft does not meet the cumulative Minimum Target as of the end of
any two consecutive calendar quarters, PeopleSoft may, by the thirtieth (30th)
day ("Cure Date") of the calendar quarter immediately following the second
consecutive calendar quarter in which the cumulative Minimum Target was missed
(the "Cure Quarter"), pay a prepaid nonrefundable royalty creditable against
future licenses entered into by PeopleSoft in an amount equal to the average
PeopleSoft Net Fees received per End User for licenses entered into (not
including access agreements to MarketSite Services) by PeopleSoft for the twelve
(12) months preceding the beginning of the Cure Quarter, multiplied by "X",
where "X" is the Minimum Target as of the expiration of the second consecutive
calendar quarter, less the actual number of Total Customers licensed or sold
access to MarketSite Services, as applicable, as of the expiration of the second
consecutive calendar quarter ("Cure Cost"). It is understood and agreed that if
at the end of the Cure Quarter, PeopleSoft has entered into sufficient licenses
or access agreements to meet the Minimum Target as of end of the Cure Quarter
and paid the Cure Cost to Commerce One, then PeopleSoft shall be entitled to
retain the right of exclusivity under Section 5.1 above.
By way of numerical example only, if, the Minimum Target for the tenth
(10th), eleventh (11th) and twelfth (12th) quarters are ninety-five (95), one
hundred and five (105) and one hundred and twenty (120) licenses or access
agreements for MarketSite Services, respectively, and the average PeopleSoft Net
Fees received per End User for licenses (but not including access agreements for
MarketSite Services) over the twelve (12) months prior to the beginning of the
Cure Quarter is equal to $500,000 ("X" = $500,000); and, PeopleSoft does not
meet the cumulative Minimum Target in the tenth (10th) quarter and enters into
only one hundred (100) licenses or access agreements to MarketSite Services by
the end of the eleventh (11th) quarter ("Total Customer" as defined in Section
14 of Attachment B herein), PeopleSoft will have missed the cumulative Minimum
Target for two (2) consecutive calendar quarters. The Cure Cost shall be equal
to the product obtained by multiplying $500,000 by five (5) (where five shall
have been calculated by subtracting the Total Customers at the end of the
eleventh quarter (100) from the cumulative Minimum Target as of the end of the
eleventh quarter (105)), or $2,500,000. If at the end of the twelfth quarter,
PeopleSoft shall have met the Minimum Target (120) and paid the Cure Cost of
$2,500,000, then PeopleSoft shall continue to retain its exclusivity.
Section 5.3. COMMERCE ONE EXCLUSIVITY. For a period commencing on the
Effective Date and ending on January 1, 2001, Commerce One shall not enter into
an agreement with PeopleSoft Specified Companies to Distribute, sell or develop
products similar to the Products or MarketSite Services. Notwithstanding the
foregoing, Commerce One may enter into an Agreement with SAP only for the
purpose of becoming ISV certified and with Oracle for the purpose of database
development. If, at any time during the eighteen (18) months from the Effective
Date, Commerce One is in breach of the exclusivity provisions of this Section
5.3 or assigns this Agreement through operation of law, merger or acquisition of
all or substantially all of its assets to a Specified Company, without limiting
any other rights or remedies of PeopleSoft, PeopleSoft shall be entitled to
change the exclusivity set forth in Section 5.1 above or 5.3(a) below to
non-exclusive by providing Commerce One with written notice thereof. Nothing in
this Section 5.3 shall be construed as terminating this Agreement or the
licenses granted herein.
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(a) COMMERCE ONE EXCLUSIVE ACCOUNT. Notwithstanding Section 5.1(a)
above, for a period of [ * ] after the Effective Date, Commerce One
shall have the exclusive right to Distribute the Products to the Commerce One
Named Accounts. In the event any of the Commerce One Named Accounts enters into
a license during such [ * ] period, such license may be between either
Commerce One or PeopleSoft and such individual Commerce One Named Account. Such
Commerce One Named Account shall pay fees to either Commerce One or PeopleSoft,
who shall then allocate the fees as set forth in Attachment B. Nothing in this
Section shall prohibit or discourage PeopleSoft from cooperatively engaging with
Commerce One with respect to Commerce One Named Accounts.
(b) COMMERCE ONE EXCLUSIVE ACCOUNT. Notwithstanding Section 5.1 (a) above,
for a period of [ * ] after the Effective Date, Commerce One shall have
the exclusive right to market and Distribute the BuySite Products to the Telco
Named Accounts.
(c) TELCO NAMED ACCOUNTS. From the Effective Date, PeopleSoft has a
non-exclusive right to Distribute the Products to the Telco Industry, excluding
the Telco Named Accounts. Commencing at the beginning of the [ * ]
after the Effective Date, PeopleSoft shall be at liberty to Distribute to the
Telco Named Accounts.
Section 5.4. LIMITED RIGHT TO WORK WITH SPECIFIED COMPANIES FOR END USER
CUSTOMER-REQUESTED IMPLEMENTATIONS.
(a) The parties contemplate that only on a rare case-by-case basis both
parties may, due to an insistent End User customer request, need to work on such
End User-requested implementations with respect to Specified Company's products
and each party may, for such rare cases, provide services to such End User
notwithstanding the provisions of Sections 5.1 and 5.3. Prior to undertaking or
so agreeing to such an implementation effort, the requested party must first use
all reasonable efforts to direct the customer to an external independent third
party implementor to conduct the work for the End User. The parties shall also
use all reasonable efforts, primarily expected to be conducted through their
alliance personnel, to provide advance written notice (which shall include by
electronic mail) of at least five (5) business days to the other of a situation
whereby the requested party has attempted and failed to persuade the End User to
use an independent third party implementor and that the party is considering
entering into an End User agreement to provide the future direct implementation
services to the End User for the Specified Company product.
(b) The intent of this Section is that implementations for a
Specified Company conducted by the Parties shall be the rare exception rather
than the rule, and in the event such End User requested implementations occur on
at least two occasions within any six month period, the Parties acknowledge that
this is cause for concern and therefore the Parties' executive liaisons will
promptly have face-to-face meeting(s) to discuss this issue to resolve the issue
to their mutual satisfaction.
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Section 5.5. PREFERRED SOLUTIONS.
(a) COMMERCE ONE. Commerce One agrees to promote customer advantages of
using the BuySite Product and the PeopleSoft Products as the preferred solution
to interconnect with the MarketSite Services.
(b) PEOPLESOFT. PeopleSoft agrees to promote customer advantages of using
the MarketSite Services as the preferred solution to interconnect with the
BuySite Product and the PeopleSoft Products.
Section 5.6. EXTENSION OF EXCLUSIVITY. In the event BuySite 6.0 is not
available for commercial release by [ * ] each of the following shall
occur: (a) the period of exclusivity set forth in this Section 5 shall be
extended solely for the benefit of PeopleSoft by one whole calendar quarter
for each calendar quarter or portion thereof it takes for BuySite 6.0 to be
delivered and accepted pursuant to the terms of the Joint Development
Agreement and (b) the target dates for all Minimum Targets as set forth in
Section 5.2 and Attachment I shall be adjusted forward by one whole calendar
quarter for each calendar quarter or portion thereof it takes for BuySite 6.0
to be delivered and accepted pursuant to the terms of the Joint Development
Agreement. By way of example only, if BuySite 6.0 is delivered and accepted
on any day from [ * ] through [ * ] the period of exclusivity shall be
extended until [ * ] and all Minimum Targets as set forth in Section 5.2
shall be adjusted forward by one whole quarter, beginning with the Minimum
Target of sixty (60) at the end of [ * ]. As further example, if BuySite
6.0 is delivered and accepted on any day from [ * ] through [ * ] the
period of exclusivity shall be extended through [ * ] and all Minimum
Targets as set forth in Section 5.2 shall be adjusted forward one quarter
beginning with the Minimum Target of sixty (60) at the end of [ * ].
Section 5.7. LIMIT TO EXCLUSIVITY. Nothing in this Agreement shall prevent
PeopleSoft from entering into Agreements with third parties to integrate any
product or service content into the PeopleSoft Products.
Section 5.8. GOVERNMENT PROCUREMENT SOLUTION. In the event PeopleSoft elects to
move forward with a government procurement solution, PeopleSoft grants to
Commerce One a right to negotiate with regard to partnering to provide a
government procurement solution. In the event the parties enter into such
negotiations, the parties shall conclude a definitive agreement or material
agreement on the terms and conditions of a definitive agreement within three (3)
months of the commencement of negotiations or PeopleSoft shall be free to enter
into negotiations with other third parties, subject to Section 18.13(c).
ARTICLE 6.
MARKETING AND DISTRIBUTION
Section 6.1. PUBLIC ANNOUNCEMENTS AND PROMOTIONAL MATERIALS. Commerce One and
PeopleSoft shall cooperate with each other so that each party may issue a press
release concerning this
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Agreement, provided that each party must approve any press release prior to its
release within seven (7) days of the Effective Date.
Section 6.2. JOINT MARKETING. Within thirty (30) days of the Effective Date,
Commerce One shall enter into PeopleSoft's substantially standard PSBN charter
merchant agreement provided that the entry into such charter merchant agreement
shall be at no cost to Commerce One. Upon the expiration or early termination of
this Agreement, Commerce One shall have the right to renew such charter merchant
agreement subject to payment of the then current maintenance rate, which shall
be negotiated by the parties.
Section 6.3. TERMS RELATING TO DISTRIBUTION.
(a) GENERAL RESTRICTIONS ON DISTRIBUTION. PeopleSoft agrees to comply with,
and shall require its Distributors to comply with, all applicable laws, rules
and regulations to preclude the acquisition of unlimited rights to technical
data, software and documentation provided with the BuySite Product to a
governmental agency, and ensure the inclusion of the appropriate "Restricted
Rights" or "Limited Rights" notices required by the U.S. Government agencies.
(b) DISTRIBUTOR LICENSE AGREEMENT. PeopleSoft shall procure from each of
its Distributors, and shall require that the PeopleSoft Customers procure from
each of their Distributors, an executed copy of a distribution license agreement
("Distributor License Agreement") sufficient to ensure that such Distributors
are required to comply with the relevant terms of this Agreement. In addition,
such agreement shall include warranty disclaimers and limitations of liability
on behalf of its licensors and suppliers.
(c) END USER LICENSE AGREEMENTS. PeopleSoft and its Distributors shall
Distribute the BuySite Products to End Users only under the terms of, and shall
ensure that the BuySite Products are subject to, end user license agreements
with terms at least as restrictive as those set forth in the applicable end user
license agreement attached hereto as Attachment D ("Commerce One End User
License Agreement").
Section 6.4. ENFORCEMENT OF SUBLICENSE AGREEMENTS. PeopleSoft and its
Distributors shall use commercially reasonable efforts to enforce each
Distributor License Agreement and End User License Agreement, whichever may be
relevant, with at least the same degree of diligence used in enforcing similar
agreements governing others, which in any event shall be sufficient to
adequately enforce such agreements. PeopleSoft shall use commercially reasonable
efforts to protect Commerce One's copyright, notify Commerce One of any breach
of a material obligation under a Distributor License Agreement or an End User
License Agreement affecting BuySite Products, and cooperate with Commerce One in
any legal action to prevent or stop unauthorized use, reproduction or
Distribution of BuySite Products.
Section 6.5. STAFFING.
(a) ACCOUNT MANAGERS. Each party shall appoint an Account Manager ("Account
Manager") to address opportunities and issues as they arise with respect to
marketing and sales activities and to
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manage the interaction of the parties respective sales forces. Either party may
change its Account Manager by providing written notice thereof to the other
party. Disputes with respect to this Agreement which cannot be resolved by the
parties' Account Managers shall be subject to the provisions of Section 18.13 of
this Agreement. The Account Managers shall meet at least once per calendar
quarter to monitor the progress of this Agreement and to manage issue resolution
under this Agreement.
(b) GUIDELINES. Within sixty (60) days of the Effective Date, the Account
Managers must establish mutually acceptable guidelines for co-operation of the
parties' respective sales forces. The parties shall maximize the effectiveness
of each respective party's sales organization.
(c) EXCHANGE OF INFORMATION. Each party shall keep appropriate records
relating to the activities contemplated by this Agreement, and shall report to
the other party on the status of such activities on a regular basis.
(d) PERSONNEL. The parties shall provide sufficient sales and pre-sales
personnel to support each other in the marketing efforts required under this
agreement. Each party agrees to use commercially reasonable efforts to support
the other party's efforts to market the Products. Commencing on the Effective
Date for a period of twelve (12) months, Commerce One shall organize its sales
personnel on a territory basis, which for the purpose of this Agreement, shall
mean a geographic organization of the sales force, to maximize sales
opportunities with PeopleSoft under this Agreement.
(e) COMMERCE ONE COMPENSATION. Commencing on the Effective Date for a
period of [ * ] for sales representatives and for a period of [ * ] for sales
managers, Commerce One shall compensate its non-CSP sales personnel based on
the gross licensing revenue received by PeopleSoft from Distribution of the
BuySite Product or the PeopleSoft Product under this Agreement to the same
extent as if Commerce One had received such Product gross license revenues
directly. As used in this Section, gross licensing revenue shall mean the
actual license fees, royalties or other cash consideration received by
Commerce One or PeopleSoft with respect to the licensing, sublicensing or
other Distribution of the BuySite Products without reduction. Commencing on
the beginning of the [ * ] from Effective Date for a period of [ * ]
thereafter, Commerce One shall compensate its sales representatives based on
the PeopleSoft Net Fees paid to Commerce One under this Agreement (pursuant
to Attachment B) for PeopleSoft Distribution of the BuySite Product or
PeopleSoft Product under this Agreement. Commerce One shall compensate its
sales personnel for a period of [ * ] from the Effective Date the same sum,
as determined in the sole discretion of Commerce One, for a MarketSite Direct
Services access license whether such access license was procured through
Commerce One or any of its Distributors.
Section 6.6. SALES AND SALES SUPPORT TRAINING. Commerce One shall provide, at no
additional charge, six (6) sales training courses of one (1) day each for sales
training for the BuySite Products to the PeopleSoft personnel. PeopleSoft will
pay to Commerce One fifty percent (50%) of Commerce One's then current list
price for any training services, in addition to such training services listed in
this Section 6.6 above, provided by Commerce One to PeopleSoft.
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Section 6.7. SALES TRAINING MATERIALS. Training materials shall be provided as
part of Commerce One's training obligation. Commerce One grants to PeopleSoft a
royalty-free, nonexclusive, worldwide and nontransferable (except as set forth
in Section 18.2) right and license to use and reproduce any sales training
materials pertaining to BuySite Products, with the exception of any web based
sales training materials, (the "Training Materials") and to use and create
Derivative Works of the Training Materials to develop training materials for
PeopleSoft Products. PeopleSoft shall have the worldwide right to reproduce and
Distribute all Training Materials internally and to Distributors. PeopleSoft
shall have the right to request a license, similar to the license for the
Training Materials set forth in this Section 6.7 above, for the web based
training materials for use by End Users subject to payment of a royalty, at a
rate to be determined by the parties, for such web based training materials.
Section 6.8. COMMERCE ONE MOST FAVORED CUSTOMER PRICING. Commerce One shall
provide PeopleSoft with equally favorable pricing on MarketSite Direct Services
access as is offered to End Users either by Commerce One or its distributors.
Commerce One represents that the prices charged PeopleSoft shall be no higher
than the prices Commerce One charges to any other unaffiliated customer or
distributor at a similar level of distribution respecting similar MarketSite
Direct Services during such calendar year provided, that PeopleSoft's actual
purchases of MarketSite Direct Services during such calendar year are under
substantially equivalent terms and conditions as the purchases by such other
customer or distributor; and PeopleSoft's actual purchases of MarketSite Direct
Services are intended for sale in the same country or geographic region or
vertical market during such calendar year. In the event Commerce One is in
breach of the foregoing, MarketSite Direct Services pricing will be reduced by
Commerce One to PeopleSoft to equal the lower prices and will apply to
PeopleSoft purchases of MarketSite Direct Services from the date lower prices
were charged to such other customers or distributors by Commerce One. In
addition, if PeopleSoft took delivery of and paid for MarketSite Direct Services
while Commerce One was in breach of the foregoing representation, appropriate
credits toward the purchase of MarketSite Direct Services or refunds, at
PeopleSoft's option, shall be issued by Commerce One to PeopleSoft, the amount
of which shall reflect the differences in the prices for MarketSite Direct
Services that were actually charged to PeopleSoft and the prices for MarketSite
Direct Services which should have been charged to PeopleSoft if Commerce One had
complied with the foregoing representation.
(a) AUDIT. Not more than once in any twelve (12) month period, and at a
time which is reasonably acceptable to Commerce One, Commerce One shall permit
an independent certified public accountant hired by PeopleSoft and approved by
Commerce One to review Commerce One's books and records for the purpose of
determining whether Commerce One is complying with the representations and other
provisions contained in this Section 6.8.
(b) COST OF AUDIT. The costs of such review shall be borne by PeopleSoft,
except in the event that it is determined, as a result of such review, that
Commerce One was not in compliance with the representations and other provisions
contained in this Section 6.8. Commerce One shall then reimburse PeopleSoft for
the reasonable costs PeopleSoft incurred in connection with such review,
including the fees paid to such certified public accountant. If the results of
such audit establish that the prices charged PeopleSoft are higher than the
prices Commerce One charges to any other
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unaffiliated customer or distributor as described above by more than five
percent (5%) of the price which should have been charged, in which case Commerce
One shall bear the expenses of the audit not to exceed $15,000.
ARTICLE 7.
FEES
Each party shall pay the royalties and other fees in accordance with
Attachment B to this Agreement. Each party shall make such payments to the other
party within thirty (30) days of the end of the calendar quarter in which such
royalties or fees accrue.
ARTICLE 8.
PAYMENT AND TAXES
Section 8.1. PAYMENTS.
(a) COMMERCE ONE. All payments to Commerce One shall be made in United
States dollars at Commerce One's address as indicated in this Agreement or at
such other address as Commerce One may from time to time indicate by proper
notice hereunder.
(b) PEOPLESOFT. All payments to PeopleSoft shall be made in United States
dollars at PeopleSoft's address as indicated in this Agreement or at such other
address as PeopleSoft may from time to time indicate by proper notice hereunder.
Section 8.2. TAXES GENERALLY. Fees do not include and are net of any foreign or
domestic governmental taxes or charges of any kind that may be applicable to the
sale, licensing, marketing or Distribution of the BuySite Products or MarketSite
Services, including without limitation excise, sales, use, or value-added taxes;
customs or other import duties; or other taxes, tariffs or duties. For payments
by PeopleSoft to Commerce One, PeopleSoft shall be responsible for, and shall
pay in a timely manner, all such taxes and charges levied against Commerce One,
excluding taxes on the income of Commerce One. When Commerce One has the legal
obligation to pay or collect such taxes the appropriate amount shall be invoiced
to PeopleSoft, excluding taxes on the income of Commerce One, and paid by
PeopleSoft within thirty (30) days of the date of invoice unless PeopleSoft
provides Commerce One with a valid tax exemption certificate authorized by the
appropriate taxing authority or affidavit of use tax directly accrued and paid
by PeopleSoft.
Section 8.3. WITHHOLDING TAXES. All payments by PeopleSoft shall be made free
and clear of, and without reduction for, any withholding taxes. Any such taxes
which are otherwise imposed on payments to Commerce One shall be the sole
responsibility of PeopleSoft. PeopleSoft shall provide Commerce One with
official receipts issued by the appropriate taxing authority or such other
evidence as is reasonably requested by Commerce One to establish that such taxes
have been paid.
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Section 8.4. QUARTERLY REPORTS. PeopleSoft and its Distributors shall maintain
accurate records and report the number and type of BuySite and PeopleSoft
Product licenses and access agreements entered into and MarketSite Services
access agreements entered into , the calendar quarter of the date of such
agreements, all supporting documentation for the calculation of PeopleSoft Net
Fees, the location shipped to (by country or state) if applicable and the
corresponding fees due hereunder. Such reports shall be submitted by PeopleSoft
to Commerce One within thirty (30) calendar days after the end of each calendar
quarter.
Section 8.5. AUDIT OF RECORDS. PeopleSoft shall keep and maintain full, true,
and accurate records containing all BuySite and PeopleSoft Products or
MarketSite Services Distributed. Not more than once in any twelve (12) month
period, Commerce One shall have the right, through auditors reasonably
acceptable to PeopleSoft who shall execute an appropriate nondisclosure
agreement reasonably acceptable to both parties, during normal business hours
upon at least fifteen (15) business days prior notice, to audit and analyze the
relevant records of PeopleSoft to verify compliance with the provisions of this
Agreement. The audit shall be conducted at Commerce One's expense unless there
is inadequate record keeping or the results of such audit establish that
inaccuracies in the monthly royalty reports have resulted in underpayment of
royalties to Commerce One more than five percent (5%) of the amount actually due
in any month, in which case PeopleSoft shall bear the expenses of the audit not
to exceed $15,000. Equivalent audit rights and reporting obligations shall be
granted to PeopleSoft with respect to the MarketSite Direct Fees or MarketSite
Indirect Fees payable to PeopleSoft under this Agreement.
ARTICLE 9.
DELIVERABLES, UPDATES AND TECHNICAL SUPPORT
Section 9.1. COMMERCE ONE DELIVERABLES. Commerce One shall provide PeopleSoft
with the deliverables indicated in Attachment A ("Commerce One Deliverables").
All deliveries under this Agreement shall be F.O.B. Commerce One, Walnut Creek,
California. F.O.B. shall have the definition in the California Uniform
Commercial Code.
Section 9.2. PEOPLESOFT DELIVERABLES. PeopleSoft shall provide Commerce One with
the deliverables indicated in Attachment F ("PeopleSoft Deliverables"). All
deliveries under this Agreement shall be F.O.B. PeopleSoft, Pleasanton,
California. F.O.B. shall have the definition in the California Uniform
Commercial Code.
Section 9.3. UPDATES AND TECHNICAL SUPPORT. Commerce One shall provide support
in accordance with Attachment E, provided that PeopleSoft has paid for such
maintenance and support in accordance with Attachment B.
Section 9.4. FURTHER SUPPORT. Within ninety (90) days of the Effective Date, the
parties shall enter into a mutually acceptable support plan which shall outline
the terms for identification of severity
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levels and escalation, bug tracking, training schedules and the names of the
appropriate contact for support for each party.
Section 9.5. TECHNICAL TRAINING. Commerce One shall provide, at no additional
charge, ten (10) technical training courses of three (3) days each for technical
training (for example, training for support and consulting) for the BuySite
Products to the PeopleSoft training personnel. PeopleSoft will pay to Commerce
One fifty percent (50%) of Commerce One's then current list price for any
training services, in addition to such training services listed in this Section
9.5 above, provided by Commerce One to PeopleSoft.
Section 9.6. TECHNICAL TRAINING MATERIALS. Training materials shall be provided
as part of Commerce One's training obligation. Commerce One grants to PeopleSoft
a royalty-free, nonexclusive, worldwide and nontransferable (except as set forth
in Section 18.2) right and license to use and reproduce any technical training
materials pertaining to BuySite Products, with the exception of any web based
technical training materials, (the "Training Materials") and to use and create
Derivative Works of the Training Materials to develop training materials for
PeopleSoft Products. PeopleSoft shall have the worldwide right to reproduce and
Distribute all Training Materials internally and to Distributors. PeopleSoft
shall have the right to request a license, similar to the license for the
Training Materials set forth in this Section 9.6 above, for the web based
training materials for use by End Users subject to payment of a royalty, at a
rate to be determined by the parties, for such web based training materials.
ARTICLE 10.
TRADEMARKS AND TRADE NAMES
Section 10.1. TRADEMARKS. Subject to the provisions of this Article 10, during
the term of this Agreement, PeopleSoft shall have the right to indicate to the
public that PeopleSoft Products contain the BuySite Product, and to advertise
the BuySite Products as incorporated into the PeopleSoft Products under the
trademarks, marks, and trade names of Commerce One set forth in Attachment C, as
same may be amended in writing by Commerce One from time to time ("Commerce
One's Trademarks"), subject to Commerce One's prior inspection and written
approval of the PeopleSoft Products in which the Commerce One Trademarks are
attached. All representations of Commerce One's Trademarks that PeopleSoft
intends to use shall first be submitted to Commerce One for approval (which
shall not be unreasonably withheld) of design, color and other details, or shall
be exact copies of those used by Commerce One. PeopleSoft shall fully comply
with all guidelines, if any, communicated by Commerce One concerning the use of
Commerce One's Trademarks. Commerce One may modify any Commerce One Trademarks,
or substitute an alternative mark for any Commerce One Trademark upon ninety
(90) days prior notice to PeopleSoft.
Section 10.2. USE. Except as set forth in this Article 10, nothing contained in
this Agreement shall grant or shall be deemed to grant to PeopleSoft any right,
title or interest in or to Commerce One's Trademarks. All uses of Commerce One's
Trademarks and all goodwill associated with such Commerce One Trademarks shall
inure solely to Commerce One and PeopleSoft shall obtain no rights with respect
to any of Commerce One's Trademarks, other than as expressly set forth herein,
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and PeopleSoft irrevocably assigns to Commerce One all such right, title and
interest, if any, in any of Commerce One's Trademarks. At no time during or
after the term of this Agreement shall PeopleSoft challenge or assist others to
challenge Commerce One's Trademarks (except to the extent expressly required by
applicable law) or the registration thereof or attempt to register any
trademarks, marks or trade names confusingly similar to those of Commerce One.
Upon Commerce One's request from time to time PeopleSoft agrees to provide
Commerce One with copies of goods bearing Commerce One's trademarks and trade
names so that Commerce One can verify their adequate quality. Upon termination
of this Agreement, PeopleSoft shall immediately cease to use all Commerce One's
Trademarks and any listing by PeopleSoft of Commerce One's name in any telephone
book, directory, public record or elsewhere, shall be removed by PeopleSoft as
soon as possible, but in any event not later than the subsequent issue of such
publication.
Section 10.3. COMMERCE ONE LOGO. PeopleSoft shall place the Commerce One
Trademark or logo on the PeopleSoft Product (provided the PeopleSoft Product is
developed under any joint development agreement between the parties) in a
location which is visible to the End User.
Section 10.4. REGISTERED USER AGREEMENTS. Commerce One and PeopleSoft shall
enter into registered user agreements with respect to the Commerce One's
Trademarks pursuant to applicable trademark law requirements worldwide.
PeopleSoft shall be responsible for proper filing of the registered user
agreement with government authorities worldwide and the parties shall share
equally all costs or fees associated with such filing.
ARTICLE 11.
PROPRIETARY RIGHTS
Section 11.1. COMMERCE ONE PROPRIETARY RIGHTS. Title to and ownership of all
copies of the BuySite Products and the MarketSite Services and associated
software whether in machine-readable or printed form, and including, without
limitation, Derivative Works thereof provided by Commerce One hereunder,
compilations, or collective works thereof and all related technical know-how and
all intellectual property rights therein (including without limitation rights in
patents, copyrights, and trade secrets applicable thereto), are and shall remain
the exclusive property of Commerce One and its suppliers. PeopleSoft shall not
take any action to jeopardize, limit or interfere in any manner with Commerce
One's ownership of and rights with respect to the BuySite Products and the
MarketSite Services and associated software. PeopleSoft shall have only those
rights in or to the BuySite Products and the MarketSite Services and associated
software granted to it pursuant to this Agreement. Title to and ownership of all
copies of the PeopleSoft Product, exclusive of the BuySite Products and the
MarketSite Services and associated software, and all related technical know-how
and all rights therein (including without limitation rights in patents,
copyrights, and trade secrets applicable thereto), are and shall remain the
exclusive property of PeopleSoft and its suppliers, as applicable.
Section 11.2. PROPRIETARY NOTICES.
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(a) NO ALTERATION OF NOTICES. PeopleSoft and its employees and agents shall
not remove or alter any trademark, trade name, copyright, or other proprietary
notices, legends, symbols, or labels appearing on or in copies of the BuySite
Products and the MarketSite Services and associated software delivered to
PeopleSoft by Commerce One and shall use the same notices, legends, symbols, or
labels in and on copies of BuySite Products and the MarketSite Services and
associated software as are contained in and on such BuySite Products and the
MarketSite Services and associated software.
(b) NOTICE. Each portion of the BuySite Products and the MarketSite
Services and associated software reproduced by PeopleSoft shall include the
intellectual property notice or notices appearing in or on the corresponding
portion of such materials as delivered by Commerce One hereunder. PeopleSoft
shall ensure that all copies of the BuySite Products and the MarketSite Services
and associated software made by PeopleSoft pursuant to this Agreement
conspicuously display the following notice: Copyright (1999 (or other
appropriate year(s)), Commerce One. All Rights Reserved.
ARTICLE 12.
CONFIDENTIAL INFORMATION AND DISCLOSURE
Section 12.1. CONFIDENTIAL INFORMATION. Each party agrees to maintain all
Confidential Information in confidence to the same extent that it protects its
own similar Confidential Information and to use such Confidential Information
only as permitted under this Agreement. For purposes of this Agreement
"Confidential Information" shall mean information including, without limitation,
computer programs, code, algorithms, names and expertise of employees and
consultants, know-how, formulas, processes, ideas, inventions (whether
patentable or not), schematics and other technical, business, financial, pricing
and product development plans, forecasts, strategies and information marked
"Confidential" or if disclosed verbally, reduced to writing and marked
"Confidential" within thirty (30) days after the date of disclosure or
reasonably understood by the parties to be confidential. Each party agrees to
take all reasonable precautions to prevent any unauthorized disclosure or use of
Confidential Information including, without limitations disclosing Confidential
Information only to its employees (a) with a need to know to further permitted
uses of such information and (b) who are parties to appropriate agreements
sufficient to comply with this Article 12, and (c) who are informed of the
nondisclosure/ non-use obligations imposed by this Article 12 and both parties
shall take appropriate steps to implement and enforce such
non-disclosure/non-use obligations. The foregoing restrictions on disclosure and
use shall survive for three (3) years following termination of this Agreement
but shall not apply with respect to any Confidential Information which (i) was
or becomes publicly known through no fault of the receiving party; (ii) was
rightfully known or becomes rightfully known to the receiving party without
confidential or proprietary restriction from a source other than the disclosing
party; (iii) is independently developed by the receiving party without the
participation of individuals who have had access to the Confidential
Information; (iv) is approved by the disclosing party for disclosure without
restriction in a written document which is signed by a duly authorized officer
of such disclosing party; (v) by the receiving party in connection with
securities filings with the Securities
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and Exchange Commission or as otherwise required by government regulation, or
(vi) the receiving party is legally compelled to disclose; provided, however,
that prior to any such compelled disclosure, the receiving party will (a) assert
the privileged and confidential nature of the Confidential Information against
the third party seeking disclosure and (b) cooperate fully with the disclosing
party in protecting against any such disclosure and/or obtaining a protective
order narrowing the scope of such disclosure and/or use of the Confidential
Information. In the event that such protection against disclosure is not
obtained, the receiving party will be entitled to disclose the Confidential
Information, but only as and to the extent necessary to legally comply with such
compelled disclosure.
Section 12.2. CONFIDENTIALITY OF AGREEMENT. Unless required by law, and except
to assert its rights hereunder or for disclosures to its own employees on a
"need to know" basis, each party agrees not to disclose the terms of this
Agreement or matters relating thereto without the prior written consent of the
other, which consent shall not be unreasonably withheld.
ARTICLE 13.
WARRANTIES AND REPRESENTATIONS
Section 13.1. LIMITED WARRANTY. Subject to the limitations set forth in this
Agreement, for a period of one (1) year from the date PeopleSoft or its
Distributors deliver the BuySite Product ("Warranty Period"), Commerce One
warrants only to PeopleSoft that the BuySite Products when properly adapted,
installed, and used will substantially conform to the specifications in the
documentation in effect when the BuySite Products are shipped to PeopleSoft.
Commerce One's warranty and obligation is solely for the benefit of PeopleSoft,
who has no authority to extend this warranty to any other person or entity.
COMMERCE ONE MAKES NO WARRANTY THAT ALL ERRORS OR FAILURES WILL BE CORRECTED. As
PeopleSoft's exclusive remedy, Commerce One will use all reasonable efforts to
timely correct nonconformities of the BuySite Products within the warranty set
forth in this Section 13.1 above.
Section 13.2. EXCLUSIVE WARRANTY. EXCEPT AS
EXPRESSLY SET FORTH IN SECTION 13.1 ABOVE, COMMERCE ONE MAKES NO OTHER
REPRESENTATION OR WARRANTY OF ANY KIND WHETHER EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE HEREUNDER, AND COMMERCE ONE EXPRESSLY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY, NONINFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.
Section 13.3. DEFECTS NOT COVERED BY WARRANTIES. Commerce One shall have no
obligations under the warranty provisions set forth in Section 13.1 for
nonperformance of Commerce One's warranty obligations if any nonconformance is
caused in whole or in part by: accident; transportation; neglect or misuse;
alteration, modification, or enhancement of the BuySite Products or
incorporation, interfacing, attachment of any feature, program or device to the
BuySite Products by a person or entity other than Commerce One or as authorized
by Commerce One; failure to install or implement according to Commerce One's
installation or implementation guidelines; use of the BuySite Products for other
than the specific purpose for which the BuySite Products are designed; use of
the
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BuySite Products on any systems other than the specified hardware platform for
such BuySite Products; or use of defective media or defective duplication of the
BuySite Products by PeopleSoft.
Section 13.4. PATENT CLAIMS. As of the Effective Date and to the knowledge of
Commerce One, there are no pending or threatened patent infringement claims.
Section 13.5. OTHER. Each party (the "Warranting Party") warrants to the other
party as of the Effective Date and on a continuing basis that:
(a) CORPORATE AUTHORITY. The Warranting Party has the right to enter this
Agreement, is a corporation duly organized, validly existing, and in good
standing under the laws of the state of its incorporation set forth on page one
hereof, has the power and authority, corporate and otherwise, to execute and
deliver this Agreement and to perform its obligations hereunder, and has by all
necessary corporate action duly and validly authorized the execution and
delivery of this Agreement and the performance of its obligations hereunder.
(b) BINDING OBLIGATION. This Agreement is the valid and legally binding
obligation of the Warranting Party in accordance with its terms, subject to
bankruptcy, reorganization, insolvency, moratorium and similar laws and to
general principles of equity which are within the discretion of courts of
applicable jurisdiction.
(c) NO CONFLICTS. The execution, delivery and performance by the Warranting
Party of this Agreement and each other agreement, document, or instrument now or
hereafter executed and delivered by the Warranting Party pursuant thereto or in
connection herewith will not: (i) conflict with or violate the articles or
certificate of incorporation or by-laws of the Warranting Party or any provision
of any law, rule, regulation, authorization or judgment of any governmental
authority having applicability to the Warranting Party or its actions; or (ii)
conflict with or result in any breach of, or constitute a default under, any
note, security agreement, commitment, contract or other agreement, instrument or
undertaking to which the Warranting Party is a party or by which any of its
property is bound.
ARTICLE 14.
INDEMNIFICATION
Section 14.1. PEOPLESOFT INDEMNIFICATION. Commerce One agrees that PeopleSoft
has the right to defend, or at its option to settle, and PeopleSoft agrees, at
its own expense, to defend or at its option to settle, any third party claim,
suit or proceeding (collectively, "Action") brought against Commerce One to the
extent such Action results from infringement by the PeopleSoft Product or any
PeopleSoft trademark of any United States patent, or any copyright, trade secret
or trademark worldwide ("PeopleSoft Intellectual Property Rights"), subject to
the limitations hereinafter set forth. PeopleSoft will have sole control of any
such Action or settlement negotiations, and PeopleSoft agrees to pay, subject to
the limitations hereinafter set forth, any settlement amounts or final judgment
entered against Commerce One on such issue in any such Action defended and/or
settled by PeopleSoft. Commerce One agrees that PeopleSoft will be relieved of
the foregoing obligations
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unless Commerce One notifies PeopleSoft promptly in writing of such Action,
gives PeopleSoft sole control and authority to proceed as contemplated herein,
and gives PeopleSoft reasonably proper and full information and reasonable
assistance to settle and/or defend any such Action. If it is adjudicatively
determined, or if PeopleSoft believes, that the PeopleSoft Products, or any part
thereof, infringe any PeopleSoft Intellectual Property Rights, or if the sale or
use of the PeopleSoft Products, or any part thereof, is, as a result, enjoined,
then PeopleSoft may, at its election, option, and expense: (i) procure for
Commerce One the right under such PeopleSoft Intellectual Property Rights to
sell or use, as appropriate, the PeopleSoft Products or such part thereof; or
(ii) replace PeopleSoft Products, or part thereof, with other noninfringing
suitable PeopleSoft Products or parts; or (iii) suitably modify the PeopleSoft
Products, PeopleSoft trademark, or part thereof to become noninfringing without
materially altering the performance or functionality; or (iv) remove the
PeopleSoft Products, or part thereof, terminate Distribution or sale thereof and
refund the payments paid by Commerce One for such PeopleSoft Products less a
prorata amount computed over a three year period using straight line
depreciation. PeopleSoft will not be liable for any costs or expenses incurred
without its prior written authorization, or for any installation costs of any
replaced PeopleSoft Products.
Section 14.2. COMMERCE ONE INDEMNIFICATION. PeopleSoft agrees that Commerce One
has the right to defend, or at its option to settle, and Commerce One agrees, at
its own expense, to defend or at its option to settle, any third party claim,
suit or proceeding (collectively, "Action") brought against PeopleSoft to the
extent such Action results from infringement by the BuySite Products or
MarketSite Direct Services of any United States patent, or any copyright, trade
secret or trademark worldwide (" Commerce One Intellectual Property Rights"),
subject to the limitations hereinafter set forth. Commerce One will have sole
control of any such Action or settlement negotiations, and Commerce One agrees
to pay, subject to the limitations hereinafter set forth, any settlement amounts
or final judgment entered against PeopleSoft on such issue in any such Action
defended and/or settled by Commerce One. PeopleSoft agrees that Commerce One
will be relieved of the foregoing obligations unless PeopleSoft notifies
Commerce One promptly in writing of such Action, gives Commerce One sole control
and authority to proceed as contemplated herein, and gives Commerce One
reasonably proper and full information and reasonable assistance to settle
and/or defend any such Action. If it is adjudicatively determined, or if
Commerce One believes, that the BuySite Products or MarketSite Direct Services,
or any part thereof, infringe any Commerce One Intellectual Property Rights, or
if the sale or use of the BuySite Products or MarketSite Direct Services, or any
part thereof, is, as a result, enjoined, then Commerce One may, at its election,
option, and expense: (i) procure for PeopleSoft the right under such Commerce
One Intellectual Property Rights to sell or use, as appropriate, the BuySite
Products or MarketSite Direct Services or such part thereof; or (ii) replace the
BuySite Products or MarketSite Direct Services, or part thereof, with other
noninfringing suitable BuySite Products or MarketSite Direct Services or parts;
or (iii) suitably modify the BuySite Products, MarketSite Direct Services,
Commerce One Trademark, or part thereof to become noninfringing without
materially altering the performance or functionality; or (iv) remove the BuySite
Products or MarketSite Direct Services, or part thereof, terminate Distribution
or sale thereof and refund the payments paid by PeopleSoft for such BuySite
Products or MarketSite Direct Services less a prorata amount computed over a
three year period using straight line depreciation provided however, during the
first twelve months of this Agreement, such prorata
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deduction shall not apply. Commerce One will not be liable for any costs or
expenses incurred without its prior written authorization, or for any
installation costs of any replaced BuySite Products or MarketSite Direct
Services.
Section 14.3. LIMITATIONS. Notwithstanding the provisions of Section 14.2 above,
Commerce One shall have no liability for (i) any infringement claims alleging
infringement by BuySite Products, MarketSite Direct Services or other completed
equipment or any assembly, circuit, combination, method or process in which any
of the BuySite Products or MarketSite Direct Services may be used but not
covering the BuySite Products or MarketSite Direct Services standing alone; (ii)
any trademark infringements involving any marking or branding not applied by or
requested by Commerce One, or involving any marking or branding applied by
Commerce One at the request of PeopleSoft; or (iii) any modification of the
BuySite Products or MarketSite Direct Services, or part thereof, (unless such
modification was made by Commerce One or at the direction of Commerce One) where
such infringement would not have occurred but for such modifications. For
purposes of this Article 14, BuySite Products shall exclude the Connectors.
Section 14.4. LIMITATIONS. Notwithstanding the provisions of Section 14.1 above,
PeopleSoft shall have no liability for (i) any infringement claims alleging
infringement by PeopleSoft Products or other completed equipment or any
assembly, circuit, combination, method or process in which any of the PeopleSoft
Products may be used but not covering the PeopleSoft Products standing alone;
(ii) any trademark infringements involving any marking or branding not applied
by or requested by PeopleSoft, or involving any marking or branding applied by
PeopleSoft at the request of Commerce One; or (iii) any modification of the
PeopleSoft Products, or part thereof, (unless such modification was made by
PeopleSoft or at the direction of PeopleSoft) where such infringement would not
have occurred but for such modifications. For purposes of this Article 14,
PeopleSoft Products shall exclude the Connectors.
Section 14.5. DISCLAIMER. THE FOREGOING PROVISIONS OF
THIS ARTICLE 14 STATE THE ENTIRE LIABILITY AND OBLIGATIONS OF COMMERCE ONE AND
PEOPLESOFT AND THE EXCLUSIVE REMEDY OF PEOPLESOFT AND ITS END USERS, AND
COMMERCE ONE, RESPECTIVELY, WITH RESPECT TO ANY ALLEGED INTELLECTUAL PROPERTY
RIGHT INFRINGEMENT BY THE MARKETSITE INDIRECT SERVICES, BUYSITE PRODUCT OR
PEOPLESOFT PRODUCTS.
ARTICLE 15.
LIMITATION OF LIABILITY
Section 15.1. With the exception of any infringement or other violation of
Intellectual Property Rights through a breach under Sections 3.1(a), (b), (c),
(e), (f), or a breach of Article 7 (including Attachment B), and Articles 12 and
14, either Party's entire liability to the other party arising out of or
relating to this Agreement, the BuySite Products and the MarketSite Services and
associated software, or the use or operation of any of the foregoing products or
documentation shall not exceed the amount received, in the aggregate, by
Commerce One and PeopleSoft during the prior twelve (12) month period from the
date the claim arose. For the avoidance of doubt, the perpetual nature of
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Section 11 of Attachment B is excluded from the foregoing limitation.
Notwithstanding the foregoing and subject to Section 16.4(c) below, the entire
liability of Commerce One to PeopleSoft arising out of the breach of Section 9.3
or Section 13.1 herein by Commerce One and the entire liability of either party
to the other party arising out of the breach of Section 5.1, 5.3 and 5.4 herein
shall be limited to two (2) times the aggregate amounts paid under this
Agreement. The foregoing exception is not intended to apply to non-conformance
of the BuySite Product to the specifications under Section 13.1.
Section 15.2. IN NO EVENT SHALL EITHER PARTY OR ITS SUPPLIERS OR LICENSORS BE
LIABLE FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS OPPORTUNITY, LOSS OF USE OR
DATA, OR FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES (AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY STATED
HEREIN), OR FOR ANY CLAIM AGAINST SUCH PARTY BY ANY THIRD PARTY.
ARTICLE 16.
TERM AND TERMINATION
Section 16.1. TERM. This Agreement shall commence upon the Effective Date and
continue in full force and effect for [ * ] unless earlier terminated in
accordance with the provisions of this Agreement. Thereafter, this Agreement may
be renewed upon mutual written agreement of the Parties.
Section 16.2. TERMINATION FOR CAUSE. This Agreement may be terminated by either
party by written notice of termination effective immediately if the other party
breaches any material term or condition of this Agreement and fails to remedy
the breach within thirty (30) days after being given written notice thereof
stating the non-breaching party's intent to terminate.
Section 16.3. NO LIABILITY FOR TERMINATION. Except as expressly required by law,
in the event of termination of this Agreement by either party in accordance with
any of the provisions of this Agreement, neither party shall be liable to the
other, solely because of such termination, for compensation, reimbursement or
damages on account of the loss of prospective profits or anticipated sales or on
account of expenditures, inventory, investments, leases or commitments in
connection with the business or goodwill of Commerce One or PeopleSoft.
Termination shall not, however, relieve either party of obligations incurred
prior to the termination.
Section 16.4. EFFECT OF TERMINATION; SURVIVAL. PeopleSoft may Distribute access
to the MarketSite Services after the effective date of such termination and the
provisions of Articles 2, 7, 8, 11, 12, 13 (except 13.5(c)) , 14, 15, 16and 18,
Section 3.1(g) and Attachment B of Section 7 hereof shall survive termination of
this Agreement. It is understood and agreed that End User Licenses shall survive
in accordance with their terms and PeopleSoft's license to use the BuySite
Products and the MarketSite Services and associated software solely for support
purposes pursuant to Section 9.3 and Attachment E shall survive during the term
of such End User Licenses.
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[ * ] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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(a) RETURN OF MATERIALS TO COMMERCE ONE. All BuySite Products and
MarketSite Services and associated software, trademarks, marks, trade names,
patents, copyrights, designs, drawings, formulas or other data, photographs,
samples, literature, and sales and promotional aids of every kind shall remain
the property of Commerce One. Within thirty (30) days after the effective date
of termination of this Agreement, PeopleSoft shall at Commerce One's option
destroy all tangible items bearing, containing, or contained in, any of the
foregoing in its possession or control, and provide written certification of
such destruction, or prepare such tangible items for shipment to Commerce One or
Commerce One's designee, as Commerce One may direct, at Commerce One's expense.
PeopleSoft shall not make or retain any copies of any Confidential Information
(as defined in Article 12 above) which may have been entrusted to it. The
parties shall meet and negotiate in good faith a mutually acceptable plan to
transition support and maintenance for the existing End Users.
(b) RETURN OF MATERIALS TO PEOPLESOFT. All PeopleSoft Products, trademarks,
marks, trade names, patents, copyrights, designs, drawings, formulas or other
data, photographs, samples, literature, and sales and promotional aids of every
kind shall remain the property of PeopleSoft. Within thirty (30) days after the
effective date of termination of this Agreement, Commerce One shall at
PeopleSoft's option destroy all tangible items bearing, containing, or contained
in, any of the foregoing in its possession or control, and provide written
certification of such destruction, or prepare such tangible items for shipment
to PeopleSoft or PeopleSoft's designee, as PeopleSoft may direct, at
PeopleSoft's expense. Commerce One shall not make or retain any copies of any
Confidential Information (as defined in Article 12 above) which may have been
entrusted to it. The parties shall meet and negotiate in good faith a mutually
acceptable plan to transition support and maintenance for the existing End
Users.
(c) THE PROVISION OF SECTION 15 THAT EXCLUDES SUPPORT SERVICES SET FORTH IN
SECTION 9.3 FROM THE LIMITATION OF DAMAGES SHALL NOT SURVIVE TERMINATION OF THIS
AGREEMENT AND SHALL NOT APPLY TO ANY PLAN TO TRANSITION SUPPORT AND MAINTENANCE
UNDER THIS ARTICLE 16.
ARTICLE 17.
COMPLIANCE WITH LAWS
Section 17.1. EXPORT CONTROL. Each Party understands and acknowledges that the
other party is subject to regulation by agencies of the United States
Government, including, but not limited to, the U.S. Department of Commerce,
which prohibit export or diversion of certain products and technology to certain
countries. Any and all obligations of Commerce One to provide the BuySite
Products and the MarketSite Services and associated software, as well as any
other technical information or assistance or of PeopleSoft to provide the
PeopleSoft Product as well as any other technical information or assistance
shall be subject in all respects to such laws and regulations as shall from time
to time govern the license and delivery of technology and products abroad by
persons subject to the jurisdiction of the United States, including without
limitation the U.S. Export Administration Act of 1979, as amended, any successor
legislation, and the Export Administration Regulations issued by the U.S.
Department of Commerce, Bureau of Export Administration. Each party agrees to
cooperate with the other including without limitation, providing required
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documentation, in order to obtain export licenses or exemptions therefrom. Each
party warrants that it will comply with the U.S. Export Administration
Regulations and other laws and regulations governing exports in effect from time
to time.
Section 17.2. GOVERNMENTAL APPROVALS. Each party represents and warrants that it
has obtained or will obtain all required approvals of the applicable government
worldwide in connection with this Agreement and that the provisions of this
Agreement and the rights and obligations of the parties hereunder, are
enforceable under the applicable laws.
ARTICLE 18.
MISCELLANEOUS PROVISIONS
Section 18.1. INDEPENDENT CONTRACTORS. The relationship of Commerce One and
PeopleSoft established by this Agreement is that of independent contractors, and
neither party is an employee, agent, partner or joint venturer of the other. All
financial obligations associated with PeopleSoft's business are the sole
responsibility of PeopleSoft. All sales and other agreements between PeopleSoft
and its End Users are PeopleSoft's exclusive responsibility and will have no
effect on PeopleSoft's obligations under this Agreement. All financial
obligations associated with Commerce One's business are the sole responsibility
of Commerce One. All sales and other agreements between Commerce One and its End
Users are Commerce One's exclusive responsibility and will have no effect on
Commerce One's obligations under this Agreement.
Section 18.2. ASSIGNMENT. Except as set forth in this Section 18.2 below,
neither party shall transfer or assign its this Agreement without the prior
written consent of the other party and any purported assignment in violation of
the foregoing shall be null and void. Either party shall have the right to
assign this Agreement, or any of its rights or obligations hereunder, to any
successor in interest to all or substantially all of such party's business or
assets related to this Agreement or to a wholly owned subsidiary. Subject to the
foregoing, this Agreement will be binding upon and inure to the benefit of the
parties hereto, their successors and assigns. It is understood and agreed that
the parties may use subcontractors to perform their obligations hereunder
provided that such party remains responsible for performance of all its
obligations hereunder
Section 18.3. INDEMNITY
(a) PEOPLESOFT INDEMNITY. Except for warranty claims for which Commerce One
is liable under Article 13 and infringement claims covered by Article 14, at
Commerce One's request, PeopleSoft agrees to indemnify and hold Commerce One
harmless against any cost, loss, liability or expense (including attorneys'
fees) arising out of third party claims against Commerce One relating to
PeopleSoft's reproduction, use, Distribution, modification or creation of
Derivative Works of the BuySite Products; provided that with respect to third
party claims brought against Commerce One, Commerce One promptly notifies
PeopleSoft of such claim, gives PeopleSoft control over the defense and/or
settlement of such claims and Commerce One gives PeopleSoft reasonable
information and assistance with respect to such claims at PeopleSoft's expense.
Commerce One
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may participate in the defense and/or settlement of any actions
covered under this Section 18.3 at its own expense with counsel of its own
choosing.
(b) COMMERCE ONE INDEMNITY. Except for warranty claims for which
PeopleSoft is liable under Article 13 and infringement claims covered by
Article 14, at PeopleSoft's request, Commerce One agrees to indemnify and
hold PeopleSoft harmless against any cost, loss, liability or expense
(including attorneys' fees) arising out of third party claims against
PeopleSoft relating to Commerce One's reproduction, use, Distribution,
modification or creation of Derivative Works of the PeopleSoft Products;
provided that with respect to third party claims brought against PeopleSoft,
PeopleSoft promptly notifies Commerce One of such claim, gives Commerce One
control over the defense and/or settlement of such claims and PeopleSoft
gives Commerce One reasonable information and assistance with respect to such
claims at Commerce One's expense. PeopleSoft may participate in the defense
and/or settlement of any actions covered under this Section 18.3 at its own
expense with counsel of its own choosing.
Section 18.4. NON-SOLICITATION. Until twenty-four (24) months after the
expiration of the Joint Development Agreement, each party agrees not to solicit
the employment of the other party's employees without the prior written consent
of such party. For this purpose, using general advertisement, employment
agencies, and the like, to which the other party's employees may respond on
their own initiative, shall not constitute "solicitation."
Section 18.5. NO IMPLIED WAIVERS. The failure of either party at any time to
require performance by the other of any provision hereof shall not affect the
right of such party to require performance at any time thereafter, nor shall the
waiver of either party of a breach of any provision hereof be taken or held to
be a waiver of a provision itself.
Section 18.6. SEVERABILITY. If any provision of this Agreement is held to be
invalid by a court of competent jurisdiction, then the remaining provisions
will nevertheless remain in full force and effect. The parties agree to
renegotiate in good faith those provisions so held to be invalid to be valid,
enforceable provisions which provisions shall reflect as closely as possible
the original intent of the parties, and further agree to be bound by the
mutually agreed substitute provision.
Section 18.7. FORCE MAJEURE. Except for payment of monies, neither party shall
be liable for failure to fulfill its obligations under this Agreement or any
purchase order issued hereunder or for delays in delivery due to causes beyond
its reasonable control, including, but not limited to, acts of God, man-made or
natural disasters, earthquakes, fire, riots, flood, material shortages, strikes,
delays in transportation or inability to obtain labor or materials through its
regular sources. The time for performance of any such obligation shall be
extended for the time period lost by reason of the delay.
Section 18.8. CONFLICTING TERMS. The parties agree that the terms and conditions
of this Agreement shall prevail, notwithstanding contrary or additional terms,
in any purchase order, sales acknowledgment, confirmation or any other document
issued by either party effecting the purchase and/or sale of the BuySite
Products, the MarketSite Services or the PeopleSoft Products.
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Section 18.9. LIABILITY OF EITHER PARTY. The provisions of this Agreement under
which the liability of either party is excluded or limited shall not apply to
the extent that such exclusions or limitations are declared illegal or void
under the laws applicable worldwide in which the Products or the MarketSite
Services are sold, unless the illegality or invalidity is cured under the laws
of the Territory by the fact that the law of the State of California, U.S.A.,
governs this Agreement.
Section 18.10. FOREIGN CORRUPT PRACTICES ACT. In conformity with the United
States Foreign Corrupt Practices Act and with the party's established corporate
policies regarding foreign business practices, the parties and their employees
and agents shall not directly or indirectly make any offer, payment, or promise
to pay; authorize payment; nor offer a gift, promise to give, or authorize the
giving of anything of value for the purpose of influencing any act or decision
of an official of any government worldwide or the United States Government
(including a decision not to act) or inducing such a person to use his or her
influence to affect any such governmental act or decision in order to assist
such party in obtaining, retaining or directing any such business.
Section 18.11. NOTICE. Any notice required or permitted to be given under this
Agreement shall be delivered (i) by hand, (ii) by registered or certified mail,
postage prepaid, return receipt requested, to the address of the other party
first set forth above, or to such other address as a party may designate by
written notice in accordance with this Section 18.11, with a copy to each
parties' General Counsel, (iii) by overnight courier, or (iv) by fax with
confirming letter mailed under the conditions described in (ii) above. Notice so
given shall be deemed effective when received, or if not received by reason of
fault of addressee, when delivered.
Section 18.12. GOVERNING LAW. This Agreement shall be governed by and construed
under the law of the State of California, U.S.A., without regard to conflict of
laws principles or the U.N. Convention on Contracts for the International Sale
of Goods.
Section 18.13. DISPUTES.
(a) ESCALATION. If Commerce One and PeopleSoft, are unable to resolve any
dispute, controversy or claim arising out of this Agreement between them, either
Commerce One or PeopleSoft may, by written notice to the other, first have such
dispute referred to the Vice President, Business Development (or equivalent) of
Commerce One and PeopleSoft, for attempted resolution by good faith negotiations
within five (5) business days after such notice is received. If not resolved
within such five (5) business day period, the parties shall escalate the dispute
their respective Chief Operating Officer (or equivalent) for resolution within
fifteen (15) business days after expiration of the initial five day period.
Unless otherwise mutually agreed, the negotiations between the designated
officers shall be conducted by face-to-face meetings within five (5) business
days and at times within the period stated above offered by the designated
officer of PeopleSoft to the designated officer of Commerce One for
consideration. If the parties are unable to resolve such dispute in accordance
with the aforementioned procedure or within such thirty (30) day period, either
party shall have the right to pursue settlement of such dispute as set forth in
Section 18.13(c).
(b) (b) Subject to Section 18.13(c) below, the parties agree that any suit
or proceeding brought in connection with, arising out of or relating to, this
Agreement shall be instituted only in a
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court of law located in the County of Santa Clara, State of California, U.S.A.,
and the parties hereby irrevocably agree and submit to the jurisdiction and
venue of any such proceeding and agree that service of process may be effected
in the same manner notice is given hereunder. Moreover, in the event that the
either party brings suit in a Federal court, the other party agrees not to
request removal of such suit to a State court.
(c) Arbitration. Any dispute or claim arising with respect to Sections
3.1(h), 4.1(a), or 5.8 of this Agreement, or the interpretation, making,
performance, breach or termination thereof, shall be finally settled by binding
arbitration under the Rules of the American Arbitration Association as presently
in force ("Rules") and by one (1) arbitrator mutually agreed upon the parties or
if not agreed, than appointed in accordance with said Rules; provided however
that either party may elect to have the dispute resolved by three (3)
arbitrators in which event each party shall appoint one of the arbitrators and
the third arbitrator will be appointed by the first two arbitrators. Judgment on
the award rendered may be entered in any court having jurisdiction thereof. The
place of arbitration shall be San Francisco, California, U.S.A. Any monetary
award shall be in U.S. dollars and the arbitration shall be conducted in the
English language. The parties may apply to any court of competent jurisdiction
for temporary or preliminary injunctive relief, without breach of this Section
18.13 and without any abridgment of the powers of the arbitrator. The arbitrator
shall have thirty days to resolve the dispute after submission of the issue to
arbitration and appointment of the arbitrator(s) as set forth above.
(d) Attorneys Fees. If any dispute arises under this Agreement, the
prevailing party shall be entitled to receive its reasonable legal fees and
costs associated therewith as part of the court proceeding or arbitration.
Section 18.14. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements relating thereto, written or oral, between the
parties. Amendments to this Agreement must be in writing, signed by the duly
authorized officers of the parties. The terms of any purchase order are
expressly excluded.
Section 18.15. REMEDIES. Unless otherwise specifically referred to herein,
nothing in this Agreement shall be deemed to limit either party's right to any
remedy under this Agreement.
Section 18.16. ATTACHMENTS. The following Attachments are attached to
and form a part of this Agreement:
Attachment A- BuySite Product Descriptions
Attachment B - Pricing, Payment Schedules and Deliverables
Attachment C - Commerce One Trademarks
Attachment D - Commerce One End User License Agreement
Attachment E - OEM Maintenance and Support
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Attachment F - PeopleSoft Products
Attachment G - Named Accounts
Attachment H - Specified Companies
Attachment I - Minimum Targets
Attachment J - PeopleSoft Distribution Channels
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to enter into this Agreement effective on the Effective Date.
Commerce One PeopleSoft, Inc.
By: Robert M. Tarkoff By: Craig Conway
------------------------------------ --------------------------------
Signature: /s/ Robert M. Tarkoff Signature: /s/ Craig Conway
----------------------------- -------------------------
Title: Vice President & General Counsel Title: President, CEO
--------------------------------- -----------------------------
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CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
JOINT DEVELOPMENT AGREEMENT
This Joint Development Agreement (the "Agreement") is made and entered into as
of this 5th day of June, 1999 ("Effective Date") by and between Commerce One,
Inc., a California corporation, with offices at 1600 Riviera Avenue, Walnut
Creek, California 94596 ("Commerce One"), PeopleSoft, Inc., a California
corporation, with principal offices at 4460 Hacienda Drive, Pleasanton,
California 94588-8615 ("PeopleSoft").
BACKGROUND
Commerce One and PeopleSoft desire that Commerce One perform development work on
behalf of PeopleSoft to develop PS products, on the terms and conditions set
forth herein. The intent of the parties is that Buysite 6.0 and Buysite 6.0P
source code baseline shall be componentized to support the isolation of user
interface and business objects to serve as the potential basis for a potential
future PeopleSoft procurement product.
The parties are concurrently entering into an OEM Software License
Agreement ("OEM Agreement").
In consideration of the mutual promises contained herein, Commerce One and
PeopleSoft agree as follows.
ARTICLE 1
DEFINITIONS
The following terms shall have the following meanings herein:
1.1 "ACCEPTANCE CRITERIA" means the acceptance criteria agreed upon by the
Joint Development Committee .
1.2 "CODE" means computer programming code. "Object Code" means the binary
machine-executable form of Code, including object files, libraries, executable
program, scripts and HTML pages. "Source Code" means the human-readable form of
Code, including but not limited to annotations, flow charts, use cases, ERDs and
design guides..
1.3 "DELIVERABLES" shall mean the items to be delivered by a party hereto
to the other party hereto in connection with the Development Task, as set forth
in the Development Exhibit.
1.4 "COMMERCE ONE DELIVERABLES" shall mean the Deliverables made, conceived
or reduced to practice solely by Commerce One, including all Technology and
Intellectual Property Rights therein.
1.5 "PEOPLESOFT DELIVERABLES" shall mean the Deliverables made, conceived
or reduced to practice solely by PeopleSoft, including all Technology and
Intellectual Property Rights therein.
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1.6 "DERIVATIVE WORK(S)" means a revision, modification, translation,
abridgment, condensation or expansion of a BuySite Product, PeopleSoft Product
or Documentation, as the case may be, or any form in which a BuySite Product,
PeopleSoft Product or Documentation, as the case may be, may be recast,
transferred, or adapted, and which, if prepared without the consent of Commerce
One or PeopleSoft, as the case may be, would be a copyright infringement.
1.7 "BUYSITE PRODUCT(S)" means BuySite versions 5.0, 6.0 and all Major and
Minor Updates thereto released during the term of this Agreement.
1.8 "DEVELOPMENT EXHIBIT" shall mean Exhibit A hereto.
1.9 "DEVELOPMENT SCHEDULE" shall mean the schedule for completion of the
Development Task, as set forth in the Development Exhibit. 1.10 "DEVELOPMENT
TASK" shall mean the development work to be performed pursuant to this Agreement
and the Development Exhibit.
1.10 "Development Task" shall mean the development work to be performed
pursuant to this Agreement and the Development Exhibit.
1.11 "INTELLECTUAL PROPERTY RIGHTS" shall mean all current and future
worldwide patents and other patent rights, utility models, copyrights, mask work
rights, trade secrets, and all other intellectual property rights, including
without limitation all applications and registrations with respect thereto.
1.12 "OEM AGREEMENT" shall mean the OEM Agreement executed by the parties
on the Effective Date.
1.13 "PEOPLESOFT PRODUCT(S)" means PeopleSoft software products as
described in the Development Exhibit with which the BuySite Products are to be
interfaced hereunder.
1.14 "PRODUCTS" means the BuySite Products and the PeopleSoft
Products collectively.
1.15 "TECHNOLOGY" shall mean all tangible and intangible results and items
arising out of or constituting the results of the Development Task, including
without limitation all Deliverables, ideas, inventions, designs, know-how,
notes, memoranda, documentation, and copyrighted materials, and all Intellectual
Property Rights constituting, embodied in, or pertaining to any of the
foregoing.
1.16 "TELCO INDUSTRY" means only those entities which carry out business in
the following named telecommunication industry sub-segmentsas set forth within
SIC code number 4813 (telecommunications) as they exist on the Effective Date.
The named sub-segments are limited to Facilities-based telecommunication
carriers (except wireless), Local telephone carriers (except wireless),
Long-distance telephone carriers (except wireless), Telecommunications carriers
(wired), Telecommunications networks (wired), and Telephone carriers facilities
based (except wireless).
1.17 "UNDERLYING TECHNOLOGY" means any inventions, discoveries, ideas,
formulae, processes, methods, techniques, improvements, technology, know-how, or
information made, conceived or reduced to practice outside of this Agreement
that are owned or controlled by
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PeopleSoft and that PeopleSoft elects to include with the Deliverables
hereunder, and all patents and other patent rights (including utility models),
copyrights, trade secrets and other intellectual property rights in or relating
to any of the foregoing, to the extent such inventions, discoveries, ideas,
formulae, processes, methods, techniques, improvements, technology, know-how, or
information is incorporated by PeopleSoft into, or would be infringed by the use
of, the Technology. For purposes of this Section 1.17, "control" means the right
to grant the licenses set forth in Section 3.6. If royalties or other
consideration is payable to third parties, or any license is required, with
respect to any Technology, PeopleSoft shall notify Commerce One of such
Technology prior to incorporating such Technology within the PeopleSoft
Deliverables.
1.18 "MAJOR AND MINOR UPDATES" shall have the meaning set forth in the OEM
Agreement.
ARTICLE 2
DEVELOPMENT, DELIVERY AND ACCEPTANCE
2.1 DEVELOPMENT.
(a) JOINT DEVELOPMENT COMMITTEE. The parties shall establish a joint
development committee comprised of six (6) members to oversee the conduct of the
Development Task, monitor the progress of the Development Task, and ensure open
communications between the parties. Each party shall appoint three (3) members
to the Joint Development Committee. The Joint Development Committee further
shall develop Acceptance Criteria for the Deliverables in a manner consistent
with Exhibit A and requirements for ongoing technical support with respect to
the Deliverables. Decisions of the Joint Development Committee shall be made by
unanimous approval. Either party may change its members of the Joint Development
Committee by providing written notice thereof to the other party. Disputes with
respect to this Agreement which cannot be resolved by the Joint Development
Committee shall be subject to the provisions of Section 9.10 of this Agreement.
The Joint Development Committee shall meet at least once per calendar quarter to
monitor the progress of this Agreement and to manage issue resolution under this
Agreement. Upon acceptance of each Deliverable, the Joint Development Committee
will confirm that the designations of Deliverables as Commerce One Deliverables,
PeopleSoft Deliverables or jointly developed Deliverables as set forth in the
Development Exhibit are correct. Inclusion of Underlying Technology shall be
subject to approval of the Joint Development Committee, which approval shall not
be unreasonably withheld.
(b) EXCHANGE OF INFORMATION. Each party shall keep appropriate records
relating to the activities contemplated by this Agreement, and shall report to
the other party on the status of such activities on a regular basis.
(c) PERSONNEL. Each party shall provide engineers to support each
other in the development efforts required under this Agreement.
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(d) DISCLOSURE OF INFORMATION NECESSARY FOR PERFORMANCE OF
DEVELOPMENT. Each party shall disclose such information as is in the possession
of such party and that such party has the right to disclose to the extent
reasonably necessary for the other party to perform the Development Task.
2.2 DELIVERY AND ACCEPTANCE.
(a) Each party shall use commercially reasonable efforts to complete
the Development Task and to deliver to the other party all applicable
Deliverables, in accordance with the Development Schedule. Upon completion of
each Deliverable, each party shall deliver to the other party all applicable
Deliverables, including documentation, for evaluation by the other party
pursuant to Section 2.2(b) below. In the event that either PeopleSoft or
Commerce One delays in the delivery of a Deliverable attributable to it as set
forth in the Development Exhibit, the schedule for the next Deliverable of the
other party hereto shall be determined by the Joint Development Committee.
(b) Upon delivery to Commerce One of the PeopleSoft Deliverables,
including related documentation, the parties shall evaluate such Deliverables
for conformity to the Acceptance Criteria. Commerce One shall provide PeopleSoft
within ten (10) business days after delivery of such materials with written
acceptance thereof, or a statement of defects to be corrected. PeopleSoft shall
promptly correct such defects and return the corrected PeopleSoft Deliverables
for retesting and reevalu tion, and Commerce One shall within ten (10) business
days after such redelivery provide PeopleSoft with written acceptance or a
statement of defects.
(c) Upon delivery to PeopleSoft of the Commerce One Deliverables,
including related documentation, PeopleSoft shall evaluate such Commerce One
Deliverables for conformity to the Acceptance Criteria. PeopleSoft shall provide
Commerce One within ten (10) business days after delivery of such materials with
written acceptance thereof, or a statement of defects to be corrected. Commerce
One shall promptly correct such defects and return the corrected Commerce One
Deliverables for retesting and reevaluation, and PeopleSoft shall within ten
(10) business days after such redelivery provide Commerce One with written
acceptance or a statement of defects.
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ARTICLE 3 a
OWNERSHIP
3.1 COMMERCE ONE OWNERSHIP. Commerce One retains all of its right, title,
and interest in and to the Commerce One Deliverables. For the avoidance of
doubt, "Commerce One Deliverables" shall include [ * ]. Commerce One shall
have the exclusive right to apply for or register patents, mask work rights,
copyrights, and such other proprietary protections as it wishes with respect
to Commerce One Deliverables. PeopleSoft agrees to, and shall have its
consultants, agents and employees, execute such documents, render such
assistance, and take such other action as may be necessary or convenient to
apply for, register, perfect, confirm, enforce, defend and protect Commerce
One's Intellectual Property Rights in and to the Commerce One Deliverables.
Patent applications to be filed with respect to inventions first conceived or
reduced to practice hereunder by PeopleSoft shall be provided to Commerce One
prior to filing to afford a reasonable opportunity to review and comment.
3.2 PEOPLESOFT OWNERSHIP. PeopleSoft retains all of its right, title, and
interest in and to the PeopleSoft Deliverables. For the avoidance of doubt,
"PeopleSoft Deliverables" shall include [ * ]. PeopleSoft shall have the
exclusive right to apply for or register patents, mask work rights,
copyrights, and such other proprietary protections as it wishes with respect
to the PeopleSoft Deliverables. Commerce One agrees to, and shall have its
consultants, agents and employees, execute such documents, render such
assistance, and take such other action as may be necessary or convenient to
apply for, register, perfect, confirm, enforce, defend and protect
PeopleSoft's Intellectual Property Rights in and to the PeopleSoft
Deliverables. Patent applications to be filed with respect to inventions
first conceived or reduced to practice hereunder by Commerce One shall be
provided to PeopleSoft prior to filing for review and comment to afford a
reasonable opportunity to review and comment.
3.3 OWNERSHIP OF BUYSITE [ * ].
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[ * ]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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3.4 JOINT OWNERSHIP. Any subject matter other than Commerce One
Deliverables or PeopleSoft Deliverables that are made, conceived or reduced to
practice jointly by Commerce One and PeopleSoft shall be jointly owned ("JOINTLY
OWNED SUBJECT MATTER"). Subject to the payment obligations expressly set forth
in Section 6 of Attachment B of the OEM Agreement, each party shall have the
right to use, license, distribute and otherwise exploit the Jointly Owned
Subject Matter without any duty to account for profits and without obtaining
consent of the other party. The application, prosecution and maintenance of
Intellectual Property Rights with respect to Jointly Owned Subject Matter shall
be subject to the mutual written agreement of the parties.
3.5 WAIVER OF MORAL RIGHTS. To the extent permitted by applicable law, each
party hereby waives any and all moral rights, including any right to
identification of authorship or limitation on subsequent modification, that such
party (or its employees, agents or consultants) has or may have in any
Technology.
3.6 LICENSE OF BUYSITE [ * ].
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Each party (the "Warranting Party") warrants to the other party as of
the date hereof and with respect to Sections 4.1(d), (e) and (f), on a
continuing basis that:
(a) CORPORATE AUTHORITY. The Warranting Party has the right to enter
this Agreement, is a corporation duly organized, validly existing, and in good
standing under the laws of the state of its incorporation set forth on page one
hereof, has the power and authority, corporate and otherwise, to execute and
deliver this Agreement and to perform its obligations hereunder, and has by all
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[ * ]=CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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necessary corporate action duly and validly authorized the execution and
delivery of this Agreement and the performance of its obligations hereunder.
(b) BINDING OBLIGATION. This Agreement is the valid and legally
binding obligation of the Warranting Party in accordance with its terms, subject
to bankruptcy, reorganization, insolvency, moratorium and similar laws and to
general principles of equity which are within the discretion of courts of
applicable jurisdiction.
(c) NO CONFLICTS. The execution, delivery and performance by the
Warranting Party of this Agreement and each other agreement, document, or
instrument now or hereafter executed and delivered by the Warranting Party
pursuant thereto or in connection herewith will not: (i) conflict with or
violate the articles or certificate of incorporation or by-laws of the
Warranting Party or any provision of any law, rule, regulation, authorization or
judgment of any governmental authority having applicability to the Warranting
Party or its actions; or (ii) conflict with or result in any breach of, or
constitute a default under, any note, security agreement, commitment, contract
or other agreement, instrument or undertaking to which the Warranting Party is a
party or by which any of its property is bound.
(d) OWNERSHIP. Except for Technology that is in the public domain or
developed by the other party hereunder, the Warranting Party will have the right
and power to make the assignments and other rights granted to the other party
hereunder.
(e) INDEPENDENT WORK. Except for the Underlying Technology and
Technology that is in the public domain or developed by the other party
hereunder, the Technology will have been independently created by the Warranting
Party's employees, agents, and consultants, and to the knowledge of the
Warranting Party, use of the Technology by the other party as contemplated
herein will not depend on the acquisition of rights from any third party.
(f) AGREEMENTS WITH EMPLOYEES. The Warranting Party has and will
maintain with all the Warranting Party's employees, agents, and consultants,
written agreements sufficient to enable the Warranting Party to perform its
obligations hereunder, including without limitation the obligations set forth in
Article 3 above. The Warranting Party shall furnish to the other party copies of
such written agreements upon request and shall cause such subcontractors,
employees and agents to execute and deliver such further certificates,
acknowledgements, waivers and assignments as may be appropriate to give effect
to the foregoing.
4.2 DISCLAIMER OF WARRANTIES. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH
IN THIS ARTICLE 4 ABOVE, NEITHER PARTY MAKES ANY WARRANTIES UNDER THIS
AGREEMENT, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE WITH RESPECT TO THE
SUBJECT MATTER HEREOF, AND EACH PARTY SPECIFICALLY DISCLAIMS THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 5
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PAYMENTS
Except as expressly set forth in this Agreement and the OEM Agreement, each
party shall perform its obligations hereunder without payment of any kind to the
other party and each party shall bear its own costs and expenses.
ARTICLE 6
CONFIDENTIAL INFORMATION AND DISCLOSURE
6.1 CONFIDENTIAL INFORMATION. Each party agrees to maintain all
Confidential Information in confidence to the same extent that it protects
its own similar Confidential Information and to use such Confidential
Information only as permitted under this Agreement. For purposes of this
Agreement "Confidential Information" shall mean information including,
without limitation, computer programs, code, algorithms, names and expertise
of employees and consultants, know-how, formulas, processes, ideas,
inventions (whether patentable or not), schematics and other technical,
business, financial and product development plans, forecasts, strategies and
information marked "Confidential" or if disclosed verbally, reduced to
writing and marked "Confidential," or which should reasonably be understood
by the receiving party to be confidential information of the disclosing
party, within thirty (30) days after the date of disclosure. Each party
agrees to take all reasonable precautions to prevent any unauthorized
disclosure or use of Confidential Information including, without limitations
disclosing Confidential Information only to its employees (a) with a need to
know to further permitted uses of such information and (b) who are parties to
appropriate agreements sufficient to comply with this Article 6, and (c) who
are informed of the nondisclosure/ non-use obligations imposed by this
Article 6 and both parties shall take appropriate steps to implement and
enforce such non-disclosure/non-use obligations. The foregoing restrictions
on disclosure and use shall survive for three (3) years following termination
of this Agreement but shall not apply with respect to any Confidential
Information which (i) was or becomes publicly known through no fault of the
receiving party; (ii) was rightfully known or becomes rightfully known to the
receiving party without confidential or proprietary restriction from a source
other than the disclosing party; (iii) is independently developed by the
receiving party without the participation of individuals who have had access
to the Confidential Information; (iv) is approved by the disclosing party for
disclosure without restriction in a written document which is signed by a
duly authorized officer of such disclosing party; (v) by the receiving party
in connection with the securities filings with the Securities and Exchange
Commission or as otherwise required by government regulation, or (vi) the
receiving party is legally compelled to disclose; provided, however, that
prior to any such compelled disclosure, the receiving party will (a) assert
the privileged and confidential nature of the Confidential Information
against the third party seeking disclosure and (b) cooperate fully with the
disclosing party in protecting against any such disclosure and/or obtaining a
protective order narrowing the scope of such disclosure and/or use of the
Confidential Information. In the event that such protection against
disclosure is not obtained, the receiving party will be entitled to disclose
the Confidential Information, but only as and to the extent necessary to
legally comply with such compelled disclosure. Notwithstanding the provisions
set forth in this Section 6.1 above, each party may disclose the terms of
this Agreement (i)
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in connection with the requirements of an initial public offering or securities
filing; (ii) in confidence, to accountants, banks, and financing sources and
their advisors; (iii) in confidence, in connection with the enforcement of this
Agreement or rights under this Agreement; or (iv) in confidence, in connection
with a merger or acquisition or proposed merger or acquisition, or the like.
6.2 SOURCE CODE. With respect to the BuySite Product Source Code disclosed
by Commerce One to PeopleSoft hereunder, the following additional provisions
shall apply:
(a) PeopleSoft agrees to use the BuySite Product Source Code under
carefully controlled conditions in accordance with and for the purposes of this
Agreement, and to inform those employees who are given access to the BuySite
Product Source Code that such materials are the confidential and proprietary
information of Commerce One and disclosed to PeopleSoft as such. PeopleSoft
agrees to limit access to the BuySite Product Source Code strictly to those
employees, agents or contractors who require access in order to carry out the
Development Task, and PeopleSoft agrees to use reasonable care in selecting such
personnel. PeopleSoft shall be fully responsible for the conduct of all its
employees, agents and representatives. PeopleSoft will use same degree of care
with respect to the BuySite Product BuySite Product Source Code as PeopleSoft
uses for PeopleSoft PeopleTools Source Code, but in no event less than
reasonable care.
(b) Without limiting the foregoing, PeopleSoft, prior to any
individual's access to the BuySite Product Source Code, shall enter into a
confidentiality agreement with each such individual, if it has not done so
already with such individual, which shall afford substantially similar
protections to those afforded herein. Commerce One shall have the right to
reasonably request to review such confidentiality agreements. Nothing in this
Article 6 shall be construed to permit access to the BuySite Product Source Code
by anyone other than PeopleSoft' employees, contractors, or agents.
ARTICLE 7
TERM AND TERMINATION
7.1 TERM. This Agreement shall commence on the Effective Date and shall
terminate upon the earlier of (1) the delivery of Buysite 6.0P by Commerce One
and acceptance of Buysite 6.0P by PeopleSoft, and (2) the expiration or
termination of the OEM Agreement, unless the parties mutually agree to extend
the term of this Agreement.
7.2 FOR CAUSE. Either party may terminate this Agreement effective upon
written notice to the other if the other party materially breaches this
Agreement which breach is not cured within thirty (30) days after written notice
thereof from the non-breaching party stating its intention to terminate this
Agreement by reason thereof.
7.3 FOR BANKRUPTCY. Either party may terminate this Agreement in the event
the other party files for bankruptcy under Chapter 7 of the U.S. Bankruptcy Act
or an involuntary petition in bankruptcy is filed against a party which is not
dismissed within ninety (90) days.
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7.4 SURVIVAL. The parties' rights and obligations with respect to the
following Sections and Articles shall survive any termination of this Agreement:
Articles 3, 4, 5, 6, 8, and 9.
ARTICLE 8
LIMITATION OF LIABILITY
IN NO EVENT SHALL EITHER PARTY OR ITS SUPPLIERS OR LICENSORS BE LIABLE FOR
ANY LOSS OF PROFITS, LOSS OF BUSINESS OPPORTUNITY, LOSS OF USE OR DATA, OR FOR
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES (AND NOTWITHSTANDING
ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY STATED HEREIN), OR FOR
ANY CLAIM AGAINST SUCH PARTY BY ANY THIRD PARTY.
IN ANY EVENT, BOTH PARTIES LIABILITY TO THE OTHER SHALL BE LIMITED IN THIS
AGREEMENT TO THE AMOUNTS AND IN THE MANNER AS THAT SET FORTH IN THE OEM
AGREEMENT.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 INDEPENDENT CONTRACTORS. The relationship of Commerce One and
PeopleSoft established by this Agreement is that of independent contractors, and
neither party is an employee, agent, partner or joint venturer of the other. All
financial obligations associated with each party's business are the sole
responsibility ofsuch party. All sales and other agreements between a party and
third parties are such party'sexclusive responsibility and will have no effect
on such party's obligations under this Agreement.
9.2 ASSIGNMENT. Except as set forth in this Section 9.2 below, neither
party shall transfer or assign its rights or obligations under this Agreement
without the prior written consent of the other party and any purported
assignment in violation of the foregoing shall be null and void. Either party
shall have the right to assign this Agreement, or any of its rights or
obligations hereunder, to any wholly owned subsidiary or any successor in
interest to all or substantially all of such party's business or assets related
to this Agreement, whether by merger, reorganization, asset sale or otherwise.
Subject to the foregoing, this Agreement will be binding upon and inure to the
benefit of the parties hereto, their successors and assigns.
9.3 NO IMPLIED WAIVERS. The failure of either party at any time to require
performance by the other of any provision hereof shall not affect the right of
such party to require performance at any time thereafter, nor shall the waiver
of either party of a breach of any provision hereof be taken or held to be a
waiver of a provision itself.
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9.4 SEVERABILITY. If any provision of this Agreement is held to be invalid
by a court of competent jurisdiction, then the remaining provisions will
nevertheless remain in full force and effect. The parties agree to renegotiate
in good faith those provisions so held to be invalid to be valid, enforceable
provisions which provisions shall reflect as closely as possible the original
intent of the parties, and further agree to be bound by the mutually agreed
substitute provision.
9.5 FORCE MAJEURE. Except for payment of monies, neither party shall be
liable for failure to fulfill its obligations under this Agreement or any
purchase order issued hereunder or for delays in delivery due to causes beyond
its reasonable control, including, but not limited to, acts of God, man-made or
natural disasters, earthquakes, fire, riots, flood, material shortages, strikes,
delays in transportation or inability to obtain labor or materials through its
regular sources. The time for performance of any such obligation shall be
extended for the time period lost by reason of the delay.
9.6 CONFLICTING TERMS. The parties agree that the terms and conditions of
this Agreement shall prevail, notwithstanding contrary or additional terms, in
any purchase order, sales acknowledgment, confirmation or any other document
issued by either party effecting the purchase and/or sale of the BuySite
Products.
9.7 HEADINGS. Headings of Sections and Articles herein are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
9.8 NOTICE. Any notice required or permitted to be given under this
Agreement shall be delivered (i) by hand, (ii) by registered or certified mail,
postage prepaid, return receipt requested, to the address of the other party
first set forth above, or to such other address as a party may designate by
written notice in accordance with this Section 9.8, (iii) by overnight courier,
or (iv) by fax with confirming letter mailed under the conditions described in
(ii) above. Notice so given shall be deemed effective when received, or if not
received by reason of fault of addressee, when delivered.
9.9 GOVERNING LAW. This Agreement shall be governed by and construed under
the law of the State of California, U.S.A., without regard to conflict of laws
principles.
9.10 DISPUTES. If Commerce One and PeopleSoft, are unable to resolve any
dispute, controversy or claim arising out of this Agreement between them, either
Commerce One or PeopleSoft may, by written notice to the other, first have such
dispute referred to the Vice President, Engineering (or equivalent) of Commerce
One and PeopleSoft, for attempted resolution by good faith negotiations within
five (5) business days after such notice is received. If not resolved within
such five (5) business day period, the parties shall escalate the dispute their
respective Presidents for resolution within fifteen (15) business days after
expiration of the initial five day period. Unless otherwise mutually agreed, the
negotiations between the designated officers shall be conducted by telephone or
otherwise, within three (3) days and at times within the period stated above
offered by the designated officer of PeopleSoft to the designated officer of
Commerce One for consideration. If the parties are unable to resolve such
dispute in accordance with the aforementioned procedure or within such thirty
(30) day period, either party shall have the right to pursue settlement of such
dispute by arbitration as set forth in Section 9.11.
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9.11 ARBITRATION. Any dispute or claim arising out of or in relation to
this Agreement, or the interpretation, making, performance, breach or
termination thereof, shall be finally settled by binding arbitration under the
Rules of the American Arbitration Association as presently in force ("Rules")
and by one (1) arbitrator mutually agreed upon the parties or if not agreed,
than appointed in accordance with said Rules; provided however that either party
may elect to have the dispute resolved by three (3) arbitrators in which event
each party shall appoint one of the arbitrators and the third arbitrator will be
appointed by the first two arbitrators. Judgment on the award rendered may be
entered in any court having jurisdiction thereof. The place of arbitration shall
be San Francisco, California, U.S.A. Any monetary award shall be in U.S. dollars
and the arbitration shall be conducted in the English language. The parties may
apply to any court of competent jurisdiction for temporary or preliminary
injunctive relief, without breach of this Section 9.11 and without any
abridgment of the powers of the arbitrator. In the event that the parties are
deadlock on the Acceptance Criteria, the parties shall submit the dispute to
binding arbitration pursuant to this Section 9.11, and the arbitrator shall have
thirty days to resolve the dispute after submission of the issue to arbitration
and appointment of the arbitrator(s) as set forth above. The arbitrator shall be
directed to resolve all other disputes submitted to arbitration in an
expeditious fashion.
9.12 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof and supersedes all prior
agreements relating thereto, written or oral, between the parties. Amendments to
this Agreement must be in writing, signed by the duly authorized officers of the
parties. The terms of any purchase order are expressly excluded.
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COMMERCE ONE, INC. PEOPLESOFT, INC.
By: /s/ Robert M. Tarkoff By: /s/ Craig Conway
------------------------------------ ---------------------------------
Print Name: Robert M. Takoff Print Name Craig Conway
---------------------------- -------------------------
Title: Vice President & General Counsel Title: President, CEO
--------------------------------- -----------------------------
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STOCK PURCHASE AND MASTER STRATEGIC RELATIONSHIP AGREEMENT
This Stock Purchase and Master Strategic Relationship Agreement (this
"Agreement") is entered into as of June 5, 1999, by and between Commerce One,
Inc., a California corporation (the "Company"), and PeopleSoft, Inc., a Delaware
corporation (the "Purchaser"). Capitalized terms used in this Agreement and not
otherwise defined are defined in EXHIBIT A attached hereto.
WHEREAS, the Purchaser wishes to purchase from the Company, and the Company
wishes to issue and sell to the Purchaser, following the Company's
reincorporation into Delaware (the "Delaware Reincorporation"), certain shares
of the Common Stock;
WHEREAS, such sale and purchase of Common Stock shall occur immediately
following the closing of the Company's initial public offering (the "IPO").
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, the parties hereto, intending to be legally bound, agree as follows:
1. AGREEMENT TO SELL AND PURCHASE SHARES; OTHER AGREEMENTS
1.1 SALE AND PURCHASE OF SHARES.
(a) Subject to the terms and conditions hereof, at the
Closing, the Company will issue and sell to the Purchaser, and the Purchaser
will purchase from the Company, shares of Common Stock equal in number to
$8,000,000 divided by the Per Share Price. The "Per Share Price" shall be equal
to the IPO Price multiplied by 94%.
(b) At the Closing, the Purchaser shall pay the purchase
price (the "Purchase Price") for the shares of Common Stock purchased hereunder
(the "Purchased Shares") by wire transfer of immediately available funds in U.S.
dollars to an account specified in writing by the Company prior to the Closing.
(c) No fractional shares shall be issued upon the sale of any
Common Stock to the Purchaser pursuant to this Agreement, and the number of
shares of Common Stock to be issued to the Purchaser shall be rounded to the
nearest whole share.
(d) All certificates representing the Purchased Shares shall
bear the following legend:
(i) "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"). SUCH SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. THE
COMPANY MAY REQUIRE AN OPINION OF COUNSEL
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REASONABLY ACCEPTABLE TO IT THAT A PROPOSED TRANSFER OR SALE IS IN COMPLIANCE
WITH THE ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDERS OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY."
(ii) Any legend required by the blue sky or
securities laws of any state or jurisdiction to the extent such laws are
applicable to the shares represented by the certificate so legended.
(e) The certificates representing the Purchased Shares will be
subject to a stop transfer order with the Company's transfer agent that
restricts the transfer of the Purchased Shares except in compliance with this
Agreement.
1.2 CLOSING.
The closing of the purchase and sale of the Purchased Shares (the
"Closing") shall take place at the offices of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304, at
11:00 a.m. (California time) on the date of and immediately following the
closing of the IPO, or on such other date or at such other place or time as the
Company and the Purchaser may mutually agree (such date, the "Closing Date").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the disclosure schedule attached hereto
as EXHIBIT B (the "Disclosure Schedule"), the Company hereby represents and
warrants to the Purchaser as follows:
2.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION.
Each of the Company and VEO Systems, Inc., a wholly-owned subsidiary of the
Company ("VEO"), is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, and has all requisite
corporate power and authority to carry on its business as now conducted and as
proposed to be conducted. Each of the Company and VEO is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which the nature of its business or the location of its
properties requires such qualification and in which the failure to so qualify
would have a material adverse effect on its business. In connection with the
IPO, as of the Closing Date, the Company shall be incorporated in the State of
Delaware and VEO shall be a wholly-owned subsidiary of the Company duly
organized, validly existing and in good standing under the laws of the State of
California.
2.2 CAPITALIZATION.
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As of the date of this Agreement, the authorized capital of the Company
consists of the following:
(a) 29,000,000 shares of Preferred Stock, no par value
("Preferred Stock") of which 673,680 shares have been designated Series A
Preferred Stock, all of which are issued and outstanding, 3,595,976 have been
designated Series B Preferred Stock, of which 3,568,293 are issued and
outstanding, 6,450,000 shares have been designated Series C Preferred Stock, of
which 5,120,608 are issued and outstanding, 10,700,000 shares have been
designated Series D Preferred Stock, 8,866,757 of which are issued and
outstanding, 800,169 shares have been designated Series D' Preferred Stock,
681,143 of which are issued and outstanding, and 5,518,764 shares have been
designated Series E Preferred Stock, of which 5,517,638 shares are issued and
outstanding. The rights, privileges and preferences of the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock, the Series D' Preferred Stock and the Series E Preferred Stock
are as stated in the Company's Amended and Restated Articles of Incorporation.
In connection with the Company's IPO, all of the outstanding shares of Preferred
Stock will convert into an equal number of shares of Common Stock, subject to
adjustment for any reverse split of the Company's Common Stock to be effected
prior to the IPO.
(b) 60,000,000 shares of common stock, no par value,
11,457,478 shares of which are issued and outstanding, subject to adjustment for
any reverse split of the Company's Common Stock to be effected prior to the IPO.
In connection with the Company's IPO, the Company will issue additional shares
of Common Stock.
(c) Warrants to purchase 27,562 shares of Series B Preferred
Stock (the "Series B Warrants"), warrants to purchase 1,293,580 shares of Series
C Preferred Stock (the "Series C Warrants"), and warrants to purchase 86,818
shares of Series D Preferred Stock (the "Series D Warrants") (each of which
Series B Warrants, Series C Warrants, and Series D Warrants is subject to
adjustment for any reverse split of the Company's Common Stock to be effected
prior to the IPO) are issued and outstanding.
(d) The Company has reserved 12,956,090 shares of common
stock, subject to adjustment for any reverse split of the Company's Common Stock
to be effected prior to the IPO, for issuance to directors, employees or
consultants under the Company's stock option and stock benefit plans of which
6,445,029 shares of common stock, subject to adjustment for any reverse split of
the Company's Common Stock to be effected prior to the IPO, are subject to
outstanding stock options as of the date hereof (the "Outstanding Options").
Except for the Warrants described above, the Outstanding Options, and as
contemplated in connection with the Company's IPO, there are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements, orally or in writing, for the purchase or acquisition from the
Company of any shares of its capital stock.
(e) All issued and outstanding shares of the Company's common
stock have been duly authorized and validly issued, are fully paid and
nonassessable, and were offered, issued
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and sold in compliance with all applicable state and federal laws concerning the
offer, sale and issuance of securities.
(f) Neither the offer nor the issuance or sale of the
Purchased Shares constitutes or will constitute an event, under any capital
stock or convertible security or any anti-dilution or similar provision of any
agreement or instrument to which the Company is a party or by which it is bound
or affected, which shall either increase the number of shares or units of
capital stock issuable upon conversion of any securities or upon exercise of any
warrant or right to subscribe to or purchase any stock or similar security, or
decrease the consideration per share or unit of capital stock to be received by
the Company upon such conversion or exercise.
2.3 SUBSIDIARIES.
Other than VEO, the Company does not currently own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity which is material to the Company's business.
2.4 AUTHORIZATION.
All corporate action on the part of the Company, its officers, directors
and shareholders necessary for the authorization, execution and delivery of this
Agreement, the performance of all obligations of the Company hereunder and
thereunder and the authorization, issuance and delivery of the Purchased Shares
has been taken or will be taken prior to the Closing. The Agreement, when
executed and delivered, will be a valid and binding obligation of the Company
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights; and (ii) general
principles of equity that restrict the availability of equitable remedies.
2.5 VALID ISSUANCE OF SECURITIES.
The Purchased Shares being issued hereunder, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable. Based in
part upon the representations of the Purchasers in this Agreement and subject to
the provisions of Section 2.7 below, the Purchased Shares will be issued in
compliance with all applicable federal and state securities laws. The Purchased
Shares shall be free of any liens or encumbrances, other than any liens or
encumbrances created by the Purchasers; PROVIDED, HOWEVER, that the Purchased
Shares may be subject to restrictions on transfer under state and/or federal
securities laws. The Purchased Shares are not and will not be subject to any
preemptive rights, rights of first refusal, rights of first offer or other
similar rights that have not been properly waived or complied with.
2.6 FIRPTA.
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The Company is not a "United States Real Property Holding Corporation"
within the meaning of Section 847(c)(2) of the Internal Revenue Code of 1986,
as amended.
2.7 GOVERNMENTAL CONSENTS.
No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this Agreement or the
consummation of the Transactions except as required in connection with the
Delaware Reincorporation and for the filing of notices required by applicable
Blue Sky laws, the filing of a Form D pursuant to Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"), as promulgated by the
Securities and Exchange Commission, and the filing of any notices required by
applicable foreign securities laws.
2.8 LITIGATION.
There is no action, suit, arbitration, proceeding or investigation pending
or currently threatened against the Company or its properties before any court,
arbitrator or governmental agency, nor is the Company aware that there is any
basis for the foregoing. The foregoing includes, without limitation, actions,
suits, arbitration proceedings or investigations pending or threatened (or any
basis therefor known to the Company) involving the prior employment of any of
the Company's employees, their use in connection with the Company's business of
any information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court of government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.9 INTELLECTUAL PROPERTY.
As of the Closing, the Company has legally enforceable rights to use all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights, know-how and processes necessary for its
business as now conducted and as proposed to be conducted without any conflict
with or infringement on the rights of others, except as may otherwise be
described in Section 2.9 of the Disclosure Schedule. Except pursuant to
Contracts (as defined in Section 2.11 below) listed in the Disclosure Schedule,
copies of which have previously been delivered to the Purchasers, there are no
outstanding options, licenses, or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights, know-how and processes of any other person or entity. Except as
described in Section 2.9 of the Disclosure Schedule, to the best of the
Company's knowledge the Company has not violated or, by conducting its business
as proposed, would not violate any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other proprietary rights of any
other person or entity. Each current or former employee, officer,
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director and consultant of the Company has executed an agreement with the
Company regarding confidentiality and proprietary information, a copy of the
form of which has previously been provided to the Purchasers, and no
exceptions have been taken by any such current or former employee, officer or
consultant. The Company is not aware that any of its employees is obligated
under any contract (including licenses, covenants or commitments of any
nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his
or her best efforts to promote the interests of the Company or that would
conflict with the Company's business as conducted or proposed to be
conducted. Neither the execution nor delivery of this Agreement or the other
Transaction Agreements, nor the carrying on of the Company's business as
conducted or as currently proposed to be conducted, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. The Company
does not believe that it is or will be necessary for the Company to utilize
any inventions of any of its employees made prior to their employment with
the Company.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS.
The Company is not in violation or default of any provisions of its charter
documents or of any instrument, judgment, order, writ, decree or contract to
which it is a party or by which it is bound or, of any provision of federal,
state, local or foreign statute, rule, regulation, order or restriction
applicable to the Company, including but not limited to the Foreign Corrupt
Practices Act. The execution, delivery and performance of this Agreement and
the other Transaction Agreements and the consummation of the Transactions will
not result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event which results in the creation of any lien, charge or encumbrance upon any
of the properties or assets of the Company or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization, or approval applicable to the Company, its business or operations
or any of its assets or properties. No consent, approval, qualification, order
or authorization of, or filing with, any governmental authority, or any consent
or approval of any third party person or entity is required in connection with
the Company's valid execution, delivery or performance of this Agreement or the
offer, sale or issuance of the Purchased Shares, or the consummation of any
other transaction contemplated on the part of the Company hereby, except as
required in connection with the Delaware Reincorporation and for the filing of
any notice required by applicable Blue Sky laws, the filing of a notice on Form
D, the filing of any notice required by applicable foreign securities laws.
Except as disclosed in the Disclosure Schedule, the Company has avoided every
condition and has not performed any act which would result in the Company's loss
of any right granted under any license, distribution or other agreement.
2.11 MATERIAL CONTRACTS AND COMMITMENTS.
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Except as listed in Section 2.11 of the Disclosure Schedule and except for
agreements explicitly contemplated hereby (the "Contracts"), there are no
agreements, instruments, leases, licenses, commitments (written or oral) or
contracts to which the Company is a party or by which it is bound, which
(i) involve obligations of or payments to the Company, absolute or contingent,
in excess of $20,000 individually, (ii) involve provisions restricting or
affecting the development, manufacture or distribution of the Company's products
or services, or (iii) involve indemnification by the Company with respect to
infringements of proprietary rights (other than indemnification obligations
arising from purchase and sale agreements entered into in the ordinary course of
business and ordinary course licensing agreements entered into with customers of
the Company). All of the Contracts are valid, binding and in full force and
effect in all material respects and enforceable by the Company in accordance
with their respective terms in all material respects, subject to the effect of
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium, usury or other laws of general application relating to or affecting
enforcement of creditors' rights and rules or laws concerning equitable
remedies. The Company is not in material default under any of such Contracts,
nor has the Company received notice that any third party does not intend to
renew any material contract it currently has with the Company, or that any third
party intends to terminate any material contract currently in place with the
Company. To the best knowledge of the Company, no other party to any of the
Contracts is in material default thereunder. Except for the merger of the
Company and VEO, the Company has not engaged in the past six (6) months in any
discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company of a
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of, or (iii) regarding any
other form of acquisition, liquidation, dissolution or winding up of the
Company.
2.12 TITLE TO PROPERTY AND ASSETS.
The Company has good and marketable title to its property and assets, free
and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets it leases, the Company is in compliance
with such leases and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances. Other than ordinary wear
and tear, all tangible assets owned or leased by the Company are in good
operating condition and repair, are reasonably fit and usable for the purposes
for which they are being used, and are adequate and sufficient for the Company's
business.
2.13 FINANCIAL STATEMENTS.
The Purchasers have received the Company's audited consolidated balance
sheet, statements of income, cash flow and shareholders' equity for the fiscal
year ended December 31, 1998, together with the related opinion of Ernst &
Young, LLP, independent public accountants (the "Financial
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Statements"), which are complete and correct in all material respects and have
been prepared in accordance with generally accepted accounting principles
applied on a basis consistent throughout the periods indicated and consistent
with each other, subject to normal end-of-period adjustments. The Financial
Statements fairly present the consolidated financial condition, operating
results and cash flows of the Company as of the respective dates and for the
respective periods indicated.
The Purchasers have received an unaudited consolidated balance sheet,
statements of income, cash flow and shareholders' equity for the three-month
period ended March 31, 1999 (the "Unaudited Financial Statements"). The
Unaudited Financial Statements were prepared in good faith by the Company, are
complete and correct in all material respects and have been prepared from the
books and records of the Company, in accordance with generally accepted
accounting principles consistently applied by the Company, and present the
consolidated financial condition, operating results and cash flows of the
Company as of the date and for the period indicated.
Except as disclosed in the Financial Statements and Unaudited Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation. The Company maintains and will continue
to maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
2.14 CHANGES.
Except as otherwise disclosed in the Financial Statements and Unaudited
Financial Statements, since March 31, 1999, there has not been:
(a) any change in the assets, liabilities, financial condition
or operating results of the Company from that reflected in the Financial
Statements and Unaudited Financial Statements, except changes in the ordinary
course of business that have not been, in the aggregate, materially adverse;
(b) any incurrence of any indebtedness for money borrowed;
(c) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(d) any waiver by the Company of a valuable right or of a
material debt owed to it;
(e) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);
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(f) except as described in Section 2.11 of the Disclosure
Schedule, any material change or amendment to a material contract or arrangement
by which the Company or any of its assets or properties is bound or subject;
(g) any material change in any compensation arrangement or
agreement with any employee, contractor or director;
(h) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets, except
licenses entered into in the ordinary course of business and consistent with
past practices;
(i) any resignation or termination of employment of any key
officer of the Company, and the Company, to the best of its knowledge, does not
know of the impending resignation or termination of employment of any such
officer;
(j) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;
(k) any mortgage, pledge, transfer of a security interest in,
or lien, created by the Company with respect to any of its material properties
or assets, except liens for taxes not yet payable;
(l) any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(m) any declaration, setting aside or payment of dividends or
other distribution with respect to any of the Company's capital stock or any
direct or indirect redemption, purchase or other acquisition of any of such
stock by the Company;
(n) to the best of the Company's knowledge, any other event or
condition of any character that could reasonably be expected to materially and
adversely affect the assets, properties, financial condition, operating results
or business of the Company (as such business is presently conducted)
(o) any agreement or commitment by the Company to perform any
of the acts described in this Section 2.14; or
2.15 OUTSTANDING INDEBTEDNESS; MATERIAL LIABILITIES.
Except pursuant to the Contracts or as disclosed in the Financial
Statements and Unaudited Financial Statements, the Company has no material
liabilities or obligations exceeding $500,000 in the aggregate, absolute or
contingent (individually or in the aggregate), except (i) liabilities and
obligations under a lease for its principal offices and leases for equipment
which do not exceed
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$5,000,000 in the aggregate, (ii) liabilities and obligations under sales,
procurement and other contracts and arrangements entered into in the normal
course of business, which do not exceed $20,000 individually, or $40,000 in the
aggregate, (iii) liabilities incurred in the ordinary course of business
subsequent to March 31, 1999, and (iv) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements and Unaudited Financial Statements, which, in all cases, individually
or in the aggregate, are not material to the financial condition or operating
results of the Company.
2.16 TAX RETURNS AND PAYMENTS.
The Company has accurately prepared all United States income tax returns
and all state and municipal tax returns required to be filed by it, has paid all
taxes, assessments, fees and charges when and as due under such returns, and has
made adequate provision for the payment of all other taxes, assessments, fees
and charges shown on such returns or on assessments received by the Company.
The Company has not requested any extension of time within which to file any
federal, state or local tax return, which tax return has not since been filed.
The Company has not been advised that any of its returns, federal, state or
other, have been or are being audited as of the date hereof, and no deficiency
assessment or proposed adjustment of the Company's United States income tax or
state or municipal taxes is pending or, to the best knowledge of the Company,
threatened. The provision for taxes for the Company as shown in the Financial
Statements and Unaudited Financial Statements is adequate for taxes due or
accrued as of the date thereof. Since the date of the Financial Statements and
Unaudited Financial Statements, the Company has made adequate provisions on its
books of account for all taxes, assessments and governmental charges with
respect to its business, properties and operations for such period. The Company
has withheld or collected from each payment made to each of its employees the
amount of all taxes (including, but not limited to, federal income taxes,
Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes)
required to be withheld or collected therefrom and has paid the same to the
proper tax receiving officers or authorized depositaries.
2.17 EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) The employment of each officer and employee of the Company
is terminable at will. The Company does not have any collective bargaining
agreements covering any of its employees. There is no labor union organizing
activity pending or, to the Company's knowledge, threatened, with respect to the
Company.
(b) The Company is not aware of any key employee of the
Company who has any plans to terminate his or her employment with the Company.
Except as described in Section 2.17 of the Disclosure Schedule, the Company does
not have any deferred compensation, pension, profit sharing, bonus, insurance,
severance or other similar employee benefit plan or obligation covering any of
its employees or any plan subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). To the Company's knowledge, the Company has
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complied with all applicable state and federal equal employment opportunity and
other laws relating to employment. The Company has not made any loans or
advances to any person other than ordinary expenses for travel expenses. There
is no strike or other labor dispute involving the Company pending, or to the
best of the Company's knowledge, threatened, that could have a material adverse
effect on the assets, properties, financial condition, operating results, or
business of the Company (as such business is presently conducted and as it is
proposed to be conducted), nor is the Company aware of any labor organization
activity involving its employees. The Company has no written employment
agreement or contract with any employee of the Company.
(c) Except as set forth in Section 2.17 of the Disclosure
Schedule, the Company does not maintain or make contributions to any employee
benefit plans ("Plans"), as defined in Section 3(3) of ERISA. The Company has
no material liability with respect to any such Plans (including, without
limitation, any unfunded liability or any accumulated funding deficiency) or any
material liability to the Pension Benefit Guaranty Corporation ("PBGC") or under
Title IV of ERISA, with respect to a multi-employer pension benefit plan, nor
would the Company have any such liability if any such plan were terminated or if
the Company withdrew, in whole or in part, from any multi-employer plan. To the
Company's best knowledge, the Company's ERISA Plans are in compliance in all
material respects with ERISA, the Internal Revenue Code and other applicable
legal requirements. The Company has filed all reports required to be filed by
it prior to the filing deadlines (including extensions) with the Internal
Revenue Service or the PBGC under ERISA and the Internal Revenue Code.
2.18 CERTAIN TRANSACTIONS.
Except as set forth in Section 2.18 of the Disclosure Schedule, the Company
is not indebted, directly or indirectly, to any of its officers, directors or
shareholders or to their spouses or children, in any amount whatsoever; and none
of said officers, directors or, to the best of the Company's knowledge,
shareholders, or any member of their immediate families, are indebted to the
Company or have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship (except as a holder of securities of a corporation whose
securities are publicly traded and which is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to the extent of owning not more than two percent (2%) of the issued and
outstanding securities of such corporation). Except as set forth in Section
2.18 of the Disclosure Schedule, no such officer, director or shareholder, or
any member of their immediate families, is, directly or indirectly, interested
in any material contract with the Company. The Company is not guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
2.19 INSURANCE.
The Company has in full force and effect the several insurance policies
listed in 2.19 of the Disclosure Schedule with such coverage and insurance
against such hazards, risks and liabilities to
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persons and property to the extent and in the manner customary for companies in
similar businesses similarly situated.
2.20 PERMITS.
The Company has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could reasonably be expected to have a material adverse
effect on the Company, and the Company believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted. The Company is not in default in any material respect
under any of such franchises, permits, licenses, or other similar authority.
2.21 ENVIRONMENTAL AND SAFETY LAWS.
The Company is not in violation of any applicable federal, state or local
statute, law or regulation relating to the environment or occupational health
and safety, and no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
2.22 DISCLOSURE.
No representation or warranty of the Company contained in this Agreement,
or in any other Transactional Agreement, or any certificate furnished or to be
furnished to the Purchaser at the Closing, when read together, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
2.23 OTHER STOCK PURCHASE AGREEMENTS.
The terms and conditions of this Agreement, other than respect to the
amount of securities to be purchased in Section 1.1 (a) hereof and the length
of time referred to in the market standoff provisions in Section 6.1 hereof,
are substantially similar to the representations and warranties made by the
Company as set forth in the Stock Purchase and Master Strategic Relationship
Agreements entered into or proposed to be entered into by the Company and
each Nippon Telegraph and Telephone Company, a corporation incorporated under
the laws of Japan, and National Computer Systems Pte. Limited, a corporation
incorporated under the laws of Singapore.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
3.1 ORGANIZATION AND GOOD STANDING.
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The Purchaser is a corporation duly organized and validly existing under
the laws of Delaware.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENTS.
The Purchaser has the requisite corporate power and authority to enter into
and to perform its obligations under this Agreement. The execution, delivery
and performance by the Purchaser of this Agreement and the consummation or
performance of the Transactions have been duly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement constitutes, or
upon execution and delivery will constitute, the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, and (ii) laws relating to the availability of
specific performance, injunctive relief or other equitable remedies.
3.3 NON-CONTRAVENTION; CONSENTS.
(a) Neither the execution and delivery by the Purchaser, nor
the consummation or performance by the Purchaser of any of the Transactions to
be consummated or performed by it, will directly or indirectly (with or without
notice or lapse of time): (i) violate any provision of the Purchaser's
certificate or articles of incorporation or bylaws or other charter documents;
(ii) constitute or result in a breach or default by the Purchaser, or give rise
to a right of termination on the part of any other party, or result in the
creation or imposition of any lien, claim or encumbrance on any Purchaser
assets, under any agreement or instrument to which the Purchaser is a party or
by which the Purchaser is bound; or (iii) constitute a violation by the
Purchaser of any Requirement of Law.
(b) Except for compliance with the terms of Sections 13 and 16
of the Exchange Act (if required), no consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
Governmental Authority on the part of the Purchaser is required in connection
with the consummation of the Transactions.
3.4 LITIGATION.
As of the date hereof, there are no suits, proceedings or investigations
pending or, to the knowledge of the Purchaser, threatened against the Purchaser,
which in any such case would materially adversely affect the Purchaser's ability
to perform its obligations under this Agreement.
3.5 BROKERS.
The Purchaser has not granted or become obligated to pay, or taken any
action that likely would result in any Person claiming to be entitled to receive
from the Company, any brokerage commission, finder's fee or similar commission
or fee in connection with any of the Transactions.
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3.6 INVESTMENT REPRESENTATIONS.
(a) The Purchaser understands that none of the Purchased
Shares has been registered under the Securities Act. The Purchaser also
understands that the Purchased Shares are being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part upon
the Purchaser's representations contained in this Agreement, and that the
Company is relying upon the truth and accuracy of the Purchaser's
representations, warranties, acknowledgements and understandings with respect to
a material fact set forth herein.
(b) The Purchaser is acquiring the Purchased Shares for the
Purchaser's own account for investment only, and not with the current intention
of making a public distribution thereof.
(c) The Purchaser has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests. The
Purchaser, by reason of its business or financial experience, has the capacity
to protect its own interests in connection with the Transactions. The Purchaser
is an "accredited investor" as that term is defined in Rule 501(a) of Regulation
D.
(d) The Purchaser acknowledges that the Purchased Shares must
be held indefinitely and that the Purchaser must bear the economic risk of this
investment indefinitely unless the Purchased Shares are subsequently registered
under the Securities Act or an exemption from such registration is available.
The Purchaser understands that the Company has no present intention of
registering the Purchased Shares. The Purchaser also understands that there is
no assurance that any exemption from registration under the Securities Act will
be available and that, even if available, such exemption may not allow the
Purchaser to transfer all or any portion of the Purchased Shares under the
circumstances, in the amounts or at the times the Purchaser might propose.
(e) The Purchaser has been advised or is aware of the
provisions of Rule 144 under the Securities Act ("Rule 144"), which permit
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: (i) the
availability of certain current public information about the Company, (ii) the
resale occurring not less than one year after a party has purchased and paid for
the security to be sold, (iii) the sale being through an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Exchange Act) and (iv) the number of shares being sold during
any three-month period not exceeding specified limitations.
(f) The Purchaser initiated discussions with the Company
relating to the purchase and sale contemplated by this Agreement on an
unsolicited basis prior to the date of this Agreement. The Purchaser did not
receive any information regarding such purchase and sale through any general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act.
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3.7 Company Disclosure Documents.
(a) The Purchaser has been furnished with materials relating
to the Company and its proposed activities. Without limiting the Company's
obligations with respect to any representations or warranties made by the
Company in this Agreement, the Purchaser has been afforded the opportunity to
obtain any additional information deemed necessary by the Purchaser to verify
the accuracy of any representations made or information conveyed to the
Purchaser. The Purchaser confirms that all documents, records and books
pertaining to its investment in Common Stock and requested by the Purchaser have
been made available or delivered to the Purchaser. The Purchaser has had an
opportunity to ask questions of and receive answers from the Company, or from a
person or persons acting on the Company's behalf, concerning the terms and
conditions of this investment.
4. CONDITIONS TO CLOSING
4.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS.
The Purchaser's obligations to purchase the Purchased Shares and to take
the other actions required to be taken by it at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part):
(a) The representations and warranties of the Company
contained in this Agreement shall be true on and as of the Closing with the same
effect as though such representations and warranties had been made on and as of
the Closing Date, except to the extent any such representations and warranties
are stated to be made as of a specific date, in which case they shall be true as
of such date, except in each case for any inaccuracies in such representations
and warranties as would not have a material adverse effect on the Company. In
addition, the Company shall have performed in all material respects all
obligations required pursuant to the terms of this Agreement to be performed or
observed by it on or prior to the Closing.
(b) The Company shall have delivered to the Purchaser a
certificate, executed by an executive officer of the Company, dated the date of
the Closing, setting forth the Company's representation that the conditions set
forth in Section 4.1(a) above shall have been satisfied.
(c) The Company shall have obtained any and all consents,
permits, waivers and approvals necessary or appropriate for consummation of the
Transactions (except for such as may be properly obtained subsequent to the
Closing).
(d) There shall be no injunction, writ, preliminary
restraining order or other order in effect of any nature issued by a court or
governmental agency of competent jurisdiction directing that the Transactions
not be consummated in the manner provided for in this Agreement. No action or
proceeding shall have been instituted and remain pending before a court or other
governmental body of competent jurisdiction to restrain, prohibit or otherwise
challenge any of the
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Transactions (or seeking material damages from the Purchaser or the Company as a
result thereof), other than any such action or proceeding which would not have a
material adverse effect on the Company or prevent the Company or the Purchaser
from performing their respective obligations hereunder.
(e) The Company shall have delivered to the Purchaser a legal
opinion from counsel to the Company, in form and substance reasonably
satisfactory to the Purchaser and its counsel and addressing the matters listed
in EXHIBIT C hereto
(f) On or prior to the Closing Date, the Purchaser shall have
received a certificate of the Secretary of State of the State of Delaware, dated
as of a recent date, as to the good standing of the Company.
4.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The Company's obligations to sell the Purchased Shares and to take the
other actions required to be taken by the Company at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Company, in whole or in part):
(a) The representations and warranties of the Purchaser
contained in this Agreement shall be true in all material respects on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing Date, except to the extent any such
representations and warranties are stated to be made as of a specific date, in
which case they shall be true in all material respects as of such date, and the
Purchaser shall have performed in all material respects all obligations required
pursuant to the terms of this Agreement to be performed or observed by either of
them on or prior to the Closing.
(b) The Purchaser shall have delivered to the Company a
certificate, executed by an executive officer of the Purchaser, dated the date
of the Closing, setting forth the Purchaser's representation that the conditions
set forth in Section 4.2(a) above shall have been satisfied.
(c) The Purchaser shall have obtained any and all consents,
permits, waivers and approvals necessary or appropriate for consummation of the
Transactions (except for such as may be properly obtained subsequent to the
Closing).
(d) There shall be no injunction, writ, preliminary
restraining order or other order in effect of any nature issued by a court or
governmental agency of competent jurisdiction directing that the Transactions
not be consummated in the manner provided for in this Agreement. No action or
proceeding shall have been instituted and remain pending before a court or other
governmental body of competent jurisdiction to restrain, prohibit or otherwise
challenge any of the Transactions (or seeking material damages from the
Purchaser or the Company as a result thereof), other than any such action or
proceeding which would not have a material adverse effect on the
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Company or prevent the Company or the Purchaser from performing their respective
obligations hereunder.
(e) On or prior to the Closing Date, if the Purchaser is
organized in the United States, the Company shall have received a certificate of
the Secretary of State (or equivalent agency) of the state of the Purchaser's
organization, as to the good standing of such party.
(f) The IPO shall have been closed.
(g) Concurrently with such sale, the Purchaser shall have paid
to the Company the Purchase Price for the Purchased Shares.
5. COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS.
Concurrently with execution and delivery of this Agreement, the Purchaser
will promptly furnish all information as may be required in order for the
requisite approvals for the purchase and sale of the Purchased Shares, and the
consummation of the Transactions, to be obtained. Each party hereto will
cooperate with each other with respect to obtaining, as promptly as practicable,
and in any event prior to the Closing, all necessary consents, approvals,
authorizations and agreements of, and the giving of all notices and making of
all other filings with, any third parties, including Governmental Authorities,
necessary to authorize, approve or permit the closing of the Transactions.
5.2 COVENANT TO SATISFY CONDITIONS.
Each party agrees to use all reasonable efforts to insure that the
conditions to the other party's obligations hereunder set forth in Section 4,
insofar as such matters are within the control of such party, are satisfied as
promptly as practicable, and in any event prior to the closing of the IPO,
PROVIDED HOWEVER, that notwithstanding anything herein to the contrary, the
Company shall have the sole and absolute discretion as to when, and whether, to
consummate or close the IPO, and may choose to cease pursuit of the IPO or to
postpone the IPO until after the termination of this Agreement, all without any
liability or obligation whatsoever to the Purchaser.
5.3 FURTHER ASSURANCES.
Each party shall execute and deliver such additional instruments, documents
or other writings as may be reasonably requested by any other party, before or
after the Closing, in order to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
6. MARKET STANDOFF AGREEMENT
6.1 MARKET STANDOFF AGREEMENT
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The Purchaser hereby agrees that, for a period of one (1) year after the
initial public offering (the "Commencement Date") of the Common Stock of the
Company, the Purchaser will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any of the Purchased Shares or
publicly disclose the intention to make any such offer, sale, pledge or
disposal, without the prior written consent of Credit Suisse First Boston
Corporation.
In furtherance of the foregoing, the Purchaser hereby agrees that the
Company and its transfer agent and registrar are authorized to decline to make
any transfer of any of the Purchased Shares if such transfer would constitute a
violation or breach of this Section 6.1.
The restrictions in this Section 6.1 shall be binding on the Purchaser and
the respective successors, heirs, personal representatives and assigns of the
Purchaser.
7. TERMINATION
7.1 TERMINATION.
This Agreement may be terminated at any time prior to the Closing:
(a) by the written agreement of the Purchaser and the Company;
(b) by the Company or the Purchaser, if the Closing shall not
have occurred by August 31, 1999; PROVIDED HOWEVER, that the failure to
consummate the Closing by such date is not a result of the Company, in the case
the Company is so electing to terminate this Agreement, or of the Purchaser, in
the case the Purchaser is so electing to terminate this Agreement, failing to
perform any of its obligations or breaching any of its representations and
warranties hereunder; and
(c) by the Company or the Purchaser in the event any court or
governmental agency of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restricting, enjoining or otherwise
prohibiting the Transactions and such order, decree, ruling or other action
shall have become final and unappealable, and the parties hereto hereby agree to
use all reasonable efforts to prevent any such order, decree, ruling or other
action from becoming final and unappealable.
7.2 EFFECT OF TERMINATION.
Except for the obligations of Section 9 hereof and this Section 7.2, if
this Agreement shall be terminated pursuant to the preceding Section 7.1, all
obligations, representations and warranties of the parties hereto under this
Agreement shall terminate and there shall be no liability hereunder of any party
hereto to any other party hereto; PROVIDED HOWEVER, that nothing in this Section
7 shall relieve any party of liability for breach of any warranty, covenant or
agreement herein or in any other Transactional Agreement.
8. SUCCESSORS AND ASSIGNS
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8.1 SUCCESSORS AND ASSIGNS; REINCORPORATION.
(a) 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.
Except as otherwise expressly provided herein, neither party may assign any of
its rights or obligations hereunder without the written consent of the other
party hereto; PROVIDED, HOWEVER, that the Company shall have the right, with or
without the consent of the Purchaser, to reincorporate into Delaware prior to
the Closing and such Delaware successor corporation will succeed to all of the
Company's rights and obligations under this Agreement.
(b) In the event of a transfer of the rights and obligations
of the Purchaser under this Agreement, the Purchaser shall ensure that all the
rights and obligations of the Purchaser under this Agreement and the ownership
of the Purchased Shares are transferred to the said successor entity without any
dilution or adverse effect on the enforceability of such obligations. Subject
to the aforesaid, the Company: (i) agrees that such a reorganization by itself
shall not constitute a default by the Purchaser or any successor entity of the
Purchaser under this Agreement and shall not constitute grounds for termination
of this Agreement by any of such parties; (ii) anything to the contrary herein
or elsewhere notwithstanding, consents to the transfer of all the rights and
obligations of the Purchaser under this Agreement to a successor entity as part
of such reorganization; (iii) consents to the transfer of the Purchaser Shares
to a successor entity as part of such reorganization; and (iv) anything to the
contrary herein or elsewhere notwithstanding, agrees to absolutely and
irrevocably release the Purchaser from its obligations under this Agreement upon
such reorganization, provided, in each case, that the successor entity shall be
subject to the terms and conditions of this Agreement, including, without
limitation, the representations and warranties of the Purchaser herein, and
shall deliver to the Company a written agreement to such effect, in form and
substance reasonably satisfactory to the Company, and provided, further, in
each case, that the successor entity is either one of the Regional Companies
or the Long Distance Company currently contemplated in the Amendment.
9. MISCELLANEOUS
9.1 PRESS RELEASES AND ANNOUNCEMENTS.
All press releases and announcements concerning the Transactions shall
be mutually agreed to by the Company and the Purchaser, except for any such
disclosure required by law which, in the case of such disclosure by the Company,
shall, to the extent practicable under the circumstances, be first discussed
with the Purchaser and, in the case of such disclosure by the Purchaser, shall,
to the extent practicable under the circumstances, be first discussed with the
Company.
9.2 INTERPRETATION.
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(a) The various section headings are inserted for purposes of
reference only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
(b) Each party hereto acknowledges that it has been
represented by competent counsel and participated in the drafting of this
Agreement, and agrees that any applicable rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in connection with the construction or interpretation of this Agreement.
(c) The original and controlling version of this Agreement
shall be the version using the English language. All translations of this
Agreement into other languages shall be for the convenience of the parties only,
and shall not control the meaning or application of this Agreement. All notices
and other communications required or permitted by this Agreement must be in
English, and the interpretation and application of such notices and other
communications shall be based solely upon the English language version thereof.
(d) When a reference is made in this Agreement to a Section,
Exhibit or Schedule, such reference shall be to a Section of, Exhibit to or
Schedule to this Agreement, unless otherwise indicated.
9.3 FEES AND EXPENSES.
Each party hereto shall be solely responsible for the payment of the
fees and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement, except to
the extent expressly set forth in this Agreement. Without limiting the
generality of the foregoing, the Purchaser shall pay all stamp and other taxes,
if any, which may be payable in respect of the issuance, sale and delivery to
the Purchaser or any Assignee of Common Stock pursuant to the terms of this
Agreement, and shall save the Company harmless against any loss or liability
resulting from nonpayment or delay in the payment of any such tax.
9.4 GOVERNING LAW; JURISDICTION AND VENUE.
(a) Prior to Closing, this Agreement is to be construed in
accordance with and governed by the internal laws of the State of California
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
California to the rights and duties of the parties. On and after Closing, this
Agreement is to be construed in accordance with and governed by the internal
laws of the State of Delaware without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Delaware to the rights and duties of the parties.
(b) Any legal action or other legal proceeding relating to
this Agreement or the enforcement of any provision of this Agreement may be
brought or otherwise commenced in any
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state or federal court located in the County of Contra Costa, California. Each
party to this Agreement:
(i) expressly and irrevocably consents and submits to
the jurisdiction of each state and federal court located in the County of Contra
Costa, California (and each appellate court located in the State of California)
in connection with any such legal proceeding, including to enforce any
settlement, order or award;
(ii) agrees that each state and federal court located in
the County of Contra Costa, California shall be deemed to be a convenient forum;
and
(iii) waives and agrees not to assert (by way of motion,
as a defense or otherwise), in any such legal proceeding commenced in any state
or federal court located in the County of Contra Costa, California, any claim
that such party is not subject personally to the jurisdiction of such court,
that such legal proceeding has been brought in an inconvenient forum, that the
venue of such proceeding is improper or that this Agreement or the subject
matter hereof or thereof may not be enforced in or by such court.
(c) Each party hereto agrees to the entry of an order to
enforce any resolution, settlement, order or award made pursuant to this Section
by the state and federal courts located in the County of Contra Costa,
California and in connection therewith hereby waives, and agrees not to assert
by way of motion, as a defense, or otherwise, any claim that such resolution,
settlement, order or award is inconsistent with or violative of the laws or
public policy of the laws of the State of California or any other jurisdiction.
9.5 SPECIFIC ENFORCEMENT.
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific intent or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which they may be entitled by law or equity.
9.6 SURVIVAL.
The representations and warranties of the parties hereunder shall
terminate upon the Closing and thereafter shall terminate and be of no force or
effect.
9.7 NO THIRD PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns and are not for the benefit
of, nor may any provision hereof or thereof be enforced by, any other Person.
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9.8 ENTIRE AGREEMENT.
This Agreement and the other documents delivered expressly hereby,
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
9.9 SEVERABILITY.
The provisions of this Agreement shall be severable, and any
invalidity, unenforceability or illegality of any provision or provisions of
this Agreement shall not affect any other provision or provisions of this
Agreement, and each term and provision of this Agreement shall be construed to
be valid and enforceable to the full extent permitted by law.
9.10 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
mutual written consent of the Company and the Purchaser.
(b) No failure to exercise and no delay in exercising any
right, power or privilege granted under this Agreement shall operate as a waiver
of such right, power or privilege. No single or partial exercise of any right,
power or privilege granted under this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Agreement are cumulative and are not
exclusive of any rights or remedies provided by law.
9.11 RELATIONSHIP OF THE PARTIES.
For all purposes of this Agreement, each of the parties hereto and
their respective Affiliates shall be deemed to be independent entities and,
anything in this Agreement to the contrary notwithstanding, nothing herein shall
be deemed to constitute the parties hereto or any of their respective Affiliates
as partners, joint venturers, co-owners, an association or any entity separate
and apart from each party itself, nor shall this Agreement make any party hereto
an employee or agent, legal or otherwise, of the other parties for any purposes
whatsoever. This Agreement does not create or constitute, and shall not be
construed as creating or constituting, a voting trust agreement under the
Delaware General Corporation Law or any other applicable corporation law. None
of the parties to this Agreement is authorized to make any statements or
representations on behalf of any other party or in any way to obligate any other
party, except as expressly authorized in writing by the other parties. Anything
in this Agreement to the contrary notwithstanding, no party hereto or thereto
shall assume nor shall be liable for any liabilities or obligations of the other
parties, whether past, present or future.
9.12 NOTICES.
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All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the party to be
notified; (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (iii)
seven (7) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (iv) two (2) days after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the parties
hereto at the respective addresses set forth below, or as notified by such party
from time to time at least ten (10) days prior to the effectiveness of such
notice:
if to the Purchaser: PeopleSoft, Inc.
4440 Rosewood Drive
Pleasanton, California 94588-3031
Attn:
Facsimile:
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with a copy to:
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Attention:
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Facsimile:
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and a copy to:
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Attention:
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Facsimile:
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if to the Company: Commerce One, Inc.
1600 Riviera Avenue
Walnut Creek, California 94596
Attention: Robert M. Tarkoff, Esq.
Facsimile: (925) 941-6066
with a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: David J. Segre, Esq.
Facsimile: (650) 493-6811
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9.13 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
PURCHASER: PeopleSoft, Inc.
By: /s/ Craig Conway
----------------------------
Name: Craig Conway
Title: President, CEO
COMPANY: Commerce One, Inc.
By: /s/ Robert M. Tarkoff
----------------------------
Name: Robert M. Tarkoff
Title: Vice President & General Counsel
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STOCK PURCHASE AND MASTER STRATEGIC RELATIONSHIP AGREEMENT
This Stock Purchase and Master Strategic Relationship Agreement (this
"Agreement") is entered into as of May ___, 1999, by and between Commerce One,
Inc., a California corporation (the "Company"), and SingTel Ventures (Cayman)
Pte Limited, a corporation organized under the laws of Cayman Islands (the
"Purchaser"). Capitalized terms used in this Agreement and not otherwise defined
are defined in EXHIBIT A attached hereto.
WHEREAS, the Purchaser wishes to purchase from the Company, and the Company
wishes to issue and sell to the Purchaser, following the Company's
reincorporation into Delaware (the "Delaware Reincorporation"), certain shares
of the Common Stock;
WHEREAS, such sale and purchase of Common Stock shall occur immediately
following the closing of the Company's initial public offering (the "IPO").
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, the parties hereto, intending to be legally bound, agree as follows:
1. AGREEMENT TO SELL AND PURCHASE SHARES; OTHER AGREEMENTS
1.1 SALE AND PURCHASE OF SHARES.
(a) Subject to the terms and conditions hereof, at the Closing,
the Company will issue and sell to the Purchaser, and the Purchaser will
purchase from the Company, shares of Common Stock equal in number to $5,000,000
divided by the Per Share Price. The "Per Share Price" shall be equal to the IPO
Price multiplied by 94%.
(b) At the Closing, the Purchaser shall pay the purchase price
(the "Purchase Price") for the shares of Common Stock purchased hereunder (the
"Purchased Shares") by wire transfer of immediately available funds in U.S.
dollars to an account specified in writing by the Company prior to the Closing.
(c) No fractional shares shall be issued upon the sale of any
Common Stock to the Purchaser pursuant to this Agreement, and the number of
shares of Common Stock to be issued to the Purchaser shall be rounded to the
nearest whole share.
(d) All certificates representing the Purchased Shares shall bear
the following legend:
(i) "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"). SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. THE COMPANY MAY REQUIRE AN
OPINION OF COUNSEL
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REASONABLY ACCEPTABLE TO IT THAT A PROPOSED TRANSFER OR SALE IS IN COMPLIANCE
WITH THE ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDERS OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY."
(ii) Any legend required by the blue sky or securities laws
of any state or jurisdiction to the extent such laws are applicable to the
shares represented by the certificate so legended.
(e) The certificates representing the Purchased Shares will be
subject to a stop transfer order with the Company's transfer agent that
restricts the transfer of the Purchased Shares except in compliance with this
Agreement.
1.2 CLOSING.
The closing of the purchase and sale of the Purchased Shares (the
"Closing") shall take place at the offices of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304, at
11:00 a.m. (California time) on the date of and immediately following the
closing of the IPO, or on such other date or at such other place or time as the
Company and the Purchaser may mutually agree (such date, the "Closing Date").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the disclosure schedule attached hereto
as EXHIBIT B (the "Disclosure Schedule"), the Company hereby represents and
warrants to the Purchaser as follows:
2.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION.
Each of the Company and VEO Systems, Inc., a wholly-owned subsidiary of the
Company ("VEO"), is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, and has all requisite
corporate power and authority to carry on its business as now conducted and as
proposed to be conducted. Each of the Company and VEO is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which the nature of its business or the location of its
properties requires such qualification and in which the failure to so qualify
would have a material adverse effect on its business. In connection with the
IPO, as of the Closing Date, the Company shall be incorporated in the State of
Delaware and VEO shall be a wholly-owned subsidiary of the Company duly
organized, validly existing and in good standing under the laws of the State of
California.
2.2 CAPITALIZATION.
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As of the date of this Agreement, the authorized capital of the Company
consists of the following:
(a) 29,000,000 shares of Preferred Stock, no par value
("Preferred Stock") of which 673,680 shares have been designated Series A
Preferred Stock, all of which are issued and outstanding, 3,595,976 have been
designated Series B Preferred Stock, of which 3,568,293 are issued and
outstanding, 6,450,000 shares have been designated Series C Preferred Stock, of
which 5,120,608 are issued and outstanding, 10,700,000 shares have been
designated Series D Preferred Stock, 8,866,757 of which are issued and
outstanding, 800,169 shares have been designated Series D' Preferred Stock, all
of which are issued and outstanding, and 5,518,764 shares have been designated
Series E Preferred Stock, of which 5,517,638 shares are issued and outstanding.
The rights, privileges and preferences of the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock, the Series D' Preferred Stock and the Series E Preferred Stock are as
stated in the Company's Amended and Restated Articles of Incorporation. In
connection with the Company's IPO, all of the outstanding shares of Preferred
Stock will convert into an equal number of shares of Common Stock, subject to
adjustment for any reverse split of the Company's Common Stock to be effected
prior to the IPO.
(b) 60,000,000 shares of common stock, no par value, 10,498,102
shares of which are issued and outstanding, subject to adjustment for any
reverse split of the Company's Common Stock to be effected prior to the IPO. In
connection with the Company's IPO, the Company will issue additional shares of
Common Stock.
(c) Warrants to purchase 27,562 shares of Series B Preferred
Stock (the "Series B Warrants"), warrants to purchase 1,293,580 shares of Series
C Preferred Stock (the "Series C Warrants"), and warrants to purchase 86,818
shares of Series D Preferred Stock (the "Series D Warrants") (each of which
Series B Warrants, Series C Warrants, and Series D Warrants is subject to
adjustment for any reverse split of the Company's Common Stock to be effected
prior to the IPO) are issued and outstanding.
(d) The Company has reserved 8,381,500 shares of common stock,
subject to adjustment for any reverse split of the Company's Common Stock to be
effected prior to the IPO, for issuance to directors, employees or consultants
under the Company's stock option and stock benefit plans of which 6,198,969
shares of common stock, subject to adjustment for any reverse split of the
Company's Common Stock to be effected prior to the IPO, are subject to
outstanding stock options as of the date hereof (the "Outstanding Options").
Except for the Warrants described above, the Outstanding Options, and as
contemplated in connection with the Company's IPO, there are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements, orally or in writing, for the purchase or acquisition from the
Company of any shares of its capital stock.
(e) All issued and outstanding shares of the Company's common
stock have been duly authorized and validly issued, are fully paid and
nonassessable, and were offered, issued and
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sold in compliance with all applicable state and federal laws concerning the
offer, sale and issuance of securities.
(f) Neither the offer nor the issuance or sale of the Purchased
Shares constitutes or will constitute an event, under any capital stock or
convertible security or any anti-dilution or similar provision of any agreement
or instrument to which the Company is a party or by which it is bound or
affected, which shall either increase the number of shares or units of capital
stock issuable upon conversion of any securities or upon exercise of any warrant
or right to subscribe to or purchase any stock or similar security, or decrease
the consideration per share or unit of capital stock to be received by the
Company upon such conversion or exercise.
2.3 SUBSIDIARIES.
Other than VEO, the Company does not currently own or control, directly or
indirectly, any interest in any other corporation, association, or other
business entity which is material to the Company's business.
2.4 AUTHORIZATION.
All corporate action on the part of the Company, its officers, directors
and shareholders necessary for the authorization, execution and delivery of this
Agreement, the performance of all obligations of the Company hereunder and
thereunder and the authorization, issuance and delivery of the Purchased Shares
has been taken or will be taken prior to the Closing. The Agreement, when
executed and delivered, will be a valid and binding obligation of the Company
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights; and (ii) general
principles of equity that restrict the availability of equitable remedies.
2.5 VALID ISSUANCE OF SECURITIES.
The Purchased Shares being issued hereunder, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable. Based in
part upon the representations of the Purchasers in this Agreement and subject to
the provisions of Section 2.7 below, the Purchased Shares will be issued in
compliance with all applicable federal and state securities laws. The Purchased
Shares shall be free of any liens or encumbrances, other than any liens or
encumbrances created by the Purchasers; PROVIDED, HOWEVER, that the Purchased
Shares may be subject to restrictions on transfer under state and/or federal
securities laws. The Purchased Shares are not and will not be subject to any
preemptive rights, rights of first refusal, rights of first offer or other
similar rights that have not been properly waived or complied with.
2.6 FIRPTA.
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The Company is not a "United States Real Property Holding Corporation"
within the meaning of Section 847(c)(2) of the Internal Revenue Code of 1986, as
amended.
2.7 GOVERNMENTAL CONSENTS.
No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of this Agreement or the
consummation of the Transactions except as required in connection with the
Delaware Reincorporation and for the filing of notices required by applicable
Blue Sky laws, the filing of a Form D pursuant to Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"), as promulgated by
the Securities and Exchange Commission, and the filing of any notices required
by applicable foreign securities laws.
2.8 LITIGATION.
There is no action, suit, arbitration, proceeding or investigation pending
or currently threatened against the Company or its properties before any court,
arbitrator or governmental agency, nor is the Company aware that there is any
basis for the foregoing. The foregoing includes, without limitation, actions,
suits, arbitration proceedings or investigations pending or threatened (or any
basis therefor known to the Company) involving the prior employment of any of
the Company's employees, their use in connection with the Company's business of
any information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court of government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.9 INTELLECTUAL PROPERTY.
As of the Closing, the Company has legally enforceable rights to use all
patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights, know-how and processes necessary for its
business as now conducted and as proposed to be conducted without any conflict
with or infringement on the rights of others, except as may otherwise be
described in Section 2.9 of the Disclosure Schedule. Except pursuant to
Contracts (as defined in Section 2.11 below) listed in the Disclosure Schedule,
copies of which have previously been delivered to the Purchasers, there are no
outstanding options, licenses, or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights, know-how and processes of any other person or entity. Except as
described in Section 2.9 of the Disclosure Schedule, to the best of the
Company's knowledge the Company has not violated or, by conducting its business
as proposed, would not violate any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other proprietary rights of any
other person or entity. Each current or former employee, officer, director and
consultant of the Company has executed an agreement with the Company regarding
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confidentiality and proprietary information, a copy of the form of which has
previously been provided to the Purchasers, and no exceptions have been taken by
any such current or former employee, officer or consultant. The Company is not
aware that any of its employees is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with the use of his or her best efforts to promote the interests
of the Company or that would conflict with the Company's business as conducted
or proposed to be conducted. Neither the execution nor delivery of this
Agreement or the other Transaction Agreements, nor the carrying on of the
Company's business as conducted or as currently proposed to be conducted, will,
to the Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated. The
Company does not believe that it is or will be necessary for the Company to
utilize any inventions of any of its employees made prior to their employment
with the Company.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS.
The Company is not in violation or default of any provisions of its charter
documents or of any instrument, judgment, order, writ, decree or contract to
which it is a party or by which it is bound or, of any provision of federal,
state or foreign statute, rule, regulation, order or restriction applicable to
the Company, including but not limited to the Foreign Corrupt Practices Act. The
execution, delivery and performance of this Agreement and the other Transaction
Agreements and the consummation of the Transactions will not result in any such
violation or be in conflict with or constitute, with or without the passage of
time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event which results
in the creation of any lien, charge or encumbrance upon any of the properties or
assets of the Company or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any material permit, license, authorization, or approval
applicable to the Company, its business or operations or any of its assets or
properties. No consent, approval, qualification, order or authorization of, or
filing with, any governmental authority, or any consent or approval of any third
party person or entity is required in connection with the Company's valid
execution, delivery or performance of this Agreement or the offer, sale or
issuance of the Purchased Shares, or the consummation of any other transaction
contemplated on the part of the Company hereby, except as required in connection
with the Delaware Reincorporation and for the filing of any notice required by
applicable Blue Sky laws, the filing of a notice on Form D, the filing of any
notice required by applicable foreign securities laws. Except as disclosed in
the Disclosure Schedule, the Company has avoided every condition and has not
performed any act which would result in the Company's loss of any right granted
under any license, distribution or other agreement.
2.11 MATERIAL CONTRACTS AND COMMITMENTS.
Except as listed in Section 2.11 of the Disclosure Schedule and except for
agreements explicitly contemplated hereby (the "Contracts"), there are no
agreements, instruments, leases, licenses, commitments (written or oral) or
contracts to which the Company is a party or by which it is
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bound, which (i) involve obligations of or payments to the Company, absolute or
contingent, in excess of $20,000 individually, (ii) involve provisions
restricting or affecting the development, manufacture or distribution of the
Company's products or services, or (iii) involve indemnification by the Company
with respect to infringements of proprietary rights (other than indemnification
obligations arising from purchase and sale agreements entered into in the
ordinary course of business and ordinary course licensing agreements entered
into with customers of the Company). All of the Contracts are valid, binding and
in full force and effect in all material respects and enforceable by the Company
in accordance with their respective terms in all material respects, subject to
the effect of applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, usury or other laws of general application relating to
or affecting enforcement of creditors' rights and rules or laws concerning
equitable remedies. The Company is not in material default under any of such
Contracts, nor has the Company received notice that any third party does not
intend to renew any material contract it currently has with the Company, or that
any third party intends to terminate any material contract currently in place
with the Company. To the best knowledge of the Company, no other party to any of
the Contracts is in material default thereunder. Except for the merger of the
Company and VEO, the Company has not engaged in the past six (6) months in any
discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale, conveyance or
disposition of all or substantially all of the assets of the Company of a
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of, or (iii) regarding any
other form of acquisition, liquidation, dissolution or winding up of the
Company.
2.12 TITLE TO PROPERTY AND ASSETS.
The Company has good and marketable title to its property and assets, free
and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets it leases, the Company is in compliance
with such leases and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances. Other than ordinary wear and
tear, all tangible assets owned or leased by the Company are in good operating
condition and repair, are reasonably fit and usable for the purposes for which
they are being used, and are adequate and sufficient for the Company's business.
2.13 FINANCIAL STATEMENTS.
The Purchasers have received the Company's audited consolidated balance
sheet, statements of income, cash flow and shareholders' equity for the fiscal
year ended December 31, 1998, together with the related opinion of Ernst &
Young, LLP, independent public accountants (the "Financial Statements"), which
are complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other,
subject to normal end-of-period adjustments. The
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Financial Statements fairly present the consolidated financial condition,
operating results and cash flows of the Company as of the respective dates and
for the respective periods indicated.
The Purchasers have received an unaudited consolidated balance sheet,
statements of income, cash flow and shareholders' equity for the three-month
period ended March 31, 1999 (the "Unaudited Financial Statements"). The
Unaudited Financial Statements were prepared in good faith by the Company, are
complete and correct in all material respects and have been prepared from the
books and records of the Company, in accordance with generally accepted
accounting principles consistently applied by the Company, and present the
consolidated financial condition, operating results and cash flows of the
Company as of the date and for the period indicated.
Except as disclosed in the Financial Statements and Unaudited Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation. The Company maintains and will continue
to maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
2.14 CHANGES.
Except as otherwise disclosed in the Financial Statements and Unaudited
Financial Statements, since March 31, 1999, there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Financial Statements
and Unaudited Financial Statements, except changes in the ordinary course of
business that have not been, in the aggregate, materially adverse;
(b) any incurrence of any indebtedness for money borrowed;
(c) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(d) any waiver by the Company of a valuable right or of a
material debt owed to it;
(e) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);
(f) except as described in Section 2.11 of the Disclosure
Schedule, any material change or amendment to a material contract or arrangement
by which the Company or any of its assets or properties is bound or subject;
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(g) any material change in any compensation arrangement or
agreement with any employee, contractor or director;
(h) [any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets, except licenses entered
into in the ordinary course of business and consistent with past practices;]
(i) any resignation or termination of employment of any key
officer of the Company, and the Company, to the best of its knowledge, does not
know of the impending resignation or termination of employment of any such
officer;
(j) receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company;
(k) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company with respect to any of its material properties or
assets, except liens for taxes not yet payable;
(l) any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(m) any declaration, setting aside or payment of dividends or
other distribution with respect to any of the Company's capital stock or any
direct or indirect redemption, purchase or other acquisition of any of such
stock by the Company;
(n) to the best of the Company's knowledge, any other event or
condition of any character that could reasonably be expected to materially and
adversely affect the assets, properties, financial condition, operating results
or business of the Company (as such business is presently conducted);
(o) any agreement or commitment by the Company to perform any of
the acts described in this Section 2.14; or
2.15 OUTSTANDING INDEBTEDNESS; MATERIAL LIABILITIES.
Except pursuant to the Contracts or as disclosed in the Financial
Statements and Unaudited Financial Statements, the Company has no material
liabilities or obligations exceeding $500,000 in the aggregate, absolute or
contingent (individually or in the aggregate), except (i) liabilities and
obligations under a lease for its principal offices and leases for equipment
which do not exceed $5,000,000 in the aggregate, (ii) liabilities and
obligations under sales, procurement and other contracts and arrangements
entered into in the normal course of business, which do not exceed $20,000
individually, or $40,000 in the aggregate, (iii) liabilities incurred in the
ordinary course of business subsequent to March 31, 1999, and (iv) obligations
under contracts and commitments
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incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in the Financial Statements and
Unaudited Financial Statements, which, in all cases, individually or in the
aggregate, are not material to the financial condition or operating results of
the Company.
2.16 TAX RETURNS AND PAYMENTS.
The Company has accurately prepared all United States income tax returns
and all state and municipal tax returns required to be filed by it, has paid all
taxes, assessments, fees and charges when and as due under such returns, and has
made adequate provision for the payment of all other taxes, assessments, fees
and charges shown on such returns or on assessments received by the Company. The
Company has not requested any extension of time within which to file any
federal, state or local tax return, which tax return has not since been filed.
The Company has not been advised that any of its returns, federal, state or
other, have been or are being audited as of the date hereof, and no deficiency
assessment or proposed adjustment of the Company's United States income tax or
state or municipal taxes is pending or, to the best knowledge of the Company,
threatened. The provision for taxes for the Company as shown in the Financial
Statements and Unaudited Financial Statements is adequate for taxes due or
accrued as of the date thereof. Since the date of the Financial Statements and
Unaudited Financial Statements, the Company has made adequate provisions on its
books of account for all taxes, assessments and governmental charges with
respect to its business, properties and operations for such period. The Company
has withheld or collected from each payment made to each of its employees the
amount of all taxes (including, but not limited to, federal income taxes,
Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes)
required to be withheld or collected therefrom and has paid the same to the
proper tax receiving officers or authorized depositaries.
2.17 EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) The employment of each officer and employee of the Company is
terminable at will. The Company does not have any collective bargaining
agreements covering any of its employees. There is no labor union organizing
activity pending or, to the Company's knowledge, threatened, with respect to the
Company.
(b) The Company is not aware of any key employee of the Company
who has any plans to terminate his or her employment with the Company. Except as
described in Section 2.17 of the Disclosure Schedule, the Company does not have
any deferred compensation, pension, profit sharing, bonus, insurance, severance
or other similar employee benefit plan or obligation covering any of its
employees or any plan subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). To the Company's knowledge, the Company has complied
with all applicable state and federal equal employment opportunity and other
laws relating to employment. The Company has not made any loans or advances to
any person other than ordinary expenses for travel expenses. There is no strike
or other labor dispute involving the Company pending, or to the best of the
Company's knowledge, threatened, that could have a material adverse effect on
the assets, properties, financial condition, operating results, or business of
the Company (as such business is
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presently conducted and as it is proposed to be conducted), nor is the Company
aware of any labor organization activity involving its employees. The Company
has no written employment agreement or contract with any employee of the
Company.
(c) Except as set forth in Section 2.17 of the Disclosure
Schedule, the Company does not maintain or make contributions to any employee
benefit plans ("Plans"), as defined in Section 3(3) of ERISA. The Company has no
material liability with respect to any such Plans (including, without
limitation, any unfunded liability or any accumulated funding deficiency) or any
material liability to the Pension Benefit Guaranty Corporation ("PBGC") or under
Title IV of ERISA, with respect to a multi-employer pension benefit plan, nor
would the Company have any such liability if any such plan were terminated or if
the Company withdrew, in whole or in part, from any multi-employer plan. To the
Company's best knowledge, the Company's ERISA Plans are in compliance in all
material respects with ERISA, the Internal Revenue Code and other applicable
legal requirements. The Company has filed all reports required to be filed by it
prior to the filing deadlines (including extensions) with the Internal Revenue
Service or the PBGC under ERISA and the Internal Revenue Code.
2.18 CERTAIN TRANSACTIONS.
Except as set forth in Section 2.18 of the Disclosure Schedule, the Company
is not indebted, directly or indirectly, to any of its officers, directors or
shareholders or to their spouses or children, in any amount whatsoever; and none
of said officers, directors or, to the best of the Company's knowledge,
shareholders, or any member of their immediate families, are indebted to the
Company or have any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a
business relationship (except as a holder of securities of a corporation whose
securities are publicly traded and which is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to the extent of owning not more than two percent (2%) of the issued and
outstanding securities of such corporation). Except as set forth in Section 2.18
of the Disclosure Schedule, no such officer, director or shareholder, or any
member of their immediate families, is, directly or indirectly, interested in
any material contract with the Company. The Company is not guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.
2.19 INSURANCE.
The Company has in full force and effect the several insurance policies
listed in 2.19 of the Disclosure Schedule with such coverage and insurance
against such hazards, risks and liabilities to persons and property to the
extent and in the manner customary for companies in similar businesses similarly
situated.
2.20 PERMITS.
The Company has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could reasonably be expected
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to have a material adverse effect on the Company, and the Company believes it
can obtain, without undue burden or expense, any similar authority for the
conduct of its business as planned to be conducted. The Company is not in
default in any material respect under any of such franchises, permits, licenses,
or other similar authority.
2.21 ENVIRONMENTAL AND SAFETY LAWS.
The Company is not in violation of any applicable federal, state or local
statute, law or regulation relating to the environment or occupational health
and safety, and no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
2.22 DISCLOSURE.
No representation or warranty of the Company contained in this Agreement,
or in any other Transactional Agreement, or any certificate furnished or to be
furnished to the Purchaser at the Closing, when read together, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
3.1 ORGANIZATION AND GOOD STANDING.
The Purchaser is a corporation duly organized and validly existing under
the laws of Singapore.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENTS.
The Purchaser has the requisite corporate power and authority to enter into
and to perform its obligations under this Agreement. The execution, delivery and
performance by the Purchaser of this Agreement and the consummation or
performance of the Transactions have been duly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement constitutes, or
upon execution and delivery will constitute, the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, and (ii) laws relating to the availability of
specific performance, injunctive relief or other equitable remedies.
3.3 NON-CONTRAVENTION; CONSENTS.
(a) Neither the execution and delivery by the Purchaser, nor the
consummation or performance by the Purchaser of any of the Transactions to be
consummated or performed by it, will directly or indirectly (with or without
notice or lapse of time): (i) violate any provision of the
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Purchaser's certificate or articles of incorporation or bylaws or other charter
documents; (ii) constitute or result in a breach or default by the Purchaser, or
give rise to a right of termination on the part of any other party, or result in
the creation or imposition of any lien, claim or encumbrance on any Purchaser
assets, under any agreement or instrument to which the Purchaser is a party or
by which the Purchaser is bound.
(b) Except for compliance with the terms of Sections 13 and 16 of
the Exchange Act (if required), no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
Governmental Authority on the part of the Purchaser is required in connection
with the consummation of the Transactions.
3.4 LITIGATION.
As of the date hereof, there are no suits, proceedings or investigations
pending or, to the knowledge of the Purchaser, threatened against the Purchaser,
which in any such case would materially adversely affect the Purchaser's ability
to perform its obligations under this Agreement.
3.5 BROKERS.
The Purchaser has not granted or become obligated to pay, or taken any
action that likely would result in any Person claiming to be entitled to receive
from the Company, any brokerage commission, finder's fee or similar commission
or fee in connection with any of the Transactions.
3.6 INVESTMENT REPRESENTATIONS.
(a) The Purchaser understands that none of the Purchased Shares
has been registered under the Securities Act. The Purchaser also understands
that the Purchased Shares are being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon the
Purchaser's representations contained in this Agreement, and that the Company is
relying upon the truth and accuracy of the Purchaser's representations,
warranties, acknowledgements and understandings with respect to a material fact
set forth herein.
(b) The Purchaser is acquiring the Purchased Shares for the
Purchaser's own account for investment only, and not with the current intention
of making a public distribution thereof.
(c) The Purchaser has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests. The
Purchaser, by reason of its business or financial experience, has the capacity
to protect its own interests in connection with the Transactions. The Purchaser
is an "accredited investor" as that term is defined in Rule 501(a) of Regulation
D.
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(d) The Purchaser acknowledges that the Purchased Shares must be
held indefinitely and that the Purchaser must bear the economic risk of this
investment indefinitely unless the Purchased Shares are subsequently registered
under the Securities Act or an exemption from such registration is available.
The Purchaser understands that the Company has no present intention of
registering the Purchased Shares. The Purchaser also understands that there is
no assurance that any exemption from registration under the Securities Act will
be available and that, even if available, such exemption may not allow the
Purchaser to transfer all or any portion of the Purchased Shares under the
circumstances, in the amounts or at the times the Purchaser might propose.
(e) The Purchaser has been advised or is aware of the provisions
of Rule 144 under the Securities Act ("Rule 144"), which permit limited resale
of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things: (i) the availability of
certain current public information about the Company, (ii) the resale occurring
not less than one year after a party has purchased and paid for the security to
be sold, (iii) the sale being through an unsolicited "broker's transaction" or
in transactions directly with a market maker (as said term is defined under the
Exchange Act) and (iv) the number of shares being sold during any three-month
period not exceeding specified limitations.
(f) The Purchaser initiated discussions with the Company relating
to the purchase and sale contemplated by this Agreement on an unsolicited basis
prior to the date of this Agreement. The Purchaser did not receive any
information regarding such purchase and sale through any general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities Act.
(g) Without the prior written consent of the Company, the
Purchaser will not, during the period commencing on the Closing Date and ending
one hundred eighty (180) days after the date of the final prospectus relating to
the IPO, (i) offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise.
3.7 COMPANY DISCLOSURE DOCUMENTS.
(a) The Purchaser has received and reviewed a copy of the
Company's Registration Statement on Form S-1, as filed with the Securities and
Exchange Commission on April 26, 1999 (the "Registration Statement"), including,
without limitation, the language therein under the caption "Risk Factors."
(b) The Purchaser has been furnished with materials relating to
the Company and its proposed activities, including, without limitation, the
Registration Statement. Without limiting
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the Company's obligations with respect to any representations or warranties made
by the Company in this Agreement, the Purchaser has been afforded the
opportunity to obtain any additional information deemed necessary by the
Purchaser to verify the accuracy of any representations made or information
conveyed to the Purchaser. The Purchaser confirms that all documents, records
and books pertaining to its investment in Common Stock and requested by the
Purchaser have been made available or delivered to the Purchaser. The Purchaser
has had an opportunity to ask questions of and receive answers from the Company,
or from a person or persons acting on the Company's behalf, concerning the terms
and conditions of this investment.
3.8 FOREIGN OFFERING REPRESENTATIONS.
(a) No offer or solicitation of an offer was made by the Company,
any of its affiliates or any other person acting for or on behalf of the
Company, to the Purchaser to enter into this Agreement, or to consummate the
Transactions (including, without limitation, the issuance of the Purchased
Shares), while the Purchaser was inside the United States and, at the time of
the execution and delivery by the Purchaser of this Agreement, the Purchaser was
outside the United States.
(b) In making the decision to invest in the shares of the
Company's Common Stock to be issued hereto, the Purchaser has not relied upon
any materials received in connection with any "directed selling efforts" of the
Company, any of its affiliates or any person acting for or on behalf of the
Company, as such term is defined in Rule 902(b) under Regulation S ("Regulation
S") promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), including, without limitation, any printed materials distributed in a
publication with a general circulation within the United States, or
advertisements with radio or television stations broadcasting within the United
States, in each case which discuss the terms of this Agreement or the
Transactions (including, without limitation, the issuance of the Purchased
Shares pursuant hereto).
(c) In making the decision to invest in the shares of the
Company's Common Stock to be issued pursuant hereto, the Purchaser has not
relied upon any "Distributors", as such term is defined in Rule 902(c) of
Regulation S, including, without limitation, any underwriter or dealer.
(d) The Purchaser understands and acknowledges that the Purchased
Shares to be issued pursuant hereto are being issued in reliance upon the
exemption from the registration requirements of the Securities Act afforded by
Regulation S, that such shares will not be registered under the Securities Act
or any state securities or "blue sky" law, and that such shares may not be
offered or sold in the United States or to any "U.S. Person", as such term is
defined in Rule 902(o) of Regulation S ( a "U.S. Person"), or otherwise disposed
of, except in accordance with the provisions of Rules 903 and 904 of Regulation
S, pursuant to registration of such shares under the Securities Act, or pursuant
to another available exemption from the registration requirements of the
Securities Act.
(e) Purchaser is not a U.S. Person, and the Purchaser is not
acquiring the Purchased Shares for the account or benefit of any U.S. Person.
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(f) The Purchaser understands and acknowledges that it may not
resell any of the Purchased Shares to be issued pursuant hereto unless any such
resale is effected in accordance with the provisions of Rule 904 of Regulation
S, pursuant to registration of such resale under the Securities Act, or pursuant
to another available exemption from the registration requirements of the
Securities Act.
4. CONDITIONS TO CLOSING
4.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS.
The Purchaser's obligations to purchase the Purchased Shares and to take
the other actions required to be taken by it at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part):
(a) The representations and warranties of the Company contained
in this Agreement shall be true on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of the
Closing Date, except to the extent any such representations and warranties are
stated to be made as of a specific date, in which case they shall be true as of
such date, except in each case for any inaccuracies in such representations and
warranties as would not have a material adverse effect on the Company. In
addition, the Company shall have performed in all material respects all
obligations required pursuant to the terms of this Agreement to be performed or
observed by it on or prior to the Closing.
(b) The Company shall have delivered to the Purchaser a
certificate, executed by an executive officer of the Company, dated the date of
the Closing, setting forth the Company's representation that the conditions set
forth in Section 4.1(a) above shall have been satisfied.
(c) The Company shall have obtained any and all consents,
permits, waivers and approvals necessary or appropriate for consummation of the
Transactions (except for such as may be properly obtained subsequent to the
Closing).
(d) There shall be no injunction, writ, preliminary restraining
order or other order in effect of any nature issued by a court or governmental
agency of competent jurisdiction directing that the Transactions not be
consummated in the manner provided for in this Agreement. No action or
proceeding shall have been instituted and remain pending before a court or other
governmental body of competent jurisdiction to restrain, prohibit or otherwise
challenge any of the Transactions (or seeking material damages from the
Purchaser or the Company as a result thereof), other than any such action or
proceeding which would not have a material adverse effect on the Company or
prevent the Company or the Purchaser from performing their respective
obligations hereunder.
(e) The Company shall have delivered to the Purchaser a legal
opinion from counsel to the Company, in form and substance reasonably
satisfactory to the Purchaser and its counsel and addressing the matters listed
in EXHIBIT C hereto.
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(f) On or prior to the Closing Date, the Purchaser shall have
received a certificate of the Secretary of State of the State of Delaware, dated
as of a recent date, as to the good standing of the Company.
(g) The IPO shall have been closed.
4.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The Company's obligations to sell the Purchased Shares and to take the
other actions required to be taken by the Company at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Company, in whole or in part):
(a) The representations and warranties of the Purchaser contained
in this Agreement shall be true in all material respects on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing Date, except to the extent any such
representations and warranties are stated to be made as of a specific date, in
which case they shall be true in all material respects as of such date, and the
Purchaser shall have performed in all material respects all obligations required
pursuant to the terms of this Agreement to be performed or observed by either of
them on or prior to the Closing.
(b) The Purchaser shall have delivered to the Company a
certificate, executed by an executive officer of the Purchaser, dated the date
of the Closing, setting forth the Purchaser's representation that the conditions
set forth in Section 4.2(a) above shall have been satisfied.
(c) The Purchaser shall have obtained any and all consents,
permits, waivers and approvals necessary or appropriate for consummation of the
Transactions (except for such as may be properly obtained subsequent to the
Closing).
(d) There shall be no injunction, writ, preliminary restraining
order or other order in effect of any nature issued by a court or governmental
agency of competent jurisdiction directing that the Transactions not be
consummated in the manner provided for in this Agreement. No action or
proceeding shall have been instituted and remain pending before a court or other
governmental body of competent jurisdiction to restrain, prohibit or otherwise
challenge any of the Transactions (or seeking material damages from the
Purchaser or the Company as a result thereof), other than any such action or
proceeding which would not have a material adverse effect on the Company or
prevent the Company or the Purchaser from performing their respective
obligations hereunder.
(e) On or prior to the Closing Date, if the Purchaser is
organized in the United States, the Company shall have received a certificate of
the Secretary of State (or equivalent agency) of the state of the Purchaser's
organization, as to the good standing of such party.
(f) The IPO shall have been closed.
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(g) Concurrently with such sale, the Purchaser shall have paid to
the Company the Purchase Price for the Purchased Shares.
5. COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS.
Concurrently with execution and delivery of this Agreement, the Purchaser
will promptly furnish all information as may be required by the Singapore
[Ministry of Finance] in order for the requisite approvals for the purchase and
sale of the Purchased Shares, and the consummation of the Transactions, to be
obtained. Each party hereto will cooperate with each other with respect to
obtaining, as promptly as practicable, and in any event prior to the Closing,
all necessary consents, approvals, authorizations and agreements of, and the
giving of all notices and making of all other filings with, any third parties,
including Governmental Authorities, necessary to authorize, approve or permit
the closing of the Transactions.
5.2 COVENANT TO SATISFY CONDITIONS.
Each party agrees to use all reasonable efforts to insure that the
conditions to the other party's obligations hereunder set forth in Section 4,
insofar as such matters are within the control of such party, are satisfied as
promptly as practicable, and in any event prior to the closing of the IPO,
PROVIDED HOWEVER, that notwithstanding anything herein to the contrary, the
Company shall have the sole and absolute discretion as to when, and whether, to
consummate or close the IPO, and may choose to cease pursuit of the IPO or to
postpone the IPO until after the termination of this Agreement, all without any
liability or obligation whatsoever to the Purchaser.
5.3 FURTHER ASSURANCES.
Each party shall execute and deliver such additional instruments, documents
or other writings as may be reasonably requested by any other party, before or
after the Closing, in order to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
6. MARKET STANDOFF AGREEMENT
6.1 MARKET STANDOFF AGREEMENT
The Purchaser hereby agrees that, for a period of one hundred eighty (180)
days after the initial public offering (the "Commencement Date") of the Common
Stock of the Company, the Purchaser will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any of the Purchased
Shares or publicly disclose the intention to make any such offer, sale, pledge
or disposal, without the prior written consent of Credit Suisse First Boston
Corporation.
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In furtherance of the foregoing, the Purchaser hereby agrees that the
Company and its transfer agent and registrar are authorized to decline to make
any transfer of any of the Purchased Shares if such transfer would constitute a
violation or breach of this Section 6.1.
The restrictions in this Section 6.1 shall be binding on the Purchaser and
the respective successors, heirs, personal representatives and assigns of the
Purchaser.
7. TERMINATION
7.1 TERMINATION.
This Agreement may be terminated at any time prior to the Closing:
(a) by the written agreement of the Purchaser and the Company;
(b) by the Company or the Purchaser, if the Closing shall not
have occurred by August 31, 1999; PROVIDED HOWEVER, that the failure to
consummate the Closing by such date is not a result of the Company, in the case
the Company is so electing to terminate this Agreement, or of the Purchaser, in
the case the Purchaser is so electing to terminate this Agreement, failing to
perform any of its obligations or breaching any of its representations and
warranties hereunder; and
(c) by the Company or the Purchaser in the event any court or
governmental agency of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restricting, enjoining or otherwise
prohibiting the Transactions and such order, decree, ruling or other action
shall have become final and unappealable, and the parties hereto hereby agree to
use all reasonable efforts to prevent any such order, decree, ruling or other
action from becoming final and unappealable.
7.2 EFFECT OF TERMINATION.
Except for the obligations of Section 9 hereof and this Section 7.2, if
this Agreement shall be terminated pursuant to the preceding Section 7.1, all
obligations, representations and warranties of the parties hereto under this
Agreement shall terminate and there shall be no liability hereunder of any party
hereto to any other party hereto; PROVIDED HOWEVER, that nothing in this Section
7 shall relieve any party of liability for breach of any warranty, covenant or
agreement herein or in any other Transactional Agreement.
8. SUCCESSORS AND ASSIGNS
8.1 SUCCESSORS AND ASSIGNS; REINCORPORATION.
(a) 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. Except as
otherwise expressly provided herein, neither party may assign any of its rights
or obligations hereunder without the written consent of the other party hereto;
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PROVIDED, HOWEVER, that the Company shall have the right, with or without the
consent of the Purchaser, to reincorporate into Delaware prior to the Closing
and such Delaware successor corporation will succeed to all of the Company's
rights and obligations under this Agreement.
(b) In the event of a transfer of the rights and obligations of
the Purchaser under this Agreement, the Purchaser shall ensure that all the
rights and obligations of the Purchaser under this Agreement and the ownership
of the Purchased Shares are transferred to the said successor entity without any
dilution or adverse effect on the enforceability of such obligations. Subject to
the aforesaid, the Company: (i) agrees that such a reorganization by itself
shall not constitute a default by the Purchaser or any successor entity of the
Purchaser under this Agreement and shall not constitute grounds for termination
of this Agreement by any of such parties; (ii) anything to the contrary herein
or elsewhere notwithstanding, consents to the transfer of all the rights and
obligations of the Purchaser under this Agreement to a successor entity as part
of such reorganization; (iii) consents to the transfer of the Purchaser Shares
to a successor entity as part of such reorganization; and (iv) anything to the
contrary herein or elsewhere notwithstanding, agrees to absolutely and
irrevocably release the Purchaser from its obligations under this Agreement upon
such reorganization, provided, in each case, that the successor entity shall be
subject to the terms and conditions of this Agreement, including, without
limitation, the representations and warranties of the Purchaser herein, and
shall deliver to the Company a written agreement to such effect, in form and
substance reasonably satisfactory to the Company, and provided, further, in each
case, that the successor entity is either one of the Regional Companies or the
Long Distance Company currently contemplated in the Amendment.
9. MISCELLANEOUS
9.1 PRESS RELEASES AND ANNOUNCEMENTS.
All press releases and announcements concerning the Transactions shall be
mutually agreed to by the Company and the Purchaser, except for any such
disclosure required by law which, in the case of such disclosure by the Company,
shall, to the extent practicable under the circumstances, be first discussed
with the Purchaser and, in the case of such disclosure by the Purchaser, shall,
to the extent practicable under the circumstances, be first discussed with the
Company.
9.2 INTERPRETATION.
(a) The various section headings are inserted for purposes of
reference only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
(b) Each party hereto acknowledges that it has been represented
by competent counsel and participated in the drafting of this Agreement, and
agrees that any applicable rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied in connection
with the construction or interpretation of this Agreement.
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(c) The original and controlling version of this Agreement shall
be the version using the English language. All translations of this Agreement
into other languages shall be for the convenience of the parties only, and shall
not control the meaning or application of this Agreement. All notices and other
communications required or permitted by this Agreement must be in English, and
the interpretation and application of such notices and other communications
shall be based solely upon the English language version thereof.
(d) When a reference is made in this Agreement to a Section,
Exhibit or Schedule, such reference shall be to a Section of, Exhibit to or
Schedule to this Agreement, unless otherwise indicated.
9.3 FEES AND EXPENSES.
Each party hereto shall be solely responsible for the payment of the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement, except to
the extent expressly set forth in this Agreement. Without limiting the
generality of the foregoing, the Purchaser shall pay all stamp and other taxes,
if any, which may be payable in respect of the issuance, sale and delivery to
the Purchaser or any Assignee of Common Stock pursuant to the terms of this
Agreement, and shall save the Company harmless against any loss or liability
resulting from nonpayment or delay in the payment of any such tax.
9.4 GOVERNING LAW; JURISDICTION AND VENUE.
(a) Prior to Closing, this Agreement is to be construed in
accordance with and governed by the internal laws of the State of California
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
California to the rights and duties of the parties. On and after Closing, this
Agreement is to be construed in accordance with and governed by the internal
laws of the State of Delaware without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Delaware to the rights and duties of the parties.
(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in the County of
Contra Costa, California. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of Contra
Costa, California (and each appellate court located in the State of California)
in connection with any such legal proceeding, including to enforce any
settlement, order or award;
(ii) agrees that each state and federal court located in the
County of Contra Costa, California shall be deemed to be a convenient forum; and
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(iii) waives and agrees not to assert (by way of motion, as
a defense or otherwise), in any such legal proceeding commenced in any state or
federal court located in the County of Contra Costa, California, any claim that
such party is not subject personally to the jurisdiction of such court, that
such legal proceeding has been brought in an inconvenient forum, that the venue
of such proceeding is improper or that this Agreement or the subject matter
hereof or thereof may not be enforced in or by such court.
(c) Each party hereto agrees to the entry of an order to enforce
any resolution, settlement, order or award made pursuant to this Section by the
state and federal courts located in the County of Contra Costa, California and
in connection therewith hereby waives, and agrees not to assert by way of
motion, as a defense, or otherwise, any claim that such resolution, settlement,
order or award is inconsistent with or violative of the laws or public policy of
the laws of the State of California or any other jurisdiction.
(d) The Purchaser has irrevocably designated
______________________, a ____________________ corporation, as agent for service
of process hereunder and the above named is authorized and directed to accept
service of process on behalf of the Purchaser in any suit regarding the
Transactions or otherwise related to this Agreement.
9.5 SPECIFIC ENFORCEMENT.
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific intent or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent or
cure breaches of the provisions of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they may be entitled by law or equity.
9.6 SURVIVAL.
The representations and warranties of the parties hereunder shall terminate
upon the Closing and thereafter shall terminate and be of no force or effect.
9.7 NO THIRD PARTY BENEFICIARIES.
This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns and are not for the benefit of, nor
may any provision hereof or thereof be enforced by, any other Person.
9.8 ENTIRE AGREEMENT.
This Agreement and the other documents delivered expressly hereby,
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no
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party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
9.9 SEVERABILITY.
The provisions of this Agreement shall be severable, and any invalidity,
unenforceability or illegality of any provision or provisions of this Agreement
shall not affect any other provision or provisions of this Agreement, and each
term and provision of this Agreement shall be construed to be valid and
enforceable to the full extent permitted by law.
9.10 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
mutual written consent of the Company and the Purchaser.
(b) No failure to exercise and no delay in exercising any right,
power or privilege granted under this Agreement shall operate as a waiver of
such right, power or privilege. No single or partial exercise of any right,
power or privilege granted under this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Agreement are cumulative and are not
exclusive of any rights or remedies provided by law.
9.11 RELATIONSHIP OF THE PARTIES.
For all purposes of this Agreement, each of the parties hereto and their
respective Affiliates shall be deemed to be independent entities and, anything
in this Agreement to the contrary notwithstanding, nothing herein shall be
deemed to constitute the parties hereto or any of their respective Affiliates as
partners, joint venturers, co-owners, an association or any entity separate and
apart from each party itself, nor shall this Agreement make any party hereto an
employee or agent, legal or otherwise, of the other parties for any purposes
whatsoever. This Agreement does not create or constitute, and shall not be
construed as creating or constituting, a voting trust agreement under the
Delaware General Corporation Law or any other applicable corporation law. None
of the parties to this Agreement is authorized to make any statements or
representations on behalf of any other party or in any way to obligate any other
party, except as expressly authorized in writing by the other parties. Anything
in this Agreement to the contrary notwithstanding, no party hereto or thereto
shall assume nor shall be liable for any liabilities or obligations of the other
parties, whether past, present or future.
9.12 NOTICES.
All notices required or permitted hereunder shall be in writing and shall
be deemed effectively given: (i) upon personal delivery to the party to be
notified; (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (iii)
seven (7) days after having been sent by registered or certified mail, return
receipt
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requested, postage prepaid; or (iv) two (2) days after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the parties hereto
at the respective addresses set forth below, or as notified by such party from
time to time at least ten (10) days prior to the effectiveness of such notice:
if to the Purchaser: SingTel Ventures (Cayman) Pte Limited
31 Exeter Road, Comcentre, #18-00
Singapore 239732
Mr. Andrew Buay
Director, Corporate Development
with a copy to:
------------------------------------------
------------------------------------------
------------------------------------------
Attention:
--------------------------------
Facsimile:
--------------------------------
and a copy to:
------------------------------------------
------------------------------------------
------------------------------------------
Attention:
--------------------------------
Facsimile:
--------------------------------
if to the Company: Commerce One, Inc.
1600 Riviera Avenue
Walnut Creek, California 94596
Attention: Robert M. Tarkoff, Esq.
Facsimile: (925) 941-6066
with a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: David J. Segre, Esq.
Facsimile: (650) 493-6811
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9.13 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]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
PURCHASER: SingTel Ventures (Cayman) Pte Limited
By: /s/ Chua Sock Koong
-------------------------------------------
Name: Chua Sock Koong
Title: Director
COMPANY: Commerce One, Inc.
By: /s/ Robert M. Tarkoff
-------------------------------------------
Name: Robert M. Tarkoff
Title: Vice President & General Council
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STOCK PURCHASE AND MASTER STRATEGIC RELATIONSHIP AGREEMENT
This Stock Purchase and Master Strategic Relationship Agreement
(this "Agreement") is entered into as of June ___, 1999, by and between
Commerce One, Inc., a California corporation (the "Company"), and Nippon
Telephone and Telegraph Corporation, a Japanese corporation (the
"Purchaser"). Capitalized terms used in this Agreement and not otherwise
defined are defined in EXHIBIT A attached hereto.
WHEREAS, the Purchaser wishes to purchase from the Company, and the
Company wishes to issue and sell to the Purchaser, following the Company's
reincorporation into Delaware (the "Delaware Reincorporation"), certain shares
of the Common Stock;
WHEREAS, such sale and purchase of Common Stock shall occur immediately
following the closing of the Company's initial public offering (the "IPO").
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, the parties hereto, intending to be legally bound, agree as follows:
1. AGREEMENT TO SELL AND PURCHASE SHARES; OTHER AGREEMENTS
1.1 SALE AND PURCHASE OF SHARES.
(a) Subject to the terms and conditions hereof, at the
Closing, the Company will issue and sell to the Purchaser, and the Purchaser
will purchase from the Company, shares of Common Stock equal in number to
$7,000,000 divided by the Per Share Price. The "Per Share Price" shall be equal
to the IPO Price multiplied by 94%.
(b) At the Closing, the Purchaser shall pay the purchase
price (the "Purchase Price") for the shares of Common Stock purchased hereunder
(the "Purchased Shares") by wire transfer of immediately available funds in U.S.
dollars to an account specified in writing by the Company prior to the Closing.
(c) No fractional shares shall be issued upon the sale of
any Common Stock to the Purchaser pursuant to this Agreement, and the number of
shares of Common Stock to be issued to the Purchaser shall be rounded to the
nearest whole share.
(d) All certificates representing the Purchased Shares
shall bear the following legend:
(i) "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"). SUCH SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. THE
COMPANY MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT THAT A
PROPOSED TRANSFER OR SALE IS IN COMPLIANCE WITH THE ACT. COPIES OF THE
AGREEMENT COVERING THE
<PAGE>
PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDERS OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY."
(ii) Any legend required by the blue sky or
securities laws of any state or jurisdiction to the extent such laws are
applicable to the shares represented by the certificate so legended.
(e) The certificates representing the Purchased Shares
will be subject to a stop transfer order with the Company's transfer agent
that restricts the transfer of the Purchased Shares except in compliance
with this Agreement.
1.2 REGISTRATION RIGHTS AGREEMENT.
At the Closing, the parties shall enter into an Amendment to the Fourth
Amended and Restated Registration Rights Agreement, substiantially in the form
attached hereto as EXHIBIT B, to provide the Purchaser with certain registration
rights relating to the Purchased Shares.
1.3 BOARD OF DIRECTORS ARRANGEMENTS.
(a) BOARD OF DIRECTORS DESIGNEE
(i) Concurrently with the Closing, the Company
shall take all corporate action necessary to increase the size of the Board of
Directors of the Company (the "Company Board") by one director and shall take
all corporate action necessary to appoint to the Company Board an individual
designated by the Purchaser and reasonably acceptable to the Company (such
person, the "Purchaser Board Designee"). The Company Board is classified and the
Purchaser Board Designee shall be a member of the second class of directors.
Subject to Section 1.3(a)(ii), the Purchaser Board Designee shall have an
initial term on the Company Board ending at the second annual stockholder
meeting following the Closing. At the second annual shareholder meeting, the
Company shall nominate a Purchaser Board Designee for election to the Company
Board by the shareholders and shall recommend to the shareholders that they vote
for the Purchaser Board Designee.
(ii) The Purchaser Board Designee shall be
entitled to serve as a member of the Company Board for term specified in the
preceding paragraph (a)(i) so long as the Purchaser and its Affiliates
collectively shall own beneficially at least eighty percent (80%) of the
aggregate Purchased Shares, adjusted as appropriate for any subsequent stock
split or reverse stock split or other similar action (the "Ownership
Threshold"). Upon such time as the Purchaser and its Affiliates collectively
shall cease to own beneficially Company Securities at least equal to the
Ownership Threshold the Purchaser shall, upon the request of the Company, cause
the Purchaser Board Designee to resign from the Company Board.
(b) ELIGIBLE INDIVIDUALS; CONFIDENTIALITY
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The Purchaser Board Designee shall not be an employee of
the Company. Each such individual, as a condition to his or her appointment
or nomination, or prior to attending any meeting of the Company Board or
any committee thereof, shall execute the Company's standard form of
confidentiality agreement.
(c) VACANCIES
In the event that the Purchaser Board Designee ceases to serve
as a member of the Company Board during such individual's term of office for any
reason and at such time the Purchaser would have the right to a designation
hereunder if an election for the resulting vacancy were to be held, the director
to fill such vacancy shall be designated by the Purchaser, subject to the
requirements provided herein for any such designee.
1.4 CLOSING.
The closing of the purchase and sale of the Purchased Shares (the
"Closing") shall take place at the offices of Wilson Sonsini Goodrich &
Rosati, 650 Page Mill Road, Palo Alto, California 94304, at 11:00 a.m.
(California time) on the date of and immediately following the closing of the
IPO, or on such other date or at such other place or time as the Company and
the Purchaser may mutually agree (such date, the "Closing Date").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the disclosure schedule attached
hereto as EXHIBIT C (the "Disclosure Schedule"), the Company hereby represents
and warrants to the Purchaser as follows:
2.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION.
Each of the Company and VEO Systems, Inc., a wholly-owned subsidiary of
the Company ("VEO"), is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, and has all requisite
corporate power and authority to carry on its business as now conducted and as
proposed to be conducted. Each of the Company and VEO is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which the nature of its business or the location of its
properties requires such qualification and in which the failure to so qualify
would have a material adverse effect on its business.
2.2 CAPITALIZATION.
As of the date of this Agreement, the authorized capital of the Company
consists of the following:
(a) 29,000,000 shares of Preferred Stock, no par value
("Preferred Stock") of which 673,680 shares have been designated Series A
Preferred Stock, all of which are issued and outstanding, 3,595,976 have been
designated Series B Preferred Stock, of which 3,568,293 are issued and
outstanding, 6,450,000 shares have been designated Series C Preferred Stock,
of which 5,120,608 are issued and outstanding, 10,700,000 shares have been
designated Series D Preferred Stock, 8,866,757 of which are issued and
outstanding, 800,169 shares have been designated Series D'
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<PAGE>
Preferred Stock, 681,143 of which are issued and outstanding, and 5,518,764
shares have been designated Series E Preferred Stock, of which 5,517,638
shares are issued and outstanding. The rights, privileges and preferences of
the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock, the Series D' Preferred Stock
and the Series E Preferred Stock are as stated in the Company's Amended and
Restated Articles of Incorporation. In connection with the Company's IPO, all
of the outstanding shares of Preferred Stock will convert into an equal
number of shares of Common Stock.
(b) 60,000,000 shares of common stock, no par value,
11,134,020 shares of which are issued and outstanding. In connection with the
Company's IPO, the Company will issue additional shares of Common Stock.
(c) Warrants. Warrants to purchase 27,562 shares of Series
B Preferred Stock (the "Series B Warrants"), warrants to purchase 1,293,580
shares of Series C Preferred Stock (the "Series C Warrants"), and warrants to
purchase 86,818 shares of Series D Preferred Stock (the "Series D Warrants")
are issued and outstanding.
(d) The Company has authorized 12,956,090 shares of common
stock for issuance to directors, employees or consultants under the Company's
stock option and stock benefit plans of which 6,773,886 shares of common
stock are subject to outstanding stock options as of the date hereof (the
"Outstanding Options"). Except for the Warrants described above, the
Outstanding Options, and as contemplated in connection with the Company's
IPO, there are no outstanding options, warrants, rights (including conversion
or preemptive rights) or agreements, orally or in writing, for the purchase
or acquisition from the Company of any shares of its capital stock.
(e) All issued and outstanding shares of the Company's
common stock have been duly authorized and validly issued, are fully paid and
nonassessable, and were offered, issued and sold in compliance with all
applicable state and federal laws concerning the offer, sale and issuance of
securities.
(f) Neither the offer nor the issuance or sale of the
Purchased Shares constitutes or will constitute an event, under any capital
stock or convertible security or any anti-dilution or similar provision of any
agreement or instrument to which the Company is a party or by which it is bound
or affected, which shall either increase the number of shares or units of
capital stock issuable upon conversion of any securities or upon exercise of
any warrant or right to subscribe to or purchase any stock or similar security,
or decrease the consideration per share or unit of capital stock to be received
by the Company upon such conversion or exercise.
2.3 SUBSIDIARIES.
Other than VEO, the Company does not currently own or control, directly
or indirectly, any interest in any other corporation, association, or other
business entity which is material to the Company's business.
2.4 AUTHORIZATION.
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<PAGE>
All corporate action on the part of the Company, its officers,
directors and shareholders necessary for the authorization, execution and
delivery of this Agreement and the other Transactional Agreements, the
performance of all obligations of the Company hereunder and thereunder and
the authorization, issuance and delivery of the Purchased Shares has been
taken or will be taken prior to the Closing. The Agreement, when executed and
delivered, will be a valid and binding obligation of the Company enforceable
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights; and (ii) general principles of
equity that restrict the availability of equitable remedies.
2.5 VALID ISSUANCE OF SECURITIES.
The Purchased Shares being issued hereunder, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable. Based
in part upon the representations of the Purchasers in this Agreement and
subject to the provisions of Section 2.7 below, the Purchased Shares will be
issued in compliance with all applicable federal and state securities laws.
The Purchased Shares shall be free of any liens or encumbrances, other than
any liens or encumbrances created by the Purchasers; PROVIDED, HOWEVER, that
the Purchased Shares may be subject to restrictions on transfer under state
and/or federal securities laws or pursuant to the Fourth Amended and Restated
Registration Rights Agreement, as amended. The Purchased Shares are not and
will not be subject to any preemptive rights, rights of first refusal, rights
of first offer or other similar rights that have not been properly waived or
complied with.
2.6 FIRPTA.
The Company is not a "United States Real Property Holding Corporation"
within the meaning of Section 847(c)(2) of the Internal Revenue Code of 1986, as
amended.
2.7 GOVERNMENTAL CONSENTS.
No consent, approval or authorization of or designation, declaration
or filing with any governmental authority on the part of the Company is
required in connection with the valid execution and delivery of this
Agreement, or the consummation of the transactions contemplated, hereby or
thereby, except as required in connection with the Delaware Reincorporation
and for the filing of notices required by applicable Blue Sky laws, the
filing of a Form D pursuant to Regulation D under the Securities Act of 1933,
as amended (the "Securities Act"), as promulgated by the Securities and
Exchange Commission, and the filing of any notices required by applicable
foreign securities laws.
2.8 LITIGATION.
There is no action, suit, arbitration, proceeding or investigation
pending or currently threatened against the Company or its properties before any
court, arbitrator or governmental agency, nor is the Company aware that there is
any basis for the foregoing. The foregoing includes, without limitation,
actions, suits, arbitration proceedings or investigations pending or threatened
(or any basis
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<PAGE>
therefor known to the Company) involving the prior employment of any of the
Company's employees, their use in connection with the Company's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court of government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.9 INTELLECTUAL PROPERTY.
As of the Closing, the Company has legally enforceable rights to use
all patents, trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights, know-how and processes necessary
for its business as now conducted and as proposed to be conducted without any
conflict with or infringement on the rights of others, except as may
otherwise be described in Section 2.9 of the Disclosure Schedule. Except
pursuant to Contracts (as defined in Section 2.11 below) listed in the
Disclosure Schedule, copies of which have previously been delivered to the
Purchasers, there are no outstanding options, licenses, or agreements of any
kind relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights, know-how and processes of any other person
or entity. Except as described in Section 2.9 of the Disclosure Schedule, to
the best of the Company's knowledge the Company has not violated or, by
conducting its business as proposed, would not violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. Each current or former
employee, officer, director and consultant of the Company has executed an
agreement with the Company regarding confidentiality and proprietary
information, a copy of the form of which has previously been provided to the
Purchasers, and no exceptions have been taken by any such current or former
employee, officer or consultant. The Company is not aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere
with the use of his or her best efforts to promote the interests of the
Company or that would conflict with the Company's business as conducted or
proposed to be conducted. Neither the execution nor delivery of this
Agreement or the other Transaction Agreements, nor the carrying on of the
Company's business as conducted or as currently proposed to be conducted,
will, to the Company's knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such employees is now
obligated. The Company does not believe that it is or will be necessary for
the Company to utilize any inventions of any of its employees made prior to
their employment with the Company. Since its organization, the Company has
taken reasonable security measures to protect the secrecy, confidentiality,
and value of its trade secrets, including know-how, negative processes,
inventions, designs, computer programs, technical data and all information
that derives independent economic value, actual or potential, from not being
generally known or known by competitors.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS.
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<PAGE>
The Company is not in violation or default of any provisions of its
charter documents or of any instrument, judgment, order, writ, decree or
contract to which it is a party or by which it is bound or, of any provision
of federal, state or foreign statute, rule, regulation, order or restriction
applicable to the Company, including but not limited to the Foreign Corrupt
Practices Act. The execution, delivery and performance of this Agreement and
the other Transaction Agreements and the consummation of the transactions
contemplated hereby will not result in any such violation or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either a default under any such provision, instrument, judgment, order, writ,
decree or contract or an event which results in the creation of any lien,
charge or encumbrance upon any of the properties or assets of the Company or
the suspension, revocation, impairment, forfeiture, or nonrenewal of any
material permit, license, authorization, or approval applicable to the
Company, its business or operations or any of its assets or properties. No
consent, approval, qualification, order or authorization of, or filing with,
any governmental authority, or any consent or approval of any third party
person or entity is required in connection with the Company's valid
execution, delivery or performance of this Agreement or the offer, sale or
issuance of the Purchased Shares, or the consummation of any other
transaction contemplated on the part of the Company hereby, except as
required in connection with the Delaware Reincorporation and for the filing
of any notice required by applicable Blue Sky laws, the filing of a notice on
Form D, the filing of any notice required by applicable foreign securities
laws. Except as disclosed in the Disclosure Schedule, the Company has avoided
every condition and has not performed any act which would result in the
Company's loss of any right granted under any license, distribution or other
agreement.
2.11 MATERIAL CONTRACTS AND COMMITMENTS.
Except as listed in Section 2.11 of the Disclosure Schedule and except
for agreements explicitly contemplated hereby (the "Contracts"), there are no
agreements, instruments, leases, licenses, commitments (written or oral) or
contracts to which the Company is a party or by which it is bound, which (i)
involve obligations of or payments to the Company, absolute or contingent, in
excess of $20,000 individually, (ii) involve provisions restricting or affecting
the development, manufacture or distribution of the Company's products or
services, or (iii) involve indemnification by the Company with respect to
infringements of proprietary rights (other than indemnification obligations
arising from purchase and sale agreements entered into in the ordinary course of
business and ordinary course licensing agreements entered into with customers of
the Company). All of the Contracts are valid, binding and in full force and
effect in all material respects and enforceable by the Company in accordance
with their respective terms in all material respects, subject to the effect of
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium, usury or other laws of general application relating to or affecting
enforcement of creditors' rights and rules or laws concerning equitable
remedies. The Company is not in material default under any of such Contracts,
nor has the Company received notice that any third party does not intend to
renew any material contract it currently has with the Company, or that any third
party intends to terminate any material contract currently in place with the
Company. To the best knowledge of the Company, no other party to any of the
Contracts is in material default thereunder. Except for the merger of the
Company and VEO, the Company has not engaged in the past six (6) months in any
discussion (i) with any representative of any corporation or corporations
regarding the consolidation or merger of the Company with or into any such
corporation or corporations, (ii) with any corporation,
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partnership, association or other business entity or any individual regarding
the sale, conveyance or disposition of all or substantially all of the assets of
the Company of a transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company is disposed of, or
(iii) regarding any other form of acquisition, liquidation, dissolution or
winding up of the Company.
2.12 REGISTRATION RIGHTS.
As of the Closing, except pursuant to the Fourth Amended and Restated
Registration Rights Agreement, as amended, the Company shall not be under any
contractual obligation to register any of its presently outstanding securities
or any of its securities which may hereafter be issued. As of the Closing,
except as set forth in this Agreement or the Fourth Amended and Restated
Registration Rights Agreement, there are no agreements, written or oral, between
the Company and any of its shareholders or among any shareholders, relating to
the acquisition, disposition or voting of the capital stock of the Company.
2.13 TITLE TO PROPERTY AND ASSETS.
The Company has good and marketable title to its property and assets,
free and clear of all mortgages, liens, loans and encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets it leases, the Company is in compliance
with such leases and, to the best of its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances. Other than ordinary wear and
tear, all tangible assets owned or leased by the Company are in good operating
condition and repair, are reasonably fit and usable for the purposes for which
they are being used, and are adequate and sufficient for the Company's business.
2.14 FINANCIAL STATEMENTS.
The Purchasers have received the Company's audited consolidated balance
sheet, statements of income, cash flow and shareholders' equity for the fiscal
year ended December 31, 1998, together with the related opinion of Ernst &
Young, LLP, independent public accountants (the "Financial Statements"), which
are complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent throughout the periods indicated and consistent with each other,
subject to normal end-of-period adjustments. The Financial Statements fairly
present the consolidated financial condition, operating results and cash flows
of the Company as of the respective dates and for the respective periods
indicated.
The Purchasers have received an unaudited consolidated balance sheet,
statements of income, cash flow and shareholders' equity for the three-month
period ended March 31, 1999 (the "Unaudited Financial Statements"). The
Unaudited Financial Statements were prepared in good faith by the Company, are
complete and correct in all material respects and have been prepared from the
books and records of the Company, in accordance with generally accepted
accounting principles consistently applied by the Company, and present the
consolidated financial condition, operating results and cash flows of the
Company as of the date and for the period indicated.
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Except as disclosed in the Financial Statements and Unaudited Financial
Statements, the Company is not a guarantor or indemnitor of any indebtedness of
any other person, firm or corporation. The Company maintains and will continue
to maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
2.15 CHANGES.
Except as otherwise disclosed in the Financial Statements and Unaudited
Financial Statements, since March 31, 1999, there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements and Unaudited Financial Statements, except changes in the
ordinary course of business that have not been, in the aggregate, materially
adverse;
(b) any incurrence of any indebtedness for money borrowed;
(c) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, prospects or business of the Company
(as such business is presently conducted and as it is proposed to be conducted);
(d) any waiver by the Company of a valuable right or of a
material debt owed to it;
(e) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the assets, properties, financial
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted);
(f) except as described in Section 2.11 of the Disclosure
Schedule, any material change or amendment to a material contract or arrangement
by which the Company or any of its assets or properties is bound or subject;
(g) any material change in any compensation arrangement or
agreement with any employee, contractor or director;
(h) any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets, except
licenses entered into in the ordinary course of business and consistent with
past practices;
(i) any resignation or termination of employment of any key
officer of the Company, and the Company, to the best of its knowledge, does not
know of the impending resignation or termination of employment of any such
officer;
(j) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Company;
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(k) any mortgage, pledge, transfer of a security interest
in, or lien, created by the Company with respect to any of its material
properties or assets, except liens for taxes not yet payable;
(l) any loans or guarantees made by the Company to or for
the benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(m) any declaration, setting aside or payment of dividends
or other distribution with respect to any of the Company's capital stock or any
direct or indirect redemption, purchase or other acquisition of any of such
stock by the Company;
(n) to the best of the Company's knowledge, any other event
or condition of any character that could reasonably be expected to materially
and adversely affect the assets, properties, financial condition, operating
results or business of the Company (as such business is presently conducted);
(o) any agreement or commitment by the Company to perform
any of the acts described in this Section 2.15; or
(p) any issuance or sale of any shares of the capital
stock or other securities of the Company, grant of any options with respect
thereto, or any modification of any of the capital stock of the Company.
2.16 OUTSTANDING INDEBTEDNESS; MATERIAL LIABILITIES.
Except pursuant to the Contracts or as disclosed in the Financial
Statements and Unaudited Financial Statements, the Company has no material
liabilities or obligations exceeding $500,000 in the aggregate, absolute or
contingent (individually or in the aggregate), except (i) liabilities and
obligations under a lease for its principal offices and leases for equipment
which do not exceed $5,000,000 in the aggregate, (ii) liabilities and
obligations under sales, procurement and other contracts and arrangements
entered into in the normal course of business, which do not exceed $20,000
individually, or $40,000 in the aggregate, (iii) liabilities incurred in the
ordinary course of business subsequent to March 31, 1999, and (iv) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
the Financial Statements and Unaudited Financial Statements, which, in all
cases, individually or in the aggregate, are not material to the financial
condition or operating results of the Company.
2.17 TAX RETURNS AND PAYMENTS.
The Company has accurately prepared all United States income tax
returns and all state and municipal tax returns required to be filed by it, has
paid all taxes, assessments, fees and charges when and as due under such
returns, and has made adequate provision for the payment of all other taxes,
assessments, fees and charges shown on such returns or on assessments received
by the Company. The Company has not requested any extension of time within which
to file any federal, state or local tax return, which tax return has not since
been filed. The Company has not been
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advised that any of its returns, federal, state or other, have been or are being
audited as of the date hereof, and no deficiency assessment or proposed
adjustment of the Company's United States income tax or state or municipal taxes
is pending or, to the best knowledge of the Company, threatened. The provision
for taxes for the Company as shown in the Financial Statements and Unaudited
Financial Statements is adequate for taxes due or accrued as of the date
thereof. Since the date of the Financial Statements and Unaudited Financial
Statements, the Company has made adequate provisions on its books of account for
all taxes, assessments and governmental charges with respect to its business,
properties and operations for such period. The Company has withheld or collected
from each payment made to each of its employees the amount of all taxes
(including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be
withheld or collected therefrom and has paid the same to the proper tax
receiving officers or authorized depositaries.
2.18 EMPLOYEES AND EMPLOYEE BENEFIT PLANS.
(a) The employment of each officer and employee of the
Company is terminable at will. The Company does not have any collective
bargaining agreements covering any of its employees. There is no labor union
organizing activity pending or, to the Company's knowledge, threatened, with
respect to the Company.
(b) The Company is not aware of any key employee of the
Company who has any plans to terminate his or her employment with the Company.
Except as described in Section 2.18 of the Disclosure Schedule, the Company does
not have any deferred compensation, pension, profit sharing, bonus, insurance,
severance or other similar employee benefit plan or obligation covering any of
its employees or any plan subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). To the Company's knowledge, the Company has
complied with all applicable state and federal equal employment opportunity and
other laws relating to employment. The Company has not made any loans or
advances to any person other than ordinary expenses for travel expenses. There
is no strike or other labor dispute involving the Company pending, or to the
best of the Company's knowledge, threatened, that could have a material adverse
effect on the assets, properties, financial condition, operating results, or
business of the Company (as such business is presently conducted and as it is
proposed to be conducted), nor is the Company aware of any labor organization
activity involving its employees. The Company has no written employment
agreement or contract with any employee of the Company.
(c) Except as set forth in Section 2.18 of the Disclosure
Schedule, the Company does not maintain or make contributions to any employee
benefit plans ("Plans"), as defined in Section 3(3) of ERISA. The Company has no
material liability with respect to any such Plans (including, without
limitation, any unfunded liability or any accumulated funding deficiency) or any
material liability to the Pension Benefit Guaranty Corporation ("PBGC") or under
Title IV of ERISA, with respect to a multi-employer pension benefit plan, nor
would the Company have any such liability if any such plan were terminated or if
the Company withdrew, in whole or in part, from any multi-employer plan. To the
Company's best knowledge, the Company's ERISA Plans are in compliance in all
material respects with ERISA, the Internal Revenue Code and other applicable
legal requirements. The Company has filed all reports required to be filed by it
prior to the filing
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deadlines (including extensions) with the Internal Revenue Service or the PBGC
under ERISA and the Internal Revenue Code.
2.19 CERTAIN TRANSACTIONS.
Except as set forth in Section 2.19 of the Disclosure Schedule, the
Company is not indebted, directly or indirectly, to any of its officers,
directors or shareholders or to their spouses or children, in any amount
whatsoever; and none of said officers, directors or, to the best of the
Company's knowledge, shareholders, or any member of their immediate families,
are indebted to the Company or have any direct or indirect ownership interest in
any firm or corporation with which the Company is affiliated or with which the
Company has a business relationship (except as a holder of securities of a
corporation whose securities are publicly traded and which is subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to the extent of owning not more than two percent (2%) of the
issued and outstanding securities of such corporation). Except as set forth in
Section 2.19 of the Disclosure Schedule, no such officer, director or
shareholder, or any member of their immediate families, is, directly or
indirectly, interested in any material contract with the Company. The Company is
not guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.
2.20 INSURANCE.
The Company has in full force and effect the several insurance policies
listed in 2.20 of the Disclosure Schedule with such coverage and insurance
against such hazards, risks and liabilities to persons and property to the
extent and in the manner customary for companies in similar businesses similarly
situated.
2.21 PERMITS.
The Company has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could reasonably be expected to have a material adverse
effect on the Company, and the Company believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted. The Company is not in default in any material respect
under any of such franchises, permits, licenses, or other similar authority.
2.22 ENVIRONMENTAL AND SAFETY LAWS.
The Company is not in violation of any applicable federal, state or
local statute, law or regulation relating to the environment or occupational
health and safety, and no material expenditures are or will be required in
order to comply with any such existing statute, law or regulation.
2.23 DISCLOSURE.
No representation or warranty of the Company contained in this
Agreement, or in any other Transactional Agreement, or any certificate furnished
or to be furnished to the Purchaser at the Closing, when read together, contains
any untrue statement of a material fact or omits to state a
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material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
3.1 ORGANIZATION AND GOOD STANDING.
The Purchaser is a corporation duly organized and validly existing
under the laws of Japan.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENTS.
The Purchaser has the requisite corporate power and authority to
enter into and to perform its obligations under this Agreement and all other
Transactional Agreements to which it is a party. The execution, delivery and
performance by the Purchaser of this Agreement and the Transactional
Agreements, and the consummation or performance of the Transactions, have
been duly authorized by all necessary corporate action on the part of the
Purchaser. Each of this Agreement and such other Transactional Agreements
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights, and (ii) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
3.3 NON-CONTRAVENTION; CONSENTS.
(a) Neither the execution and delivery by the Purchaser,
nor the consummation or performance by the Purchaser of any of the Transactions
to be consummated or performed by it, will directly or indirectly (with or
without notice or lapse of time): (i) violate any provision of the Purchaser's
certificate or articles of incorporation or bylaws or other charter documents;
(ii) constitute or result in a breach or default by the Purchaser, or give rise
to a right of termination on the part of any other party, or result in the
creation or imposition of any lien, claim or encumbrance on any Purchaser
assets, under any agreement or instrument to which the Purchaser is a party or
by which the Purchaser is bound; or (iii) constitute a violation by the
Purchaser of any Requirement of Law, except that the approval of the Japanese
Ministry of Post and Telecommunications is required to consummate the
Transactions.
(b) Except for compliance with the terms of Sections 13
and 16 of the Exchange Act (if required) and except for the approval of the
Japanese Ministry of Post and Telecommunications, no consent, approval, order
or authorization of, or registration, qualification, designation, declaration
or filing with, any Governmental Authority on the part of the Purchaser is
required in connection with the consummation of the Transactions.
3.4 LITIGATION.
As of the date hereof, there are no suits, proceedings or
investigations pending or, to the knowledge of the Purchaser, threatened against
the Purchaser, which in any such case would
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materially adversely affect the Purchaser's ability to perform its obligations
under this Agreement or any of the other Transactional Agreements.
3.5 BROKERS.
The Purchaser has not granted or become obligated to pay, or taken any
action that likely would result in any Person claiming to be entitled to receive
from the Company, any brokerage commission, finder's fee or similar commission
or fee in connection with any of the Transactions.
3.6 INVESTMENT REPRESENTATIONS.
(a) The Purchaser understands that none of the Purchased Shares
has been registered under the Securities Act. The Purchaser also understands
that the Purchased Shares are being offered and sold pursuant to an exemption
from registration contained in the Securities Act based in part upon the
Purchaser's representations contained in this Agreement, and that the Company is
relying upon the truth and accuracy of the Purchaser's representations,
warranties, acknowledgements and understandings with respect to a material fact
set forth herein.
(b) The Purchaser is acquiring the Purchased Shares for the
Purchaser's own account for investment only, and not with the current intention
of making a public distribution thereof.
(c) The Purchaser has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests. The
Purchaser, by reason of its business or financial experience, has the capacity
to protect its own interests in connection with the Transactions. The Purchaser
is an "accredited investor" as that term is defined in Rule 501(a) of Regulation
D.
(d) The Purchaser acknowledges that the Purchased Shares must be
held indefinitely and that the Purchaser must bear the economic risk of this
investment indefinitely unless the Purchased Shares are subsequently registered
under the Securities Act or an exemption from such registration is available.
Without limiting the obligations of the Company under the Fourth Amended and
Restated Rights Agreement, as amended, the Purchaser understands that the
Company has no present intention of registering the Purchased Shares. The
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow the Purchaser to transfer all or any
portion of the Purchased Shares under the circumstances, in the amounts or at
the times the Purchaser might propose.
(e) The Purchaser has been advised or is aware of the provisions
of Rule 144 under the Securities Act ("Rule 144"), which permit limited resale
of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things: (i) the availability of
certain current public information about the Company, (ii) the resale occurring
not less than one year after a party has purchased and paid for the security to
be sold, (iii) the sale being through an unsolicited "broker's transaction" or
in transactions directly with a market maker (as said
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term is defined under the Exchange Act) and (iv) the number of shares being sold
during any three-month period not exceeding specified limitations.
(f) The Purchaser initiated discussions with the Company
relating to the purchase and sale contemplated by this Agreement on an
unsolicited basis prior to the date of this Agreement. The Purchaser did not
receive any information regarding such purchase and sale through any general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act.
3.7 COMPANY DISCLOSURE DOCUMENTS.
(a) The Purchaser has received and reviewed a copy of the
Company's Registration Statement on Form S-1, as filed with the Securities and
Exchange Commission on April 26, 1999 (the "Registration Statement"), including,
without limitation, the language therein under the caption "Risk Factors."
(b) The Purchaser has been furnished with materials relating to
the Company and its proposed activities, including, without limitation, the
Registration Statement. Without limiting the Company's obligations with respect
to any representations or warranties made by the Company in this Agreement, the
Purchaser has been afforded the opportunity to obtain any additional information
deemed necessary by the Purchaser to verify the accuracy of any representations
made or information conveyed to the Purchaser. The Purchaser confirms that all
documents, records and books pertaining to its investment in Common Stock and
requested by the Purchaser have been made available or delivered to the
Purchaser. The Purchaser has had an opportunity to ask questions of and receive
answers from the Company, or from a person or persons acting on the Company's
behalf, concerning the terms and conditions of this investment.
3.8 FOREIGN OFFERING REPRESENTATIONS.
(a) No offer or solicitation of an offer was made by the
Company, any of its affiliates or any other person acting for or on behalf of
the Company, to the Purchaser to enter into this Agreement, or to consummate the
transactions contemplated hereby (including, without limitation, the issuance of
the Purchased Shares), while the Purchaser was inside the United States and, at
the time of the execution and delivery by the Purchaser of this Agreement, the
Purchaser was outside the United States.
(b) In making the decision to invest in the shares of the
Company's Common Stock to be issued hereto, the Purchaser has not relied upon
any materials received in connection with any "directed selling efforts" of the
Company, any of its affiliates or any person acting for or on behalf of the
Company, as such term is defined in Rule 902(b) under Regulation S ("Regulation
S") promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), including, without limitation, any printed materials distributed in a
publication with a general circulation within the United States, or
advertisements with radio or television stations broadcasting within the United
States, in each case which discuss the terms of this Agreement or the
transactions contemplated hereby (including, without limitation, the issuance of
the Purchased Shares pursuant hereto).
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(c) In making the decision to invest in the shares of the
Company's Common Stock to be issued pursuant hereto, the Purchaser has not
relied upon any "Distributors", as such term is defined in Rule 902(c) of
Regulation S, including, without limitation, any underwriter or dealer.
(d) The Purchaser understands and acknowledges that the
Purchased Shares to be issued pursuant hereto are being issued in reliance upon
the exemption from the registration requirements of the Securities Act afforded
by Regulation S, that such shares will not be registered under the Securities
Act or any state securities or "blue sky" law, and that such shares may not be
offered or sold in the United States or to any "U.S. Person", as such term is
defined in Rule 902(o) of Regulation S ( a "U.S. Person"), or otherwise disposed
of, except in accordance with the provisions of Rules 903 and 904 of Regulation
S, pursuant to registration of such shares under the Securities Act, or pursuant
to another available exemption from the registration requirements of the
Securities Act.
(e) Purchaser is not a U.S. Person, and the Purchaser is not
acquiring the Purchased Shares for the account or benefit of any U.S. Person.
(f) The Purchaser understands and acknowledges that it may not
resell any of the Purchased Shares to be issued pursuant hereto unless any such
resale is effected in accordance with the provisions of Rule 904 of Regulation
S, pursuant to registration of such resale under the Securities Act, or pursuant
to another available exemption from the registration requirements of the
Securities Act.
4. CONDITIONS TO CLOSING
4.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS.
The Purchaser's obligations to purchase the Purchased Shares and to take
the other actions required to be taken by it at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part):
(a) The representations and warranties of the Company contained
in this Agreement shall be true on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of the
Closing Date, except to the extent any such representations and warranties are
stated to be made as of a specific date, in which case they shall be true as of
such date, except in each case for any inaccuracies in such representations and
warranties as would not have a material adverse effect on the Company. In
addition, the Company shall have performed in all material respects all
obligations required pursuant to the terms of this Agreement or any of the other
Transactional Agreements to be performed or observed by it on or prior to the
Closing.
(b) The Company shall have delivered to the Purchaser a
certificate, executed by an executive officer of the Company, dated the date of
the Closing, setting forth the Company's representation that the conditions set
forth in Section 4.1(a) above shall have been satisfied.
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(c) The Company shall have obtained any and all consents,
permits, waivers and approvals necessary or appropriate for consummation of the
Transactions (except for such as may be properly obtained subsequent to the
Closing).
(d) There shall be no injunction, writ, preliminary restraining
order or other order in effect of any nature issued by a court or governmental
agency of competent jurisdiction directing that the Transactions not be
consummated in the manner provided for in this Agreement and the other
Transactional Agreements. No action or proceeding shall have been instituted and
remain pending before a court or other governmental body of competent
jurisdiction to restrain, prohibit or otherwise challenge any of the
Transactions (or seeking material damages from the Purchaser or the Company as a
result thereof), other than any such action or proceeding which would not have a
material adverse effect on the Company or prevent the Company or the Purchaser
from performing their respective obligations hereunder.
(e) The Company shall have delivered to the Purchaser a legal
opinion from counsel to the Company, in form and substance reasonably
satisfactory to the Purchaser and its counsel and addressing the matters listed
in EXHIBIT D hereto.
(f) On or prior to the Closing Date, the Purchaser shall have
received a certificate of the Secretary of State of the State of Delaware, dated
as of a recent date, as to the good standing of the Company.
(g) The Company shall have executed and delivered to the
Purchaser the Amendment to the Fourth Amended and Restated Registration Rights
Agreement.
(h) The Purchaser Board Designee shall have been appointed to a
term on the Board of Directors of the Company as provided in Section 1.3.
(i) The IPO shall have been closed.
(j) The approval of the Japanese Ministry of Post and
Telecommunications shall have been received.
4.2 CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The Company's obligations to sell the Purchased Shares and to take the
other actions required to be taken by the Company at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by the Company, in whole or in part):
(a) The representations and warranties of the Purchaser
contained in this Agreement shall be true in all material respects on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the Closing Date, except to the extent any such
representations and warranties are stated to be made as of a specific date, in
which case they shall be true in all material respects as of such date, and the
Purchaser shall have performed in all material respects all obligations required
pursuant to the terms of this Agreement or
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any of the other Transactional Agreements to be performed or observed by either
of them on or prior to the Closing.
(b) The Purchaser shall have delivered to the Company a
certificate, executed by an executive officer of the Purchaser, dated the date
of the Closing, setting forth the Purchaser's representation that the conditions
set forth in Section 4.2(a) above shall have been satisfied.
(c) The Purchaser shall have obtained any and all consents,
permits, waivers and approvals necessary or appropriate for consummation of the
Transactions (except for such as may be properly obtained subsequent to the
Closing).
(d) There shall be no injunction, writ, preliminary restraining
order or other order in effect of any nature issued by a court or governmental
agency of competent jurisdiction directing that the Transactions not be
consummated in the manner provided for in this Agreement and the other
Transactional Agreements. No action or proceeding shall have been instituted and
remain pending before a court or other governmental body of competent
jurisdiction to restrain, prohibit or otherwise challenge any of the
Transactions (or seeking material damages from the Purchaser or the Company as a
result thereof), other than any such action or proceeding which would not have a
material adverse effect on the Company or prevent the Company or the Purchaser
from performing their respective obligations hereunder or under any of the other
Transactional Agreements.
(e) On or prior to the Closing Date, if the Purchaser is
organized in the United States, the Company shall have received a certificate of
the Secretary of State (or equivalent agency) of the state of the Purchaser's
organization, as to the good standing of such party.
(f) The IPO shall have been closed.
(g) Concurrently with such sale, the Purchaser shall have paid
to the Company the Purchase Price for the Purchased Shares.
5. COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS.
Concurrently with execution and delivery of this Agreement, the Purchaser
will promptly furnish all information as may be required by the Japanese
Ministry of Finance in order for the requisite approvals for the purchase and
sale of the Purchased Shares, and the consummation of the Transactions, to be
obtained. Each party hereto will cooperate with each other with respect to
obtaining, as promptly as practicable, and in any event prior to the Closing,
all necessary consents, approvals, authorizations and agreements of, and the
giving of all notices and making of all other filings with, any third parties,
including Governmental Authorities, necessary to authorize, approve or permit
the closing of the Transactions.
5.2 COVENANT TO SATISFY CONDITIONS.
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Each party agrees to use all reasonable efforts to insure that the
conditions to the other party's obligations hereunder set forth in Section 4,
insofar as such matters are within the control of such party, are satisfied as
promptly as practicable, and in any event prior to the closing of the IPO,
PROVIDED HOWEVER, that notwithstanding anything herein to the contrary, the
Company shall have the sole and absolute discretion as to when, and whether, to
consummate or close the IPO, and may choose to cease pursuit of the IPO or to
postpone the IPO until after the termination of this Agreement, all without any
liability or obligation whatsoever to the Purchaser.
5.3 FURTHER ASSURANCES.
Each party shall execute and deliver such additional instruments, documents
or other writings as may be reasonably requested by any other party, before or
after the Closing, in order to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
6. MARKET STANDOFF AGREEMENT
6.1 MARKET STANDOFF AGREEMENT
Without the prior written consent of the Company, the Purchaser will not,
during the period commencing on the Closing Date and ending one hundred eighty
(180) days after the date of the final prospectus relating to the IPO, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of Common Stock, whether any such transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. Notwithstanding the foregoing, the Purchaser
may transfer any of the Purchased Shares to any successor entity without the
prior written consent of the Company if such successor entity agrees in writing
to the provisions binding the Purchaser in this Section 6.1.
In furtherance of the foregoing, the Purchaser hereby agrees that the
Company and its transfer agent and registrar are authorized to decline to make
any transfer of any of the Purchased Shares if such transfer would constitute a
violation or breach of this Section 6.1.
The restrictions in this Section 6.1 shall be binding on the Purchaser and
the respective successors, heirs, personal representatives and assigns of the
Purchaser.
7. TERMINATION
7.1 TERMINATION.
This Agreement may be terminated at any time prior to the Closing:
(a) by the written agreement of the Purchaser and the Company;
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(b) by the Company or the Purchaser, if the Closing shall not
have occurred by August 31, 1999; PROVIDED HOWEVER, that the failure to
consummate the Closing by such date is not a result of the Company, in the case
the Company is so electing to terminate this Agreement, or of the Purchaser, in
the case the Purchaser is so electing to terminate this Agreement, failing to
perform any of its obligations or breaching any of its representations and
warranties hereunder; and
(c) by the Company or the Purchaser in the event any court or
governmental agency of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restricting, enjoining or otherwise
prohibiting the Transactions and such order, decree, ruling or other action
shall have become final and unappealable, and the parties hereto hereby agree to
use all reasonable efforts to prevent any such order, decree, ruling or other
action from becoming final and unappealable.
7.2 EFFECT OF TERMINATION.
Except for the obligations of Section 9 hereof and this Section 7.2, if
this Agreement shall be terminated pursuant to the preceding Section 7.1, all
obligations, representations and warranties of the parties hereto under this
Agreement shall terminate and there shall be no liability hereunder of any party
hereto to any other party hereto; PROVIDED HOWEVER, that nothing in this Section
7 shall relieve any party of liability for breach of any warranty, covenant or
agreement herein or in any other Transactional Agreement.
8. SUCCESSORS AND ASSIGNS
8.1 SUCCESSORS AND ASSIGNS; REINCORPORATION.
(a) 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.
Except as otherwise expressly provided herein, neither party may assign any of
its rights or obligations hereunder without the written consent of the other
party hereto; PROVIDED, HOWEVER, that the Company shall have the right, with or
without the consent of the Purchaser, to reincorporate into Delaware prior to
the Closing and such Delaware successor corporation will succeed to all of the
Company's rights and obligations under this Agreement.
(b) In the event of a transfer of the rights and obligations of
the Purchaser under this Agreement pursuant to a statutory reorganization of the
Purchaser prescribed in the Supplementary Provisions to the Law Concerning
Partial Amendment to the Nippon Telegraph and Telephone Corporation Law (Law No.
98 of 1997) (the "Amendment"), the Purchaser shall ensure that all the rights
and obligations of the Purchaser under this Agreement and the ownership of the
Purchased Shares are transferred to the said successor entity without any
dilution or adverse effect on the enforceability of such obligations. Subject
to the aforesaid, the Company: (i) agrees that such a reorganization by itself
shall not constitute a default by the Purchaser or any successor entity of the
Purchaser under this Agreement and shall not constitute grounds for termination
of this Agreement by any of such parties; (ii) anything to the contrary herein
or elsewhere notwithstanding, consents to the transfer of all the rights and
obligations of the Purchaser under this Agreement to a successor entity as part
of such reorganization; (iii) consents to the transfer of the Purchaser Shares
to a
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successor entity as part of such reorganization; and (iv) anything to the
contrary herein or elsewhere notwithstanding, agrees to absolutely and
irrevocably release the Purchaser from its obligations under this Agreement and
the other Transactional Agreements upon such reorganization, provided, in each
case, that the successor entity shall be subject to the terms and conditions of
this Agreement and the other Transactional Agreements, including, without
limitation, the representations and warranties of the Purchaser herein and in
the other Transactional Agreements, and shall deliver to the Company a written
agreement to such effect, in form and substance reasonably satisfactory to the
Company, and provided, further, in each case, that the successor entity is
either one of the Regional Companies or the Long Distance Company currently
contemplated in the Amendment.
9. MISCELLANEOUS
9.1 PRESS RELEASES AND ANNOUNCEMENTS.
All press releases and announcements concerning the Transactions shall be
mutually agreed to by the Company and the Purchaser, except for any such
disclosure required by law which, in the case of such disclosure by the Company,
shall, to the extent practicable under the circumstances, be first discussed
with the Purchaser and, in the case of such disclosure by the Purchaser, shall,
to the extent practicable under the circumstances, be first discussed with the
Company.
9.2 INTERPRETATION.
(a) The various section headings are inserted for purposes of
reference only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
(b) Each party hereto acknowledges that it has been represented
by competent counsel and participated in the drafting of this Agreement and the
other Transactional Agreements, and agrees that any applicable rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in connection with the construction or
interpretation of this Agreement and the other Transactional Agreements.
(c) The original and controlling version of this Agreement and
the other Transactional Agreements shall be the version using the English
language. All translations of this Agreement or any of the other Transactional
Agreements into other languages shall be for the convenience of the parties
only, and shall not control the meaning or application of this Agreement or any
of the other Transactional Agreements. All notices and other communications
required or permitted by this Agreement or any other Transactional Agreement
must be in English, and the interpretation and application of such notices and
other communications shall be based solely upon the English language version
thereof.
(d) When a reference is made in this Agreement or any other
Transactional Agreement to a Section, Exhibit or Schedule, such reference shall
be to a Section of, Exhibit to or Schedule to this Agreement or such other
Transactional Agreement, unless otherwise indicated.
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9.3 FEES AND EXPENSES.
Each party hereto shall be solely responsible for the payment of the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement and the other
Transactional Agreements, except to the extent expressly set forth in this
Agreement and the other Transactional Agreements. Without limiting the
generality of the foregoing, the Purchaser shall pay all stamp and other taxes,
if any, which may be payable in respect of the issuance, sale and delivery to
the Purchaser or any Assignee of Common Stock pursuant to the terms of this
Agreement, and shall save the Company harmless against any loss or liability
resulting from nonpayment or delay in the payment of any such tax.
9.4 GOVERNING LAW; JURISDICTION AND VENUE.
(a) Prior to Closing, this Agreement and the other Transactional
Agreements are to be construed in accordance with and governed by the internal
laws of the State of California without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of California to the rights and duties of the
parties. On and after Closing, this Agreement and the other Transactional
Agreements are to be construed in accordance with and governed by the internal
laws of the State of Delaware without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Delaware to the rights and duties of the parties.
(b) Any legal action or other legal proceeding relating to this
Agreement or the other Transactional Agreements or the enforcement of any
provision of this Agreement or the other Transactional Agreements may be brought
or otherwise commenced in any state or federal court located in the County of
Contra Costa, California. Each party to this Agreement and the other
Transactional Agreements:
(i) expressly and irrevocably consents and submits to
the jurisdiction of each state and federal court located in the County of Contra
Costa, California (and each appellate court located in the State of California)
in connection with any such legal proceeding, including to enforce any
settlement, order or award;
(ii) agrees that each state and federal court located
in the County of Contra Costa, California shall be deemed to be a convenient
forum; and
(iii) waives and agrees not to assert (by way of motion,
as a defense or otherwise), in any such legal proceeding commenced in any state
or federal court located in the County of Contra Costa, California, any claim
that such party is not subject personally to the jurisdiction of such court,
that such legal proceeding has been brought in an inconvenient forum, that the
venue of such proceeding is improper or that this Agreement or the other
Transactional Agreements or the subject matter hereof or thereof may not be
enforced in or by such court.
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(c) Each party hereto agrees to the entry of an order to enforce
any resolution, settlement, order or award made pursuant to this Section by the
state and federal courts located in the County of Contra Costa, California and
in connection therewith hereby waives, and agrees not to assert by way of
motion, as a defense, or otherwise, any claim that such resolution, settlement,
order or award is inconsistent with or violative of the laws or public policy of
the laws of the State of California or any other jurisdiction.
(d) The Purchaser has irrevocably designated NTT America, Inc.,
a New York corporation, as agent for service of process hereunder and the above
named is authorized and directed to accept service of process on behalf of the
Purchaser in any suit regarding the Transactions or otherwise related to this
Agreement or the other Transactional Agreements.
9.5 SPECIFIC ENFORCEMENT.
The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement or the other Transactional
Agreements were not performed in accordance with their specific intent or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement or the other Transactional Agreements and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they may be entitled by law or equity.
9.6 SURVIVAL.
The representations and warranties of the parties hereunder shall terminate
upon the Closing and thereafter shall terminate and be of no force or effect.
9.7 NO THIRD PARTY BENEFICIARIES.
This Agreement and the other Transactional Agreements are intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and are not for the benefit of, nor may any provision hereof or thereof
be enforced by, any other Person.
9.8 ENTIRE AGREEMENT.
This Agreement, the other Transactional Agreements and the other documents
delivered expressly hereby, constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and no party
shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein and
therein.
9.9 SEVERABILITY.
The provisions of this Agreement and the other Transactional Agreements
shall be severable, and any invalidity, unenforceability or illegality of any
provision or provisions of this Agreement and the other Transactional Agreements
shall not affect any other provision or provisions of this Agreement and the
other Transactional Agreements, and each term and provision of this
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Agreement and the other Transactional Agreements shall be construed to be valid
and enforceable to the full extent permitted by law.
9.10 AMENDMENT AND WAIVER.
(a) This Agreement and the other Transactional Agreements may be
amended or modified only upon the mutual written consent of the Company and the
Purchaser.
(b) No failure to exercise and no delay in exercising any right,
power or privilege granted under this Agreement or the other Transactional
Agreements shall operate as a waiver of such right, power or privilege. No
single or partial exercise of any right, power or privilege granted under this
Agreement or the other Transactional Agreements shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Agreement and the other Transactional
Agreements are cumulative and are not exclusive of any rights or remedies
provided by law.
9.11 RELATIONSHIP OF THE PARTIES.
For all purposes of this Agreement and the other Transactional Agreements,
each of the parties hereto and their respective Affiliates shall be deemed to be
independent entities and, anything in this Agreement or the other Transactional
Agreements to the contrary notwithstanding, nothing herein shall be deemed to
constitute the parties hereto or any of their respective Affiliates as partners,
joint venturers, co-owners, an association or any entity separate and apart from
each party itself, nor shall this Agreement or any other Transactional Agreement
make any party hereto an employee or agent, legal or otherwise, of the other
parties for any purposes whatsoever. This Agreement does not create or
constitute, and shall not be construed as creating or constituting, a voting
trust agreement under the Delaware General Corporation Law or any other
applicable corporation law. None of the parties to this Agreement or any other
Transactional Agreement is authorized to make any statements or representations
on behalf of any other party or in any way to obligate any other party, except
as expressly authorized in writing by the other parties. Anything in this
Agreement or any other Transactional Agreement to the contrary notwithstanding,
no party hereto or thereto shall assume nor shall be liable for any liabilities
or obligations of the other parties, whether past, present or future.
9.12 NOTICES.
All notices required or permitted hereunder shall be in writing and shall
be deemed effectively given: (i) upon personal delivery to the party to be
notified; (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day; (iii)
seven (7) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (iv) two (2) days after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the parties
hereto at the respective addresses set forth below, or as notified by such party
from time to time at least ten (10) days prior to the effectiveness of such
notice:
if to the Purchaser: Nippon Telegraph and Telephone
Corporation
Teruo Hamano NTT
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Shinagawa-TWINS ANNEX
9-1 Konan, 1 Chome
Minato-ku
Tokyo, 108-8019
JAPAN
with a copy to: NTT America, Inc.
700 East El Camino Real,
Suite 200
Mountain View, CA 94040
Attention: Noriyoshi Osumi
Facsimile: (650) 940-6556
and a copy to: Skadden, Arps, Slate, Meagher
& Flom
525 University Avenue
Palo Alto, CA 94301
Attention: Kenton J. King
Facsimile: (650) 470-4570
if to the Company: Commerce One, Inc.
1600 Riviera Avenue
Walnut Creek, California 94596
Attention: Robert M. Tarkoff,
Esq.
Facsimile: (925) 941-6066
with a copy to: Wilson Sonsini Goodrich &
Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: David J. Segre,
Esq.
Facsimile: (650) 493-6911
9.13 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
PURCHASER: Nippon Telegraph and Telephone Corporation
By:/s/ Mamoru Ishida
----------------------------------
Name: Mamoru Ishida
Title: Senior Vice President
COMPANY: Commerce One, Inc.
By: /s/ Robert M. Tarkoff
----------------------------------
Name: Robert M. Tarkoff
Title: Vice President & General Counsel
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