<PAGE>
As filed with the Securities and Exchange Commission on August 2, 1999
Registration No. 333-81387
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
AGILE SOFTWARE CORPORATION
(Exact name of Registrant as specified in its charter)
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<CAPTION>
Delaware 7372 77-0397905
<S> <C> <C>
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Number) Identification No.)
</TABLE>
One Almaden Boulevard
San Jose, California 95113-2211
(408) 975-3900
(Address and telephone number of principal executive offices)
----------------
Bryan D. Stolle
Chairman of the Board and Chief Executive Officer
Agile Software Corporation
One Almaden Boulevard
San Jose, California 95113-2211
(408) 975-3900
(Name, address and telephone number of agent for service)
Copies to:
<TABLE>
<S> <C>
Gregory M. Gallo, Esq. Jeffrey R. Vetter, Esq.
Peter M. Astiz, Esq. Scott J. Leichtner, Esq.
Sally J. Rau, Esq. Cynthia E. Garabedian, Esq.
Paul K. Lauher, Esq. Fenwick & West LLP
Gray Cary Ware & Freidenrich LLP Two Palo Alto Square
400 Hamilton Avenue Palo Alto, California 94306
Palo Alto, California 94301-1825 (650) 494-0600
(650) 328-6561
</TABLE>
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
----------------
If the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, please check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration 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. [_]
----------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed
Proposed Maximum
Title of Each Class of Maximum Aggregate Amount of
Securities to be Amount to be Offering Price Offering Registration
Registered Registered Per Share Price(1) Fee
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<S> <C> <C> <C> <C>
Common Stock ($.001 par
value)................. 3,450,000(2) $17.00 $58,650,000 $16,305(3)
- ------------------------------------------------------------------------------
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</TABLE>
(1) Estimated solely for the purposes of determining the registration fee
pursuant to Rule 457(a) promulgated under the Securities Act.
(2) Includes 450,000 shares subject to the underwriters over-allotment
option.
(3) Previously paid.
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities, and we are not soliciting an offer to buy +
+these securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Issued August 2, 1999
3,000,000 Shares
[LOGO OF AGILE SOFTWARE APPEARS HERE]
COMMON STOCK
-----------
Agile Software Corporation is offering 3,000,000 shares of its common stock.
This is our initial public offering and no public market currently exists for
our shares. We anticipate that the initial public offering price will be
between $15 and $17 per share. Concurrent with the sale of the shares in this
offering, Agile will sell directly to each of Dell Computer Corporation and
Flextronics International Ltd. $5.0 million of common stock. The sale price
will be the public offering price less anticipated underwriting discounts and
commissions.
-----------
We have applied to list our common stock for quotation on the Nasdaq National
Market under the symbol "AGIL."
-----------
Investing in the common stock involves risks. See "Risk Factors" beginning on
page 6.
-----------
PRICE $ A SHARE
-----------
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<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions Agile
-------- ------------- -----------
<S> <C> <C> <C>
Per Share....................... $ $ $
Total........................... $ $ $
</TABLE>
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
Agile has granted the underwriters the right to purchase up to an additional
450,000 shares to cover over-allotments. Morgan Stanley & Co. Incorporated
expects to deliver the shares to purchasers on , 1999.
-----------
MORGAN STANLEY DEAN WITTER
DEUTSCHE BANC ALEX. BROWN
HAMBRECHT & QUIST
,1999
<PAGE>
TABLE OF CONTENTS
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Page
----
<S> <C>
Prospectus Summary.................. 3
Risk Factors........................ 6
Use of Proceeds..................... 18
Dividend Policy..................... 18
Capitalization...................... 19
Dilution............................ 20
Selected Consolidated Financial
Data............................... 21
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 22
Business............................ 33
Management.......................... 44
Certain Transactions................ 51
Principal Stockholders.............. 53
Description of Capital Stock........ 56
Shares Eligible for Future Sale..... 59
Underwriters........................ 61
Legal Matters....................... 63
Experts............................. 63
Where to Find Additional
Information About Agile............ 63
Index to Consolidated Financial
Statements......................... F-1
</TABLE>
----------------
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of our common stock only in those jurisdictions where offers and
sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of our common stock.
Until , 1999, 25 days after commencement of this offering, all dealers
that buy, sell or trade our common stock, whether or not participating in this
offering, may be required to deliver a prospectus. This delivery requirement
is in addition to the dealers' obligation to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.
2
<PAGE>
PROSPECTUS SUMMARY
You should read this summary together with the more detailed information
regarding our company and the common stock being sold in this offering and our
consolidated financial statements and notes to the consolidated financial
statements appearing elsewhere in this prospectus.
AGILE SOFTWARE CORPORATION
We are a leading supplier of product content management software, which is
software that enables companies to collaborate over the Internet by
interactively exchanging information about the manufacture and supply of
products and components. Our suite of software products is designed to improve
the ability of all members of the manufacturing supply chain to communicate and
collaborate with one another about new or changing information concerning the
manufacture, source or supply of products or components. We believe that our
products are well-suited for participants in outsourced supply chains, as well
as companies managing multi-site engineering, manufacturing, sales and
distribution operations, connected via the Internet. Since June 1996, when we
shipped our first product, we have licensed our products to approximately 300
customers in the computers and peripherals, components, consumer electronics,
data networking and telecommunications equipment, electronics manufacturing,
medical equipment and semiconductor equipment markets. Our current customers in
these markets include Gateway, Texas Instruments, Philips Mobile Computing,
Lucent Technologies, Solectron, GE Marquette Medical Systems and FSI
International.
The competitive environment for manufacturing and supply companies has
intensified dramatically and expanded globally in recent years. Many of these
companies are shifting their organizations from traditional manufacturing
approaches, where a manufacturer controls most phases of the manufacturing
process of its products from raw materials to finished goods, to a
manufacturing process where much or all of the manufacturing process is
outsourced to multiple companies as part of a supply chain. According to
Technology Forecasters, Inc., the outsourcing market in electronics alone
exceeded $89 billion in 1998 and is expected to grow to $178 billion in 2001,
although we cannot be certain that this projection will be met. Outsourcing
production is geared toward creating supply chains that are more efficient,
dynamic and flexible than manufacturing operations that are controlled by
manufacturers. A critical aspect of managing the outsourced supply chain across
multiple suppliers is finding effective ways to store, access and share
information within the manufacturer, as well as with all participants in the
supply chain during each stage of the production process.
The Internet has created new and evolving ways for conducting commerce.
According to Forrester Research, business-to-business electronic commerce is
expected to grow to $1.3 trillion in 2003, accounting for more than 90% of the
dollar value of electronic commerce in the United States. The market for
applications that enable business-to-business electronic commerce is expected
to reach $1.5 billion by 2002, according to Dataquest. However, we cannot be
certain that these projections will be met. Companies that have successfully
implemented strategies to communicate with their customers over the Internet
now face the challenge of utilizing the Internet and intranets to gain the same
level of increased efficiencies in their supply chain.
The Agile solution is designed to facilitate communication and collaboration
within and among supply chain members without requiring substantial investments
in additional technology infrastructure. We believe that our solution can
enable companies and their supply chain partners to increase revenue by
accelerating time-to-market, facilitate cost-effective production by increasing
output, reducing inventory and shortening the production process, and enhance
return on investment by facilitating rapid implementation.
Our growth strategy is to be the leading provider of business-to-business
collaborative supply chain applications to global organizations. We will focus
on providing superior customer satisfaction to continue to build a highly
referenceable customer base of market leaders in targeted manufacturing
industry vertical markets.
3
<PAGE>
We seek to capitalize on network effects that can be created when our software
is deployed across the supply chains of our customers, enabling even non-
customer participants in the supply chain to experience first-hand some of the
benefits from our solutions. We will also seek to continue the development of
our technology to extend the features and functionality of our product content
management software.
THE OFFERING
<TABLE>
<C> <S>
Common stock offered................................ 3,000,000 shares
Common stock to be outstanding after this offering.. 19,805,340 shares
Over-allotment option............................... 450,000 shares
Use of proceeds..................................... For general corporate
purposes, including
working capital, capital
expenditures and
repayment of debt. See
"Use of Proceeds."
Proposed Nasdaq National Market symbol.............. AGIL
</TABLE>
The above information is based on 16,805,340 shares outstanding as of April
30, 1999. This information does not include 1,159,725 shares of common stock
subject to outstanding options under our 1995 Stock Option Plan as of April 30,
1999 and 98,301 shares of common stock issuable upon exercise of outstanding
warrants. After April 30, 1999, we granted options to purchase an additional
544,700 shares of common stock. See "Capitalization" on page 20 and
"Management--Stock Plans" on page 48 for additional information concerning the
terms, conditions and number of outstanding shares of our capital stock and
stock options.
Unless otherwise specifically stated, the information in this prospectus:
. gives effect to the conversion of each outstanding share of preferred
stock into one share of common stock effective upon the closing of
the offering;
. assumes no exercise of the underwriters' over-allotment option;
. assumes the exercise of a warrant to purchase 60,000 shares of our
common stock which was outstanding on April 30, 1999; and
. gives effect to the sale of 672,042 shares of common stock to two
corporate investors, based upon an assumed initial public offering
price of $16.00 per share. The shares will be sold at the
initial public offering price less anticipated underwriters'
discounts and commissions, contemporaneously with this offering.
We originally incorporated in California on March 13, 1995 and will
reincorporate in Delaware prior to the completion of this offering. Our
principal executive offices are located at One Almaden Boulevard, San Jose,
California 95113, and our telephone number is (408) 975-3900. Our principal web
site is located at www.agilesoft.com. Information contained on our web site
does not constitute a part of this prospectus. In this prospectus, "Agile,"
"we," "us" and "our" refer to Agile Software Corporation and not to the
underwriters.
We incurred net losses of approximately $11.4 million for fiscal 1999 and as
of April 30, 1999 we had an accumulated deficit of approximately $26.5 million.
Agile(TM), Agile Workplace(TM), Agile Anywhere(TM), Agile eHub(TM), Agile
iCM(TM), My Agile(TM), Agile eXpress Viewer(TM), Agile ChangeCAST(TM), Agile
Product Definition Server(TM), Agile Product Change Server(TM), Agile AML
Server(TM), Agile Administrator(TM), Agile Scan(TM), Agile Import(TM), Agile
Export(TM) and the Agile logo are trademarks of Agile Software Corporation. All
other trademarks or tradenames referred to in this prospectus are the property
of their respective owners.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
March 13,
1995 Fiscal Year Ended April
(Inception) to 30,
April 30, --------------------------
1996 1997 1998 1999
-------------- ------- ------- --------
<S> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Total revenues..................... $ 38 $ 1,352 $ 8,003 $ 16,807
Gross profit....................... 32 1,086 5,835 10,822
Loss from operations............... (1,399) (4,906) (8,874) (11,606)
Net loss........................... (1,327) (4,836) (8,942) (11,428)
Net loss per share:
Basic and diluted................ $ (1.94) $ (3.72) $ (4.20) $ (3.87)
Weighted average shares.......... 684 1,300 2,129 2,952
Unaudited pro forma net loss per
share:
Basic and diluted................ $ (.78)
Weighted average shares.......... 14,668
</TABLE>
<TABLE>
<CAPTION>
As of April 30,
1999
-------------------
Actual As Adjusted
------- -----------
<S> <C> <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents................................... $10,003 $60,567
Working capital............................................. 4,174 54,738
Total assets................................................ 17,948 68,512
Long-term obligations, noncurrent........................... 3,224 871
Stockholders' equity........................................ 3,291 56,855
</TABLE>
Shares used in computing unaudited pro forma basic and diluted net loss per
share include the shares used in computing basic and diluted net loss per share
adjusted for the conversion of preferred stock to common stock, as if the
conversion occurred at the date of original issuance. The as adjusted
information above reflects the application of the estimated net proceeds from
the sale of the 3,000,000 shares of common stock that we are offering at an
assumed initial public offering price of $16.00 per share, after deducting
estimated underwriting discounts and commissions and our estimated offering
expenses. It also gives effect to the exercise of a warrant to purchase 60,000
shares of our common stock and the contemporaneous private placement to two
corporate investors of an aggregate of $10.0 million or 672,042 shares of
common stock, based upon an assumed initial public offering price of $16.00 per
share.
5
<PAGE>
RISK FACTORS
You should carefully consider the risks described below, together with all
of the other information included in this prospectus, before you decide to buy
our common stock. If any of the following risks actually occur, our business
could be harmed. If our business is harmed, the trading price of our common
stock could decline, and you could lose all or part of your investment.
Risks Related to Our Operations
Because We Have a Limited Operating History, It Is Difficult to Evaluate
Our Business and Prospects
We are still in the early stages of our development, so evaluating our
business operations and our prospects is difficult. We incorporated in 1995
and began shipping our first product in June 1996. The revenues and income
potential of our business and market are unproven. We will encounter risks and
difficulties frequently encountered by early-stage companies in new and
rapidly evolving markets. These risks include the following:
. we have only one product suite, and will need to successfully introduce
new products and enhance existing products to this suite, including Agile
Anywhere, a new version which has been available only since August 1999;
. we need to increase sales to achieve profitability, requiring us to sell
additional licenses and software products to our existing customers and
expand our customer base outside of the electronics and medical device
industries;
. we need to expand our sales and marketing, customer support and
professional services organizations, build strategic relationships and
expand our international operations in order to increase sales; and
. we need to effectively manage our anticipated growth which could lead to
management distractions and increased operating expenses, and will
require us to attract and retain key personnel.
Our business strategy may not be successful and we may not be able to
successfully address these risks. In addition, because of our limited
operating history, we have limited insight into trends that may emerge and
affect our business.
We Have a History of Losses, We Expect to Incur Losses in the Future and We
May Not Achieve or Maintain Profitability
We incurred net losses of approximately $4.8 million for fiscal 1997, $8.9
million for fiscal 1998, and $11.4 million for fiscal 1999. As of April 30,
1999, we had an accumulated deficit of approximately $26.5 million. Moreover,
we expect to continue to incur significant sales and marketing, research and
development and general and administrative expenses. We have incurred and
expect to continue to incur substantial non-cash costs relating to the
amortization of deferred compensation which will contribute to our net losses.
We expect to incur losses for the foreseeable future. We will need to generate
significant increases in revenues to achieve and maintain profitability, and
we may not be able to do so. Even if we do achieve profitability, we may not
be able to sustain or increase profitability on a quarterly or annual basis in
the future. See "Selected Consolidated Financial Data" on page 21 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on page 22 for more detailed information about our operating
results.
Our Quarterly Operating Results Fluctuate and Are Difficult to Predict and,
if Our Future Results are Below the Expectations of Public Market Analysts
or Investors, the Price of Our Common Stock May Decline
Our quarterly operating results have varied significantly in the past and
are likely to vary significantly in the future, which makes it difficult for
us to predict our future operating results. This quarter-to-quarter
fluctuation is due to a number of factors, including the following:
. fluctuations in demand for Internet product content management software;
6
<PAGE>
. size and timing of sales and installations of our products;
. entry of new competitors into our market, or the announcement of new
products or product enhancements by competitors;
. our ability to successfully expand our direct sales force and our
international sales organization;
. changes in our sales force incentives;
. unexpected delays in developing or introducing new and enhanced products;
. unexpected decline in purchases by our existing customers, including
purchases of additional licenses and maintenance contracts;
. delays in our customers' orders due to their year 2000 priorities;
. variability in the mix of our license and professional service revenues;
. our ability to accurately price fixed-priced professional services
projects;
. variability in the mix of professional services that we perform versus
those performed for our customers by others; and
. our ability to establish and maintain relationships with our third-party
implementation partners.
License revenues in any quarter can be difficult to forecast because they
depend on orders shipped or installed in that quarter. Moreover, we typically
recognize a substantial percentage of revenues in the last month of each
quarter; for example, in fiscal 1999, revenues generated each quarter that was
recognized in the last month of the quarter ranged from 35% to 51%. This
increase in revenues earned in the last month of each quarter is driven
primarily by quarter-end commissions payable and the time required to
supplement software installations. A high percentage of our operating expenses
are essentially fixed in the short term and we may be unable to adjust
spending to compensate for an unexpected shortfall in our revenues. In
addition, we expect our operating expenses to increase as we expand our
engineering and sales and marketing operations, broaden our customer support
capabilities, develop new distribution channels and strategic alliances, fund
increased levels of research and development and build our operational
infrastructure. As a result, if we experience delays in recognizing revenue,
or if our revenues do not grow faster than the increase in these expenses, we
could experience significant variations in operating results from quarter to
quarter.
If, in response to market pressures or other demands, we introduce new
pricing structures for our existing products, we could experience customer
dissatisfaction and loss of sales. In addition, if we introduce products that
are sold in a manner different from how we currently market our products, or
we could recognize revenue differently than under our current accounting
policies. Depending on the manner in which we sell existing or future
products, this could have the effect of extending the length of time over
which we recognize revenues. Furthermore, our quarterly revenues could be
significantly affected based on how applicable accounting standards are
amended or interpreted over time.
Due to these and other factors, we believe that period-to-period
comparisons of our results of operations are not meaningful and should not be
relied upon as indicators of our future performance. It is possible that in
some future periods our results of operations may be below the expectations of
public market analysts and investors. If this occurs, the price of our common
stock may decline.
We May Not Achieve Anticipated Revenues if the Introduction and Customer
Acceptance of Our New Release, Agile Anywhere, or Any Upgrades or
Enhancements to Our Products, Is Unsuccessful
Our future financial performance will depend on the successful introduction
and customer acceptance of Agile Anywhere and any upgrades or enhancements
that we may make to our products in the future. We have generated
substantially all of our revenues from licenses and services related to
current and prior versions of our product suite. Agile Anywhere, the latest
version of our product suite, has only been available since August 1999. We
believe that revenues from Agile Anywhere, together with revenues from
maintenance and support contracts
7
<PAGE>
from Agile Anywhere and prior versions of our suite, will account for a
substantial portion of our revenues for the foreseeable future. If we are
unable to ship or implement any upgrades or enhancements when planned, or if
the introduction of upgrades or enhancements causes customers to defer orders
for our existing products, we may not achieve anticipated revenues.
Year 2000 Considerations Among Our Customers and Potential Customers May
Reduce Our Sales
We may experience reduced sales of products as customers and potential
customers put a priority on correcting year 2000 problems and therefore defer
purchase decisions for software products until later in 2000. Accordingly,
demand for our products may be particularly volatile and unpredictable for the
remainder of 1999 and early 2000.
Implementation of Our Products By Large Customers May Be Complex and
Customers Could Become Dissatisfied if Implementation of Our Products
Proves Difficult, Costly or Time-Consuming
Our products must integrate with many existing computer systems and
software programs used by our customers. Integrating with many other computer
systems and software programs can be complex, time consuming and expensive and
cause delays in the deployment of our products. Because we are one of the
first companies to offer products designed for product content management,
many customers will be facing these integration issues for the first time in
the context of collaborating with supply chain partners. Customers could
become dissatisfied with our products if implementations prove to be
difficult, costly or time-consuming.
We Currently Perform Most of Our Implementations on a Fixed-Price Basis,
Which Could Cause Us to Incur More Costs Than We Expect
When we install our products or when we have a third party install them, we
typically charge customers a fixed fee for these services. At the time of a
product sale and prior to agreeing to an installation price, we estimate the
amount of work involved for a particular installation project. We have at
times in the past underestimated and may in the future underestimate the
amount of time or resources required to install our products. If we do not
correctly estimate the amount of time or resources required for a large number
of installations, our gross margins could decline.
If We Do Not Sell Additional Licenses or Enhanced Versions or Upgrades of
Our Products to Existing Customers, We May Not Achieve Revenue Growth
The size of a new customer's initial order is relatively small and may
include a limited number of user licenses. In later orders, customers often
add user licenses or additional products designed for specific functions, such
as the AML Server targeted at manufacturers. In order to grow revenues, we
depend on sales of additional user licenses to our existing customers as well
as sales of new licenses to new customers. Therefore, it is important that our
customers are satisfied with their initial product implementations and that
they believe that expanded use of the product they purchased will provide them
with additional benefits. Customers could choose not to purchase any new
products or expand the use of our products. If we do not increase sales to
existing customers, we may not be able to achieve revenue growth.
If We Do Not Establish and Maintain Relationships With Key Partners, We May
Encounter Difficulty in Providing Implementation and Customer Support of
Our Products
We rely heavily on our relationships with consulting and integration
partners to implement our software, provide customer support services and
endorse our products during the evaluation stage of the sales cycle.
Currently, only three companies provide implementation services for our
products in North America. We expect to increasingly rely on these types of
partners in the future. These companies are not contractually obligated to
continue to provide implementation services for us or to otherwise promote our
products. Although we seek to develop and maintain relationships with these
types of service providers, they may have similar or more
8
<PAGE>
established relationships with our competitors. If these service providers do
not increase this segment of their business, or reduce or discontinue their
relationships with us or their support of our products, our business could be
harmed. We will need to develop new third party relationships if sales of our
products increase and our current partners cannot fulfill the need for
implementation and customer support services. Without these third parties we
would have to expand our services organization to increase the consulting and
professional services that we provide to our customers and divert resources
from other areas of our business. If we are required to expand our
professional services capabilities, we may not be able to do so on a timely
basis.
To meet customer demand, we might have to outsource services to more costly
independent contractors and other third parties. In addition, if our
implementation partners do not adequately perform implementation services, our
customers could become dissatisfied with our products. In order to avoid
dissatisfaction, we may need to provide supplemental implementation services
at no additional cost to the customer. Although we could experience an
increase in services revenues if our service partners are not successful,
services revenues have lower gross margins than license revenues. We could
also experience delays in revenue recognition if customer implementation
projects fall behind schedule.
We May Experience Customer Dissatisfaction and Lost Sales if Our Products
Do Not Scale to Accommodate Substantial Increases in the Number of
Concurrent Users
Our strategy requires that our software be highly scalable, or able to
accommodate substantial increases in the number of users concurrently using
the product. To date, however, only a limited number of our customers have
deployed our software to manage the manufacturing process across their entire
organization. While we have performed product testing on the scalability of
our products, these products have not been tested in the context of a customer
implementation. If our customers cannot successfully implement large-scale
deployments, or if they determine that our products cannot accommodate large-
scale deployments, we could experience customer dissatisfaction and find it
more difficult to obtain new customers or to sell additional products to our
existing customers.
We May Not be Able to Increase Sales of Our Products if We Do Not Expand
Our Direct Sales Organization
We sell our products primarily through our direct sales force. Our ability
to increase our sales will depend on our ability to recruit, train and retain
top quality sales people with the advanced sales skills and technical
knowledge we need. There is a shortage of the sales personnel we need, and
competition for qualified personnel is intense in our industry. In addition,
it takes time for our new sales personnel to become productive, particularly
our senior sales and services personnel, who could take up to nine months to
become fully productive. If we are unable to hire or retain qualified sales
personnel, or if newly hired personnel fail to develop the necessary skills or
reach productivity more slowly than anticipated, it would be more difficult
for us to sell our products, and we may experience a shortfall in revenues.
Our Lengthy and Variable Sales Cycle Makes it Difficult For Us to Predict
When or if Sales Will Be Made
Our products have an unpredictable sales cycle that contributes to the
uncertainty of our future operating results. Our product content management
software is a new category of products, and customers often view the purchase
of our products as a significant and strategic decision. As a result,
customers may take time to evaluate our products, resulting in a sales cycle
that has historically ranged from approximately four to seven months. The sale
of our products may be subject to delays due to the lengthy internal
budgeting, approval and evaluation processes of our customers. We may expend
significant sales and marketing expenses during this evaluation period before
the customer places an order with us. Customers may initially purchase a
smaller number of user licenses before expanding the order to allow a greater
number of users to benefit from the application. Larger customers may purchase
our products as part of multiple simultaneous purchasing decisions, which may
result in additional unplanned administrative processing and other delays in
our product sales. If sales forecasted from a specific customer for a
particular quarter are not realized, we may experience an unplanned shortfall
in revenues. As a result, we have only a limited ability to forecast the
timing and size of sales of our products.
9
<PAGE>
The Success of Our Business Depends on Our Key Personnel, Whose Knowledge
of Our Business and Technical Expertise Would Be Difficult to Replace
Our success depends largely on the continued contributions of our key
senior management, particularly Bryan D. Stolle, our Chief Executive Officer,
who is not bound by an employment agreement, as well as of our key engineering
and sales and marketing personnel. We do not have key-man life insurance on
Mr. Stolle. If one or more members of our senior management or any of our key
employees were to resign, the loss of personnel could result in delays to
product development, loss of sales, and diversion of management resources. See
"Management" for additional information on our key personnel.
Because of Competition for Additional Qualified Personnel, We May Not be
Able to Recruit or Retain Necessary Personnel, Which Could Impact
Development or Sales of Our Products
Our success depends on our ability to attract and retain qualified,
experienced employees. We currently are seeking to hire a Senior Vice
President of World Field Operations. There is substantial competition for
experienced engineering, sales and marketing personnel in our industry. If we
are unable to retain our existing key personnel, or attract and retain
additional qualified personnel, we may from time to time experience inadequate
levels of staffing to perform services for our customers. In addition, if we
are unable to hire a qualified Vice President of Sales, we may experience
delays in the expansion of our sales organization. As a result, our growth
could be limited due to our lack of capacity to develop and market our
products to our customers, or we could experience deterioration in service
levels or decreased customer satisfaction.
Our Efforts to Expand Sales of Our Products to Other Industries May Not
Succeed
We have historically sold our products primarily to companies in the
electronics and medical device manufacturing industries. We intend to market
products to customers in additional industries. Although we have targeted
enterprises in other markets as potential customers, these potential customers
may not be as willing to purchase products like ours as have other technology-
based industries such as the electronics and medical device manufacturing
industries.
The Market For Our Products Is Newly Emerging and Customers May Not Accept
Our Products
The market for software products that allow companies to collaborate with
suppliers on product information and change is newly emerging. Companies have
not traditionally automated this product content management process throughout
the supply chain. We cannot be certain that this market will continue to
develop and grow or that companies will elect to utilize our products rather
than attempt to develop applications internally or through other sources. In
addition, the use of the Internet, as well as corporate intranets, has not
been widely adopted for sharing product information as well as for
collaboration among supply chain participants. Companies that have already
invested substantial resources in other methods of sharing product information
during the manufacturing and supply process may be reluctant to adopt a new
approach that may replace, limit or compete with their existing systems or
methods. We expect that we will continue to need to pursue intensive marketing
and sales efforts to educate prospective customers about the uses and benefits
of our products. Therefore, demand for and market acceptance of our products
will be subject to a high level of uncertainty.
Competition Among Providers of Software Enabling Collaboration in a
Manufacturing Supply Chain May Increase, Which Could Cause Us to Reduce
Prices, and Result in Reduced Gross Margins or Loss of Market Share
The market for products that enable companies to interactively manage and
share information relating to the manufacture and supply of products is new,
highly fragmented, rapidly changing and increasingly competitive. We expect
competition to intensify, which could result in price reductions for our
products, reduced gross margins and loss of market share. Competitors vary in
size and in the scope and breadth of the products and services offered. We
face potential competition from in-house development efforts by potential
customers or partners, vendors of software designed for management of
engineering information, and developers of general
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purpose groupware software addressing only limited technology components
involved in managing data generated by changes to the engineering process. We
also face potential competition from providers of enterprise software.
Many of our actual or potential competitors have a number of significant
advantages over us, including:
. longer operating histories;
. significantly greater financial, technical, marketing and other
resources;
. significantly greater name recognition and a larger installed base of
customers; and
. well-established relationships with our actual and potential customers as
well as with systems integrators and other vendors and service providers.
These competitors may also be able to respond more quickly to new or
emerging technologies and changes in customer requirements, or to devote
greater resources to the development, promotion and sale of their products,
than we can. Some of our actual or potential competitors may also bundle their
products in a manner that may discourage potential customers from purchasing
our products. Accordingly, we may not be able to maintain or expand our sales
if competition increases and we are unable to respond effectively. See
"Business--Competition" on page 41 for further discussion of the competitive
market in which we operate.
We May Experience Difficulties in Introducing New Products and Upgrades
Which Could Result in Negative Publicity, Loss of Sales, Delay in Market
Acceptance or Customer Dissatisfaction
Our future financial performance depends on our successful and timely
development, introduction and market acceptance of new and enhanced products.
The life cycles of our products are difficult to predict because the market for
our products is new and emerging, and is characterized by rapid technological
change, changing customer needs and evolving industry standards. The
introduction of products or computer systems employing new technologies and
emerging industry standards could render our existing products obsolete and
unmarketable. For example, portions of our software are written in the Java
computer programming language. If a new software language becomes standard in
our industry or is considered more robust than Java, we may need to rewrite
portions of our products in another computer language in order to remain
competitive. The introduction of enhancements to our suite of products may also
cause customers to defer orders for our existing products. We may experience
difficulties that could delay or prevent the successful development,
introduction or marketing of new or enhanced products in the future. In
addition, those products may not meet the requirements of the marketplace and
achieve market acceptance.
We expect to add new products to our supply chain applications by
acquisition or internal development and by developing enhancements to our
existing products. We have in the past experienced delays in the planned
release dates of our software products and upgrades, and we have discovered
software defects in new products after their introduction. New products or
upgrades may not be released according to schedule, or may contain defects when
released. Either situation could result in negative publicity, loss of sales,
delay in market acceptance of our products or customer claims against us.
Our Products Might Not Be Compatible With All Major Platforms, Which Could
Inhibit Sales
We must continually modify and enhance our products to keep pace with
changes in computer hardware and software and database technology, as well as
emerging technical standards in the software industry. For example, we have
designed our products to work with databases and servers such as Oracle and
Microsoft SQL Server. Any changes to these platforms could require us to modify
our products, and could cause us to delay releasing a product until the updated
version of that platform has been released. Furthermore, third parties develop
adapters to integrate our products with other design, manufacture, finance and
supply chain systems used by our customers. We rely on these third parties to
update the adapters to reflect changes to our products as well as to the
targeted platform in order to maintain the functionality provided by our
products. As a result,
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<PAGE>
uncertainties related to the timing and nature of new product announcements,
introductions or modifications by vendors of operating systems, back-office
applications and browsers and other Internet-related applications could hurt
our business, as customers may not be certain as to how our product will
operate with their existing systems.
In addition, although portions of our products are based upon the Java
programming language, the Java language does not offer all of the features
available in Windows. Accordingly, certain features available to products that
run on Windows may not be available in the non-Windows version of our
products, and this could result in reduced customer demand. Furthermore, some
of our products do not run on certain types of popular server computers, such
as those that utilize the UNIX operating system. If another platform becomes
more widely used, we could be required to convert, or "port," our product to
that platform. We may not succeed in these efforts, and even if we do,
potential customers may not choose our product.
If We Are Unable to Timely Expand Our International Operations, We May Not
Achieve Anticipated Revenue Growth
We believe that expansion of our international operations will be necessary
for our future success, and a key aspect to our business strategy is to expand
our sales and support organizations internationally. Therefore, we believe
that we will need to commit significant resources to expand our international
operations. We employ sales professionals in Europe and are in the early
stages of expanding into the Asia Pacific market. If we are unable to
successfully enter into and expand these international markets on a timely
basis, we may not be able to achieve anticipated revenue growth. This
expansion may be more difficult or take longer than we anticipate, and we may
not be able to successfully market, sell, deliver and support our products
internationally.
If successful in our international expansion, we will be subject to a
number of risks associated with international business activities. These risks
include:
. difficulty in providing customer support for our software in multiple
time zones;
. need to develop our software in multiple foreign languages;
. longer sales cycles associated with educating foreign customers on the
benefits of using our products;
. greater difficulty in collecting accounts receivable from customers
located abroad;
. political and economic instability, particularly in Asia;
. difficulties in enforcing agreements through foreign legal systems; and
. unexpected changes in regulatory requirements that may limit our ability
to export our software or sell into particular jurisdictions or impose
multiple conflicting tax laws and regulations.
To date, most of our revenues have been denominated in United States
dollars. If we experience an increase in the portion of our revenues
denominated in foreign currencies, we may incur greater risks in currency
fluctuations, particularly since we translate our foreign currency revenues
once at the end of each quarter. In the future, our international revenues
could be denominated in the Euro, the currency of the European Union. The Euro
is an untested currency and may be subject to economic risks that are not
currently contemplated. We currently do not engage in foreign exchange hedging
activities, and therefore our international revenues and expenses are
currently subject to the risks of foreign currency fluctuations.
We Depend on Licensed Technology and the Loss or Inability to Maintain
These Technology Licenses Could Result in Increased Cost or Delays in Sales
of Our Products
We license technology on a non-exclusive basis from several businesses for
use with our products, including licenses from RSA Data Security, Inc. for
security and encryption technology software, Actuate Corporation for reporting
capability and from Cimmetry Systems Inc. for our viewers. We anticipate that
we will continue to license technology from third parties in the future. Some
of the software we license from third parties would be
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<PAGE>
difficult to replace. This software may not continue to be available on
commercially reasonable terms, if at all. The loss or inability to maintain
any of these technology licenses could result in delays in the licensing of
our products until equivalent technology, if available, is identified,
licensed and integrated. In addition, the effective implementation of our
products depends upon the successful operation of third-party licensed
products in conjunction with our products, and therefore any undetected errors
in these licensed products may prevent the implementation or impair the
functionality of products, delay new product introductions and/or injure our
reputation. The increased use of third-party software could require us to
enter into license agreements with third parties, which could result in higher
royalty payments and a loss of product differentiation.
Defects In Our Software Products Could Diminish Demand For Our Products
Our software products are complex and may contain errors, including year
2000 related errors, that may be detected at any point in the life of the
product. We have in the past discovered software errors in certain of our
products and as a result have experienced delays in shipment of products
during the period required to correct these errors. We cannot assure you that,
despite testing by us, our implementation partners and our current and
potential customers, errors will not be found in new products or releases
after shipment, resulting in loss of revenue, delay in market acceptance and
sales, diversion of development resources, injury to our reputation or
increased service and warranty costs.
Further, our products are generally used in systems with other vendors'
products, and as a result, our products must integrate successfully with these
existing systems. System errors, whether caused by our products or those of
another vendor, could adversely affect the market acceptance of our products,
and any necessary revisions could cause us to incur significant expenses.
If We Become Subject to Product Liability Litigation, It Could Be Time
Consuming and Costly to Defend
Since our products are used for mission critical applications in the supply
chain, errors, defects or other performance problems could result in financial
or other damages to our customers. For example, our products are designed to
communicate information relating to changes in product specifications during
the manufacturing process. If a supplier or other participant receives
inaccurate or erroneous data, it is possible that it could claim it incurred
damages based on its reliance on that data. Although our license agreements
generally contain provisions designed to limit our exposure to product
liability litigation, existing or future laws or unfavorable judicial
decisions could negate such limitation of liability provisions. Product
liability litigation, even if unsuccessful, would be time-consuming and costly
to defend and could harm our business.
In Order to Manage Our Growth and Expansion, We Will Need to Improve and
Implement New Systems, Procedures and Controls
We have recently experienced a period of rapid growth and expansion that
has placed a significant strain on our management information systems and our
administrative, operational and financial resources. For example, we have
grown from 65 employees at April 30, 1997 to 156 employees at April 30, 1999.
If we are unable to manage our growth and expansion in an efficient or timely
manner, our business will be seriously harmed. In addition, we have recently
hired a significant number of employees and plan to further increase our total
headcount. We also plan to expand the geographic scope of our operations. This
expansion has resulted and will continue to result in substantial demands on
our management resources. To accommodate continued anticipated growth and
expansion, we will be required to:
. improve existing and implement new operational and financial systems,
procedures and controls;
. hire, train, manage, retain and motivate qualified personnel; and
. enter into relationships with strategic partners.
These measures may place additional burdens on our management and our
internal resources.
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If We Are Unable to Protect Our Intellectual Property We May Lose a
Valuable Asset, Experience Reduced Market Share or Incur Costly Litigation
to Protect Our Rights
Our success and ability to compete depend upon our proprietary technology,
including our brand and logo and the technology underlying our products. We
rely on trademark, trade secret and copyright laws to protect our intellectual
property. Despite our efforts to protect our intellectual property, a third
party could copy or otherwise obtain our software or other proprietary
information without authorization, or could develop software competitive to
ours. Our means of protecting our proprietary rights may not be adequate and
our competitors may independently develop similar technology, duplicate our
products or design around patents that may be issued to us or our other
intellectual property. In addition, the laws of some foreign countries do not
protect our proprietary rights to as great an extent as do the laws of the
United States, and we expect that it will become more difficult to monitor the
use of our products if we increase our international presence.
We may have to resort to litigation to enforce our intellectual property
rights, to protect our trade secrets or know-how or to determine their scope,
validity or enforceability. Enforcing or defending our proprietary technology
is expensive, could cause the diversion of our resources, and may not prove
successful. Our protective measures may prove inadequate to protect our
proprietary rights, and any failure to enforce or protect our rights could
cause us to lose a valuable asset.
We May Be Subject to Intellectual Property Infringement Claims That, With
or Without Merit, Could Be Costly to Defend or Settle
We may from time to time be subject to claims of infringement of other
parties' proprietary rights or claims that our own intellectual property
rights are invalid. There has been a substantial amount of litigation in the
software and Internet industries regarding intellectual property rights. It is
possible that, in the future, third parties may claim that we or our current
or potential future products infringe their intellectual property. We expect
that software product developers and providers of electronic commerce
solutions will increasingly be subject to infringement claims as the number of
products and competitors in our industry segment grows and the functionality
of products in industry segments overlaps. Any infringement claims made
against us, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or negative publicity. In addition,
if our products were found to infringe a third party's proprietary rights, we
could be required to enter into royalty or licensing agreements in order to
continue to be able to sell our products. Royalty or licensing agreements, if
required, may not be available on terms acceptable to us or at all.
Year 2000 Compliance Costs and Risks Are Difficult to Assess and Could
Result in Delay or Loss of Revenue, Diversion of Development Resources,
Damage to Our Reputation or Increased Service, Warranty or Litigation Costs
Our products are generally integrated into computer systems involving
sophisticated hardware and complex software products, which may not be year
2000 compliant. The failure of our customers' systems to be year 2000
compliant could impede the success of applications that we have developed for
them. Accordingly, known or unknown defects that affect the operation of our
software, including any defects or errors in applications that include our
products, could result in delay or loss of revenue, diversion of development
resources, damage to our reputation or increased service, warranty or
litigation costs, any of which could harm our business.
In addition, earlier versions of our products may not be year 2000
compliant, and we do not intend to make them year 2000 compliant. We also need
to ensure year 2000 compliance of our own internal computer and other systems,
to continue testing our software products, and to audit the year 2000
compliance status of our suppliers and business partners. We have not
completed our year 2000 investigation and overall compliance initiative, and
the total cost of our year 2000 compliance may be substantial and may harm our
business. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Year 2000 Readiness" on page 30 for a discussion of the
status of our year 2000 compliance review.
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Future Acquisitions May Be Difficult to Integrate, Disrupt Our Business,
Dilute Stockholder Value or Divert Management Attention
As part of our business strategy, we may seek to acquire or invest in
businesses, products or technologies that we feel could complement or expand
our business, augment our market coverage, enhance our technical capabilities
or that may otherwise offer growth opportunities. Acquisitions could create
risks for us, including:
. difficulties in assimilation of acquired personnel, operations,
technologies or products;
. unanticipated costs associated with the acquisition;
. diversion of management's attention from other business concerns;
. adverse effects on our existing business relationships with suppliers and
customers; and
. use of substantial portions of our available cash, including the proceeds
of this offering, to consummate the acquisition.
In addition, if we consummate acquisitions through an exchange of our
securities, our stockholders could suffer significant dilution. Any future
acquisitions, even if successfully completed, may not generate any additional
revenue or provide any benefit to our business.
Provisions Contained in Our Charter Documents May Delay or Prevent a Change
in Our Control
We intend to reincorporate in Delaware prior to the completion of this
offering. Provisions of our Delaware certificate of incorporation and bylaws
and of Delaware law could make it more difficult for a third party to acquire
us, even if a change in control would be beneficial to our stockholders. These
provisions also may prevent changes in our management. See "Description of
Capital Stock--Antitakeover Effect of Delaware Law and Provisions of Our
Certificate of Incorporation and Bylaws" on page 57 for further discussion of
the specific provisions in our charter documents that may delay or prevent a
change in our control.
Risks Related to the Internet on Our Business and Prospects
If Use of the Internet Does Not Continue to Develop and Reliably Support
the Demands Placed on It by Electronic Commerce, We May Experience Loss of
Sales
Our success depends upon continued growth in the use of the Internet as a
medium of commerce. Although the Internet is experiencing rapid growth in the
number of users, this growth is a recent phenomenon and may not continue.
Furthermore, despite this growth in usage, the use of the Internet for
commerce is relatively new. As a result, a sufficiently broad base of
companies and their supply chain partners may not adopt or continue to use the
Internet as a medium of exchanging product content information. Our business
would be seriously harmed if:
. use of the Internet does not continue to increase or increases more
slowly than expected;
. the infrastructure for the Internet does not effectively support
enterprises and their supply chain partners;
. the Internet does not create a viable commercial marketplace, inhibiting
the development of electronic commerce and reducing the demand for our
products; or
. concerns over the secure transmission of confidential information over
public networks inhibit the growth of the Internet as a means of
conducting commercial transactions.
Capacity Restraints May Restrict the Use of the Internet as a Commercial
Marketplace, Resulting in Decreased Demand for Our Products
The Internet infrastructure may not be able to support the demands placed
on it by increased usage or the limited capacity of networks to transmit large
amounts of data. Other risks associated with commercial use of the Internet
could slow its growth, including:
. outages and other delays resulting from the inadequate reliability of the
network infrastructure;
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. slow development of enabling technologies and complementary products; and
. limited availability of cost-effective, high-speed access.
Delays in the development or adoption of new equipment standards or
protocols required to handle increased levels of Internet activity, or
increased governmental regulation, could cause the Internet to lose its
viability as a means of communication between manufacturers and their supply
chain partners. If these or any other factors cause use of the Internet for
commerce to slow or decline, the Internet may not prove viable as a commercial
marketplace, resulting in decreased demand for our products.
Increasing Governmental Regulation of the Internet Could Limit the Market
for Our Products
As Internet commerce continues to evolve, we expect that federal, state and
foreign governments will adopt laws and regulations covering issues such as
user privacy, taxation of goods and services provided over the Internet,
pricing, content and quality of products and services. It is possible that
legislation could expose companies involved in electronic commerce to
liability, taxation or other increased costs, any of which could limit the
growth of electronic commerce generally. Legislation could dampen the growth
in Internet usage and decrease its acceptance as a communications and
commercial medium. If enacted, these laws and regulations could limit the
market for our products.
Risks Related to This Offering
Our Executive Officers, Directors and Major Stockholders Will Retain
Significant Control Over Us After This Offering, Which May Lead to
Conflicts With Other Stockholders Over Corporate Governance Matters
After this offering, executive officers, directors and holders of 5% or
more of our outstanding common stock will, in the aggregate, own approximately
53.0% of our outstanding common stock. These stockholders would be able to
significantly influence all matters requiring approval by our stockholders,
including the election of directors and the approval of significant corporate
transactions. This concentration of ownership may also delay, deter or prevent
a change in our control and may make some transactions more difficult or
impossible to complete without the support of these stockholders.
Our Stock Price May Be Volatile, Which May Lead to Losses By Investors and
to Securities Litigation
Prior to this offering, you could not buy or sell our common stock
publicly. An active public market for our common stock may not develop or be
sustained after the offering. We will negotiate and determine the initial
public offering price with the representatives of the underwriters based on
several factors. This price may vary from the market price of the common stock
after the offering. The stock market has experienced significant price and
volume fluctuations and the market prices of securities of technology
companies, particularly Internet-related companies, have been highly volatile.
Investors may not be able to resell their shares at or above the initial
public offering price.
In the past, securities class action litigation has often been instituted
against a company following periods of volatility in the company's stock
price. This type of litigation, if filed against us, could result in
substantial costs and could divert our management's attention and resources.
Our Management Will Retain Broad Discretion in the Use of Proceeds From
This Offering and May Not Obtain a Significant Return on the Use of These
Proceeds
We currently have no specific plans for a significant portion of our net
proceeds from this offering. Consequently, our management has complete
discretion as to how to spend the proceeds from this offering. They may spend
these proceeds in ways with which our stockholders may not agree. Management's
allocation of the proceeds of this offering may not benefit our business and
the investment of the proceeds may not yield a favorable return.
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Substantial Future Sales of Our Common Stock Could Cause Our Stock Price to
Decline
Sales of a substantial number of shares of our common stock after this
offering could cause the market price of our common stock to decline by
potentially introducing a large number of sellers of our common stock into a
market in which our common stock price is already volatile. In addition, the
sale of these shares could impair our ability to raise capital through the
sale of additional equity securities. Based on shares outstanding as of
April 30, 1999, we will have 19,805,340 shares of our common stock
outstanding, or 20,255,340 shares if the underwriters' overallotment is
exercised in full. Our directors, executive officers and current stockholders
have executed lock-up agreements that limit their ability to sell shares of
our common stock. These stockholders have agreed, subject to limited
exceptions, not to sell or otherwise dispose of any shares of our common stock
for a period of 180 days after the date of this prospectus without the prior
written approval of Morgan Stanley & Co. Incorporated. When these lock-up
agreements expire, these shares and the shares of the common stock underlying
any options held by these individuals will become eligible for sale, in some
cases subject only to the volume, manner of sale and notice requirements of
Rule 144 of the Securities Act of 1933. See "Shares Eligible for Future Sale"
on page 59 for further discussion of the shares that will be freely tradeable
after the date of this prospectus.
Investors in This Offering Will Suffer Immediate Dilution
We expect that the initial public offering price of our common stock will
be substantially higher than the pro forma net tangible book value per share
of our outstanding common stock. Accordingly, purchasers of common stock in
this offering will experience immediate and substantial dilution of
approximately $13.13 in net tangible book value per share, or approximately
82.1% of the assumed offering price of $16.00 per share. In contrast, our
existing stockholders paid an average price of $2.19 per share. Investors will
incur additional dilution upon the exercise of outstanding stock options and
warrants. See "Dilution" on page 20 for further discussion of the deletion
that new investors will incur.
Special Note Regarding Forward-Looking Statements
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates" and similar expressions. Because
these forward-looking statements involve risks and uncertainties, actual
results could differ materially from those expressed or implied by these
forward-looking statements for a number of reasons, including those discussed
under "Risk Factors" and elsewhere in this prospectus.
You should read statements that contain these words carefully because they
discuss our expectations about our future performance, contain projections of
our future operating results or our future financial condition, or state other
"forward-looking" information. Before you invest in our common stock, you
should be aware that the occurrence of any of the events described in these
risk factors and elsewhere in this prospectus could substantially harm our
business, results of operations and financial condition and that upon the
occurrence of any of these events, the trading price of our common stock could
decline and you could lose all or part of your investment.
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USE OF PROCEEDS
We estimate that we will receive net proceeds of $43.2 million from the
sale of the 3,000,000 shares of common stock in this offering, assuming an
initial public offering price of $16.00 per share and after deducting
estimated underwriting discounts and commissions and estimated offering
expenses of $4.8 million. If the underwriters' over-allotment option is
exercised in full, we estimate that our net proceeds will be $49.9 million.
We intend to use the net proceeds of the offering primarily for general
corporate purposes, including working capital, capital expenditures and
repayment of approximately $3.0 million of indebtedness under our subordinated
notes payable. We may, if appropriate opportunities arise, use an undetermined
portion of the net proceeds to acquire or invest in complementary companies,
product lines, products or technologies. We do not currently have any
agreements or commitments with respect to any acquisition or investment and we
are not currently involved in any negotiations with respect to any such
transaction. Pending these uses, the net proceeds of the offering will be
invested in short-term, interest-bearing investments or accounts.
Borrowings under our subordinated notes payable, due through fiscal 2002,
bear interest at an annual rate of 11.75%.
DIVIDEND POLICY
We have never paid cash dividends on our common stock and do not anticipate
paying cash dividends in the foreseeable future. We currently intend to retain
any future earnings to develop and expand our business. Under the terms of our
line of credit facilities, we may not declare or pay any dividends without the
prior consent of the lenders under these facilities.
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CAPITALIZATION
The following table sets forth our capitalization as of April 30, 1999:
. on an actual basis;
. on a pro forma basis to reflect the assumed exercise of a warrant to
purchase 60,000 shares of preferred stock at an exercise price of $6.75
per share, based upon an indication from the warrant holder that it
intends to exercise the warrant and the fact that the warrant expires
upon completion of the offering, the conversion of all outstanding shares
of preferred stock, including the shares issued upon the exercise of the
warrant, into 11,933,273 shares of common stock and the sale of 672,042
shares of common stock to be issued to two corporate investors at a price
per share equal to the initial public offering price, less the per share
aggregate underwriters' discounts and commissions for an aggregate of
$10.0 million in a private placement that will close contemporaneously
with this offering; and
. on a pro forma as adjusted basis to reflect the application of the
estimated net proceeds from the sale of 3,000,000 shares of common stock
in this offering, including the repayment of approximately $3.0 million
of indebtedness under our subordinated notes payable, after deducting the
estimated underwriting discounts and commissions and estimated offering
expenses.
The outstanding share information excludes 1,159,725 shares of common stock
reserved for issuance upon exercise of outstanding options granted under our
1995 Stock Option Plan with a weighted average exercise price of $2.12 per
share; 2,245,025 shares of common stock available for issuance under our 1995
Stock Option Plan; 500,000 shares of common stock reserved for issuance under
our 1999 Employee Stock Purchase Plan; and 98,301 shares of common stock
issuable upon exercise of outstanding warrants at a weighted average exercise
price of $1.22 per share, which will remain outstanding after this offering.
Of the total shares outstanding, 963,606 shares are subject to our right of
repurchase.
You should read this table in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements and the related notes to the consolidated
financial statements.
<TABLE>
<CAPTION>
April 30, 1999
-------------------------------
Pro Pro Forma
Actual Forma As Adjusted
-------- -------- -----------
(in thousands, except share
data)
<S> <C> <C> <C>
Capital lease obligations and notes payable,
less current portion.......................... $ 3,224 $ 3,224 $ 871
-------- -------- --------
Stockholders' equity:
Convertible preferred stock, $.001 par value;
21,175,556 shares authorized, 11,873,273
shares issued and outstanding actual;
10,000,000 shares authorized, no shares
issued or outstanding pro forma and pro
forma as adjusted........................... 12 -- --
Common stock, $.001 par value; 29,000,000
shares authorized, 4,200,025 shares issued
and outstanding actual; 100,000,000 shares
authorized, 16,805,340 shares issued and
outstanding pro forma; 100,000,000 shares
authorized, 19,805,340 shares issued and
outstanding pro forma as adjusted........... 4 17
Additional paid-in capital................... 34,814 45,218 88.374
Notes receivable from stockholders........... (748) (748) (748)
Unearned stock compensation.................. (4,258) (4,258) (4,258)
Accumulated deficit.......................... (26,533) (26,533) (26,533)
-------- -------- --------
Total stockholders' equity................. 3,291 13,696 56,855
-------- -------- --------
Total capitalization..................... $ 6,515 $ 16,920 $ 57,726
======== ======== ========
</TABLE>
19
<PAGE>
DILUTION
Our pro forma net tangible book value at April 30, 1999 was approximately
$13.7 million or approximately $.81 per share. Pro forma net tangible book
value per share represents total assets less total liabilities, divided by the
number of shares outstanding as of April 30, 1999, after giving effect to the
conversion into common stock of all of our outstanding shares of preferred
stock, the exercise of a warrant to purchase 60,000 shares of preferred stock
at an exercise price of $6.75 per share and the sale of 672,042 shares of
common stock to be issued to two corporate investors at a price per share
equal to the initial public offering price, less the per share aggregate
underwriters' discounts and commissions for an aggregate of $10.0 million in a
private placement contemporaneous with this offering.
After giving effect to our sale of 3,000,000 shares of common stock in this
offering at an assumed initial public offering price of $16.00 per share, and
after deducting the estimated underwriters' discounts and commissions and
estimated offering expenses payable by us, our pro forma net tangible book
value as of April 30, 1999 would have been approximately $56.9 million, or
$2.87 per share. This represents an immediate increase in net tangible book
value of $2.06 per share to existing stockholders and an immediate dilution in
net tangible book value of $13.13 per share to new investors purchasing shares
in this offering. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $16.00
Pro forma net tangible book value per share as of April 30,
1999............................................................ $.81
Increase per share attributable to new investors................. 2.06
----
Pro forma net tangible book value per share after this offering.... 2.87
------
Dilution per share to new investors in this offering............... $13.13
======
</TABLE>
The following table assumes conversion into common stock of all of our
outstanding shares of preferred stock, the exercise of a warrant to purchase
60,000 shares of preferred stock at an exercise price of $6.75 per share and
the sale of 672,042 shares of common stock to two corporate investors at a
price per share equal to the initial public offering price, less the per share
aggregate underwriters' discounts and commissions, for an aggregate of $10.0
million, and sets forth, on a pro forma basis as of April 30, 1999,the
difference between the existing stockholders and the purchasers of shares in
this offering, at the assumed initial public offering price of $16.00 per
share, with respect to the number of shares of common stock purchased from us,
the total consideration paid to us and the average price per share paid by
existing stockholders and by new investors, before deduction of the estimated
underwriting discounts and commissions and estimated offering expenses payable
by us:
<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ ------------------- Price Per
Number Percent Amount Percent Share
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... 16,805,340 84.9% $36,849,000 43.4% $ 2.19
New stockholders............... 3,000,000 15.1 48,000,000 56.6 16.00
---------- ----- ----------- -----
Totals....................... 19,805,340 100.0% $84,849,000 100.0%
========== ===== =========== =====
</TABLE>
As of April 30, 1999, there were options outstanding to purchase a total of
1,159,725 shares of common stock at a weighted average exercise price of $2.12
per share under our 1995 Stock Option Plan. In addition, as of April 30, 1999,
there were 98,301 shares of common stock issuable upon exercise of outstanding
warrants at a weighted average exercise price of $1.22 per share. To the
extent outstanding options or warrants are exercised, there will be further
dilution to new investors.
20
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with, and are qualified by reference to, our consolidated
financial statements and related notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The selected
consolidated statement of operations data for each of the three years in the
period ended April 30, 1999 and the selected consolidated balance sheet data
at April 30, 1998 and April 30, 1999, are derived from, and are qualified by
reference to, our consolidated financial statements included elsewhere in this
prospectus. The selected consolidated statement of operations data for the
period from inception on March 13, 1995 to April 30, 1996 and the selected
consolidated balance sheet data as of April 30, 1996 and April 30, 1997 are
derived from consolidated financial statements not included in this
prospectus. The historical results are not necessarily indicative of results
to be expected in any future period.
<TABLE>
<CAPTION>
Period from March 13, Fiscal Year Ended April 30,
1995 (Inception) to -----------------------------
April 30, 1996 1997 1998 1999
--------------------- --------- --------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Consolidated Statement of
Operations Data:
Revenues:
License................ $ 24 $ 1,143 $ 6,102 $ 10,859
Professional services.. 14 187 1,385 3,665
Maintenance............ -- 22 516 2,283
------- -------- -------- ---------
Total revenues....... 38 1,352 8,003 16,807
------- -------- -------- ---------
Cost of revenues:
License................ 2 113 543 819
Professional services.. 4 88 1,347 3,823
Maintenance............ -- 65 278 1,343
------- -------- -------- ---------
Total cost of
revenues............ 6 266 2,168 5,985
------- -------- -------- ---------
Gross profit............. 32 1,086 5,835 10,822
------- -------- -------- ---------
Operating expenses:
Sales and marketing.... 198 2,149 8,070 13,495
Research and
development........... 852 2,510 3,788 4,742
General and
administrative........ 381 1,333 1,995 1,938
Amortization of stock
compensation.......... -- -- 856 2,253
------- -------- -------- ---------
Total operating
expenses............ 1,431 5,992 14,709 22,428
------- -------- -------- ---------
Loss from operations..... (1,399) (4,906) (8,874) (11,606)
Interest income
(expense), net.......... 72 70 (68) 178
------- -------- -------- ---------
Net loss................. $(1,327) $ (4,836) $ (8,942) $ (11,428)
======= ======== ======== =========
Net loss per share:
Basic and diluted...... $ (1.94) $ (3.72) $ (4.20) $ (3.87)
======= ======== ======== =========
Weighted average
shares................ 684 1,300 2,129 2,952
======= ======== ======== =========
Unaudited pro forma net
loss per share:
Basic and diluted...... $ (.78)
=========
Weighted average
shares................ 14,668
=========
</TABLE>
<TABLE>
<CAPTION>
As of April 30,
-----------------------------
1996 1997 1998 1999
------ ------ ------ -------
(in thousands)
<S> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term
investments.................................... $3,829 $3,292 $2,160 $10,003
Working capital (deficit)....................... 3,747 2,617 (930) 4,174
Total assets.................................... 4,219 5,366 7,531 17,948
Long-term obligations........................... 152 626 782 3,224
Stockholders' equity............................ 3,867 3,154 177 3,291
</TABLE>
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with "Selected
Consolidated Financial Data" and our consolidated financial statements and
related notes included elsewhere in this prospectus. In addition to historical
information, the discussion in this prospectus contains certain forward-
looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated by these forward-looking
statements due to factors, including, but not limited to, those set forth
under "Risk Factors" and elsewhere in this prospectus.
Overview
We are a leading supplier of product content management software for the
use within and among companies in a manufacturing supply chain over the
Internet. Our suite of software products is designed to improve the ability of
all members of the supply chain to communicate and collaborate with one
another about new or changing information concerning the manufacture, source
or supply of products or components. We were founded in March 1995 and in June
1996 we began selling our first products and delivering related services. We
currently license our products in the United States through our direct sales
force, and in Europe through our direct sales force and distributors. To date,
revenues from international sales have not been material. We have derived our
revenues principally from the licenses of our products, the delivery of
professional services and from maintenance contracts.
Customers who license our software products receive a license for our
application servers, one or more user licenses, and third-party provided
adapters to connect with the customer's other existing enterprise systems. Our
customers generally purchase a limited number of user licenses at the time of
the initial license of the software products and may purchase additional user
licenses as needed. Customers may purchase implementation services from us.
These professional services are generally provided on a fixed-price basis and
are often provided by third-party consulting organizations. We also offer fee-
based training services to our customers. Substantially all of our customers
who license our products purchase maintenance contracts, which provide
unspecified software upgrades, on a when-and-if available basis, and technical
support over a stated term, which is generally a twelve-month period.
We recognize revenue under Statement of Position, or SOP, 97-2, Software
Revenue Recognition, and SOP 98-9, Modification of SOP 97-2, Software Revenue
Recognition, with Respect to Certain Transactions. When contracts contain
multiple elements and vendor-specific objective evidence exists for all
undelivered elements, we account for the delivered elements in accordance with
the "Residual Method" prescribed by SOP 98-9. Software licenses sold to new
customers are recognized upon installation and acceptance by the customer.
Software licenses sold to existing customers, or add-on sales, do not include
acceptance provisions and are recognized upon shipment of the software
product. During fiscal 1997, our first full year of operations, substantially
all of our license revenues were generated from new customers. In fiscal 1998
and fiscal 1999, a majority of our license revenues were generated from new
customers. Our professional services revenues consist of implementation
services which are recognized upon customer acceptance and training revenues
which are recognized as the services are performed. Our maintenance revenues
are recognized ratably over the contract period, generally twelve months.
Our cost of license revenues include royalties due to third parties for
integrated technology, the cost of manuals and product documentation,
production media used to deliver our products and packaging costs. Our cost of
professional services revenues include salaries and related expenses for the
implementation and training services organizations, costs of third parties
contracted to provide implementation services to customers and an allocation
of our overhead expenses. Our cost of maintenance revenues include salaries
and related expenses for the customer support organization and an allocation
of our overhead expenses. The cost of professional services can fluctuate
depending upon whether more or less of the professional services are provided
to our customers by us rather than by third-party service providers. We
generally provide implementation services to our customers
22
<PAGE>
on a fixed-price basis. If we have to engage independent contractors or third
parties to provide these services on our behalf, it is generally at higher
cost resulting in a lower gross margin than if we had provided the services to
our customers ourselves. Therefore, our gross margin from professional
services may fluctuate based on who performs the services and the actual cost
to provide these services. Although services revenues may increase in absolute
dollars if we increase the professional services we provide, services revenues
have lower gross margins than license revenues. Our overall gross profit can
therefore fluctuate based on the mix of license revenues compared to
professional services revenues and maintenance revenues.
Our operating expenses are classified as sales and marketing, research and
development and general and administrative. We classify all charges to these
operating expense categories based on the nature of the expenditures. Although
each category includes expenses that are unique to the category type, there
are common recurring expenditures that are typically included in all operating
expenses categories, such as salaries, employee benefits, incentive
compensation, bonuses, travel costs, telephone, communication, rent and
allocated facilities costs and professional fees. The sales and marketing
category of operating expenses includes additional expenditures specific to
the marketing group, such as public relations and advertising, trade shows,
marketing collateral materials, and customer user group meetings and
expenditures specific to the sales group, such as commissions. To date, all
software development costs in research and development have been expensed as
incurred. Also included in our operating expenses is the amortization of stock
compensation described below.
In connection with the granting of stock options to our employees, we have
recorded unearned stock compensation totaling approximately $7.4 million
through April 30, 1999, of which $4.3 million remains to be amortized. This
amount represents the difference between the exercise price and the current
estimated fair value of our common stock on the date these stock options were
granted. This amount is included as a component of stockholders' equity and is
being amortized by charges to operations over the vesting period of the
options, consistent with the method described in Financial Accounting
Standards Board, or FASB, Interpretation No. 28. We recognized amortization of
unearned stock compensation of $856,000 for fiscal 1998 and $2.3 million for
fiscal 1999. We expect to record additional unearned stock compensation with
respect to stock option grants made subsequent to April 30, 1999 of at least
$2.5 million. The amortization of the remaining unearned stock compensation at
April 30, 1999 will result in additional charges to operations through fiscal
2004. The amortization of stock compensation is classified as a separate
component of operating expenses in our consolidated statement of operations.
Although our total revenues have increased from quarter to quarter, we have
incurred significant costs to develop our products and to recruit and train
personnel for our engineering, sales, marketing, professional services and
administration departments. As a result, we have incurred significant losses
since inception, and, as of April 30, 1999, had an accumulated deficit of
$26.5 million.
We intend to continue to incur significant sales and marketing, research
and development and general and administrative expenses. For example, we had
65 full-time employees as of April 30, 1997 compared to 103 at April 30, 1998
and 156 at April 30, 1999. We will seek to hire additional employees in the
future. We expect to continue to incur operating losses for the foreseeable
future. In order to achieve profitability, we will need to increase our
revenues significantly. Therefore, we cannot assure you that we will ever
attain or maintain profitability. Our expansion will also place significant
demands on our management and operational resources. To manage this rapid
growth and increased demands, we must improve existing and implement new
operational and financial systems, procedures and controls. We must also hire,
train, manage, retain and motivate qualified personnel. We expect future
expansion to continue to challenge our ability to hire, train, manage, retain
and motivate our employees.
In view of the rapidly changing nature of our market and our limited
operating history, we believe that period-to-period comparisons of our
revenues and other operating results are not necessarily meaningful and should
not be relied upon as indications of future performance. Our historic revenue
growth rates are not necessarily sustainable or indicative of our future
growth.
23
<PAGE>
Results of Operations
The following table sets forth selected consolidated financial data for the
periods indicated, expressed as a percentage of total revenues:
<TABLE>
<CAPTION>
Fiscal Year Ended
April 30,
-----------------------
1997 1998 1999
------ ------ -----
<S> <C> <C> <C>
Revenues:
License............................................ 84 % 76 % 65 %
Professional services.............................. 14 17 22
Maintenance........................................ 2 7 13
------ ------ -----
Total revenues................................... 100 100 100
------ ------ -----
Cost of revenues:
License............................................ 8 7 5
Professional services.............................. 7 17 23
Maintenance........................................ 5 3 8
------ ------ -----
Total cost of revenues........................... 20 27 36
------ ------ -----
Gross profit......................................... 80 73 64
------ ------ -----
Operating expenses:
Sales and marketing................................ 159 101 80
Research and development........................... 185 47 28
General and administrative......................... 99 25 12
Amortization of stock compensation................. -- 11 13
------ ------ -----
Total operating expenses......................... 443 184 133
------ ------ -----
Loss from operations................................. (363) (111) (69)
Interest income (expense), net....................... 5 (1) 1
------ ------ -----
Net loss............................................. (358)% (112)% (68)%
====== ====== =====
</TABLE>
Revenues
Our total revenues were $1.4 million for fiscal 1997, $8.0 million for
fiscal 1998 and $16.8 million for fiscal 1999, representing increases of $6.6
million, or 492%, from fiscal 1997 to fiscal 1998 and $8.8 million, or 110%,
from fiscal 1998 to fiscal 1999. We had no customer that accounted for more
than 10% of our total revenues in fiscal 1997, fiscal 1998 or fiscal 1999.
License Revenues. Our license revenues were $1.1 million for fiscal 1997,
$6.1 million for fiscal 1998 and $10.9 million for fiscal 1999, representing
increases of $5.0 million, or 434%, from fiscal 1997 to fiscal 1998 and $4.8
million, or 78%, from fiscal 1998 to fiscal 1999. License revenues as a
percentage of total revenues were 84% for fiscal 1997, 76% for fiscal 1998 and
65% for fiscal 1999. The increase in our license revenues from fiscal 1997 to
fiscal 1998 was due primarily to increased market acceptance of our suite of
products and, to a lesser extent, to increases in both the size and
productivity of our sales force. The increase in license revenues from fiscal
1998 to fiscal 1999 was primarily due to the continued impact of those same
factors, and, to a lesser extent, to the release of a new version of our
products.
Professional Services Revenues. Our professional services revenues were
$187,000 for fiscal 1997, $1.4 million for fiscal 1998 and $3.7 million for
fiscal 1999, representing increases of $1.2 million, or 640%, from fiscal 1997
to fiscal 1998 and $2.3 million, or 165%, from fiscal 1998 to fiscal 1999.
Professional services revenues as a percentage of total revenues were 14% for
fiscal 1997, 17% for fiscal 1998 and 22% for fiscal 1999. The increase in
professional services revenues from fiscal 1997 to fiscal 1998 and from fiscal
1998 to fiscal
24
<PAGE>
1999 reflects increased license revenues and, to a lesser extent, an increased
range of services, consisting of additional data migration and integration
services. The increase in professional services revenues as a percentage of
total revenues from fiscal 1997 to fiscal 1998 and from fiscal 1998 to fiscal
1999 was primarily due to the increased range of services. To date, a portion
of our professional services revenues relates to our invoicing for services
provided by third parties. In the future, we anticipate that an increasing
percentage of professional services will be provided by third parties who will
invoice the customer directly. As a result, we anticipate that professional
services revenues will decline as a percentage of total revenues.
Maintenance Revenues. Our maintenance revenues were $22,000 for fiscal
1997, $516,000 for fiscal 1998 and $2.3 million for fiscal 1999, representing
increases of $494,000, or 2,245%, from fiscal 1997 to fiscal 1998 and $1.8
million, or 342%, from fiscal 1998 to fiscal 1999. Maintenance revenues as a
percentage of total revenues were 2% for fiscal 1997, 7% for fiscal 1998 and
13% for fiscal 1999. The increase in maintenance revenues and maintenance
revenues as a percentage of total revenues from fiscal 1997 to fiscal 1998 and
from fiscal 1998 to fiscal 1999 is primarily due to increased licenses for our
products, and, to a lesser extent, to renewals of prior period maintenance
contracts.
Cost of Revenues
Cost of License Revenues. Cost of license revenues were $113,000 for fiscal
1997, $543,000 for fiscal 1998 and $819,000 for fiscal 1999, representing
increases of $430,000, or 381%, from fiscal 1997 to fiscal 1998 and $276,000,
or 51%, from fiscal 1998 to fiscal 1999. Cost of license revenues as a
percentage of license revenues were 10% for fiscal 1997, 9% for fiscal 1998
and 8% for fiscal 1999. Cost of license revenues increased from fiscal 1997 to
fiscal 1998 and from fiscal 1998 to fiscal 1999 primarily due to increased
expenses associated with the sub-licensing of third-party software used in our
products, and, to a lesser extent, the costs of production, manuals and other
media associated with the license of an increased number of software products.
Cost of license revenues as a percentage of total license revenues have
decreased as add-on licenses, which have a higher gross margin than initial
customer licenses, have increased as a percentage of total license revenues.
Cost of Professional Services Revenues. Cost of professional services
revenues were $88,000 for fiscal 1997, $1.3 million for fiscal 1998 and $3.8
million for fiscal 1999, representing increases of $1.2 million, or 1,431%,
from fiscal 1997 to fiscal 1998 and $2.5 million, or 183%, from fiscal 1998 to
fiscal 1999. Cost of services revenues as a percentage of services revenues
were 47% for fiscal 1997, 97% for fiscal 1998 and 104% for fiscal 1999. The
increase in cost and as a percentage of professional services revenues from
fiscal 1997 to fiscal 1998 was primarily due to hiring and training a
consulting organization to implement our products. The increase in cost and as
a percentage of professional services revenues from fiscal 1998 to fiscal 1999
was primarily due to an increase in third-party professional services
personnel to support the increased customer base. In certain periods in the
past, and potentially in the future, our cost of professional services
revenues exceeded our professional services revenues. This is generally
because the actual cost of providing the services, whether provided internally
or through third parties, exceeded the fixed price payment received from some
of our customers. In addition, as we increase the size of our professional
services staff, costs are incurred for new personnel before they become fully
productive.
Cost of Maintenance Revenues. Cost of maintenance revenues were $65,000 for
fiscal 1997, $278,000 for fiscal 1998 and $1.3 million for fiscal 1999,
representing increases of $213,000, or 328%, from fiscal 1997 to fiscal 1998
and $1.0 million, or 383%, from fiscal 1998 to fiscal 1999. Cost of
maintenance revenues as a percentage of maintenance revenues were 295% for
fiscal 1997, 54% for fiscal 1998 and 59% for fiscal 1999. The increase in cost
of maintenance revenues from fiscal 1997 to fiscal 1998 and from fiscal 1998
to fiscal 1999 was primarily due to hiring and training a support organization
needed in connection with our increased customer base during these periods.
The decrease in cost of maintenance revenues as a percentage of maintenance
revenues from fiscal 1997 to fiscal 1998 was primarily due to economies of
scale realized as a result of increased management personnel and increased
experience of the maintenance personnel. The increase in the cost of
maintenance revenues as a percentage of maintenance revenues from fiscal 1998
to fiscal 1999 was primarily due to expansion of the support organization.
25
<PAGE>
Operating Expenses
Sales and Marketing. Sales and marketing expenses were $2.1 million for
fiscal 1997, $8.1 million for fiscal 1998 and $13.5 million for fiscal 1999,
representing increases of $5.9 million, or 276%, from fiscal 1997 to fiscal
1998 and $5.4 million, or 67%, from fiscal 1998 to fiscal 1999. Sales and
marketing expenses as a percentage of total revenues were 159% for fiscal
1997, 101% for fiscal 1998 and 80% for fiscal 1999. The increase in sales and
marketing expenses from fiscal 1997 to fiscal 1998 and from fiscal 1998 to
fiscal 1999 primarily reflect our investment in our sales and marketing
organization, including significant personnel-related expenses such as
salaries, benefits and commissions, recruiting fees, travel expenses and
related costs of hiring sales management, sales representatives, sales
engineers and marketing personnel. The increase in sales and marketing
expenses from fiscal 1997 to fiscal 1998 also reflects increased hiring rates,
and, to a lesser extent, increased public relations and trade show expenses.
We anticipate that our sales and marketing expenses will increase in absolute
dollars for the foreseeable future as we expand our domestic and international
sales force.
Research and Development. Research and development expenses were $2.5
million for fiscal 1997, $3.8 million for fiscal 1998 and $4.7 million for
fiscal 1999, representing increases of $1.3 million, or 51%, from fiscal 1997
to fiscal 1998 and $954,000, or 25%, from fiscal 1998 to fiscal 1999. Research
and development costs as a percentage of total revenues were 185% for fiscal
1997, 47% for fiscal 1998 and 28% for fiscal 1999. The increases in research
and development expenses from fiscal 1997 to fiscal 1998 and from fiscal 1998
to fiscal 1999 were primarily due to the increase in the number of our
software developers, quality assurance personnel and outside contractors to
support our product development, documentation and testing activities related
to the development and release of the latest versions of our products. We
anticipate that research and development expenses will continue to increase in
absolute dollars for the foreseeable future as we continue to add to our
research and development staff.
General and Administrative. General and administrative expenses were $1.3
million for fiscal 1997, $2.0 million for fiscal 1998 and $1.9 million for
fiscal 1999, representing an increase of $662,000, or 50%, from fiscal 1997 to
1998 and a decrease of $57,000, or 3%, from fiscal 1998 to 1999. General and
administrative expenses as a percentage of total revenues were 99% for fiscal
1997, 25% for fiscal 1998 and 12% for fiscal 1999. The increase in costs from
fiscal 1997 to fiscal 1998 was primarily due to hiring additional finance,
executive and administrative personnel to support the growth of our business
during that period. We expect that general and administrative expenses will
increase in absolute dollars for the foreseeable future as we expand our
operations and incur the normal costs of a public company.
Amortization of Stock Compensation. During fiscal 1998 and fiscal 1999, we
recorded a total of approximately $7.4 million of unearned stock compensation.
We recognized amortization of stock compensation of $856,000 in fiscal 1998
and $2.3 million in fiscal 1999.
Interest Income (Expense), Net. Interest income (expense), net, was $70,000
for fiscal 1997, $(68,000) for fiscal 1998 and $178,000 for fiscal 1999. At
April 30, 1999, we had unamortized interest of $253,000 related to warrants
issued in connection with $3.0 million of subordinated notes payable which
were issued during fiscal 1999. We plan to use proceeds from our initial
public offering to prepay these subordinated notes payable in their entirety.
As a result, we will recognize the unamortized interest balance as an expense
in the period we prepay the notes payable.
Income Taxes. No provision for income taxes has been recorded since our
inception because we have incurred net losses in all periods. As of April 30,
1999, we had net operating loss carryforwards for federal income tax reporting
purposes of approximately $20.0 million that expire in various amounts
beginning in fiscal 2016. We also had net operating loss carryforwards for
state income tax reporting purposes of approximately $18.0 million that expire
in various amounts beginning in fiscal 2004. The U.S. tax laws contain
provisions that limit the use in any future period of net operating loss and
credit carryforwards upon the occurrence of certain events, including a
significant change in ownership interests. We had deferred tax assets,
including our net
26
<PAGE>
operating loss carryforwards and tax credits of approximately $8.7 million as
of April 30, 1999. A valuation allowance has been recorded for the entire
deferred tax asset as a result of uncertainties regarding the realization of
the asset balance. See note 4 of notes to consolidated financial statements.
Quarterly Results of Operations
The following tables set forth our unaudited consolidated statement of
operations data for each of the eight quarters in the period ended April 30,
1999, as well as that data expressed as a percentage of our total revenues for
the quarters presented. You should read this information in conjunction with
our consolidated financial statements and related notes appearing elsewhere in
this prospectus. We have prepared this unaudited consolidated information on a
basis consistent with our audited consolidated financial statements, and, in
the opinion of our management, reflects all normal recurring adjustments that
we consider necessary for a fair presentation of our financial position and
operating results for the quarters presented. You should not draw any
conclusions about our future results from the operating results for any
quarter.
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------------------------
Jul. 31, Oct. 31, Jan. 31, Apr. 30, Jul. 31, Oct. 31, Jan. 31, Apr. 30,
1997 1997 1998 1998 1998 1998 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License................ $ 926 $ 1,324 $ 1,543 $ 2,309 $ 2,270 $ 2,486 $ 2,898 $ 3,205
Professional services.. 213 254 419 499 655 816 976 1,218
Maintenance............ 40 91 166 219 316 510 718 739
------- ------- ------- ------- ------- ------- ------- -------
Total revenues........ 1,179 1,669 2,128 3,027 3,241 3,812 4,592 5,162
------- ------- ------- ------- ------- ------- ------- -------
Cost of revenues:
License................ 79 124 119 221 165 241 211 202
Professional services.. 199 330 348 470 756 790 1,165 1,112
Maintenance............ 59 64 116 39 237 306 371 429
------- ------- ------- ------- ------- ------- ------- -------
Total cost of
revenues............. 337 518 583 730 1,158 1,337 1,747 1,743
------- ------- ------- ------- ------- ------- ------- -------
Gross profit............ 842 1,151 1,545 2,297 2,083 2,475 2,845 3,419
------- ------- ------- ------- ------- ------- ------- -------
Operating expenses:
Sales and marketing.... 1,279 2,024 2,006 2,761 2,756 3,234 3,339 4,166
Research and
development........... 745 826 1,044 1,173 1,076 1,140 1,294 1,232
General and
administrative........ 428 448 481 638 431 439 492 576
Amortization of stock
compensation.......... -- 223 280 353 444 501 622 686
------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses............. 2,452 3,521 3,811 4,925 4,707 5,314 5,747 6,660
------- ------- ------- ------- ------- ------- ------- -------
Loss from operations.... (1,610) (2,370) (2,266) (2,628) (2,624) (2,839) (2,902) (3,241)
Interest income
(expense), net......... (2) (26) (23) (17) 52 98 64 (36)
------- ------- ------- ------- ------- ------- ------- -------
Net loss................ $(1,612) $(2,396) $(2,289) $(2,645) $(2,572) $(2,741) $(2,838) $(3,277)
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
As a Percentage of Total Revenues
-----------------------------------------------------------------------
Jul. 31, Oct. 31, Jan. 31, Apr. 30, Jul. 31, Oct. 31, Jan. 31, Apr. 30,
1997 1997 1998 1998 1998 1998 1999 1999
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License................ 79 % 79 % 72 % 76 % 70 % 65 % 63 % 62 %
Professional services.. 18 15 20 17 20 22 21 24
Maintenance............ 3 6 8 7 10 13 16 14
---- ---- ---- --- --- --- --- ---
Total revenues........ 100 100 100 100 100 100 100 100
---- ---- ---- --- --- --- --- ---
Cost of revenues:
License................ 7 7 6 7 5 6 5 4
Professional services.. 17 20 16 16 24 21 25 22
Maintenance............ 5 4 5 1 7 8 8 8
---- ---- ---- --- --- --- --- ---
Total cost of
revenues............. 29 31 27 24 36 35 38 34
---- ---- ---- --- --- --- --- ---
Gross profit............ 71 69 73 76 64 65 62 66
---- ---- ---- --- --- --- --- ---
Operating expenses:
Sales and marketing.... 109 121 94 91 85 85 73 80
Research and
development........... 63 50 49 39 33 30 28 24
General and
administrative........ 36 27 23 21 13 11 11 11
Amortization of stock
compensation.......... -- 13 13 12 14 13 13 14
---- ---- ---- --- --- --- --- ---
Total operating
expenses............. 208 211 179 163 145 139 125 129
---- ---- ---- --- --- --- --- ---
Loss from operations.... (137) (142) (106) (87) (81) (74) (63) (63)
Interest income
(expense), net......... -- (2) (2) -- 2 2 1 --
---- ---- ---- --- --- --- --- ---
Net loss................ (137)% (144)% (108)% (87)% (79)% (72)% (62)% (63)%
==== ==== ==== === === === === ===
</TABLE>
Revenues. Our total revenues increased in each of the eight quarterly
periods ended April 30, 1999. The increase in revenues in these periods
reflects the increase in the number of customers and increased sales following
our December 1998 release of a new version of our product suite. License
revenues in the first quarter of fiscal 1999 decreased 2% from the fourth
quarter of fiscal 1998 due to the effect of our sales commission plan
providing increased bonuses for sales in the last quarter of fiscal 1998.
Although in future periods first quarter license revenues could be lower than
the level achieved in the preceding fourth quarter due to year-end sales
efforts, we are unable to determine if this is a historical trend.
Cost of Revenues. Cost of revenues increased in each of the eight quarterly
periods ended April 30, 1999 as a result of the growth of revenues. In the
quarters ended July 31, 1998 and January 31, 1999, cost of professional
services as a percentage of total professional services revenues significantly
increased primarily due to lower margin third-party implementation projects
and losses on certain implementation projects.
Operating Expenses. Operating expenses increased significantly in each of
the eight quarterly periods ended April 30, 1999 as a result of increased
sales and marketing expenses associated with higher numbers of personnel, use
of independent contractors and other third parties for development of our
products, recruiting and related hiring expenses for additional senior
management in our research and development, administrative, sales and
marketing organizations and amortization of stock compensation. In addition,
sales and marketing expenses increased significantly in the fourth quarter of
fiscal 1998 and fiscal 1999 primarily due to commissions and other
compensation paid to the direct sales force for the attainment of sales
quotas.
Our quarterly operating results have varied widely in the past, and we
expect that they will continue to fluctuate in the future as a result of a
number of factors, many of which are outside our control. We believe that our
period-to-period operating results are not meaningful, and you should not rely
on them as indicative of our future performance. You should also evaluate our
prospects in light of the risks, expenses and difficulties commonly
encountered by comparable early-stage companies in new and rapidly emerging
markets. We might not successfully address the risks and challenges that face
us. In addition, although we have experienced
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significant revenue growth recently, our revenue might not continue to grow
and we might not become or remain profitable in the future. Our future
operating results will depend on many factors, including:
. size and timing of sales and installations of our products;
. entry of new competitors into our market, or the announcement of new
products or product enhancements by competitors;
. our ability to successfully expand our direct sales force and our
international sales organization;
. changes in our sales force incentives;
. unexpected delays in developing and marketing new and enhanced products;
. deferral of customer orders in anticipation of product enhancements or
new products;
. unexpected decline in purchases by our existing customers, including
purchases of additional licenses and maintenance contracts;
. delays in our customers' orders due to their year 2000 priorities;
. variability in the mix of our license and professional service revenues;
. our ability to accurately price fixed-priced professional services
projects;
. variability in the mix of professional services that we perform versus
those performed for our customers by others; and
. our ability to establish and maintain relationships with our third-party
implementation partners.
Liquidity and Capital Resources
Since our inception, we have primarily financed our operations through the
sale of convertible preferred stock, resulting in net proceeds of $26.2
million through April 30, 1999. To a lesser extent, we have financed our
operations through equipment financing and lending arrangements.
As of April 30, 1999, we had cash and cash equivalents of $10.0 million, an
increase from $2.2 million of cash and cash equivalents held as of April 30,
1998. Our working capital at April 30, 1999 was $4.2 million, compared to a
working capital deficit of $930,000 at April 30, 1998. The increase in the
working capital is attributable to the increase in cash from the sales of our
equity securities and the increase in accounts receivable.
We have a $2.0 million senior line of credit facility with a bank that
bears interest at 8.5% and expires on August 31, 1999. We are currently in the
process of applying for an extension to the line of credit. At April 30, 1999,
no balance was outstanding under this line of credit. This line of credit is
secured by accounts receivable and certain other assets. We also have $3.0
million outstanding of subordinated notes payable which bear interest at an
annual rate of 11.75% and are payable through fiscal 2002. In addition,
capital lease obligations including both short-term and long-term portions,
were $1.6 million at April 30, 1999, and are payable through fiscal 2003. Our
senior line of credit requires us to maintain certain monthly financial
covenants, including a minimum tangible net worth and a minimum quick ratio.
We were in compliance with all of our financial covenants at April 30, 1999.
We also have noncancelable operating leases for office space and equipment
of approximately $2.4 million which are payable through fiscal 2003.
Our operating activities resulted in net cash outflows of $4.2 million for
fiscal 1997 compared to $6.4 million for fiscal 1998 and $5.1 million for
fiscal 1999.
Investing activities resulted in cash outflows of $728,000 for fiscal 1997,
provided cash of $2.6 million for fiscal 1998 and resulted in cash outflows of
$459,000 for fiscal 1999. Net cash provided by investing activities
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<PAGE>
for fiscal 1998 consisted of proceeds from the sale of short-term investments
offset by cash used to acquire property and equipment. Net cash outflows in
fiscal 1997 and fiscal 1999 were due to the acquisition of property and
equipment.
Financing activities provided cash of $4.0 million in fiscal 1997, $5.7
million in fiscal 1998 and $13.4 million in fiscal 1999, primarily through
proceeds from the issuance of preferred stock and net proceeds from debt and
capital lease borrowings.
Purchases of property and equipment, including equipment purchased under
capital leases, were approximately $1.1 million in fiscal 1997, $1.3 million
in fiscal 1998 and $1.5 million in fiscal 1999. These expenditures were
primarily for computer hardware and software and furniture and fixtures. We
expect that capital expenditures will continue to increase to the extent we
continue to increase our headcount or expand our operations.
We currently anticipate that we will continue to experience significant
growth in our operating expenses for the foreseeable future as we:
. enter new markets for our products;
. increase research and development spending;
. increase our sales and marketing activities; and
. enhance our operational and financial systems.
We currently anticipate that the net proceeds from this offering, together
with our current cash, cash equivalents and available credit facilities, will
be sufficient to meet our anticipated cash needs for working capital and
capital expenditures for at least the next 12 months. However, we may need to
raise additional funds in future periods through public or private financings,
or other sources, to fund our operations and potential acquisitions, if any,
until we achieve profitability, if ever. We may not be able to obtain adequate
or favorable financing at that time. Failure to raise capital when needed
could harm our business. If we raise additional funds through the issuance of
equity securities, the percentage of ownership of our stockholders would be
reduced. Furthermore, these equity securities might have rights, preferences
or privileges senior to our common stock.
Year 2000 Readiness
Many currently installed computer systems are not capable of distinguishing
21st century dates from 20th century dates or have been programmed with
default dates ending in 99, the common two-digit reference for 1999. As a
result, as we transition from the 20th century to the 21st century, computer
systems and software used by many companies and organizations in a wide
variety of industries will produce erroneous results or fail unless they have
been modified or upgraded to process date information correctly. Significant
uncertainty exists in the software industry and other industries concerning
the scope and magnitude of problems associated with the year 2000 issue.
State of Readiness. We have completed our initial assessment of the
potential overall impact of the impending century change on our business.
Based on our current assessment, we believe the current versions of our
software products are year 2000 compliant. By year 2000 compliant, we mean
that our software products, when used with accurate date data and in
accordance with their associated documentation, are capable of properly
processing date data from, into and between the 20th and 21st centuries,
including the years 1999, 2000 and leap years, provided that all other
products, e.g., hardware, software and firmware, used with our products
properly exchange date data with them. However, our products are generally
integrated into enterprise systems involving sophisticated hardware and
complex software products that we cannot adequately evaluate for year 2000
compliance. We may face claims based on year 2000 problems in other companies'
products, or issues arising from the integration of multiple products within
an overall system even if our products are otherwise year 2000 compliant.
Although we have not been a party to any litigation or arbitration proceeding
involving our products
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<PAGE>
or services related to year 2000 compliance issues, we may in the future be
required to defend our products or services in these proceedings, or to
negotiate resolutions of claims based on year 2000 issues. The costs of
defending and resolving year 2000-related disputes, regardless of the merits
of these disputes, and any liability we have for year 2000-related damages,
including consequential damages, could substantially harm our business.
In addition, we believe that the purchasing patterns of customers and
potential customers may be affected by year 2000 issues, as companies expend
significant resources to correct or upgrade their current software systems for
year 2000 compliance and as they delay purchase of new systems that may not be
year 2000 compliant. These expenditures may result in reduced funds available
to purchase software products such as those we offer. To the extent year 2000
issues cause a significant delay in, or cancellation of, decisions to purchase
our products or services, our business would be substantially harmed.
We are currently reviewing our internal management information and other
computer systems to identify any year 2000 problems, and are beginning to
communicate with the external vendors that supply us with material software
and information systems and with our significant suppliers to determine their
year 2000 readiness. We have not completed our year 2000 investigation and
overall compliance initiative.
Costs. To date, we have not incurred any material costs directly associated
with our year 2000 compliance efforts, except for compensation expenses
associated with our salaried employees who have devoted some of their time to
our year 2000 assessment and remediation efforts. We do not expect the total
cost of year 2000 problems to be material to our business. However, during the
months prior to the century change, we will continue to evaluate new versions
of our software products, new software and information systems provided to us
by third parties and any new infrastructure systems that we acquire to
determine whether they are year 2000 compliant. Despite our current
assessment, we may not identify and correct all significant year 2000 problems
on a timely basis. Year 2000 compliance efforts may involve significant time
and expense and unremediated problems could substantially harm our business.
We currently have no contingency plans to address the risks associated with
unremediated year 2000 problems.
Risks. We are not currently aware of any year 2000 readiness problems
relating to our internally-developed proprietary systems that would
substantially harm our business. We may discover year 2000 readiness problems
in these systems that will require substantial revision. In addition, third-
party software, hardware or services incorporated into our material systems
may need to be revised or replaced, all of which could be time-consuming and
expensive. Our failure to fix or replace our internally developed proprietary
software or third-party software, hardware or services on a timely basis could
result in lost revenues, increased operating costs, the loss of customers and
other business interruptions, any of which could substantially harm our
business. Moreover, our failure to adequately address year 2000 readiness
issues in our internally developed proprietary software could result in claims
of mismanagement, misrepresentation or breach of contract and related
litigation, which could be costly and time-consuming to defend.
In addition, governmental agencies, utility companies, Internet access
companies, third-party service providers and others outside of our control may
not be year 2000 ready. The failure by these entities to be year 2000 ready
could result in a systemic failure beyond our control, such as a prolonged
Internet, telecommunications or electrical failure, which could also prevent
us from delivering our services to our customers, decrease the use of the
Internet or prevent users from accessing web sites.
Contingency Plan. As discussed above, we are engaged in an ongoing year
2000 assessment and have not yet developed any contingency plans. The results
of our year 2000 simulation testing and the responses received from third-
party vendors and service providers will be taken into account in determining
the nature and extent of any contingency plans we adopt.
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Recent Accounting Pronouncements
In March 1998, the American Institute of Certified Public Accountants, or
AICPA, issued Statement of Position, or SOP, 98-1, Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use. SOP 98-1 will be
effective for our fiscal year ending April 30, 2000. SOP 98-1 provides
guidance on accounting for computer software developed or obtained for
internal use including the requirement to capitalize and amortize specified
costs. We do not expect the adoption of this standard to have a material
impact on our results of operations, financial position or cash flows.
In June 1998, the FASB issued Statement of Financial Accounting Standard,
or SFAS, 133, Accounting for Derivative Instruments and Hedging Activities.
This statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. SFAS 133 will be effective for our
fiscal year ending April 30, 2001. The adoption of SFAS is not expected to
have a material impact on our results of operations, financial position or
cash flows in the foreseeable future.
Qualitative and Quantitative Disclosures About Market Risk
We develop products in the United States and market our products in North
America, and to a lesser extent in the Europe and Asia Pacific regions. As a
result, our financial results could be affected by factors such as changes in
foreign currency exchange rates or weak economic conditions in foreign
markets. Because all of our revenues are currently denominated in U.S.
dollars, a strengthening of the dollar could make our products less
competitive in foreign markets. Our interest income is sensitive to changes in
the general level of U.S. interest rates, particularly since the majority of
our investments are in short-term instruments. Due to the short-term nature of
our investments, we believe that there is not a material risk exposure.
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BUSINESS
The following description of Agile's business should be read in conjunction
with the information included elsewhere in this prospectus. This description
contains forward-looking statements that involve risks and uncertainties.
Agile's actual results could differ significantly from the results discussed
in the forward-looking statements as a result of the factors set forth in
"Risk Factors" and elsewhere in this prospectus.
Overview
We are a leading supplier of product content management software for use
over the Internet within and among companies in a manufacturing supply chain.
Our suite of products is designed to improve the ability of supply chain
members to communicate and collaborate with one another about new or changing
product content. We believe that our products are well-suited for participants
connected in outsourced supply chains, as well as those managing multi-site
engineering, manufacturing, sales and distribution via the Internet. Since
June 1996, when we shipped our first product, we have licensed our products to
approximately 300 customers in the computers and peripherals, components,
consumer electronics, data networking and telecommunications equipment,
electronics manufacturing, medical equipment and semiconductor equipment
markets. Our current customers in these markets include Gateway, Texas
Instruments, Philips Mobile Computing, Lucent Technologies, Solectron, GE
Marquette Medical Systems and FSI International.
Industry Background
The competitive environment for companies engaged in the manufacture and
supply of products has intensified dramatically and expanded globally in
recent years. This trend has been driven principally by productivity
improvements arising from advances in technology and growing customer
expectations for feature-rich products delivered quickly and at competitive
prices. To remain competitive, companies are adopting new strategies to
address these challenges.
Many companies are shifting from traditional manufacturing approaches,
where a manufacturer controls most phases of the manufacturing process from
raw materials to finished goods, to a manufacturing process where much or all
of the manufacturing process is outsourced to multiple companies as part of a
supply chain. According to Technology Forecasters, Inc., the outsourcing
market in electronics alone exceeded $89 billion in 1998 and is expected to
grow to $178 billion in 2001, although we cannot be certain that this
projection will be met.
By outsourcing their production, some companies have created supply chains
that are more efficient, dynamic and flexible than manufacturing operations
that control all phases of the manufacturing process. Use of the outsourced
supply chain has afforded companies the flexibility to choose top suppliers
and partners to make each link in the supply chain more competent, innovative
and productive. As companies operate on a global basis, supply chains can span
multiple continents, tying suppliers in one part of the world with a plant in
another to serve customers in a third location. The end result is that
companies can bring their products to market more efficiently while at the
same time achieving higher levels of customer satisfaction.
Managing the Outsourced Supply Chain
A critical aspect of managing the outsourced supply chain across multiple
suppliers is finding effective ways to store, access, and share information
within the company as well as with all supply chain partners during each stage
of the production process. Different stages of the production process generate
many complex types of data that need to be shared across the supply chain.
There are many types of data and a vast number of information flows that can
occur in the production process.
Product Content. During the product design stage, the company must
communicate large amounts of data within the company as well as to supply
chain partners. The company begins by designating the content of the finished
product with a list of components known as the bill of materials. The
components on this list can be
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divided into two classes: "buy" or "make." For the "buy" components, also
called off-the-shelf components, specifications for each part must be
determined and information must be collected and analyzed to determine if the
available components meet the required specifications. Once eligible
components have been selected, the manufacturers of the parts are incorporated
into the approved manufacturers list. For customized, or "make" components,
other data are created, including:
. assembly drawings, detailing precisely how the component should be
fabricated;
. work instructions, which guide the manual assembly process;
. machine instructions, to drive automated manufacturing and assembly
equipment;
. art work, for processes such as printed circuit board fabrication;
. schematics, for describing electronic components and assemblies; and
. test instructions, which enable the suppliers and original equipment
manufacturers to test for conformity to the manufacturer's
specifications.
New Product Introduction. Prior to volume production, the data created
during the product design stage must be communicated to each relevant party in
the supply chain. One of the complexities of the outsourced supply chain model
is that supply chain members often have multiple discrete roles, including
sourcing parts, fabrication, assembling components, testing and delivery. In
addition, the manufacture of a product such as a personal computer can include
several hundred suppliers. Ensuring that accurate product information is
disseminated promptly and to the correct parties is one of the most difficult
challenges for a company employing the outsourced supply chain model. Further,
suppliers may often discover constraints and/or opportunities for improvements
during the prototyping and pilot production phases. This often prompts a
flurry of product changes that requires rapid collaboration among supply chain
partners to avoid delays and excessive start-up or inventory costs.
Volume Production and Product Changes. Product specifications frequently
change even during volume production. This can occur due to a number of
reasons, including:
. changes in design in response to customer requests or market conditions;
. changes required to address a defect in the design or to improve the
manufacturing process; and
. changes in the costs or availability of components.
The communication of information regarding product changes is a dynamic
loop in which members of the supply chain must respond to market-dictated
demands while also reacting to information being shared among supply chain
partners. Whatever the reason for the change, executing it through the
manufacturing process expeditiously and effectively, while minimizing cost, is
a complex problem. To change a design requires:
. creating an engineering change order;
. developing the specifications required by the engineering change order;
. securing the necessary approvals to effect the change; and
. communicating the change to the supply chain.
This problem is especially complex for companies operating in a market
where product specifications or volume requirements may be changing
continuously. For example, the requirements of a personal computer
manufacturer that builds products to order may change continuously during each
day as information regarding orders is received from customers or its sales
force.
To address these challenges, many companies have implemented software
systems that govern supply chain management, electronic data interchange,
product data management and enterprise resource planning. However,
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many of these products were not designed to interconnect multiple companies in
an outsourced supply chain, and therefore do not fully address the need for
supply chain collaboration. Electronic data interchange, a software system
that facilitates interconnection and exchange of data, is expensive to install
and maintain and therefore is viable only to large organizations that can
justify the cost. Other methods of communication and collaboration within the
supply chain, including phone, paper-based solutions such as courier or fax,
or e-mail or web page sources, are not linked in real-time and are slow,
incomplete and often inaccurate.
As product changes become more frequent and time to market increasingly
becomes important, the ability to manage this process effectively becomes
critical to a company's competitiveness. A company that can disseminate
information quickly and accurately to the appropriate supply chain partners
may be in a position to compete effectively. However, a company that is agile
and can effectively collaborate with its supply chain partners in real time
can have an even larger competitive advantage. For example, through
collaboration with its supply chain partners, a company may learn that a
component is not readily available due to lack of supply or that a new
component is available which might substantially reduce costs or improve
manufacturing efficiencies. Instead of continuing to rely on the originally
selected component, the company can respond by incorporating another component
in the product design and notify partners before these components are
incorporated into new products. By doing so, the company has the opportunity
to increase revenues by maintaining product availability or increase profits
by taking advantage of lower cost components more quickly.
Impact of the Internet
The Internet, as a fast growing communications network, is changing the way
businesses communicate and share information and creating new and evolving
ways for conducting commerce. The typical corporate web site is evolving from
a mere repository for information regarding products into a medium for
conducting business. According to Forrester Research, its research indicates
that business-to-business electronic commerce is expected to grow to $1.3
trillion in 2003, accounting for more than 90% of the dollar value of
electronic commerce in the United States. This market is expected to create
substantial demand for Internet and intranet-based commerce applications. The
market for applications that enable business-to-business electronic commerce
is expected to reach $1.5 billion by 2002, according to Dataquest based upon
its research. However, we cannot be certain that these projections will be
met.
Companies that have successfully implemented strategies to communicate with
their customers over the Internet now face the challenge of utilizing the
Internet and intranets to gain the same level of increased efficiencies in
their supply chain. An Internet-based software solution can offer scalability,
easier implementation, compatibility across diverse information technology
platforms and reduced incremental infrastructure investments. However, many
companies are wary of major software development projects due to the cost and
complications of enterprise application development projects undertaken in
recent years. To compete effectively, companies must implement a solution
which will allow them to interactively communicate information related to
product design, development and manufacturing within the company and will
allow them to collaborate with their supply chain partners. At the same time,
companies want to be able to implement new software systems without the need
to burden already over-taxed internal information technology staffs while
avoiding costs of outside consulting and minimizing incremental
infrastructure-related expenses.
The Agile Solution
Our product content management software is designed to improve the ability
of supply chain members to communicate and collaborate with one another over
the Internet about new or changing product content. Our solution is designed
for use over the Internet, reduces dependence upon traditional methods of
interaction, and allows supply chain members to link to each other without
requiring substantial investments in additional technology infrastructure. We
have also designed our products to allow for rapid implementation by the
manufacturer with limited consulting assistance and by supply chain members
with minimal technical expertise.
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We believe that our products are well-suited for participants in outsourced
supply chains connected via the Internet, as well as those managing multi-site
engineering, manufacturing and sales and distribution. The Agile solution
delivers the following benefits to companies and their supply chain partners:
Enhanced Productivity and Response Time. With the help of our solution,
Agile Anywhere, and the Internet, companies can respond more rapidly to
changes in customer demand, availability of components, market conditions and
manufacturing capacities arising throughout the production cycle. This ability
to effect change even during volume production allows Agile Anywhere users to
adjust production strategies, enabling companies to produce what they can
sell, rather than sell what they can produce. Agile Anywhere also enables
companies to enhance their sales productivity by being first to market with
the right product.
More Cost-effective Production. The Agile Anywhere suite of products is
designed to help companies increase output, reduce inventory and compress the
time required to complete the production cycle. Through effective
collaboration, both time to market and design effectiveness can be improved.
Companies can benefit by reducing design and production errors due to
miscommunication within the supply chain, and can decrease operating
inefficiencies incurred when obsolete parts are specified and incorrectly
built products must be scrapped.
More Rapid Return on Investment. Because Agile Anywhere is based on
existing industry standards and does not require the implementation of custom
data models, Agile Anywhere implementations can be completed in less time than
required for traditional enterprise software applications which tend to
require extensive customization.
The Agile Growth Strategy
Our objective is to be the leading provider of product content management
software, enabling business-to-business global collaboration among supply
chain partners. Key elements of our strategy include:
Provide superior customer satisfaction. We expect to continue to build a
highly referenceable customer base of market leaders in various vertical
markets. We intend to continue to focus significant resources on customer
satisfaction programs. We intend to continue to anticipate customer needs by
introducing new product functionality and new technology platforms. We believe
this focus can help create high levels of customer loyalty, which can provide
follow-on sales opportunities and shorter sales cycles.
Capitalize on network effects to expand our customer base. As users of
Agile Anywhere deploy our software across their supply chains, additional
supply chain members will be exposed to our solution and the functionality
provided by our products. We believe that this exposure, which allows non-
customer participants in the supply chain to benefit from our solution first
hand, creates a network effect that accelerates industry recognition and
adoption of our products. As additional members of a supply chain deploy Agile
Anywhere, the quality and timeliness of available information improves, which
increases the value to each participant and helps drive greater usage.
Pursue a vertical market strategy. Since inception, we have pursued a
vertical market strategy, developing product features tailored for particular
industries. To date, we have focused on various electronics market segments,
including data communications, computers and peripherals, and the medical
device market. We seek to further penetrate our current markets while
addressing new vertical markets characterized by high rates of product change,
short product cycles, and extensive supply chains.
Leverage our technology platform. We intend to continue to pioneer new
Internet business applications based on emerging standards supporting
electronic commerce. For instance, we have leveraged the Java computer
programming language to deliver a robust, powerful and rapidly deployable
Internet business application to our customers. Further, we have taken the
initiative to define a protocol for supply chains, Product Definition
eXchange, or PDX, based on eXtensible Mark-up Language, or XML, and have
submitted it to
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industry standards groups for approval. We intend to continue to lead
technological innovation in the product content management market, offering
our customers solutions designed to provide a rapid and high return on
investment.
Extend supply chain collaboration and functionality. We believe our
solution provides a robust platform to enable us to extend the functionality
and application of our products to the creation and delivery of new value-
added applications. We intend to continue to develop our products to enable
increased collaboration among outsourced supply chain partners and to address
new opportunities that result from new business processes that are being
created for Internet-based collaboration and interaction among supply chain
partners.
The Agile Suite of Products
The Agile Anywhere suite of products provides a comprehensive business-to-
business solution to the problem of product change collaboration across the
manufacturing supply chain. Utilizing XML technology, Agile Anywhere will
allow supply chain partners to share and collaborate on product content and
changes in real time via the Internet. Agile Anywhere is designed to provide
the scalability, security and open standards that are required in an
electronic supply chain. At the core of the Agile Anywhere suite is the Agile
eHub, which manages product content, processes and business rules. Users
interact with the product content within the eHub via the My Agile portal.
Enterprises that manage and create the product content interact with the Agile
iCM client. Utilizing the Agile eXpress Viewer, product content can also be
published to users anywhere throughout the supply chain. To complete the
suite, Agile provides several integration products that import, export, and
publish product content from or to existing design, manufacturing, finance,
and supply chain systems. Following the initial implementation of Agile
Anywhere, licenses for additional concurrent users and application-specific
modules can be added to expand the scope of the manufacturer's
implementations.
In our latest release, available starting in August 1999, we have renamed
our product suite "Agile Anywhere." Previously known as Agile Workplace, our
latest release retains all of the core technology and functionality provided
by earlier releases, but adds significant enhancements to the number of users
that can be accommodated, and the speed and performance of our solutions.
Agile Anywhere also incorporates additional security features, and provides
enhanced capabilities for the transmission and exchange of data and
integration with other software applications, allowing for further
collaboration capabilities among supply chain partners.
As part of the enhancements, individual products in the suite have been
renamed, and Agile eXpress Viewer, Product Definition eXchange and a software
development kit have been included as new separate products.
Agile eHub
The foundation of the suite is Agile eHub. The Agile eHub is comprised of
application servers that enable users to define, store, change and manage
product content information. Agile eHub incorporates new technology for high
speed performance, storage and secure data, and is designed to scale to
accommodate the needs of supply chain partners of all sizes. It is also
designed to facilitate fast, direct Internet access, and is easily
implemented. Agile eHub includes one or more of the following server modules:
Agile Product Definition Server, previously Agile Configurator, manages
parts, documents, bills of materials and drawings, in a web environment that
provides fast, easy access to product content for all members of the supply
chain.
Agile Product Change Server, previously Agile CCB, automates the electronic
routing, notification and sign-off processes that are associated with
engineering changes. This functionality can result in reduced ordering errors
and costs and improved cycle times associated with evaluating, approving and
implementing changes.
Agile AML Server, previously Agile Parts, enables companies to collaborate
with supply chain partners on approved parts and manufacturers at the time of
new product introduction as well as tracking changes throughout the
manufacturing process.
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<PAGE>
Agile Administrator enables companies to easily and rapidly configure and
modify Agile Anywhere components without writing code. Agile Administrator,
which has not been renamed, speeds the implementation of the Agile Anywhere
suite and minimizes maintenance time.
Accessing Agile eHub
Agile customers and their supply chain partners can gain access to product
content for review or modification by the following:
Agile iCM (Internet Content Manager) is designed for individuals who have
responsibility for managing a product and its content through its entire
lifecycle. This functionality is also provided through Agile CM, a module
designed for Windows-based applications.
My Agile includes a web portal to allow secure, personalized web access to
product content that is stored in any Agile eHub. It is an intuitive, easy-to-
use portal allowing users to link to any or all of their supply-chain
information sources in a customizable interface and participate in product
content related processes via the Internet.
Agile eXpress Viewer allows supply chain partners to send and receive
information in the PDX format, a new standard for data exchange that we have
first offered with Agile Anywhere. Agile eXpress Viewer will be available for
downloading free of charge from the Agile web site, to enable supply chain
partners to share data even if they are not Agile customers.
Agile Integration Products
Product content information flows throughout the supply chain, and is
published to or from Agile Anywhere and a variety of other design,
manufacturing, finance and supply chain systems. Agile Anywhere integration
products, previously available with Agile Workplace, provide data exchange
between systems, as follows:
Agile ChangeCAST publishes released engineering change orders, approved
parts lists, approved manufacturers lists and bills of materials from Agile to
separate enterprise resource planning systems.
Agile Scan allows customers to scan drawings and documents into the Agile
eHub database.
Agile Import allows customers to import bills of materials produced in
ASCII format or in Microsoft Excel, providing a consolidated database of
product information.
Agile Export provides a quick and easy method of exporting information to
an ASCII file, allowing information in Agile Anywhere to be shared with other
business applications.
Agile Software Development Kit, newly available with Agile Anywhere, allows
customers and partners to develop complementary applications integrating Agile
Anywhere with design, manufacturing, customer service, supply chain or other
legacy systems. The Agile Software Development Kit allows users to write
applications in Java, Visual Basic and Visual C++.
Initial implementations of the Agile Anywhere suite typically include the
Agile eHub and one or more server modules such as what we now call the Product
Definition Server, Product Change Server and AML Server, together with user
licenses, and one or more of the integration products, in particular Agile
ChangeCAST, and often a third-party adapter for other existing enterprise
systems of the customer. Following the initial implementation, additional user
licenses and additional server modules may be purchased.
Customers
To date, we have licensed our products to approximately 300 customers,
predominantly within the electronics and medical device manufacturing
industries. No customer accounted for more than ten percent of our total
revenues in fiscal 1997, fiscal 1998 or fiscal 1999.
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<PAGE>
The following is a representative list of current customers in our targeted
industry markets that to date have purchased over $50,000 of Agile products
and services. These customers represented more than 26% of our total revenue
for fiscal 1999:
<TABLE>
<S> <C> <C>
Datacom/Telecom Equipment Computers and Peripherals Medical Equipment
Alcatel Schweiz Diamond Multimedia Systems EndoSonics
Aspect Telecommunications Fujitsu Computer Products GE Marquette Medical Systems
Brocade Communications Systems Gateway Guidant
Lucent Technologies Hitachi Hologic
Nortel Networks Iomega Humphrey Instruments
PairGain Packard Bell Visx
Xircom
Electronics Manufacturing Components Semiconductor Equipment
EFTC Advanced Micro Devices Credence Systems
Flextronics International Micron Technology Electro-Scientific Industries
Pemstar Reltec Communications FSI International
Solectron Texas Instruments Johnson Matthey Electronics
Xetel VLSI Technology Strasbaugh
Consumer Electronics
3Com Palm Computing
Dolby Laboratories
Philips Mobile Computing
Scientific Atlanta
WebTV Networks
</TABLE>
Product Technology and Architecture
The Agile Anywhere product suite is designed upon open systems based on
software industry standards for scalable Internet applications. The result is
a low cost, low maintenance end-user business application that eliminates the
need for complex custom or in-house development. Agile Anywhere is built on an
Internet-based architecture:
. The core of our architecture is the Agile eHub, the application server,
which currently runs on Microsoft NT. The application server is the
intermediary between the iCM and My Agile applications and the database,
providing the necessary security for validation of the data, and the web
server, which hosts the Internet access to Agile Anywhere. We use
encryption technology licensed from RSA Data Security to maintain secure
data when transported over the Internet.
. The applications are Java and HTML-based applications that can run on
versions of Microsoft Internet Explorer and Netscape Navigator. There is
also a Windows application for users who prefer a Windows user interface
rather than a web browser interface. Operating systems supported include
Windows 95, Windows 98, Windows NT and Sun Solaris. We follow the
Microsoft standards for the Windows 95 and 98 CM clients, and Internet
standards for the Java iCM application running within Microsoft Internet
Explorer and Netscape Communicator. Our products can be integrated with
more than 15 enterprise resource planning systems including, among
others, Oracle, J.D. Edwards and SAP.
. The backend includes the database server, which is either Oracle or
Microsoft SQL Server, and the Agile Internet File Server. We connect with
Microsoft SQL Server through Open Database Connectivity, and Oracle's
database through direct integration.
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We are certified in Windows Back-Office, Oracle CAI, as a Microsoft
Solution Provider, and from Sun Microsystems Inc. in "100% Pure Java." The
Agile Anywhere suite is enabled for both single-byte and double-byte
localization, and has been localized for French. We intend to provide
localization for additional languages.
We have entered into platform alliances to ensure our products are based on
industry standards and to enable us to take advantage of current and emerging
technologies, including alliances with Sun Microsystems, Oracle and Microsoft.
To promote development, definition, adoption, promotion and implementation of
open standards that can be leveraged by Agile Anywhere, we work with several
industry standards organizations such as the National Institute of Standards
and Technology, National Electronics Manufacturing Initiative, Institute for
Interconnecting and Packaging Electronic Circuits, RosettaNet, and World Wide
Web Consortium. We are involved with Solectron, Marshall Industries, and other
industry participants in an initiative to define an XML-based protocol called
Product Definition eXchange.
Product Development
Our product development objectives are to:
. be innovative in developing solutions to remove complexity from supply
chain collaboration;
. develop products that require no custom code, contain reusable components
and are easy to use, implement, maintain, and upgrade; and
. adopt industry standard technologies.
Our software development staff is divided into teams consisting of
development engineers, project managers, quality assurance engineers, and
technical writers. Working closely with our marketing department, we determine
product functionality based upon market requirements, customer feedback,
available technical support and customer engineering in addition to emerging
technologies allowing us to develop additional features.
We introduced our first product, Agile Configurator version 1.3, in June,
1996 and have subsequently released nine revisions, adding over a dozen new
modules. During this time, the product has evolved from a 2-tiered client-
server database application running on Oracle to a multi-tiered application
supporting both Windows and Java clients, and both Oracle and Microsoft SQL
Server databases. Our product development activities are focused on broadening
the scalability and functionality of Agile Anywhere, enhancing scalability,
and including application interfaces that allow customers to more easily
integrate Agile Anywhere with other systems.
Our research and development expenses were $2.5 million for fiscal 1997,
$3.8 million for fiscal 1998 and $4.7 million for fiscal 1999, and we expect
to continue to invest significantly in research and development in the future.
We cannot be sure that we will complete our existing and future development
efforts within our anticipated schedule or that our new and enhanced products
will have the features to make them successful. We may experience difficulties
that could delay or prevent the successful development, introduction or
marketing of new or enhanced products. In addition, these new and enhanced
products may not meet the requirements of the marketplace and achieve market
acceptance. Furthermore, despite testing by us, our implementation partners
and our customers, errors might be found in new products or in releases after
shipment, resulting in loss of revenue or delay in market acceptance and
sales, diversion of development resources, injury to our reputation or
increased service and warranty costs.
Sales and Marketing
Our sales and marketing organization is responsible for identifying and
developing vertical markets as well as identifying and notifying our research
and development staff of customer product requirements. We market and sell our
products primarily through our direct sales force located at our headquarters
in San Jose, California,
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and at regional and local sales offices in the United States and at one office
in France. Our direct sales force consists of Major Account Executives who
focus entirely on our major accounts, Senior Account Executives who focus on
specific geographic territories, and Emerging Technology Manufacturers Account
Executives who focus on emerging and smaller-sized companies. We also market
and sell through our direct telesales and telemarketing representatives. Sales
engineers at most regional offices provide pre-sales technical support. We
intend to expand our domestic and international direct sales force
significantly by expanding into additional geographic locations. We are also
in the early stages of complementing our direct sales force, particularly
internationally, through additional distribution channels, including non-
exclusive distributors, integrators and consulting partners.
To support our direct sales efforts and to actively promote our Agile
brand, we engage in a variety of marketing activities. These include co-
marketing strategies with our existing business partners, targeting additional
strategic relationships, managing and maintaining our web site content,
advertising in industry and other publications, conducting public relations
campaigns and establishing and maintaining relationships with recognized
industry analysts. We also actively participant in manufacturing-related trade
shows.
A critical element of our sales strategy is to establish marketing
alliances to promote sales and marketing of our products, as well as to
increase product interoperability. We also pursue services alliances with
consulting and integration firms to implement our software, provide customer
support services, create customized customer presentations and demonstrations
and endorse our products during the evaluation stage of the sales cycle. We
believe that our relationships with these service providers may shorten our
sales cycle because these service providers have generated and qualified sales
leads, made initial customer contacts and assessed needs prior to our
introduction. We currently have relationships with Siemens and Origin
Technology in Business.
Customer Service and Support
Consulting and Implementation. We offer services, primarily on a fixed-
price basis, to assist in implementation planning, product installation,
implementation assistance, legacy data loading and effectiveness audits. To
facilitate and enhance the integration of our products, we have alliances for
integration of our products with existing design, manufacturing, finance and
supply chain systems. This approach allows us to focus on our core
competencies and leverage our partners' domain knowledge, which helps reduce
time to market both for us and our customers.
Customer Support. We believe that responsive technical support is a
requirement for our continued growth. We provide technical support and
unspecified product upgrades on a when-and-if available basis through our
annual maintenance program. Our customers are not entitled to new products
under our annual maintenance program. Customers generally purchase the first
year of support at the time they initially license a product. After the
initial term, support may be renewed on an annual or multi-year basis.
Customer support is offered by telephone, email, fax and Internet-based
support that features frequently asked questions, technical alerts, product
upgrades and updates, problem reporting and analysis, and self-help through
our on-line knowledge base. In addition, our consulting and implementation
partners provide customer support and maintenance in some instances. Revenues
associated with maintenance contracts are recognized ratably over the term of
the maintenance contract, which is generally 12 months.
Training. We offer a variety of classes and related materials to train our
customers on system administration, upgrades and new releases. These classes
are also available as part of our Train the Trainer program. Training classes
are offered at our headquarters in San Jose, California, at customer sites,
and at other locations. To improve access to our explanatory materials, we
offer on-line documentation contained on the compact discs for our products
and from our web site for all our products. We also offer on-line help for the
majority of our products. Customers can purchase additional documentation via
our web site.
Competition
The market for product content management software is new, highly
fragmented, rapidly changing and increasingly competitive. We expect
competition to persist and intensify, which could result in price reductions,
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<PAGE>
reduced gross margins and loss of market share, any one of which could
seriously harm our business. Competitors vary in size and in the scope and
breadth of the products and services offered.
We believe that our ability to compete depends on many factors both within
and beyond our control, including:
. the performance, functionality, price, reliability and speed of
implementation of our solutions;
. the timing and market acceptance of new products and product enhancements
to our Agile Anywhere suite of products;
. the quality of our customer service; and
. the effectiveness of our sales and marketing efforts.
Although we believe that we currently compete favorably as to each of these
factors, our market is relatively new and our product content management
software is a new category of products. However, we encounter competition with
respect to different aspects of our solution from a variety of vendors. We
currently face three primary sources of competition:
. in-house development efforts by potential customers or partners;
. vendors of engineering information management software, such as
Parametric Technology Corporation, Dassault Systemes S.A., Structural
Dynamics Research Corporation and Unigraphics Solutions, Inc.; and
. developers of general purpose groupware software addressing only limited
technology components of engineering change management, including
companies such as Novell, Inc. and Lotus Development Corporation.
In addition, we face potential competition from providers of enterprise
software who seek to extend the functionality of their products, such as
Oracle Corporation, SAP A.G., i2 Technologies, Inc., Aspect Development, Inc.
and Baan Company N.V.
We may not be able to maintain our competitive position against current and
potential competition, particularly competitors that have longer operating
histories and significantly greater financial, technical, marketing and other
resources than we do and therefore may be able to respond more quickly to new
or changing opportunities, technologies and customer requirements. Also, many
current and potential competitors have greater name recognition and more
extensive customer bases that could be leveraged to gain market share to our
detriment. These competitors may be able to undertake more extensive
promotional activities, adopt more aggressive pricing policies, and offer more
attractive terms to purchasers than we can. In addition, current and potential
competitors have established or may establish cooperative relationships among
themselves or with third parties to enhance their products. Accordingly it is
possible that new competitors or alliances among competitors may emerge and
rapidly acquire significant market share. We also expect that competition may
increase as a result of industry consolidation. We may not be able to maintain
our competitive position against current and potential competitors, especially
those with significantly greater financial, marketing, service, support,
technical and other resources.
Proprietary Rights
Our success and ability to compete depend upon our proprietary technology.
We rely on patent, copyright, trade secret and trademark law to protect our
proprietary information. We also typically enter into agreements with our
employees, consultants and customers to control their access to and
distribution of our software, documentation and other proprietary information.
Nevertheless, a third party could copy or otherwise obtain our software or
other proprietary information without authorization, or could develop software
competitive to ours. Our means of protecting our proprietary rights may not be
adequate and our competitors may independently develop similar technology,
duplicate our products or design around patents that may be issued to us or
our other intellectual property. In addition, the laws of some foreign
countries do not protect our proprietary rights to as
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<PAGE>
great an extent as do the laws of the United States, and we expect that it
will become more difficult to monitor the use of our products if we increase
our international presence.
We utilize database management software from Microsoft and Oracle for our
database servers. Our customers can purchase this software directly from
Microsoft and Oracle or from us. In addition, we integrate third-party
software into our products from RSA Data Security for security and encryption
technology, from Actuate for reporting capability and from Cimmetry Systems
for our viewers. This third-party software may not continue to be available on
commercially reasonable terms. If we cannot maintain licenses to this third-
party software at an acceptable cost, shipments of our products could be
delayed until equivalent software could be developed or licensed and
integrated into our products. We do not believe that our business could be
considered to be substantially dependent on any one of these license
agreements, and none of these licenses are responsible for a significant
amount of our revenues.
There has been a substantial amount of litigation in the software and
Internet industries regarding intellectual property rights. It is possible
that, in the future, third parties may claim that we or our current or
potential future products infringe their intellectual property. We expect that
software product developers and providers of electronic commerce solutions
will increasingly be subject to infringement claims as the number of products
and competitors in our industry segment grows and the functionality of
products in industry segments overlaps. Any claims, with or without merit,
could be time-consuming, result in costly litigation, cause product shipment
delays or require us to enter into royalty or licensing agreements. If our
products were found to infringe a third party's proprietary rights, we could
be required to enter into royalty or licensing agreements in order to continue
to be able to sell our products. Royalty or licensing agreements, if required,
may not be available on terms acceptable to us or at all, which could
seriously harm our business.
Employees
As of April 30, 1999, we had a total of 156 employees. Of this total, 37
were in engineering, 51 in sales and marketing, 46 in professional services,
including technical support and customer training, and 22 in finance and
administration. We also retain independent contractors to support activities
such as our professional services and product development. Our success depends
on our ability to attract and retain qualified, experienced employees. None of
our employees are represented by a collective bargaining unit, and we have
never experienced a work stoppage. We consider our relations with our
employees to be good.
Facilities
Our headquarters are currently located in a leased facility in San Jose,
California, consisting of approximately 43,000 square feet under a lease
expiring in 2002 with expansion and renewal options, of which approximately
12,000 square feet is currently sublet to other tenants on short-term
subleases. We also lease offices for sales and service personnel in eight
locations in the United States as well as in Paris, France. We believe our
current facilities will be adequate to meet our needs for the foreseeable
future.
Legal Proceedings
We are currently involved in litigation with Facilities Management
International, a Southern California based systems integration company that
filed a complaint against us in the Superior Court for the State of
California, County of Orange, on February 19, 1999. The complaint alleges our
interference with prospective economic advantage and unfair business practices
in connection with our quote for services to one of our customers. We have
responded by filing an answer that denies all allegations. The lawsuit seeks
unspecified compensatory and punitive damages as well as injunctive relief. We
intend to defend ourselves vigorously, and after consideration of the nature
of the claims do not believe that resolution of this matter will harm our
business. However, due to the inherently uncertain nature of litigation and
the fact that discovery has yet to take place, we cannot determine the
possible loss, if any, that we may ultimately incur either in the context of a
trial or as a result of a negotiated settlement. Our defense of this
litigation, regardless of its outcome, could result in the expenditure of
significant financial and managerial resources.
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MANAGEMENT
Executive Officers and Directors
Our executive officers and directors and their ages as of June 15, 1999 are
as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Bryan D. Stolle......... 41 Chairman of the Board, Chief Executive Officer, President and Director
Thomas P. Shanahan...... 52 Executive Vice President, Chief Financial Officer, Secretary and Director
Carol B. Schrader....... 43 Vice President, Marketing
Dorothy O. Wise......... 38 Vice President, Development and Support
Mark C. Irvine.......... 42 Vice President, North American Field Operations
Gregory G. Schott....... 35 Vice President, Business Development
Klaus-Dieter Laidig..... 57 Director
Michael Moritz.......... 44 Director
James L. Patterson...... 61 Director
Nancy J. Schoendorf..... 44 Director
</TABLE>
Bryan D. Stolle is a co-founder of Agile and has served as our President
and Chief Executive Officer and a member of our board of directors since our
inception in March 1995. From 1987 to 1994, Mr. Stolle served as Director of
Product and Strategic Marketing at Sherpa Corporation, a developer of
enterprise product data management software. From 1983 to 1987, Mr. Stolle
served as Marketing Officer at Rexcom Systems, a software company co-founded
by Mr. Stolle. Mr. Stolle received a B.A. in Business Administration and an
M.B.A. from the University of Texas at Austin.
Thomas P. Shanahan is a co-founder of Agile and has been a member of our
board of directors since our inception in March 1995. Since November 1997, Mr.
Shanahan has served as Agile's Executive Vice President and Chief Financial
Officer. From 1994 to 1997, Mr. Shanahan served as Vice President and Chief
Financial Officer of Digital Generation Systems, Inc., a provider of
electronic and physical distribution of audio and video spot advertising. From
1993 to 1994, Mr. Shanahan served as Chief Financial Officer of Sherpa
Corporation. Mr. Shanahan received a B.A. in Economics from Stanford
University and an M.B.A. from Harvard University.
Carol B. Schrader has served as Agile's Vice President of Marketing since
October 1997. In 1997, Ms. Schrader served as an independent consultant with
Killarney Group. From 1995 to 1997, Ms. Schrader served as Director, Industry
Development at Documentum, Inc., a provider of web content management
solutions. From 1990 to 1995, Ms. Schrader served as Director, Market
Development at Sherpa Corporation. Ms. Schrader received a B.A. in Business
Management from Clarke College.
Dorothy O. Wise has served as Agile's Vice President of Development and
Support since March 1996. From 1994 to 1996, Ms. Wise served as Vice
President, Quattro Pro Business Unit, at Novell, Inc., a provider of network
services operating system software. Ms. Wise received a B.S.E. in Electrical
Engineering and Computer Science from Princeton University.
Mark C. Irvine has served as Agile's Vice President of North American Field
Operations since May 1999. From 1996 to 1999, Mr. Irvine served as Director,
Western Field Operations, at Agile. From 1995 to 1996, Mr. Irvine served as
Vice President, Sales, at ExpertEdge Corp., a field service application
software company. From 1991 to 1995, Mr. Irvine served as District Manager at
Sybase, Inc. Mr. Irvine received a B.A. in Biology from the University of
Colorado.
Gregory G. Schott has served as Agile's Vice President of Business
Development since June 1999. From 1997 to 1999, Mr. Schott served as Vice
President of Marketing at Digital Generation Systems, Inc., a provider and
distributor of electronic audio and video spot advertising. From 1996 to 1997,
Mr. Schott served as Vice President of Operations, from 1995 to 1996 as
Director of Business Development and from 1994 to 1995 as Director of
Operations, all at Digital Generation Systems, a developer of radio and
television servers and
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distributor of audio and video content. From 1991 to 1994, Mr. Schott served
as a management consultant at The Boston Consulting Group. Mr. Schott received
a B.S. in Mechanical Engineering from North Carolina State University and an
M.B.A. from Stanford University.
Klaus-Dieter Laidig has served as a director of Agile since 1998. Mr.
Laidig has served as a management consultant with Laidig Business Consulting
GmbH since 1998. From 1984 to 1997, Mr. Laidig served as General Manager of
Hewlett-Packard GmbH. Mr. Laidig currently serves as a director of SAP AG,
Henninger Braeu AG and several privately held companies. Mr. Laidig received
an M.B.A. from the Pforzheim University of Applied Sciences in Germany.
Michael Moritz has served as a director of Agile since 1996. Mr. Moritz has
been a general partner of Sequoia Capital, a venture capital firm, since 1986.
Mr. Moritz serves as a director of eToys, Inc., Flextronics International
Ltd., Yahoo! Inc. and several additional private companies. Mr. Moritz
received an M.A. from Christ Church, Oxford.
James L. Patterson has served as a director of Agile since 1996. Mr.
Patterson has been an independent consultant since 1989. Mr. Patterson
currently serves as a director of Latitude Communications, Inc., a provider of
integrated voice and data conferencing solutions, and several privately held
companies. Mr. Patterson received a B.S. in Electrical Engineering from the
University of Colorado.
Nancy J. Schoendorf has served as a director of Agile since 1995. Ms.
Schoendorf has been a general partner of Mohr, Davidow Ventures, a venture
capital firm, since 1994, and a Managing Partner since 1997. Prior to joining
Mohr, Davidow Ventures, Ms. Schoendorf spent 17 years in the computer industry
including management positions with Hewlett-Packard, Software Publishing
Corporation and Sun Microsystems. Ms. Schoendorf currently serves as a
director of Actuate Software Corp., a provider of enterprise reporting
software solutions and several privately held companies. Ms. Schoendorf
received a B.S. in Computer Science from Iowa State University and an M.B.A.
from Santa Clara University.
Board of Directors
Upon completion of the offering, the terms of the board of directors will
be divided into three classes: Class I, whose term will expire at the annual
meeting of stockholders to be held in 2000; Class II, whose term will expire
at the annual meeting of stockholders to be held in 2001; and Class III, whose
term will expire at the annual meeting of stockholders to be held in 2002. The
Class I directors are Mr. Moritz and Mr. Laidig, the Class II directors are
Ms. Schoendorf and Mr. Patterson, and the Class III directors are Mr. Stolle
and Mr. Shanahan. At each annual meeting of stockholders after the initial
classification, the successors to directors whose term expires will be elected
to serve a term of three years. This classification of directors may have the
effect of delaying or preventing changes in our control.
Board Committees
Audit Committee. The board of directors has established an audit committee
consisting of Mr. Laidig and Mr. Moritz. The audit committee reviews with our
independent accountants the scope and timing of their audit services and any
other services that they are asked to perform, the independent accountants'
report on our consolidated financial statements following completion of their
audit, and our policies and procedures with respect to internal accounting and
financial controls. In addition, the audit committee makes annual
recommendations to our board of directors for the appointment of independent
accountants for the ensuing year.
Compensation Committee. The board of directors has established a
compensation committee consisting of Mr. Patterson and Ms. Schoendorf. The
compensation committee makes recommendations to the board concerning salaries
and incentive compensation for our officers and employees and administers our
employee benefit plans.
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Director Compensation
Our directors do not receive any cash compensation for their services as
directors but are reimbursed for their reasonable travel expenses in attending
meetings of the board of directors. Our directors are eligible to participate
in our 1995 Stock Option Plan and employee-directors will be able to
participate in our 1999 Employee Stock Purchase Plan. Mr. Laidig received an
option to purchase 50,000 shares of common stock at an exercise price of $2.65
per share when he joined the board of directors in November, 1998.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship exists between any member of our board of
directors or our compensation committee and any member of the board of
directors or compensation committee of any other company, and no such
relationship has existed in the past. Prior to the creation of our
compensation committee in May 1999, all compensation decisions were made by
our full board. Neither Mr. Stolle nor Mr. Shanahan participated in
discussions by our board with respect to his compensation.
Employment Contracts, Termination of Employment and Change of Control
Arrangements
None of our executive officers is employed under an employment agreement
with significant contractual severance provisions. However, if any of our
executives is terminated without cause during the eighteen months following a
change of control, then vesting of all options to purchase our common stock
held by these employees will accelerate.
Executive Compensation
The following table presents information regarding the compensation paid to
our chief executive officer and each of our other highest-paid executive
officers whose total salary and bonus exceeded $100,000 for the fiscal year
ended April 30, 1999:
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation
Compensation Awards
---------------- --------------
Securities
Underlying All Other
Name and Principal Position Salary Bonus Options/SARs(#) Compensation
- --------------------------- -------- ------- -------------- ------------
<S> <C> <C> <C> <C>
Bryan D. Stolle................. $159,997 $50,000 125,000 $4,000
Chairman and Chief Executive
Officer
Thomas P. Shanahan.............. 146,664 29,735 25,000 --
Chief Financial Officer
Carol B. Schrader............... 114,000 19,000 32,000 --
Vice President, Marketing
Dorothy O. Wise................. 138,000 41,669 25,000 --
Vice President, Development and
Support
Mark C. Irvine.................. 87,000 264,902 18,000 3,600
Vice President, North America
Field Operations
</TABLE>
Option Grants in Last Fiscal Year
The following table designates each grant of stock options during the
fiscal year ended April 30, 1999 to our chief executive officer and each of
our other highest-paid executive officers. All of these options were granted
under our 1995 Stock Option Plan. Each of these options has been exercised,
but the shares purchased under
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<PAGE>
these options are subject to repurchase by us at the original exercise price
paid per share upon the optionee's cessation of service with us prior to
vesting of the shares. Our repurchase right lapses and the optionee vests in
20% of his or her option shares upon completion of 12 months of service from
the vesting start date and vests in the balance in a series of equal monthly
installments over the next four years of service. Vesting of the option shares
will fully accelerate upon a change in our control and involuntary termination
of the employee's services during the subsequent 18 months.
The percentages in the column entitled "Percent of Total Options Granted to
Employees in Fiscal 1999" are based on an aggregate of 978,275 options granted
to our employees under our 1995 Stock Option Plan during the fiscal year ended
April 30, 1999. The exercise price of each option is equal to the fair market
value of our common stock as determined by the board of directors on the date
of grant, taking into account the purchase price paid by investors for shares
of our preferred stock, the liquidation preferences and other rights,
privileges and preferences associated with the preferred stock and an
evaluation by the board of directors of our revenues, operating history and
prospects.
The potential realizable value is calculated based on the ten-year term of
the option at the time of grant. For purposes of these columns, we assumed
stock price appreciation of 5% and 10% as required by the Securities and
Exchange Commission. These rates of appreciation do not represent our
prediction of our stock price performance. The potential realizable values at
5% and 10% appreciation are calculated by assuming that the estimated fair
market value on the date of grant appreciates at the indicated rate for the
entire term of the options and that the option is exercised at the exercise
price and sold on the last day of its term at the appreciated price.
Information on how we determined the fair market value of our common stock is
disclosed in the preceding paragraph. The initial public offering price is
estimated to be higher than the estimated fair market value on the date of
grant. Therefore, the potential realizable value of the option grants would be
significantly higher than the numbers shown in this column if future stock
prices were projected to the end of the option term by applying the same
annual rates of stock price appreciation to the initial public offering price.
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price
Appreciation for
Individual Grants Option Term
--------------------------------------------- -----------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted Fiscal 1999 ($/Share) Date 5% 10%
---- ---------- ------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bryan D. Stolle......... 33,333 3.4% $3.00 3/26/09 $ 62,889 $159,373
91,667 9.4 3.00 3/26/09 172,947 438,281
Thomas P. Shanahan...... 25,000 2.6 2.50 8/25/08 59,667 132,031
Carol B. Schrader....... 22,000 2.3 2.35 7/8/08 55,807 119,487
10,000 1.0 2.65 11/17/08 22,367 51,312
Dorothy O. Wise......... 25,000 2.6 2.65 11/17/08 55,917 128,281
Mark C. Irvine.......... 3,000 .3 1.75 5/21/08 9,410 18,094
15,000 1.5 2.65 11/17/08 33,550 76,968
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table presents for our chief executive officer and each of
our other highest-paid executive officers the number of options exercised
during the fiscal year ended April 30, 1999 and the number and value of
securities underlying unexercised options that are held by our chief executive
officer and each of our other highest-paid executive officers as of April 30,
1999. Each of the options listed in the table is immediately exercisable. The
shares purchased under the options may be repurchased by us at the original
exercise price paid per share if the optionee ceases service with us before
vesting in the shares. The heading "Vested" refers to shares no longer subject
to repurchase; the heading "Unvested" refers to shares subject to repurchase
as of April 30, 1999. The numbers in the column entitled "Value of Unexercised
In-the-Money Options at April 30,
47
<PAGE>
1999" are based on the fair market value of our common stock of $3.00 at April
30, 1999, as determined by our board of directors, less the exercise price
payable for these shares. The fair market value of our common stock at April
30, 1999 was estimated by the board of directors on the basis of the purchase
price paid by investors for shares of our preferred stock, taking into account
the liquidation preferences and other rights, privileges and preferences
associated with the preferred stock, and an evaluation by the board of our
revenues, operating history and prospects. The initial public offering price
is estimated to be higher than the estimated fair market value on April 30,
1999. Consequently, the value of unexercised options would be higher than the
numbers shown in the table if values were calculated by subtracting the
option's exercise price from the initial public offering price.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Shares Options at Options at
Acquired on April 30, 1999 April 30, 1999 ($)
Exercise Value --------------- ---------------------
(#) Realized ($) Vested Unvested Vested Unvested
----------- ------------ ------ -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Bryan D. Stolle......... -- -- -- 175,000 -- $77,500
Thomas P. Shanahan...... -- -- -- 25,000 -- 12,500
Carol B. Schrader....... 22,000 $51,700 -- 10,000 -- 3,500
Dorothy O. Wise......... -- -- -- 25,000 -- 8,750
Mark Irvine............. 3,000 15,000 22,500
</TABLE>
Stock Plans
1995 Stock Option Plan. Our 1995 stock option plan was approved by our
board of directors in May 1995 and by our stockholders in January 1996. The
plan provides for the grant of incentive stock options, within the meaning of
Section 422 of the Internal Revenue Code, to employees, and for grants of
nonstatutory stock options and stock issuances to employees, including
officers, non-employee directors and consultants.
The plan is currently administered by the compensation committee. Subject
to the provisions of the plan, the board or its committee has the authority to
select the persons to whom options or stock issuances are granted and
determine the terms of each option or stock issuance, including:
. the number of shares of common stock covered by the option or stock
issuance;
. when the option becomes exercisable or when the stock issuance vests;
. the per share option exercise price, which in the case of incentive stock
options must be at least equal to the fair market value of a share of
common stock on the grant date or 110% of such fair market value for
incentive stock options granted to 10% stockholders, and, in the case of
nonstatutory stock options, must be at least 85% of the fair market value
of a share of common stock on the grant date; and
. the duration of the option, which for incentive stock options may not
exceed ten years, or, with respect to incentive stock options granted to
10% stockholders, five years.
Generally, options granted under the plan are immediately exercisable.
Options and stock issuances granted under the plan generally vest over five
years, although the board or its committee may specify a different vesting
schedule for a particular grant. Options granted under the plan are non-
transferable other than by will or the laws of descent and distribution;
provided, however that the board or its committee may provide that
nonstatutory stock options are transferable for estate planning purposes,
subject to applicable law. Unvested shares issued pursuant to a stock issuance
are generally non-transferrable.
In the event of a change in control of Agile, the acquiring or successor
corporation may either assume the outstanding options granted under the plan
or replace the options with a cash incentive program that is paid out in
accordance with the original vesting schedule and that preserves the spread on
the unvested shares subject to the options. If the options or stock issuances
are not assumed or replaced by the acquiring or successor
48
<PAGE>
corporation, then the shares subject to each option outstanding under the plan
at the time of the change in control shall automatically vest in full, and
then expire.
Currently, the maximum number of shares issuable under the plan is
5,375,000. The share reserve will automatically be increased on the first day
of each fiscal year beginning on and after May 1, 2000 by the lesser of
500,000 shares per year, 5% of the number of shares of our common stock that
was issued and outstanding on the last day of the preceding fiscal year, or a
lesser number of shares determined by the board of directors. As of April 30,
1999, 2,127,880 shares have been issued upon the exercise of options, options
to purchase a total of 1,159,725 shares at a weighted average exercise price
of $2.12 per share were outstanding and 2,245,025 shares were available for
future option grants.
1999 Employee Stock Purchase Plan. The board of directors adopted, subject
to stockholder approval, our 1999 employee stock purchase plan in June 1999.
We have reserved a total of 500,000 shares of common stock for issuance under
the 1999 employee stock purchase plan, none of which have been issued as of
the effective date of this offering. The share reserve will automatically be
increased on May 1, 2000 and on each May 1 thereafter until and including May
1, 2009, by an amount equal to the lesser of 500,000 shares per year, 2% of
our outstanding common stock on the last day of the immediately preceding
fiscal year, or such lesser number of shares as determined by the board of
directors.
The employee stock purchase plan is intended to qualify under Section 423
of the Internal Revenue Code. The plan will be administered by our
compensation committee. Employees, including officers and employee directors,
of Agile or any subsidiary designated by the board for participation in the
plan, are eligible to participate in the plan if they are customarily employed
for more than 20 hours per week and more than five months per year. Eligible
employees may begin participating at the start of any offering period.
The first offering period will run for approximately 24 months and will be
divided into four consecutive purchase periods of approximately six months.
The first offering period and the first purchase period commence on the date
of this prospectus and will terminate on the last day of August, 2001.
Subsequent offering periods will generally have a duration of approximately 6
months. Offering periods after the initial offering period will commence on
the first day of March and September of each year. The board may change the
dates or duration of one or more offering periods, but no offering may exceed
27 months.
The employee stock purchase plan permits eligible employees to purchase
common stock through payroll deductions at a price no less than 85% of the
lower of the fair market value of the common stock on (a) the first day of the
offering, or (b) the purchase date. Participants generally may not purchase
more than 1,000 shares in a six-month offering period or stock having a value
greater than $25,000 in any calendar year as measured at the beginning of the
offering period. In the event of a change in control of Agile, the board may
accelerate the purchase date of the then current offering period to a date
prior to the change in control, unless the acquiring or successor corporation
assumes or replaces the purchase rights outstanding under the employee stock
purchase plan. Our board of directors may amend or terminate the 1999 employee
stock purchase plan at any time.
401(k) Plan
Agile provides a tax-qualified employee savings and retirement plan,
commonly known as a 401(k) plan, which covers its eligible employees. Pursuant
to the 401(k) plan, employees may elect to reduce their current annual
compensation up to the lesser of 20% or the statutorily prescribed annual
limit, which is $10,000 in calendar year 1999, and have the amount of the
reduction contributed to the 401(k) plan. The 401(k) plan does not currently
permit additional matching contributions to the 401(k) plan by Agile on behalf
of the participants in the 401(k) plan. The 401(k) plan is intended to qualify
under Sections 401(a) and 401(k) of the Internal Revenue Code, so that
contributions by Agile or its employees to the 401(k) plan, and income earned
on such contributions, are not taxable to employees until withdrawn from the
401(k) plan, and so that contributions by Agile, if any, will be deductible by
Agile when made. The trustee of the 401(k) plan invests the assets of the
401(k) plan in the various investment options as directed by the participants.
49
<PAGE>
Limitation of Liability and Indemnification
As permitted by the Delaware General Corporation Law, we have adopted
provisions in our certificate of incorporation and bylaws that limit or
eliminate the personal liability of our directors for a breach of their
fiduciary duty of care as a director. The duty of care generally requires
that, when acting on behalf of the corporation, directors exercise an informed
business judgment based on all material information reasonably available to
them. Consequently, a director will not be personally liable to us or our
stockholders for monetary damages or breach of fiduciary duty as a director,
except for liability for:
. any breach of the director's duty of loyalty to us or our stockholders;
. acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;
. unlawful payments of dividends or unlawful stock repurchases, redemptions
or other distributions; or
. any transaction from which the director derived an improper personal
benefit.
Our certificate of incorporation allows us to indemnify our officers,
directors and other agents to the full extent permitted by Delaware law. We
intend to enter into indemnification agreements with each of our directors and
officers that are, in some cases, broader than the specific indemnification
provisions permitted by in Delaware law, and that may provide additional
procedural protection. The indemnification agreements require us, among other
things, to:
. indemnify officers and directors against certain liabilities that may
arise because of their status as officers or directors;
. advance expenses, as incurred, to officers and directors in connection
with a legal proceeding, subject to limited exceptions; or
. obtain directors' and officers' insurance.
Our bylaws also permit us to purchase insurance on behalf of any officer,
director, employee or other agent for any liability arising out of his or her
actions in such capacity, regardless of whether Delaware law would permit
indemnification, and to provide indemnification in circumstances in which
indemnification is otherwise discretionary under Delaware law.
At present, there is no pending litigation or proceeding involving any of
our directors, officers or employees in which indemnification is sought, nor
are we aware of any threatened litigation that may result in claims for
indemnification.
50
<PAGE>
CERTAIN TRANSACTIONS
Since May 1, 1996 there has been no transaction or series of transactions
to which we were a party involving $60,000 or more and in which any director,
executive officer or holder of more than 5% of our capital stock had a
material interest other than the transactions described below.
Sales of Preferred Stock to Insiders
Since inception in March 1995, we have issued shares of preferred stock, in
private placement transactions to the following persons who are executive
officers, directors or principal stockholders of Agile:
<TABLE>
<CAPTION>
Series A Series B Series C Series D Series E Series F
Preferred Preferred Preferred Preferred Preferred Preferred
Investor Stock Stock Stock Stock Stock Stock
- -------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Entities affiliated with
Sequoia Capital........ 150,000 -- 2,275,000 322,000 334,672 148,148
Entities affiliated with
Mohr, Davidow
Ventures............... 30,000 2,825,000 1,225,000 448,000 565,424 74,074
Entities affiliated with
Accel Partners......... 140,000 -- -- 580,000 85,893 222,222
Entities affiliated with
James L. Patterson..... -- -- 75,000 -- 14,011 14,816
Affiliates of Bryan D.
Stolle................. 185,000 -- -- -- -- --
Thomas P. Shanahan...... 85,000 -- -- -- -- --
</TABLE>
The preferred stock purchased by these directors and affiliates was
purchased on the same terms and conditions as the preferred stock purchased by
other investors. The preferred stock is convertible into common stock at the
rate of one share of common stock for each share of preferred stock.
In April, 1995, we issued a total of 1,150,000 shares of Series A preferred
stock and in May 1995 we issued 82,500 shares of Series A Preferred Stock at a
purchase price of $.10 per share. The purchasers of the Series A Preferred
Stock originally included various private individuals including Thomas P.
Shanahan, Chief Financial Officer and a director of Agile, and relatives of
Bryan Stolle, Chairman and Chief Executive Officer of Agile. Subsequently,
entities affiliated with Sequoia Capital, Mohr, Davidow Ventures and Accel
Partners purchased the shares of Series A preferred stock reflected in the
table above from some of these private individuals.
In June 1995, we issued a total of 2,937,995 shares of Series B preferred
stock at a purchase price of $.354 per share. In January 1996, we issued
3,500,000 shares of Series C preferred stock and in October 1996 we issued
75,000 shares of Series C preferred stock at a purchase price of $1.16 per
share. In February 1997, we issued 1,350,000 shares of Series D preferred
stock at a purchase price of $2.964 per share. In November 1997, we issued
1,000,000 shares of Series E preferred stock at a purchase price of $5.00 per
share. In June 1998, we issued 1,777,778 shares of Series F preferred stock at
a purchase price of $6.75 per share.
The entities affiliated with Sequoia Capital are together considered a
greater than 5% stockholder of Agile. Mr. Michael Moritz, a director of Agile,
is a general partner of Sequoia Capital. Entities affiliated with Mohr,
Davidow are together considered a greater than 5% stockholder of Agile. Ms.
Nancy Schoendorf, a director of Agile, is a general partner of Mohr, Davidow.
Entities affiliated with Accel Investors are together considered a greater
than 5% stockholder of Agile. Mr. James Patterson is a director of Agile, Mr.
Bryan Stolle is Chairman and Chief Executive Officer of Agile, and Mr. Thomas
Shanahan is Chief Financial Officer and a director of Agile.
Loans to Executive Officers and Directors
On November 17, 1997, we loaned $31,800 to Carol B. Schrader, our Vice
President, Marketing, in connection with the purchase of 53,000 shares of our
common stock for $.60 per share upon exercise of stock options. The note
accrues interest at the rate of 6.14% per year and is due on November 17,
2001. On August 4, 1998, we loaned $51,700 to Ms. Schrader, in connection with
the purchase of 22,000 shares of our common stock for $2.35 per share upon
exercise of stock options. This note accrues interest at the rate of 5.68% per
year,
51
<PAGE>
and is due on August 4, 2003. On November 17, 1997, we loaned $5,475 to Eric
Schrader, an affiliate of Carol Schrader, in connection with the purchase of
9,125 shares of our common stock for $.60 per share upon exercise of stock
options. The note accrues interest at the rate of 6.14% per year and is due on
November 17, 2001. The principal amounts of each of these notes remain
outstanding. Each of these loans are full recourse and secured by a pledge of
the stock purchased upon exercise of the stock option.
On February 11, 1999, we loaned an aggregate of $15,250 to Mark Irvine, our
Vice President, North America Field Operations, under 3 promissory notes in
connection with his purchase of 12,000 shares of our common stock for prices
ranging from $1.00 to $1.75 per share upon the exercise of his stock options.
The notes accrue interest at the rate of 4.57% and are due on February 11,
2003. On October 6, 1997, November 14, 1997 and November 17, 1997, we loaned
Mr. Irvine an aggregate of $21,600 under 3 promissory notes in connection with
his purchase of 41,000 shares of our common stock for prices ranging from $.15
to .60 per share upon the exercise of his stock options. The notes accrue
interest at the rate of 6.14% and are due four years from the date of
issuance, from October 6, 2001 to November 15, 2001. The principal amounts of
each of these notes remain outstanding. Each of these loans are full recourse
and secured by the shares of common stock purchased by Mr. Irvine.
On June 1, 1999, we loaned $132,500 to Klaus-Dieter Laidig, one of our
directors, in connection with the purchase of 50,000 shares of our common
stock for $2.65 per share upon exercise of stock options. The note accrues
interest at the rate of 4.84% per year, and is due on June 1, 2004. The
principal amount of the note remains outstanding. This loan is full recourse
and is secured by a pledge of the stock purchased upon exercise of the stock
option.
All loan amounts outstanding as of April 30, 1999 are reflected as a
reduction of equity in the consolidated balance sheet.
Recent Option Grants
Subsequent to April 30, 1999, our board of directors granted to the
following executive officers options to purchase shares of common stock at an
exercise price per share of $5.00:
. Mr. Shanahan received an option to purchase 25,000 shares;
. Ms. Schrader received an option to purchase 45,000 shares; and
. Ms. Wise received an option to purchase 15,000 shares.
. Mr. Irvine received an option to purchase 12,000 shares.
. Mr. Schott received an option to purchase 100,000 shares.
Indemnification
We intend to enter into indemnification agreements with each of our
directors and officers. These indemnification agreements will require us to
indemnify our directors and officers to the fullest extent permitted by
Delaware law. See "Management--Limitation of Liability and Indemnification."
Conflict of Interest Policy
We believe that all transactions with our directors, officers and principal
stockholders described above were made on terms no less favorable to us than
could have been obtained from unaffiliated third parties. A majority of the
disinterested outside directors on our board of directors approves all
transactions between Agile and our officers, directors, principal stockholders
and their affiliates. Any similar transactions will continue to be on terms no
less favorable to us than we could have obtained from unaffiliated third
parties.
52
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of our common stock
as of April 30, 1999 and as adjusted to reflect the sale of the shares of
common stock offered hereby by:
. the chief executive officer, each of the executive officers named in the
summary compensation table and each of our directors;
. all executive officers and directors as a group; and
. each person or entity who is known by us to beneficially own more than 5%
of our outstanding common stock.
Unless otherwise indicated, the address for each of the named individuals
is c/o Agile Software Corporation, One Almaden Boulevard, San Jose, California
95113-2211. Except as otherwise indicated, and subject to applicable community
property laws, we believe that the persons named in the table have sole voting
and investment power with respect to all shares of common stock shown as
beneficially owned by them.
Applicable percentage ownership in the table is based on 16,073,298 shares
of common stock outstanding as of April 30, 1999, and 19,805,340 shares
outstanding immediately following the completion of this offering, assuming
the underwriters' over-allotment option is not exercised, the exercise of a
warrant to purchase 60,000 shares of preferred stock and the conversion of all
shares of preferred stock into common stock and the issuance of 672,042 shares
of common stock, based on an assumed initial public offering price of $16.00
less anticipated underwriters' commissions and discounts to two corporate
investors. Of the total shares outstanding, 963,606 shares are subject to our
right of repurchase. Beneficial ownership is determined under the rules and
regulations of the Securities and Exchange Commission. Shares of common stock
subject to options or warrants that are presently exercisable or exercisable
within 60 days of April 30, 1999 are deemed outstanding for the purpose of
computing the percentage ownership of the person or entity holding options or
warrants, but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person or entity. Entries denoted by an
asterisk represent an amount less than 1%.
<TABLE>
<CAPTION>
Shares Percentage
Beneficially Beneficially
Owned Owned
------------ -----------------
Prior to After
Name and Address of Beneficial Owner Number Offering Offering
- ------------------------------------ ------------ -------- --------
<S> <C> <C> <C>
Bryan D. Stolle(1)............................... 1,020,500 6.3% 5.2%
Thomas P. Shanahan(2)............................ 410,000 2.5 2.1
Dorothy O. Wise(3)............................... 228,000 1.4 1.2
Carol B. Schrader(4)............................. 135,000 * *
Mark C. Irvine(5)................................ 103,000 * *
Gregory G. Schott(6)............................. 100,000 * *
James L. Patterson(7)............................ 153,827 1.0 *
Nancy J. Schoendorf(8)........................... 5,280,493 32.9 26.7
c/o Mohr, Davidow Ventures
2775 Sand Hill Road
Building 1, Suite 240
Menlo Park, CA 94025
Michael Moritz(9)................................ 3,229,820 20.0 16.3
c/o Sequoia Capital
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
Klaus-Dieter Laidig(10).......................... 50,000 * *
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
Shares Percentage
Beneficially Beneficially
Owned Owned
------------ -----------------
Prior to After
Name and Address of Beneficial Owner Number Offering Offering
- ------------------------------------ ------------ -------- --------
<S> <C> <C> <C>
Entities associated with Mohr Davidow
Ventures(11).................................. 5,280,493 32.9% 26.7%
2775 Sand Hill Road
Building 1, Suite 240
Menlo Park, CA 94025
Entities associated with Sequoia Capital(12)... 3,229,820 20.0 16.3
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
Entities associated with Accel Partners(13).... 1,028,115 6.4 5.2
428 University Avenue
Palo Alto, CA 94301
All executive officers and directors
as a group (10 persons)(14).................. 10,710,640 65.0 53.0
</TABLE>
- --------
(1) Includes 18,750 shares held by Bryan D. Stolle as Custodian for Jacob N.
Stolle under UCAUTMA and 18,750 shares held by Bryan D. Stolle as
Custodian for Wilson E. Stolle under UCAUTMA. Also includes
175,000 shares subject to options that are immediately exercisable.
(2) Includes 81,563 shares subject to a right of repurchase in favor of Agile
which lapses over time. Also includes 15,000 shares held by Thomas P.
Shanahan as Custodian for Thomas A. Shanahan, 15,000 shares held by
Thomas P. Shanahan as Custodian for Kelly J. Shanahan, and 15,000 shares
held by Thomas P. Shanahan as Custodian for Patrick L. Shanahan, and
340,000 shares held by Thomas P. Shanahan and Robyn Lynn Shanahan,
Trustees of the Shanahan Family Trust u/d/t dated April 15, 1997. Also
includes 25,000 shares subject to options that are immediately
exercisable.
(3) Includes 70,000 shares subject to a right of repurchase in favor of Agile
which lapses over time. Also includes 25,000 shares subject to options
that are immediately exercisable.
(4) Includes 55,125 shares subject to a right of repurchase in favor of Agile
which lapses over time. Also includes 10,000 shares subject to options
that are immediately exercisable and 50,000 shares held by Eric Schrader.
(5) Includes 45,373 shares subject to a right of repurchase in favor of Agile
which lapses over time and 15,000 shares subject to options that are
immediately exercisable. Also includes 6,000 shares held by Mark C.
Irvine as Custodian for Adriana E. Irvine under UCAUTMA, 5,000 shares
held by Mark C. Irvine as Custodian for Conor M. Irvine under UCAUTMA,
and 4,000 shares held by Mark C. Irvine as Custodian for Melissa E.
Irvine under UCAUTMA.
(6) Includes 100,000 shares subject to options that are immediately
exercisable.
(7) Includes 73,011 shares held directly by James L. Patterson, 34,800 shares
held by The Patterson Grandchildren's Trust, of which James L. Patterson
is trustee, and 14,816 shares held by The Patterson Family Trust, of
which James L. Patterson is trustee. Also includes 2,200 shares held by
Mark R. Patterson, 2,200 shares held by Matthew S. Patterson, 2,200
shares held by Michael J. Patterson, 12,300 shares held by Steven C.
Patterson Irrevocable Trust dated October 18, 1994, Mark R. Patterson,
Trustee, and 12,300 shares held by Paul R. Patterson Irrevocable Trust
dated October 18, 1994, Mark R. Patterson, Trustee, all of which Mr.
James Patterson disclaims beneficial ownership.
(8) Ms. Schoendorf is a general partner of Mohr, Davidow and is a director of
Agile. Represents 216,284 shares held by MDV IV Entrepreneurs Network
Fund, L.P., and 5,064,209 shares held by Mohr, Davidow Ventures IV, L.P.
Ms. Schoendorf disclaims beneficial ownership of shares held by these
entities, except to the extent of her proportional pecuniary interest
arising from her partnership interest in Mohr, Davidow.
54
<PAGE>
(9) Mr. Moritz is a general partner of the general partners of the entities
affiliated with Sequoia Capital and is a director of Agile. Represents
109,880 shares held by Sequoia 1995, 2,080 shares held by Sequoia 1997,
318,074 shares held by Sequoia Capital Growth Fund, 2,631,214 shares held
by Sequoia Capital VI, 20,302 shares held by Sequoia Technology Partners
III, 144,572 shares held by Sequoia Technology Partners VI, and 3,698
shares held by SQP 1997. SC VIII Management, LLC exercises investment and
voting power over the shares held by Sequoia 1997. Mr. Moritz disclaims
beneficial ownership of shares held by these entities, except to the
extent of his proportional pecuniary interest arising from his
partnership interest in the general partner of the general partners of
the entities affiliated with Sequoia Capital. Mr. Moritz does not hold
sole voting or investment power in any of these entities.
(10) Represents shares subject to options that are immediately exercisable.
(11) Represents 216,284 shares held by MDV IV Entrepreneurs Network Fund,
L.P., and 5,064,209 shares held by Mohr, Davidow Ventures IV, L.P. Ms.
Schoendorf, a director of Agile, is a general partner of Mohr, Davidow.
(12) Represents 109,880 shares held by Sequoia 1995, 2,080 shares held by
Sequoia 1997, 318,074 shares held by Sequoia Capital Growth Fund,
2,631,214 shares held by Sequoia Capital VI, 20,302 shares held by
Sequoia Technology Partners III, 144,572 shares held by Sequoia
Technology Partners VI, and 3,698 shares held by SQP 1997. SC VIII
Management, LLC exercises investment and voting power over the shares
held by Sequoia 1997. Mr. Moritz, a director of Agile, is a general
partner of the general partners of the entities affiliated with Sequoia
Capital.
(13) Represents 828,661 shares held by Accel V L.P., 111,036 shares held by
Accel Internet/Strategic Technology Fund L.P., 49,350 shares held by
Accel Investors '96 L.P., 16,450 shares held by Accel Keiretsu V L.P and
22,618 shares held by Ellmore C. Patterson Partners.
(14) Shares listed as held by all directors and executive officers as a group
include 400,000 shares subject to options that are immediately
exercisable.
55
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Upon completion of this offering, our authorized capital stock will consist
of 100,000,000 shares of common stock and 10,000,000 shares of preferred
stock.
The following is a summary of our capital stock. Our certificate of
incorporation and bylaws, to be effective after the closing of this offering,
and the provisions of applicable law provide further information about our
capital stock.
Common Stock
As of April 30, 1999 there were 4,200,025 shares of common stock
outstanding held of record by approximately 125 stockholders. Subject to
preferences that may be applicable to any preferred stock outstanding at the
time, the holders of outstanding shares of common stock are entitled to the
following rights:
. to receive dividends out of assets legally available therefor at such
times and in such amounts as the board from time to time may determine in
its sole discretion;
. one vote for each share held on all matters submitted to a vote of
stockholders; and
. upon liquidation, dissolution or winding-up of Agile, to share ratably in
all assets remaining after payment of liabilities and the liquidation of
any preferred stock.
Cumulative voting for the election of directors is not authorized by our
certificate of incorporation, which means that the holders of a majority of
the shares voted can elect all of the directors then standing for election.
The common stock is not entitled to preemptive rights and is not subject to
conversion or redemption. Each outstanding share of common stock is, and all
shares of common stock to be outstanding upon completion of this offering will
be, upon payment, duly and validly issued, fully paid and nonassessable. The
rights, preferences and privileges of the holders of common stock are subject
to, and may be adversely affected by, the rights of the holders of any shares
of preferred stock which we may issue in the future.
Preferred Stock
Upon completion of this offering, all outstanding shares of preferred stock
will be converted on a one-to-one basis into 11,933,273 shares of common
stock. However, following this conversion, under our certificate of
incorporation, the board of directors will have the authority, without further
action by the stockholders, to designate and issue up to 10,000,000 shares of
preferred stock in one or more series. The board of directors can fix the
rights, preferences and privileges of the shares of each series and any
qualifications, limitations or restrictions on these shares.
The board of directors may authorize the issuance of preferred stock with
voting or conversion rights that could adversely affect the voting power or
other rights of the holders of common stock. The issuance of preferred stock,
while providing flexibility in connection with possible acquisitions and other
corporate purposes could, under certain circumstances, have the effect of
delaying, deferring or preventing a change in control of Agile. We have no
current plans to issue any shares of preferred stock.
Warrants
In September 1995, Agile issued a warrant to Comdisco, Inc. to purchase an
aggregate of 41,111 shares of Series B preferred stock at an exercise price of
$.354 per share. The warrant may be exercised at any time within seven years
after issuance.
In March 1996, Agile issued a warrant to Comdisco, Inc. to purchase an
aggregate of 35,313 shares of Series C preferred stock at an exercise price of
$1.16 per share. The warrant may be exercised at any time within seven years
after issuance.
56
<PAGE>
In February 1997, Agile issued a warrant to Comdisco, Inc. to purchase an
aggregate of 17,828 shares of Series D preferred stock at an exercise price of
$2.964 per share. The warrant may be exercised at any time within seven years
after issuance.
In November 1997, Agile issued a warrant to Comdisco, Inc. to purchase an
aggregate of 4,049 shares of Series D preferred stock at an exercise price of
$2.964 per share. The warrant may be exercised at any time within seven years
after issuance.
In February 1999, Agile issued a warrant to Comdisco, Inc. to purchase an
aggregate of 60,000 shares of Series F preferred stock at an exercise price of
$6.75 per share. The warrant, if not exercised prior to the completion of this
offering, will expire.
Registration Rights of Some of Our Stockholders
Following this offering, the holders of approximately 11,933,273 shares of
preferred stock convertible into 11,933,273 shares of common stock and 98,301
shares of stock issuable upon exercise of warrants will have certain rights to
register those shares under the Securities Act and an amended and restated
rights agreement. Subject to certain limitations in the registration rights
agreement, the holders of at least 30% of these shares, or a lesser percent if
the anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $10,000,000, may require, on two occasions, that
Agile use its best efforts to register those shares for public resale. If
Agile registers any of its common stock for its own account or for the account
of other security holders, the holders of those shares are entitled to include
their shares of common stock in the registration, subject to the ability of
the underwriters to limit the number of shares included in the offering. Any
holder or holders of those shares may also require Agile to register all or a
portion of their registrable securities in a registration statement on Form S-
3 when Agile is eligible to use that form, provided, among other limitations,
that the proposed aggregate price to the public is at least $500,000 and that
Agile has not effected two of these registrations in any 12-month period.
Agile will pay all fees, costs and expenses of these registrations, other than
underwriting discounts and commissions. These rights terminate on the earlier
of the date three years following the consummation of this public offering,
and the date when all shares of a holder can be sold by the holder under Rule
144 of the Securities Act during any 90 day period.
Dell and Flextronics will have the right to include the 672,042 shares to
be purchased by them concurrently with this offering, based upon an assumed
initial offering price of $16.00, less anticipated underwriting' discounts and
commissions, in subsequent registration by Agile of its common stock for its
own account or for the account other securities holders.
All of the registration rights described above are subject to conditions
and limitations, among them the right of the underwriters in any underwritten
offering to limit the number of shares of common stock to be included in a
registration. Registrations of any shares of common stock held by holders with
registration rights would result in these shares being freely tradeable
without restriction under the Securities Act upon the effective date of the
registration.
Antitakeover Effects of Delaware Law and Provisions of Our Certificate of
Incorporation and Bylaws
Delaware Takeover Statute
We are subject to Section 203 of the Delaware General Corporation Law. This
provision generally prohibits any Delaware corporation from engaging in any
business combination with any interested stockholder for a period of three
years following the date the stockholder became an interested stockholder,
unless:
. prior to that date the board of directors approved either the business
combination or the transaction that resulted in the stockholder becoming
an interested stockholder;
. upon completion of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock outstanding at the time the transaction
began; or
57
<PAGE>
. on or following that date, the business combination is approved by the
board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock that is not owned by the interested stockholder.
Section 203 defines a business combination to include:
. any merger or consolidation involving the corporation and the interested
stockholder;
. any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholder;
. subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the corporation
to the interested stockholder;
. any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or series of
the corporation beneficially owned by the interested stockholder; or
. the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
In general, Section 203 defines an interested stockholder as any entity or
person beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
Certificate of Incorporation and Bylaws
Upon filing after the closing of this offering, our certificate of
incorporation will provide that all stockholder actions must be effected at a
duly called meeting and not by a consent in writing. The bylaws provide that,
except as otherwise required by law or by our certificate of incorporation,
special meetings of the stockholders can only be called by a resolution
adopted by a majority of the board of directors, or by the president or at the
request of stockholders holding at least 10% of our capital stock. Our
certificate of incorporation and bylaws also provide that our board of
directors will be divided into three classes, with each class serving
staggered three-year terms. The classification system of electing directors
may tend to discourage a third party from making a tender offer or otherwise
attempting to obtain control of us and may maintain the incumbency of our
board of directors, as the classification of the board of directors generally
increases the difficulty of replacing a majority of the directors. Our
certificate of incorporation authorizes undesignated preferred stock, which
makes it possible for the board of directors to issue preferred stock with
voting or other rights or preferences that could discourage potential
acquisition proposals and could delay or prevent a change in our control or
management. The amendment of any of these provisions would require approval by
holders of at least two-thirds of the outstanding common stock.
These provisions are designed to reduce our vulnerability to an unsolicited
acquisition proposal, and to enhance the likelihood of continuity and
stability in the composition of our board of directors. These provisions are
also designed to discourage tactics that may be used in proxy fights. However,
these provisions could have the effect of discouraging others from making
tender offers for our shares and, as a consequence, they may also inhibit
fluctuations in the market price of our shares that could result from rumored
or actual takeover attempts.
Transfer Agent and Registrar
The transfer agent and registrar for Agile's common stock is Boston
EquiServe.
Listing
Agile has applied to list its common stock on the Nasdaq National Market
under the trading symbol "AGIL."
58
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has not been a public market for our common
stock. Future sales of substantial amounts of our common stock in the public
market, or the possibility of these sales, could cause the trading price of
our common stock to decline.
Upon completion of this offering, we will have outstanding 19,805,340
shares of common stock, assuming no exercise of the underwriters' over-
allotment option and no exercise of outstanding options to purchase common
stock after April 30, 1999. Of these shares, the 3,000,000 shares sold in this
offering through the underwriters will be freely tradeable without restriction
or further registration under the Securities Act, except for any shares
purchased by our "affiliates," as defined in Rule 144 under the Securities
Act, which would be subject to the limitations and restrictions described
below. Shares purchased by affiliates will also be restricted from sale until
180 days after the date of this prospectus pursuant to lock-up agreements
between these affiliates and the underwriters.
The remaining 16,805,340 shares of common stock outstanding upon completion
of this offering will be "restricted securities" as defined in Rule 144. These
securities may be sold in the public market only if registered or if they
qualify for an exemption from registration under Rules 144 or 701 under the
Securities Act, which are summarized below. Sales of these restricted
securities in the public market, or the availability of these shares for sale,
could cause the trading price of our common stock to decline.
The amounts of restricted securities that will be available for sale in the
public market, subject in some cases to the volume limitations and other
restrictions of Rule 144, will be as follows:
<TABLE>
<CAPTION>
Days after Date of Approximate Shares
this Prospectus Eligible for Future Sale Comment
---------------------- ------------------------ -------------------------------------------------------------
<S> <C> <C>
On Effectiveness........ 3,000,000 Freely tradeable shares sold in offering
180 Days................ 15,224,763 180 day lock-up expires; shares salable under Rule 144 or 701
More than 180 Days...... 1,580,577 Restricted securities held for one year or less
</TABLE>
The 672,042 shares to be sold to Dell Computer Corporation and Flextronics
International Ltd. will be "restricted securities" and the one year holding
period for these shares will expire one year from the date of sale, which we
anticipate will be in August 2000.
Shares issued upon exercise of options granted by us prior to the date of
this prospectus will be available for sale in the public market under Rule 701
of the Securities Act. Rule 701 permits resales of these shares in reliance
upon Rule 144 but without compliance with various restrictions, including the
holding period requirement, imposed under Rule 144. In general, under Rule
144, beginning 90 days after the date of this prospectus, a person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
for at least one year would be entitled to sell within any three-month period
a number of shares not to exceed the greater of (1) one percent of the then
outstanding shares of common stock or (2) the average weekly trading volume of
our common stock during the four calendar weeks preceding the filing of a Form
144 with respect to the sale. Sales under Rule 144 are also subject to manner
of sale and notice requirements, as well as to the availability of current
public information about us. Under Rule 144(k), a person who is not deemed to
have been an affiliate at any time during the 90 days preceding a sale and who
has beneficially owned the shares proposed to be sold for at least two years
is entitled to sell the shares without complying with the manner of sale,
public information, volume limitation or notice provisions of Rule 144.
We have reserved an aggregate of 5,375,000 shares of common stock for
issuance pursuant to our 1995 Stock Option Plan. As of April 30, 1999, options
to purchase an aggregate of 1,159,725 shares of common stock were outstanding
and 2,245,025 shares remained available for grant under our 1995 Stock Option
Plan. We intend to file registration statements on Form S-8 under the
Securities Act approximately 90 days after the date
59
<PAGE>
of this prospectus to register all of the shares of common stock issued or
reserved for issuance under our 1995 Stock Option Plan and 1999 Employee Stock
Purchase Plan. Shares of common stock issued under these plans, after the
filing of related registration statements, will be freely tradable in the
public market, subject in the case of the holders to the Rule 144 limitations
applicable to our affiliates, lock-up agreements with the underwriters and
vesting restrictions imposed by us.
Our officers, directors and substantially all other stockholders have
agreed with Morgan Stanley & Co. Incorporated not to sell or otherwise dispose
of any of their shares for a period of 180 days after the date of the offering
without the consent of Morgan Stanley & Co. Incorporated.
60
<PAGE>
UNDERWRITERS
Under the terms and subject to the conditions contained in the underwriting
agreement dated the date of this prospectus, the underwriters named below, for
whom Morgan Stanley & Co. Incorporated, Deutsche Bank Securities Inc. and
Hambrecht & Quist LLC are acting as representatives, have severally agreed to
purchase, and we have agreed to sell to them, severally, the respective number
of shares of common stock set forth opposite the names of the underwriters
below:
<TABLE>
<CAPTION>
Number
Name of Shares
---- ---------
<S> <C>
Morgan Stanley & Co. Incorporated................................
Deutsche Bank Securities Inc.....................................
F Hambrecht & Quist LLC............................................
----
Total..........................................................
====
</TABLE>
The underwriters are offering the shares subject to their acceptance of the
shares from us and subject to prior sale. The underwriting agreement provides
that the obligations of the several underwriters to pay for and accept
delivery of the shares of common stock offered hereby are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The underwriters are obligated to take and pay for all of the
shares of common stock offered hereby, other than those covered by the over-
allotment option described below, if any such shares are taken.
The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price set forth on the
cover page hereof and part to certain dealers at a price that represents a
concession not in excess of $ a share under the public offering price. Any
underwriters may allow, and such dealers may reallow, a concession not in
excess of $ a share to other underwriters or to certain other dealers.
After the initial offering of the shares of common stock, the offering price
and other selling terms may from time to time be varied by the representatives
of the underwriters.
We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus, to purchase up to an aggregate of 450,000
additional shares of common stock at the public offering price set forth on
the cover page of this prospectus, less underwriting discounts and
commissions. The underwriters may exercise this option solely for the purpose
of covering over-allotments, if any, made in connection with the offering of
the shares of common stock offered by the prospectus. To the extent this
option is exercised, each underwriter will become obligated, subject to
certain conditions, to purchase approximately the same percentage of
additional shares of common stock as the number set forth next to each
underwriters name in the preceding table bears to the total number of shares
of common stock set forth next to the names of all underwriters in the
preceding table.
At our request, the underwriters have reserved up to 297,500 shares of
common stock to be sold in the offering and offered hereby for sale, at the
public offering price, to various business associates and persons related to
us. The number of shares of commons stock available for sale to the general
public will be reduced to the extent these individuals purchase these reserved
shares. Any reserved shares which are not so purchased will be offered by the
underwriters to the general public on the same basis as the other shares
offered by this prospectus.
61
<PAGE>
Agile and our officers, directors and substantially all of our stockholders
has agreed that, without the prior written consent of Morgan Stanley & Co.
Incorporated on behalf of the underwriters, or otherwise during the period
ending 180 days after the date of this prospectus, it will not:
. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise dispose of, directly or
indirectly, any shares of common stock or any securities convertible into
or exercisable or exchangeable for common stock;
. enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
common stock; or
. whether any transaction described above is to be settled by delivery of
common stock or such other securities, in cash or by alternative payment.
The restrictions described in the previous paragraph do not apply to:
. the sale of shares to the underwriters;
. the issuance by Agile of shares of common stock upon the exercise of an
option or a warrant or the conversion of a security outstanding on the
date of this prospectus which is described in the prospectus;
. transactions by any person other than Agile relating to shares of common
stock or other securities acquired in open market transactions after the
completion of the offering of the shares; or
. the grant of options to purchase shares of common stock pursuant to our
existing employee benefit plans.
The underwriters have informed us that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
common stock offered by them.
We have submitted an application to have our common stock approved for
quotation on the Nasdaq National Market under the symbol "AGIL."
In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock. Specifically, the underwriters may over-allot in
connection with the offering, creating a short position in the common stock
for their own account. In addition, to cover over-allotments or to stabilize
the price of the common stock, the underwriters may bid for, and purchase,
shares of common stock in the open market. Finally, the underwriting syndicate
may reclaim selling concessions allowed to an underwriter or a dealer for
distributing the common stock in the offering if the syndicate repurchases
previously distributed shares of common stock in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the common
stock above independent market levels. The underwriters are not required to
engage in these activities and may end any of these activities at any time.
We and the underwriters have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act.
On June 4, 1998, we sold shares of our Series F Preferred Stock in a
private placement. In this private placement, entities associated with
Hambrecht & Quist LLC, one of the underwriters in this offering, purchased
148,148 shares of Series F Preferred Stock, which are convertible into 148,148
shares of common stock, for $999,999, or $6.75 per share. These entities
purchased these shares on the same terms as the other investors in the private
placement.
Concurrent with the sale of the shares in this offering, Agile will sell
directly to each of Dell Computer Corporation and Flextronics International
Ltd. $5.0 million of common stock (in a private placement). The sale price
will be the public offering price less anticipated underwriting discounts and
commissions. Dell and Flextronics have each agreed to execute lockup
agreements with Morgan Stanley & Co. in the same form as other stockholders.
62
<PAGE>
Pricing of the Offering
Prior to this offering, there has been no public market for the shares of
our common stock. Consequently, the public offering price for the shares of
common stock will be determined by negotiations between Agile and the
representatives of the underwriters. Among the factors to be considered in
determining the public offering price will be:
. our record of operations, our current financial position and future
prospects,
. the experience of our management,
. sales, earnings and other financial and operating information in recent
periods, and
. the price-earnings ratios, price-sales ratios, market prices of
securities and certain financial and operating information of companies
engaged in activities similar to ours.
The estimated initial public offering price range indicated on the cover
page of this prospectus is subject to change as a result of market conditions
and other factors.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for Agile by Gray Cary Ware & Freidenrich LLP, Palo Alto, California.
Certain legal matters in connection with the offering will be passed upon for
the underwriters by Fenwick & West LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of Agile Software Corporation as of
April 30, 1998 and 1999 and for each of the three years in the period ended
April 30, 1999 included in this Prospectus have been so included in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
WHERE TO FIND ADDITIONAL INFORMATION ABOUT AGILE
Agile has filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the shares of common stock offered by this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the
registration statement and the exhibits and schedules filed with it. For
further information with respect to Agile and the common stock, reference is
made to the registration statement and the exhibits and schedules filed with
it. With respect to statements contained in this prospectus regarding the
contents of any agreement or any other document, in each instance, reference
is made to the copy of such agreement or other document filed as an exhibit to
the registration statement. Each statement is qualified in all respects by the
exhibits and schedules.
For further information with respect to Agile and the common stock,
reference is made to the registration statement and its exhibits and
schedules. You may read and copy any document Agile files at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information about the public
reference rooms. Agile's SEC filings are also available to the public from the
SEC's Web site at http://www.sec.gov.
Upon completion of this offering, Agile will become subject to the
information and periodic reporting requirements of the Exchange Act, and will
file periodic reports, proxy statements and other information with the SEC.
These periodic reports, proxy statements and other information will be
available for inspection and copying at the SEC's public reference rooms and
the SEC's Web site, which is described above.
63
<PAGE>
AGILE SOFTWARE CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants........................................... F-2
Consolidated Balance Sheet.................................................. F-3
Consolidated Statement of Operations........................................ F-4
Consolidated Statement of Stockholders' Equity.............................. F-5
Consolidated Statement of Cash Flows........................................ F-6
Notes to Consolidated Financial Statements.................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The reincorporation described in Note 1 to the consolidated financial
statements has not been consummated at May 28, 1999. When it has been
consummated, we will be in a position to furnish the following report:
"To the Board of Directors and Stockholders of
Agile Software Corporation
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of stockholders' equity and
of cash flows present fairly, in all material respects, the financial
position of Agile Software Corporation and its subsidiary (the "Company")
at April 30, 1998 and 1999, and the results of their operations and their
cash flows for each of the three years in the period ended April 30, 1999
in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above."
PricewaterhouseCoopers LLP
San Jose, California
May 28, 1999
F-2
<PAGE>
AGILE SOFTWARE CORPORATION
CONSOLIDATED BALANCE SHEET
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
April 30,
------------------
1998 1999
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 2,160 $ 10,003
Accounts receivable, net of allowance for doubtful
accounts of $379 and $495, respectively................. 3,384 4,980
Other current assets..................................... 98 624
-------- --------
Total current assets....................................... 5,642 15,607
Property and equipment, net................................ 1,694 1,973
Other assets............................................... 195 368
-------- --------
$ 7,531 $ 17,948
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank line of credit borrowings........................... $ 1,000 $ --
Accounts payable......................................... 698 1,287
Accrued expenses and other liabilities................... 1,227 3,618
Deferred revenue......................................... 3,146 5,107
Current portion of capital lease obligations............. 501 735
Current portion of notes payable......................... -- 686
-------- --------
Total current liabilities.................................. 6,572 11,433
Capital lease obligations, noncurrent...................... 743 871
Notes payable, noncurrent.................................. 39 2,353
-------- --------
7,354 14,657
-------- --------
Commitments and contingencies (Note 7)
Stockholders' equity:
Convertible Preferred Stock, $.001 par value; 25,000
shares authorized; 10,096 and 11,874 shares issued and
outstanding............................................. 10 12
Common Stock, $.001 par value; 100,000 shares authorized;
3,998 and 4,200 shares issued and outstanding........... 4 4
Additional paid-in capital............................... 17,868 34,814
Notes receivable from stockholders....................... (363) (748)
Unearned stock compensation (Note 6)..................... (2,237) (4,258)
Accumulated deficit...................................... (15,105) (26,533)
-------- --------
Total stockholders' equity................................. 177 3,291
-------- --------
$ 7,531 $ 17,948
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
AGILE SOFTWARE CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended April 30,
--------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Revenues:
License.......................................... $ 1,143 $ 6,102 $ 10,859
Professional services............................ 187 1,385 3,665
Maintenance...................................... 22 516 2,283
------- ------- --------
Total revenues................................. 1,352 8,003 16,807
------- ------- --------
Cost of revenues:
License.......................................... 113 543 819
Professional services............................ 88 1,347 3,823
Maintenance...................................... 65 278 1,343
------- ------- --------
Total cost of revenues......................... 266 2,168 5,985
------- ------- --------
Gross profit....................................... 1,086 5,835 10,822
------- ------- --------
Operating expenses:
Sales and marketing.............................. 2,149 8,070 13,495
Research and development......................... 2,510 3,788 4,742
General and administrative....................... 1,333 1,995 1,938
Amortization of stock compensation (Note 6)...... -- 856 2,253
------- ------- --------
Total operating expenses....................... 5,992 14,709 22,428
------- ------- --------
Loss from operations............................... (4,906) (8,874) (11,606)
Interest and other income.......................... 134 95 447
Interest expense................................... (64) (163) (269)
------- ------- --------
Net loss........................................... $(4,836) $(8,942) $(11,428)
======= ======= ========
Net loss per share:
Basic and diluted................................ $ (3.72) $ (4.20) $ (3.87)
======= ======= ========
Weighted average shares.......................... 1,300 2,129 2,952
======= ======= ========
Unaudited pro forma net loss per share:
Basic and diluted................................ $ (.78)
========
Weighted average shares.......................... 14,668
========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
AGILE SOFTWARE CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Convertible
Preferred Notes
Stock Common Stock Additional Receivable Unearned
------------- -------------- Paid-In From Stock Accumulated
Shares Amount Shares Amount Capital Stockholders Compensation Deficit Total
------ ------ ------ ------ ---------- ------------ ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at April 30,
1996................... 7,671 $ 8 2,215 $ 2 $ 5,214 $ (40) $ -- $ (1,327) $ 3,857
Issuance of Common Stock
for cash............... -- -- 52 -- 3 -- -- -- 3
Issuance of Common Stock
on exercise of
options................ -- -- 564 1 64 -- -- -- 65
Issuance of Common Stock
in exchange for
services............... -- -- 12 -- 2 -- -- -- 2
Issuance of Series C
Convertible Preferred
Stock at $1.16 per
share, net of issuance
costs.................. 75 -- -- -- 83 -- -- -- 83
Issuance of Series D
Convertible Preferred
Stock at $2.964 per
share, net of issuance
costs.................. 1,350 1 -- -- 3,979 -- -- -- 3,980
Net loss................ -- -- -- -- -- -- -- (4,836) (4,836)
------ --- ----- --- ------- ----- ------- -------- --------
Balance at April 30,
1997................... 9,096 9 2,843 3 9,345 (40) -- (6,163) 3,154
Repurchase of unvested
Common Stock........... -- -- (48) -- (18) 15 -- -- (3)
Issuance of Common Stock
on exercise of
options................ -- -- 255 -- 71 -- -- -- 71
Issuance of Common Stock
in exchange for notes
receivable on exercise
of options............. -- -- 772 1 293 (294) -- -- --
Issuance of restricted
Common Stock in
exchange for notes
receivable............. -- -- 176 -- 106 (106) -- -- --
Repayment of notes
receivable............. -- -- -- -- -- 62 -- -- 62
Issuance of Series E
Convertible Preferred
Stock at $5.00 per
share, net of issuance
costs.................. 1,000 1 -- -- 4,978 -- -- -- 4,979
Unearned stock
compensation (Note 6).. -- -- -- -- 3,093 -- (3,093) -- --
Amortization of unearned
compensation (Note 6).. -- -- -- -- -- -- 856 -- 856
Net loss................ -- -- -- -- -- -- -- (8,942) (8,942)
------ --- ----- --- ------- ----- ------- -------- --------
Balance at April 30,
1998................... 10,096 10 3,998 4 17,868 (363) (2,237) (15,105) 177
Repurchase of unvested
Common Stock........... -- -- (120) -- (38) 32 -- -- (6)
Issuance of Common Stock
on exercise of
options................ -- -- 56 -- 28 -- -- -- 28
Issuance of Common Stock
in exchange for notes
receivable on exercise
of options............. -- -- 259 -- 419 (419) -- -- --
Issuance of restricted
Common Stock in
exchange for notes
receivable............. -- -- 7 -- 19 (19) -- -- --
Repayment of notes
receivable............. -- -- -- -- -- 21 -- -- 21
Issuance of Series F
Convertible Preferred
Stock at $6.75 per
share, net of issuance
costs.................. 1,778 2 -- -- 11,970 -- -- -- 11,972
Issuance of warrants.... -- -- -- -- 274 -- -- -- 274
Unearned stock
compensation (Note 6).. -- -- -- -- 4,274 -- (4,274) -- --
Amortization of unearned
compensation (Note 6).. -- -- -- -- -- -- 2,253 -- 2,253
Net loss................ -- -- -- -- -- -- -- (11,428) (11,428)
------ --- ----- --- ------- ----- ------- -------- --------
Balance at April 30,
1999................... 11,874 $12 4,200 $ 4 $34,814 $(748) $(4,258) $(26,533) $ 3,291
====== === ===== === ======= ===== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
AGILE SOFTWARE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended April 30,
--------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss......................................... $(4,836) $(8,942) $(11,428)
Adjustments to reconcile net loss to net cash
used in operating activities:
Provision for doubtful accounts................ 100 277 155
Depreciation................................... 220 673 1,180
Amortization of stock compensation (Note 6).... -- 856 2,253
Warrant expense................................ -- -- 21
Changes in assets and liabilities:
Accounts receivable.......................... (838) (2,900) (1,751)
Other assets, current and non-current........ (90) (89) (446)
Accounts payable............................. 370 313 589
Accrued expenses and other liabilities....... 270 912 2,391
Deferred revenue............................. 607 2,485 1,961
------- ------- --------
Net cash used in operating activities...... (4,197) (6,415) (5,075)
------- ------- --------
Cash flows from investing activities:
Purchase of short-term investments............... (387) -- --
Proceeds from sale of short-term investments..... -- 3,023 --
Acquisition of property and equipment............ (341) (420) (459)
------- ------- --------
Net cash provided by (used in) investing
activities................................ (728) 2,603 (459)
------- ------- --------
Cash flows from financing activities:
Proceeds from bank line of credit................ -- 2,230 1,900
Repayment of bank line of credit................. -- (1,230) (2,900)
Repayment of capital lease obligations........... (145) (382) (638)
Proceeds from notes payable...................... 39 -- 3,000
Repayment of notes payable....................... (24) (24) --
Proceeds from issuance of Common Stock, net of
repurchase...................................... 68 68 22
Repayment of notes receivable from stockholders.. -- 62 21
Proceeds from issuance of Convertible Preferred
Stock, net...................................... 4,063 4,979 11,972
------- ------- --------
Net cash provided by financing activities.. 4,001 5,703 13,377
------- ------- --------
Net increase (decrease) in cash and cash
equivalents....................................... (924) 1,891 7,843
Cash and cash equivalents at beginning of period... 1,193 269 2,160
------- ------- --------
Cash and cash equivalents at end of period......... $ 269 $ 2,160 $ 10,003
======= ======= ========
Supplemental disclosure:
Cash paid during the year for interest........... $ 48 $ 138 $ 168
======= ======= ========
Noncash investing and financing activities:
Common Stock issued in exchange for notes
receivable...................................... $ -- $ 400 $ 438
======= ======= ========
Property and equipment acquired under capital
lease........................................... $ 743 $ 838 $ 1,000
======= ======= ========
Issuance of warrants............................. $ -- $ -- $ 274
======= ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1--The Company And Summary Of Significant Accounting Policies:
The Company
Agile Software Corporation (the "Company") was incorporated in California
on March 15, 1995 and is headquartered in San Jose, California. The Company is
a leading supplier of product content management software for use within and
among companies in a manufacturing supply chain over the Internet. The
Company's suite of software products is designed to improve the ability of all
members of the supply chain to communicate and collaborate with one another
about new or changing information concerning the manufacture, source or supply
of products or components.
Reincorporation
In June 1999, the Company's Board of Directors authorized the
reincorporation of the Company in the State of Delaware. As a result of the
reincorporation, the Company is authorized to issue 100,000,000 shares of
$.001 par value Common Stock and 25,000,000 shares of $.001 par value
Preferred Stock. The Board of Directors has the authority to issue the
undesignated Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof. The par value of the
Preferred Stock and shares of Common Stock and Preferred Stock authorized in
the consolidated balance sheet at April 30, 1998 and 1999 and in consolidated
statement of stockholders' equity for the each of the three years in the
period ended April 30, 1999 have been retroactively adjusted to reflect the
reincorporation.
Principles of consolidation and basis of presentation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Agile Software International Corporation. All
significant intercompany balances and transactions have been eliminated in
consolidation.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. The majority of the
Company's cash equivalents consist of money market funds.
Concentrations of credit risk
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and cash
equivalents, short-term investments and accounts receivable. Cash and cash
equivalents are deposited with financial institutions that management believes
are credit worthy.
The Company performs ongoing credit evaluations of its customers' financial
condition and, generally, requires no collateral from its customers. The
Company maintains an allowance for doubtful accounts receivable based on the
expected collectibility of accounts receivable. To date, the Company has not
experienced any material losses with respect to its accounts receivable.
F-7
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Fair value of financial instruments
The Company's financial instruments, including cash, cash equivalents,
short-term investments, accounts receivable, accounts payable, notes payable
and capital lease obligations are carried at cost, which approximates their
fair value because of the short-term maturity of these instruments.
Property and equipment
Property and equipment are recorded at cost. Depreciation is computed using
the straight-line method based upon the useful lives of the assets, which
range from two to five years, or the lease term of the respective assets.
Software development costs
Software development costs are included in research and development and are
expensed as incurred. After technological feasibility is established, material
software development costs are capitalized. The capitalized cost is then
amortized on a straight-line basis over the estimated product life, or in the
ratio of current revenues to total projected product revenues, whichever is
greater. To date, the period between achieving technological feasibility,
which the Company has defined as the establishment of a working model which
typically occurs when the beta testing commences, and the general availability
of such software has been short and software development costs qualifying for
capitalization have been insignificant. Accordingly, the Company has not
capitalized any software development costs.
Revenue recognition
The Company derives revenues from the license of software products under
software license agreements and from the delivery of professional services and
maintenance services. When contracts contain multiple elements, and vendor
specific objective evidence exists for all undelivered elements, the Company
accounts for the delivered elements in accordance with the "Residual Method"
prescribed by Statement of Position ("SOP") 98-9. License revenues are
recognized when persuasive evidence of an arrangement exists, the fee is fixed
or determinable, collectibility is probable, and delivery and customer
acceptance, if required under the terms of the contract, of the software
products have occurred. A provision for the estimated losses on fixed-price
contracts is recognized in the period in which the loss becomes known.
Allowances for estimated returns are provided upon product delivery. In
instances where vendor obligations remain, revenues are deferred until the
obligation has been satisfied. Revenues from professional services consist of
implementation and training services. Training revenues are recognized as the
services are performed. Implementation services are typically performed under
fixed-price contracts and accordingly, revenues are recognized upon customer
acceptance. Maintenance contracts include the right to unspecified upgrades on
a when-and-if available basis, and ongoing support. Maintenance revenues are
recognized ratably over the term of the maintenance contract, which is
generally twelve months.
During 1999, the Company has recognized revenues in accordance with
Statement of Position No. 97-2, "Software Revenue Recognition," and SOP 98-9,
"Modification of SOP 97-2, Software Revenue Recognition, with Respect to
Certain Transactions."
Income taxes
The Company accounts for income taxes under the asset and liability
approach which recognizes deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the tax basis of
assets and liabilities and their financial statement reported amounts. The
Company records a valuation allowance against deferred tax assets when it is
more likely than not that such assets will not be realized.
F-8
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Comprehensive income
Effective May 1, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting comprehensive income
and its components in financial statements. Comprehensive income, as defined,
includes all changes in equity (net assets) during a period from non-owner
sources. To date, the Company has not had any significant transactions that
are required to be reported in comprehensive income.
Net loss per share
The Company computes net loss per share in accordance with SFAS No. 128,
"Earnings per Share" and SEC Staff Accounting Bulletin ("SAB") No. 98. Under
the provisions of SFAS No. 128 and SAB No. 98, basic and diluted net loss per
share is computed by dividing the net loss available to holders of Common
Stock for the period by the weighted average number of shares of Common Stock
outstanding during the period. The calculation of diluted net loss per share
excludes potential Common Stock if their effect is antidilutive. Potential
Common Stock consists of unvested restricted Common Stock, incremental common
shares issuable upon the exercise of stock options and warrants and shares
issuable upon conversion of the Series A, Series B, Series C, Series D, Series
E and Series F Convertible Preferred Stock.
The following table sets forth the computation of basic and diluted net
loss per share of the period indicated (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Year Ended April 30,
--------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Numerator:
Net loss..................................... $(4,836) $(8,942) $(11,428)
======= ======= ========
Denominator:
Weighted average shares...................... 2,414 3,467 4,140
Weighted average unvested shares of Common
Stock subject to repurchase................. (1,114) (1,338) (1,188)
------- ------- --------
Denominator for basic and diluted
calculation................................. 1,300 2,129 2,952
======= ======= ========
Net loss per share:
Basic and diluted............................ $ (3.72) $ (4.20) $ (3.87)
======= ======= ========
</TABLE>
The following table sets forth potential shares of Common Stock that are
not included in the diluted net loss per share calculation above because to do
so would be anti-dilutive for the periods indicated (in thousands):
<TABLE>
<CAPTION>
April 30,
--------------------
1997 1998 1999
------ ------ ------
<S> <C> <C> <C>
Series A Preferred Stock................................ 1,233 1,233 1,233
Series B Preferred Stock................................ 2,938 2,938 2,938
Series C Preferred Stock................................ 3,575 3,575 3,575
Series D Preferred Stock................................ 1,350 1,350 1,350
Series E Preferred Stock................................ -- 1,000 1,000
Series F Preferred Stock................................ -- -- 1,778
Preferred Stock warrants................................ 94 98 158
Unvested Common Stock subject to repurchase............. 1,251 1,361 964
Common Stock options.................................... 732 527 1,160
------ ------ ------
11,173 12,082 14,156
====== ====== ======
</TABLE>
F-9
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Pro forma net loss per share (unaudited)
Pro forma net loss per share for the year ended April 30, 1999 is computed
using the weighted average number of shares of Common Stock outstanding,
including the pro forma effects of the automatic conversion of the Company's
Series A, Series B, Series C, Series D, Series E and Series F Convertible
Preferred Stock and Series F Preferred Stock warrants into shares of the
Company's Common Stock effective upon the closing of the Company's initial
public offering as if such conversion occurred on May 1, 1998, or at the date
of original issuance, if later. The resulting pro forma adjustment includes an
increase in the weighted average shares used to compute basic net loss per
share of 11,716,000 for the year ended April 30, 1999. The calculation of
diluted net loss per share excludes potential shares of Common Stock as their
effect would be antidilutive. Pro forma potential Common Stock consist of
unvested Common Stock subject to repurchase rights and incremental shares of
Common Stock issuable upon the exercise of stock options and warrants.
Stock compensation
The Company accounts for stock-based employee compensation arrangements in
accordance with provisions of Accounting Principles Board Opinion ("APB") No.
25, "Accounting for Stock Issued to Employees" and complies with the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation." Under APB No. 25, unearned compensation is based on the
difference, if any, on the date of the grant, between the fair value of the
Company's stock and the exercise price. Unearned compensation is amortized and
expensed in accordance with Financial Accounting Standards Board ("FASB")
Interpretation No. 28. The Company accounts for stock issued to non-employees
in accordance with the provisions of SFAS No. 123 and Emerging Issues Task
Force No. 96-18, "Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services."
Foreign currency translation
The Company uses the U.S. dollar as its functional currency in all foreign
locations expect for France. The balance sheet accounts are translated into
United States dollars at the end-of-period exchange rates except for fixed
assets, which are translated at historical exchange rates. Revenue and
expenses are translated at average exchange rates in effect during each
period. Gains and losses resulting from translation are accumulated as a
component of stockholders' equity. Net gains or losses resulting from foreign
currency exchange transactions are included in the consolidated statement of
operations and were not significant during any of the periods presented.
Segment information
Effective May 1, 1998, the Company adopted the provisions of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." The
Company identifies its operating segments based on business activities,
management responsibility and geographical location. During each of the three
years in the period ended April 30, 1999, the Company operated in a single
business segment, primarily in the United States. Through April 30, 1999,
foreign operations have not been significant in either revenue or investment
in long-lived assets.
Recent accounting pronouncements
In March 1998, the AICPA issued SOP No. 98-1, "Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use." SOP No. 98-1 will
be effective for the Company's fiscal year ending April 30, 2000. SOP No. 98-1
provides guidance on accounting for computer software developed or obtained
for internal use including the requirement to capitalize specified costs and
amortization of such costs. The Company does not expect the adoption of SOP
No. 98-1 to have a material effect on the Company's results of operations,
financial position or cash flows.
F-10
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives and
Hedging Activities." This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. SFAS No. 133 will be
effective for the Company's fiscal year ending April 30, 2001. The adoption of
SFAS No. 133 is not expected to have a material effect on the Company's
results of operations, financial position or cash flows.
Reclassifications
Certain reclassifications have been made to the prior year consolidated
financial statements to conform to the current year presentation.
Note 2--Balance Sheet Components (in thousands):
Property and equipment comprise the following:
<TABLE>
<CAPTION>
April 30,
---------------
1998 1999
------ -------
<S> <C> <C>
Computer hardware and software.............................. $2,087 $ 3,214
Furniture and equipment..................................... 508 828
Leasehold improvements...................................... 34 46
------ -------
2,629 4,088
Less: accumulated depreciation.............................. (935) (2,115)
------ -------
$1,694 $ 1,973
====== =======
</TABLE>
Accrued expenses and other liabilities comprise the following:
<TABLE>
<CAPTION>
April 30,
--------------
1998 1999
------ -------
<S> <C> <C>
Accrued employee costs....................................... $ 661 $ 1,770
Sales taxes payable.......................................... 151 172
Accrued professional fees.................................... 125 400
Other........................................................ 290 1,276
------ -------
$1,227 $ 3,618
====== =======
</TABLE>
Note 3--Borrowings:
Notes payable
Notes payable consist of amounts payable to equipment financing companies
and are collateralized by the underlying assets as follows (in thousands):
<TABLE>
<CAPTION>
April 30,
-----------
1998 1999
---- ------
<S> <C> <C>
11.75% note; interest payable monthly; principal payable
monthly commencing September 1999; matures February 2002...... -- $1,000
11.75% note; interest payable monthly; principal payable
monthly commencing November 1999; matures March 2002.......... -- 1,000
11.75% note; interest payable monthly; principal payable
monthly commencing December 1999; matures April 2002.......... -- 1,000
Non-interest bearing note; principal payable upon maturity in
July 2002..................................................... $39 39
--- ------
39 3,039
Less: current portion of notes payable......................... -- (686)
--- ------
Notes payable, non-current..................................... $39 $2,353
=== ======
</TABLE>
F-11
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Future minimum principal payments under the notes at April 30, 1999 are as
follows (in thousands):
<TABLE>
<CAPTION>
Year Ending April 30,
---------------------
<S> <C>
2000.................................................................. $ 686
2001.................................................................. 1,181
2002.................................................................. 1,133
2003.................................................................. 39
------
Total payments........................................................ $3,039
======
</TABLE>
Bank line-of-credit
As of April 30, 1999, the Company had a $2,000,000 line-of-credit agreement
with a bank that provides for borrowings of up to $2,000,000, including
$250,000 available for the issuance of letters of credit and foreign currency
exchange activity. Borrowings under the credit agreement bear interest at an
annual rate of 8.5%, subject to adjustment by the bank. The interest rate was
8.5% at April 30, 1999. Borrowings under the line of credit are secured by the
assets of the Company. As of April 30, 1998 and 1999, $1,000,000 and no
amount, respectively, were outstanding under the line. The credit agreement
expires in August 1999. In connection with this line-of-credit, the Company is
required to meet certain monthly financial tests, including a minimum tangible
net worth and a minimum quick ratio. At April 30, 1999, the Company was in
compliance with all financial covenants.
Note 4--Income Taxes:
The Company's operating losses are generated domestically, and amounts
attributable to its foreign operations have been insignificant for all periods
presented. For each of the three years in the period ended April 30, 1999, the
Company incurred net operating losses and accordingly no provision for income
taxes has been recorded. In addition, no benefit for income taxes has been
recorded due to the uncertainty of the realization of any tax assets. At April
30, 1999, the Company had approximately $20,000,000 of federal and $18,000,000
of state net operating loss carryforwards available to offset future taxable
income which expire in varying amounts beginning in 2016 and 2004,
respectively. Under the Tax Reform Act of 1986, the amounts of and benefits
from net operating loss carryforwards may be impaired or limited in certain
circumstances. Events which cause limitations in the amounts of net operating
losses that the Company may utilize in any one year include, but are not
limited to, a cumulative ownership change of more than 50%, as defined, over a
three year period.
Deferred taxes comprise the following (in thousands):
<TABLE>
<CAPTION>
April 30,
----------------
1998 1999
------- -------
<S> <C> <C>
Deferred tax assets:
Depreciation............................................. $ 66 $ 67
Other accruals and liabilities........................... 123 398
Net operating loss and credit carryforwards.............. 5,235 8,197
------- -------
Total deferred tax assets................................ 5,424 8,662
Less: Valuation allowance................................ (5,424) (8,662)
------- -------
Net deferred tax assets.................................... $ -- $ --
======= =======
</TABLE>
For financial reporting purposes, the Company has incurred a loss in each
period since its inception. Based on the available objective evidence,
including the Company's history of losses, management believes it is more
likely than not that the net deferred tax assets will not be fully realizable.
Accordingly, the Company has provided for a full valuation allowance against
its net deferred tax assets at April 30, 1998 and 1999.
F-12
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A reconciliation between the amount of income tax benefit determined by
applying the applicable U.S. statutory income tax rate to pre-tax loss is as
follows:
<TABLE>
<CAPTION>
Year Ended
April 30,
------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate................................. (35)% (35)% (35)%
State tax, net of federal impact....................... (6)% (6)% (6)%
Provision for valuation allowance on deferred tax
assets................................................ 41% 41% 41%
--- --- ---
--% --% --%
=== === ===
</TABLE>
Note 5--Stockholders' Equity:
Preferred stock
Convertible Preferred Stock at April 30, 1999 comprise the following (in
thousands):
<TABLE>
<CAPTION>
Shares Liquidation Proceeds, Net
---------------------- Preference of Issuance
Authorized Outstanding Amount Costs
---------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Series A.................... 1,500 1,233 $ 123 $ 115
Series B.................... 3,000 2,938 1,040 1,024
Series C.................... 4,000 3,575 4,147 4,124
Series C1................... 4,000 -- -- --
Series D.................... 1,500 1,350 4,001 3,980
Series D1................... 1,500 -- -- --
Series E.................... 1,000 1,000 5,000 4,979
Series E1................... 1,000 -- -- --
Series F.................... 1,838 1,778 12,002 11,972
Series F1................... 1,838 -- -- --
------ ------ ------- -------
21,176 11,874 $26,313 $26,194
====== ====== ======= =======
</TABLE>
Each share of Series A, Series B, Series C, Series C1, Series D, Series D1,
Series E, Series E1, Series F and Series F1 Preferred Stock is convertible
into one share of Common Stock, at the option of the holder. The conversion
ratio of the Series C Preferred Stock is subject to adjustment for dilution.
Holders of at least 100,000 shares of Preferred Stock have a right of first
offer in connection with any subsequent issuances of Preferred Stock. These
provisions will terminate upon the Company's initial public offering. In the
event that such holders of Series C or Series D Preferred Stock elect not to
participate in certain subsequent financings, their existing shares of Series
C and Series D Preferred Stock will automatically convert into shares of
Series C1 and Series D1 Preferred Stock, respectively.
Each share of Series A, Series B, Series C, Series C1, Series D, Series D1,
Series E, Series E1, Series F and Series F1 Preferred Stock automatically
converts into Common Stock upon the closing of an underwritten public offering
with an offering price of at least $8.78 per share and aggregate proceeds of
at least $20,000,000 or upon the consent of the holders of a majority of the
outstanding shares of Series A, Series B, Series C, Series C1, Series D,
Series D1, Series E and Series E1 Preferred Stock (voting together as a single
class and not as separate series, on an as-converted basis). Each share of
Series F and Series F1 will automatically convert into Common Stock upon the
consent of a majority of the outstanding Series F and Series F1 shares.
F-13
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Each share of Series A, Series B, Series C, Series C1, Series D, Series D1,
Series E, Series E1, Series F and Series F1 Preferred Stock has voting rights
equal to the number of shares of Common Stock into which it is convertible. As
long as at least 50% or more of the original issued shares of each respective
class remain outstanding, holders of Series A, Series B and Series C and C1
(Series C and C1 voting as a class) are entitled to elect one director at each
annual election of members of the Board of Directors. Holders of all shares of
Common Stock and Preferred Stock, on an as-converted basis, are entitled to
vote to elect the remaining directors of the Company.
As long as at least 50% of the original Preferred Stock issued remains
outstanding, the Company may not, without prior approval of at least the
majority of the then outstanding shares of Preferred Stock, (a) sell, merge or
consolidate the Company, (b) effect any transaction or series of transactions
which would result in the dissolution of more than 50% of the voting power of
the Company, (c) change the rights, preferences and privileges of the
Preferred Stock or (d) authorize or issue any equity security or any security
convertible into or exercisable for any equity security having a preference
over or equal to those of the existing Preferred Stock with respect to voting,
dividends or liquidation.
Holders of Series A, Series B, Series C, Series C1, Series D, Series D1,
Series E, Series E1, Series F and Series F1 Preferred Stock are entitled to
receive, when and as declared by the Board of Directors, noncumulative annual
dividends of $.01 per share. No dividends on the Preferred Stock or Common
Stock have been declared by the Board of Directors from the Company's
inception through April 30, 1999.
In the event of a liquidation, dissolution or winding up of the Company,
the holders of Series A, Series B, Series C, Series C1, Series D, Series D1,
Series E, Series E1, Series F and Series F1 Preferred Stock shall be entitled
to receive $.10, $.354, $1.16, $1.16, $2.964, $2.964, $5.00, $5.00, $6.75 and
$6.75 per share, respectively, plus any declared but unpaid dividends.
Thereafter, the remaining assets of the Company will be distributed pro rata
among the holders of Series B, Series C, Series C1, Series D, Series D1,
Series E, Series E1, Series F and Series F1 Preferred Stock and Common Stock
until the holders of Series B, Series C, Series C1, Series D, Series D1,
Series E, Series E1, Series F and Series F1 Preferred Stock have received an
aggregate of $.708, $2.32, $2.32, $5.928, $5.928, $10.00, $10.00, $13.50 and
$13.50 per share, respectively. Thereafter, the holders of Common Stock will
receive all of the remaining assets of the Company.
Preferred Stock warrants
In conjunction with certain capital leases and notes payable, the Company
issued warrants to purchase shares of the Company's Preferred Stock as
follows:
<TABLE>
<CAPTION>
Fiscal
Exercise Year of
Date of Grant Shares Price Expiration Value
-------------- ------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Series B Preferred Stock
warrants...................... September 1995 41,111 $.354 2003 de minimus
Series C Preferred Stock
warrants...................... March 1996 35,313 1.160 2003 de minimus
Series D Preferred Stock
warrants...................... February 1997 17,828 2.964 2004 de minimus
Series D Preferred Stock
warrants...................... November 1997 4,049 2.964 2005 de minimus
Series F Preferred Stock
warrants...................... February 1999 60,000 6.750 2010 $ 274,000
</TABLE>
The Company calculated the minimum fair value of all warrants on the date
of grant using the Black-Scholes option pricing model as prescribed by SFAS
No. 123 with the following underlying assumptions: expected volatility of 50%,
risk free interest rates ranging from 4.7% to 6.3% and terms ranging from 7 to
10.5 years.
F-14
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Series B, Series C and Series D Preferred Stock warrants are
exercisable for the period stated above or three years from the effective date
of the Company's initial public offering, whichever is longer. The Series F
Preferred Stock warrants are exercisable for the shorter of the period stated
above or immediately prior to the Company's initial public offering. Upon
completion of the Company's initial public offering, the Series F Preferred
Stock warrants expire. If the Company's initial public offering yields
proceeds of not less than $14.00 per share, then the warrant shall be
exercisable for no more than 45,000 shares of Series F Preferred Stock or the
Common Stock issuable upon conversion thereof. The Company records the expense
related to the warrants over the life of the associated financing instrument
as interest expense. At April 30, 1999, the Company has unamortized interest
of $253,000 related to warrants issued in connection with $3.0 million of
subordinated notes payable which were issued during fiscal 1999. The Company
plans to use proceeds from its initial public offering to prepay these
subordinated notes payable in their entirety. As a result, the Company will
recognize the unamortized interest balance as an expense in the period it
prepays the notes payable in entirety.
Common Stock
The Company's Certificate of Incorporation, as amended, authorizes the
Company to issue 100,000,000 shares of $.001 par value Common Stock.
The Company has granted restricted stock to certain founders and employees.
As of April 30, 1999, the Company had 2,269,775 shares of restricted Common
Stock outstanding. The Company has a right of first offer in connection with
any proposed sale or transfer of these shares and has the right to repurchase
these shares at the original issue price. The Company's right to repurchase
such shares declines on a percentage basis, usually over four years, based on
the length of the employees' continual employment with the Company. At April
30, 1999, 173,371 of such shares granted under the Company's restricted stock
plan were subject to repurchase at a weighted-average exercise price of $.69
per share and 76,500 shares were reserved for issuance as restricted Common
Stock in the future. This plan was terminated in June 1999.
Certain of these and other shares were issued in exchange for notes
receivable, which are full recourse and additionally collateralized by the
underlying shares of Common Stock. These notes receivable are payable on
various dates through March 2004 and bear interest at rates ranging from 4.52%
to 7.34%. These notes receivable have been included in stockholders' equity.
At April 30, 1999, the Company has reserved shares of Common Stock for
future issuance as follows (in thousands):
<TABLE>
<CAPTION>
April 30, 1999
--------------
<S> <C>
Conversion of Series A Preferred Stock........................ 1,500
Conversion of Series B Preferred Stock........................ 3,000
Conversion of Series C and Series C1 Preferred Stock.......... 8,000
Conversion of Series D and Series D1 Preferred Stock.......... 3,000
Conversion of Series E and Series E1 Preferred Stock.......... 2,000
Conversion of Series F and Series F1 Preferred Stock.......... 3,556
Exercise of Preferred Stock warrants.......................... 158
Exercise of Common Stock options.............................. 1,405
Issuance of restricted Common Stock........................... 77
</TABLE>
F-15
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Note 6--Employee Benefit Plans:
401(k) plan
Employees of the Company may elect to participate in the Company's 401(k)
plan. The Company does not make contributions to the 401(k) plan.
Stock option plan
In May 1995, the Company adopted the 1995 Stock Option Plan (the "Plan")
which, as amended, provides for the issuance of incentive and nonqualified
stock options to employees, directors and consultants of the Company. Under
the Plan, 3,375,000 shares have been authorized for issuance. Options granted
under the Plan are for periods not to exceed ten years and options must be
issued at prices not less than 100% and 85%, for incentive and nonqualified
stock options, respectively, of the estimated fair value of the stock on the
date of grant as determined by the Board of Directors. Options granted to
shareholders who own greater than 10% of the outstanding stock are for periods
not to exceed five years, and must be issued at prices not less than 110% of
the estimated fair value of the stock on the date of grant. Options are
exercisable upon grant and generally vest 25% or 20% at the end of the first
year and at a rate of 1/36 or 1/48 per month thereafter such that they vest
over four or five years, respectively.
The following table summarizes activity under the Plan (shares in
thousands):
<TABLE>
<CAPTION>
Weighted
Shares Average
Available Number Exercise
for Grant Outstanding Price
--------- ----------- --------
<S> <C> <C> <C>
Balance at April 30, 1996........................ 372 406 $ .10
Options authorized............................. 575 -- --
Options granted................................ (933) 933 .24
Options exercised.............................. -- (564) .12
Options canceled............................... 43 (43) .18
----- ------
Balance at April 30, 1997........................ 57 732 .26
Options authorized............................. 800 -- --
Options granted................................ (857) 857 .63
Options exercised.............................. -- (1,027) .31
Options canceled............................... 35 (35) .56
Unvested shares repurchased.................... 43 -- --
----- ------
Balance at April 30, 1998........................ 78 527 .84
Options authorized............................. 1,000 -- --
Options granted................................ (978) 978 2.57
Options exercised.............................. -- (315) 1.42
Options canceled............................... 30 (30) 1.70
Unvested shares repurchased.................... 115 -- --
----- ------
Balance at April 30, 1999........................ 245 1,160 2.12
===== ======
</TABLE>
At April 30, 1999, 790,235 outstanding shares of Common Stock purchased
under the Plan are subject to repurchase. Upon termination of employment,
unvested shares previously purchased under the Plan are subject to repurchase
by the Company at a price equal to the exercise price.
F-16
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following table summarizes the information about stock options
outstanding and exercisable as of April 30, 1999 (shares in thousands):
<TABLE>
<CAPTION>
Options Vested
Options Outstanding and Exercisable
-------------------------------------- -----------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life (Years) Price Outstanding Price
------------ ----------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$.015 - .45 83 7.97 $ .36 38 $ .35
.50 - 1.25 154 8.54 .91 52 .86
1.45 - 2.50 454 9.20 2.19 18 1.91
2.65 - 3.00 469 9.71 2.77 -- --
----- ---
1,160 9.23 2.12 108 .86
===== ===
</TABLE>
Fair value disclosures
The Company calculated the minimum fair value of each option grant under
the Plan on the date of grant using the Black-Scholes option pricing model as
prescribed by SFAS No. 123 with the followings underlying assumptions:
<TABLE>
<CAPTION>
Year Ended
April 30,
----------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Dividend yield........................................... -- -- --
Expected volatility...................................... -- -- --
Average risk free interest rate.......................... 6.3% 6.0% 5.7%
Expected life (in years)................................. 5 5 5
Weighted average fair value of options granted........... $.07 $.17 $.64
</TABLE>
Had compensation cost for options granted under the Plan been determined
based on the fair value at the grant dates for the awards under a method
prescribed by SFAS No. 123, the Company's net loss would have been increased
to the pro forma amounts below for the fiscal years ended April 30, 1997, 1998
and 1999, respectively (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Year Ended April 30,
--------------------------
1997 1998 1999
------- ------- --------
<S> <C> <C> <C>
Net loss as reported.......................... $(4,836) $(8,942) $(11,428)
Pro forma net loss............................ (4,843) (8,973) (11,529)
Net loss per share as reported................ (3.72) (4.20) (3.87)
Pro forma net loss per share.................. (3.73) (4.21) (3.91)
</TABLE>
Because the determination of the fair value of all options granted after
the Company becomes a public entity will include an expected volatility factor
in addition to the factors described above and because additional option
grants are expected to be made each year, the compensation expense for options
granted during each of the three years in the period ended April 30, 1999 are
not representative of the pro forma effects of option grants on reported net
income (loss) for future years.
F-17
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Unearned stock compensation
In connection with certain stock option grants during the years ended April
30, 1998 and 1999, the Company recorded unearned stock compensation cost
totaling $3,093,000 and $4,274,000, respectively, which is being recognized
over the vesting period of the related options of five years. Amortization of
unearned stock compensation totaled $856,000 and $2,253,000 for the years
ended April 30, 1998 and 1999, respectively.
Note 7--Commitments And Contingencies:
Leases
The Company has entered into noncancelable operating leases for office
space and equipment and capital leases for equipment with original terms
ranging from 12 to 60 months. The terms of certain operating leases provide
for rental payments on a graduated scale. The Company recognizes expense on a
straight-line basis over the lease period and has accrued for rent expense
incurred but not paid. The future minimum lease payments under these leases at
April 30, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
Operating Capital
Year Ending April 30, Leases Leases
--------------------- --------- -------
<S> <C> <C>
2000...................................................... $1,061 $ 843
2001...................................................... 967 598
2002...................................................... 339 292
2003...................................................... 56 58
------ ------
Total minimum lease payments.............................. $2,423 1,791
======
Less: Amount representing interest........................ (185)
------
Present value of capital lease obligations................ 1,606
Less: Current portion..................................... (735)
------
Capital lease obligations, noncurrent..................... $ 871
======
</TABLE>
Property and equipment under capital leases are as follows (in thousands):
<TABLE>
<CAPTION>
April 30,
---------------
1998 1999
------ -------
<S> <C> <C>
Computer hardware and software.............................. $1,519 $ 2,338
Furniture and equipment..................................... 289 470
------ -------
1,808 2,808
Less: Accumulated depreciation.............................. (710) (1,558)
------ -------
$1,098 $ 1,250
====== =======
</TABLE>
Rent expense under noncancelable operating leases was approximately
$160,000, net of sublease rental income of $28,000, for the year ended April
30, 1997, $396,000 for the year ended April 30, 1998 and $568,000, net of
sublease rental income of $208,000, for the year ended April 30, 1999.
Contingencies
As of April 30, 1999, the Company was involved in litigation with
Facilities Management International. The complaint against the Company, filed
in the Orange County Superior Court, alleges interference with prospective
economic advantage and unfair business practices in connection with the
Company's quote for
F-18
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
services to a customer. The lawsuit seeks unspecified compensatory and
punitive damages as well as injunctive relief. The Company intends to
vigorously defend itself against the claim. The Company believes that the
ultimate outcome of this matter will not have a material adverse affect on its
financial condition, results of operations or cash flows.
Note 8--Subsequent Events:
Initial public offering
In June 1999, the Company's Board of Directors authorized management to
file a registration statement with the Securities and Exchange Commission to
permit the Company to sell shares of its Common Stock to the public.
On August 2, 1999, the Company entered into agreements to sell shares of
Common Stock in a private placement with two separate corporate investors for
$5.0 million each. The sale of Common Stock will occur contemporaneous with
the Company's initial public offering and the number of shares issued to the
corporate investors will be calculated by dividing the amount invested by the
offering price per share less an amount equal to the underwriter's commissions
and discounts per share.
Stock option plan
Subsequent to April 30, 1999, the Board adopted an increase in the number
of shares reserved for issuance under the Company's 1995 Stock Option Plan by
an additional 2,000,000 shares. This reserve will be automatically increased
on the first day of each fiscal year beginning on and after May 1, 2001 by the
lesser of 500,000 shares per year, 5% of the number of shares of the Company's
Common Stock which were issued and outstanding on the last day of the
preceding fiscal year or a number of shares determined by the Company's board
of directors.
Employee stock purchase plan
In June 1999, the Board adopted the 1999 Employee Stock Purchase Plan (the
"Purchase Plan") which will become effective on the date of the Company's
initial public offering, and reserved 500,000 shares of Common Stock for
issuance thereunder. This reserve will be automatically increased on May 1,
2000 and on each May 1 thereafter until and including May 1, 2009, by an
amount equal to the lesser of 500,000 shares per year, 2% of the number of
shares of Common Stock which are issued and outstanding on the last day of the
preceding fiscal year or a number of shares determined by the Company's board
of directors. Employees generally will be eligible to participate in the
Purchase Plan if they are customarily employed by the Company for more than 20
hours per week and more than five months in a fiscal year end. The first
Offering Period is expected to begin on the first business day on which price
quotations for the Company's Common Stock are available. Depending on the
effective date, the first Offering Period may be more or less than 24 months
long. Offering Periods and Purchase Periods thereafter will begin on the first
day of May and September of each year. In general, the price at which the
Common Stock is purchased under the Purchase Plan is 85% of the lesser of the
fair market value of the Company's Common Stock on the first day of the
applicable Offering Period or on the purchase date. Employees generally may
not purchase more than 1,000 shares in a six-month period or stock having a
value greater than $25,000 in any calendar year as measured at the beginning
of the offering period.
Unearned stock compensation
During the period May 1, 1999 through June 23, 1999, the Company granted
options to purchase an aggregate of 544,700 shares of Common Stock at exercise
prices ranging from $5.00 to $8.00 per share.
F-19
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Note 9--Unaudited Quarterly Consolidated Financial Data:
<TABLE>
<CAPTION>
Quarter Ended
------------------------------------
Jul. Apr.
31, Oct. 31, Jan. 31, 30, Fiscal
1998 1998 1999 1999 1999
------- -------- -------- ------- --------
1999: (in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Total revenues................. $ 3,241 $ 3,812 $ 4,592 $ 5,162 $ 16,807
Gross profit................... 2,083 2,475 2,845 3,419 10,822
Loss from operations........... (2,624) (2,839) (2,902) (3,241) (11,606)
Net loss....................... (2,572) (2,741) (2,838) (3,277) (11,428)
Net loss per share--basic and
diluted....................... (.94) (.96) (.94) (1.02) (3.87)
<CAPTION>
Quarter Ended
------------------------------------
Jul. Apr.
31, Oct. 31, Jan. 31, 30, Fiscal
1997 1997 1998 1998 1998
------- -------- -------- ------- --------
1998: (in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Total revenues................. $ 1,179 $ 1,669 $ 2,128 $ 3,027 $ 8,003
Gross profit................... 842 1,151 1,545 2,297 5,835
Loss from operations........... (1,610) (2,370) (2,266) (2,628) (8,874)
Net loss....................... (1,612) (2,396) (2,289) (2,645) (8,942)
Net loss per share--basic and
diluted....................... (.89) (1.20) (1.02) (1.07) (4.20)
</TABLE>
F-20
<PAGE>
[LOGO OF AGILE SOFTWARE APPEARS HERE]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions to be paid by Agile, in connection with
this offering. All amounts shown are estimates except for the registration fee
and the NASD filing fee.
<TABLE>
<S> <C>
SEC registration fee........................................... $ 16,305
NASD filing fee................................................ 6,365
Nasdaq National Market initial listing fee..................... 5,000
Blue sky fees and expenses..................................... 10,000
Printing and engraving expenses................................ 150,000
Legal fees and expenses........................................ 400,000
Accounting fees and expenses................................... 225,000
Director and officer Securities Act liability insurance........ 550,000
Transfer agent and registrar fees.............................. 8,000
Miscellaneous expenses......................................... 110,330
----------
Total........................................................ $1,481,000
==========
</TABLE>
Item 14. Indemnification of Officers and Directors
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to officers,
directors and other corporate agents under certain circumstances and subject
to certain limitations. Our certificate of incorporation and bylaws provide
that we shall indemnify our directors, officers, employees and agents to the
full extent permitted by Delaware General Corporation Law, including in
circumstances in which indemnification is otherwise discretionary under
Delaware law. In addition, we intend to enter into separate indemnification
agreements with our directors, officers and certain employees which would
require us, among other things, to indemnify them against certain liabilities
which may arise by reason of their status as directors, officers or certain
other employees. We also intend to maintain director and officer liability
insurance, if available on reasonable terms.
These indemnification provisions and the indemnification agreements that we
intend to enter into with our officers and directors may be sufficiently broad
to permit indemnification of our officers and directors for liabilities
(including reimbursement of expenses incurred) arising under the Securities
Act.
We intend to obtain in conjunction with the effectiveness of the
registration statement a policy of directors' and officers' liability
insurance that insures our directors and officers against the cost of defense,
settlement or payment of a judgment under certain circumstances.
The form of Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement provides for indemnification by the underwriters of
Agile and our officers and directors for certain liabilities arising under the
Securities Act, or otherwise.
Item 15. Recent Sales of Unregistered Securities
(a) Since May 1, 1996, we have sold and issued the following unregistered
securities:
(1) From inception to April 30, 1999, we issued options to purchase an
aggregate of 3,395,750 shares of common stock under the 1995 Stock Option
Plan at exercise prices of $.015 to $3.00 per share, of which options to
purchase 2,117,880 shares have been exercised.
II-1
<PAGE>
(2) From inception to April 30, 1999, we issued options to purchase an
aggregate of 183,500 shares of common stock under our Restricted Stock
Purchase Plan at exercise prices of $.60 to $2.65 per share, of which
options to purchase 183,500 shares have been exercised.
(3) On January 16, 1996, we issued and sold 3,500,000 shares of Series C
Preferred Stock to 5 private investors at a price of $1.16 per share for a
total offering of $4,060,000.
(4) On October 31, 1996, we issued and sold 75,000 shares of Series C
Preferred Stock to one private investor at a price of $1.16 per share for a
total price of $87,000.
(5) On February 16, 1997, in connection with an equipment lease, we
issued a warrant to an equipment lessor to purchase 17,828 shares of Series
D preferred stock at an exercise price of $2.964 per share.
(6) On February 16, 1997, we issued and sold an aggregate of 1,350,000
shares of Series D Preferred Stock to 10 private investors at a price of
$2.964 per share for a total offering price of $4,001,400.
(7) On May 1, 1997, we issued 6,750 shares of Common Stock to our Chief
Executive Officer as a bonus in lieu of cash.
(8) On November 14, 1997, we issued and sold an aggregate of 1,000,000
shares of Series E Preferred Stock to 14 private investors at a price of
$5.00 per share for a total offering price of $5,000,000.
(9) On November 14, 1997, in connection with an equipment lease, we
issued a warrant to an equipment lessor to purchase 4,049 shares of Series
D preferred stock at an exercise price of $2.964 per share.
(10) On June 4, 1998, we issued and sold an aggregate of 1,777,778
shares of Series F Preferred Stock to 24 private investors at a price of
$6.75 per share for a total offering price of $12,000,001.50.
(11) On February 8, 1999, in connection with an equipment lease, we
issued a warrant to an equipment lessor to purchase an aggregate of 60,000
shares of Series F preferred stock at an exercise price of $6.75 per share.
There were no underwriters employed in connection with any of the
transactions set forth in Item 15.
For additional information concerning these equity investment transactions,
please see the section entitled "Certain Transactions" in the prospectus.
The issuances described in Items 15(a)(3) through 15(a)(6) and 15(a)(8)
through 15(a)(11) were deemed exempt from registration under the Securities
Act in reliance on Section 4(2) of the Securities Act as transactions by an
issuer not involving a public offering. Certain issuances described in Item
15(a)(1), 15(a)(2) and 15(a)(7) were deemed exempt from registration under the
Securities Act in reliance on Section 4(2) or Rule 701 promulgated thereunder
as transactions pursuant to compensatory benefit plans and contracts relating
to compensation. The recipients of securities in each such transaction
represented their intention to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the share certificates and other
instruments issued in such transactions. All recipients either received
adequate information about us or had access, through employment or other
relationships, to such information.
II-2
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1** Form of Underwriting Agreement.
3.1 Certificates of Incorporation of Agile Software Corporation, as
amended to date.
3.2 Form of Certificate of Elimination and Certificate of Amendment.
3.3 Bylaws of Agile Software Corporation.
4.1* Specimen Common Stock Certificate.
5.1* Opinion of Gray Cary Ware & Freidenrich LLP.
10.1 Amended and Restated 1995 Stock Option Plan.
10.2 1999 Employee Stock Purchase Plan.
10.3 Form of Indemnity Agreement between Agile Software Corporation and
its directors and officers.
10.4** Almaden Financial Plaza Office Lease dated May 30, 1996 between
North Block Partnership and Agile Software Corporation, as amended.
10.5** Subordinated Loan and Security Agreement dated February 8, 1999
between Comdisco, Inc. and Agile Software Corporation.
10.6 Revolving Credit Loan and Security Agreement (Accounts and
Inventory) dated December 11, 1996 between Comerica Bank--
California and Agile Software Corporation as modified.
10.7 Master Lease Agreement dated September 18, 1995 between Comdisco,
Inc. and Agile Software Corporation, and associated equipment
schedules.
10.8** Fifth Amended and Restated Investors' Rights Agreement dated June 4,
1998 by and among Agile Software Corporation and the investors
listed on Schedule A thereto.
10.9 Series A Preferred Stock Purchase Agreement.
10.10 Series B Preferred Stock Purchase Agreement.
10.11 Series C Preferred Stock Purchase Agreement.
10.12 Series D Preferred Stock Purchase Agreement.
10.13 Series E Preferred Stock Purchase Agreement.
10.14 Series F Preferred Stock Purchase Agreement.
21.1** Subsidiaries of Agile Software Corporation.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2* Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit
5.1).
24.1** Power of Attorney (included on page II-5).
27.1** Financial Data Schedule (EDGAR filed version only).
</TABLE>
- --------
* To be filed by amendment
**Previously filed
(b) Financial Statement Schedules
All financial statement schedules have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
II-3
<PAGE>
Item 17. Undertakings
We hereby undertake to provide to the underwriters at the closing specified
in the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification by us for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the provisions described in Item 14 above or otherwise, we
have been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer, or controlling person of
ours in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
We hereby undertake that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by us pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Agile has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Jose, State of
California, on the 2nd day of August, 1999.
Agile Software Corporation
/s/ Bryan D. Stolle
By: _________________________________
Bryan D. Stolle
Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Bryan D. Stolle Chief Executive Officer, August 2, 1999
____________________________________ President and Director
Bryan D. Stolle (Principal Executive
Officer)
/s/ Thomas P. Shanahan Chief Financial Officer, August 2, 1999
____________________________________ Secretary and Director
Thomas P. Shanahan (Principal Financial and
Accounting Officer)
Klaus-Dieter Laidig* Director August 2, 1999
____________________________________
Klaus-Dieter Laidig
Michael Moritz* Director August 2, 1999
____________________________________
Michael Moritz
James L. Patterson* Director August 2, 1999
____________________________________
James L. Patterson
Nancy J. Schoendorf* Director August 2, 1999
____________________________________
Nancy J. Schoendorf
/s/ Thomas P. Shanahan
*By: _______________________________
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1** Form of Underwriting Agreement.
3.1 Certificates of Incorporation of Agile Software Corporation, as
amended to date.
3.2 Form of Certificate of Elimination and Certificate of Amendment.
3.3 Bylaws of Agile Software Corporation.
4.1* Specimen Common Stock Certificate.
5.1* Opinion of Gray Cary Ware & Freidenrich LLP.
10.1 Amended and Restated 1995 Stock Option Plan.
10.2 1999 Employee Stock Purchase Plan.
10.3 Form of Indemnity Agreement between Agile Software Corporation and its
directors and officers.
10.4** Almaden Financial Plaza Office Lease dated May 30, 1996 between North
Block Partnership and Agile Software Corporation, as amended.
10.5** Subordinated Loan and Security Agreement dated February 8, 1999
between Comdisco, Inc. and Agile Software Corporation.
10.6 Revolving Credit Loan and Security Agreement (Accounts and Inventory)
dated December 11, 1996 between Comerica Bank--California and Agile
Software Corporation as modified.
10.7 Master Lease Agreement dated September 18, 1995 between Comdisco, Inc.
and Agile Software Corporation, and associated equipment schedules.
10.8** Fifth Amended and Restated Investors' Rights Agreement dated June 4,
1998 by and among Agile Software Corporation and the investors listed
on Schedule A thereto.
10.9 Series A Preferred Stock Purchase Agreement.
10.10 Series B Preferred Stock Purchase Agreement.
10.11 Series C Preferred Stock Purchase Agreement.
10.12 Series D Preferred Stock Purchase Agreement.
10.13 Series E Preferred Stock Purchase Agreement.
10.14 Series F Preferred Stock Purchase Agreement.
21.1** Subsidiaries of Agile Software Corporation.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2* Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit 5.1).
24.1** Power of Attorney (included on page II-5).
27.1** Financial Data Schedule (EDGAR filed version only).
</TABLE>
- --------
*To be filed by amendment
**Previously filed
<PAGE>
Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AGILE SOFTWARE CORPORATION
I, Thomas P. Shanahan, Chief Financial Officer of Agile Software
Corporation, a Delaware corporation (the "Corporation"), hereby certify:
1. That the Corporation's Board of Directors has duly adopted the
following resolutions:
RESOLVED, that Article First of the Certificate of Incorporation is hereby
amended to read in full as follows:
FIRST: The name of this corporation is Agile Software Corporation
-----
Delaware (hereinafter sometimes referred to as the "Corporation").
2. That the proposed amendment has been duly adopted by the
Corporation's Board of Directors and sole stockholder in accordance with the
provisions of Sections 242 and 228 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment of Certificate of Incorporation to be signed by a duly authorized
officer on this 30th day of June, 1999.
AGILE SOFTWARE CORPORATION
By: /s/ Thomas P. Shanahan
-------------------------------------------
Thomas P. Shanahan, Chief Financial Officer
<PAGE>
CERTIFICATE OF INCORPORATION
OF
AGILE SOFTWARE CORPORATION
FIRST: The name of this corporation is Agile Software Corporation
-----
(hereinafter sometimes referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the
------
State of Delaware is Incorporating Services, Ltd., 15 East North Street, in the
City of Dover, County of Kent. The name of the registered agent at that address
is Incorporating Services, Ltd.
THIRD: The purpose of the Corporation is to engage in any lawful act or
-----
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
------
have authority to issue is One Thousand (1,000) shares of Common Stock, par
value $0.001 per share (the "Common Stock").
FIFTH: The name and mailing address of the incorporator is:
-----
Lynn Rooke
c/o Gray Cary Ware & Freidenrich LLP
400 Hamilton Avenue
Palo Alto, CA 94031
SIXTH: The business and affairs of the Corporation shall be managed by or
-----
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by Statute or by this Certificate of
Incorporation or the Bylaws of the Corporation, the directors are hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation. Election of directors need not be by
written ballot unless the Bylaws so provide.
<PAGE>
SEVENTH: The Board of Directors is authorized to make, adopt, amend, alter
-------
or repeal the Bylaws of the Corporation. The stockholders shall also have power
to make, adopt, amend, alter or repeal the Bylaws of the Corporation.
EIGHTH: This Corporation reserves the right to amend or repeal any of the
------
provisions contained in this Certificate of Incorporation in any manner now or
hereafter permitted by law, and the rights of the stockholders of this
Corporation are granted subject to this reservation.
NINTH: To the fullest extent permitted by the Delaware General Corporation
-----
Law, a director of this Corporation shall not be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director. Any repeal or modification of the foregoing provisions of this Article
NINTH by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.
I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a
corporation under the laws of the State of Delaware, do make, file and record
this Certificate of Incorporation, do certify that the facts herein stated are
true, and accordingly, have hereto set my hand this 23rd day of June, 1999.
/s/ Lynn Rooke
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
DELAWARE AGILE SOFTWARE CORPORATION
(Pursuant to Sections 242 and 245 of the General Corporation Law of the State
of Delaware)
Delaware Agile Software Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware on June 22, 1999,
(the "Corporation") certifies as follows:
1. The Corporation's Restated Certificate of Incorporation was duly adopted
by the Board of Directors and sole stockholder by written consent in accordance
with Sections 242 and 245 of the General Corporation Law.
2. The Corporation's Certificate of Incorporation is restated to read in
full as follows:
FIRST: The name of the Corporation is Delaware Agile Software
-----
Corporation.
SECOND: The address of the registered office of the Corporation in
------
the State of Delaware is Incorporating Services, Ltd., 15 East
North Street, in the City of Dover, County of Kent. The name of
the registered agent at that address is Incorporating
Services, Ltd.
THIRD: The purpose of the Corporation is to engage in any lawful act
-----
or activity for which a corporation may be organized under the
General Corporation Law of Delaware.
FOURTH:
------
A. The Corporation is authorized to issue a total of 131,175,556
shares of stock in two classes designated respectively
"Preferred Stock" and "Common Stock". The total number of
shares of all series of Preferred Stock that the Corporation
shall have the authority to issue is 31,175,556 and the
total number of shares of Common Stock that the Corporation
shall have the authority to issue is 100,000,000. All of the
authorized shares shall have a par value of $0.001.
B. The shares of Preferred Stock may be divided into such number
of series as the Board of Directors may determine. The Board of
Directors is authorized to determine and alter the rights,
preferences, privileges and restrictions granted to and imposed
upon the Preferred Stock or any series thereof with respect to
any wholly unissued series of Preferred Stock, and to fix the
number of shares of any such series of Preferred Stock. The
<PAGE>
Board of Directors, within the limits and restrictions stated
in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any series,
may increase or decrease (but not below the number of shares of
such series then outstanding) the number of shares of any
series subsequent to the issue of shares of that series.
FIFTH: The following provisions are inserted for the management of the
-----
business and the conduct of the affairs of the Corporation, and
for further definition, limitation and regulation of the powers
of the Corporation and of its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors. In addition
to the powers and authority expressly conferred upon them by
statute or by this Certificate of Incorporation or the Bylaws
of the Corporation, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may
be exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
C. On and after the closing date of the first sale of the
Corporation's Common Stock pursuant to a firmly underwritten
registered public offering (the "IPO"), any action required or
permitted to be taken by the stockholders of the Corporation
must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any
consent in writing by such stockholders. Prior to such sale,
unless otherwise provided by law, any action which may
otherwise be taken at any meeting of the stockholders may be
taken without a meeting and without prior notice, if a written
consent describing such actions is signed by the holders of
outstanding shares having not less than the minimum number of
votes which would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were
present and voted.
D. Special meetings of stockholders of the Corporation may be
called only (1) by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any vacancies
in previously authorized directorships at the time any such
resolution is presented to the Board for adoption), (2) by the
President of the Corporation or (3) by the holders of not less
than ten percent (10%) of all of the shares entitled to cast
votes at the meeting.
2
<PAGE>
SIXTH:
-----
A. The number of directors shall initially be set at six (6) and,
thereafter, shall be fixed from time to time exclusively by the
Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors (whether
or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to
the Board for adoption). Upon the closing of the IPO, the
directors shall be divided into three classes with the term of
office of the first class (Class I) to expire at the first
annual meeting of the stockholders following the IPO; the term
of office of the second class (Class II) to expire at the
second annual meeting of stockholders held following the IPO;
the term of office of the third class (Class III) to expire at
the third annual meeting of stockholders; and thereafter for
each such term to expire at each third succeeding annual
meeting of stockholders after such election. Subject to the
rights of the holders of any series of Preferred Stock then
outstanding, a vacancy resulting from the removal of a director
by the stockholders as provided in Article SIXTH, Section C
below may be filled at a special meeting of the stockholders
held for that purpose. All directors shall hold office until
the expiration of the term for which elected, and until their
respective successors are elected, except in the case of the
death, resignation, or removal of any director.
B. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting
from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death,
resignation or other cause (other than removal from office by a
vote of the stockholders) may be filled only by a majority vote
of the directors then in office, though less than a quorum, and
directors so chosen shall hold office for a term expiring at
the next annual meeting of stockholders at which the term of
office of the class to which they have been elected expires,
and until their respective successors are elected, except in
the case of the death, resignation, or removal of any director.
No decrease in the number of directors constituting the Board
of Directors shall shorten the term of any incumbent director.
C. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any directors, or the entire Board of
Directors, may be removed from office at any time, with or
without cause, but only by the affirmative vote of the holders
of at least a majority of the voting power of all of the then
outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors, voting together
as a single class. Vacancies in the Board of Directors
resulting from such removal may be filled by a majority of the
directors then in office, though less than a quorum, or by the
stockholders as provided in Article SIXTH, Section A above.
Directors so chosen shall hold office for a term expiring at
the next annual meeting of stockholders at which the term of
office of
3
<PAGE>
the class to which they have been elected expires, and until
their respective successors are elected, except in the case of
the death, resignation, or removal of any director.
SEVENTH: The Board of Directors is expressly empowered to adopt,
-------
amend or repeal Bylaws of the Corporation. Any adoption,
amendment or repeal of Bylaws of the Corporation by the Board
of Directors shall require the approval of a majority of the
total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at
the time any resolution providing for adoption, amendment or
repeal is presented to the Board). The stockholders shall also
have power to adopt, amend or repeal the Bylaws of the
Corporation. Any adoption, amendment or repeal of Bylaws of the
Corporation by the stockholders shall require, in addition to
any vote of the holders of any class or series of stock of the
Corporation required by law or by this Certificate of
Incorporation, the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power
of all of the then outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of
directors, voting together as a single class.
EIGHTH: A director of the Corporation shall not be personally liable
------
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involved intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
If the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the
liability of a director, then the liability of a director of
the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so
amended.
Any repeal or modification of the foregoing provisions of this
Article EIGHTH by the stockholders of the Corporation shall not
adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or
modification.
4
<PAGE>
NINTH: The Corporation reserves the right to amend or repeal any
-----
provision contained in this Certificate of Incorporation in the
manner prescribed by the laws of the State of Delaware and all
rights conferred upon stockholders are granted subject to this
reservation; provided, however, that, notwithstanding any other
-------- -------
provision of this Certificate of Incorporation or any provision
of law which might otherwise permit a lesser vote or no vote,
but in addition to any vote of the holders of any class or
series of the stock of this Corporation required by law or by
this Certificate of Incorporation, the affirmative vote of the
holders of at least 66-2/3% of the voting power of all of the
then outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of directors, voting
together as a single class, shall be required to amend or
repeal this Article NINTH, Article FIFTH, Article SIXTH,
Article SEVENTH or Article EIGHTH.
5
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Certificate to be signed by a duly authorized officer on this ____ day of
______, 1999.
DELAWARE AGILE SOFTWARE
CORPORATION
By:
----------------------------------------
Thomas P. Shanahan, Chief Financial
Officer, and Secretary
6
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF ELIMINATION
OF
SERIES A, SERIES B, SERIES C, SERIES C1, SERIES D, SERIES D1,
SERIES E, SERIES E1, SERIES F AND SERIES F1 PREFERRED STOCK
OF
AGILE SOFTWARE CORPORATION
(Pursuant to Section 151 of the General Corporation Law of the State of
Delaware)
Agile Software Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), certifies
as follows:
FIRST: Article FOURTH of the Certificate of Incorp
oration of the
-----
Corporation authorizes the issuance of 31,175,556 shares of Preferred Stock, par
value $0.001 per share (the "Preferred Stock"), of which Preferred Stock,
1,500,000 shares have been designated Series A Preferred Stock, 3,000,000 shares
have been designated Series B Preferred Stock, 4,000,000 shares have been
designated Series C Preferred Stock, 4,000,000 shares have been designated
Series C1 Preferred Stock, 1,500,000 shares have been designated Series D
Preferred Stock, 1,500,000 shares have been designated Series D1 Preferred
Stock, 1,000,000 shares have been designated Series E Preferred Stock, 1,000,000
shares have been designated Series E1 Preferred Stock, 1,837,778 shares have
been designated Series F Preferred Stock, and 1,837,778 shares have been
designated Series F1 Preferred Stock pursuant to a Certificate of Designations
filed pursuant to Section 151 of the General Corporation Law of the State of
Delaware.
SECOND: The following resolution was adopted on __________, 1999 the
------
Board of Directors of the Corporation as required by Section 151(g) of the
General Corporation Law of the State of Delaware:
RESOLVED, that none of the authorized shares of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series C1
Preferred Stock, Series D Preferred Stock, Series D1 Preferred Stock,
Series E Preferred Stock, Series E1 Preferred Stock, Series F Preferred
Stock and Series F1 Preferred Stock are outstanding and no shares of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series C1 Preferred Stock, Series D Preferred Stock, Series D1
Preferred Stock, Series E Preferred Stock, Series E1 Preferred Stock,
Series F Preferred Stock and Series F1 Preferred Stock will be issued
subject to the Certificate of Designations previously file
d with respect to
such Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series C1 Preferred Stock, Series D Preferred Stock, Series D1
Preferred Stock, Series E Preferred Stock, Series E1 Preferred Stock,
Series F Preferred Stock and Series F1 Preferred Stock.
THIRD: Pursuant to the provisions of Section 151(g) of the General
-----
Corporation Law of the State of Delaware, all matters set forth in the
Certificate of Designations with respect to such
1
<PAGE>
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series C1 Preferred Stock, Series D Preferred Stock, Series D1 Preferred Stock,
Series E Preferred Stock, Series E1 Preferred Stock, Series F Preferred Stock
and Series F1 Preferred Stock are hereby eliminated from the Certificate of
Incorporation.
2
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its duly authorized officer this ____ day of __________, 1999.
AGILE SOFTWARE CORPORATION
By: ___________________________________
Thomas P. Shanahan, Chief Financial
Officer and Secretary
3
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
AGILE SOFTWARE CORPORATION
Agile Software Corporation, a Delaware corporation (the "Corporation"),
hereby certifies:
1. That the Corporation's Board of Directors has duly adopted the
following resolutions:
RESOLVED, that the first paragraph of Article FOURTH of the Restated
Certificate of Incorporation is hereby amended to read in full as follows:
FOURTH:
------
A. The Corporation is authorized to issue a total of 110,000,000 shares
of stock in two classes designated respectively "Prefe
rred Stock" and
"Common Stock." The total number of shares of all series of Preferred
Stock that the Corporation shall have the authority to issue is
10,000,000 and the total number of shares of Common Stock that the
Corporation shall have the authority to issue is 100,000,000. All of
the authorized shares shall have a par value of $0.001.
2. That the proposed amendment has been duly adopted by the Corporation's
Board of Directors and sole stockholder in accordance with the provisions of
Sections 242 and 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment of Restated Certificate of Incorporation to be signed by a duly
authorized officer on this _____ day of ___________, 1999.
AGILE SOFTWARE CORPORATION
By: ___________________________________
Thomas P.
Shanahan, Chief Financial
Officer and Secretary
<PAGE>
EXHIBIT 3.3
BYLAWS
OF
DELAWARE AGILE SOFTWARE CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION> Page
----
<S> <C>
ARTICLE I STOCKHOLDERS.................................................... 1
Section 1.1 Annual Meeting............................................. 1
Section 1.2 Special Meetings........................................... 1
Section 1.3 Notice of Meetings......................................... 1
Section 1.4 Quorum..................................................... 2
Section 1.5 Conduct of the Stockholders' Meeting....................... 2
Section 1.6 Conduct of Business........................................ 2
Section 1.7 Notice of Stockholder Business............................. 2
Section 1.8 Proxies and Voting......................................... 3
Section 1.9 Stock List................................................. 3
ARTICLE II BOARD OF DIRECTORS.............................................. 4
Section 2.1 Number and Term of Office.................................. 4
Section 2.2 Vacancies and Newly Created Directorships.................. 4
Section 2.3 Removal.................................................... 4
Section 2.4 Regular Meetings........................................... 5
Section 2.5 Special Meetings........................................... 5
Section 2.6 Quorum..................................................... 5
Section 2.7 Participation in Meetings by Conference Telephone.......... 5
Section 2.8 Conduct of Business........................................ 5
Section 2.9 Powers..................................................... 5
Section 2.10 Compensation of Directors.................................. 6
Section 2.11 Nomination of Director Candidates.......................... 6
ARTICLE III COMMITTEES...................................................... 7
Section 3.1 Committees of the Board of Directors....................... 7
Section 3.2 Conduct of Business........................................ 8
ARTICLE IV OFFICERS........................................................ 8
Section 4.1 Generally.................................................. 8
Section 4.2 Chairman of the Board...................................... 8
Section 4.3 President.................................................. 8
Section 4.4 Vice President............................................. 8
Section 4.5 Treasurer/Chief Financial Officer.......................... 9
Section 4.6 Secretary.................................................. 9
Section 4.7 Delegation of Authority.................................... 9
Section 4.8 Removal.................................................... 9
Section 4.9 Action With Respect to Securities of Other Corporations.... 9
ARTICLE V STOCK........................................................... 9
Section 5.1 Certificates of Stock...................................... 9
Section 5.2 Transfers of Stock......................................... 9
Section 5.3 Record Date................................................ 9
</TABLE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 5.4 Lost, Stolen or Destroyed Certificates..................... 10
Section 5.5 Regulations................................................ 10
ARTICLE VI NOTICES......................................................... 10
Section 6.1 Notices.................................................... 10
Section 6.2 Waivers.................................................... 10
ARTICLE VII MISCELLANEOUS................................................... 10
Section 7.1 Facsimile Signatures....................................... 10
Section 7.2 Corporate Seal............................................. 11
Section 7.3 Reliance Upon Books, Reports and Records................... 11
Section 7.4 Fiscal Year................................................ 11
Section 7.5 Time Periods............................................... 11
ARTICLE VIII INDEMNIFICATION OF DIRECTORS AND OFFICERS....................... 11
Section 8.1 Right to Indemnification................................... 11
Section 8.2 Right of Claimant to Bring Suit............................ 12
Section 8.3 Non-Exclusivity of Rights.................................. 12
Section 8.4 Indemnification Contracts.................................. 12
Section 8.5 Insurance.................................................. 13
Section 8.6 Effect of Amendment........................................ 13
ARTICLE IX AMENDMENTS...................................................... 13
Section 9.1 Amendment of Bylaws........................................ 13
</TABLE>
<PAGE>
DELAWARE AGILE SOFTWARE CORPORATION
A DELAWARE CORPORATION
BYLAWS
ARTICLE I
STOCKHOLDERS
------------
Section 1.1 Annual Meeting. An annual meeting of the stockholders, for the
--------------
election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date, and at such time as the Board of
Directors shall each year fix, which date shall be within thirteen months
subsequent to the later of the date of incorporation or the last annual meeting
of stockholders.
Section 1.2 Special Meetings. Special meetings of the stockholders, for any
----------------
purpose or purposes prescribed in the notice of the meeting, may be called only
(i) by the Board of Directors pursuant to a resolution adopted by a majority of
the board of directors or (ii) by the President or (iii) by the holders of not
less than 10% of capital stock and shall be held at such place, on such date,
and at such time as they shall fix. Business transacted at special meetings
shall be confined to the purpose or purposes stated in the notice.
Section 1.3 Notice of Meetings. Written notice of the place, date, and time
------------------
of all meetings of the stockholders shall be given, not less than ten (10) nor
more than sixty (60) days before the date on which the meeting is to be held, to
each stockholder entitled to vote at such meeting, except as otherwise provided
herein or required by law (meaning, here and hereinafter, as required from time
to time by the Delaware General Corporation Law or the Certificate of
Incorporation of the Corporation).
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty (30) days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 1.4 Quorum. At any meeting of the stockholders, the holders of a
------
majority of all of the shares of the stock entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger number may be
required by law.
<PAGE>
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date,
or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, then except as otherwise required by law, those
present at such adjourned meeting shall constitute a quorum, and all matters
shall be determined by a majority of the votes cast at such meeting.
Section 1.5 Conduct of the Stockholders' Meeting. At every meeting of the
------------------------------------
stockholders, the Chairman, if there is such an officer, or if not, the
President of the Corporation, or in his absence the Vice President designated by
the President, or in the absence of such designation any Vice President, or in
the absence of the President or any Vice President, a chairman chosen by the
majority of the voting shares represented in person or by proxy, shall act as
Chairman. The Secretary of the Corporation or a person designated by the
Chairman shall act as Secretary of the meeting. Unless otherwise approved by the
Chairman, attendance at the stockholders' meeting is restricted to stockholders
of record, persons authorized in accordance with Section 8 of these Bylaws to
act by proxy, and officers of the Corporation.
Section 1.6 Conduct of Business. The Chairman shall call the meeting to
-------------------
order, establish the agenda, and conduct the business of the meeting in
accordance therewith or, at the Chairman's discretion, it may be conducted
otherwise in accordance with the wishes of the stockholders in attendance. The
date and time of the opening and closing of the polls for each matter upon which
the stockholders will vote at the meeting shall be announced at the meeting.
The Chairman shall also conduct the meeting in an orderly manner, rule on
the precedence of and procedure on, motions and other procedural matters, and
exercise discretion with respect to such procedural matters with fairness and
good faith toward all those entitled to take part. The Chairman may impose
reasonable limits on the amount of time taken up at the meeting on discussion in
general or on remarks by any one stockholder. Should any person in attendance
become unruly or obstruct the meeting proceedings, the Chairman shall have the
power to have such person removed from participation. Notwithstanding anything
in the Bylaws to the contrary, no business shall be conducted at a meeting
except in accordance with the procedures set forth in this Section 1.6 and
Section 1.7, below. The Chairman of a meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting and in accordance with the provisions of this Section 1.6 and
Section 1.7, and if he should so determine, he shall so declare to the meeting
and any such business not properly brought before the meeting shall not be
transacted.
Section 1.7 Notice of Stockholder Business. At an annual or special
------------------------------
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before a
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
properly brought before the meeting by or at the direction of the Board of
Directors, (c) properly brought before an annual meeting by a stockholder, or
(d) properly brought before a special meeting by a stockholder, but if, and only
if, the notice of a special
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meeting provides for business to be brought before the meeting by stockholders.
For business to be properly brought before a meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Corporation. To be timely, a stockholder proposal to be presented at an
annual meeting shall be received at the Corporation's principal executive
offices not less than 120 calendar days in advance of the date that the
Corporation's (or the Corporation's predecessor's) proxy statement was released
to stockholders in connection with the previous year's annual meeting of
stockholders, except that if no annual meeting was held in the previous year or
the date of the annual meeting has been changed by more than 30 calendar days
from the date contemplated at the time of the previous year's proxy statement,
or in the event of a special meeting, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual or
special meeting (a) a brief description of the business desired to be brought
before the annual or special meeting and the reasons for conducting such
business at the special meeting, (b) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (c) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder, and (d) any material interest of the stockholder in such business.
Section 1.8 Proxies and Voting. At any meeting of the stockholders, every
------------------
stockholder entitled to vote may vote in person or by proxy authorized by an
instrument in writing or by a transmission permitted by law filed in accordance
with the procedure established for the meeting. No stockholder may authorize
more than one proxy for his shares.
Each stockholder shall have one vote for every share of stock entitled to
vote which is registered in his or her name on the record date for the meeting,
except as otherwise provided herein or required by law.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or his or her proxy, a stock
vote shall be taken. Every stock vote shall be taken by ballots, each of which
shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
Every vote taken by ballots shall be counted by an inspector or inspectors
appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes cast, and
except as otherwise required by law, all other matters shall be determined by a
majority of the votes cast.
Section 1.9 Stock List. A complete list of stockholders entitled to vote at
----------
any meeting of stockholders, arranged in alphabetical order for each class
of stock and showing the address of each such stockholder and the number of
shares registered in his or her name, shall be open to the examination of
any such stockholder, for any purpose germane to the meeting, during
ordinary business hours for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held.
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The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
ARTICLE II
BOARD OF DIRECTORS
------------------
Section 2.1 Number and Term of Office. The number of directors shall
-------------------------
initially be six (6) and, thereafter, shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by a
majority of the total number of authorized directors (whether or not there exist
any vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption). Upon the closing of the
first sale of the Corporation's common stock pursuant to a firmly underwritten
registered public offering (the "IPO"), the directors shall be divided into
three classes, with the term of office of the first class to expire at the first
annual meeting of stockholders held after the IPO, the term of office of the
second class to expire at the second annual meeting of stockholders held after
the IPO, the term of office of the third class to expire at the third annual
meeting of stockholders held after the IPO and thereafter for each such term to
expire at each third succeeding annual meeting of stockholders after such
election. A vacancy resulting from the removal of a director by the
stockholders as provided in Article II, Section 2.3 below may be filled at
special meeting of the stockholders held for that purpose. All directors shall
hold office until the expiration of the term for which elected and until their
respective successors are elected, except in the case of the death, resignation
or removal of any director.
Section 2.2 Vacancies and Newly Created Directorships. Subject to the
-----------------------------------------
rights of the holders of any series of Preferred Stock then outstanding, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification or other cause (other than removal
from office by a vote of the stockholders) may be filled only by a majority vote
of the directors then in office, though less than a quorum, and directors so
chosen shall hold office for a term expiring at the next annual meeting of
stockholders. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
Section 2.3 Removal. Subject to the rights of holders of any series of
-------
Preferred Stock then outstanding, any directors, or the entire Board of
Directors, may be removed from office at any time, with or without cause, but
only by the affirmative vote of the holders of at least a majority of the voting
power of all of the then outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class. Vacancies in the Board of Directors resulting from such removal
may be filled by a majority of the directors then in office, though less than a
quorum, or by the stockholders as provided in Article II, Section 2.1 above.
Directors so chosen shall hold office until the new annual meeting of
stockholders.
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Section 2.4 Regular Meetings. Regular meetings of the Board of Directors
----------------
shall be held at such place or places, on such date or dates, and at such time
or times as shall have been established by the Board of Directors and publicized
among all directors. A notice of each regular meeting shall not be required.
Section 2.5 Special Meetings. Special meetings of the Board of Directors
----------------
may be called by one-third of the directors then in office (rounded up to the
nearest whole number) or by the chief executive officer and shall be held at
such place, on such date, and at such time as they or he or she shall fix.
Notice of the place, date, and time of each such special meeting shall be given
each director by whom it is not waived by mailing written notice not fewer than
five (5) days before the meeting or by telegraphing or personally delivering the
same not fewer than twenty-four (24) hours before the meeting. Unless otherwise
indicated in the notice thereof, any and all business may be transacted at a
special meeting.
Section 2.6 Quorum. At any meeting of the Board of Directors, a majority
------
of the total number of authorized directors shall constitute a quorum for all
purposes. If a quorum shall fail to attend any meeting, a majority of those
present may adjourn the meeting to another place, date, or time, without further
notice or waiver thereof.
Section 2.7 Participation in Meetings by Conference Telephone. Members of
-------------------------------------------------
the Board of Directors, or of any committee thereof, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other and such participation shall constitute presence in
person at such meeting.
Section 2.8 Conduct of Business. At any meeting of the Board of
-------------------
Directors, business shall be transacted in such order and manner as the Board
may from time to time determine, and all matters shall be determined by the vote
of a majority of the directors present, except as otherwise provided herein or
requited by law. Action may be taken by the Board of Directors without a meeting
if all members thereof consent thereto in writing, and the writing or writings
are filed with the minutes of proceedings of the Board of Directors.
Section 2.9 Powers. The Board of Directors may, except as otherwise
------
required by law, exercise all such powers and do all such acts and things as may
be exercised or done by the Corporation, including, without limiting the
generality of the foregoing, the unqualified power:
(a) To declare dividends from time to time in accordance with
law;
(b) To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
(c) To authorize the creation, making and issuance, in such form
as it may determine, of written obligations of every kind, negotiable or non-
negotiable, secured or unsecured, and to do all things necessary in connection
therewith;
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(d) To remove any officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties of any officer
upon any other person for the time being;
(e) To confer upon any officer of the Corporation the power to
appoint, remove and suspend subordinate officers, employees and agents;
(f) To adopt from time to time such stock, option, stock
purchase, bonus or other compensation plans for directors, officers, employees
and agents of the Corporation and its subsidiaries as it may determine;
(g) To adopt from time to time such insurance, retirement, and
other benefit plans for directors, officers, employees and agents of the
Corporation and its subsidiaries as it may determine; and
(h) To adopt from time to time regulations, not inconsistent with
these bylaws, for the management of the Corporation's business and affairs.
Section 2.10 Compensation of Directors. Directors, as such, may receive,
-------------------------
pursuant to resolution of the Board of Directors, fixed fees and other
compensation for their services as directors, including, without limitation,
their services as members of committees of the Board of Directors.
Section 2.11 Nomination of Director Candidates. Subject to the rights of
---------------------------------
holders of any class or series of Preferred Stock then outstanding, nominations
for the election of Directors may be made by the Board of Directors or a proxy
committee appointed by the Board of Directors or by any stockholder entitled to
vote in the election of Directors generally. However, any stockholder entitled
to vote in the election of Directors generally may nominate one or more persons
for election as Directors at a meeting only if timely notice of such
stockholder's intent to make such nomination or nominations has been given in
writing to the Secretary of the Corporation. To be timely, a stockholder
nomination for a director to be elected at an annual meeting shall be received
at the Corporation's principal executive offices not less than 120 calendar days
in advance of the date that the Corporation's (or the Corporation's
Predecessor's) Proxy statement was released to stockholders in connection with
the previous year's annual meeting of stockholders, except that if no annual
meeting was held in the previous year or the date of the annual meeting has been
changed by more than 30 calendar days from the date contemplated at the time of
the previous year's proxy statement, or in the event of a nomination for
director to be elected at a special meeting, notice by the stockholders to be
timely must be received not later than the close of business on the tenth day
following the day on which such notice of the date of the special meeting was
mailed or such public disclosure was made. Each such notice shall set forth:
(a) the name and address of the stockholder who intends to make the nomination
and of the person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of stock of the Corporation entitled to vote
for the election of Directors on the date of such notice and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons
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(naming such person or persons) pursuant to which the nomination or nominations
are to be made by the stockholder; (d) such other information regarding each
nominee proposed by such stockholder as would be required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated, or intended to be nominated, by the
Board of Directors; and (e) the consent of each nominee to serve as a director
of the Corporation if so elected.
In the event that a person is validly designated as a nominee in accordance
with this Section 2.11 and shall thereafter become unable or unwilling to stand
for election to the Board of Directors, the Board of Directors or the
stockholder who proposed such nominee, as the case may be, may designate a
substitute nominee upon delivery, not fewer than five days prior to the date of
the meeting for the election of such nominee, of a written notice to the
Secretary setting forth such information regarding such substitute nominee as
would have been required to be delivered to the Secretary pursuant to this
Section 2.11 had such substitute nominee been initially proposed as a nominee.
Such notice shall include a signed consent to serve as a director of the
Corporation, if elected, of each such substitute nominee.
If the chairman of the meeting for the election of Directors determines
that a nomination of any candidate for election as a Director at such meeting
was not made in accordance with the applicable provisions of this Section 2.11,
such nomination shall be void; provided, however, that nothing in this Section
2.11 shall be deemed to limit any voting rights upon the occurrence of dividend
arrearages provided to holders of Preferred Stock pursuant to the Preferred
Stock designation for any series of Preferred Stock.
ARTICLE III
COMMITTEES
----------
Section 3.1 Committees of the Board of Directors. The Board of Directors,
------------------------------------
by a vote of a majority of the whole Board, may from time to time designate
committees of the Board, with such lawfully delegable powers and duties as it
thereby confers, to serve at the pleasure of the Board and shall, for those
committees and any others provided for herein, elect a director or directors to
serve as the member or members, designating, if it desires, other directors as
alternate members who may replace any absent or disqualified member at any
meeting of the committee. Any committee so designated may exercise the power and
authority of the Board of Directors to declare a dividend, to authorize the
issuance of stock or to adopt a certificate of ownership and merger pursuant to
Section 253 of the Delaware General Corporation Law if the resolution which
designates the committee or a supplemental resolution of the Board of Directors
shall so provide. In the absence or disqualification of any member of any
committee and any alternate member in his place, the member or members of the
committee present at the meeting and not disqualified from voting, whether or
not he or she or they constitute a quorum, may by unanimous vote appoint another
member of the Board of Directors to act at the meeting in the place of the
absent or disqualified member.
Section 3.2 Conduct of Business. Each committee may determine the
-------------------
procedural rules for meeting and conducting its business and shall act in
accordance therewith, except as
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otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third of the authorized members shall
constitute a quorum unless the committee shall consist of one or two members, in
which event one member shall constitute a quorum; and all matters shall be
determined by a majority vote of the members present. Action may be taken by any
committee without a meeting if all members thereof consent thereto in writing,
and the writing or writings are filed with the minutes of the proceedings of
such committee.
ARTICLE IV
OFFICERS
--------
Section 4.1 Generally. The officers of the Corporation shall consist of a
---------
President, one or more Vice Presidents, a Secretary and a Treasurer. The
Corporation may also have, at the discretion of the Board of Directors, a
Chairman of the Board and such other officers as may from time to time be
appointed by the Board of Directors. Officers shall be elected by the Board of
Directors, which shall consider that subject at its first meeting after every
annual meeting of stockholders. Each officer shall hold office until his or her
successor is elected and qualified or until his or her earlier resignation or
removal. The Chairman of the Board, if there shall be such an officer, and the
President shall each be members of the Board of Directors. Any number of offices
may he held by the same person.
Section 4.2 Chairman of the Board. The Chairman of the Board, if there
---------------------
shall be such an officer, shall, if present, preside at all meetings of the
Board of Directors, and exercise and perform such other powers and duties as may
be from time to time assigned to him by the Board of Directors or prescribed by
these bylaws.
Section 4.3 President. The President shall be the chief executive officer
---------
of the Corporation. Subject to the provisions of these bylaws and to the
direction of the Board of Directors, he or she shall have the responsibility for
the general management and control of the business and affairs of the
Corporation and shall perform all duties and have all powers which are commonly
incident to the office of chief executive or which are delegated to him or her
by the Board of Directors. He or she shall have power to sign all stock
certificates, contracts and other instruments of the Corporation which are
authorized and shall have general supervision and direction of all of the other
officers, employees and agents of the Corporation.
Section 4.4 Vice President. Each Vice President shall have such powers
--------------
and duties as may be delegated to him or her by the Board of Directors. One Vice
President shall be designated by the Board to perform the duties and exercise
the powers of the President in the event of the President's absence or
disability.
Section 4.5 Treasurer/Chief Financial Officer. The Treasurer/Chief
---------------------------------
Financial Officer shall keep and maintain, or cause to be kept and maintained,
adequate and correct books and records of accounts of the properties and
business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital retained earnings,
8
<PAGE>
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
The Treasurer/Chief Financial Officer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. He or she shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, shall render to the President, the Chief Executive Officer, or the
directors, upon request, an account of all his or her transactions as
Treasurer/Chief Financial Officer and of the financial condition of the
corporation, and shall have other powers and perform such other duties as may be
prescribed by the Board of Directors or the Bylaws.
Section 4.6 Secretary. The Secretary shall issue all authorized notices
---------
for, and shall keep, or cause to be kept, minutes of all meetings of the
stockholders, the Board of Directors, and all committees of the Board of
Directors. He or she shall have charge of the corporate books and shall perform
such other duties as the Board of Directors may from time to time prescribe.
Section 4.7 Delegation of Authority. The Board of Directors may from time
-----------------------
to time delegate the powers or duties of any officer to any other officers or
agents, notwithstanding any provision hereof.
Section 4.8 Removal. Any officer of the Corporation may be removed at any
-------
time, with or without cause, by the Board of Directors.
Section 4.9 Action With Respect to Securities of Other Corporations.
-------------------------------------------------------
Unless otherwise directed by the Board of Directors, the President or any
officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which this Corporation may hold securities and otherwise to
exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other corporation.
ARTICLE V
STOCK
-----
Section 5.1 Certificates of Stock. Each stockholder shall be entitled to
---------------------
a certificate signed by, or in the name of the Corporation by, the President or
a Vice President, and by the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer, certifying the number of shares owned by
him or her. Any of or all the signatures on the certificate may be facsimile.
Section 5.2 Transfers of Stock. Transfers of stock shall be made only
------------------
upon the transfer books of the Corporation kept at an office of the Corporation
or by transfer agents designated to transfer shares of the stock of the
Corporation. Except where a certificate is issued in accordance with Section 4
of Article V of these bylaws, an outstanding certificate for the number of
shares involved shall be surrendered for cancellation before a new certificate
is issued therefor.
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Section 5.3 Record Date. The Board of Directors may fix a record date,
-----------
which shall not be more than sixty (60) nor fewer than ten (10) days before the
date of any meeting of stockholders, nor more than sixty (60) days prior to the
time for the other action hereinafter described, as of which there shall be
determined the stockholders who are entitled: to notice of or to vote at any
meeting of stockholders or any adjournment thereof; to receive payment of any
dividend or other distribution or allotment of any rights; or to exercise any
rights with respect to any change, conversion or exchange of stock or with
respect to any other lawful action.
Section 5.4 Lost, Stolen or Destroyed Certificates. In the event of the
--------------------------------------
loss, theft or destruction of any certificate of stock, another may be issued in
its place pursuant to such regulations as the Board of Directors may establish
concerning proof of such loss, theft or destruction and concerning the giving of
a satisfactory bond or bonds of indemnity.
Section 5.5 Regulations. The issue, transfer, conversion and registration
-----------
of certificates of stock shall be governed by such other regulations as the
Board of Directors may establish.
ARTICLE VI
NOTICES
-------
Section 6.1 Notices. Except as otherwise specifically provided herein or
-------
required by law, all notices required to be given to any stockholder, director,
officer, employee or agent shall be in writing and may in every instance be
effectively given by hand delivery to the recipient thereof, by depositing such
notice in the mails, postage paid, or by sending such notice by prepaid
telegram, mailgram, telecopy or commercial courier service. Any such notice
shall be addressed to such stockholder, director, officer, employee or agent at
his or her last known address as the same appears on the books of the
Corporation. The time when such notice shall be deemed to be given shall be the
time such notice is received by such stockholder, director, officer, employee or
agent, or by any person accepting such notice on behalf of such person, if hand
delivered, or the time such notice is dispatched, if delivered through the mails
or be telegram or mailgram.
Section 6.2 Waivers. A written waiver of any notice, signed by a
-------
stockholder, director, officer, employee or agent, whether before or after the
time of the event for which notice is to be given, shall be deemed equivalent to
the notice required to be given to such stockholder, director, officer, employee
or agent. Neither the business nor the purpose of any meeting need be specified
in such a waiver.
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.1 Facsimile Signatures. In addition to the provisions for use
--------------------
of facsimile signatures elsewhere specifically authorized in these bylaws,
facsimile signatures of any officer
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or officers of the Corporation may be used whenever and as authorized by the
Board of Directors or a committee thereof.
Section 7.2 Corporate Seal. The Board of Directors may provide a suitable
--------------
seal, containing the name of the Corporation, which seal shall be in the charge
of the Secretary. If and when so directed by the Board of Directors or a
committee thereof, duplicates of the seal may be kept and used by the Treasurer
or by an Assistant Secretary or Assistant Treasurer.
Section 7.3 Reliance Upon Books, Reports and Records. Each director, each
----------------------------------------
member of any committee designated by the Board of Directors, and each officer
of the Corporation shall, in the performance of his duties, be fully protected
in relying in good faith upon the books of account or other records of the
Corporation, including reports made to the Corporation by any of its officers,
by an independent certified public accountant, or by an appraiser selected with
reasonable care.
Section 7.4 Fiscal Year. The fiscal year of the Corporation shall be as
-----------
fixed by the Board of Directors.
Section 7.5 Time Periods. In applying any provision of these bylaws which
------------
require that an act be done or not done a specified number of days prior to an
event or that an act be done during a period of a specified number of days prior
to an event, calendar days shall be used, the day of the doing of the act shall
be excluded, and the day of the event shall be included.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
Section 8.1 Right to Indemnification. Each person who was or is made a
------------------------
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she or a person of whom he or
she is the legal representative, is or was a director, officer or employee of
the Corporation or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, or of a Partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer or employee or in any other capacity
while serving as a director, officer or employee, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by Delaware Law, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said Law permitted the Corporation
to provide prior to such amendment) against all expenses, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties,
amounts paid or to be paid in settlement and amounts expended in seeking
indemnification granted to such person under applicable law, this bylaw or any
agreement with the Corporation) reasonably incurred or suffered by such person
in connection therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer or employee and shall inure to the
benefit of his or her heirs, executors and administrators; provided, however,
-------- -------
that, except as
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provided in Section 8.2 of this Article VIII, the Corporation shall indemnify
any such person seeking indemnity in connection with an action, suit or
proceeding (or part thereof) initiated by such person only if (a) such
indemnification is expressly required to be made by law, (b) the action, suit or
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation, (c) such indemnification is provided by the Corporation, in its
sole discretion, pursuant to the powers vested in the Corporation under the
Delaware General Corporation Law, or (d) the action, suit or proceeding (or part
thereof) is brought to establish or enforce a right to indemnification under an
indemnity agreement or any other statute or law or otherwise as required under
Section 145 of the Delaware General Corporation Law. Such right shall be a
contract right and shall include the right to be paid by the Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, unless the Delaware General Corporation
-------- -------
Law then so prohibits, the payment of such expenses incurred by a director or
officer of the Corporation in his or her capacity as a director or officer (and
not in any other capacity in which service was or is tendered by such person
while a director or officer, including, without limitation. service to an
employee benefit plan) in advance of the final disposition of such proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it
should be determined ultimately that such director or officer is not entitled to
be indemnified under this Section or otherwise.
Section 8.2 Right of Claimant to Bring Suit. If a claim under Section 1
------------------------------
of this Article VIII is not paid in full by the Corporation within ninety (90)
days after a written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if such suit is not frivolous or brought in bad
faith, the claimant shall be entitled to be paid also the expense of prosecuting
such claim. The burden of proving such claim shall be on the claimant. It shall
be a defense to any such action (other then an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to this
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that claimant has not
met the applicable standard of conduct.
Section 8.3 Non-Exclusivity of Rights. The rights conferred on any person
-------------------------
in Sections 1 and 2 shall not be exclusive of any other right which such persons
may have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.
Section 8.4 Indemnification Contracts. The Board of Directors is
-------------------------
authorized to enter into a contract with any director, officer, employee or
agent of the Corporation, or any person
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serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including employee benefit plans, providing for indemnification
rights equivalent to or, if the Board of Directors so determinates, greater
than, those provided for in this Article VIII.
Section 8.5 Insurance. The Corporation shall maintain insurance to the
---------
extent reasonably available, at its expense, to protect itself and any such
director, officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the Delaware
General Corporation Law.
Section 8.6 Effect of Amendment. Any amendment, repeal or modification of
-------------------
any provision of this Article VIII by the stockholders and the directors of the
Corporation shall not adversely affect any right or protection of a director or
officer of the Corporation existing at the time of such amendment, repeal or
modification.
ARTICLE IX
AMENDMENTS
----------
Section 9.1 Amendment of Bylaws. The Board of Directors is expressly
-------------------
empowered to adopt, amend or repeal Bylaws of the Corporation. Any adoption,
amendment or repeal of Bylaws of the Corporation by the Board of Directors shall
require the approval of a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized directorships
at the time any resolution providing for adoption, amendment or repeal is
presented to the Board). The stockholders shall also have power to adopt, amend
or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of
By-Laws of the Corporation by the stockholders shall require, in addition to any
vote of the holders of any class or series of stock of the Corporation required
by law or by this Certificate of Incorporation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
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<PAGE>
CERTIFICATE OF SECRETARY
------------------------
I hereby certify that I am the duly elected and acting Secretary of
Delaware Agile Software Corporation Delaware, a Delaware corporation (the
"Corporation"), and that the foregoing Bylaws, comprising thirteen (13) pages,
constitute the Bylaws of the Corporation as duly adopted on _____, 1999, by the
unanimous written consent of the Board of Directors of the Corporation.
IN WITNESS WHEREOF, I have hereunto subscribed my name on ________________,
199____.
_________________________________________
Thomas P. Shanahan
<PAGE>
EXHIBIT 10.1
AGILE SOFTWARE CORPORATION
1995 STOCK OPTION PLAN
(As Amended through July , 1999)
ARTICLE ONE
GENERAL PROVISIONS
------------------
I. PURPOSE OF THE PLAN
This 1995 Stock Option Plan is intended to promote the interests of Agile
Software Corporation, a Delaware corporation, by providing eligible persons with
the opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.
II. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
a Committee. Members of the Committee shall serve for such period of time as the
Board may determine and shall be subject to removal by the Board at any time.
The Board may also at any time terminate the functions of the Committee and
reassume all powers and authority previously delegated to the Committee.
B. Any officer of the Corporation shall have the authority to act on
behalf of the Corporation with respect to any matter, right, obligation,
determination or election which is the responsibility of or which is allocated
to the Corporation herein, provided the officer has apparent authority with
respect to such matter, right, obligation, determination or election.
C. In addition to any other powers set forth in the Plan and subject to
the provisions of the Plan, the Plan Administrator shall have the full and final
power and authority, in its discretion to:
1. establish such rules and regulations as it may deem appropriate
for proper administration of the Plan and to make such determinations under, and
issue such interpretations of, the Plan and any outstanding option or stock
issuance as it may deem necessary or advisable;
2. determine which eligible persons are to receive option grants and
stock issuances under the Plan, the time or times when such option grants or
stock issuances are to be made, the number of shares to be covered by each such
grant, the status of the granted option as either an Incentive Option or a Non-
Statutory Option, the time or times at which each option is to become
exercisable, the vesting schedule (if any) applicable to each option or stock
issuance, the maximum term for which the option is to remain outstanding;
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3. amend, modify, extend, cancel, or renew, any option or stock
issuance or to waive any restrictions or conditions applicable to any option or
shares acquired pursuant to a stock issuance or upon the exercise of an option;
4. amend the exercisability of any option or the vesting of any
shares acquired upon the exercise of any option or pursuant to any stock
issuance, including with respect to the period following an Optionee's
termination of Service with the Corporation;
5. delegate to any proper officer of the Corporation the authority
to grant one or more options or stock issuances, without further approval of the
Board, to any person eligible pursuant to Section II below, other than a person
who, at the time of such grant, is an Insider; provided, however, that (i) such
options and stock issuances shall not be granted to any one person within any
fiscal year of the Corporation for more than 250,000 shares in the aggregate,
(ii) the exercise price per share of each option shall be equal to the Fair
Market Value per share of the Common Stock on the effective date of grant (or,
if the Common Stock has not traded on such date, on the last day preceding the
effective date of grant on which the Common Stock was traded), and (iii) each
option or stock issuance shall be subject to the terms and conditions of the
appropriate standard form of option agreement or Issuance Agreement approved by
the Board and shall conform to the provisions of the Plan and such other
guidelines as shall be established from time to time by the Board; and
6. correct any defect, supply any omission or reconcile any
inconsistency in the Plan, any option agreement, or any stock issuance agreement
and to make all other determinations and take such other actions with respect to
the Plan or any option or stock issuance as the Board may deem advisable to the
extent not inconsistent with the provisions of the Plan or applicable law.
Decisions of the Plan Administrator shall be final and binding on all
parties who have an interest in the Plan or any option, stock issuance, or
shares issued thereunder.
D. With respect to participation by Insiders in the Plan, at any time that
any class of equity security of the Corporation is registered pursuant to
Section 12 of the 1934 Act, the Plan shall be administered in compliance with
the requirements, if any, of Rule 16b-3 of the 1934 Act.
E. If the Corporation (or participating Parent or Subsidiary corporation)
is a "publicly held corporation" within the meaning of Section 162(m) of the
Code, the Board may establish a Committee of "outside directors" within the
meaning of Section 162(m) of the Code to approve the grant of any option or
stock issuance which might reasonably be anticipated to result in the payment of
employee remuneration that would otherwise exceed the limit on employee
remuneration deductible for income tax purposes pursuant to Section 162(m).
F. In addition to such other rights of indemnification as they may have as
members of the Board or officers or employees of the Corporation (or
participating Parent or Subsidiary corporation), members of the Board and any
officers or employees of the Corporation (or participating Parent or Subsidiary
corporation) to whom authority to act for the Board or the Corporation is
delegated shall be indemnified by the Corporation against all reasonable
expenses, including attorneys' fees, actually and necessarily incurred in
connection with the
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defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Corporation) or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, except in relation to matters as to which it shall
be adjudged in such action, suit or proceeding that such person is liable for
gross negligence, bad faith or intentional misconduct in duties; provided,
however, that within sixty (60) days after the institution of such action, suit
or proceeding, such person shall offer to the Corporation, in writing, the
opportunity at its own expense to handle and defend the same.
III. ELIGIBILITY
A. Employees, Consultants and non-employee Directors are eligible to
receive option grants pursuant to the option Grant Program and/or stock
issuances under the Stock Issuance Program.
B. For purposes of the foregoing sentence, Employees, Consultants, and non-
employee Directors shall include prospective Employees, prospective Consultants
and prospective non-employee Directors to whom options and/or stock issuances
are granted in connection with written offers of employment or other service
relationship with the Corporation or any participating Parent or Subsidiary
corporation. Eligible persons may be granted more than one (1) option and/or
stock issuance.
IV. STOCK SUBJECT TO THE PLAN
A. The maximum number of shares of Common Stock which may be issued over
the term of the Plan shall not exceed 5,375,000 shares, cumulatively increased
on May 1, 2000 and each May 1 thereafter until and including May 1, 2005 by an
amount equal to the lesser of (a) five hundred thousand (500,000) shares per
year or (b) five percent (5%) of the number of shares of Common Stock issued and
outstanding on the immediately preceding April 30, or (c) a lesser amount of
shares determined by the Board, and shall consist of authorized but unissued or
reacquired shares of Common Stock, or any combination thereof. If an outstanding
option for any reason expires or is terminated or canceled or if shares of stock
are acquired upon the exercise of an option or pursuant to a stock issuance are
subject to repurchase by the Corporation and are repurchased by the Corporation,
the shares of stock allocable to the unexercised portion of such option or such
repurchased shares of stock shall again be available for issuance under the
Plan.
B. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities and the exercise price per
share in effect under each outstanding option, and (iii) the number and/or class
of securities acquired pursuant to each stock issuance that are subject to
vesting and/or a repurchase right of the Corporation in order to prevent the
dilution or enlargement of benefits thereunder. The
3
<PAGE>
adjustments determined by the Plan Administrator shall be final, binding and
conclusive. In no event shall any such adjustments be made in connection with
the conversion of one or more outstanding shares of the Corporation's preferred
stock into shares of Common Stock.
ARTICLE TWO
OPTION GRANT PROGRAM
--------------------
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
--------
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, comply with the terms of the Plan
applicable to Incentive Options.
A. Exercise Price.
--------------
1. The exercise price per share shall not be less than eighty-five
percent (85%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. The exercise price shall become immediately due upon exercise of
the option and shall, subject to the documents evidencing the option, be made:
a. in cash, cash equivalent, or check made payable to the
Corporation;
b. in shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date;
c. to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to which the Optionee
shall concurrently provide irrevocable instructions (a) to a Corporation-
designated brokerage firm to effect the immediate sale of the purchased shares
and remit to the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price payable
for the purchased shares plus all applicable Federal, state and local income and
employment taxes required to be withheld by the Corporation by reason of such
exercise and (b) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the sale;
d. provided that the person to whom the Option is granted is an
Employee and in the Corporation's sole discretion at the time the Option is
exercised, by delivery of a promissory note in a form approved by the
Corporation for the aggregate exercise price, provided that, if the Corporation
is incorporated in the State of Delaware, the portion of the aggregate exercise
price not less than the par value of the shares being acquired shall be paid in
cash;
4
<PAGE>
e. by such other consideration as may be approved by the Board
from time to time to the extent permitted by applicable law; or
f. by any combination thereof.
The Board may at any time or from time to time, grant options which do not
permit all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.
3. No promissory note shall be permitted if the exercise of an
option using a promissory note would be a violation of any law. Any permitted
promissory note shall be on such terms as the Board shall determine at the time
the option is granted. The Board shall have the authority to permit or require
the Optionee to secure any promissory note used to exercise an option with the
shares of stock acquired upon the exercise of the option or with other
collateral acceptable to the Corporation. Unless otherwise provided by the
Board, if the Corporation at any time is subject to the regulations promulgated
by the Board of Governors of the Federal Reserve System or any other
governmental entity affecting the extension of credit in connection with the
Corporation's securities, any promissory note shall comply with such applicable
regulations, and the Optionee shall pay the unpaid principal and accrued
interest, if any, to the extent nece ssary to comply with such applicable
regulations.
B. Exercise and Term of Options. Each option shall be exercisable at such
----------------------------
time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant; provided, however, that no option granted to a prospective
Employee, prospective Consultant, prospective non-employee Director may become
exercisable prior to the date on which such person commences services with the
Corporation (or any Parent or Subsidiary corporation).
C. Effect of Termination of Service. The following provisions shall
--------------------------------
govern the exercise of any options held by the Optionee at the time of cessation
of Service or death:
1. Should the Optionee cease to remain in Service for any reason
other than Disability, death or Misconduct, then the Optionee shall have a
period of three (3) months following the date of such cessation of Service
during which to exercise each outstanding option held by such Optionee.
2. Should such Service terminate by reason of Disability, then the
Optionee shall have a period of twelve (12) months following the date of such
cessation of Service during which to exercise each outstanding option held by
such Optionee.
3. Should the Optionee die while holding one or more outstanding
options, then the personal representative of the Optionee's estate or the person
or persons to whom the option is transferred pursuant to the Optionee's will or
in accordance with the laws of descent and distribution shall have a period of
twelve (12) months following the date of the Optionee's death during which to
exercise each such option.
4. Notwithstanding the foregoing, if the exercise of an Option
within the applicable time periods set forth above is prevented by the
provisions of Section V of Article
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<PAGE>
Four below, the option shall remain exercisable until three (3) months after the
date the Optionee is notified by the Corporation that the option is exercisable,
but in any event no later than the specified expiration of the option term.
5. Notwithstanding the foregoing, if a sale within the applicable
time periods set forth above of shares acquired upon the exercise of the option
would subject the Optionee to suit under Section 16(b) of the 1934 Act, the
option shall remain exercisable until the earliest to occur of (i) the tenth
(10th) day following the date on which a sale of such shares by the Optionee
would no longer be subject to such suit, (ii) the one hundred and ninetieth
(190th) day after the Optionee's termination of Service, or (iii) the specified
expiration of the option term.
6. Under no circumstances, however, shall any option be exercisable
after the specified expiration of the option term.
7. During the applicable post-Service exercise period, the option
may not be exercised in the aggregate for more than the number of vested shares
for which the option is exercisable on the date of the Optionee's cessation of
Service. Upon the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall terminate and cease to
be outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's cessation
of Service, terminate and cease to be outstanding to the extent it is not
exercisable for vested shares on the date of such cessation of Service.
8. Should Optionee's Service be terminated for Misconduct, then all
outstanding options held by the Optionee shall terminate immediately and cease
to remain outstanding.
D. Stockholder Rights. The holder of an option shall have no stockholder
------------------
rights with respect to the shares subject to the option until such person shall
have exercised the option, paid the exercise price and become a holder of record
of the purchased shares.
E. Transferability of Options. During the lifetime of the Optionee, an
--------------------------
option shall be exercisable only by the Optionee or the Optionee's guardian or
legal representative. No option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Board, in its
discretion, and set forth in the option agreement evidencing such option, a Non-
Statutory Option shall be assignable or transferable subject to the applicable
limitations, if any, described in Section 260.140.41 of Title 10 of the
California Code of Regulations, Rule 701 under the Securities Act, and the
General Instructions to Form S-8 Registration Statement under the Securities
Act.
F. Withholding. The Corporation's obligation to deliver shares of Common
-----------
Stock upon the exercise of any options granted under the Plan shall be subject
to the satisfaction of all applicable federal, state, local, and foreign income
and employment tax withholding requirements.
6
<PAGE>
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options.
Except as modified by the provisions of this Section II, all the provisions of
the Plan shall be applicable to Incentive Options. Options which are
specifically designated as Non-Statutory Options shall not be subject to the
terms specified in this Section II.
A. Eligibility. Incentive Options may only be granted to Employees. Any
-----------
person who is not an Employee on the effective date of the grant of an option to
such person may be granted only a Non-statutory Option. An Incentive Option
granted to a prospective Employee upon the condition that such person become an
Employee shall be deemed granted effective on the date such person commences
service as an Employee with the Corporation or participating Parent or
Subsidiary corporation, with an exercise price determined as of such date.
B. Exercise Price. The exercise price per share shall be fixed by the
--------------
Plan Administrator in accordance with the following provisions:
1. The exercise price per share shall not be less than one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the option
grant date.
2. If the person to whom the option is granted is a Ten Percent
Stockholder, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock on
the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the shares of
-----------------
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary corporation) may for the
first time become exercisable as Incentive Options during any one (1) calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. Term of Incentive Options. No Incentive Option shall be exercisable
-------------------------
after the expiration of ten (10) years after the effective date of grant of such
Incentive Option and no Incentive Option granted to a Ten Percent Stockholder
shall be exercisable after the expiration of five (5) years after the effective
date of grant of such option.
ARTICLE THREE
STOCK ISSUANCE PROGRAM
----------------------
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock shall be issued under the Stock Issuance Program
through direct and immediate purchases without any intervening stock options
grants. The issued shares
7
<PAGE>
shall be evidenced by a Stock Issuance Agreement ("Issuance Agreement") that
complies with the terms and conditions of this Article Three.
A. Consideration.
-------------
Shares of Common Stock shall be issued under the Plan for one or more
of the following items of consideration, which the Plan Administrator may deem
appropriate in each individual instance:
1. cash or cash equivalents (such as a personal check or bank draft)
paid to the Corporation;
2. Common Stock of the Corporation valued at Fair Market Value on
the date of issuance;
3. a promissory note payable to the Corporation's order in one or
more installments, which may be subject to cancellation in whole or in part upon
terms and conditions established by the Plan Administrator;
4. past services rendered to the Corporation or any parent or
subsidiary corporation; or
5. any combination of the above approved by the Plan Administrator.
Shares may, in the absolute discretion of the Plan Administrator, be
issued for consideration with a value less than one-hundred percent (100%) of
the Fair Market Value of such shares, but in no event less than eighty-five
percent (85%) of such Fair Market Value.
B. Vesting Provisions.
------------------
1. Shares of Common Stock issued under this Article Three may, in
the absolute discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant's period of Service. The effect which death, disability or other
event designated by the Plan Administrator is to have upon the vesting schedule
shall be determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.
2. The Participant shall have full stockholder rights with respect
to any shares of Common Stock issued to him or her under this Article Three,
whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares by reason of any stock dividend, stock split,
reclassification of Common Stock or other similar change in the Corporation's
capital structure or by reason of any Corporate Transaction shall be issued,
subject to (i) the same vesting requirements applicable to his or her unvested
shares and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.
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<PAGE>
3. Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock under this Article Three, then those
shares shall be immediately surrendered to the Corporation for cancellation, and
the Participant shall have no further stockholder rights with respect to those
shares. The Corporation shall repay to the Participant the cash consideration
paid for the surrendered shares and shall cancel the principal balance of any
outstanding purchase-money note of the Participant to the extent attributable to
such surrendered shares. The surrendered shares may, at the Plan Administrator's
discretion, be retained by the Corporation as treasury shares or may be retired
to authorized but unissued share status.
4. The Plan Administrator may in its discretion elect to waive the
surrender and cancellation of one or more unvested shares of Common Stock (or
other assets attributable thereto) which should otherwise occur upon the non-
completion of the vesting schedule applicable to such shares. Such waiver shall
result in the immediate vesting of the Participant's interest in the shares of
Common Stock as to which the waiver applies. Such wavier may be effected at any
time, whether before or after the Participant's cessation of Service.
II. TRANSFER RESTRICTIONS/SHARE ESCROW
A. Unvested shares under this Article Three may, in the Plan
Administrator's discretion, be held in escrow by the Corporation until the
Participant's interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing such
unvested shares. To the extent an escrow arrangement is utilized, the unvested
shares and any securities or other assets issued with respect to such shares
(other than regular cash dividends) shall be delivered in escrow to the
Corporation to be held until the Participant's interest in such shares (or other
securities or assets) vests. Alternatively, if the unvested shares are issued
directly to the Participant, the restrictive legend on the certificates for such
shares shall read substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED
AND ARE ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER
RESTRICTIONS AND TO (II) CANCELLATION OR OTHER
REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE
CORPORATION'S SERVICE. SUCH TRANSFER RESTRICTIONS AND
THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR
REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT
BETWEEN THE CORPORATION AND THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) DATED _______________,
19__, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE
OF THE CORPORATION."
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<PAGE>
B. The Participant shall have no right to transfer any unvested shares of
Common Stock issued to him or her under this Article Three. For purposes of
this restriction, the term ("transfer") shall include (without limitation) any
sale, pledge, assignment, encumbrance, gift, or other disposition of such
shares, whether voluntary or involuntary. Upon any such attempted transfer, the
unvested shares shall immediately be cancelled, and neither the Participant nor
the proposed transferee shall have any rights with respect to those shares.
However, the Participant shall have the right to make a gift of unvested shares
acquired under the Plan to his or her spouse or issue, including adopted
children, or to a trust established for such spouse or issue, provided the donee
of such shares delivers to the Corporation a written agreement to be bound by
all the provisions of the Plan and the Issuance Agreement applicable to the
gifted shares.
ARTICLE FOUR
MISCELLANEOUS
-------------
I. CORPORATE TRANSACTIONS
A. The shares subject to each option outstanding under the Plan at
the time of a Corporate Transaction shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, the shares subject to an
outstanding option shall not vest on such an accelerated basis if and to the
extent: (i) such option is assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and the Corporation's repurchase rights
with respect to the unvested option shares are concurrently assigned to such
successor corporation (or parent thereof) or (ii) such option is to be replaced
with a cash incentive program of the successor corporation which preserves the
spread existing on the unvested option shares at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to those unvested option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.
C. The Corporation shall use its best efforts to provide at least
twenty (20) days prior written notice of the occurrence of any Corporate
Transaction in which the options or repurchase rights under the Plan are not to
be assumed by or assigned to the successor corporation and such options or
repurchase rights vest or terminate on an accelerated basis.
D. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
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E. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction, had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same.
F. The Plan Administrator shall have the discretion, exercisable
either at the time the option or stock issuance is granted or at any time while
the option remains outstanding or shares acquired pursuant to a stock issuance
are unvested, to provide for the automatic acceleration (in whole or in part) of
one or more outstanding options and the immediate termination of the
Corporation's repurchase rights with respect to the shares subject to those
options or any stock issuance upon the occurrence of a Corporate Transaction,
whether or not those options or repurchase rights are to be assumed or assigned
in the Corporate Transaction.
G. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option or stock issuance is granted or at any
time while the option remains outstanding or shares acquired pursuant to a stock
issuance are unvested, to structure such option or stock issuance so that the
shares subject to that option or stock issuance will automatically vest on an
accelerated basis should the Optionee's or Participant's Service terminate by
reason of an Involuntary Termination within a designated period (not to exceed
eighteen (18) months) following the effective date of any Corporate Transaction
in which the option or is assumed and the repurchase rights applicable to the
unvested option shares or stock issuance shares do not otherwise terminate. Any
option so accelerated shall remain exercisable for the fully-vested option
shares until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination. In addition, the Plan Administrator may provide that
one or more of the Corporation's outstanding repurchase rights with respect to
shares held by the Optionee or Participant at the time of such Involuntary
Termination shall immediately terminate on an accelerated basis, and the shares
subject to those terminated rights shall accordingly vest at that time.
H. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction shall remain exercisable as an Incentive Option
only to the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under
federal tax laws.
I. The grant of options or stock issuances under the Plan shall in
no way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
11
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II. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan became effective when adopted by the Board on May 8, 1995.
The initial share reserve established for the Plan was 750,000 shares. On May
26, 1995 and January 9, 1996, the Board approved 250,000 and 575,000-share
increases, respectively, in the total number of shares reserved for issuance
over the term of the Plan. The Plan, together with the 250,000 and 575,000-share
increases, was approved by the Corporation's stockholders on January 9, 1996.
B. On July 9, 1997, the Board amended and restated the Plan (the "July
1997 Restatement") in order to effect the following changes: (i) increase the
number of shares reserved for issuance by an additional 500,000 shares to
2,075,000 shares of Common Stock, (ii) allow unvested shares issued under the
Plan and subsequently repurchased by the Corporation at the option exercise
price paid per share to be reissued under the Plan and (iii) broaden the option
acceleration provisions of the Plan applicable in the event there is a change in
ownership or control of the Corporation. On November 19, 1997, the Board again
amended and restated the Plan (the "November 1997 Restatement") in order to
increase the number of shares reserved for issuance by an additional 300,000
shares to 2,375,000 shares of Common Stock. The stockholders approved the July
and November 1997 Restatements in July 1997 and November 1997, respectively.
C. On October 7, 1998, the Board again amended and restated the Plan (the
"October 1998 Restatement") in order to increase the number of shares reserved
for issuance by an additional 500,000 shares to 2,875,000 shares of Common
Stock. The stockholders approved the October 1998 Restatement on October 7,
1998.
D. On June 22, 1999, the Board again amended and restated the Plan (the
"June 1999 Restatement") in order to: (i) increase the number of shares reserved
for issuance by an additional 2,500,000 shares to 5,375,000 shares of Common
Stock and to provide for automatic annual increases to the share reserve
beginning on May 1, 2000 and ending on May 1, 2005, and (ii) to make certain
other changes to the Plan in connection with the Corporation's initial public
offering of its Common Stock. The stockholders approved the June 1999
Restatement on __________________, 1999.
E. The Plan shall terminate upon the earliest of: (i) the date on which
all shares available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing options or stock issuances granted under the Plan have lapsed, or
(ii) its termination by the Board; provided, however, that, all Incentive
Options shall be granted, if at all, on or before May 7, 2005.
III. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, subject to changes in
applicable law, regulations or rules that would permit otherwise, without the
approval of the Corporation's stockholders, there shall be (i) no increase in
the maximum aggregate number of shares of Common Stock that may be issued under
the Plan (except by operation of the provisions of
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Section IV(C) of Article One), (ii) no change in the class of persons eligible
to receive Incentive Options, and (iii) no other amendment of the Plan that
would require approval of the Company's stockholders under any applicable law,
regulation or rule. No amendment or modification of the Plan shall affect any
then outstanding option or unvested shares acquired pursuant to a stock issuance
unless expressly provided by the Board. In any event, no amendment or
modification of the Plan may adversely affect any then outstanding option or
unvested shares acquired pursuant to a stock issuance without the consent of the
Optionee or Participant, unless such amendment or modification is required to
enable an option designated as an Incentive Option to qualify as an Incentive
Option or is necessary to comply with any applicable law, regulation or rule.
IV. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of
Common Stock under the Plan shall be used for general corporate purposes.
V. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option hereunder and
the issuance of any shares of Common Stock upon the exercise of any option shall
be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it and the shares of Common Stock issued pursuant to it.
VI. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or Participant any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary corporation employing or retaining the Optionee or Participant) or of
the Optionee or Participant, which rights are hereby expressly reserved by each,
to terminate the Optionee's or Participant's Service at any time for any reason,
with or without cause.
VII. FINANCIAL REPORTS
Each Optionee or Participant shall be given access to information
concerning the Corporation equivalent to that information generally made
available to the Corporation's common stockholders.
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<PAGE>
APPENDIX
--------
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
-----
B. Code shall mean the Internal Revenue Code of 1986, as amended.
----
C. Committee shall mean a committee of the Board duly appointed to
---------
administer the Plan and having such powers as shall be specified by the Board.
Unless the powers of the Committee have been specifically limited, the Committee
shall have all of the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law.
D. Common Stock shall mean the Corporation's common stock.
------------
E. Consultant shall mean a person engaged to provide consulting or
----------
advisory services (other than as an Employee or a Director) to the Corporation
or any participating Parent or Subsidiary corporation, provided that the
identity of such person, the nature of such services or the entity to which such
services are provided would not preclude the Corporation from offering or
selling securities to such person pursuant to the Plan in reliance on either the
exemption from registration provided by Rule 701 under the Securities Act or, if
the Corporation is required to file reports pursuant to Section 13 or 15(d) of
the Exchange Act, registration on a Form S-8 Registration Statement under the
Securities Act.
F. Corporate Transaction shall mean an Ownership Change Event or a series
---------------------
of related Ownership Change Events (collectively, a "Transaction") wherein the
stockholders of the Corporation immediately before the Transaction do not retain
immediately after the Transaction, in substantially the same proportions as
their ownership of shares of the Corporation's voting stock immediately before
the Transaction, direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the outstanding voting stock
of the Corporation or the corporation or corporations to which the assets of the
Corporation were transferred (the "Transferee Corporation(s)"), as the case may
be. For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
stock of one or more corporations which, as a result of the Transaction, own the
Corporation or the Transferee Corporation(s), as the case may be, either
directly or through one or more subsidiary corporations. The Board shall have
the right to determine whether multiple sales or exchanges of the voting stock
of the Corporation or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.
G. Corporation shall mean Agile Software Corporation, a Delaware
-----------
corporation, and any successor corporation to all or substantially all of the
assets or voting stock of Agile Software Corporation which shall by appropriate
action adopt the Plan.
H. Director shall means a member of the Board or of the board of
--------
directors of any other Parent or Subsidiary corporation.
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I. Disability shall mean the permanent and total disability on the
----------
Optionee or Participant within the meaning of Section 22(e)(3) of the Code.
J. Employee shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary corporation), subject to the control
and direction of the employer entity as to both the work to be performed and the
manner and method of performance.
K. Exercise Date shall mean the date on which the Corporation shall have
-------------
received written notice of the option exercise.
L. Fair Market Value per share of Common Stock on any relevant date shall
-----------------
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as such price is reported by
the National Association of Securities Dealers on the Nasdaq National Market or
any successor system. If there is no closing selling price for the Common Stock
on the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the Fair Market
Value shall be determined by the Plan Administrator after taking into account
such factors as the Plan Administrator shall deem appropriate.
M. Incentive Option shall mean an option which satisfies the requirements
----------------
of Code Section 422.
N. Insider shall mean an officer or Director of the Corporation or any
-------
other person whose transactions in Common Stock are subject to Section 16 of the
1934 Act.
O. Involuntary Termination shall mean the termination of the Service of
-----------------------
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by
the Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially reduces his
or her duties and responsibilities or the level of management to which he or she
reports, (B) a reduction in his or
A-2
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her level of compensation (including base salary, fringe benefits and target
bonuses under any corporate-performance based bonus or incentive programs) by
more than fifteen percent (15%) or (C) a relocation of such individual's place
of employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected without the individual's consent.
P. Misconduct shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by the Optionee or Participant, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary corporation), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary corporation) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary corporation) may consider as
grounds for the dismissal or discharge of any Optionee, Participant or other
person in the Service of the Corporation (or any Parent or Subsidiary
corporation).
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
--------
R. Non-Statutory Option shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
S. Ownership Change Event shall be deemed to have occurred if any of the
----------------------
following occurs with respect to the Corporation: (i) the direct or indirect
sale or exchange in a single or series of related transactions by the
stockholders of the Corporation of more than fifty percent (50%) of the voting
stock of the Corporation; (ii) a merger or consolidation in which the
Corporation is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Corporation; or (iv) a liquidation or
dissolution of the Corporation.
T. Optionee shall mean any person to whom an option is granted pursuant
--------
to the Option Grant Program under the Plan.
U. Parent shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
V. Participant shall mean any person to whom a stock issuance or stock
-----------
bonus is granted pursuant to the Stock Issuance Program under the Plan.
W. Plan shall mean the Corporation's 1995 Stock Option Plan, as set forth
----
in this document.
X. Plan Administrator shall mean either the Board or the Committee, to
------------------
the extent the Committee is at the time responsible for the administration of
the Plan.
Y. Securities Act shall mean the Securities Act of 1933, as amended.
--------------
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<PAGE>
Z. Service shall mean an Optionee's or Participant's employment or
service with the Corporation or participating Parent or Subsidiary corporation,
whether in the capacity of an Employee, a Director or a Consultant. Unless
otherwise determined by the Board, an Optionee's or Participant's Service shall
not be deemed to have terminated merely because of a change in the capacity in
which the Optionee or Participant renders Service to the Corporation or
participating Parent or Subsidiary corporation or a change in the Corporation or
participating Parent or Subsidiary corporation for which the Optionee or
Participant renders such Service, provided that there is no interruption or
termination of the Optionee's or Participant's Service. Furthermore, an
Optionee's or Participant's Service with the Corporation or participating Parent
or Subsidiary corporation shall not be deemed to have terminated if the Optionee
or Participant takes any military leave, sick leave, or other bona fide leave of
absence approved by the Corporation; provided, however, that if any such leave
exceeds ninety (90) days, on the one hundred eighty-first (181st) day following
the commencement of such leave any Incentive Option held by the Optionee shall
cease to be treated as an Incentive Option and instead shall be treated
thereafter as a Non-Statutory Option unless the Optionee's right to return to
Service with the Corporation or participating Parent or Subsidiary corporation
is guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Corporation or required by law, a leave of absence
shall not be treated as Service for purposes of determining vesting under the
Optionee's option agreement or Participant's stock issuance agreement. An
Optionee's or Participant's Service shall be deemed to have terminated either
upon an actual termination of Service or upon the corporation for which the
Optionee or Participant performs Service ceasing to be a participating
corporation. Subject to the foregoing, the Corporation, in its discretion, shall
determine whether an Optionee's or Participant's Service has terminated and the
effective date of such termination.
AA. Stock Exchange shall mean either the American Stock Exchange or the
-------------
New York Stock Exchange.
BB. Subsidiary shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
CC. Ten Percent Stockholder shall mean the owner of stock (as determined
-----------------------
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary corporation).
A-4
<PAGE>
EXHIBIT 10.2
AGILE SOFTWARE CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
Adopted by the Board on June 22, 1999
1. Establishment, Purpose and Term of Plan.
---------------------------------------
1.1 Establishment. This 1999 Employee Stock Purchase Plan (the
"Plan") is hereby established effective as of the effective date of the initial
registration by the Company of its Stock under Section 12 of the Securities
Exchange Act of 1934, as amended (the "Effective Date").
1.2 Purpose. The purpose of the Plan is to advance the interests of
Company and its shareholders by providing an incentive to attract, retain and
reward Eligible Employees of the Participating Company Group and by motivating
such persons to contribute to the growth and profitability of the Participating
Company Group. The Plan provides such Eligible Employees with an opportunity to
acquire a proprietary interest in the Company through the purchase of Stock. The
Company intends that the Plan qualify as an "employee stock purchase plan" under
Section 423 of the Code.
1.3 Term of Plan. The Plan shall continue in effect until the earlier
of its termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued.
2. Definitions and Construction.
----------------------------
2.1 Definitions. Any term not expressly defined in the Plan but
defined for purposes of Section 423 of the Code shall have the same definition
herein. Whenever used herein, the following terms shall have their respective
meanings set forth below:
(a) "Board" means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
"Board" also means such Committee(s) .
(b) "Code" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.
(c) "Committee" means a committee of the Board duly appointed to
administer the Plan and having such powers as shall be specified by the Board.
Unless the powers of the Committee have been specifically limited, the Committee
shall have all of the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any time, subject to the
terms of the Plan and any applicable limitations imposed by law.
(d) "Company" means Agile Software Corporation, a California
corporation, or any successor corporation thereto.
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<PAGE>
(e) "Compensation" means, with respect to any Offering Period,
base wages or salary, commissions, overtime, bonuses, annual awards, other
incentive payments, shift premiums, and all other compensation paid in cash
during such Offering Period before deduction for any contributions to any plan
maintained by a Participating Company and described in Section 401(k) or Section
125 of the Code. Compensation shall not include reimbursements of expenses,
allowances, long-term disability, workers' compensation or any amount deemed
received without the actual transfer of cash or any amounts directly or
indirectly paid pursuant to the Plan or any other stock purchase or stock option
plan, or any other compensation not included above.
(f) "Eligible Employee" means an Employee who meets the
requirements set forth in Section 5 for eligibility to participate in the Plan.
(g) "Employee" means a person treated as an employee of a
Participating Company for purposes of Section 423 of the Code. A Participant
shall be deemed to have ceased to be an Employee either upon an actual
termination of employment or upon the corporation employing the Participant
ceasing to be a Participating Company. For purposes of the Plan, an individual
shall not be deemed to have ceased to be an Employee while such individual is on
any military leave, sick leave, or other bona fide leave of absence approved by
the Company of ninety (90) days or less. In the event an individual's leave of
absence exceeds ninety (90) days, the individual shall be deemed to have ceased
to be an Employee on the ninety-first (91st) day of such leave unless the
individual's right to reemployment with the Participating Company Group is
guaranteed either by statute or by contract. The Company shall determine in good
faith and in the exercise of its discretion whether an individual has become or
has ceased to be an Employee and the effective date of such individual's
employment or termination of employment, as the case may be. For purposes of an
individual's participation in or other rights, if any, under the Plan as of the
time of the Company's determination, all such determinations by the Company
shall be final, binding and conclusive, notwithstanding that the Company or any
governmental agency subsequently makes a contrary determination.
(h) "Entry Date" means (i) the Offering Date of an Offering
Period, or (ii) with respect to persons who first become Eligible Employees
after the commencement of the Initial Offering Period (as defined in Section 6.1
below) but prior to the commencement of the final Purchase Period of the Initial
Offering Period, the first day of the Purchase Period following the date on
which such person becomes an Eligible Employee. Notwithstanding the foregoing,
in the event that the Fair Market Value of a share of Stock on the first, second
or third Purchase Date of the Initial Offering Period is less than the Fair
Market Value of a share of Stock on the Entry Date for a Participant who was
participating in the Offering as of such Purchase Date, the Entry Date for such
Participant for the remainder of the Offering shall be the first day of the
Purchase Period following such Purchase Date.
(i) "Fair Market Value" means, as of any date, if there is then a
public market for the Stock, the closing price of a share of Stock (or the mean
of the closing bid and asked prices if the Stock is so quoted instead) as quoted
on the Nasdaq National Market, The Nasdaq SmallCap Market or such other national
or regional securities exchange or market system constituting the primary market
for the Stock, as reported in The Wall Street Journal or such other source as
-----------------------
the Company deems reliable. If the relevant date does not fall on a day on
2
<PAGE>
which the Stock has traded on such securities exchange or market system, the
date on which the Fair Market Value shall be established shall be the last day
on which the Stock was so traded prior to the relevant date, or such other
appropriate day as shall be determined by the Board, in its discretion. If, as
of any date, there is then no public market for the Stock, the Fair Market Value
on any relevant date shall be as determined by the Board. Notwithstanding the
foregoing, the Fair Market Value per share of Stock on the Effective Date shall
be deemed to be the public offering price set forth in the final prospectus
filed with the Securities and Exchange Commission in connection with the initial
public offering of the Stock.
(j) "Offering" means an offering of Stock as provided in
Section 6.
(k) "Offering Date" means, for any Offering, the first day of the
Offering Period with respect to such Offering.
(l) "Offering Period" means a period established in accordance
with Section 6.1.
(m) "Parent Corporation" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.
(n) "Participant" means an Eligible Employee who has become a
participant in an Offering Period in accordance with Section 7 and remains a
participant in accordance with the Plan.
(o) "Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation designated by the Board as a corporation
the Employees of which may, if Eligible Employees, participate in the Plan. The
Board shall have the sole and absolute discretion to determine from time to time
which Parent Corporations or Subsidiary Corporations shall be Participating
Companies.
(p) "Participating Company Group" means, at any point in time,
the Company and all other corporations collectively which are then Participating
Companies.
(q) "Purchase Date" means the last day of (i) any Purchase Period
during the Initial Offering Period, or (ii) an Offering Period which begins
after the Initial Offering Period.
(r) "Purchase Period" means a period established in accordance
with Section 6.2.
(s) "Purchase Price" means the price at which a share of Stock
may be purchased under the Plan, as determined in accordance with Section 9.
(t) "Purchase Right" means an option granted to a Participant
pursuant to the Plan to purchase such shares of Stock as provided in Section 8,
which the Participant may or may not exercise during the Offering Period in
which such option is outstanding. Such option arises from the right of a
Participant to withdraw any accumulated
3
<PAGE>
payroll deductions of the Participant not previously applied to the purchase of
Stock under the Plan and to terminate participation in the Plan at any time
during an Offering Period.
(u) "Stock" means the common stock of the Company, as adjusted
from time to time in accordance with Section 4.2.
(v) "Subscription Agreement" means a written agreement in such
form as specified by the Company, stating an Employee's election to participate
in the Plan and authorizing payroll deductions under the Plan from the
Employee's Compensation.
(w) "Subscription Date" means the last business day prior to an
Entry Date or such other date as the Company shall establish.
(x) "Subsidiary Corporation" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
2.2 Construction. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.
3. Administration.
--------------
3.1 Administration by the Board. The Plan shall be administered by the
Board. All questions of interpretation of the Plan, of any form of agreement or
other document employed by the Company in the administration of the Plan, or of
any Purchase Right shall be determined by the Board and shall be final and
binding upon all persons having an interest in the Plan or the Purchase Right.
Subject to the provisions of the Plan, the Board shall determine all of the
relevant terms and conditions of Purchase Rights granted pursuant to the Plan;
provided, however, that all Participants granted Purchase Rights pursuant to the
Plan shall have the same rights and privileges within the meaning of Section
423(b)(5) of the Code. All expenses incurred in connection with the
administration of the Plan shall be paid by the Company.
3.2 Authority of Officers. Any officer of the Company shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election that is the responsibility of or that is
allocated to the Company herein, provided that the officer has apparent
authority with respect to such matter, right, obligation, determination or
election.
3.3 Policies and Procedures Established by the Company. The Company
may, from time to time, consistent with the Plan and the requirements of Section
423 of the Code, establish, change or terminate such rules, guidelines,
policies, procedures, limitations, or adjustments as deemed advisable by the
Company, in its sole discretion, for the proper administration of the Plan,
including, without limitation, (a) a minimum payroll deduction amount required
for participation in an Offering, (b) a limitation on the frequency or number of
changes permitted in the rate of payroll deduction during an Offering, (c) an
exchange ratio applicable to amounts withheld in a currency other than United
States dollars, (d) a payroll
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<PAGE>
deduction greater than or less than the amount designated by a Participant in
order to adjust for the Company's delay or mistake in processing a Subscription
Agreement or in otherwise effecting a Participant's election under the Plan or
as advisable to comply with the requirements of Section 423 of the Code, and (e)
determination of the date and manner by which the Fair Market Value of a share
of Stock is determined for purposes of administration of the Plan.
4. Shares Subject to Plan.
----------------------
4.1 Maximum Number of Shares Issuable. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be five hundred thousand (500,000),
cumulatively increased on May 1, 2000 and each May 1 thereafter until and
including May 1, 2009 by an amount equal to the lesser of (a) five hundred
thousand (500,000) shares per year or (b) two percent (2%) of the number of
shares of common stock that was issued and outstanding on the last day of the
preceding fiscal year, or (c) a lesser amount of shares determined by the Board,
and shall consist of authorized but unissued or reacquired shares of Stock, or
any combination thereof. If an outstanding Purchase Right for any reason expires
or is terminated or canceled, the shares of Stock allocable to the unexercised
portion of such Purchase Right shall again be available for issuance under the
Plan.
4.2 Adjustments for Changes in Capital Structure. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company, or
in the event of any merger (including a merger effected for the purpose of
changing the Company's domicile), sale of assets or other reorganization in
which the Company is a party, appropriate adjustments shall be made in the
number and class of shares subject to the Plan and each Purchase Right and in
the Purchase Price. If a majority of the shares which are of the same class as
the shares that are subject to outstanding Purchase Rights are exchanged for,
converted into, or otherwise become (whether or not pursuant to an Ownership
Change Event) shares of another corporation (the "New Shares"), the Board may
unilaterally amend the outstanding Purchase Rights to provide that such Purchase
Rights are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to, and the Purchase Price of, the outstanding Purchase
Rights shall be adjusted in a fair and equitable manner, as determined by the
Board, in its sole discretion. Notwithstanding the foregoing, any fractional
share resulting from an adjustment pursuant to this Section 4.2 shall be rounded
down to the nearest whole number, and in no event may the Purchase Price be
decreased to an amount less than the par value, if any, of the stock subject to
the Purchase Right. The adjustments determined by the Board pursuant to this
Section 4.2 shall be final, binding and conclusive.
5. Eligibility.
-----------
5.1 Employees Eligible to Participate. Each Employee of a
Participating Company is eligible to participate in the Plan and shall be deemed
an Eligible Employee, except the following:
(a) Any Employee who is customarily employed by the Participating
Company Group for less than twenty (20) hours per week; or
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(b) Any Employee who is customarily employed by the Participating
Company Group for not more than five (5) months in any calendar year.
5.2 Exclusion of Certain Shareholders. Notwithstanding any provision
of the Plan to the contrary, no Employee shall be granted a Purchase Right under
the Plan if, immediately after such grant, such Employee would own or hold
options to purchase stock of the Company or of any Parent Corporation or
Subsidiary Corporation possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of such corporation, as
determined in accordance with Section 423(b)(3) of the Code. For purposes of
this Section 5.2, the attribution rules of Section 424(d) of the Code shall
apply in determining the stock ownership of such Employee.
6. Offerings.
---------
6.1 Offering Periods.
(a) Initial Offering Period. The Plan shall be implemented by
sequential Offerings (an "Offering Period"). The first Offering Period shall
commence on the Effective Date and end on the last day of August, 2001 (the
"Initial Offering Period").
(b) Subsequent Offering Periods. After the completion of the
Initial Offering Period, subsequent Offerings shall commence on the first day of
March and September of each year and end on the last day of August and February,
respectively, occurring thereafter, and will have a duration of approximately
six (6) months.
6.2 Purchase Periods. The Initial Offering Period shall consist of
four (4) consecutive Purchase Periods of approximately six (6) months duration.
Purchase Periods shall commence on the Effective Date, March 1, 2000, September
1, 2000 and March 1, 2001. Purchase Periods beginning on the first day of March
and September shall end on the last day of August and February, respectively,
occurring thereafter. The Purchase Period commencing on the Effective Date shall
end on February 29, 2000.
6.3 Discretion to Vary Duration. Notwithstanding the foregoing, the
Board may establish a different duration for one or more Offering Periods or
Purchase Periods or different commencing or ending dates for such periods;
provided, however, that no Offering Period may have a duration exceeding twenty-
seven (27) months. If the first or last day of an Offering Period or a Purchase
Period is not a day on which the national securities exchanges or Nasdaq Stock
Market are open for trading, the Company shall specify the trading day that will
be deemed the first or last day, as the case may be, of the period.
7. Participation in the Plan.
-------------------------
7.1 Initial Participation. An Eligible Employee may become a
Participant in an Offering Period by delivering a properly completed
Subscription Agreement to the Company not later than the close of business for
such office on the Subscription Date established by the Company for the
applicable Entry Date. An Eligible Employee who does not deliver a properly
completed Subscription Agreement to the Company's designated office on or before
the Subscription Date shall not participate in that Offering Period or any
subsequent Offering Period
6
<PAGE>
unless such Eligible Employee subsequently delivers a properly completed
Subscription Agreement to the appropriate office of the Company on or before the
Subscription Date for such subsequent Offering Period. An Employee who becomes
an Eligible Employee after the Offering Date of an Offering Period (other than
the Initial Offering Period) shall not be eligible to participate in such
Offering Period but may participate in any subsequent Offering Period provided
such Employee is still an Eligible Employee as of the Offering Date of such
subsequent Offering Period.
7.2 Continued Participation. A Participant shall automatically
participate in the next Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant participates
provided that such Participant remains an Eligible Employee on the Offering Date
of the new Offering Period and has not either (a) withdrawn from the Plan
pursuant to Section 10.7 or (b) terminated employment as provided in Section 13.
A Participant who may automatically participate in a subsequent Offering Period,
as provided in this Section, is not required to deliver any additional
Subscription Agreement for the subsequent Offering Period in order to continue
participation in the Plan. However, a Participant may deliver a new Subscription
Agreement for a subsequent Offering Period in accordance with the procedures set
forth in Section 7.1 if the Participant desires to change any of the elections
contained in the Participant's then effective Subscription Agreement.
8. Right to Purchase Shares.
------------------------
8.1 Grant of Purchase Right. Except as set forth below, on the
Offering Date of each Offering Period, each Participant in such Offering Period
shall be granted automatically, on his or her Entry Date, a Purchase Right
consisting of an option to purchase, on each Purchase Date within such Offering
Period, that number of whole shares of Stock determined by dividing the
aggregate payroll deductions collected from the Participant by the applicable
Purchase Price on such Purchase Date; provided, that no Participant may purchase
more than one thousand (1,000) shares of Stock on any Purchase Date.
8.2 Calendar Year Purchase Limitation. Notwithstanding any provision
of the Plan to the contrary, no Participant shall be granted a Purchase Right
which permits his or her right to purchase shares of Stock under the Plan to
accrue at a rate which, when aggregated with such Participant's rights to
purchase shares under all other employee stock purchase plans of a Participating
Company intended to meet the requirements of Section 423 of the Code, exceeds
Twenty-Five Thousand Dollars ($25,000) in Fair Market Value (or such other
limit, if any, as may be imposed by the Code) for each calendar year in which
such Purchase Right is outstanding at any time. For purposes of the preceding
sentence, the Fair Market Value of shares purchased during a given Offering
Period shall be determined as of the Entry Date for such Offering Period. The
limitation described in this Section shall be applied in conformance with
applicable regulations under Section 423(b)(8) of the Code.
9. Purchase Price.
--------------
The Purchase Price at which each share of Stock may be acquired in an
Offering Period upon the exercise of all or any portion of a Purchase Right
shall be established by the Board; provided, however, that the Purchase Price
shall not be less than eighty-five percent
7
<PAGE>
(85%) of the lesser of (a) the Fair Market Value of a share of Stock on the
Participant's Entry Date of the Offering Period or (b) the Fair Market Value of
a share of Stock on the Purchase Date. Unless otherwise provided by the Board
prior to the commencement of an Offering Period, the Purchase Price for that
Offering Period shall be eighty-five percent (85%) of the lesser of (a) the Fair
Market Value of a share of Stock on the Participant's Entry Date of the Offering
Period, or (b) the Fair Market Value of a share of Stock on the Purchase Date.
10. Accumulation of Purchase Price through Payroll Deduction.
--------------------------------------------------------
Shares of Stock acquired pursuant to the exercise of all or any
portion of a Purchase Right may be paid for only by means of payroll deductions
from the Participant's Compensation accumulated during the Offering Period for
which such Purchase Right was granted, subject to the following:
10.1 Amount of Payroll Deductions. Except as otherwise provided
herein, the amount to be deducted under the Plan from a Participant's
Compensation on each payday during an Offering Period (after the Participant's
Entry Date) shall be determined by the Participant's Subscription Agreement. The
Subscription Agreement shall set forth the percentage of the Participant's
Compensation to be deducted on each payday during an Offering Period (after the
Participant's Entry Date) in whole percentages of not less than one percent (1%)
(except as a result of an election pursuant to Section 10.3 to stop payroll
deductions made effective following the first payday during an Offering after
the Participant's Entry Date) or more than ten percent (10%). Notwithstanding
the foregoing, the Board may change the limits on payroll deductions effective
as of any future Offering Date.
10.2 Commencement of Payroll Deductions. Payroll deductions shall
commence on the first payday following the Entry Date and shall continue to the
end of the Offering Period unless sooner altered or terminated as provided
herein.
10.3 Election to Change or Stop Payroll Deductions. During an
Offering Period, a Participant may elect to increase or decrease the rate of or
to stop deductions from his or her Compensation by delivering to the Company an
amended Subscription Agreement authorizing such change on or before the "Change
Notice Date." The "Change Notice Date" shall be a date prior to the beginning of
the first pay period for which such election is to be effective as established
by the Company from time to time and announced to the Participants. A
Participant who elects to decrease the rate of his or her payroll deductions to
zero percent (0%) shall nevertheless remain a Participant in the current
Offering Period unless such Participant withdraws from the Plan as provided in
Section 12.1.
10.4 Administrative Suspension of Payroll Deductions. The Company
may, in its sole discretion, suspend a Participant's payroll deductions under
the Plan as the Company deems advisable to avoid accumulating payroll deductions
in excess of the amount that could reasonably be anticipated to purchase the
maximum number of shares of Stock permitted during a calendar year under the
limit set forth in Section 8.2. Payroll deductions shall be resumed at the rate
specified in the Participant's then effective Subscription Agreement at the
beginning of the next Purchase Period the Purchase Date of which falls in the
following calendar year.
8
<PAGE>
10.5 Participant Accounts. Individual bookkeeping accounts shall be
maintained for each Participant. All payroll deductions from a Participant's
Compensation shall be credited to such Participant's Plan account and shall be
deposited with the general funds of the Company. All payroll deductions received
or held by the Company may be used by the Company for any corporate purpose.
10.6 No Interest Paid. Interest shall not be paid on sums deducted
from a Participant's Compensation pursuant to the Plan.
10.7 Voluntary Withdrawal from Plan Account. A Participant may
withdraw all or any portion of the payroll deductions credited to his or her
Plan account and not previously applied toward the purchase of Stock by
delivering to the Company a written notice on a form provided by the Company for
such purpose. A Participant who withdraws the entire remaining balance credited
to his or her Plan account shall be deemed to have withdrawn from the Plan in
accordance with Section 12.1. Amounts withdrawn shall be returned to the
Participant as soon as practicable after the withdrawal and may not be applied
to the purchase of shares in any Offering under the Plan. The Company may from
time to time establish or change limitations on the frequency of withdrawals
permitted under this Section, establish a minimum dollar amount that must be
retained in the Participant's Plan account, or terminate the withdrawal right
provided by this Section.
11. Purchase of Shares.
------------------
11.1 Exercise of Purchase Right. On each Purchase Date, each
Participant who has not withdrawn from the Plan and whose participation in the
Offering has not terminated before such Purchase Date shall automatically
acquire pursuant to the exercise of the Participant's Purchase Right the number
of whole shares of Stock determined by dividing (a) the total amount of the
Participant's payroll deductions accumulated in the Participant's Plan account
during the Purchase Period and not previously applied toward the purchase of
Stock by (b) the Purchase Price. No shares of Stock shall be purchased on a
Purchase Date on behalf of a Participant whose participation in the Offering or
the Plan has terminated before such Purchase Date.
11.2 Pro Rata Allocation of Shares. In the event that the number of
shares of Stock which might be purchased by all Participants in the Plan on a
Purchase Date exceeds the number of shares of Stock available in the Plan as
provided in Section 4.1, the Company shall make a pro rata allocation of the
remaining shares in as uniform a manner as shall be practicable and as the
Company shall determine to be equitable. Any fractional share resulting from
such pro rata allocation to any Participant shall be disregarded.
11.3 Delivery of Certificates. As soon as practicable after each
Purchase Date, the Company shall arrange the delivery to each Participant, as
appropriate, of a certificate representing the shares acquired by the
Participant on such Purchase Date; provided that the Company may deliver such
shares to a broker that holds such shares in street name for the benefit of the
Participant. Shares to be delivered to a Participant under the Plan shall be
registered in the name of the Participant, or, if requested by the Participant,
in the name of the Participant and his or her spouse, or, if applicable, in the
names of the heirs of the Participant.
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11.4 Return of Cash Balance. Any cash balance remaining in a
Participant's Plan account following any Purchase Date shall be refunded to the
Participant as soon as practicable after such Purchase Date. However, if the
cash to be returned to a Participant pursuant to the preceding sentence is an
amount less than the amount that would have been necessary to purchase an
additional whole share of Stock on such Purchase Date, the Company may retain
such amount in the Participant's Plan account to be applied toward the purchase
of shares of Stock in the subsequent Purchase Period or Offering Period, as the
case may be.
11.5 Tax Withholding. At the time a Participant's Purchase Right is
exercised, in whole or in part, or at the time a Participant disposes of some or
all of the shares of Stock he or she acquires under the Plan, the Participant
shall make adequate provision for the foreign, federal, state and local tax
withholding obligations of the Participating Company Group, if any, which arise
upon exercise of the Purchase Right or upon such disposition of shares,
respectively. The Participating Company Group may, but shall not be obligated
to, withhold from the Participant's compensation the amount necessary to meet
such withholding obligations.
11.6 Expiration of Purchase Right. Any portion of a Participant's
Purchase Right remaining unexercised after the end of the Offering Period to
which the Purchase Right relates shall expire immediately upon the end of the
Offering Period.
11.7 Reports to Participants. Each Participant who has exercised all
or part of his or her Purchase Right shall receive, as soon as practicable after
the Purchase Date, a report of such Participant's Plan account setting forth the
total payroll deductions accumulated prior to such exercise, the number of
shares of Stock purchased, the Purchase Price for such shares, the date of
purchase and the cash balance, if any, remaining immediately after such purchase
that is to be refunded or retained in the Participant's Plan account pursuant to
Section 11.4. The report required by this Section may be delivered in such form
and by such means, including by electronic transmission, as the Company may
determine.
12. Withdrawal from Offering or Plan.
--------------------------------
12.1 Voluntary Withdrawal from the Plan. A Participant may withdraw
from the Plan by signing and delivering to the Company a written notice of
withdrawal on a form provided by the Company for such purpose. Such withdrawal
may be elected at any time prior to the end of an Offering Period; provided,
however, that if a Participant withdraws from the Plan after the Purchase Date
of a Purchase Period, the withdrawal shall not affect shares of Stock acquired
by the Participant on such Purchase Date. A Participant who voluntarily
withdraws from the Plan is prohibited from resuming participation in the Plan in
the same Offering from which he or she withdrew, but may participate in any
subsequent Offering by again satisfying the requirements of Sections 5 and 7.1.
The Company may impose a requirement that the notice of withdrawal from the Plan
be on file with the Company for a reasonable period prior to the effectiveness
of the Participant's withdrawal.
12.2 Return of Payroll Deductions. Upon a Participant's voluntary
withdrawal from the Plan pursuant to Section 12.1, the Participant's accumulated
payroll deductions which have not been applied toward the purchase of shares of
Stock shall be refunded to the Participant as soon as practicable after the
withdrawal, without the payment of any
10
<PAGE>
interest, and the Participant's interest in the Plan or the Offering, as
applicable, shall terminate. Such accumulated payroll deductions to be refunded
in accordance with this Section may not be applied to any other Offering under
the Plan.
13. Termination of Employment or Eligibility.
----------------------------------------
Upon a Participant's ceasing, prior to a Purchase Date, to be an
Employee of the Participating Company Group for any reason, including
retirement, disability or death, or the failure of a Participant to remain an
Eligible Employee, the Participant's participation in the Plan shall terminate
immediately. In such event, the payroll deductions credited to the Participant's
Plan account since the last Purchase Date shall, as soon as practicable, be
returned to the Participant or, in the case of the Participant's death, to the
Participant's legal representative, and all of the Participant's rights under
the Plan shall terminate. Interest shall not be paid on sums returned pursuant
to this Section 13. A Participant whose participation has been so terminated may
again become eligible to participate in the Plan by again satisfying the
requirements of Sections 5 and 7.1.
14. Change in Control.
-----------------
14.1 Definitions.
(a) An "Ownership Change Event" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the shareholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.
(b) A "Change in Control" shall mean an Ownership Change Event
or a series of related Ownership Change Events (collectively, the "Transaction")
wherein the shareholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "Transferee
Corporation(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
14.2 Effect of Change in Control on Purchase Rights. In the event of
a Change in Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "Acquiring
Corporation"), may assume the
11
<PAGE>
Company's rights and obligations under the Plan. If the Acquiring Corporation
elects not to assume the Company's rights and obligations under outstanding
Purchase Rights, the Purchase Date of the then current Purchase Period shall be
accelerated to a date before the date of the Change in Control specified by the
Board, but the number of shares of Stock subject to outstanding Purchase Rights
shall not be adjusted. All Purchase Rights which are neither assumed by the
Acquiring Corporation in connection with the Change in Control nor exercised as
of the date of the Change in Control shall terminate and cease to be outstanding
effective as of the date of the Change in Control.
15. Nontransferability of Purchase Rights.
-------------------------------------
A Purchase Right may not be transferred in any manner otherwise than
by will or the laws of descent and distribution and shall be exercisable during
the lifetime of the Participant only by the Participant.
16. Compliance with Securities Law.
------------------------------
The issuance of shares under the Plan shall be subject to compliance
with all applicable requirements of federal, state and foreign law with respect
to such securities. A Purchase Right may not be exercised if the issuance of
shares upon such exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the
requirements of any securities exchange or market system upon which the Stock
may then be listed. In addition, no Purchase Right may be exercised unless (a) a
registration statement under the Securities Act of 1933, as amended, shall at
the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (b) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Purchase
Right may be issued in accordance with the terms of an applicable exemption from
the registration requirements of said Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares under the Plan shall relieve the Company of any liability in
respect of the failure to issue or sell such shares as to which such requisite
authority shall not have been obtained. As a condition to the exercise of a
Purchase Right, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation, and to make any representation or warranty
with respect thereto as may be requested by the Company.
17. Rights as a Shareholder and Employee.
------------------------------------
A Participant shall have no rights as a shareholder by virtue of the
Participant's participation in the Plan until the date of the issuance of a
certificate for the shares purchased pursuant to the exercise of the
Participant's Purchase Right (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company). No
adjustment shall be made for dividends, distributions or other rights for which
the record date is prior to the date such certificate is issued, except as
provided in Section 4.2. Nothing herein shall confer upon a Participant any
right to continue in the employ of the Participating Company
12
<PAGE>
Group or interfere in any way with any right of the Participating Company Group
to terminate the Participant's employment at any time.
18. Legends.
-------
The Company may at any time place legends or other identifying symbols
referencing any applicable federal, state or foreign securities law restrictions
or any provision convenient in the administration of the Plan on some or all of
the certificates representing shares of Stock issued under the Plan. The
Participant shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to a
Purchase Right in the possession of the Participant in order to carry out the
provisions of this Section. Unless otherwise specified by the Company, legends
placed on such certificates may include but shall not be limited to the
following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE CORPORATION TO
THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER AN EMPLOYEE STOCK
PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED. THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE
CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER
HEREOF. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN
THE REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF ANY NOMINEE)."
19. Notification of Sale of Shares.
------------------------------
The Company may require the Participant to give the Company prompt
notice of any disposition of shares acquired by exercise of a Purchase Right
within two (2) years from the date of granting such Purchase Right or one (1)
year from the date of exercise of such Purchase Right. The Company may require
that until such time as a Participant disposes of shares acquired upon exercise
of a Purchase Right, the Participant shall hold all such shares in the
Participant's name (or, if elected by the Participant, in the name of the
Participant and his or her spouse but not in the name of any nominee) until the
lapse of the time periods with respect to such Purchase Right referred to in the
preceding sentence. The Company may direct that the certificates evidencing
shares acquired by exercise of a Purchase Right refer to such requirement to
give prompt notice of disposition.
20. Notices.
-------
All notices or other communications by a Participant to the Company
under or in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Company at the location, or by the
person, designated by the Company for the receipt thereof.
21. Indemnification.
---------------
In addition to such other rights of indemnification as they may have
as members of the Board or officers or employees of the Participating Company
Group, members of the
13
<PAGE>
Board and any officers or employees of the Participating Company Group to whom
authority to act for the Board or the Company is delegated shall be indemnified
by the Company against all reasonable expenses, including attorneys' fees,
actually and necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.
22. Amendment or Termination of the Plan.
------------------------------------
The Board may at any time amend or terminate the Plan, except that (a)
such termination shall not affect Purchase Rights previously granted under the
Plan, provided that the Board may terminate the Plan (and any Offering
thereunder) on any Purchase Date if the Board determines that such termination
is in the best interests of the Company and its shareholders except as permitted
under the Plan, and (b) no amendment may adversely affect a Purchase Right
previously granted under the Plan (except to the extent permitted by the Plan or
as may be necessary to qualify the Plan as an employee stock purchase plan
pursuant to Section 423 of the Code or to obtain qualification or registration
of the shares of Stock under applicable federal, state or foreign securities
laws). In addition, an amendment to the Plan must be approved by the
shareholders of the Company within twelve (12) months of the adoption of such
amendment if such amendment would authorize the sale of more shares than are
authorized for issuance under the Plan or would change the definition of the
corporations that may be designated by the Board as Participating Companies.
14
<PAGE>
AGILE SOFTWARE CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
NAME (Please print):____________________________________________________________
(Last) (First) (Middle)
ADDRESS:________________________________________________________________________
MY SOCIAL SECURITY NUMBER:______________________________________________________
(TM) Original Application for the Offering Period beginning_____________, 199__.
(TM) Change in Payroll Deduction rate effective with the pay period
ending ___________________, 199__.
I hereby elect to participate in the 1999 Employee Stock Purchase Plan (the
"Plan") of Agile Software Corporation (the "Company") and subscribe to purchase
shares of the Company's Stock in accordance with this Subscription Agreement and
the Plan.
I hereby authorize payroll deductions in the amount of ________ percent (in
whole percentages not less than 1% or more than 10%) of my "Compensation" on
each payday throughout the "Offering Period" in accordance with the Plan. I
understand that these payroll deductions will be accumulated for the purchase of
shares of Stock at the applicable purchase price determined in accordance with
the Plan. I understand that, except as otherwise provided by the Plan, I will
automatically purchase shares on each Purchase Date under the Plan unless I
withdraw from the Plan by giving written notice on a form provided by the
Company or unless my employment terminates.
I understand that I will automatically participate in each subsequent
Offering that commences immediately after the last day of an Offering in which I
am participating until I withdraw from the Plan by giving written notice on a
form provided by the Company or my employment terminates.
Shares I purchase under the Plan should be issued in the name(s) set forth
below. (Shares may be issued in the participant's name alone or together with
the participant's spouse as community property or in joint tenancy.)
NAME(S): __________________________________________________________________
(TM) In my name alone(TM) Community Property (TM) Joint Tenancy
I agree to make adequate provision for the federal, state, local and
foreign tax withholding obligations, if any, which may arise upon my purchase of
shares under the Plan and/or my disposition of such shares. The Company may, but
will not be obligated to, withhold from my compensation the amount necessary to
meet such withholding obligations.
I agree that while I hold shares acquired under the Plan, unless otherwise
permitted by the Company, I will hold such shares in the name(s) entered above
(and not in the name of any nominee). This restriction only applies to the
name(s) in which shares are held and does not affect my ability to dispose of
---
Plan shares.
The tax treatment of a disposition of Plan shares (including a gift)
depends on when the disposition occurs. I agree that I will notify the Chief
Financial Officer of the Company in writing within 30 days after any disposition
of Plan shares that occurs within 2 years after the Entry Date or 1 year after
--
the Purchase Date (a "Disqualifying Disposition"). I further agree that if I do
not respond within 30 days to a Company survey delivered to me requesting
information about a possible Disqualifying Disposition, the Company may (1)
treat my nonresponse as my notice to the Company that a Disqualifying
Disposition occurred, and (2) report the ordinary income I must recognize as a
result of the Disqualifying Disposition to the Internal Revenue Service.
I am familiar with the provisions of the Plan and agree to participate in
the Plan subject to all of its provisions. I understand that the Board of
Directors of the Company reserves the right to terminate the Plan or to amend
the Plan and my right to purchase stock under the Plan to the extent provided by
the Plan. I understand that the effectiveness of this Subscription Agreement is
dependent upon my eligibility to participate in the Plan.
Date: _______________________ Signature:____________________________________
<PAGE>
AGILE SOFTWARE CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
NAME (Please print): _________________________________________________________
(Last) (First) (Middle)
I hereby elect to withdraw from the Offering under Agile Software
Corporation 1999 Employee Stock Purchase Plan (the "Plan") which began on
_________________________, 19____ and in which I am currently participating (the
"Current Offering").
Elect either A or B below:
(TM) A. I elect to terminate immediately my participation in the Current
Offering and in the Plan.
I request that the Company cease all further payroll deductions from
my Compensation under the Plan (provided that I have given sufficient
notice prior to the next payday). I request that all payroll
deductions credited to my account under the Plan (if any) not
previously used to purchase shares under the Plan shall not be used to
---
purchase shares on the next Purchase Date of the Current Offering.
Instead, I request that all such amounts be paid to me as soon as
practicable. I understand that this election immediately terminates my
interest in the Current Offering and in the Plan.
(TM) B. I elect to terminate my participation in the Current Offering and in
the Plan following my purchase of shares on next Purchase Date of the
Current Offering.
I request that the Company cease all further payroll deductions from
my Compensation under the Plan (provided that I have given sufficient
notice prior to the next payday). I request that all payroll
deductions credited to my account under the Plan (if any) not
previously used to purchase shares under the Plan shall be used to
purchase shares on the next Purchase Date of the Current Offering to
the extent permitted by the Plan. I understand that this election will
terminate my interest in the Current Offering and in the Plan
immediately following such purchase. I request that any cash balance
remaining in my account under the Plan after my purchase of shares be
paid to me as soon as practicable.
I understand that by making this election I am terminating my interest in
the Plan and that no further payroll deductions will be made (provided that I
have given sufficient notice prior to the next payday) unless I elect in
accordance with the Plan to become a participant in another Offering under the
Plan by filing a new Subscription Agreement with the Company.
Date: ______________________________ Signature:______________________________
<PAGE>
Exhibit 10.3
INDEMNITY AGREEMENT
This Indemnity Agreement, dated as of __________, 1999, is made by and
between Agile Software Corporation, a Delaware corporation (the "Company"), and
______________ (the "Indemnitee").
RECITALS
--------
A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors, officers or agents of corporations
unless they are protected by comprehensive liability insurance or
indemnification, due to increased exposure to litigation costs and risks
resulting from their service to such corporations, and due to the fact that the
exposure frequently bears no reasonable relationship to the compensation of such
directors, officers and other agents.
B. The statutes and judicial decisions regarding the duties of
directors and officers are often difficult to apply, ambiguous, or conflicting,
and therefore fail to provide such directors, officers and agents with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take.
C. Plaintiffs often seek damages in such large amounts and the costs
of litigation may be so enormous (whether or not the case is meritorious), that
the defense and/or settlement of such litigation is often beyond the personal
resources of directors, officers and other agents.
D. The Company believes that it is unfair for its directors, officers
and agents and the directors, officers and agents of its subsidiaries to assume
the risk of huge judgments and other expenses which may occur in cases in which
the director, officer or agent received no personal profit and in cases where
the director, officer or agent was not culpable.
E. The Company recognizes that the issues in controversy in
litigation against a director, officer or agent of a corporation such as the
Company or its subsidiaries are often related to the knowledge, motives and
intent of such director, officer or agent, that he is usually the only witness
with knowledge of the essential facts and exculpating circumstances regarding
such matters, and that the long period of time which usually elapses before the
trial or other disposition of such litigation often extends beyond the time that
the director, officer or agent can reasonably recall such matters; and may
extend beyond the normal time for retirement for such director, officer or agent
with the result that he, after retirement or in the event of his death, his
spouse, heirs, executors or administrators, may be faced with limited ability
and undue hardship in maintaining an adequate defense, which may discourage such
a director, officer or agent from serving in that position.
F. Based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that, to retain and attract
talented and experienced individuals to serve as directors, officers and agents
of the Company and its subsidiaries and to encourage such individuals to take
the business risks necessary for the success of the Company
1
<PAGE>
and its subsidiaries, it is necessary for the Company to contractually indemnify
its directors, officers and agents and the directors, officers and agents of its
subsidiaries, and to assume for itself maximum liability for expenses and
damages in connection with claims against such directors, officers and agents in
connection with their service to the Company and its subsidiaries, and has
further concluded that the failure to provide such contractual indemnification
could result in great harm to the Company and its subsidiaries and the Company's
stockholders.
G. Section 145 of the General Corporation Law of Delaware, under
which the Company is organized ("Section 145"), empowers the Company to
indemnify its directors, officers, employees and agents by agreement and to
indemnify persons who serve, at the request of the Company, as the directors,
officers, employees or agents of other corporations or enterprises, and
expressly provides that the indemnification provided by Section 145 is not
exclusive.
H. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director, officer or agent of the Company and/or one or
more subsidiaries of the Company free from undue concern for claims for damages
arising out of or related to such services to the Company and/or one or more
subsidiaries of the Company.
I. Indemnitee is willing to serve, or to continue to serve, the
Company and/or one or more subsidiaries of the Company, provided that he is
furnished the indemnity provided for herein.
AGREEMENT
---------
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions.
-----------
(a) Agent. For the purposes of this Agreement, "agent" of the
-----
Company means any person who is or was a director, officer, employee or other
agent of the Company or a subsidiary of the Company; or is or was serving at the
request of, for the convenience of, or to represent the interests of the Company
or a subsidiary of the Company as a director, officer, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise; or was a director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of the Company or a
subsidiary of the Company, or was a director, officer, employee or agent of
another enterprise at the request of, for the convenience of, or to represent
the interests of such predecessor corporation.
(b) Expenses. For purposes of this Agreement, "expenses"
--------
include all out of pocket expenses costs of any type or nature whatsoever
(including, without limitation, all attorneys' fees and related disbursements),
actually and reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement or Section 145 or otherwise;
provided,
2
<PAGE>
however, that "expenses" shall not include any judgments, fines, ERISA excise
taxes or penalties, or amounts paid in settlement of a proceeding.
(c) Proceeding. For the purposes of this Agreement,
----------
"proceeding" means any threatened, pending, or completed action, suit or other
proceeding, whether civil, criminal, administrative, or investigative.
(d) Subsidiary. For purposes of this Agreement, "subsidiary"
----------
means any corporation of which more than 50% of the outstanding voting
securities is owned directly or indirectly by the Company, by the Company and
one or more other subsidiaries, or by one or more other subsidiaries.
2. Agreement to Serve. The Indemnitee agrees to serve and/or
------------------
continue to serve as agent of the Company, at its will (or under separate
agreement, if such agreement exists), in the capacity Indemnitee currently
serves as an agent of the Company, so long as he is duly appointed or elected
and qualified in accordance with the applicable provisions of the Bylaws of the
Company or any subsidiary of the Company or until such time as he tenders his
resignation in writing; provided, however, that nothing contained in this
Agreement is intended to create any right to continued employment by Indemnitee.
3. Liability Insurance.
-------------------
(a) Maintenance of D&O Insurance. The Company hereby covenants
----------------------------
and agrees that, so long as the Indemnitee shall continue to serve as an agent
of the Company and thereafter so long as the Indemnitee shall be subject to any
possible proceeding by reason of the fact that the Indemnitee was an agent of
the Company, the Company, subject to Section 3(c), shall promptly obtain and
maintain in full force and effect directors' and officers' liability insurance
("D&O Insurance") in reasonable amounts from established and reputable insurers.
(b) Rights and Benefits. In all policies of D&O Insurance, the
-------------------
Indemnitee shall be named as an insured in such a manner as to provide the
Indemnitee the same rights and benefits as are accorded to the most favorably
insured of the Company's directors, if the Indemnitee is a director; or of the
Company's officers, if the Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, if the Indemnitee is not a director
or officer but is a key employee.
(c) Limitation on Required Maintenance of D&O Insurance.
---------------------------------------------------
Notwithstanding the foregoing, the Company shall have no obligation to obtain or
maintain D&O Insurance if the Company determines in good faith that such
insurance is not reasonably available, the premium costs for such insurance are
disproportionate to the amount of coverage provided, the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or the Indemnitee is covered by similar insurance maintained by a
subsidiary of the Company.
4. Mandatory Indemnification. Subject to Section 9 below, the
-------------------------
Company shall indemnify the Indemnitee as follows:
3
<PAGE>
(a) Successful Defense. To the extent the Indemnitee has been
------------------
successful on the merits or otherwise in defense of any proceeding (including,
without limitation, an action by or in the right of the Company) to which the
Indemnitee was a party by reason of the fact that he is or was an Agent of the
Company at any time, against all expenses of any type whatsoever actually and
reasonably incurred by him in connection with the investigation, defense or
appeal of such proceeding.
(b) Third Party Actions. If the Indemnitee is a person who was
-------------------
or is a party or is threatened to be made a party to any proceeding (other than
an action by or in the right of the Company) by reason of the fact that he is or
was an agent of the Company, or by reason of anything done or not done by him in
any such capacity, the Company shall indemnify the Indemnitee against any and
all expenses and liabilities of any type whatsoever (including, but not limited
to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in
settlement) actually and reasonably incurred by him in connection with the
investigation, defense, settlement or appeal of such proceeding, provided the
Indemnitee acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company and its stockholders, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.
(c) Derivative Actions. If the Indemnitee is a person who was
------------------
or is a party or is threatened to be made a party to any proceeding by or in the
right of the Company by reason of the fact that he is or was an agent of the
Company, or by reason of anything done or not done by him in any such capacity,
the Company shall indemnify the Indemnitee against all expenses actually and
reasonably incurred by him in connection with the investigation, defense,
settlement, or appeal of such proceeding, provided the Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company and its stockholders; except that no indemnification
under this subsection 4(c) shall be made in respect to any claim, issue or
matter as to which such person shall have been finally adjudged to be liable to
the Company by a court of competent jurisdiction unless and only to the extent
that the court in which such proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such amounts which the court shall deem proper.
(d) Actions where Indemnitee is Deceased. If the Indemnitee
------------------------------------
is a person who was or is a party or is threatened to be made a party to any
proceeding by reason of the fact that he is or was an agent of the Company, or
by reason of anything done or not done by him in any such capacity, and if prior
to, during the pendency of after completion of such proceeding Indemnitee
becomes deceased, the Company shall indemnify the Indemnitee's heirs, executors
and administrators against any and all expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
and penalties, and amounts paid in settlement) actually and reasonably incurred
to the extent Indemnitee would have been entitled to indemnification pursuant to
Sections 4(a), 4(b), or 4(c) above were Indemnitee still alive.
4
<PAGE>
(e) Notwithstanding the foregoing, the Company shall not be
obligated to indemnify the Indemnitee for expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
and penalties, and amounts paid in settlement) for which payment is actually
made to Indemnitee under a valid and collectible insurance policy of D&O
Insurance, or under a valid and enforceable indemnity clause, by-law or
agreement.
5. Partial Indemnification. If the Indemnitee is entitled under any
-----------------------
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts
paid in settlement) incurred by him in the investigation, defense, settlement or
appeal of a proceeding, but not entitled, however, to indemnification for all of
the total amount hereof, the Company shall nevertheless indemnify the Indemnitee
for such total amount except as to the portion hereof to which the Indemnitee is
not entitled.
6. Mandatory Advancement of Expenses. Subject to Section 8(a)
---------------------------------
below, the Company shall advance all expenses incurred by the Indemnitee in
connection with the investigation, defense, settlement or appeal of any
proceeding to which the Indemnitee is a party or is threatened to be made a
party by reason of the fact that the Indemnitee is or was an agent of the
Company. Indemnitee hereby undertakes to repay such amounts advanced only if,
and to the extent that, it shall be determined ultimately that the Indemnitee is
not entitled to be indemnified by the Company as authorized hereby. The advances
to be made hereunder shall be paid by the Company to the Indemnitee within
twenty (20) days following delivery of a written request therefor by the
Indemnitee to the Company.
7. Notice and Other Indemnification Procedures.
-------------------------------------------
(a) Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.
(b) If, at the time of the receipt of a notice of the
commencement of a proceeding pursuant to Section 7(a) hereof, the Company has
D&O Insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.
(c) In the event the Company shall be obligated to pay the
expenses of any proceeding against the Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee, upon the delivery to the Indemnitee of written
notice of its election so to do. After delivery of such notice, approval of such
counsel by the Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to the Indemnitee under this Agreement for any fees
of counsel subsequently incurred by the Indemnitee with respect to the same
proceeding, provided that (i) the Indemnitee
5
<PAGE>
shall have the right to employ his counsel in any such proceeding at the
Indemnitee's expense; and (ii) if (A) the employment of counsel by the
Indemnitee has been previously authorized by the Company, (B) the Indemnitee
shall have reasonably concluded that there may be a conflict of interest between
the Company and the Indemnitee in the conduct of any such defense; or (C) the
Company shall not, in fact, have employed counsel to assume the defense of such
proceeding, the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company.
8. Exceptions. Any other provision herein to the contrary
----------
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:
(a) Claims Initiated by Indemnitee. To indemnify or advance
------------------------------
expenses to the Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by the Indemnitee and not by way of defense, unless (i) such
indemnification is expressly required to be made by law, (ii) the proceeding was
authorized by the Board, (iii) such indemnification is provided by the Company,
in its sole discretion, pursuant to the powers vested in the Company under the
General Corporation Law of Delaware or (iv) the proceeding is brought to
establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under Section 145.
(b) Lack of Good Faith. To indemnify the Indemnitee for any
------------------
expenses incurred by the Indemnitee with respect to any proceeding instituted by
the Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or
(c) Unauthorized Settlements. To indemnify the Indemnitee
------------------------
under this Agreement for any amounts paid in settlement of a proceeding unless
the Company consents to such settlement, which consent shall not be unreasonably
withheld.
9. Non-exclusivity. The provisions for indemnification and
---------------
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company's Certificate of Incorporation or Bylaws, the vote of the
Company's stockholders or disinterested directors, other agreements, or
otherwise, both as to action in his official capacity and to action in another
capacity while occupying his position as an agent of the Company, and the
Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.
10. Enforcement. Any right to indemnification or advances granted by
-----------
this Agreement to Indemnitee shall be enforceable by or on behalf of Indemnitee
in any court of competent jurisdiction if (i) the claim for indemnification or
advances is denied, in whole or in part, or (ii) no disposition of such claim is
made within ninety (90) days of request therefor. Indemnitee, in such
enforcement action, if successful in whole or in part, shall be entitled to be
paid also the expense of prosecuting his claim. It shall be a defense to any
action for which a claim for indemnification is made under this Agreement (other
than an action brought to enforce
6
<PAGE>
a claim for expenses pursuant to Section 6 hereof, provided that the required
undertaking has been tendered to the Company) that Indemnitee is not entitled to
indemnification because of the limitations set forth in Sections 4 and 8 hereof.
Neither the failure of the Corporation (including its Board of Directors or its
stockholders) to have made a determination prior to the commencement of such
enforcement action that indemnification of Indemnitee is proper in the
circumstances, nor an actual determination by the Company (including its Board
of Directors or its stockholders) that such indemnification is improper, shall
be a defense to the action or create a presumption that Indemnitee is not
entitled to indemnification under this Agreement or otherwise.
11. Subrogation. In the event of payment under this Agreement, the
-----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
12. Survival of Rights.
------------------
(a) All agreements and obligations of the Company contained
herein shall continue during the period Indemnitee is an agent of the Company
and shall continue thereafter so long as Indemnitee shall be subject to any
possible claim or threatened, pending or completed action, suit or proceeding,
whether civil, criminal, arbitrational, administrative or investigative, by
reason of the fact that Indemnitee was serving in the capacity referred to
herein.
(b) The Company shall require any successor to the Company
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place.
13. Interpretation of Agreement. It is understood that the parties
---------------------------
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent permitted by law
including those circumstances in which indemnification would otherwise be
discretionary.
14. Severability. If any provision or provisions of this Agreement
------------
shall be held to be invalid, illegal or unenforceable for any reason whatsoever,
(i) the validity, legality and enforceability of the remaining provisions of the
Agreement (including without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 13 hereof.
7
<PAGE>
15. Modification and Waiver. No supplement, modification or
-----------------------
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
16. Notice. All notices, requests, demands and other communications
------
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on
the signature page of this Agreement, or as subsequently modified by written
notice.
17. Governing Law. This Agreement shall be governed exclusively by
-------------
and construed according to the laws of the State of Delaware as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.
18. Consent to Jurisdiction. The Company and the Indemnitee each
-----------------------
hereby consent to the jurisdiction of the courts of the State of Delaware with
respect to any action or proceeding which arises out of or relates to this
Agreement.
8
<PAGE>
The parties hereto have entered into this Indemnity Agreement
effective as of the date first above written.
THE COMPANY:
AGILE SOFTWARE CORPORATION
By___________________________________
Its__________________________________
Address: One Almaden Boulevard
San Jose, California 95113
INDEMNITEE:
_____________________________________
[NAME]
Address: _____________________________________
_____________________________________
9
<PAGE>
REVOLVING CREDIT LOAN & SECURITY
AGREEMENT
(ACCOUNTS AND INVENTORY)
EXHIBIT 10.6
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
OBLIGOR# NOTE# AGREEMENT DATE
DECEMBER 11, 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CREDIT LIMIT INTEREST RATE B+1.00% OFFICER NO./INITIALS
$1,000,000.00 9.25% 48704 CLAY JONES
- ---------------------------------------------------------------------------------------------------------
</TABLE>
THIS AGREEMENT is entered into on DECEMBER 11, 1996, between COMERICA BANK-
CALIFORNIA ("Bank") as secured party, whose Headquarter Office is 333 WEST SANTA
CLARA STREET, SAN JOSE, CA and AGILE SOFTWARE CORPORATION ("Borrower"), a
CALIFORNIA CORPORATION whose sole place of business (if it has only one), chief
executive office (if it has more than one place of business) or residence (if an
individual is located at ONE ALMADEN BLVD., 12TH FLOOR, SAN JOSE, CA.
The parties agree as follows:
1. DEFINITIONS
-----------
1.1 "Agreement" as used in this Agreement means and includes this Revolving
Credit Loan & Security Agreement (Accounts and Inventory), any concurrent or
subsequent rider to this Revolving Credit Loan & Security Agreement (Accounts
and Inventory) and any extensions, supplements, amendments or modifications
to this Revolving Credit Loan & Security Agreement (Accounts and Inventory)
and to any such rider.
1.2 "Bank Expenses" as used in this Agreement means and includes: all costs
or expenses required to be paid by Borrower under this Agreement which are
paid or advanced by Bank; taxes and insurance premiums of every nature and
kind of Borrower paid by Bank; filing, recording, publication and search
fees, appraiser fees, auditor fees and costs, and title insurance premiums
paid or incurred by Bank in connection with Bank's transactions with
Borrower; costs and expenses incurred by Bank in collecting the Receivables
(with or without suit) to correct any default or enforce any provision of
this Agreement, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, disposing of, preparing for sale
and/or advertising to sell the Collateral, whether or not a sale is
consummated; costs and expenses of suit incurred by Bank in enforcing or
defending this Agreement or any portion hereof, including, but not limited
to, expenses incurred by Bank in attempting to obtain relief from any stay,
restraining order, injunction or similar process which prohibits Bank from
exercising any of its rights or remedies; and attorneys' fees and expenses
incurred by Bank in advising, structuring, drafting, reviewing, amending,
terminating, enforcing, defending or concerning this Agreement, or any
portion hereof or any agreement related hereto, whether or not suit is
brought. Bank Expenses shall include Bank's in-house legal charges at
reasonable rates.
1.3 "Base Rate" as used in this Agreement means that variable rate of
interest so announced by Bank at its headquarters office in San Jose,
California as its "Base Rate" from time to time and which serves as the basis
upon which effective rates of interest are calculated for those loans making
reference thereto.
1.4 "Borrower's Books" as used in this Agreement means and includes all of
the Borrower's books and records including but not limited to: minute books;
ledgers; records indicating, summarizing or evidencing Borrower's assets,
liabilities, Receivables, business operations or financial condition, and all
information relating thereto, computer programs; computer disk or tape files;
computer printouts, computer runs; and other computer prepared information
and equipment of any kind.
1.5 "Borrowing Base" as used in this Agreement means the sum of: (1)
SEVENTY FIVE percent (75.00%) of the net amount of Eligible Accounts after
deducting therefrom all payments, adjustments and credits applicable thereto
("Accounts Receivable Borrowing Base"); and (2) the amount, if any, of the
advances against inventory agreed to be made pursuant to any Inventory Rider
("Inventory Borrowing Base"), or other rider, amendment or modification to
this Agreement, that may now or hereafter be entered into by Bank and
Borrower. Up to $350,000 can be advanced without regard to formula; Upon
borrowings exceeding $350,000 (including Letters of Credit) advance on
Accounts Receivable will be limited, in aggregate, to 75% of eligible
accounts receivable.
1.6 "Cash Flow" as used in this Agreement means, for any applicable period
of determination, the Net Income (after deduction for income taxes and other
taxes of such person determined by reference to income or profits of such
person) for such period, plus, to the extent deducted in computation of such
Net Income, the amount of depreciation and amortization expense and the
amount of deferred tax liability during such period, all as determined in
accordance with GAAP. The applicable period of determination will be N/A,
beginning with the period from ____________ to _________________________.
1.7 "Collateral" as used in this Agreement means and includes each and all
of the following: the Receivables; the Intangibles; the negotiable
collateral, the inventory; all money, deposit accounts and all other assets
of Borrower in which Bank receives a security interest or which hereafter
come into the possession, custody or control of Bank; and the proceeds of any
of the foregoing, including, but not limited to, proceeds of insurance
covering the collateral and any and all Receivables, Intangibles, negotiable
collateral, inventory, equipment, money, deposit accounts or other tangible
and intangible property of borrower resulting from the sale or other
disposition of the collateral, and the proceeds thereof. Notwithstanding
anything to the contrary contained herein, collateral shall not include any
waste or other materials which have been or may be designated as toxic or
hazardous by Bank.
1.8 "Credit" as used in this Agreement means all Obligations, except those
obligations arising pursuant to any other separate contract, instrument,
note, or other separate agreement which, by its terms, provides for a
specified interest rate and term.
1
<PAGE>
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
1.9 "Current Assets" as used in this Agreement means, as of any applicable
date of determination, all cash, non-affiliated customer receivables, United
States government securities, claims against the United States government, and
inventories.
1.10 "Current Liabilities" as used in this Agreement means, as of any
applicable date of determination, (i) all liabilities of a person that should
be classified as current in accordance with GAAP, including without limitation
any portion of the principal of the Indebtedness classified as current, plus
(ii) to the extent not otherwise included, all liabilities of the Borrower to
any of its affiliates whether or not classified as current in accordance with
GAAP.
1.11 "Daily Balance" as used in this Agreement means the amount determined
by taking the amount of the Credit owed at the beginning of a given day,
adding any new Credit advanced or incurred on such date, and subtracting any
payments or collections which are deemed to be paid and are applied by Bank in
reduction of the Credit on that date under the provisions of this Agreement.
1.12 "Eligible Accounts" as used in this Agreement means and includes those
accounts of Borrower which are due and payable within THIRTY (30) days, or
------ ----
less, from the date of invoice, have been validly assigned to Bank and
strictly comply with all of Borrower's warranties and representations to Bank;
but Eligible Accounts shall not include the following: (a) accounts with
respect to which the account debtor is an officer, employee, partner, joint
venturer or agent of Borrower; (b) accounts with respect to which goods are
placed on consignment, guaranteed sale or other terms by reason of which the
payment by the account debtor may be conditional; (c) accounts with respect to
which the account debtor is not a resident of the United States; (d) accounts
with respect to which the account debtor is the United States or any
department, agency or instrumentality of the United States; (e) accounts with
respect to which the account debtor is any State of the United States or any
city, county, town, municipality or division thereof; (f) accounts with
respect to which the account debtor is a subsidiary of, related to, affiliated
or has common shareholders, officers or directors with Borrower; (g) accounts
with respect to which Borrower is or may become liable to the account debtor
for goods sold or services rendered by the account debtor to Borrower; (h)
accounts not paid by an account debtor within ninety (90) days from the date
of the invoice; (i) accounts with respect to which account debtors dispute
liability or make any claim, or have any defense, crossclaim, counterclaim, or
offset; (j) accounts with respect to which any insolvency Proceeding is filed
by or against the account debtor, or if an account debtor becomes insolvent,
fails or goes out of business; and (k) accounts owed by any single account
debtor which exceed twenty percent (20%) of all of the Eligible Accounts; and
(l) accounts with a particular account debtor on which over twenty-five
percent (25%) of the aggregate amount owing is greater than ninety (90) days
from the date of the invoice.
1.13 "Event of Default" as used in this Agreement means those events
described in Section 7 contained herein below.
1.14 "Fixed Charges" as used in this Agreement means and includes, for any
applicable period of determination, the sum, without duplication, of (a) all
interest paid or payable during such period by a person on debt of such
person, plus (b) all payments of principal or other sums paid or payable
during such period by such person with respect to debt of such person having a
final maturity more than one year from the date of creation of such debt, plus
(c) all debt discount and expense amortized or required to be amortized during
such period by such person, plus (d) the maximum amount of all rents and other
payments paid or required to be paid by such person during such period under
any lease or other contract or arrangement providing for use of real or
personal property in respect of which such person is obligated as a lessee,
use or obligor, plus (e) all dividends and other distributions paid or payable
by such person or otherwise accumulating during such period on any capital
stock of such person, plus (f) all loans or other advances made by such person
during such period to any Affiliate of such person. The applicable period of
determination will be N/A, beginning with the period from ________________
---
to ____________________.
1.15 "GAAP" as used in this Agreement means as of any applicable period,
generally accepted accounting principles in effect during such period.
1.16 "Insolvency Proceeding" as used in this Agreement means and includes
any proceeding or case commenced by or against the Borrower, or any guarantor
of Borrower's Obligations, or any of borrower's account debtors, under any
provisions of the Bankruptcy Code, as amended, or any other bankruptcy or
insolvency law, including but not limited to assignments for the benefit of
creditors, formal or informal moratoriums, composition or extensions with some
or all creditors, any proceeding seeking a reorganization, arrangement or any
other relief under the Bankruptcy code, as amended, or any other bankruptcy or
insolvency law.
1.17 "Intangibles" as used in this Agreement means and includes all of
Borrower's present and future general intangibles and other personal property
(including, without limitation, any and all rights in any legal proceedings,
goodwill, patents, trade names, copyrights, trademarks, blueprints, drawings,
purchase orders, computer programs, computer disks, computer tapes,
literature, reports, catalogs and deposit accounts) other than goods and
Receivables, as well as Borrower's Books relating to any of the foregoing.
1.18 "Inventory" as used in this Agreement means and includes all present
and future inventory in which Borrower has any interest, including, but not
limited to, goods held by Borrower for sale or lease or to be furnished under
a contract of service and all of Borrower's present and future raw materials,
work in process, finished goods, advertising materials, and packing and
shipping materials, wherever located and any documents of title representing
any of the above, and any equipment, fixtures or other property used in the
storing, moving, preserving, identifying, accounting for and shipping of
preparing for the shipping of inventory, and any and all other items hereafter
acquired by Borrower by way of substitution,
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replacement, return, repossession or otherwise, and all additions and
accessions thereto, and the resulting product or mass, and any documents of
title respecting any of the above.
1.19 "Net Income" as used in this Agreement means the net income (or loss)
of a person for any period determined in accordance with GAAP but excluding in
any event:
(a) any gains or losses on the sale or other disposition, not in the
ordinary course of business, of investments or fixed or capital
assets, and any taxes on the excluded gains and any tax deductions or
credits on account on any excluded losses; and
(b) in the case of the Borrower, net earnings of any Person in which
Borrower has an ownership interest, unless such net earnings shall
have actually been received by Borrower in the form of cash
distributions.
1.20 "Judicial Officer or Assignee" as used in this Agreement means and
includes any trustee, receiver, controller, custodian, assignee for the
benefit of creditors or any other person or entity having powers or duties
like or similar to the powers and duties of trustee, receiver, controller,
custodian or assignee for the benefit of creditors.
1.21 "Obligations" as used in this Agreement means and includes any and all
loans, advances, overdrafts, debts, liabilities (including, without
limitation, any and all amounts charged to Borrower's account pursuant to any
agreement authorizing Bank to charge Borrower's account), obligations, lease
payments, guaranties, covenants and duties owing by Borrower to Bank of any
kind and description whether advanced pursuant to or evidenced by this
Agreement; by any note or other instrument; or by any other agreement between
Bank and Borrower and whether or not for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including, without limitation, any debt, liability or
obligation owing from Borrower to others which Bank may have obtained by
assignment, participation, purchase or otherwise, and further including,
without limitation, all interest not paid when due and all Bank Expenses which
Borrower is required to pay or reimburse by this Agreement, by law, or
otherwise.
1.22 "Person" or "person" as used in this Agreement means and includes any
individual, corporation, partnership, joint venture, association, trust,
unincorporated association, joint stock company, government, municipality,
political subdivision or agency, or other entity.
1.23 "Receivables" as used in this Agreement means and includes all
presently existing and hereafter arising accounts, instruments, documents,
chattel paper, general intangibles, all other forms of obligations owing to
Borrower, all of Borrower's rights in, to and under all purchase orders
heretofore or hereafter received, all moneys due to Borrower under all
contracts or agreements (whether or not yet earned or due), all merchandise
returned to or reclaimed by Borrower and the Borrower's books (except minute
books) relating to any of the foregoing.
1.24 "Subordinated Debt" as used in this Agreement means indebtedness of
the Borrower to third parties which has been subordinated to the Obligations
pursuant to a subordination agreement in form and content satisfactory to the
Bank.
1.25 "Subordination Agreement" as used in this Agreement means a
subordination agreement in form satisfactory to Bank making all present and
future indebtedness of the Borrower to N/A subordinate to the Obligations.
---
1.26 "Tangible Effective Net Worth" as used in this Agreement means net
worth as determined in accordance with GAAP consistently applied, increased by
Subordinated Debt, if any, and decreased by the following: patents, licenses,
goodwill, subscription lists, organization expenses, trade receivables
converted to notes, money due from affiliates (including officers, directors,
subsidiaries and commonly held companies).
1.27 "Tangible Net Worth" as used in this Agreement means, as of any
applicable date of determination, the excess of
a. the net book value of all assets of a person (other than patents,
patent rights, trademarks, trade names, franchises, copyrights,
licenses, goodwill, and similar intangible assets) after all
appropriate deductions in accordance with GAAP (including, without
limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization), over
b. all Debt of such person.
1.28 "Total Liabilities" as used in this Agreement means the total of all
items of indebtedness, obligation or liability which, in accordance with GAAP
consistently applied, would be included in determining the total liabilities
of the Borrower as of the date Total Liabilities is to be determined,
including without limitation (a) all obligations secured by any mortgage,
pledge, security interest or other lien on property owned or acquired, whether
or not the obligations secured thereby shall have been assumed; (b) all
obligations which are capitalized lease obligations; and (c) all guaranties,
endorsements or other contingent or surety obligations with respect to the
indebtedness of others, whether or not reflected on the balance sheets of the
Borrower, including any obligation to furnish funds, directly or indirectly
through the purchase of goods, supplies, services, or by way of stock
purchase, capital contribution, advance or loan or any obligation to enter
into a contract for any of the foregoing.
1.29 "Working Capital" as used in this Agreement means, as of any
applicable date of determination, Current Assets less Current Liabilities.
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1.30 Any and all terms used in this Agreement shall be construed and
defined in accordance with the meaning and definition of such terms under and
pursuant to the California Uniform Commercial Code (hereinafter referred to
as the "Code") as amended.
1.31 As of 6/30/1997 all existing current obligations under stand-by and
commercial Letters of Credit will be reserved under the Borrowing Base.
2. LOAN AND TERMS OF PAYMENT
-------------------------
For value received, Borrower promises to pay to the order of Bank such
amount, as provided below, together with interest, as provided for below.
2.1 Upon the request of Borrower, made at any time and from time to time
during the term hereof, and so long as no Event of Default has occurred,
Bank shall lend to Borrower an amount equal to the Borrowing Base; provided,
however, that in no event shall Bank be obligated to make advances to
Borrower under this Section 2.1 whenever the Daily Balance exceeds, at any
time, either the Borrowing Base or the sum of ONE MILLION AND NO/100
----------------------
($1,000,000.00), such amount being referred to herein as an "Overadvance".
---------------
2.2 Except as hereinbelow provided, the Credit shall bear interest, on the
Daily Balance owing, at a rate of ONE AND NO/1000 (1.000) percentage points
--------------- -------
per annum above the Base Rate (the "Rate"). The Credit shall bear interest,
from and after the occurrence of an Event of Default and without constituting
a waiver of any such Event of Default, on the Daily Balance owing, at a rate
three (3) percentage points per annum above the Rate. All Interest chargeable
under this Agreement that is based upon a per annum calculation shall be
computed on the basis of a three hundred sixty (360) day year for actual days
elapsed.
The Base Rate as of the date of this Agreement is EIGHT AND 250/1000
------------------
(8.250%) per annum. In the event that the Base Rate announced is, from time
--------
to time hereafter changed, adjustment in the Rate shall be made and based on
the Base Rate in effect on the date of such change. The Rate, as adjusted,
shall apply to the Credit until the Base Rate is adjusted again. The minimum
interest payable by the Borrower under this Agreement shall in no event be
less than N/A per month. All interest payable by Borrower under the Credit,
---
shall be due and payable on the first day of each calendar month during the
term of this Agreement and Bank may, at its option, elect to treat such
interest and any and all Bank Expenses as advances under the Credit, which
amounts shall thereupon constitute Obligations and shall thereafter accrue
interest at the rate applicable to the Credit under the terms of the
Agreement.
2.3 Without affecting Borrower's obligation to repay immediately any
Overadvance in accordance with Section 2.1 hereof, all Overadvances shall
bear additional interest on the amount thereof at a rate equal to N/A
---
(N/A%) percentage points per month in excess of the interest rate set forth
------
in Section 2.2, from the date incurred and for each month thereafter, until
repaid in full.
3. TERM.
----
3.1 This Agreement shall remain in full force and effect until JANUARY 1,
1998, or until terminated by notice by Borrower. Notice of such
termination by Borrower shall be effectuated by mailing of a registered or
certified letter not less than thirty (30) days prior to the effective date
of such termination, addressed to the Bank at the address set forth herein
and the termination shall be effective as of the date so fixed in such
notice. Notwithstanding the foregoing, should Borrower be in default of one
or more of the provisions of this Agreement, Bank may terminate this
Agreement at any time without notice. Notwithstanding the foregoing, should
either Bank or Borrower become insolvent or unable to meet its debts as they
mature, or fail, suspend, or go out of business, the other party shall have
the right to terminate this Agreement at any time without notice. On the date
of termination all Obligations shall become immediately due and payable
without notice or demand; no notice of termination by Borrower shall be
effective until Borrower shall have paid all Obligations to Bank in full.
Notwithstanding termination, until all Obligations have been fully satisfied,
Bank shall retain its security interest in all existing Collateral and
Collateral arising thereafter, and Borrower shall continue to perform all of
its Obligations.
3.2 After termination and when Bank has received payment in full of
Borrower's obligations to Bank, Bank shall reassign to Borrower all
Collateral held by Bank, and shall execute a termination of all security
agreements and security interests given by Borrower to Bank, upon the
execution and delivery of mutual general releases.
4. CREATION OF SECURITY INTEREST.
-----------------------------
4.1 Borrower hereby grants to Bank a continuing security interest in all
presently existing and hereafter arising Collateral in order to secure prompt
repayment of any and all Obligations owed by Borrower to Bank and in order to
secure prompt performance by Borrower of each and all of its covenants and
Obligations under this Agreement and otherwise created. Bank's security
interest in the Collateral shall attach to all Collateral without further act
on the part of Bank or Borrower. In the event that any Collateral, including
proceeds, is evidenced by or consists of a letter of credit, advice of
credit, instrument, money, negotiable documents, chattel paper or similar
property (collectively, "Negotiable Collateral"), Borrower shall, immediately
upon receipt thereof, endorse and assign such Negotiable Collateral over to
Bank and deliver actual physical possession of the Negotiable Collateral to
Bank.
4.2 Bank's security interest in Receivables shall attach to all
Receivables without further act on the part of Bank or Borrower. Upon request
from Bank, Borrower shall provide Bank with schedules describing all
Receivables created or acquired by Borrower (including without limitation
agings listing the names and addresses of, and amounts owing by date by
account debtors), and shall execute and deliver written assignments of all
Receivables to Bank all in a form acceptable to Bank, provided, however,
Borrower's failure to execute and deliver such schedules and/or assignments
shall not effect or limit Bank's security interest and other rights in and to
the Receivables. Together with each schedule,
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Borrower shall furnish Bank with copies of Borrower's customers' invoices or
the equivalent, and original shipping or delivery receipts for all
merchandise sold, and Borrower warrants the genuineness thereof. Bank or
Bank's designee may notify customers or account debtors of collection costs
and expenses to Borrower's account but, unless and until Bank does so or
gives Borrower other written instructions, Borrower shall collect all
Receivables for Bank, receive in trust all payments thereon as Bank's
trustee, and, if so requested to do so from Bank, Borrower shall immediately
deliver said payments to Bank in their original form as received from the
account debtor and all letters of credit, advices of credit, instruments,
documents, chattel paper or any similar property evidencing or constituting
Collateral. Notwithstanding anything to the contrary contained herein, if
sales of inventory are made for cash, Borrower shall immediately deliver to
Bank, in identical form, all such cash, checks, or other forms of payment
which Borrower receives. The receipt of any check or other item of payment by
Bank shall not be considered a payment on account until such check or other
item of payment is honored when presented for payment, in which event, said
check or other item of payment shall be deemed to have been paid to Bank TWO
(2) calendar days after the date Bank actually receives such check or other
item of payment.
4.3 Bank's security interest in inventory shall attach to all inventory
without further act on the part of Bank or Borrower. Upon Bank's request
Borrower will from time to time at Borrower's expense pledge, assemble and
deliver such inventory to Bank or to a third party as Bank's bailee; or hold
the same in trust for Bank's account or store the same in a warehouse in
Bank's name; or deliver to Bank documents of title representing said
inventory; or evidence of Bank's security interest in some other manner
acceptable to Bank. Until a default by Borrower under this Agreement or any
other Agreement between Borrower and Bank. Borrower may, subject to the
provisions hereof and consistent herewith, sell the inventory, but only in
the ordinary course of Borrower's business. A sale of inventory in Borrower's
ordinary course of business does not include an exchange or a transfer in
partial or total satisfaction of a debt owing by Borrower.
4.4 Borrower shall execute and deliver to Bank concurrently with Borrower's
execution of this Agreement, and at any time or times hereafter at the
request of Bank, all financing statements, continuation financing statements,
security agreements, mortgages, assignments, certificates of title,
affidavits, reports, notices, schedules of accounts, letters of authority and
all other documents that Bank may request, in form satisfactory to Bank, to
perfect and maintain perfected Bank's security interest in the Collateral and
in order to fully consummate all of the transactions contemplated under this
Agreement. Borrower hereby irrevocably makes, constitutes and appoints Bank
(and any of Bank's officers, employees or agents designated by Bank) as
Borrower's true and lawful attorney-in-fact with power to sign the name of
Borrower on any financing statements, continuation financing statements,
security agreement, mortgage, assignment, certificate of title, affidavit,
letter of authority, notice of other similar documents which must be executed
and/or filed in order to perfect or continue perfected Bank's security
interest in the Collateral.
Borrower shall make appropriate entries in Borrower's Books disclosing
Bank's security interest in the Receivables. Bank (through any of its
officers, employees or agents) shall have the right at any time or times
hereafter during Borrower's usual business hours, or during the usual
business hours of any third party having control over the records of
Borrower, to inspect and verify Borrower's Books in order to verify the
amount or condition of, or any other matter, relating to, said Collateral and
Borrower's financial condition.
4.5 Borrower appoints Bank or any other person whom Bank may designate as
Borrower's attorney-in-fact, with power to endorse Borrower's name on any
checks, notes, acceptances, money order, drafts or other forms of payment or
security that may come into Bank's possession; to sign Borrower's name on any
invoice or bill of lading relating to any Receivables, on drafts against
account debtors, on schedules and assignments of Receivables, on
verifications of Receivables and on notices to account debtors; to establish
a lock box arrangement and/or to notify the post office authorities to change
the address for delivery of Borrower's mail addressed to Borrower to an
address designated by Bank, to receive and open all mail addressed to
Borrower, and to retain all mail relating to the Collateral and forward all
other mail to Borrower; to send, whether in writing or by telephone, requests
for verification of Receivables; and to do all things necessary to carry out
this Agreement. Borrower ratifies and approves all acts of the attorney-in-
fact. Neither Bank nor its attorney-in-fact will be liable for any acts or
omissions or for any error of judgement or mistake of fact or law. This power
being coupled with an interest, is irrevocable so long as any Receivables in
which Bank has a security interest remain unpaid and until the Obligations
have been fully satisfied.
4.6 In order to protect or perfect any security interest which Bank is
granted hereunder, Bank may, in its sole discretion, discharge any lien or
encumbrance or bond the same, pay any insurance, maintain guards,
warehousemen, or any personnel to protect the Collateral, pay any service
bureau, or, obtain any records, and all costs for the same shall be added to
the Obligations and shall be payable on demand.
4.7 Borrower agrees that Bank may provide information relating to this
Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries
and service providers.
5. CONDITIONS PRECEDENT
--------------------
5.1 Conditions precedent to the making of the loans and the extension of
the financial accommodations hereunder, Borrower shall execute, or cause to
be executed, and deliver to Bank, in form and substance satisfactory to Bank
and its counsel, the following:
a. This Agreement and other documents required by Bank;
b. Financing statements (Form UCC-1) in form satisfactory to Bank for
filing and recording with the appropriate governmental authorities;
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c. If Borrower is a corporation, then certified extracts from the minutes
of the meeting of its board of directors, authorizing the borrowings and
the granting of the security interest provided for herein and authorizing
specific officers to execute and deliver the agreements provided for
herein;
d. If Borrower is a corporation, then a certificate of good standing
showing that Borrower is in good standing under the laws of the state of
its incorporation and certificates indicating that Borrower is qualified
to transact business and is in good standing in any other state in which
it conducts business;
e. If Borrower is a partnership, then a copy of Borrower's partnership
agreement certified by each general partner of Borrower;
f. UCC searches, tax lien and litigation searches, fictitious business
statement filings, insurance certificates, notices or other similar
documents which Bank may require and in such form as Bank may require, in
order to reflect, perfect or protect Bank's first priority security
interest in the Collateral and in order to fully consummate all of the
transactions contemplated under this Agreement;
g. Evidence that Borrower has obtained insurance and acceptable
endorsements;
h. Waivers executed by landlords and mortgagees of any real property on
which any Collateral is located; and
i. Warranties and representations of officers.
6. WARRANTIES REPRESENTATIONS AND COVENANTS.
----------------------------------------
6.1 If so requested by Bank, Borrower shall, at such intervals designated by
Bank, during the term hereof execute and deliver a Report of Accounts Receivable
or similar report, in form customarily used by Bank. Borrower's Borrowing Base
at all times pertinent hereto shall not be less than the advances made
hereunder. Bank shall have the right to recompute Borrower's Borrowing Base in
conformity with this Agreement.
6.2 If any warranty is breached as to any account, or any account is not paid
in full by an account debtor within NINETY (90) days from the date of invoice,
or an account debtor disputes liability or makes any claim with respect thereto,
or a petition in bankruptcy or other application for relief under the Bankruptcy
Code or any other insolvency law is filed by or against an account debtor, or an
account debtor makes and assignment for the benefit of creditors, becomes
insolvent, fails or goes out of business, then Bank may deem ineligible any and
all accounts owing by that account debtor, and reduce Borrower's Borrowing Base
by the amount thereof. Bank shall retain its security interest in all
Receivables and accounts, whether eligible or ineligible, until all Obligations
have been fully paid and satisfied. Returns and allowances, if any, as between
Borrower and its customers, will be on the same basis and in accordance with the
usual customary practices of the Borrower, as they exist at this time. Any
merchandise which is returned by an account debtor or otherwise recovered shall
be set aside, marked with Bank's name, and Bank shall retain a security interest
therein. Borrower shall promptly notify Bank of all disputes and claims and
settle or adjust them on terms approved by Bank. After default by Borrower
hereunder, no discount, credit or allowance shall be granted to any account
debtor by Borrower and no return of merchandise shall be accepted by Borrower
without Bank's consent, Bank may, after default by Borrower, settle or adjust
disputes and claims directly with account debtors for amounts and upon terms
which Bank considers advisable, and in such cases Bank will credit Borrower's
account with only the net amounts received by Bank in payment of the accounts,
after deducting all Bank Expenses in connection therewith.
6.3 Borrower warrants, represents, covenants and agrees that:
a. Borrower has good and marketable title to the Collateral. Bank has and
shall continue to have a first priority perfected security interest in and
to the Collateral. The Collateral shall at all times remain free and clear
of all liens, encumbrances and security interests (except those in favor
of Bank).
b. All accounts are and will, at all times pertinent hereto, be bona fide
existing obligations created by the sale and delivery of merchandise or
the rendition of services to account debtors in the ordinary course of
business, free of liens, claims, encumbrances and security interests
(except as held by Bank and except as may be consented to, in writing, by
Bank) and are unconditionally owed to Borrower without defenses, disputes,
offsets, counterclaims, rights of return or cancellation, and Borrower
shall have received no notice of actual or imminent bankruptcy or
insolvency of any account debtor at the time an account due from such
account debtor is assigned to Bank.
c. At the time each account is assigned to Bank, all property giving rise
to such account shall have been delivered to the account debtor or to the
agent for the account debtor for immediate shipment to, and unconditional
acceptance by, the account debtor. Borrower shall deliver to Bank, as Bank
may from time to time require, delivery receipts, customer's purchase
orders, shipping instruction, bills of lading and any other evidence of
shipping arrangements. Absent such a request by Bank, copies of all such
documentation shall be held by Borrower as custodian for Bank.
6.4 At the time each eligible account is assigned to Bank, all such eligible
accounts will be due and payable on terms set forth in Section 1.12, or on such
other terms approved in writing by Bank in advance of the creation of such
accounts and which are expressly set forth on the face of all invoices, copies
of which shall be held by Borrower as custodian for Bank, and no such eligible
account will then be past due.
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6.5 Borrower shall keep the inventory only at the following locations: _______
__________________________________________ and the owner or mortgagees of the
respective locations are:____________________________________________________
a. Borrower, immediately upon demand by Bank therefor, shall now and from time
to time hereafter, at such intervals as are requested by Bank, deliver to
Bank, designations of inventory specifying Borrower's cost of inventory, the
wholesale market value thereof and such other matters and information relating
to the inventory as Bank may request;
b. Borrower's inventory, valued at the lower of Borrower's cost or the
wholesale market value thereof, at all times pertinent hereto shall not be
less than N/A Dollars ($N/A) of which no less than N/A Dollars ($N/A)
--- ------ --- ------
shall be in raw materials and finished goods;
c. All of the inventory is and shall remain free from all purchase money or
other security interests, liens or encumbrances, except as held by Bank;
d. Borrower does now keep and hereafter at all times shall keep correct and
accurate records itemizing and describing the kind, type, quality and quantity
of the inventory, its cost therefor and selling price thereof, and the daily
withdrawals therefrom and additions thereto, all of which records shall be
available upon demand to any of Bank's officers, agents and employees for
inspection and copying;
e. All inventory, now and hereafter at all times, shall be new inventory of
good and merchantable quality free from defects;
f. Inventory is not now and shall not at any time or times hereafter be
located or stored with a bailee, warehouseman or other third party without
Bank's prior written consent, and, in such event, Borrower will concurrently
therewith cause any such bailee, warehouseman or other third party to issue
and deliver to Bank, in a form acceptable to Bank, warehouse receipts in
Bank's name evidencing the storage of inventory or other evidence of Bank's
prior rights in the inventory. In any event, Borrower shall instruct any third
party to hold all such inventory for Bank's account subject to Bank's security
interests and its instructions; and
g. Bank shall have the right upon demand now and/or at all times hereafter,
during Borrower's usual business hours, to inspect and examine the inventory
and to check and test the same as to quality, quantity, value and condition
and Borrower agrees to reimburse Bank for Bank's reasonable costs and expenses
in so doing.
6.6 Borrower represents, warrants and covenants with Bank that Borrower will
not, without Bank's prior written consent:
a. Grant a security interest in or permit a lien, claim or encumbrance upon
any of the Collateral to any person, association, firm, corporation, entity or
governmental agency or instrumentality;
b. Permit any levy, attachment or restraint to be made affecting any of
Borrower's assets;
c. Permit any Judicial Officer or Assignee to be appointed or to take
possession of any or all of Borrower's assets;
d. Other than sales of inventory in the ordinary course of Borrower's
business, to sell, lease, or otherwise dispose of, move, or transfer, whether
by sale or otherwise, any of Borrower's assets;
e. Change its name, business structure, corporate identity or structure; add
any new fictitious names, liquidate, merge or consolidate with or into any
other business organization;
f. Move or relocate any Collateral;
g. Acquire any other business organization;
h. Enter into any transaction not in the usual course of Borrower's business;
i. Make any investment in securities of any person, association, firm, entity,
or corporation other than the securities of the United States of America;
j. Make any change in Borrower's financial structure or in any of its business
objectives, purposes or operations which would adversely effect the ability of
Borrower to repay Borrower's Obligations;
k. Incur any debts outside the ordinary course of Borrower's business except
renewals or extensions of existing debts and interest thereon;
l. Make any advance or loan except in the ordinary course of Borrower's
business as currently conducted;
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REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS AND INVENTORY)
m. Make icons, advances or extensions of credit to any Person, except for
sales on open account and otherwise in the ordinary course of business;
n. Guarantee or otherwise, directly or indirectly, in any way be or become
responsible for obligations of any other Person, whether by agreement to
purchase the indebtedness of any other Person, agreement for the furnishing of
funds to any other Person through the furnishing of goods, supplies or
services, by way of stock purchase, capital contribution, advance or loan, for
the purpose of paying or discharging (or causing the payment or discharge of)
the indebtedness of any other Person, or otherwise, except for the endorsement
of negotiable instruments by the Borrower in the ordinary course of business
for deposit or collection.
o. (a) Sell, lease, transfer or otherwise dispose of properties and assets
having an aggregate book value of more than N/A Dollars ($N/A) (whether in one
--- ------
transaction or in a series of transactions) except as to the sale of inventory
in the ordinary course of business; (b) change its name, consolidate with or
merge into any other corporation, permit another corporation to merge into it,
acquire all or substantially all the properties or assets of any other Person,
enter into any reorganization or recapitalization or reclassify its capital
stock, or (c) enter into any sale-leaseback transaction;
p. Subordinate any indebtedness due to it from a person to indebtedness of
other creditors of such person;
q. Purchase or hold beneficially any stock or other securities of, or make any
investment or acquire any interest whatsoever in, any other Person except for
the common stock of the Subsidiaries owned by the Borrower on the date of this
Agreement and except for certificates of deposit with maturities of one year
or less of United States commercial banks with capital, surplus and undivided
profits in excess of $100,000,000 and direct obligations of the United States
Government maturing within one year from the date of acquisition thereof; or
r. Allow any fact, condition or event to occur or exist with respect to any
employee pension or profit sharing plans established or maintained by it which
might constitute grounds for termination of any such plan or for the court
appointment of a trustee to administer any such plan.
6.7 Borrower is not a merchant whose sales for resale of goods for personal,
family or household purposes exceeded seventy-five percent (75%) in dollar
volume of its total sales of all goods during the 12 months preceding the filing
by Bank of a financing statement describing the Collateral. At no time hereafter
shall Borrower's sales for resale of goods for personal, family or household
purposes exceed seventy-five (75%) in dollar volume of its total sales.
6.8 Borrower's sole place of business or chief executive office or residence
is located at the address indicated above and Borrower covenants and agrees that
it will not, during the term of the Agreement, without prior written
notification to Bank, relocate said sole place of business or chief executive
office or residence.
6.9 If Borrower is a corporation, Borrower represents, warrants and covenants
as follows:
a. Borrower will not make any distribution or declare or pay any dividend (in
stock or in cash) to any shareholder or on any of its capital stock, of any
class, whether now or hereafter outstanding, or purchase, acquire, repurchase,
redeem or retire any such capital stock;
b. Borrower is and shall at all times hereafter be a corporation duly
organized and exleting in good standing under the laws of the state of its
incorporation and qualified and licensed to do business in California or any
other state in which it conducts its business;
c. Borrower has the right and power and is duly authorized to enter into this
Agreement; and
d. The execution by Borrower of this Agreement shall not constitute a breach
of any provision contained in Borrower's articles of incorporation or by-laws,
6.10 The execution of and performance by Borrower of all of the terms and
provisions contained in this Agreement shall not result in a breach of or
constitute an event of default under any agreement to which Borrower is now or
hereafter becomes a party.
6.11 Borrower shall promptly notify Bank in writing of its acquisition by
purchase, lease or otherwise of any after acquired property of the type included
in the Collateral, with the exception of purchases of inventory in the ordinary
course of business.
6.12 All assessments and taxes, whether real, personal or otherwise, due
payable by, or imposed, levied or assessed against, Borrower or any of its
property have been paid, and shall hereafter be paid in full, before
delinquency, Borrower shall make due and timely payment or deposit of all
federal, state and local taxes, assessments or contributions required of it by
law, and will execute and deliver to Bank, on demand, appropriate certificates
attesting to the payment or deposit thereof. Borrower will make timely payment
or deposit of all F.I.C.A. payments and withholding taxes required of it by
applicable laws, and will upon request furnish Bank with proof satisfactory to
it that Borrower has made such payments or deposit. If Borrower fails to pay any
such assessment, tax, contribution, or make such deposit, or furnish the
required proof, Bank may, in its sole and absolute discretion and without notice
to Borrower,
8
<PAGE>
REVOLVING
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
(i) make payment of the same or any part thereof; or (ii) set up such reserves
in Borrower's account as Bank deems necessary to satisfy the liability therefor,
or both. Bank may conclusively rely on the usual statements of the amount owing
or other official statements issued by the appropriate governmental agency.
Each amount so paid or deposited by Bank shall constitute a Bank Expense and an
additional advance to Borrower.
6.13 There are no actions or proceedings pending by or against Borrower
or any guarantor of Borrower before any court or administrative agency and
Borrower has no knowledge of any pending, threatened or imminent litigation,
governmental investigations or claims, complaints, actions or prosecutions
involving Borrower or any guarantor of Borrower, except as heretofore
specifically disclosed in writing to Bank. If any of the foregoing arise during
the term of the Agreement, Borrower shall immediately notify Bank in writing.
6.14 a. Borrower, at its expense, shall keep and maintain its assets
insured against loss or damage by fire, theft, explosion, sprinklers and all
other hazards and risks ordinarily insured against by other owners who use such
properties in similar businesses for the full insurable value thereof. Borrower
shall also keep and maintain business interruption insurance and public
liability and property damage insurance relating to Borrower's ownership and use
of the Collateral and its other assets. All such policies of insurance shall be
in such form, with such companies, and in such amounts as may be satisfactory to
Bank. Borrower shall deliver to Bank certified copies of such policies of
insurance and evidence of the payments of all premiums therefor. All such
policies of insurance (except those of public liability and property damage)
shall contain an endorsement in a form satisfactory to Bank showing Bank as a
loss payee thereof, with a waiver of warranties (Form 438-BFU), and all proceeds
payable thereunder shall be payable to Bank and, upon receipt by Bank shall be
applied on account of the Obligations owing to Bank. To secure the payment of
the Obligations, Borrower grants Bank a security interest in and to all such
policies of insurance (except those of public liability and property damage) and
the proceeds thereof, and Borrower shall direct all insurers under such policies
of insurance to pay all proceeds thereof directly to Bank.
b. Borrower hereby irrevocably appoints Bank (and any of Bank's officers,
employees or agents designated by Bank) as Borrower's attorney for the purpose
of making, selling and adjusting claims under such policies of insurance,
endorsing the name of Borrower on any check, draft, instruments or other item of
payment for the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance.
Borrower will not cancel any of such policies without Bank's prior written
consent. Each such insurer shall agree by endorsement upon the policy or
policies of insurance issued by it to Borrower as required above, or by
independent instruments furnished to Bank, that it will give Bank at least ten
(10) days written notice before any such policy or policies of insurance shall
be altered or cancelled, and that no act or default of Borrower, or any other
person, shall affect the right of Bank to recover under such policy or policies
of insurance required above or to pay any premium in whole or in part relating
thereto. Bank without waiving or releasing any Obligations or any Event of
Default, may, but shall have no obligation to do so, obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect to such policies which Bank deems advisable. All sums so disbursed by
Bank, as well as reasonable attorneys' fees, court costs, expenses and other
charges relating thereto, shall constitute Bank Expenses and are payable on
demand.
6.15 All financial statements and information relating to Borrower which
have been or may hereafter be delivered by Borrower to Bank are true and correct
and have been prepared in accordance with GAAP consistently applied and there
has been no material adverse change in the financial condition of Borrower since
the submission of such financial information to Bank.
6.16 a. Borrower at all times hereafter shall maintain a standard and
modern system of accounting in accordance with GAAP consistently applied with
ledger and account cards and/or computer tapes and computer disks, computer
printouts and computer records pertaining to the Collateral which contain
information as may from time to time be requested by Bank, not modify or change
its method of accounting or enter into, modify or terminate any agreement
presently existing, or at any time hereafter entered into with any third party
accounting firm and/or service bureau for the preparation and/or storage of
Borrower's accounting records without the written consent of Bank first obtained
and without said accounting firm and/or service bureau agreeing to provide
information regarding the Receivables and Inventory and Borrower's financial
condition to Bank; permit Bank and any of its employees, officers or agents,
upon demand, during Borrower's usual business hours, or the usual business hour
of third persons having control thereof, to have access to and examine all of
the Borrower's Books relating to the Collateral, Borrower's Obligations to Bank,
Borrower's financial condition and the results of Borrower's operations and in
connection therewith, permit Bank or any of its agents, employees or officers to
copy and make extracts therefrom.
b. Borrower shall deliver to Bank within thirty (30) days after the end of each
month, a company prepared balance sheet and profit and loss statement covering
Borrower's operations and deliver to Bank within one hundred twenty (120) days
after the end of each of Borrower's fiscal years a(n) audited statement of the
financial condition of the Borrower for each such fiscal year, including but not
limited to, a balance sheet and profit and loss statement and any other report
requested by Bank relating to the Collateral and the financial condition of
Borrower, and a certificate signed by an authorized employee of Borrower to the
effect that all reports, statements, computer disk or tape files, computer
printouts, computer runs, or other computer prepared information of any kind or
nature relating to the foregoing or documents delivered or caused to be
delivered to Bank under this subparagraph are complete, correct and thoroughly
present the financial condition of borrower and that there exists on the date of
delivery to Bank no condition or event which constitutes a breach or Event of
Default under this Agreement.
9.
<PAGE>
REVOLVING
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
c. In addition to the financial statements requested above, the Borrower
agrees to provide Bank with the following schedules:
<TABLE>
<CAPTION>
<S> <C>
x Accounts Receivable Agings on a MONTHLY basis: *
---------------------- ----------------------------------------
x Accounts Payable Agings on a MONTHLY basis: *
---------------------- ----------------------------------------
Job Progress Reports on a basis; and
______________________ ________________________________________
x BORROWING BASE CERTIFICATES on a MONTHLY basis: *
---------------------- ----------------------------------------
</TABLE>
* within 15 days of month end
6.17 Borrower shall maintain the following financial ratios and covenants
on a consolidated and non-consolidated basis:
a. Working Capital in an amount not less than n/a
------------------------------
___________________________________________________________________________
b. Tangible Effective Net Worth in an amount not less than $750,000.00
-----------------
___________________________________________________________________________
c. a ratio of Current Assets to Current Liabilities of not less than n/a
-------
___________________________________________________________________________
d. a quick ratio of cash plus securities plus Receivables to Current
Liabilities of not less than 1.25:1.00
-----------------------------------------------
___________________________________________________________________________
e. a ratio of Total Liabilities (less debt subordinated to Bank) to
tangible Effective Net Worth of less than 2.50:1.00
----------------------------------
___________________________________________________________________________
f. a ratio of Cash Flow to Fixed Charges of not less than n/a
------------------
___________________________________________________________________________
g. Net income after taxes of ______________________________________________
___________________________________________________________________________
h. Borrower shall not without Bank's prior written consent acquire or
expend for or commit itself to acquire or expend for fixed assets by lease,
purchase or otherwise in an aggregate amount that exceeds no/100
------------------
n/a Dollars ($ n/a 0.00) in any fiscal year; and
- -------------------------- ---------------
i. Upon a capital raising event of $1,000,000 or greater, Borrower and
------------------------------------------------------------------------
Lender will review and revisit financial covenants.
------------------------------------------------------------------------
All financial covenants shall be computed in accordance with GAAP
consistently applied except as otherwise specifically set forth in this
Agreement. All monies due from affiliates (including officers, directors and
shareholders) shall be excluded from Borrower assets for all purposes hereunder.
6.18 Borrower shall promptly supply Bank (and cause any guarantor to
supply Bank) with such other information (including tax returns) concerning its
financial affairs (or that any guarantor) as Bank may request from time to time
hereafter, and shall promptly notify Bank of any material adverse change in
Borrower's financial condition and of any condition or event which constitutes a
breach of or an event which constitutes an Event of Default under this
Agreement.
6.19 Borrower is now and shall be at all times hereafter solvent and able
to pay its debts (including trade debts) as they mature.
6.20 Borrower shall immediately and without demand reimburse Bank for all
sums expended by Bank in connection with any action brought by Bank to correct
any default or enforce any provision of this Agreement, including all Bank
Expenses; Borrower authorizes and approves all advances and payments by Bank for
items described in this Agreement as Bank Expenses.
6.21. Each warranty, representation and agreement contained in this
Agreement shall be automatically deemed repeated with each advance and shall be
conclusively presumed to have been relied on by Bank regardless of any
investigations made or information possessed by Bank. The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements which
Borrower shall give, or cause to be given, to Bank, either now or hereafter.
6.22 Borrower shall keep all of its principal bank accounts with Bank and
shall notify the Bank immediately in writing of the existence of any other bank
account, deposit account, or any other account into which money can be
deposited.
6.23. Borrower shall furnish to the Bank: (a) as soon as possible, but in
no event later than thirty (30) days after Borrower knows or has reason to know
that any reportable event with respect to any deferred compensation plan has
occurred, a statement of the chief financial officer of Borrower setting forth
the details concerning such reportable
10.
<PAGE>
REVOLVING
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
event and the action which Borrower proposes to take with respect thereto,
together with a copy of the notice of such reportable event given to the Pension
Benefit Guaranty Corporation, if a copy of such notice is available to Borrower;
(b) promptly after filing thereof with the United States Secretary of Labor or
the Pension Benefit Guaranty Corporation, copies of each annual report with
respect to each deferred compensation plan; (c) promptly after receipt thereof,
a copy of any notice Borrower may receive from the Pension Benefit Guaranty
Corporation or the Internal Revenue Service with respect to any deferred
compensation plan; provided, however, this subparagraph shall not apply to
notice of general application issued by the Pension Benefit Guaranty Corporation
or the Internal Revenue Service; and (d) when the same is made available to
participants in the deferred compensation plan, all notices and other forms of
information from time to time disseminated to the participants by the
administrator of the deferred compensation plan.
6.24 Borrower is now and shall at all times hereafter remain in compliance
with all federal, state and municipal laws, regulations and ordinances relating
to the handling, treatment and disposal of toxic substances, wastes and
hazardous material and shall maintain all necessary authorizations and permits.
6.25 Borrower shall maintain Insurance on the life of N/A in an
------------
amount not to be less than No/100 Dollars ($ n/a )
------------------------- ----------------
under one or more policies issued by insurance companies satisfactory to Bank,
which policies shall be assigned to Bank as security for the Obligations and on
which Bank shall be named as sole beneficiary.
6.26 Borrower shall limit direct and indirect compensation paid to the
following employees: _______________________, __________________, to an
aggregate of N/A Dollars ($ N/A ) per __________.
-------------------------- -------------
7. EVENTS OF DEFAULT
-----------------
Any one or more of the following events shall constitute a default by
Borrower under the Agreement:
a. If Borrower fails or neglects to perform, keep or observe any term,
provision, condition, covenant, agreement, warranty or representation
contained in this Agreement, or any other present or future agreement
between Borrower and Bank;
b. If any representation, statement, report, or certificate made or
delivered by Borrower, or any of its officers, employees or agents to Bank
is not true and correct;
c. If Borrower fails to pay when due and payable or declared due and
payable, all or any portion of the Borrower's Obligations (whether of
principal, interest, taxes, reimbursement of Bank Expenses, or otherwise);
d. If there is a material impairment of the prospect of repayment of all
or any portion of Borrower's Obligations or a material impairment of the
value or priority of Bank's security interest in the Collateral;
e. If all or any of Borrower's assets are attached, seized, subject to a
writ or distress warrant, or are levied upon, or come into the possession
of any Judicial Officer or Assignee and the same are not released,
discharged or bonded against within ten (10) days thereafter;
f. If any insolvency Proceeding is filed or commenced by or against
Borrower without being dismissed within ten (10) days thereafter;
g. If any proceeding is filed or commenced by or against Borrower for its
dissolution or liquidation;
h. If Borrower is enjoined, restrained or in any way prevented by court
order from continuing to conduct all or any material part of its business
affairs;
i. If a notice of lien, levy or assessment is filed of record with respect
to any or all of Borrower's assets by the United States Government, or any
department, agency or instrumentality thereof, or by any state, county
municipal, or other government agency, or if any taxes or debts owing at
any time hereafter to any one or more of such entitles becomes a lien,
whether choate or otherwise, upon any or all of the Borrower's assets and
the same is not paid on the payment date thereof;
j. If a judgement or other claim becomes a lien or encumbrance upon any or
all of Borrower's assets and the same is not satisfied, dismissed or bonded
against within ten (10) days thereafter;
k. If Borrower's records are prepared and kept by an outside computer
service bureau at the time this Agreement is entered into or during the
term or this Agreement such an agreement with an outside service bureau is
entered into, and at any time thereafter, without first obtaining the
written consent of Bank, Borrower terminates, modifies, amends or changes
its contractual relationship with said computer service bureau or said
computer service bureau fails to provide Bank with any requested
information or financial data pertaining to Bank's Collateral, Borrower's
financial condition or the results of Borrower's operations;
l. If Borrower permits a default in any material agreement to which
Borrower is a party with third parties so as to result in an acceleration
of the maturity of Borrower's indebtedness to others, whether under any
indenture, agreement or otherwise;
11.
<PAGE>
REVOLVING
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
m. If Borrower makes any payment on account of indebtedness which has been
subordinated to Borrower's Obligations to Bank;
n. If any misrepresentation exists now or thereafter in any warranty or
representation made to Bank by any officer or director of Borrower, or if
any such warranty or representation is withdrawn by any officer or
director;
o. If any party subordinating its claims to that of Bank's or any
guarantor of Borrower's Obligations dies or terminates its subordination or
guaranty, becomes insolvent or an insolvency Proceeding is commenced by or
against any such subordinating party or guarantor;
p. If Borrower is an individual and Borrower dies;
q. If there is a change of ownership or control of N/A percent
--------------
(__________ %) or more of the issued and outstanding stock of Borrower; or
r. If any reportable event, which the Bank determines constitutes grounds
for the termination of any deferred compensation plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a trustee to administer any such plan,
shall have occurred and be continuing thirty (30) days after written notice
of such determination shall have been given to Borrower by Bank, or any
such Plan shall be terminated within the meaning of Title IV of the
Employment Retirement Income Security Act ("ERISA"), or a trustee shall be
appointed by the appropriate United States District Court to administer any
such plan, or the Pension Benefit Guaranty Corporation shall institute
proceedings to terminate any plan and in case of any event described in
this Section 7.0, the aggregate amount of the Borrower's liability to the
Pension Benefit Guaranty Corporation under Sections 4062, 4063 or 4064 of
ERISA shall exceed five percent (5%) of Borrower's Tangible Effective Net
Worth.
Notwithstanding anything contained in Section 7 to the contrary, Bank
shall refrain from exercising its rights and remedies and Event of Default
shall thereafter not be deemed to have occurred by reason of the occurrence
of any of the events set forth in Sections 7.e, 7.f or 7.j of this
Agreement if, within ten (10) days from the date thereof, the same is
released, discharged, dismissed, bonded against or satisfied; provided,
however, if the event is the institution of Insolvency Proceedings against
Borrower, Bank shall not be obligated to make advances to Borrower during
such cure period.
8. BANK'S RIGHTS AND REMEDIES
--------------------------
8.1 Upon the occurrence of an Event of Default by Borrower under this
Agreement, Bank may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are
authorized by Borrower:
a. Declare Borrower's Obligations, whether evidenced by this
Agreement, Installment notes, demand notes or otherwise, immediately
due and payable to the Bank;
b. Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, or any other agreement between Borrower
and Bank;
c. Terminate this Agreement as to any future liability or obligation
of Bank, but without affecting Bank's rights and security interests in
the Collateral, and the Obligations of the Borrower to Bank.
d. Without notice to or demand upon Borrower or any guarantor, make
such payments and do such acts as Bank considers necessary or
reasonable to protect its security interest in the Collateral.
Borrower agrees to assemble the Collateral if Bank so requires and to
make the Collateral available to Bank as Bank may designate. Borrower
authorizes Bank to enter the premises where the Collateral is located,
take and maintain possession of the Collateral and the premises (at no
charge to Bank), or any part thereof, and to pay, purchase, contest or
compromise any encumbrance, charge or lien which in the opinion of
Bank appears to be prior or superior to its security interest and to
pay all expenses incurred in connection therewith;
e. Without limiting Bank's rights under any security interest, Bank
is hereby granted a license or other right to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or any
property of a similar nature as it pertains to the Collateral, in
completing production of, advertising for sale and selling any
Collateral and Borrower's rights under all license and all franchise
agreement shall inure to Bank's benefit, and Bank shall have the right
and power to enter into sublicense agreements with respect to all such
rights with third parties on terms acceptable to Bank;
f. Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sales and sell (in the manner provided for
herein) the inventory;
g. Sell or dispose the Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or
on terms, in such manner and at such places (including Borrower's
premises) as is commercially reasonable in the opinion of Bank. It is
not necessary that the Collateral be present at any such sale;
h. Bank shall give notice of the disposition of the Collateral as
follows:
12.
<PAGE>
REVOLVING
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
(1) Bank shall give the Borrower and each holder of a security
interest in the Collateral who has filed with Bank a written
request for notice, a notice in writing of the time and place of
public sale, or, if the sale is a private sale or some
disposition other than a public sale is to be made of the
Collateral, the time on or after which the private sale or other
disposition is to be made:
(2) The notice shall be personally delivered or mailed, postage
prepaid, to Borrower's address appearing in this Agreement, at
least five (5) calendar days before the date fixed for the sale,
or at least five (5) calendar days before the date on or after
which the private sale or other disposition is to be made,
unless the Collateral is perishable or threatens to decline
speedily in value. Notice to persons other than Borrower
claiming an interest in the Collateral shall be sent to such
addresses as they have furnished to Bank;
(3) If the sale is to be a public sale, Bank shall also give
notice of the time and place by publishing a notice one time at
least five (5) calendar days before the date of the sale in a
newspaper of general circulation in the county in which the sale
is to be held; and
(4) Bank may credit bid and purchase at any public sale.
i. Borrower shall pay all Bank Expenses incurred in connection with
Bank's enforcement and exercise of any of its rights and remedies as
herein provided, whether or not suit is commenced by Bank;
j. Any deficiency which exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will
be returned, without interest and subject to the rights of third
parties, to Borrower by Bank or, in Bank's discretion, to any party
who Bank believes, in good faith, is entitled to the excess; and
k. Without constituting a retention of Collateral in satisfaction of
an obligation within the meaning of 9505 of the Uniform Commercial
Code or an action under California Code of Civil Procedure 726, apply
any and all amounts maintained by Borrower as deposit accounts (as
that term is defined under 8105 of the Uniform Commercial Code) or
other accounts that Borrower maintains with Bank against the
Obligations.
8.2 Bank's rights and remedies under this Agreement and all other
agreements shall be cumulative. Bank shall have all other rights and
remedies not inconsistent herewith as provided by law or in equity. No
exercise by Bank of one right or remedy shall be deemed an election, and no
waiver by Bank of any default on Borrower's part shall be deemed a
continuing waiver. No delay by Bank shall constitute a waiver, election or
acquiescence by Bank.
9. TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY.
------------------------------------------------
If Borrower fails to pay promptly when due to another person or entity, monies
which Borrower is required to pay by reason of any provision in the Agreement,
Bank may, but need not, pay the same and charge Borrower's account therefor, and
Borrower shall promptly reimburse Bank. All such sums shall become additional
indebtedness owing to Bank, shall bear interest at the rate hereinabove
provided, and shall be secured by all Collateral. Any payments made by Bank
shall not constitute (i) an agreement by it to make similar payments in the
future; or (ii) a waiver by Bank of any default under this Agreement. Bank need
not inquire as to, or contest the validity of, any such expense, tax, security
interest, encumbrance or lien and the receipt of the usual official notice of
the payment thereof shall be conclusive evidence that the same was validly due
and owing. Such payments shall constitute Bank Expenses and additional
advances to Borrower.
10. WAIVERS.
-------
10.1 Borrower agrees that checks and other instruments received by
Bank in payment or on account of Borrower's Obligations constitute only
conditional payment until such items are actually paid to the Bank and
Borrower waives the right to direct the application of any and all payments
at any time or times hereafter received by Bank on account of Borrower's
Obligations and Borrower agrees that Bank shall have the continuing
exclusive right to apply and reapply such payments in any manner as Bank
may deem advisable, notwithstanding any entry by Bank upon its books.
10.2 Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension
or renewal of any or all commercial paper, accounts, documents, instruments
chattel paper, and guarantees at any time held by Bank on which Borrower
may in any way be liable.
10.3 Bank shall not in any way or manner be liable or responsible for
(a) the safekeeping of the inventory; (b) any loss or damage thereto
occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency or other person whomsoever. All
risk of loss, damage or destruction of inventory shall be borne by
Borrower.
10.4 Borrower waives the right and the right to assert a confidential
relationship, if any, it may have with any accountant, accounting firm
and/or service bureau or consultant in connection with any information
requested by Bank pursuant to or in accordance with this Agreement, and
agrees that a Bank may contact directly any such accountants, accounting
firm and/or service bureau or consultant in order to obtain such
information.
10.5 BORROWER AND BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY TRANSACTION
HEREUNDER, OR CONTEMPLATED HEREUNDER OR ANY OTHER CLAIM (INCLUDING TORT OR
BREACH OF DUTY CLAIMS) OR DISPUTE HOWSOEVER ARISING BETWEEN BANK AND
BORROWER.
13.
<PAGE>
REVOLVING
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
10.6 In the event that Bank elects to waive any rights or remedies
hereunder, or compliance with any of the terms hereof, or delays or fails to
pursue or enforce any terms, such waiver, delay or failure to pursue or
enforce shall only be effective with respect to that single act and shall
not be construed to affect any subsequent transactions or Bank's right to
later pursue such rights and remedies.
11. ONE CONTINUING LOAN TRANSACTION.
-------------------------------
All loans and advances heretofore, now or at any time or times hereafter made by
Bank to Borrower under this Agreement or any other agreement between Bank and
Borrower, shall constitute one loan secured by Bank's security interests in the
Collateral and by all other security interests, liens, encumbrances heretofore,
now or from time to time hereafter granted by Borrower to Bank.
Notwithstanding the above, (i) to the extent that any portion of the Obligations
are a consumer loan, that portion shall not be secured by any deed of trust or
mortgage on or other security interest in the Borrower's principal dwelling
which is not a purchase money security interest as to that portion, unless
expressly provided to the contrary in another place, or (ii) if the Borrower (or
any of them) has (have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure the loan
and any other Obligation of the Borrower (or any of them), unless expressly
provided to the contrary in another place.
12. NOTICES.
-------
Unless otherwise provided in this Agreement, all notices or demands by either
party on the other relating to this Agreement shall be in writing and sent by
regular United States mail, postage prepaid, properly addressed to Borrower or
to Bank at the addresses stated in this Agreement, or to such other addresses as
Borrower or Bank may from time to time specify to the other in writing.
Requests to Borrower by Bank hereunder may be made orally.
13. AUTHORIZATION TO DISBURSE.
-------------------------
Bank is hereby authorized to make loans and advances hereunder upon telephonic
or other instructions received from anyone purporting to be an officer,
employee, or representative of Borrower, or at the discretion of Bank if said
loans and advances are necessary to meet any Obligations of Borrower to Bank.
Bank shall have no duty to make inquiry or verify the authority of any such
party, and Borrower shall hold Bank harmless from any damage, claims or
liability by reason of Bank's honor of, or failure to honor, any such
instructions.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
-----------------------------------
Any documents, schedules, invoices or other papers delivered to Bank, may be
destroyed or otherwise disposed of by Bank six (6) months after they are
delivered to or received by Bank, unless Borrower requests, in writing, the
return of the said documents, schedules, invoices or other papers and makes
arrangements, at Borrower's expense, for their return.
15. CHOICE OF LAW.
-------------
The validity of this Agreement, its construction, interpretation and
enforcement, and the rights of the parties hereunder and concerning the
Collateral, shall be determined according to the laws of the State of
California. The parties agree that all actions or proceedings arising in
connection with this Agreement shall be tried and litigated only in the state
and federal courts in the Northern District of California or County of Santa
Clara.
16. GENERAL PROVISIONS.
-------------------
16.1 This Agreement shall be binding and deemed effective when
executed by the Borrower and accepted and executed by Bank at its
Headquarter Office.
16.2 This Agreement shall bind and inure to the benefit of the
respective successors and assign of each of the parties, provided,
however, that Borrower may not assign this Agreement or any rights
hereunder without Bank's prior written consent and any prohibited
assignment shall be absolutely void. No consent to an assignment by Bank
shall release Borrower or any guarantor from their Obligations to Bank.
Bank may assign this Agreement and its rights and duties hereunder. Bank
reserves the right to sell, assign, transfer, negotiate or grant
participations in all or any part of, or any interest in Bank's rights and
benefits hereunder. In connection therewith, Bank may disclose all
documents and information which Bank now or hereafter may have relating to
Borrower or Borrower's business.
16.3 Paragraph headings and paragraph numbers have been set forth
herein for convenience only; unless the contrary is compelled by the
context, everything contained in each paragraph applies equally to this
entire Agreement.
16.4 Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against Bank or Borrower, whether under any
rule of construction or otherwise; on the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to
the ordinary meaning of the words used so as to fairly accomplish the
purposes and intentions of all parties hereto. When permitted by the
context, the singular includes the plural and vice versa.
14.
<PAGE>
REVOLVING
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
16.5 Each provision of this Agreement shall be severable from every
other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
16.6 This Agreement cannot be changed or terminated orally. Except as
to currently existing Obligations owing by Borrower to Bank, all prior
agreements, understandings, representations, warranties, and negotiations,
if any, with respect to the subject matter hereof, are merged into this
Agreement.
16.7 The parties intend and agree that their respective rights,
duties, powers liabilities, obligations and discretions shall be
performed, carried out, discharged and exercised reasonably and in good
faith.
IN WITNESS WHEREOF, the parties hereto have caused this Revolving Credit
Loan & Security Agreement (Accounts and Inventory) to be executed as of the date
first hereinabove written.
ATTEST: BORROWER: AGILE SOFTWARE CORPORATION
___________________________________ By: /s/ Bryan D. Stolle
-------------------------------------
Title: Signature of Bryan D. Stolle
Accepted and effective as of Title: President & CEO
DECEMBER 11, 1996 at Bank's ----------------------------------
- ---------------------
Headquarter Office
By:_____________________________________
Signature of
(Bank) Title:__________________________________
By:________________________________ By:_____________________________________
Signature of CLAY JONES Signature of
Title: VICE PRESIDENT Title:__________________________________
-----------------------------
By:_____________________________________
Signature of
Title:__________________________________
15.
<PAGE>
Comerica Bank-California 75 East Trimble Road
San Jose, California 95131
(408) 556-5000
MODIFICATION TO REVOLVING CREDIT LOAN & SECURITY AGREEMENT
----------------------------------------------------------
This First Modification to Revolving Credit Loan & Security Agreement (this
"Modification") is entered into by and between AGILE SOFTWARE CORPORATION
--------------------------
("Borrower") and Comerica Bank-California ("Bank") as of this 24TH day of
----
September 1997 at San Jose, California.
- --------------
RECITALS
--------
A. Bank and Borrower have previously entered into or are concurrently
herewith entering into a Revolving Credit Loan & Security Agreement (Accounts &
Inventory) (the "Agreement") dated December 11, 1996.
-----------------
B. Borrower has requested, and Bank has agreed, to modify the Agreement
as set forth below.
AGREEMENT
---------
For good and valuable consideration, the parties agree as set forth below:
Incorporation by Reference. The Agreement as modified hereby and the
--------------------------
Recitals are incorporated herein by this reference.
Section 1.5 "Borrowing Base" as used in this Agreement means the sum
-----------
of: (1) Seventy-five percent (75.00%) of the net amount of Eligible Accounts
after deducting therefrom all payments, adjustments and credits applicable
thereto ("Accounts Receivable Borrowing Base"); and (2) the amount, if any, of
the advances against inventory agreed to be made pursuant to any Inventory
Rider ("Inventory Borrowing Base"), or other rider, amendment or modification to
this Agreement, that may now or hereafter be entered into by Bank and Borrower.
Up to $500,000.00 can be advanced without regard to formula; Upon borrowings
exceeding $500,000.00 (including Letters of Credit) and potential letter of
credit obligations, advance on Accounts Receivable will be limited, in
aggregate, to 75% of eligible Accounts Receivable and 100% of pledged cash.
Section 1.31 LETTER OF CREDIT SUB-FEATURE - The amount of $250,000.00
------------
for the issuance of Letters of Credit is to be allowed within the Borrowing Base
and within the Line amount. Letters of Credit are allowed to expire up to 180
days past the expiration of the Line. If the Line is not renewed, Letters of
Credit must be cash secured.
Section 2.1 Upon the request of Borrower, made at any time and from
-----------
time to time during the term hereof, and so long as no Event of Default has
occurred, Bank shall lend to
<PAGE>
Borrower an amount equal to the Borrowing Base; provided, however, that in no
event shall Bank be obligated to make advances to Borrower under this Section
2.1 whenever the Daily Balance exceeds, at any time, either the Borrowing Base
or the sum of TWO MILLION AND NO/100 DOLLARS ($2,000.000.00), such amount being
------------------------------ ---------------
referred to herein as an "Overadvance".
Section 2.4 A fee of 1.5% Per Annum of the Line ($30,000.00) is to
-----------
be paid as follows: 1/3 ($10,000.00) due on acceptance and 2/3 ($20,000.00) due
upon the earlier of the Maturity date or a Capital Raising Event.
Section 3.1 This Agreement shall remain in full force and effect
-----------
until August 31, 1998, or until terminated by notice by Borrower. Notice of such
---------------
termination by Borrower shall be effectuated by mailing of a registered or
certified letter not less than thirty (30) days prior to the effective date of
such termination, addressed to the Bank at the address set forth herein and the
termination shall be effective as of the date so fixed in such notice.
Notwithstanding the foregoing, should borrower be in default of one or more of
the provisions of this Agreement, Bank may terminate this Agreement at any time
without notice. Notwithstanding the foregoing, should either Bank or Borrower
become insolvent or unable to meet its debts as they mature, or fail, suspend,
or go out of business, the other party shall have the right to terminate this
Agreement at any time without notice. On the date of termination all Obligations
shall become immediately due and payable without notice or demand; no notice of
termination by Borrower shall be effective until Borrower shall have paid all
Obligations to Bank in full. Notwithstanding termination, until all obligations
have been fully satisfied, Bank shall retain its security interest in all
existing Collateral and Collateral arising thereafter, and Borrower shall
continue to perform all of its Obligations.
Section 6.16c In addition to the financial statements requested above,
-------------
the Borrower agrees to provide Bank with the following schedules:
X Accounts Receivable Agings on a MONTHLY basis *
- ---------- -------
X Accounts Payable Agings on a MONTHLY basis *
- ---------- -------
X Borrowing Base Certificates on a MONTHLY basis *
- ---------- -------
X Compliance Certificate within 30 days of month end;
- ----------
X Other reports as reasonably requested.
- ----------
*within 15 days of month end
Section 6.17(b) is ELIMINATED.
---------------
Section 6.17(d) A quick ratio of 1.25:1.00 to be calculated as Cash +
---------------
Accounts Receivable/Current Liabilities excluding Deferred Revenue tested
monthly.
<PAGE>
Section 6.17(e) is ELIMINATED.
---------------
Section 6.17(g) Net Income after taxes of Q4 ending 4/30/98, maximum
---------------
loss of $500,000.00; Quarterly Profitability (after taxes)of $50,000.00 or more
beginning with the quarter ending 7/31/98 and thereafter - OR - to complete a
Capital Raising Event by 7/31/98 of $2,000,000.00 or greater.
Section 6.17(i) Upon a capital raising event of $2,000,000.00 or
---------------
greater, the financial covenants will be renegotiated.
Section 6.17(j) Borrower to provide "Comfort Letters" from Mohr
---------------
Davidow Ventures & Sequoia Capital indicating a willingness of continued support
if needed.
Legal Effect. Except as specifically set forth in this Modification,
------------
all of the terms and conditions of the Agreement remain in full force and
effect.
Integration. This is an integrated Modification and supersedes all
-----------
prior negotiations and agreements regarding the subject matter hereof. All
amendments hereto must be in writing and signed by the parties.
IN WITNESS WHEREOF, the parties have agreed as of the date first set forth
above.
COMERICA BANK-CALIFORNIA
By:_________________________________
R. Clay Jones
Title: Vice President
-----------------------------
BORROWER:
AGILE SOFTWARE CORPORATION
By: /s/
---------------------------------
Title: CFO (Acting)
------------------------------
<PAGE>
[LOGO OF COMERICA]
- --------------------------------------------------------------------------------
Comerica Bank-California 75 East Trimble Road
San Jose, California 95131
(408) 556-5000
MODIFICATION TO REVOLVING LOAN & SECURITY AGREEMENT
---------------------------------------------------
This Second Modification to Revolving Loan & Security Agreement (this
"Modification") is entered into by and between AGILE SOFTWARE CORPORATION
("Borrower") and Comerica Bank-California ("Bank") as of this 3rd day of
February, 1998, at San Jose, California.
RECITALS
--------
A. Bank and Borrower have previously entered into or are concurrently
herewith entering into a Revolving Loan & Security Agreement (Accounts &
Inventory) (the "Agreement") dated December 11, 1996.
B. Borrower has requested, and Bank has agreed, to modify the Agreement as
set forth below.
AGREEMENT
---------
For good and valuable consideration, the parties agree as set forth below:
Incorporation by Reference. The Agreement as modified hereby and the
--------------------------
Recitals are incorporated herein by this reference.
Section 1.5 "Borrowing Base" as used in this Agreement means the sum of: (1)
Seventy-Five percent (75.00%) of the net amount of Eligible
Accounts after deducting therefrom all payments, adjustments and
credits applicable thereto ("Accounts Receivable Borrowing Base");
and (2) the amount, if any, of the advances against Inventory
agreed to be made pursuant to any Inventory Rider ("Inventory
Borrowing Base"), or other rider, amendment or modification to this
Agreement, that may now or hereafter be entered into by Bank and
Borrower. Up to $500,000.00 can be advanced without regard to
formula; Upon borrowings exceeding $500,000.00 (including Letters
of Credit) and potential letter of credit obligations, advance on
Accounts Receivable will be limited, in aggregate, to 75% of
Eligible Accounts Receivable and 100% of pledged cash. Training and
service receivables will be eligible for borrowing. Foreign
accounts will be limited to $750,000.00 in aggregate.
Section 2.2 Except as hereinbelow provided, the Credit shall
<PAGE>
bear interest, on the Daily Balance owing, at a rate of Zero
(0.00%) percentage points per annum above the Base Rate (the
"Rate"). The Credit shall bear interest, from and after the
occurrence of an Event of Default and without constituting a
waiver of any such Event of Default, on the Daily Balance owing,
at a rate three (3) percentage points per annum above the Rate.
All interest chargeable under this Agreement that is based upon a
per annum calculation shall be computed on the basis of a three
hundred sixty (360) day year for actual days elapsed.
The Base Rate as of the date of this Agreement is Eight and
500/1000 (8.500%) per annum. In the event that the Base Rate
announced is, from time to time hereafter changed, adjustment in
the Rate shall be made and based on the Base Rate in effect on
the date of such change. The Rate, as adjusted, shall apply to
the Credit until the Base Rate is adjusted again. The minimum
interest payable by the Borrower under this Agreement shall in no
event be less than N/A per month. All interest payable by
-------
Borrower under the Credit shall be due and payable on the first
day of each calendar month during the term of this Agreement and
Bank may, at its option, elect to treat such interest and any and
all Bank Expenses as advances under the Credit, which amounts
shall thereupon constitute Obligations and shall thereafter
accrue interest at the rate applicable to the Credit under the
terms of the Agreement.
Section 6.16b Borrower shall deliver to Bank within thirty (30) days after the
end of each Month, a Company Prepared balance sheet and profit
and loss statement covering Borrower's operations and deliver to
Bank within One Hundred Twenty (120) days after the end of each
Borrower's fiscal years a CPA Audited statement of the financial
condition of the Borrower for each such fiscal year, including
but not limited to, a balance sheet and profit and loss statement
and any other report requested by Bank relating to the collateral
and the financial condition of Borrower, and a certificate signed
by an authorized employee of Borrower to the effect that all
reports, statements, computer disk or tape files, computer
printouts, computer runs, or other computer prepared information
of any kind or nature relating to the foregoing or documents
delivered or caused to be delivered to Bank under this
subparagraph are complete, correct and thoroughly present the
financial condition of borrower and
<PAGE>
delivery to Bank no condition or event which constitutes a
breach or Event of Default under this Agreement.
Section 6.17b Tangible Net Worth in an amount not less than $1,000,000.00 to
increase by 80% of new equity and quarterly net profit after tax,
when applicable.
Section 6.17d a quick ratio of cash plus securities plus Receivables to Current
Liabilities of not less than 1.50:1.00 - Quick Ratio excludes
deferred revenue from current liabilities
Legal Effect. Except as specifically set forth in this Modification,
------------
all of the terms and conditions of the Agreement remain in full force and
effect.
Integration. This is an integrated Modification and supersedes all prior
-----------
negotiations and agreements regarding the subject matter hereof. All amendments
hereto must be in writing and signed by the parties.
IN WITNESS WHEREOF, the parties have agreed as of the date first set forth
above.
AGILE SOFTWARE CORPORATION COMERICA BANK-CALIFORNIA
By: [ILLEGIBLE] By: /s/ R. Clay Jones
------------------------- -------------------------
R. Clay Jones
Title: CFO Title: Vice President
----------------------
<PAGE>
MODIFICATION TO REVOLVING LOAN & SECURITY AGREEMENT
---------------------------------------------------
This Third Modification to Revolving Loan & Security Agreement (this
"Modification") is entered into by and between AGILE SOFTWARE CORPORATION
("Borrower") and Comerica Bank-California ("Bank") as of this 17th day of
September, 1998, at San Jose, California.
RECITALS
--------
A. Bank and Borrower have previously entered into or are concurrently
herewith entering into a Revolving Loan & Security Agreement (Accounts &
Inventory) (the "Agreement") dated December 11, 1996.
B. Borrower has requested, and Bank has agreed, to modify the Agreement as
set forth below.
AGREEMENT
---------
For good and valuable consideration, the parties agree as set forth below:
Incorporated by Reference. The Agreement as modified hereby and the
-------------------------
Recitals are incorporated herein by this reference.
Section 1.5 "Borrowing Base" as used in this Agreement means the sum of: (1)
eighty percent (80.00%) of the net amount of Eligible Accounts
after deducting therefrom all payments, adjustments, and credits
applicable thereto ("Accounts Receivable Borrowing Base"); and (2)
the amount if any, of the advances against Inventory Rider
("Inventory Borrowing Base"), or other rider, amendment or
modification to this Agreement. That may now or hereafter be
entered into by Bank and Borrower. The entire amount outstanding,
including potential
<PAGE>
letter of credit obligations, will be limited to eighty percent
(80%) of eligible accounts receivable.
Section 1.12
(e) Accounts with respect to which the accounts debtor is any State
of the United States or any city, county, town, municipality or
division thereof. Training and service receivables will be
eligible for borrowing and foreign accounts will be limited to
$750,000.00 in aggregate.
Section 3.1 This Agreement shall remain in full force and effect until
August 31, 1999, or until terminated by notice by Borrower.
Notice of such termination by Borrower shall be effectuated by
mailing of a registered or certified letter not less than thirty
(30) days prior to the effective date of such termination,
addressed to the Bank at the address set forth herein and the
termination shall be effective as of the date so fixed in such
notice. Notwithstanding the foregoing, should Borrower be in
default of one or more of the provisions of this Agreement, Bank
may terminate this Agreement at any time without notice.
Notwithstanding the foregoing, should either Bank or Borrower
become insolvent or unable to meet its debts as they mature, or
fail, suspend, or go out of business, the other party shall have
the right to terminate this Agreement at any time without
notice. On the date of termination all Obligations shall become
immediately due and payable without notice or demand; no notice
of termination by Borrower shall be effective until Borrower
shall have paid all Obligations to Bank in full. Notwithstanding
termination, until all Obligations have been fully satisfied,
Bank shall retain its security interest in all existing
Collateral and Collateral arising thereafter, and Borrower shall
continue to perform all of its Obligations.
2
<PAGE>
Section 6.17b Tangible Net Worth in an amount not less than $2,000,000.00 to
increase by 50% of new equity and quarterly net profit after
tax.
Legal Effect. Except as specifically set forth in this Modification, all of
------------
the terms and conditions of the Agreement remain in full force and effect.
Integration. This is an integrated Modification and supersedes all prior
-----------
negotiations and agreements regarding the subject matter hereof. All amendments
hereto must be in writing and signed by the parties.
IN WITNESS WHEREOF, the parties have agreed as of the date first set forth
above.
AGILE SOFTWARE CORPORATION COMERICA BANK-CALIFORNIA
By: By: /s/ Brad Smith
------------------------------ ------------------------------
Brad Smith
Title: Chief Financial Officer Title: Vice President
---------------------------
<PAGE>
MODIFICATION OF REVOLVING CREDIT
LOAN & SECURITY AGREEMENT
This Fourth Modification to Revolving Credit Loan & Security Agreement
(Accounts & Inventory) (this "Modification") is entered into by and between
Agile Software Corporation ("Borrower") and COMERICA BANK-CALIFORNIA ("Bank") as
of this 17th day of July, 1999, at San Jose, California.
RECITALS
--------
A. Bank and Borrower have previously entered into a Loan & Security
Agreement (Accounts & Inventory) (the "Agreement") dated December 11, 1996.
B. Borrower has requested, and Bank has agreed, to modify the Agreement as
set forth below.
AGREEMENT
---------
For good and valuable consideration, the parties agree as set forth below:
Incorporation by Reference. The Agreement as modified hereby and the
--------------------------
Recitals are incorporated herein by this reference;
Section 1.31 Letter of Credit Sub-feature - The amount of $500,000.00 for the
-----------
issuance of Letters of Credit is to be allowed within the Borrowing Base
and within the Line amount. Letters of Credit are allowed to expire up to
180 days past the expiration of the Line. If the Line is not renewed,
Letters of Credit must be cash secured.
Section 2.1 Upon the request of the Borrower, made at any time and from time
to time during the term hereof, and so long as no Event of Default has
occurred, Bank shall lend to Borrower an amount equal to the Borrowing
Base; provided, however, that in no event shall Bank be obligated to make
advances to Borrower under this Section 2.1 whenever the Daily Balance
exceeds, at any time, either the Borrowing Base or the sum of Five Million
------------
and No/100 Dollars ($5,000,000.00), such amount being referred to herein as
----------------------------------
"Overadvance."
Section 6.17 Borrower shall maintain the following financial ratios and
covenants on a consolidated and consolidating basis:
<PAGE>
(b) Effective Tangible Net Worth in an amount not less than Six
Million and No/100 Dollars ($6,000,000.00), to increase by
80% of new equity and 75% of Quarterly NPAT, when
applicable, reduced by 100% of quarterly losses.
(g) Maximum net quarterly losses of $3,000,000.00 for the first
quarter ending July 31, 1999; $2,600,000.00 for the second
quarter ending October 31, 1999; $1,750,000.00 for the third
quarter ending January 31, 2000; $1,000,000.00 for the
fourth quarter ending April 30, 2000; $500,000.00 for the
first quarter ending July 31, 2000. Losses to exclude one-
time non-cash charges for stock acquisitions or non-cash
compensation charges.
(h) Borrower shall not without Bank's prior written consent
acquire or expend for or commit itself to acquire or expend
for fixed assets by lease, purchase or otherwise in an
aggregate amount that exceeds Two Million Five Hundred
Dollars ($2,500,000.00) in any fiscal year; and
Section 3.1 This Agreement shall remain in full force and effect until August
31, 2000 or until terminated by notice by Borrower. Notice of such
termination by Borrower shall be effectuated by mailing of a registered
or certified letter not less than thirty (30) days prior to the
effective date of such termination, addressed to the Bank at the address
set forth herein and the termination shall be effective as of the date
so fixed in such notice. Notwithstanding the foregoing, should Borrower
be in default of one or more of the provisions of this Agreement, Bank
may terminate this Agreement at any time without notice. Notwithstanding
the foregoing, should either Bank or Borrower become insolvent or unable
to meet its debts as they mature, or fail, suspend, or go out of
business, the other party shall have the right to terminate this
Agreement at any time without notice. On the date of termination all
Obligations shall become immediately due and payable without notice or
demand; no notice of termination by Borrower shall be effective until
Borrower shall have paid all Obligations to Bank in full.
Notwithstanding termination, until all Obligations have been fully
satisfied, Bank shall retain its security interest in all existing
Collateral and Collateral arising thereafter, and Borrower shall
continue to perform all of its Obligations.
Section 6. Section 6 of this Agreement is hereby amended by adding the
following at the end thereof.
6.27 Borrower shall perform all acts reasonably necessary to ensure that: (i)
Borrower and any business in which Borrower holds a substantial
interest, (ii) all customers, suppliers and vendors that are material to
Borrower's business, become Year 2000 Compliant in a timely manner. Such
acts shall include, without limitation, performing a comprehensive
review and assessment of all of Borrower's systems and adopting a
detailed plan, with itemized budget, for the remediation, monitoring
<PAGE>
and testing of such systems. As used in this paragraph, "Year 2000
Compliant" shall mean, in regard to any entity, that all software,
hardware, firmware, equipment, goods or systems utilized by or material to
the business operations or financial condition of such entity, will
properly perform date sensitive functions before, during and after the year
2000. Borrower shall, immediately upon request, provide to Bank such
certifications or other evidence of Borrower's compliance with terms of
this paragraph as Bank may from time to time require.
Legal Effect. Except as specifically set forth in this Modification, all
------------
of the terms and conditions of the Agreement remain in full force and effect.
Integration. This is an integrated Modification and supersedes all prior
-----------
negotiations and agreements regarding the subject matter hereof. All amendments
hereto must be in writing and signed by the parties.
IN WITNESS WHEREOF, the parties have agreed as of the date first set forth
above.
COMERICA BANK-CALIFORNIA AGILE SOFTWARE CORPORATION
By: By:
Mary Beth Suhr
Title: Vice President Title:
--------------
<PAGE>
EXHIBIT 10.7
MASTER LEASE AGREEMENT
MASTER LEASE AGREEMENT (the "Master Lease") dated September 18, 1995 by and
between COMDISCO, INC. ("Lessor") and Agile Software Corporation ("Lessee"),
IN CONSIDERATION of the mutual agreements described below, the parties agree as
follows (all capitalized terms are defined in Section 14.18):
1. Property Leased.
Lessor leases to Lessee all of the Equipment described on each Summary Equipment
Schedule. In the event of a conflict, the terms of the applicable Schedule
prevail over this Master Lease.
2. Term.
On the Commencement Date, Lessee will be deemed to accept the Equipment, will be
bound to its rental obligations for each item of Equipment and the term of a
Summary Equipment Schedule will begin and continue through the Initial Term and
thereafter until terminated by either party upon prior written notice received
during the Notice Period. No termination may be effective prior to the
expiration of the Initial Term.
3. Rent and Payment.
Rent is due and payable in advance on the first day of each Rent Interval at the
address specified in Lessor's Invoice. Interim Rent is due and payable when
invoiced. If any payment is not made when due, Lessee will pay a Late Charge on
the overdue amount.
Upon Lessee's execution of each Schedule, Lessee will pay Lessor the
Advance specified on the Schedule. The Advance will be credited towards the
final Rent payment if Lessee is not then in default. No interest will be paid on
the Advance.
4. Selection; Warranty and Disclaimer of Warranties.
4.1 Selection. Lessee acknowledges that it has selected the Equipment and
disclaims any reliance upon statements made by the Lessor, other than as set
forth in the Schedule.
4.2 Warranty and Disclaimer of Warranties. Lessor warrants to Lessee that, so
long as Lessee is not in default, Lessor will not disturb Lessee's quiet and
peaceful possession, and unrestricted use of the Equipment. To the extent
permitted by the manufacturer, Lessor assigns to Lessee during the term of the
Summary Equipment Schedule any manufacturer's warranties for the Equipment.
LESSOR MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER,
INCLUDING, WITHOUT IMITATION. THE MERCHANTABILITY OF THE EQUIPMENT OR ITS
FITNESS FOR A PARTICULAR PURPOSE. Lessor is not responsible for any liability,
claim, loss, damage or expense of any kind (including strict liability in tort)
caused by the Equipment except for any loss or damage caused by the willful
misconduct or negligent acts of Lessor. In no event is Lessor responsible for
special, incidental or consequential damages.
6. Title; Relocation or Sublease; and Assignment.
6.1 Title. Lessee holds the Equipment subject and subordinate to the rights of
the Owner, Lessor, any Assignee and any Secured Party. Lessee authorizes Lessor,
as Lessee's agent, and at Lessor's expense, to prepare, execute and file in
Lessee's name precautionary Uniform Commercial Code financing statements showing
the interest of the Owner, Lessor, and any Assignee or Secured Party in the
Equipment and to insert serial numbers in Summary Equipment Schedules as
appropriate. Lessee will, at its expense, keep the Equipment free and clear from
any liens or encumbrances of any kind (except any caused by Lessor) and will
indemnify and hold the Owner, Lessor, any Assignee and Secured Party harmless
from and against any loss caused by Lessee's failure to do so, except where such
is caused by Lessor.
5.2 Relocation or Sublease. Upon prior written notice, Lessee may relocate
equipment to any location within the continental United States provided (i) the
Equipment will not be used by an entity exempt from federal income tax, and (ii)
all additional costs (including any administrative fees, additional taxes and
insurance coverage) are reconciled and promptly paid by Lessee.
Lessee may sublease the Equipment upon the reasonable consent of the Lessor and
the Secured Party. Such consent to sublease will be granted if: (i) Lessee meets
the relocation requirements set out above, (ii) the sublease is expressly
subject and subordinate to the terms of the Schedule, (iii) Lessee assigns its
rights in the sublease to Lessor and the Secured Party as additional collateral
and security, (iv) Lessee's obligation to maintain and insure the Equipment is
not altered, (v) all financing statements required to continue the Secured
Party's prior perfected security interest are filed, and (vi) Lessee executes
sublease documents acceptable to Lessor.
filed and or exchange will relieve Leasee from any of its obligations under this
Master Lease and the relevant Schedule.
5.3 Assignment by Lessor. The terms and conditions of each Schedule have been
fixed by Lessor in order to permit Lessor to sell and/or assign or transfer its
interest or grant a security interest in each Schedule and/or the Equipment to a
Secured Party or Assignee. In that event, the term Lessor will mean the Assignee
and any Secured Party. However, any assignment, sale, or other transfer by
Lessor will not relieve Lessor of its obligations to Lessee and will not
materially change Lessee's duties or materially increase the burdens or risks
imposed on Lessee. The Lessee consents to and will acknowledge such assignments
in a written notice given to Lessee. Lessee also agrees that:
(a) The Secured Party will be entitled to exercise all of Lessor's rights,
but will not be obligated to perform any of the obligations of Lessor. The
Secured Party will not disturb Lessee's quiet and peaceful possession and
unrestricted use of the Equipment so long as Lessee is not in default and the
secured Party continues to receive all Rent payable under the Schedule; and
(b) Lessee will pay all Rent and all other amounts payable to the Secured
Party, despite any defense or claim which it has against Lessor. Lessee reserves
its right to have recourse directly against Lessor for any defense or claim;
(c) Subject to and without impairment of Lessee's leasehold rights in the
Equipment, Lessee holds the Equipment for the Secured Party to the extent of the
Secured Party's rights in that Equipment.
6. Net Lease; Taxes and Fees.
6.1 Net Lease. Each Summary Equipment Schedule constitutes a net lease.
Lessee's obligation to pay Rent and all other amounts due hereunder is absolute
and unconditional and is not subject to any statement, reduction, set-off,
defense, counterclaim, interruption, deferment or recoupment for any reason
whatsoever.
6.2 Taxes and Fees. Lessee will pay when due or reimburse Lessor for all taxes,
fees or any other charges (together with any related interest or penalties not
arising from the negligence of Lessor) accrued for or arising during the term of
each Summary Equipment Schedule against Lessor, Lessee or the Equipment by any
governmental authority (except only Federal, state, local and franchise taxes on
the capital or the net Income of Lessor). Lessor will file all personal property
tax returns for the Equipment and pay all such properly taxes due, Lessee will
reimburse Lessor for property taxes within thirty (30) days of receipt of an
invoice.
7. Care, Use and Maintenance; Inspection by Lessor.
7.1 Care, Use and Maintenance. Lessee will maintain the Equipment in good
operating order and appearance, protect the Equipment from deterioration, other
than normal wear and tear, and will not use the Equipment for any purpose other
than that for which it was designed. If commercially available and considered
common business practice for each item of Equipment, Lessee will maintain in
force a standard maintenance contract with the manufacturer of the Equipment, or
another party acceptable to Lessor, and will provide Lessor with a complete copy
of that contract. If Lessee has the Equipment maintained by a party other than
the manufacturer or self maintains, Lessee agrees to pay any costs necessary for
the manufacturer to bring the Equipment to then current release, revision and
engineering change levels, and to re-certify the Equipment as eligible for
manufacturer's maintenance at the expiration of the lease term, provided re-
certification is available and is required by Lessor. The lease term will
continue upon the same terms and conditions until recertification has been
obtained.
7.2 Inspection by Lessor. Upon reasonable advance notice, Lessee, during
reasonable business hours and subject to Lessee's security requirements, will
make the Equipment and its related log and maintenance records available to
Lessor for inspection.
8. Representations and Warranties of Lessee. Lessee hereby represents,
warrants and covenants that with respect to the Master Lease and each Schedule
executed hereunder:
(a) The Lessee is a corporation duly organized and validly existing in
good standing under the laws of the jurisdiction of its incorporation, in duly
qualified to do business in each jurisdiction (Including the jurisdiction where
the Equipment is, or is to be, located) where its ownership or lease of property
or the conduct of its business requires such qualification, except for where
such lack of qualification would not have a material adverse effect on the
Company's business; and has full corporate power and authority to hold property
under the Master Lease and each Schedule and to enter into and perform its
obligations under the Master Lease and each Schedule.
(b) The execution and delivery by the Lessee of the Master Lease and each
Schedule and its performance thereunder have been duly authorized by all
necessary corporate action on the part of the Lessee, and the Master Lease and
each Schedule are not inconsistent with the Lessee's Articles of Incorporation
or Bylaws, do not contravene any law or governmental rule, regulation or order
applicable to it, do not and will not contravene any provision of, or constitute
a default under, any indenture, mortgage, contract or other instrument to which
it is a party or by which it is bound, and the Master Lease and each Schedule
constitute legal, valid and binding agreements of the Lessee, enforceable in
accordance with their terms, subject to the effect of applicable bankruptcy and
other similar laws affecting the rights of creditors generally and rules of law
concerning equitable remedies.
1
<PAGE>
(c) There are no actions, suits, proceedings or patent claims pending or,
to the knowledge of the Lessee, threatened against or affecting the Lessee in
any court or before any governmental commission, board or authority which, if
adversely determined, will have a material adverse effect on the ability of the
Lessee to perform its obligations under the Master Lease and each Schedule.
(d) The Equipment is personal property and when subjected to use by the
Lessee will not be or become fixtures under applicable law.
(e) The Lessee has no material liabilities or obligations, absolute or
contingent (Individually or in the aggregate), except the liabilities and
obligations of the lessee as set forth in the Financial Statements and
liabilities and obligations which have occurred in the ordinary course of
business, and which have not been, in any case or in the aggregate, materially
adverse to Lessee's ongoing business.
(f) To the best of the Lessee's knowledge, the Lessee owns, possesses, has
access to, or can become licensed on reasonable terms under all patents, patent
applications, trademarks, trade names, inventions, franchises, licenses,
permits, computer software and copyrights necessary for the operations of its
business as now conducted, with no known infringement of, or conflict with, the
rights of others.
(g) All material contracts, agreements and instruments to which the Lessee
is a party are in full force and effect in all material respects, and are valid,
binding and enforceable by the Lessee in accordance with their respective terms,
subject to the effect of applicable bankruptcy and other similar laws affecting
the rights of creditors generally, and rules of law concerning equitable
remedies.
9. Delivery and Return of Equipment.
Lessee hereby assumes the full expense of transportation and in-transit
insurance to Lessee's premises and installation thereat of the Equipment. Upon
termination (by expiration or otherwise) of each Summary Equipment Schedule,
Lessee shall, pursuant to Lessor's instructions and at Lessee's full expense
(including, without limitation, expenses of transportation and in-transit
insurance), return the Equipment to Lessor in the same operating order, repair,
condition and appearance as when received, less normal depreciation and wear and
tear. Lessee shall return the Equipment to Lessor at 6111 North River Road,
Rosemont, Illinois 60018 or at such other address within the continental United
States as directed by Lessor, provided, however, that Lessee's expense shall be
limited to the cost of returning the equipment to Lessor's address as set forth
herein. During the period subsequent to receipt of a notice under Section 2,
Lessor may demonstrate the Equipment's operation in place and Lessee will supply
any of its personnel as may reasonably be required to assist in the
demonstrations.
10. Labeling.
Upon request, Lessee will mark the Equipment indicating Lessor's Interest with
labels provided by Lessor. Lessee will keep all Equipment free from any other
marking or labeling which might be interpreted as a claim of ownership.
11. Indemnity.
With regard to bodily injury and property damage liability only, Lessee will
indemnify and hold Lessor, any Assignee and any Secured Party harmless from and
against any and all claims, costs, expenses, damages and liabilities, including
reasonable attorneys' fees, arising out of the ownership (for strict liability
in tort only), selection, possession, leasing, operation, control, use,
maintenance, delivery, return or other disposition of the Equipment during the
term of this Master Lease or until Lessee's obligations under the Master Lease
terminate. However, Lessee is not responsible to a party indemnified hereunder
for any claims, costs, expenses, damages and liabilities occasioned by the
negligent acts of such indemnified party. Lessee agrees to carry bodily injury
and property damage liability insurance during the term of the Master Lease in
amounts and against risks customarily insured against by the Lessor on equipment
owned by it. Any amounts received by Lessor under that insurance will be
credited against Lessee's obligations under this Section.
12. Risk of Loss.
Effective upon delivery and until the Equipment is returned, Lessee relieves
Lessor of responsibility for all risks of physical damage to or loss or
destruction of the Equipment. Lessee will carry casualty insurance for each item
of Equipment in an amount not less than the Casualty Value. All policies for
such insurance will name the Lessor and any Secured Party as additional insured
and as loss payee, and will provide for at least thirty (30) days prior written
notice to the Lessor of cancellation or expiration, and will insure Leasor's
interests regardless of any breach or violation by Lessee of any representation,
warranty or condition contained in such policies and will be primary without
right of contribution from any Insurance effected by Lessor. Upon the execution
of any Schedule, the Lessee will furnish appropriate evidence of such Insurance
acceptable to Lessor.
Lessee will promptly repair any damaged item of Equipment unless such Equipment
has suffered a Casualty Loss. Within fifteen (15) days of Casualty Loss, Lessee
will provide written notice of that loss to Lessor and Lessee will, at Lessee's
option, either (a) replace the item of Equipment with Like Equipment and
marketable title to the Like Equipment will automatically vest in Lessor or (b)
pay the Casually Value and after that payment and the payment of all other
amounts due and owing with respect to that item of Equipment, Lessee's
obligation to pay further Rent for the item of Equipment will cease.
13. Default, Remedies and Mitigation.
13.1 Default. The occurrence of any one or more of the following Events of
Default constitutes a default under a Summery Equipment Schedule:
(a) Lessee's failure to pay Rent or other amounts payable by Lessee when
due if that failure continues for five (5) business days after written notice;
or
(b) Lessee's failure to perform any other term or condition of the
Schedule or the material inaccuracy of any representation or warranty made by
the Lessee in the Schedule or in any document or certificate furnished to the
Lessor hereunder if that failure or inaccuracy continues for ten (10) business
days after written notice; or
(c) An assignment by Lessee for the benefit of its creditors, the failure
by Lessee to pay its debts when due, the insolvency of Lessee, the filing by
Lessee or the filing against Lessee of any petition under any bankruptcy or
insolvency law or for the appointment of a trustee or other officer with similar
powers, the adjudication of Lessee as insolvent, the liquidation of Lessee, or
the taking of any action for the purpose of the foregoing; or
(d) The occurrence of an Event of Default under any Schedule, Summary
Equipment Schedule or other agreement between Lessee and Lessor or its Assignee
or Secured Party.
13.2 Remedies. Upon the occurrence of any of the above Events of Default,
Lessor, at its option, may:
(a) enforce Lessee's performance of the provisions of the applicable
Schedule by appropriate court action in law or in equity;
(b) recover from Lessee any damages and or expenses, including Default
Costs;
(c) with notice and demand, recover all sums due and accelerate and
recover the present value of the remaining payment stream of all Rent due under
the defaulted Schedule (discounted at the same rate of interest at which such
defaulted Schedule was discounted with a Secured Party plus any prepayment fees
charged to Lessor by the Secured Party or, if there is no Secured Party, then
discounted at 8%) together with all Rent and other amounts currently due as
liquidated damages and not as a penalty;
(d) with notice and process of law and in compliance with Lessee's
security requirements, Lessor may enter on Lessee's premises to remove and
repossess the Equipment without being liable to Lessee for damages due to the
repossession, except those resulting from Lessor's, its assignees', agents' or
representatives' negligence: and
(e) pursue any other remedy permitted by law or equity.
The above remedies, in Lessor's discretion and to the extent permitted by law,
are cumulative and may be exercised successively or concurrently.
13.3 Mitigation. Upon return of the Equipment pursuant to the terms of Section
13.2, Lessor will use its best efforts in accordance with its normal business
procedures (and without obligation to give any priority to such Equipment) to
mitigate Lessor's damages as described below. EXCEPT AS SET FORTH IN THIS
SECTION, LESSEE HEREBY WAIVES ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE
OR OTHERWISE WHICH MAY REQUIRE LESSOR TO MITIGATE ITS DAMAGES OR MODIFY ANY OF
LESSOR'S RIGHTS OR REMEDIES STATED HEREIN. Lessor may sell, lease or otherwise
dispose of all or any part of the Equipment at a public or private sale for cash
or credit with the privilege of purchasing the Equipment. The proceeds from any
sale, lease or other disposition of the Equipment are defined as either:
(a) If sold or otherwise disposed of, the cash proceeds less the Fair
Market Value of the Equipment at the expiration of the Initial Term less the
Default Costs; or
(b) if leased, the present value (discounted at 3 percent (3%) over the
U.S. Treasury Notes of comparable maturity to the term of the re-lease) of the
rentals for a term not to exceed the Initial Term, less the Default Costs.
Any proceeds will be applied against liquidated damages and any other sums due
to Lessor from Lessee. However, Lessee is liable to Lessor for, and Lessor may
recover, the amount by which the proceeds are less than the liquidated damages
and other sums due to Lessor from Lessee.
14. Additional Provisions.
14.1 Board Attendance. One representative of Lessor will have the right to
attend Lessee's corporate Board of Directors meetings and Lessee will give
Lessor reasonable notice in advance of any special Board of Directors meeting,
which notice will provide an agenda of the subject matter to be discussed at
such board meeting. Lessee will provide Lessor with a certified copy of the
minutes of each Board of
2
<PAGE>
Directors meeting within thirty (30) days following the date of such meeting
held during the term of this Master Lease.
14.2 Financial Statements. As soon as practicable at the end of each month (and
in any event within thirty (30) days), Lessee will provide to Lessor the same
information which Lessee provides to its Board of Directors, but which will
include not less than a monthly income statement, balance sheet and statement of
cash flows prepared in accordance with generally accepted accounting principles,
consistently applied (the "Financial Statements"). As soon as practicable at the
end of each fiscal year, Lessee will provide to Lessor audited Financial
Statements setting forth in comparative form the corresponding figures for the
fiscal year (and in any event within ninety (90) days), and accompanied by an
audit report and opinion of the independent certified public accountants
selected by Lessee. Lessee will promptly furnish to Lessor any additional
information (including, but not limited to, tax returns, income statements,
balance sheets and names of principal creditors) as Lessor reasonably believes
necessary to evaluate Lessee's continuing ability to meet financial obligations.
After the effective date of the initial registration statement covering a public
offering of Lessee's securities, the term "Financial Statements" will be deemed
to refer to only those statements required by the Securities and Exchange
Commission.
14.3 Obligation to Lease Additional Equipment. Upon notice to Lessee, Lessor
will not be obligated to lease any Equipment which would have a Commencement
Date after said notice if: (i) Lessee is in default under this Master Lease or
any Schedule; (ii) Lessee is in default under any loan agreement, the result of
which would allow the lender or any secured party to demand immediate payment of
any material indebtedness; (iii) there is a material adverse change in Lessee's
credit standing; or (iv) Lessor determines (in reasonable good faith) that
Lessee will be unable to perform its obligations under this Master Lease or any
Schedule.
14.4 Merger and Sale Provisions. Lessee will notify Lessor of any proposed
Merger at least sixty (60) days prior to the closing date. Lessor may, in its
discretion, either (i) consent to the assignment of the Master Lease and all
relevant Schedules to the successor entity, or (ii) terminate the Lease and all
relevant Schedules. If Lessor elects to consent to the assignment, Lessee and
its successor will sign the assignment documentation provided by Lessor. If
Lessor elects to terminate the Master Lease and all relevant Schedules, then
Lessee will pay Lessor all amounts then due and owing and a termination fee
equal to the present value (discounted at ?%) of the remaining Rent for the
balance of the Initial Term(s) of all Schedules, and will return the Equipment
in accordance with Section 9. Lessor hereby consents to any Merger in which the
acquiring entity has a Moody's Bond Rating of BA3 or better or a commercially
acceptable equivalent measure of creditworthiness as reasonably determined by
Lessor.
14.5 Entire Agreement. This Master Lease and associated Schedules and Summary
Equipment Schedules supersede all other oral or written agreements or
understandings between the parties concerning the Equipment including, for
example, purchase orders. ANY AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE, MAY
ONLY BE ACCOMPLISHED BY A WRITING SIGNED BY THE PARTY AGAINST WHOM THE AMENDMENT
IS SOUGHT TO BE ENFORCED.
14.6 No Waiver. No action taken by Lessor or Lessee will be deemed to constitute
a waiver of compliance with any representation, warranty or covenant contained
in this Master Lease or a Schedule. The waiver by Lessor or Lessee of a breach
of any provision of this Master Lease or a Schedule will not operate or be
construed as a waiver of any subsequent breach.
14.7 Binding Nature. Each Schedule is binding upon, and inures to the benefit of
Lessor and its assigns. LESSEE MAY NOT ASSIGN ITS RIGHTS OR OBLIGATIONS.
14.8 Survival of Obligations. All agreements, obligations including, but not
limited to those arising under Section 6.2, representations and warranties
contained in this Master Lease, any Schedule, Summary Equipment Schedule or in
any document delivered in connection with those agreements are for the benefit
of Lessor and any Assignee or Secured Party and survive the execution, delivery,
expiration or termination of this Master Lease.
14.9 Notices. Any notice, request or other communication to either party by the
other will be given in writing and deemed received upon the earlier of actual
receipt or three days after mailing if mailed postage prepaid by regular or
airmail to Lessor (to the attention of "the Comdisco Venture Group") or Lessee,
at the address set out in the Schedule or, one day after it is sent by courier
or on the same day as sent via facsimile transmission, provided that the
original is sent by personal delivery or mail by the receiving party.
14.10 Applicable Law. THIS MASTER LEASE HAS BEEN, AND EACH SCHEDULE WILL HAVE
BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF ILLINOIS FOR ALL PURPOSES
IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO
CONFLICT OF LAW PROVISIONS. NO RIGHTS OR REMEDIES REFERRED TO IN ARTICLE 2A OF
THE UNIFORM COMMERCIAL CODE WILL BE CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED
IN THIS MASTER LEASE OR A SCHEDULE.
14.11 Severability. If any one or more of the provisions of this Master Lease or
any Schedule is for any reason held invalid, illegal or unenforceable, the
remaining provisions of this Master Lease and any such Schedule will be
unimpaired, and the invalid. Illegal or unenforceable provision replaced by a
mutually acceptable valid, legal and enforceable provision that is closest to
the original intention of the parties.
14.12 Counterparts. This Master Lease and any Schedule may be executed in any
number of counterparts, each of which will be deemed an original, but all such
counterparts together constitute one and the same instrument. If Lessor grants a
security interest in all or any part of a Schedule, the Equipment or sums
payable thereunder, only that counterpart Schedule marked "Secured Party's
Original" can transfer Lessor's rights and all other counterparts will be marked
"Duplicate."
14.13 Licensed Products. Lessee will obtain no title to Licensed Products which
will at all times remain the property of the owner of the Licensed Products. A
license from the owner may be required and it is Lessee's responsibility to
obtain any required license before the use of the Licensed Products. Lessee
agrees to treat the Licensed Products as confidential information of the owner,
to observe all copyright restrictions, and not to reproduce or sell the Licensed
Products.
14.14 Secretary's Certificate. Lessee will, upon execution of this Master Lease,
provide Lessor with a secretary's certificate of incumbency and authority. Upon
the execution of each Schedule with a purchase price in excess of $1,000,000,
Lessee will provide Lessor with an opinion from Lessee's counsel in a form
acceptable to Lessor regarding the representations and warranties in Section 8.
14.15 Electronic Communications. Each of the parties may communicate with the
other by electronic means under mutually agreeable terms.
14.16 Landlord/Mortgagee Waiver. Lessee agrees to provide Lessor with a
Landlord/Mortgagee Waiver with respect to the Equipment. Such waiver shall be in
a form satisfactory to Lessor.
14.17 Equipment Procurement Charges/Progress Payments. Lessee hereby agrees that
Lessor shall not, by virtue of its entering into this Master Lease, be required
to remit any payments to any manufacturer or other third party until Lessee
accepts the Equipment subject to this Master Lease.
14.18 Definitions.
Advance - means the amount due to Lessor by Lessee upon Lessee's execution of
- -------
each Schedule.
Assignee - means an entity to whom Lessor has sold or assigned its rights as
- --------
owner and Lessor of Equipment.
Casualty Loss - means the irreparable loss or destruction of Equipment.
- -------------
Casualty Value - means the greater of the aggregate Rent remaining to be paid
- --------------
for the balance of the lease term or the Fair Market Value of the Equipment
immediately prior to the Casualty Loss. However, if a Casualty Value Table is
attached to the relevant Schedule its terms will control.
Commencement Date - is defined in each Schedule.
- -----------------
Default Costs - means reasonable attorney's fees and remarketing costs resulting
- -------------
from a Lessee default or Lessor's enforcement of its remedies.
Delivery Date - means date of delivery of Inventory Equipment to Lessee's
- -------------
address.
Equipment - means the property described on a Summary Equipment Schedule and any
- ---------
replacement for that property required or permitted by this Master Lease or a
Schedule.
Event of Default - means the events described In Subsection 13.1.
- ----------------
Fair Market Value - means the aggregate amount which would be obtainable in an
- -----------------
arm's-length transaction between an informed and willing buyer/user and an
informed and willing seller under no compulsion to sell.
Initial Term - means the period of time beginning on the first day of the first
- ------------
full Rent Interval following the Commencement Date for all items of Equipment
and continuing for the number of Rent Intervals indicated on a Schedule.
Interim Rent - means the pro-rata portion of Rent due for the period from the
- ------------
Commencement Date through but not including the first day of the first full Rent
Interval included in the Initial Term.
Late Charge - means the lesser of five percent (5%) of the payment due or the
- -----------
maximum amount permitted by the law of the state where the Equipment is located.
Licensed Products - means any software or other licensed products attached to
- -----------------
the Equipment.
Like Equipment - means replacement Equipment which is lien free and of the same
- --------------
model, type, configuration and manufacture as Equipment.
-3-
<PAGE>
Merger - means any consolidation or merger of the Lessee with or into any other
- ------
corporation or entity, any sale or conveyance of all or substantially all of the
assets or stock of the Lessee by or to any other person or entity in which
Lessee is not the surviving entity.
Notice period - means not less than ninety (90) days nor more than twelve (12)
- -------------
months prior to the expiration of the lease term.
Owner - means the owner of Equipment.
- -----
Rent - means the rent Lessee will pay for each item of Equipment expressed in a
- ----
Summary Equipment Schedule either as a specific amount or an amount equal to the
amount which Lessor pays for an item of Equipment multiplied by a lease rate
factor plus all other amounts due to Lessor under this Master Lease or a
Schedule.
Rent Interval - means a full calendar month or quarter as indicated on a
- --------------
Schedule.
Schedule - means either an Equipment Schedule or a Licensed Products Schedule
- --------
which incorporates all of the terms and conditions of this Master Lease.
Secured Party - means an entity to whom Lessor has granted a security interest
- -------------
for the purpose of securing a loan.
Summary Equipment Schedule - means a certificate provided by Lessor summarizing
- --------------------------
all of the Equipment for which Lessor has received Lessee approved vendor
Invoices, purchase documents and/or evidence of delivery during a calendar
quarter which will incorporate all of the terms and conditions of the related
Schedule and this Master Lease and will constitute a separate lease for the
equipment leased thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on or as
of the day and year first above written.
AGILE SOFTWARE CORPORATION COMDISCO, INC.,
as Lessee as Lessor
By: /s/ By: /s/
--------------------------------- ---------------------------------
Title: President and CEO Title:
------------------------------ ------------------------------
Date: 9/22/95
-------------------------------
-4-
<PAGE>
EQUIPMENT SCHEDULE VL-1
DATED AS OF September 19, 1995
TO MASTER LEASE AGREEMENT
DATED AS OF September 18, 1995 (THE "MASTER LEASE")
LESSEE: AGILE SOFTWARE CORPORATION LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
- ------------------------ -----------------------
Mr. Bryan D. Stolle, CEO
(408)271-4851 6111 North River Road
Rosemont, Illinois 60018
Attn.: Venture Group
Address for Notices:
- -------------------
Two North First Street
San Jose, CA 95113
Attn.: Mr. Bryan D. Stolle, CEO
Central Billing Location: Rent Interval: Monthly
- ------------------------ -------------
same as above
Attn.:
Lessee Reference No.:_____________
(26 digits maximum)
Location of Equipment: Initial Term: Thirty-six (36)
- --------------------- ------------
same as above (Number of Rent Intervals)
Lease Rate Factor: 3.22%
-----------------
Attn.:
EQUIPMENT (as defined below): Advance: $4,025.00
-------
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period September 18, 1995 through September
1, 1996 ("Equipment Delivery Period"), for which Lessor receives vendor
invoices approved for payment, up to an aggregate purchase price of
$125,000 ("Commitment Amount"); excluding custom use equipment, leasehold
improvements, installation costs and delivery costs, rolling stock, special
tooling, hand held items, molds and fungible items. In no event shall any
software exceed twenty-five percent (25%) of Lessor's aggregate cost
hereunder.
<PAGE>
1. Equipment Purchase
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in a value up to the Commitment
Amount referred to on the face of this schedule. If the Equipment acquired is of
category (i), (ii) or (iii) below, the effectiveness of this Schedule as it
relates to those items of Equipment is contingent upon Lessee's acknowledgment
at the time Lessor acquires the Equipment that Lessee has either received or
approved the relevant purchase documentation between vendor and Lessor for that
Equipment.
Lessor will finance only the aquisition of individual items of Equipment
with a cost to Lessor of more than $500.00.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
specifically approved by Lessor.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the "Sale-
Leaseback Transaction"). Any request for a Sale-Leaseback Transaction
must be submitted to Lessor in writing (along with accompanying
evidence of Lessee's Equipment ownership satisfactory to Lessor for
all Equipment submitted) no later than September 18, 1995*. Lessor
will not perform a Sale-Leaseback Transaction for any request or
accompanying Equipment ownership documents which arrive after the
date marked above by an asterisk (*). Further, any sale-leaseback
Equipment will be placed on lease subject to: (1) Lessor prior
approval of the Equipment; and (2) if approved, at Lessor's actual
net appraised Equipment value pursuant to the schedule below:
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
-------------------------- ---------------------------------
Between 1/1/95 and 09/18/95 100%
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which is
obtained from a third party by Lessee for its use subject to Lessor's
prior approval of the Equipment and at Lessor's appraised value for
such used Equipment.
(iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new or
used Equipment from its inventory at rates provided by Lessor.
2. Commencement Date
The Commencement Date for each item of new on-order or used on-order
Equipment will be the date Lessee approves the vendor invoice. The Commencement
Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase
price, and the Commencement Date for inventory Equipment shall be the Delivery
Date. Lessor will summarize all approved invoices, purchase documentation and
evidence of delivery, as applicable, received in the same calendar quarter into
a Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1,
and the Initial Term will begin the first day of the calendar quarter
thereafter. Each Summary Equipment Schedule will contain the Equipment location,
description, serial number(s) and cost and will incorporate the terms and
conditions of the Master Lease and this Schedule and will constitute a separate
lease.
3. Option to Extend
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event, the
rent to be paid during said extended period shall be mutually agreed upon and if
the parties cannot mutually agree, then the Summary Equipment Schedule shall
continue in full force and effect pursuant to the existing terms and conditions
until terminated in accordance with its terms. The Summary Equipment Schedule
will continue in effect following said extended period until terminated by
either party upon not less than ninety (90) days prior written notice, which
notice shall be effective as of the date of receipt.
<PAGE>
4. Purchase Option
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price and upon terms and conditions to be mutually agreed upon by the
parties following Lessee's written notice, plus any taxes applicable at time
of purchase. Said purchase price shall be paid to Lessor at least thirty (30)
days before the expiration date of the Initial Term or extended term. Title to
the equipment shall automatically pass to Lessee upon payment in full of the
purchase price but, in no event, earlier than the expiration of the fixed
Initial Term or extended term, if applicable. If the parties are unable to agree
on the purchase price or the terms and conditions with respect to said purchase,
then the Summary Equipment Schedule with respect to this Equipment shall remain
in full force and effect. Notwithstanding the exercise by Lessee of this option
and payment of the purchase price, until all obligations under the applicable
Summary Equipment Schedule have been fulfilled, it is agreed and understood that
Lessor shall retain a purchase money security interest in the Equipment listed
therein and the Summary Equipment Schedule shall constitute a Security Agreement
under the Uniform Commercial Code of the state in which the Equipment is
located.
5. Special Terms
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
A. Section 14.16
Delete this Section in its entirety.
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
AGILE SOFTWARE CORPORATION COMDISCO, INC.
as Lessee as Lessor
By: /s/ By: /s/
---------------------------- ----------------------------
Title: President & CEO Title:
------------------------- -------------------------
Date: 9/18/95 Date: 7/22/96
-------------------------- -------------------------
<PAGE>
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
--------------------------
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
-------------------- ----------
2. Initial Term Starts on: Initial Term:
---------------------- ------------
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
----------------------------
4. Lease Rate Factor:
-----------------
5. Rent:
----
6. Acceptance Doc Type:
-------------------
<PAGE>
EQUIPMENT SCHEDULE VL-2
DATED AS OF March 1, 1996
TO MASTER LEASE AGREEMENT
DATED AS OF September 18, 1995 (THE "MASTER LEASE")
LESSEE: AGILE SOFTWARE CORPORATION LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
- ------------------------ -----------------------
Mr. Bryan D. Stolle, CEO
(408)271-4851 6111 North River Road
Rosemont, Illinois 60018
Attn.: Venture Group
Address for Notices:
- -------------------
Two North First Street
San Jose, CA 95113
Attn.: Mr. Bryan D. Stolle, CEO
Central Billing Location: Rent Interval: Monthly
- ------------------------ -------------
same as above
Attn.:
Lessee Reference No.:______________
(26 digits maximum)
Location of Equipment: Initial Term: Forty-two (42)
- --------------------- ------------
same as above (Number of Rent Intervals)
Lease Rate Factor: 2.75%
-----------------
Attn.:
EQUIPMENT (as defined below): Advance: $15,537.50
-------
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period March 1, 1996 through June 15, 1997
("Equipment Delivery Period"), for which Lessor receives vendor invoices
approved for payment, up to an aggregate purchase price of $565,000
("Commitment Amount"); excluding custom use equipment, leasehold
improvements, installation costs and delivery costs, rolling stock, special
tooling, hand held items, molds and fungible items. In no event shall any
software exceed twenty percent (20%) of Lessor's aggregate cost hereunder.
<PAGE>
1. Equipment Purchase
This Schedule contemplates Lessor's acquisition of Equipment for lease
to Lessee, either by one of the first three categories listed below or by
providing Lessee with Equipment from the fourth category, in a value up to the
Commitment Amount referred to on the face of this schedule. If the Equipment
acquired is of category (i), (ii) or (iii) below, the effectiveness of this
Schedule as it relates to those items of Equipment is contingent upon Lessee's
acknowledgment at the time Lessor acquires the Equipment that Lessee has either
received or approved the relevant purchase documentation between vendor and
Lessor for that Equipment.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which
is specifically approved by Lessor.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the "Sale-
Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership satisfactory
to Lessor for all Equipment submitted) no later than April 1,
1996*. Lessor will not perform a Sale-Leaseback Transaction for any
request or accompanying Equipment ownership documents which arrive
after the date marked above by an asterisk (*). Further, any sale-
leaseback Equipment will be placed on lease subject to: (1) Lessor
prior approval of the Equipment; and (2) if approved, at Lessor's
actual net appraised Equipment value pursuant to the schedule
below:
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
-------------------------- ---------------------------------
Between 01/02/96 and 04/01/96 100%
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new
or used Equipment from its inventory at rates provided by Lessor.
2. Commencement Date
The Commencement Date for each item of new on-order or used on-order
Equipment will be the date Lessee approves the vendor invoice. The Commencement
Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase
price, and the Commencement Date for inventory Equipment shall be the Delivery
Date. Lessor will summarize all approved invoices, purchase documentation and
evidence of delivery, as applicable, received in the same calendar quarter into
a Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1,
and the Initial Term will begin the first day of the calendar quarter
thereafter. Each Summary Equipment Schedule will contain the Equipment location,
description, serial number(s) and cost and will incorporate the terms and
conditions of the Master Lease and this Schedule and will constitute a separate
lease.
3. Option to Extend
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event, the
rent to be paid during said extended period shall be mutually agreed upon and if
the parties cannot mutually agree, then the Summary Equipment Schedule shall
continue in full force and effect pursuant to the existing terms and conditions
until terminated in accordance with its terms. The Summary Equipment Schedule
will continue in effect following said extended period until terminated by
either party upon not less than ninety (90) days prior written notice, which
notice shall be effective as of the date of receipt.
<PAGE>
4. Purchase Option
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price and upon terms and conditions to be mutually agreed upon by the
parties following Lessee's written notice, plus any taxes applicable at the time
of purchase. Said purchase price shall be paid to Lessor at least thirty (30)
days before the expiration date of the Initial Term or extended term. Title to
the Equipment shall automatically pass to Lessee upon payment in full of the
purchase price but, in no event, earlier than the expiration of the fixed
Initial Term or extended term, if applicable. If the parties are unable to agree
on the purchase price or the terms and conditions with respect to said purchase,
then the Summary Equipment Schedule with respect to this Equipment shall remain
in full force and effect. Notwithstanding the exercise by Lessee of this option
and payment of the purchase price, until all obligations under the applicable
Summary Equipment Schedule have been fulfilled, it is agreed and understood that
Lessor shall retain a purchase money security interest in the Equipment listed
therein and the Summary Equipment Schedule shall constitute a Security Agreement
under the Uniform Commercial Code of the state in which the Equipment is
located.
5. Special Terms
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
A. Section 14.16
Delete this Section in its entirety.
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
AGILE SOFTWARE CORPORATION COMDISCO, INC.
as Lessee as Lessor
By: /s/ By: /s/ James P. Labe
--------------------------- ------------------------------------
Title: President & CEO Title: President, Venture Lease Division
------------------------ ---------------------------------
Date: 3/6/96 Date:
------------------------- ----------------------------------
<PAGE>
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
--------------------------
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
-------------------- ----------
2. Initial Term Starts on: Initial Term:
---------------------- ------------
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
----------------------------
4. Lease Rate Factor:
-----------------
5. Rent:
----
6. Acceptance Doc Type:
-------------------
<PAGE>
EQUIPMENT SCHEDULE VL-3
DATED AS OF February 3, 1997
TO MASTER LEASE AGREEMENT
DATED AS OF September 18, 1995 (THE "MASTER LEASE")
LESSEE: AGILE SOFTWARE CORPORATION LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
- ------------------------ -----------------------
Paula Davis 6111 North River Road
Office Manager Rosemont, Illinois 60018
(408) 975-3929 Attn.: Venture Group
Address for Notices:
- -------------------
One Almaden Blvd, 12th Floor
San Jose, CA 95113
Attn.: Mr. Bryan D. Stolle, CEO
Central Billing Location: Rent Interval: Monthly
- ------------------------ -------------
same as above
Attn.:
Lessee Reference No.: _______________
(26 digits maximum)
Location of Equipment: Initial Term: Forty-two (42)
- --------------------- ------------
same as above (Number of Rent Intervals)
Lease Rate Factor: 2.72%
-----------------
Attn.:
EQUIPMENT (as defined below): Advance: $20,400
-------
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period February 3, 1997 through December 15,
1997 ("Equipment Delivery Period"), for which Lessor receives vendor
invoices approved for payment, up to an aggregate purchase price of
$750,000 ("Commitment Amount"); excluding custom use equipment, leasehold
improvements, installation costs and delivery costs, rolling stock, special
tooling, hand held items, molds and fungible items. In no event shall any
software exceed twenty percent (20%) of Lessor's aggregate cost hereunder.
<PAGE>
1. Equipment Purchase
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in a value up to the Commitment
Amount referred to on the face of this Schedule. If the Equipment acquired is of
category (i), (ii) or (iii) below, the effectiveness of this Schedule as it
relates to those items of Equipment is contingent upon Lessee's acknowledgment
at the time Lessor acquires the Equipment that Lessee has either received or
approved the relevant purchase documentation between vendor and Lessor for that
Equipment.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
specifically approved by Lessor.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the "Sale-
Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership satisfactory
to Lessor for all Equipment submitted) no later than April 3, 1997*.
Lessor will not perform a Sale-Leaseback Transaction for any request
or accompanying Equipment ownership documents which arrive after the
date marked above by an asterisk (*). Further, any sale-leaseback
Equipment will be placed on lease subject to: (1) Lessor prior
approval of the Equipment; and (2) if approved, at Lessor's actual
net appraised Equipment value pursuant to the schedule below:
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
-------------------------- ---------------------------------
Between 08/01/96 and 02/03/97 100%
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new
or used Equipment from its inventory at rates provided by Lessor.
2. Commencement Date
The Commencement Date for each item of new on-order or used on-order
Equipment will be the date Lessee approves the vendor invoice. The Commencement
Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase
price, and the Commencement Date for inventory Equipment shall be the Delivery
Date. Lessor will summarize all approved invoices, purchase documentation and
evidence of delivery, as applicable, received in the same calendar month into a
Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1,
and the Initial Term will begin the first day of the calendar month thereafter.
Each Summary Equipment Schedule will contain the Equipment location,
description, serial number(s) and cost and will incorporate the terms and
conditions of the Master Lease and this Schedule and will constitute a separate
lease.
3. Option to Extend
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event, the
rent to be paid during said extended period shall be mutually agreed upon and if
the parties cannot mutually agree, then the Summary Equipment Schedule shall
continue in full force and effect pursuant to the existing terms and conditions
until terminated in accordance with its terms. The Summary Equipment Schedule
will continue in effect following said extended period until terminated by
either party upon not less than ninety (90) days prior written notice, which
notice shall be effective as of the date of receipt.
<PAGE>
4. Purchase Option
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price, not to exceed 12.5% of the original Equipment cost and upon
terms and conditions to be mutually agreed upon by the parties following
Lessee's written notice, plus any taxes applicable at the time of purchase. Said
purchase price shall be paid to Lessor at least thirty (30) days before the
expiration date of the Initial Term or extended term. Title to the Equipment
shall automatically pass to Lessee upon payment in full of the purchase price
but, in no event, earlier than the expiration of the fixed Initial Term or
extended term, if applicable.
If the parties are unable to agree on the purchase price or
the terms and conditions with respect to said purchase, then the Summary
Equipment Schedule with respect to this Equipment shall remain in full force and
effect. Notwithstanding the exercise by Lessee of this option and payment of the
purchase price, until all obligations under the applicable Summary Equipment
Schedule have been fulfilled, it is agreed and understood that Lessor shall
retain a purchase money security interest in the Equipment listed therein and
the Summary Equipment Schedule shall constitute a Security Agreement under the
Uniform Commercial Code of the state in which the Equipment is located.
5. Special Terms
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
A. Section 14.16
Delete this Section in its entirety.
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
AGILE SOFTWARE CORPORATION COMDISCO, INC.
as Lessee as Lessor
By: /s/ [SIGNATURE ILLEGIBLE]^^ By: /s/ James P. Labe
-------------------------------- -------------------------------
JAMES P. LABE
Title: President Title: PRESIDENT VENTURE LEASE,
----------------------------- ----------------------------
DIVISION
----------------------------
Date: 2-1-97 Date:
------------------------------ ------------------------------
<PAGE>
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
--------------------------
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
-------------------- ----------
2. Initial Term Starts on: Initial Term:
---------------------- ------------
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
----------------------------
4. Lease Rate Factor:
-----------------
5. Rent:
----
6. Acceptance Doc Type:
-------------------
<PAGE>
EQUIPMENT SCHEDULE VL-4
DATED AS OF November 7, 1997
TO MASTER LEASE AGREEMENT
DATED AS OF September 18, 1995 (THE "MASTER LEASE")
LESSEE: AGILE SOFTWARE CORPORATION LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
- ------------------------ -----------------------
Mr. Bryan D. Stolle, CEO
(408)271-4851 6111 North River Road
Rosemont, Illinois 60018
Attn.: Venture Group
Address for Notices:
- -------------------
One Almaden Blvd., 12th Floor
San Jose, CA 95113
Attn.: Mr. Bryan D. Stolle, CEO
Central Billing Location: Rent Interval: Monthly
- ------------------------ -------------
same as above
Attn.:
Lessee Reference No.:_____________
(26 digits maximum)
Location of Equipment: Initial Term: Forty-two (42)
- --------------------- ------------
same as above (Number of Rent Intervals)
Lease Rate Factor: 2.74%
-----------------
Attn.:
EQUIPMENT (as defined below): Advance: $8,220.00
-------
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period November 7, 1997 through November 7,
1998 ("Equipment Delivery Period"), for which Lessor receives vendor
invoices approved for payment, up to an aggregate purchase price of
$300,000 ("Commitment Amount"); excluding custom use equipment, leasehold
improvements, installation costs and delivery costs, rolling stock, special
tooling, hand held items, molds and fungible items. In no event shall any
software exceed twenty percent (20%) of Lessor's aggregate cost hereunder.
<PAGE>
1. Equipment Purchase
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in a value up to the Commitment
Amount referred to on the face of this schedule. If the Equipment acquired is of
category (i), (ii) or (iii) below, the effectiveness of this Schedule as it
relates to those items of Equipment is contingent upon Lessee's acknowledgment
at the time Lessor acquires the Equipment that Lessee has either received or
approved the relevant purchase documentation between vendor and Lessor for that
Equipment.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
specifically approved by Lessor.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the "Sale-
Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership satisfactory
to Lessor for all Equipment submitted) no later than December 8,
1997*. Lessor will not perform a Sale-Leaseback Transaction for any
request or accompanying Equipment ownership documents which arrive
after the date marked above by an asterisk (*). Further, any sale-
leaseback Equipment will be placed on lease subject to: (1) Lessor
prior approval of the Equipment; and (2) if approved, at Lessor's
actual net appraised Equipment value pursuant to the schedule below:
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
-------------------------- ---------------------------------
Between 8/8/97 and 11/7/97 100%
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new
or used Equipment from its inventory at rates provided by Lessor.
2. Commencement Date
The Commencement Date for each item of new on-order or used on-order
Equipment will be the date Lessee approves the vendor invoice. The Commencement
Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase
price, and the Commencement Date for inventory Equipment shall be the Delivery
Date. Lessor will summarize all approved invoices, purchase documentation and
evidence of delivery, as applicable, received in the same calendar month into a
Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1,
and the Initial Term will begin the first day of the calendar month thereafter.
Each Summary Equipment Schedule will contain the Equipment location,
description, serial number(s) and cost and will incorporate the terms and
conditions of the Master Lease and this Schedule and will constitute a separate
lease.
3. Option to Extend
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event, the
rent to be paid during said extended period shall be mutually agreed upon and if
the parties cannot mutually agree, then the Summary Equipment Schedule shall
continue in full force and effect pursuant to the existing terms and conditions
until terminated in accordance with its terms. The Summary Equipment Schedule
will continue in effect following said extended period until terminated by
either party upon not less than ninety (90) days prior written notice, which
notice shall be effective as of the date of receipt.
<PAGE>
4. Purchase Option
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price not to exceed 12.5% of the original Equipment cost and upon terms
and conditions to be mutually agreed upon by the parties following Lessee's
written notice, plus any taxes applicable at time of purchase. Said purchase
price shall be paid to Lessor at least thirty (30) days before the expiration
date of the Initial Term or extended term. Title to the Equipment shall
automatically pass to Lessee upon payment in full of the purchase price but, in
no event, earlier than the expiration of the fixed Initial Term or extended
term, if applicable. If the parties are unable to agree on the purchase price or
the terms and conditions with respect to said purchase, then the Summary
Equipment Schedule with respect to this Equipment shall remain in full force and
effect. Notwithstanding the exercise by Lessee of this option and payment of the
purchase price, until all obligations under the applicable Summary Equipment
Schedule have been fulfilled, it is agreed and understood that Lessor shall
retain a purchase money security interest in the Equipment listed therein and
the Summary Equipment Schedule shall constitute a Security Agreement under the
Uniform Commercial Code of the state in which the Equipment is located.
5. Special Terms
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
A. Section 14.16
Delete this Section in its entirety.
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this Schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
AGILE SOFTWARE CORPORATION COMDISCO, INC.
as Lessee as Lessor
By: /s/ By:_____________________________
-----------------------------
Title: President/CEO Title:__________________________
--------------------------
Date: 11/10/97 Date:___________________________
---------------------------
<PAGE>
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
--------------------------
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
-------------------- ----------
2. Initial Term Starts on: Initial Term:
---------------------- ------------
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
----------------------------
4. Lease Rate Factor:
-----------------
5. Rent:
----
6. Acceptance Doc Type:
-------------------
<PAGE>
EQUIPMENT SCHEDULE VL-5
DATED AS OF February 23, 1998
TO MASTER LEASE AGREEMENT
DATED AS OF September 18, 1995 (THE "MASTER LEASE")
LESSEE: AGILE SOFTWARE CORPORATION LESSOR: COMDISCO, INC.
Admin. Contact/Phone No.: Address for all Notices:
- ------------------------ -----------------------
Mr. Thomas P. Shanahan, CFO
(408)975-3974 6111 North River Road
Rosemont, Illinois 60018
Attn.: Venture Group
Address for Notices:
- -------------------
One Almaden Blvd, 12th Floor
San Jose, CA 95113
Attn.: Mr. Thomas P. Shanahan, CFO
Central Billing Location: Rent Interval: Monthly
- ------------------------ -------------
same as above
Attn.:
Lessee Reference No.:_______________
(26 digits maximum)
Location of Equipment: Initial Term: Forty-two (42)
- --------------------- ------------
same as above (Number of Rent Intervals)
Lease Rate Factor: 2.8053%
-----------------
Attn.:
EQUIPMENT (as defined below): Advance: $56,106.00
-------
(Consisting of Lessee's first and last
monthly lease payments)
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period February 23, 1998 through February
23, 1999 ("Equipment Delivery Period"), for which Lessor receives vendor
invoices approved for payment, up to an aggregate purchase price of
$1,000,000 ("Commitment Amount"); excluding custom use equipment, leasehold
improvements, installation costs and delivery costs, rolling stock, special
tooling, hand held items, molds and fungible items. In no event shall any
software exceed thirty percent (30%) of Lessor's aggregate cost hereunder.
<PAGE>
1. Equipment Purchase
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in a value up to the Commitment
Amount referred to on the face of this Schedule. If the Equipment acquired is of
category (i), (ii) or (iii) below, the effectiveness of this Schedule as it
relates to those items of Equipment is contingent upon Lessee's acknowledgment
at the time Lessor acquires the Equipment that Lessee has either received or
approved the relevant purchase documentation between vendor and Lessor for that
Equipment.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
specifically approved by Lessor.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the "Sale-
Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership satisfactory
to Lessor for all Equipment submitted) no later than March___,
1998*. Lessor will not perform a Sale-Leaseback Transaction for any
request or accompanying Equipment ownership documents which arrive
after the date marked above by an asterisk (*). Further, any sale-
leaseback Equipment will be placed on lease subject to: (1) Lessor
prior approval of the Equipment; and (2) if approved, at Lessor's
actual net appraised Equipment value pursuant to the schedule below:
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
-------------------------- ---------------------------------
Between 11/25/97 and 2/23/98 100%
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) INVENTORY EQUIPMENT. Upon Lessee's request, Lessor may supply new
or used Equipment from its inventory at rates provided by Lessor.
2. Commencement Date
The Commencement Date for each item of new on-order or used on-order
Equipment will be the date Lessee approves the vendor invoice. The Commencement
Date for sale-leaseback Equipment shall be the date Lessor tenders the purchase
price, and the Commencement Date for inventory Equipment shall be the Delivery
Date. Lessor will summarize all approved invoices, purchase documentation and
evidence of delivery, as applicable, received in the same calendar month into a
Summary Equipment Schedule in the form attached to this Schedule as Exhibit 1,
and the Initial Term will begin the first day of the calendar month thereafter.
Each Summary Equipment Schedule will contain the Equipment location,
description, serial number(s) and cost and will incorporate the terms and
conditions of the Master Lease and this Schedule and will constitute a separate
lease.
3. Option to Extend
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event, the
rent to be paid during said extended period shall be mutually agreed upon and if
the parties cannot mutually agree, then the Summary Equipment Schedule shall
continue in full force and effect pursuant to the existing terms and conditions
until terminated in accordance with its terms. The Summary Equipment Schedule
will continue in effect following said extended period until terminated by
either party upon not less than ninety (90) days prior written notice, which
notice shall be effective as of the date of receipt.
<PAGE>
4. Purchase Option
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price not to exceed 15.0% of the original Equipment cost and upon terms
and conditions to be mutually agreed upon by the parties following Lessee's
written notice, plus any taxes applicable at time of purchase. Said purchase
price shall be paid to Lessor at least thirty (30) days before the expiration
date of the Initial Term or extended term. Title to the Equipment shall
automatically pass to Lessee upon payment in full of the purchase price but, in
no event, earlier than the expiration of the fixed Initial Term or extended
term, if applicable.
If the parties are unable to agree on the purchase price or the terms and
conditions with respect to said purchase, then the Summary Equipment Schedule
with respect to this Equipment shall remain in full force and effect.
Notwithstanding the exercise by Lessee of this option and payment of the
purchase price, until all obligations under the applicable Summary Equipment
Schedule have been fulfilled, it is agreed and understood that Lessor shall
retain a purchase money security interest in the Equipment listed therein and
the Summary Equipment Schedule shall constitute a Security Agreement under the
Uniform Commercial Code of the state in which the Equipment is located.
5. Technology Exchange Option
If Lessee is not in default, and there is no material adverse change
in Lessee's credit, on or after the expiration of the 12th month of any Summary
Equipment Schedule, Lessee shall have the option to replace any of the Equipment
subject to such summary Equipment Schedule with new technology equipment ("New
Technology Equipment") utilizing the following guidelines:
A. Equipment being replaced with New Technology Equipment shall have an
aggregate original cost equal to or greater than $20,000 and be comprised of
full configurations of equipment.
B. This technology Exchange Option shall be limited to a maximum in the
aggregate of fifty percent (50%) of the original equipment cost and shall not
apply to software.
C. The cost of the New Technology Equipment must be equal to or greater than the
original equipment cost of the replaced equipment, but in no event shall exceed
150% of the original equipment cost.
D. The remaining lease payments applicable to the equipment being replaced by
the New Technology Equipment will be discounted to present value at 6%.
The wholesale market value of the equipment being replaced will be established
by Comdisco based upon then current market conditions. Upon the return of the
replaced equipment, the wholesale price will be deducted from the present value
of the remaining rentals and the differential will be added to the cost of the
New Technology Equipment in calculating the new rental. The lease for the New
Technology Equipment will contain terms and conditions substantially similar to
those for the replaced equipment and will have an Initial Term not less than the
balance of the remaining Initial Term for the replaced equipment.
6. Option Amount
So long as no Event of Default shall have occurred and is continuing and
upon Lessee's request, subject to final review by Lessor, Lessor agrees to
provide to Lessee an additional $1,000,000.00 of Equipment upon rates and terms
to be negotiated.
7. Special Terms
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
A. Section 14.16
Delete this Section in its entirety.
<PAGE>
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this Schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
AGILE SOFTWARE CORPORATION COMDISCO, INC.
as Lessee as Lessor
By: /s/ By: /s/ James P. Labe
--------------------------- ----------------------------------------
Title: CFO Title: President, Comdisco Ventures Division
------------------------ -------------------------------------
Date: 2-25-98 Date: Mar 6 1998
------------------------ --------------------------------------
<PAGE>
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
--------------------------
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
-------------------- ----------
2. Initial Term Starts on: Initial Term:
---------------------- ------------
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
----------------------------
4. Lease Rate Factor:
-----------------
5. Rent:
----
6. Acceptance Doc Type:
-------------------
<PAGE>
EXHIBIT 10.9
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT ("Agreement") is made
as of April 7, 1995 by and between Agile Software Corporation, a California
corporation (the "Company"), and the investors listed on Schedule A hereto, each
of which is herein referred to individually as an "Investor" and collectively
the "Investors".
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Series A Preferred Stock. The Investors
---------------------------------------------
agree to purchase at the Closing and the Company agrees to sell and issue to the
Investors at the Closing, up to 1,500,000 shares of Series A Preferred Stock
(collectively, the "Series A Shares").
1.1 Closing: Subsequent Closings. The purchase and sale of the Series
----------------------------
A Shares shall take place at the offices of Brobeck, Phleger & Harrison, 2200
Geng Road, Palo Alto, California, at 2:00 p.m., on April 7, 1995, or at such
other time and place as the Company and the Investors hereto mutually agree upon
orally or in writing (which time and place are designated as the "Closing"). At
the Closing, the Company shall deliver to the Investors shares of Series A
Preferred Stock against delivery to the Company by the Investors of a check or
wire transfer, payable to the Company's order, in the amount set forth beside
such Investor's name on Schedule A. The Company may sell additional Series A
Shares to such purchasers as it shall select.
2. Representations and Warranties of the Investors. Each Investor
-----------------------------------------------
hereby severally, but not jointly, represents and warrants that:
2.1 Authorization. All action on the part of such Investor necessary
-------------
for the authorization, execution, delivery and performance of this Agreement and
purchase of the Series A Shares has been taken or will be taken prior to the
Closing.
2.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which, by such Investor's execution of this Agreement, such Investor hereby
confirms that the Series A Shares purchased by such Investor and any stock into
which such Series A Shares may be converted (collectively, the "Securities")
will be acquired for investment for such Investor's own account, and not with a
view to the resale or distribution of any part thereof unless such resale or
distribution is in compliance with the Securities Act of 1933, as amended (the
"Act"), and any rules or regulations promulgated thereunder, and, except as
provided above, that such Investor has no present intention of selling, granting
any participation in, or otherwise distributing the same. By executing this
Agreement, each Investor further represents that such Investor does not have any
contract,
1
<PAGE>
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Securities. Each Investor represents that it has full power and authority to
enter into this Agreement.
2.3 Disclosure of Information. Such Investor believes it has received
-------------------------
all the information it considers necessary or appropriate for deciding whether
to purchase the Series A Shares. Such Investor further represents that such
Investor has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Series A
Shares. Such Investor is aware that investment in the Company is speculative and
involves a high degree of risk. Such Investor, in evaluating the merits of an
investment in the Company, has relied on the advice of its own personal tax and
legal counsel, and is not relying on the Company or its counsel for an
evaluation of the tax, legal or other consequences of an investment in the
Company.
2.4 Investment Experience. Such Investor is an experienced investor
---------------------
in securities of emerging growth high technology companies and acknowledges that
it is able to fend for itself, can bear the economic risk of its investment and
has such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series A
Shares.
2.5 Restricted Securities. Such Investor understands that the
---------------------
Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may not be resold without registration
under the Act, except in certain limited circumstances. In this connection, such
Investor represents that such Investor is familiar with SEC Rule 144 promulgated
by the Securities and Exchange Commission, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
2.6 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, such Investor further agrees that such
Investor will not make any disposition of all or any portion of the Securities
unless and until the transferee and any subsequent transferee has agreed in
writing for the benefit of the Company to be bound by the terms of this
Agreement, as amended, provided and to the extent such instruments are then
applicable and:
(a) There is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement; or
(b) Such Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the
2
<PAGE>
circumstances surrounding the proposed disposition, and if reasonably requested
by the Company, such Investor shall have furnished the Company with an opinion
of counsel, reasonably satisfactory to the Company, that such disposition will
not require registration of such Securities under the Act. It is agreed that the
Company will not require opinions of counsel for transactions made pursuant to
Rule 144 except in unusual circumstances.
2.7 Legends. It is understood that the certificates evidencing the
-------
Securities may bear one or all of the following legends:
(a) "THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES, OR DELIVERY OF
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE
ACT OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT."
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the Code or any other legends required by applicable
state securities or blue sky laws.
3. Commissioner of Corporations.
----------------------------
3.1 California Corporate Securities Law. THE SALE OF THE SECURITIES
-----------------------------------
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH
SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF
SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
4. Conditions of the Company's Obligations at Closing. The
--------------------------------------------------
obligations of the Company to each Investor under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
that Investor:
3
<PAGE>
4.1 Representations and Warranties. The representations and
------------------------------
warranties of each Investor contained in Section 2 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.
4.2 Payment of Purchase Price. The Investors shall have delivered the
-------------------------
purchase price for the Series A Shares specified in Section 1.2, as applicable.
4.3 State Qualifications. The Commissioner of Corporations of the
--------------------
State of California shall have issued a permit qualifying the offer and sale to
the Investors of the Securities or such offer and sale shall be exempt from such
qualification under the California Corporate Securities Law of 1968, as amended.
4.4 Amended and Restated Articles of Incorporation. The Secretary of
----------------------------------------------
State of the State of California shall have filed and cleared the Amended and
Restated Articles of Incorporation in substantially the form attached hereto as
Exhibit A.
- ---------
4.5 Investors' Rights Agreement. Each of the Investors shall have
---------------------------
executed a copy of the Investors' Rights Agreement in substantially the form
attached hereto as Exhibit B.
---------
5. Miscellaneous.
-------------
5.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
5.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of the Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
5.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
5.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4
<PAGE>
5.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
5.6 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties. If to the Company, a copy of any notice shall be sent in the same
manner to (a) Agile Software Corporation, 1816 Marlyn Way, San Jose, CA 95125
Attention: President and (b) Brobeck, Phleger & Harrison, 2200 Geng Road, Palo
Alto, California 94303, Attention: Margaret E. Nibbi, Esq.
5.7 Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finders' fee or commission in connection with this
transaction.
5.8 Expenses. Each party shall pay all costs and expenses that it
--------
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
5.9 Amendments and Waivers. Any term of this Agreement may be amended
----------------------
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Series A Shares. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon all the Investors and the Company.
5.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AGILE SOFTWARE CORPORATION
By: /s/ Bryan D. Stolle
-------------------------------
Bryan D. Stolle
President and
Chief Executive Officer
Signature Page to Agile Software Corporation
Series A Preferred Stock Purchase Agreement
<PAGE>
EXHIBIT 10.10
SERIES B PREFERRED
STOCK PURCHASE AGREEMENT
------------------------
THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 2nd day of June, 1995, by and among Agile Software Corporation, a
California corporation (the "Company"), and Mohr, Davidow Ventures IV, L.P., a
Delaware limited partnership (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
---------------------------
1.1 Sale and Issuance of Series B Preferred Stock.
---------------------------------------------
(a) The Company shall adopt and file with the Secretary of State of
California on or before the Closing (as defined below) the Second Amended and
Restated Articles of Incorporation in the form attached hereto as Exhibit A (the
---------
"Restated Articles").
(b) Subject to the terms and conditions of this Agreement, the
Investor agrees to purchase at the Closing and the Company agrees to sell and
issue to the Investor at the Closing, 2,825,000 shares of the Company's Series B
Preferred Stock (the "Series B Preferred Stock") at a purchase price of $0.354
per share, for an aggregate purchase price of $1,000,050.00.
1.2 Closing. The purchase and sale of the Series B Preferred Stock
-------
shall take place at the offices of Brobeck, Phleger & Harrison, Two Embarcadero
Place, 2200 Geng Road, Palo Alto, California, at 11:00 A.M., on June 2, 1995, or
at such other time and place as the Company and Investor mutually agree upon
orally or in writing (which time and place are designated as the "Closing"). At
the Closing, the Company shall deliver to the Investor a certificate
representing the Series B Preferred Stock that the Investor is purchasing
against payment of the purchase price therefor by check or wire transfer to an
account specified by the Company.
2. Representations and Warranties of the Company. The Company
---------------------------------------------
hereby represents and warrants to the Investor that, except as set forth on a
Schedule of Exceptions (the "Schedule of Exceptions") furnished the Investor and
special counsel for the Investor, specifically identifying the relevant
subparagraph hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the
<PAGE>
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 in its Business
Plan dated as of April 1995 ("Business Plan"). The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its business or
properties.
2.2 Capitalization and Voting Rights. The authorized capital of the
--------------------------------
Company consists of or will consist of prior to the Closing:
(i) Preferred Stock. 6,000,000 shares of Preferred Stock (the
---------------
"Preferred Stock"), of which 1,500,000 shares have been designated Series A
Preferred Stock (the "Series A Preferred Stock"), 1,240,000 of which are
outstanding, and 3,000,000 of which have been designated Series B Preferred
Stock, of which 2,825,000 will be sold pursuant to this Agreement. The rights,
privileges and preferences of the Series A Preferred Stock and Series B
Preferred Stock will be as stated in the Company's Restated Articles.
(ii) Common Stock. 10,000,000 shares of common stock ("Common
------------
Stock"), of which 1,990,000 shares are issued and outstanding.
(iii) The outstanding shares of Series A Preferred Stock and
Common Stock are owned by the shareholders in the numbers specified in Exhibit C
---------
hereto.
(iv) The outstanding shares of Series A Preferred Stock and
Common Stock are all duly and validly authorized and issued, fully paid and
nonassessable, and were issued in accordance with the registration or
qualification provisions of the Securities Act of 1933, as amended (the "Act")
and any relevant state securities laws or pursuant to valid exemptions
therefrom.
(v) Except for (A) the conversion privileges of the Series A
Preferred Stock and Series B Preferred Stock, (B) the rights provided in Section
2 of the Amended and Restated Investors' Rights Agreement (the "Investors'
Rights Agreement"), the form of which is attached hereto as Exhibit B, and (C)
---------
currently outstanding options to purchase 60,000 shares of Common Stock granted
to directors and an advisor pursuant to the 1995 Stock Option Plan (the "Option
Plan"), there are not outstanding any options, warrants, rights (including
conversion or preemptive rights) or agreements for the purchase or acquisition
from the Company of any shares of its capital stock. The Company has reserved
3,000,000 shares of Series B Preferred Stock for issuance hereunder and
4,500,000 shares of Common Stock for issuance upon conversion of the Series A
and Series B Preferred Stock. In addition to the aforementioned options, the
Company has reserved an additional 940,000 shares of its Common Stock for
issuance upon exercise of options to be granted in the future under the Option
Plan. The Company is not a party or subject to any agreement or understanding,
and, to the best of
2.
<PAGE>
the Company's knowledge, there is no agreement or understanding between any
persons and/or entities, which affects or relates to the voting or giving of
written consents with respect to any security or by a director of the Company.
2.3 Subsidiaries. The Company does not presently own or control,
------------
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
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 Investors' Rights Agreement and
the Co-Sale Agreement, the form of which is attached hereto as Exhibit E, the
---------
performance of all obligations of the Company hereunder and thereunder, and the
authorization, issuance (or reservation for issuance), sale and delivery of the
Series B Preferred Stock being sold hereunder and the Common Stock issuable upon
conversion of the Series B Preferred Stock has been taken or will be taken prior
to the Closing, and this Agreement, the Investors' Rights Agreement and the Co-
Sale Agreement constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Investors' Rights Agreement may be
limited by applicable federal or state securities laws.
2.5 Valid Issuance of Preferred and Common Stock.
---------------------------------------------
The Series B Preferred Stock that is being purchased by the Investor
hereunder, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly and validly
issued, fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement and the
Investors' Rights Agreement and under applicable state and federal securities
laws. The Common Stock issuable upon conversion of the Series B Preferred Stock
purchased under this Agreement has been duly and validly reserved for issuance
and, upon issuance in accordance with the terms of the Restated Articles, will
be duly and validly issued, fully paid, and nonassessable and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement and the Investors' Rights Agreement and under applicable state and
federal securities laws.
2.6 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement,
3.
<PAGE>
the Investors' Rights Agreement and the Co-Sale Agreement, except for the filing
pursuant to Section 25102(f) of the California Corporate Securities Law of 1968,
as amended, and the rules thereunder, which filing will be effected within
fifteen (15) days of the sale of the Series B Preferred Stock hereunder.
2.7 Litigation. There is no action, suit, proceeding or
----------
investigation pending or currently threatened against the Company that questions
the validity of this Agreement, the Investors' Rights Agreement or the Co-Sale
Agreement, or the right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company. The
foregoing includes, without limitation, actions, suits, proceedings or
investigations, pending or threatened, 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 or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.8 Proprietary Information and Inventions Agreement. Each employee,
------------------------------------------------
officer and consultant of the Company has executed a Proprietary Information and
Inventions Agreement in the form provided to special counsel to the Investor.
The Company, after reasonable investigation, is not aware that any of its
employees, officers or consultants are in violation thereof, and the Company
will use its best efforts to prevent any such violation.
2.9 Patents and Trademarks. To the best of its knowledge (but
----------------------
without having conducted any special investigation or patent search), the
Company has sufficient title to and ownership of all patents, trademarks,
service marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes necessary for its business as now conducted and as proposed
to be conducted as described in the Business Plan without any conflict with or
infringement of the rights of others. 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 and processes of any
other person or entity.
2.10 Compliance with Other Instruments.
----------------------------------
(a) The Company is not in violation or default in any material
respect of any provision of its Restated Articles or Bylaws, or in any material
respect of any instrument, judgment, order, writ, decree or contract to which it
is a party or by which it
4.
<PAGE>
is bound, or, to the best of its knowledge, of any provision of any federal or
state statute, rule or regulation applicable to the Company. The execution,
delivery and performance of this Agreement, the Investors' Rights Agreement and
the Co-Sale Agreement, and the consummation of the transactions contemplated
hereby and thereby 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 that results in the creation of any lien, charge or
encumbrance upon any 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.
2.11 Agreements; Action.
-------------------
(a) Except for agreements explicitly contemplated hereby, by the
Investors' Rights Agreement and the Co-Sale Agreement, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, affiliates, or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or by which it is bound that may involve (i) obligations (contingent
or otherwise) of, or payments to the Company in excess of, $10,000, (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company, or (iii) provisions restricting or affecting the development,
manufacture or distribution of the Company's products or services.
(c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $10,000 or, in the case of
indebtedness and/or liabilities individually less than $10,000, in excess of
$25,000 in the aggregate, (iii) except with respect to the purchase of shares of
stock of the Company by employees, officers or directors, made any loans or
advances to any person, other than ordinary advances for travel expenses, or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights, other
than the sale of its inventory in the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar mounts of
such subsections.
5.
<PAGE>
2.12 Related-Party Transactions. Except with respect to the purchase
--------------------------
of shares of stock of the Company, no employee, officer, or director of the
Company or member of his or her immediate family is indebted to the Company, nor
is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the best of the Company's knowledge, none of said
employees, officers or directors, or any members of their immediate families,
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, or any firm or corporation which competes with the Company, except
that Bryan Stolle owns 400 shares and Matthias Moran owns 3,000 shares of the
common stock of Sherpa Corporation, and employees, officers and directors of the
Company may own stock in publicly traded companies that may compete with the
Company. To the best of the Company's knowledge, no employee, officer or
director or any member of their immediate families, is, directly or indirectly,
interested in any material contract with the Company other than as a shareholder
in the Company. The Company is not a guarantor or indemnitor of any indebtedness
of any other person, firm or corporation.
2.13 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 materially and adversely affect the
business, properties, prospects, or financial condition of 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.
2.14 Disclosure. The Company has fully provided the Investor with all
----------
the information that the Investor has requested for deciding whether to purchase
the Series B Preferred Stock. To the best of its knowledge, neither this
Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, nor any other
statements or certificates made or delivered in connection herewith or therewith
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements herein or therein not misleading.
2.15 Registration Rights. Except as provided in the Investors' Rights
-------------------
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
2.16 Corporate Documents. Except for amendments necessary to satisfy
-------------------
representations and warranties or conditions contained herein (the form of which
amendments has been approved by the Investor), the Restated Articles and Bylaws
of the Company are in the form previously provided to special counsel for the
Investor.
2.17 Section 83(b) Elections. To the best of the Company's knowledge,
-----------------------
all individuals who have purchased shares of the Company's Common Stock have
timely
6.
<PAGE>
filed elections under Section 83(b) of the Internal Revenue Code of 1986, as
amended, and any analogous provisions of applicable state tax laws.
2.18 Employees. To the best of the Company's knowledge, no employee
---------
or consultant of the Company is in violation of any term of any employment,
employment contract, patent disclosure agreement or any other contract or
agreement relating to the relationship of any such person with the Company or
any other party because of the nature of the business conducted or to be
conducted by the Company. The Company does not have any collective bargaining
agreements covering any of its employees. Except for the Option Plan, the
Company has no employee benefit plans presently in-force with respect to profit-
sharing, pensions, stock options, or other stock benefits. 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.
2.19 Offering. Subject to the accuracy of the Investor's
--------
representations in Section 3 of this Agreement and in written responses to the
Company's inquiries, the offer, sale and issuance of the Series B Preferred
Stock to be issued in conformity with the terms of this Agreement and the
issuance of the Common Stock to be issued upon conversion of the Series B
Preferred Stock constitute transactions exempt from the registration
requirements of Section 5 of the Act.
2.20 Corporate Records. The minute books of the Company made
-----------------
available to the Investor contain a complete summary of all meetings or actions
by written consent of directors and shareholders since the time of incorporation
of the Company and reflect all transactions referred to in such minutes
accurately in all material respects.
2.21 Arbitration. Each employee of the Company has agreed in writing
-----------
that all disputes that arise under the terms of the Proprietary Information and
Inventions Agreement, the Restricted Stock Purchase Agreement(s) or the
Employment Agreement entered into between each employee and the Company shall be
resolved through final and binding arbitration.
3. Representations and Warranties of the Investor. The Investor
----------------------------------------------
hereby represents and warrants that:
3.1 Authorization. Such Investor has full power and authority to
-------------
enter into this Agreement, the Investors' Rights Agreement and the Co-Sale
Agreement, and each such agreement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the
7.
<PAGE>
Series B Preferred Stock to be received by such Investor and the Common Stock
issuable upon conversion thereof (collectively, the "Securities") will be
acquired for investment for such Investor's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that such Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, such Investor further represents that such Investor does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Securities.
3.3 Disclosure of Information. Such Investor believes it has received
-------------------------
all the information it considers necessary or appropriate for deciding whether
to purchase the Series B Preferred Stock. Such Investor further represents that
it has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Series B Preferred
Stock and the business, properties, prospects and financial condition of the
Company. The foregoing, however, does not limit or modify the representations
and warranties of the Company in Section 2 of this Agreement or the right of the
Investor to rely thereon.
3.4 Investment Experience. Such Investor is an investor in securities
---------------------
of companies in the development stage and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment, and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Series B Preferred Stock. If other
than an individual, Investor also represents it has not been organized for the
purpose of acquiring the Series B Preferred Stock.
3.5 Accredited Investor. Such Investor is an "accredited investor"
-------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 Restricted Securities. Such Investor understands that the
---------------------
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, such
Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
3.7 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Investors'
8.
<PAGE>
Rights Agreement provided and to the extent this Section 3 and such agreement
are then applicable; and:
(a) There is then in effect a Registration Statement under the Act
coveting such proposed disposition and such disposition is made in accordance
with such Registration Statement; or
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above,
no such registration statement or opinion of counsel shall be necessary for a
transfer by an Investor that is a partnership to a partner of such partnership
or a retired partner of such partnership who retires after the date hereof, or
to the estate of any such partner or retired partner or the transfer by gift,
will or intestate succession of any partner to his or her spouse or to the
siblings, lineal descendants or ancestors of such partner or his or her spouse,
if the transferee agrees in writing to be subject to the terms hereof to the
same extent as if he or she were an original Investor hereunder.
3.8 Legends. It is understood that the certificates evidencing the
-------
Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the Securities
Act of 1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel satisfactory to the
Company that such registration is not required or unless sold pursuant to Rule
144 of such Act."
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code.
4. California Commissioner of Corporations.
----------------------------------------
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE THE
------------------------
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT
9.
<PAGE>
OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
5. Conditions of Investor's Obligations at Closing. The obligations
-----------------------------------------------
of the Investor under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 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 date of such Closing.
5.2 Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
5.3 Compliance Certificate. The President of the Company shall
----------------------
deliver to the Investor at the Closing a certificate stating that the conditions
specified in Sections 5.1 and 5.2 have been fulfilled and stating that there
shall have been no adverse change in the business, affairs, operations,
properties, assets or condition of the Company since the date of the Business
Plan.
5.4 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
5.5 Proceedings and Documents. All corporate and other proceedings in
-------------------------
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Investor's special counsel, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
5.6 Bylaws. The Bylaws of the Company shall provide that the Board of
------
Directors of the Company shall consist of not less than five (5) or more than
seven (7) persons, which number shall not be changed by an amendment to the
Restated Articles ' or the Bylaws without the consent of a majority of the
Series A Preferred Stock and Series B Preferred Stock then outstanding.
10.
<PAGE>
5.7 Opinion of Company Counsel. The Investor shall have received from
--------------------------
Brobeck, Phleger & Harrison, counsel for the Company, an opinion, dated as of
the Closing, in the form attached hereto as Exhibit D.
---------
5.8 Investors' Rights Agreement. The Company, the Investor and each
---------------------------
of the holders of Series A Preferred Stock shall have entered into the
Investors' Rights Agreement in the form attached hereto as Exhibit B.
---------
5.9 Co-Sale Agreement. Bryan D. Stolle, Matthias F. Moran, Joseph
-----------------
Fazio, and Carlos Camacho shall each have entered into a Co-Sale Agreement in
the form attached hereto as Exhibit E.
---------
6. Conditions of the Company's Obligations at Closing. The
--------------------------------------------------
obligations of the Company to the Investor under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
the Investor, the waiver of which shall not be effective against the Company
unless in writing and signed on behalf of the Company:
6.1 Representations and Warranties. The representations and
------------------------------
warranties of the Investor contained in Section 3 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.
6.2 Payment of Purchase Price. The Investor shall have delivered the
-------------------------
purchase price specified in Section 1.2.
6.3 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
7. Miscellaneous.
-------------
7.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any
11.
<PAGE>
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
7.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
7.7 Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finders' fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless the Investor from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.8 Expenses. Irrespective of whether the Closing is effected, the
--------
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Closing is effected, the Company shall, at the Closing, reimburse the reasonable
fees of special counsel for the Investor, not to exceed $5,000, and shall, upon
receipt of a bill therefor, reimburse the reasonable out of pocket expenses of
such counsel. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the Investors' Rights Agreement, the Co-
Sale Agreement or the Restated Articles, the prevailing party shall
12.
<PAGE>
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
7.9 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issued or issuable upon conversion of the Series
B Preferred Stock. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the
Company.
7.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.11 Aggregation of Stock. All shares of the Preferred Stock held or
--------------------
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
7.12 Entire Agreement. This Agreement and the documents referred to
----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
13.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AGILE SOFTWARE CORPORATION
By: /s/ Bryan D. Stolle
-----------------------------------------
Bryan D. Stolle
President and Chief Executive Officer
Address: 2 North First Street
San Jose, California 95125
INVESTOR:
MOHR, DAVIDOW VENTURES IV, LP.,
a Delaware limited partnership
By: Fourth MDV Partners, a
Delaware limited liability company
Its General Partner
By: /s/
------------------------------------
Nancy J. Schoendorf, Member
Address: 3000 Sand Hill Road
Building 1, Suite 240
Menlo Park, California 94025
SIGNATURE PAGE TO
PREFERRED STOCK PURCHASE AGREEMENT
<PAGE>
EXHIBIT 10.11
SERIES C PREFERRED
STOCK PURCHASE AGREEMENT
------------------------
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 16th day of January, 1996, by and among Agile Software
Corporation, a California corporation (the "Company") and the investors listed
on Schedule A hereto (the "Investors" or, individually, an "Investor").
----------
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
--------------------------
1.1 Sale and Issuance of Series C Preferred Stock.
---------------------------------------------
(a) The Company shall adopt and file with the Secretary of State of
California on or before the Closing (as defined below) the Third Amended and
Restated Articles of Incorporation in the form attached hereto as Exhibit A (the
---------
"Restated Articles").
(b) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally, to purchase at the Closing and the Company agrees to
sell and issue to each Investor at the Closing that number of shares of the
Company's Series C Preferred Stock (the "Series C Preferred Stock") set forth
opposite each Investor's name on Schedule A hereto for the purchase price set
----------
forth thereon.
1.2 Closing. The purchase and sale of the Series C Preferred Stock
-------
shall take place at the offices of Brobeck, Phleger & Harrison, Two Embarcadero
Place, 2200 Geng Road, Palo Alto, California, at 2:00 P.M., on January 16, 1996,
or at such other time and place as the Company and the Investors mutually agree
upon orally or in writing (which time and place are designated as the
"Closing"). At the Closing, the Company shall deliver to each Investor a
certificate representing the number of shares of Series C Preferred Stock that
each such Investor is purchasing against payment of the purchase price therefor
by check or wire transfer to an account specified by the Company.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the Investors that, except as set forth on a Schedule
of Exceptions (the "Schedule of Exceptions") furnished the Investors and special
counsel for the Investors, specifically identifying the relevant subparagraph
hereof, which exceptions shall be deemed to be representations and warranties as
if made hereunder:
<PAGE>
2.1 Organization, Good Standing and Qualification. The Company 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. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on its business or properties.
2.2 Capitalization and Voting Rights. The authorized capital of the
--------------------------------
Company consists of or will consist of prior to the Closing:
(i) Preferred Stock. 12,500,000 shares of Preferred Stock (the
---------------
"Preferred Stock"), of which 1,500,000 shares have been designated Series A
Preferred Stock (the "Series A Preferred Stock"), 1,232,500 of which are issued
and outstanding, of which 3,000,000 have been designated Series B Preferred
Stock (the "Series B Preferred Stock"), 2,937,995 of which are issued and
outstanding, of which 4,000,000 have been designated Series C Preferred Stock
(the "Series C Preferred Stock"), 3,500,000 of which will be sold pursuant to
this Agreement and of which 4,000,000 shares have been designated Series C1
Preferred Stock (the "Series C1 Preferred Stock"), none of which are issued and
outstanding. The respective rights, privileges and preferences of the Series A,
Series B, Series C and Series C1 Preferred Stock will be as stated in the
Company's Restated Articles.
(ii) Common Stock. 25,000,000 shares of common stock ("Common
------------
Stock"), of which 2,072,025 shares are issued and outstanding.
(iii) The outstanding shares of Series A and Series B Preferred
Stock and of Common Stock are owned by the shareholders in the numbers specified
in Exhibit C hereto.
---------
(iv) The outstanding shares of Series A and Series B Preferred
Stock and of Common Stock are all duly and validly authorized and issued, fully
paid and nonassessable, and were issued in accordance with the registration or
qualification provisions of the Securities Act of 1933, as amended (the "Act")
and any relevant state securities laws or pursuant to valid exemptions
therefrom.
(v) Except for (A) the conversion privileges of the Series A,
Series B, Series C and Series C1 Preferred Stock, (B) the rights provided in
Section 2 of the Second Amended and Restated Investors' Rights Agreement (the
"Investors' Rights Agreement"), the form of which is attached hereto as Exhibit
-------
B, (C) a warrant to purchase 41,111 shares of Series B Preferred Stock and (D)
- -
currently outstanding options to purchase 302,500 shares of Common Stock granted
to certain officers, directors and/or advisors of the Company pursuant to the
1995 Stock Option Plan (the "Option Plan"), there are not outstanding any
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of
2.
<PAGE>
any shares of its capital stock. The Company has reserved 4,000,000 shares of
Series C and Series C1 Preferred Stock for issuance hereunder and 12,500,000
shares of Common Stock for issuance upon conversion of the Series A, Series B,
Series C and Series C1 Preferred Stock. In addition to the aforementioned
options, the Company has reserved an additional 1,222,500 shares of its Common
Stock for issuance upon exercise of options to be granted in the future under
the Option Plan. The Company is not a party or subject to any agreement or
understanding, and, to the best of the Company's knowledge, there is no
agreement or understanding between any persons and/or entities, which affects or
relates to the voting or giving of written consents with respect to any security
or by a director of the Company.
2.3 Subsidiaries. The Company does not presently own or control,
------------
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
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 Investors' Rights Agreement and
the Amended and Restated Co-Sale Agreement (the "Co-Sale Agreement"), the form
of which is attached hereto as Exhibit F the performance of all obligations of
---------
the Company hereunder and thereunder, and the authorization, issuance (or
reservation for issuance), sale and delivery of the Series C Preferred Stock
being sold hereunder and the Common Stock issuable upon conversion of the Series
C Preferred Stock has been taken or will be taken prior to the Closing, and this
Agreement, the Investors' Rights Agreement and the Co-Sale Agreement constitute
valid and legally binding obligations of the Company, enforceable in accordance
with their respective terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
contained in the Investors' Rights Agreement may be limited by applicable
federal or state securities laws.
2.5 Valid Issuance of Preferred and Common Stock.
--------------------------------------------
The Series C Preferred Stock that is being purchased by the Investors
hereunder, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly and validly
issued, fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement and the
Investors' Rights Agreement and under applicable state and federal securities
laws. The Common Stock issuable upon conversion of the Series C Preferred Stock
purchased under this Agreement has been duly and validly reserved for issuance
and, upon issuance in accordance with the terms of the Restated Articles, will
be duly and validly issued, fully paid, and nonassessable and
3.
<PAGE>
will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and the Investors' Rights Agreement and under applicable
state and federal securities laws.
2.6 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, the Investors' Rights Agreement or the Co-Sale
Agreement, except for the filing pursuant to Section 25102(f) of the California
Corporate Securities Law of 1968, as amended, and the rules thereunder, which
filing will be effected within fifteen (15) days of the sale of the Series C
Preferred Stock hereunder.
2.7 Litigation. There is no action, suit, proceeding or
----------
investigation pending or currently threatened against the Company that questions
the validity of this Agreement, the Investors' Rights Agreement or the Co-Sale
Agreement, or the right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company. The
foregoing includes, without limitation, actions, suits, proceedings or
investigations, pending or threatened, 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 or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.8 Proprietary Information and Inventions Agreement. Each employee,
------------------------------------------------
officer and consultant of the Company has executed a Proprietary Information and
Inventions Agreement in the form provided to special counsel to the Investors.
The Company, after reasonable investigation, is not aware that any of its
employees, officers or consultants are in violation thereof, and the Company
will use its best efforts to prevent any such violation.
2.9 Patents and Trademarks. To the best of its knowledge (but
----------------------
without having conducted any special investigation or patent search), the
Company has sufficient title to and ownership of all patents, trademarks,
service marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes necessary for its business as now conducted and as proposed
to be conducted without any conflict with or infringement of the rights of
others. 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,
4.
<PAGE>
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity.
2.10 Compliance with Other Instruments. The Company is not in
---------------------------------
violation or default in any material respect of any provision of its Restated
Articles or Bylaws, or in any material respect of any instrument, judgment,
order, writ, decree or contract to which it is a party or by which it is bound,
or, to the best of its knowledge, of any provision of any federal or state
statute, rule or regulation applicable to the Company. The execution, delivery
and performance of this Agreement, the Investors' Rights Agreement and the Co-
Sale Agreement, and the consummation of the transactions contemplated hereby and
thereby 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 that results in the creation of any lien, charge or
encumbrance upon any 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.
2.11 Agreements: Action.
------------------
(a) Except for agreements explicitly contemplated hereby, by the
Investors' Rights Agreement and the Co-Sale Agreement, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or by which it is bound that may involve (i) obligations
(contingent or otherwise) of, or payments to the Company in excess of, $10,000,
(ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company, or (iii) provisions restricting or affecting the
development, manufacture or distribution of the Company's products or services.
(c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $20,000 or, in the case of
indebtedness and/or liabilities individually less than $20,000, in excess of
$50,000 in the aggregate, (iii) except with respect to the purchase of shares of
stock of the Company by employees, officers or directors, made any loans or
advances to any person, other than ordinary advances for travel expenses or (iv)
sold, exchanged or otherwise disposed of any of its assets or rights, other than
the sale of its inventory in the ordinary course of business.
5.
<PAGE>
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
2.12 Related-Party Transactions. Except with respect to the purchase
--------------------------
of shares of stock of the Company, no employee, officer, or director of the
Company or member of his or her immediate family is indebted to the Company, nor
is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the best of the Company's knowledge, none of said
founders, officers or directors, or any members of their immediate families, has
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,
or any firm or corporation which competes with the Company, except that Bryan
Stolle owns 400 shares and Matthias Moran owns 3,000 shares of the common stock
of Sherpa Corporation, and employees, officers and directors of the Company may
own stock in publicly traded companies that may compete with the Company. To the
best of the Company's knowledge, no employee, officer or director or any member
of their immediate families, is, directly or indirectly, interested in any
material contract with the Company other than as a shareholder in the Company.
The Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
2.13 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 materially and adversely affect the
business, properties, prospects, or financial condition of 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.
2.14 Disclosure. The Company has fully provided the Investors with
----------
all the information that the Investors have requested for deciding whether to
purchase the Series C Preferred Stock. To the best of its knowledge, neither
this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, nor any
other statements or certificates made or delivered in connection herewith or
therewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
2.15 Registration Rights. Except as provided in the Investors'
-------------------
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
6.
<PAGE>
2.16 Corporate Documents. Except for amendments necessary to satisfy
-------------------
representations and warranties or conditions contained herein (the form of which
amendments has been approved by the Investors), the Restated Articles and the
Bylaws of the Company are in the form previously provided to special counsel for
the Investors.
2.17 Section 83(b) Elections. To the best of the Company's
-----------------------
knowledge, all individuals who have purchased shares of the Company's Common
Stock have timely filed elections under Section 83(b) of the Internal Revenue
Code of 1986, as amended, and any analogous provisions of applicable state tax
laws.
2.18 Employees. To the best of the Company's knowledge, no employee
---------
or consultant of the Company is in violation of any term of any employment,
employment contract, patent disclosure agreement or any other contract or
agreement relating to the relationship of any such person with the Company or
any other party because of the nature of the business conducted or to be
conducted by the Company. The Company does not have any collective bargaining
agreements covering any of its employees. Except for the Option Plan, the
Company has no employee benefit plans presently in force with respect to profit-
sharing, pensions, stock options or other stock benefits. 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.
2.19 Offering. Subject to the accuracy of the Investors'
--------
representations in Section 3 of this Agreement and in written responses to the
Company's inquiries, the offer, sale and issuance of the Series C Preferred
Stock to be issued in conformity with the terms of this Agreement and the
issuance of the Common Stock to be issued upon conversion of the Series C
Preferred Stock constitute transactions exempt from the registration
requirements of Section 5 of the Act.
2.20 Corporate Records. The minute books of the Company made
-----------------
available to the Investors contain a complete summary of all meetings or actions
by written consent of directors and shareholders since the time of incorporation
of the Company and reflect all transactions referred to in such minutes
accurately in all material respects.
2.21 Arbitration. Each employee of the Company has agreed in writing
-----------
that all disputes that arise under the terms of the Proprietary Information and
Inventions Agreement, the Restricted Stock Purchase Agreement(s) or the
Employment Agreement entered into between each employee and the Company shall be
resolved through final and binding arbitration.
3. Representations and Warranties of the Investors. Each Investor
-----------------------------------------------
hereby represents and warrants that:
7.
<PAGE>
3.1 Authorization. The Investor has full power and authority to
-------------
enter into this Agreement, the Investors' Rights Agreement and the Co-Sale
Agreement, and each such agreement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series C Preferred Stock to be received by such Investor and
the Common Stock issuable upon conversion thereof (collectively, the
"Securities") will be acquired for investment for such Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, such Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Securities.
3.3 Disclosure of Information. Such Investor believes it has
-------------------------
received all the information it considers necessary or appropriate for deciding
whether to purchase the Series C Preferred Stock. Such Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Series C Preferred Stock and the business, properties, prospects and financial
condition of the Company. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of each Investor to rely thereon.
3.4 Investment Experience. Such Investor is an investor in
---------------------
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series C
Preferred Stock. If other than an individual, such Investor also represents it
has not been organized for the purpose of acquiring the Series C Preferred
Stock.
3.5 Accredited Investor. Such Investor is an "accredited investor"
-------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 Restricted Securities. Such Investor understands that the
---------------------
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such
8.
<PAGE>
securities may be resold without registration under the Act, only in certain
limited circumstances. In this connection, such Investor represents that it is
familiar with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
3.7 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Investors' Rights Agreement provided and to the extent
this Section 3 and such agreement are then applicable; and:
(a) There is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such Registration Statement; or
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above,
no such registration statement or opinion of counsel shall be necessary for a
transfer by an Investor that is a partnership to a partner of such partnership
or a retired partner of such partnership who retires after the date hereof, or
to the estate of any such partner or retired partner or the transfer by gift,
will or intestate succession of any partner to his or her spouse or to the
siblings, lineal descendants or ancestors of such partner or his or her spouse,
if the transferee agrees in writing to be subject to the terms hereof to the
same extent as if he or she were an original Investor hereunder.
3.8 Legends. It is understood that the certificates evidencing the
-------
Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the Securities
Act of 1933, as amended. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel satisfactory to the
Company that such registration is not required or unless sold pursuant to Rule
144 of such Act."
9.
<PAGE>
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code.
4. California Commissioner of Corporations.
---------------------------------------
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE
------------------------
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
5. Conditions of Investors' Obligations at Closing.
-----------------------------------------------
The obligations of the Investors under subsection 1.1(b) of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 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 date of such Closing.
5.2 Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
5.3 Compliance Certificate. The President of the Company shall
----------------------
deliver to the Investors at the Closing a certificate stating that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating
that there shall have been no adverse change in the business, affairs,
operations, properties, assets or condition of the Company since the date of
this Agreement.
5.4 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
5.5 Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents
10.
<PAGE>
incident thereto shall be reasonably satisfactory in form and substance to
Investors' special counsel, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
5.6 Opinion of Company Counsel. The Investors shall have received
--------------------------
from Brobeck, Phleger & Harrison, counsel for the Company, an opinion, dated as
of the Closing, in the form attached hereto as Exhibit D.
---------
5.7 Investors' Rights Agreement. The Company, each Investor and a
---------------------------
majority of the holders of the Series A and Series B Preferred Stock, taken
together as a whole and not as separate series, shall have entered into the
Investors' Rights Agreement in the form attached hereto as Exhibit B.
5.8 Co-Sale Agreement. Each of the Founders (as defined in the Co-
-----------------
Sale Agreement) and the Investors shall have entered into the Co-Sale Agreement.
5.9 Board of Directors. As of the Closing, the Company's Board of
------------------
Directors shall consist of Cheryl Breetwor, Mike Moritz, Nancy Schoendorf, Tom
Shanahan and Bryan Stolle.
6. Condition of the Company's Obligations at Closing. The
-------------------------------------------------
obligations of the Company to the Investors under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
the Investors, the waiver of which shall not be effective against the Company
unless in writing and signed on behalf of the Company:
6.1 Representations and Warranties. The representations and
------------------------------
warranties of each Investor contained in Section 3 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.
6.2 Payment of Purchase Price. Each Investor shall have delivered
-------------------------
the purchase price specified in Section 1.1(b).
6.3 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6.4 Waivers of Right of First Offer. Each Major Investor (as
-------------------------------
defined in the Investors' Rights Agreement) shall have waived the right of first
offer granted to such Investor pursuant to the Amended and Restated Investors'
Rights Agreement dated June 2, 1995.
11.
<PAGE>
7. Miscellaneous.
-------------
7.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and each Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of such Investor or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein,
----------------------
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and
-------------
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
7.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
7.7 Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finders' fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees or representatives is responsible.
12.
<PAGE>
The Company agrees to indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.8 Expenses. Irrespective of whether the Closing is effected, the
--------
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Closing is effected, the Company shall, at the Closing, reimburse the reasonable
fees and, upon receipt of a bill therefor, out-of-pocket expenses of special
counsel for the Investor, not to exceed $5,000. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
Investors' Rights Agreement, the Co-Sale Agreement or the Restated Articles, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.9 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issued or issuable upon conversion of the Series
C Preferred Stock. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the
Company.
7.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.11 Aggregation of Stock. All shares of the Preferred Stock held or
--------------------
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
7.12 Entire Agreement. This Agreement and the documents referred to
----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants, except as specifically set forth herein or
therein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
13.
<PAGE>
the date first above written.
AGILE SOFTWARE CORPORATION
By: /s/ Bryan D. Stolle
---------------------------------------
Bryan D. Stolle
President and Chief Executive Officer
Address: 2 North First Street
San Jose, California 95125
INVESTORS:
SEQUOIA CAPITAL VI
SEQUOIA TECHNOLOGY PARTNERS VI
SEQUOIA 1995
By:____________________________________
, General Partner
Address: 3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
[SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]
<PAGE>
EXHIBIT 10.12
SERIES D PREFERRED
STOCK PURCHASE AGREEMENT
------------------------
THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 6th day of February, 1997, by and among Agile Software
Corporation, a California corporation (the "Company") and the investors listed
on Schedule A hereto (the "Investors" or, individually, an "Investor").
----------
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
--------------------------
1.1 Sale and Issuance of Series D Preferred Stock.
---------------------------------------------
(a) The Company shall adopt and file with the Secretary of State of
California on or before the Closing (as defined below) the Fourth Amended and
Restated Articles of Incorporation in the form attached hereto as Exhibit A (the
---------
"Restated Articles").
(b) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally, to purchase at the Closing and the Company agrees to
sell and issue to each Investor at the Closing that number of shares of the
Company's Series D Preferred Stock (the "Series D Preferred Stock") set forth
opposite each Investor's name on Schedule A hereto for the purchase price set
----------
forth thereon.
1.2 Closing. The purchase and sale of the Series D Preferred Stock
-------
shall take place at the offices of Brobeck, Phleger & Harrison LLP, Two
Embarcadero Place, 2200 Geng Road, Palo Alto, California, at 1:00P.M., on
February 6, 1997, or at such other time and place as the Company and the
Investors mutually agree upon orally or in writing (which time and place are
designated as the "Closing"). At the Closing, the Company shall deliver to each
Investor a certificate representing the number of shares of Series D Preferred
Stock that each such Investor is purchasing against payment of the purchase
price therefor by check or wire transfer to an account specified by the Company.
2. Representations and Warranties of the Company. The Company
---------------------------------------------
hereby represents and warrants to the Investors that, except as set forth on a
Schedule of Exceptions (the "Schedule of Exceptions") furnished the Investors
and special counsel for the Investors, specifically identifying the relevant
subparagraph hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company 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
<PAGE>
conducted and as proposed to be conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its business or
properties.
2.2 Capitalization and Voting Rights. The authorized capital of the
--------------------------------
Company consists of or will consist of prior to the Closing:
(i) Preferred Stock. 15,500,000 shares of Preferred Stock (the
---------------
"Preferred Stock"), of which 1,500,000 shares have been designated Series A
Preferred Stock (the "Series A Preferred Stock"), 1,232,500 of which are issued
and outstanding, of which 3,000,000 have been designated Series B Preferred
Stock (the "Series B Preferred Stock"), 2,937,995 of which are issued and
outstanding, of which 4,000,000 have been designated Series C Preferred Stock
(the "Series C Preferred Stock"), 3,575,000 of which are issued and outstanding,
of which 4,000,000 shares have been designated Series C1 Preferred Stock (the
"Series C1 Preferred Stock"), none of which are issued and outstanding, of which
1,500,000 have been designated Series D Preferred Stock (the "Series D Preferred
Stock"), none of which are issued and outstanding and 1,350,000 of which will be
sold pursuant to this Agreement, and of which 1,500,000 shares have been
designated Series D1 Preferred Stock (the "Series D1 Preferred Stock"), none of
which are issued and oustanding. The respective rights, privileges and
preferences of the Series A, Series B, Series C, Series C1, Series D and Series
D1 Preferred Stock will be as stated in the Company's Restated Articles.
(ii) Common Stock. 25,000,000 shares of common stock ("Common
------------
Stock"), of which 2,853,775 shares are issued and outstanding.
(iii) The outstanding shares of Series A, Series B and Series C
Preferred Stock and of Common Stock are owned by the shareholders in the numbers
specified in Exhibit C hereto.
---------
(iv) The outstanding shares of Series A, Series B and Series C
Preferred Stock and of Common Stock are all duly and validly authorized and
issued, fully paid and nonassessable, and were issued in accordance with the
registration or qualification provisions of the Securities Act of 1933, as
amended (the "Securities Act") and any relevant state securities laws or
pursuant to valid exemptions therefrom.
(v) Except for (A) the conversion privileges of the Series A,
Series B, Series C, Series C1, Series D and Series D1 Preferred Stock, (B) the
rights provided in Section 2 of the Third Amended and Restated Investors' Rights
Agreement (the "Investors' Rights Agreement"), the form of which is attached
hereto as Exhibit B, (C) a warrant to purchase 41,111 shares of Series B
---------
Preferred Stock, (D) a warrant to purchase 35,312 shares of Series C Preferred
Stock, and (E) currently outstanding options to purchase 55,500 shares of Common
Stock granted to certain officers, directors and/or advisors of the Company
pursuant to the 1995 Stock Option Plan (the "Option Plan"), there are not
outstanding any options, warrants, rights (including conversion or preemptive
rights or rights of first refusal) or
2.
<PAGE>
agreements for the purchase or acquisition from the Company of any shares of its
capital stock. The Company has reserved 1,500,000 shares of Series D Preferred
Stock for issuance hereunder and 15,500,000 shares of Common Stock for issuance
upon conversion of the Series A, Series B, Series C, Series C1, Series D and
Series D1 Preferred Stock. In addition to the aforementioned options, the
Company has reserved an additional 627,750 shares of its Common Stock for
issuance upon exercise of options to be granted in the future under the Option
Plan. The Company is not a party or subject to any agreement or understanding,
and, to the best of the Company's knowledge, there is no agreement or
understanding between any persons and/or entities, which affects or relates to
the voting or giving of written consents with respect to any security or by a
director of the Company.
2.3 Subsidiaries. The Company does not presently own or control,
------------
directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.
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 Investors' Rights Agreement and
the Second Amended and Restated Co-Sale Agreement (the "Co-Sale Agreement"), the
form of which is attached hereto as Exhibit F, the performance of all
---------
obligations of the Company hereunder and thereunder, and the authorization,
issuance (or reservation for issuance), sale and delivery of the Series D
Preferred Stock being sold hereunder and the Common Stock issuable upon
conversion of the Series D Preferred Stock has been taken or will be taken prior
to the Closing, and this Agreement, the Investors' Rights Agreement and the Co-
Sale Agreement constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except (i)as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Investors' Rights Agreement may be
limited by applicable federal or state securities laws.
2.5 Valid Issuance of Preferred and Common Stock.
--------------------------------------------
The Series D Preferred Stock that is being purchased by the Investors
hereunder, when issued, sold and delivered in accordance with the terms of this
Agreement for the consideration expressed herein, will be duly and validly
issued, fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement and the
Investors' Rights Agreement and under applicable state and federal securities
laws. The Common Stock issuable upon conversion of the Series D Preferred Stock
purchased under this Agreement has been duly and validly reserved for issuance
and, upon issuance in accordance with the terms of the Restated Articles, will
be duly and validly issued, fully paid, and nonassessable and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement and the Investors' Rights Agreement and under applicable state and
federal securities laws.
3.
<PAGE>
2.6 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, the Investors' Rights Agreement or the Co-Sale
Agreement, except for the filing pursuant to Section 25102(f) of the California
Corporate Securities Law of 1968, as amended, and the rules thereunder, which
filing will be effected within fifteen (15) days of the sale of the Series D
Preferred Stock hereunder.
2.7 Litigation. There is no action, suit, proceeding or
----------
investigation pending or currently threatened against the Company that questions
the validity of this Agreement, the Investors' Rights Agreement or the Co-Sale
Agreement, or the right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company. The
foregoing includes, without limitation, actions, suits, proceedings or
investigations, pending or threatened, 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 or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.8 Proprietary Information and Inventions Agreement. Each employee,
------------------------------------------------
officer and consultant of the Company has executed a Proprietary Information and
Inventions Agreement in the form provided to special counsel to the Investors.
The Company, after reasonable investigation, is not aware that any of its
employees, officers or consultants are in violation thereof, and the Company
will use its best efforts to prevent any such violation.
2.9 Patents and Trademarks. To the best of its knowledge (but
----------------------
without having conducted any special investigation or patent search), the
Company has sufficient title to and ownership of all patents, trademarks,
service marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes necessary for its business as now conducted and as proposed
to be conducted without any conflict with or infringement of the rights of
others. 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 and processes of any other person or entity.
2.10 Compliance with Other Instruments. The Company is not in
---------------------------------
violation or default in any material respect of any provision of its Restated
Articles or Bylaws, or in any material respect of any instrument, judgment,
order, writ, decree or contract to which it is a party or by which it is bound,
or, to the best of its knowledge, of any provision of any federal or state
statute, rule or regulation applicable to the Company. The execution, delivery
and
4.
<PAGE>
performance of this Agreement, the Investors' Rights Agreement and the Co-Sale
Agreement, and the consummation of the transactions contemplated hereby and
thereby 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 that results in the creation of any lien, charge or
encumbrance upon any 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.
2.11 Agreements; Action.
------------------
(a) Except for agreements explicitly contemplated hereby, by the
Investors' Rights Agreement and the Co-Sale Agreement, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or by which it is bound that may involve (i) obligations (contingent
or otherwise) of, or payments to the Company in excess of, $10,000, (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company, or (iii)provisions restricting or affecting the development,
manufacture or distribution of the Company's products or services.
(c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $20,000 or, in the case of
indebtedness and/or liabilities individually less than $20,000, in excess of
$50,000 in the aggregate, (iii) except with respect to the purchase of shares of
stock of the Company by employees, officers or directors, made any loans or
advances to any person, other than ordinary advances for travel expenses or (iv)
sold, exchanged or otherwise disposed of any of its assets or rights, other than
the sale of its inventory in the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
2.12 Related-Party Transactions. Except with respect to the purchase
--------------------------
of shares of stock of the Company, no employee, officer, or director of the
Company or member of his or her immediate family is indebted to the Company, nor
is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the best of the Company's knowledge, none of said
founders, officers or directors, or any members of their immediate families, has
any direct or indirect ownership interest in any firm or corporation with
5.
<PAGE>
which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation which competes with the Company, except
that Bryan Stolle owns 400 shares and Matthias Moran owns 3,000 shares of the
common stock of Sherpa Corporation, and employees, officers and directors of the
Company may own stock in publicly traded companies that may compete with the
Company. To the best of the Company's knowledge, no employee, officer or
director or any member of their immediate families, is, directly or indirectly,
interested in any material contract with the Company other than as a shareholder
in the Company. The Company is not a guarantor or indemnitor of any indebtedness
of any other person, firm or corporation.
2.13 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 materially and adversely affect the
business, properties, prospects, or financial condition of 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.
2.14 Disclosure. The Company has fully provided the Investors with
----------
all the information that the Investors have requested for deciding whether to
purchase the Series D Preferred Stock. To the best of its knowledge, neither
this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement, nor any
other statements or certificates made or delivered in connection herewith or
therewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
2.15 Registration Rights. Except as provided in the Investors' Rights
-------------------
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
2.16 Corporate Documents. Except for amendments necessary to satisfy
-------------------
representations and warranties or conditions contained herein (the form of which
amendments has been approved by the Investors), the Restated Articles and the
Bylaws of the Company are in the form previously provided to special counsel for
the Investors.
2.17 Section 83(b) Elections. To the best of the Company's knowledge,
-----------------------
all individuals who have purchased shares of the Company's Common Stock have
timely filed elections under Section 83(b) of the Internal Revenue Code of 1986,
as amended, and any analogous provisions of applicable state tax laws.
2.18 Employees. To the best of the Company's knowledge, no employee
---------
or consultant of the Company is in violation of any term of any employment,
employment contract, patent disclosure agreement or any other contract or
agreement relating to the relationship of any such person with the Company or
any other party because of the nature of the business conducted or to be
conducted by the Company. The Company does not have any collective
6.
<PAGE>
bargaining agreements covering any of its employees. Except for the Option Plan,
the Company has no employee benefit plans presently in force with respect to
profit-sharing, pensions, stock options or other stock benefits. 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.
2.19 Offering. Subject to the accuracy of the Investors'
--------
representations in Section 3 of this Agreement and in written responses to the
Company's inquiries, the offer, sale and issuance of the Series D Preferred
Stock to be issued in conformity with the terms of this Agreement and the
issuance of the Common Stock to be issued upon conversion of the Series D
Preferred Stock constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act.
2.20 Corporate Records. The minute books of the Company made
-----------------
available to the Investors contain a complete summary of all meetings or actions
by written consent of directors and shareholders since the time of incorporation
of the Company and reflect all transactions referred to in such minutes
accurately in all material respects.
2.21 Arbitration. Each employee of the Company has agreed in writing
-----------
that all disputes that arise under the terms of the Proprietary Information and
Inventions Agreement, the Restricted Stock Purchase Agreement(s) or the
Employment Agreement entered into between each employee and the Company shall be
resolved through final and binding arbitration.
3. Representations and Warranties of the Investors. Each Investor
-----------------------------------------------
hereby represents and warrants that:
3.1 Authorization. The Investor has full power and authority to
-------------
enter into this Agreement, the Investors' Rights Agreement and the Co-Sale
Agreement, and each such agreement constitutes its valid and legally binding
obligation, enforceable against such Investor in accordance with its terms.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series D Preferred Stock to be received by such Investor and
the Common Stock issuable upon conversion thereof (collectively, the
"Securities") will be acquired for investment for such Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, such Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Securities.
3.3 Disclosure of Information. Such Investor believes it has
-------------------------
received all the information it considers necessary or appropriate for deciding
whether to purchase the Series D
7.
<PAGE>
Preferred Stock. Such Investor further represents that it has had an opportunity
to ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Series D Preferred Stock and the business,
properties, prospects and financial condition of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 2 of this Agreement or the right of each Investor to rely
thereon.
3.4 Investment Experience. Such Investor is an investor in
---------------------
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series D
Preferred Stock. If other than an individual, such Investor also represents it
has not been organized for the purpose of acquiring the Series D Preferred
Stock.
3.5 Accredited Investor. Such Investor is an "accredited investor"
-------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 Restricted Securities. Such Investor understands that the
---------------------
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act, only in certain limited circumstances. In this connection,
such Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
3.7 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Investors' Rights Agreement provided and to the extent
this Section 3 and such agreement are then applicable; and:
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
8.
<PAGE>
(c) Notwithstanding the provisions of paragraphs (a) and (b) above,
no such registration statement or opinion of counsel shall be necessary for a
transfer by an Investor that is a partnership to a partner of such partnership
or a retired partner of such partnership who retires after the date hereof, or
to the estate of any such partner or retired partner or the transfer by gift,
will or intestate succession of any partner to his or her spouse or to the
siblings, lineal descendants or ancestors of such partner or his or her spouse,
if the transferee agrees in writing to be subject to the terms hereof to the
same extent as if he or she were an original Investor hereunder.
3.8 Legends. It is understood that the certificates evidencing the
-------
Securities may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT."
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code.
4. California Commissioner of Corporations.
----------------------------------------
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE
------------------------
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
5. Conditions of Investors' Obligations at Closing. The obligations
-----------------------------------------------
of the Investors under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 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 date of such Closing.
9.
<PAGE>
5.2 Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
5.3 Compliance Certificate. The President of the Company shall
----------------------
deliver to the Investors at the Closing a certificate stating that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating
that there shall have been no adverse change in the business, affairs,
operations, properties, assets or condition of the Company since the date of
this Agreement.
5.4 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
5.5 Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Investors' special counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
5.6 Opinion of Company Counsel. The Investors shall have received
--------------------------
from Brobeck, Phleger & Harrison LLP, counsel for the Company, an opinion, dated
as of the Closing, in the form attached hereto as Exhibit D.
---------
5.7 Investors' Rights Agreement. The Company, each Investor and a
---------------------------
majority of the holders of the Series A, Series B and Series C Preferred Stock,
taken together as a whole and not as separate series, shall have entered into
the Investors' Rights Agreement in the form attached hereto as Exhibit B.
---------
5.8 Co-Sale Agreement. Each of the Founders (as defined in the Co-
-----------------
Sale Agreement) and the Investors shall have entered into the Co-Sale Agreement.
5.9 Board of Directors. As of the Closing, the Company's Board of
------------------
Directors shall consist of Mike Moritz, James Patterson, Nancy Schoendorf, Tom
Shanahan and Bryan Stolle.
6. Conditions of the Company's Obligations at Closing. The
--------------------------------------------------
obligations of the Company to the Investors under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
the Investors, the waiver of which shall not be effective against the Company
unless in writing and signed on behalf of the Company:
10.
<PAGE>
6.1 Representations and Warranties. The representations and
------------------------------
warranties of each Investor contained in Section 3 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.
6.2 Payment of Purchase Price. Each Investor shall have delivered
-------------------------
the purchase price specified in Section 1.1(b).
6.3 Qualifications. All authorizations, approvals, or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6.4 Waivers of Right of First Offer. Each Major Investor (as defined
-------------------------------
in the Investors' Rights Agreement shall have waived the right of first offer
granted to such Investor pursuant to the Second Amended and Restated Investors'
Rights Agreement, dated January 16, 1996.
7. Miscellaneous.
-------------
7.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and each Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of such Investor or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
7.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.
<PAGE>
7.6 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
7.7 Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finders' fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.8 Expenses. Irrespective of whether the Closing is effected, the
--------
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Closing is effected, the Company shall, at the Closing, reimburse the reasonable
fees and, upon receipt of a bill therefor, out-of-pocket expenses of special
counsel for the Investors, not to exceed $5,000. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
Investors' Rights Agreement, the Co-Sale Agreement or the Restated Articles, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.9 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issued or issuable upon conversion of the Series
D Preferred Stock. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities, and the
Company.
7.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
12.
<PAGE>
7.11 Aggregation of Stock. All shares of the Preferred Stock held or
--------------------
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
7.12 Entire Agreement. This Agreement and the documents referred to
----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants, except as specifically set forth herein or
therein.
13.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AGILE SOFTWARE CORPORATION
By: /s/ Bryan D. Stolle
----------------------------------------------
Bryan D. Stolle
President and Chief Executive Officer
Address: One Almaden Boulevard, 12th Floor
San Jose, California 95113
INVESTORS:
SEQUOIA CAPITAL VI
SEQUOIA TECHNOLOGY PARTNERS VI
SEQUOIA 1995
By: /s/
----------------------------------------------
Michael Mortiz, General Partner
MOHR, DAVIDOW VENTURES IV, L.P.
By: Fourth MDV Partners, L.L.C., General Partner
By: /s/
----------------------------------------------
Nancy Schoendorf, Member
MDV IV Entrepreneurs' Network Fund, L.P.
By: Fourth MDV Partners, L.L.C., General Partner
By: /s/
----------------------------------------------
Nancy Schoendorf, Member
[SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]
<PAGE>
EXHIBIT 10.13
SERIES E PREFERRED
STOCK PURCHASE AGREEMENT
------------------------
THIS SERIES E PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of the 14th day of November 1997, by and among Agile Software
Corporation, a California corporation (the "Company") and the investors listed
on Schedule A hereto (the "Investors" or, individually, an "Investor").
----------
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
--------------------------
1.1 Sale and Issuance of Series E Preferred Stock.
---------------------------------------------
(a) The Company shall adopt and file with the Secretary of State of
California on or before the Closing (as defined below) the Fifth Amended and
Restated Articles of Incorporation in the form attached hereto as Exhibit A (the
---------
"Restated Articles").
(b) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally, to purchase at the Closing and the Company agrees to
sell and issue to each Investor at the Closing that number of shares of the
Company's Series E Preferred Stock (the "Series E Preferred Stock") set forth
opposite each Investor's name on Schedule A hereto for the purchase price set
----------
forth thereon.
1.2 Closing. The purchase and sale of the Series E Preferred Stock
-------
shall take place at the offices of Brobeck, Phleger & Harrison LLP, Two
Embarcadero Place, 2200 Geng Road, Palo Alto, California, at 1:00 P.M., on
November 14, 1997, or at such other time and place as the Company and the
Investors mutually agree upon orally or in writing (which time and place are
designated as the "Closing"). At the Closing, the Company shall deliver to each
Investor a certificate representing the number of shares of Series E Preferred
Stock that each such Investor is purchasing against payment of the purchase
price therefor by check or wire transfer to an account specified by the Company.
2. Representations and Warranties of the Company. The Company
---------------------------------------------
hereby represents and warrants to the Investors that, except as set forth on a
Schedule of Exceptions (the "Schedule of Exceptions") furnished to the Investors
specifically identifying the relevant subparagraph hereof, which exceptions
shall be deemed to be representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company 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
<PAGE>
now conducted and as proposed to be conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its business or
properties.
2.2 Capitalization and Voting Rights. The authorized capital of the
--------------------------------
Company consists of or will consist of prior to the Closing:
(i) Preferred Stock. 17,500,000 shares of Preferred Stock (the
---------------
"Preferred Stock"), of which 1,500,000 shares have been designated Series A
Preferred Stock (the "Series A Preferred Stock"), 1,232,500 of which are issued
and outstanding, of which 3,000,000 shares have been designated Series B
Preferred Stock (the "Series B Preferred Stock"), 2,937,995 of which are issued
and outstanding, of which 4,000,000 shares have been designated Series C
Preferred Stock (the "Series C Preferred Stock"), 3,575,000 of which are issued
and outstanding, of which 4,000,000 shares have been designated Series C1
Preferred Stock (the "Series C1 Preferred Stock"), none of which are issued and
outstanding, of which 1,500,000 shares have been designated Series D Preferred
Stock (the "Series D Preferred Stock"), 1,350,000 of which are issued and
outstanding, of which 1,500,000 shares have been designated Series D1 Preferred
Stock (the "Series D1 Preferred Stock"), none of which are issued and
outstanding, of which 1,000,000 shares have been designated Series E Preferred
Stock (the "Series E Preferred Stock"), none of which are issued and outstanding
and 1,000,000 of which will be sold pursuant to this Agreement, and of which
1,000,000 shares have been designated Series E1 Preferred Stock (the "Series E1
Preferred Stock"), none of which are issued and outstanding. The respective
rights, privileges and preferences of the Series A, Series B, Series C, Series
C1, Series D, Series D1, Series E and Series E1 Preferred Stock will be as
stated in the Company's Restated Articles.
(ii) Common Stock. 25,000,000 shares of common stock ("Common
------------
Stock"), of which 3,230,275 shares are issued and outstanding.
(iii) The outstanding shares of Series A, Series B, Series C and
Series D Preferred Stock and of Common Stock are owned by the shareholders in
the numbers specified in Exhibit C hereto.
---------
(iv) The outstanding shares of Series A, Series B, Series C and
Series D Preferred Stock and of Common Stock are all duly and validly authorized
and issued, fully paid and nonassessable, and were issued in accordance with the
registration or qualification provisions of the Securities Act of 1933, as
amended (the "Securities Act") and any relevant state securities laws or
pursuant to valid exemptions therefrom.
(v) Except for (A) the conversion privileges of the Series A,
Series B, Series C, Series C1, Series D, Series D1, Series E and Series E1
Preferred Stock, (B) the rights provided in Section 2 of the Fourth Amended and
Restated Investors' Rights Agreement (the "Investors' Rights Agreement"), the
form of which is attached hereto as Exhibit B, (C) a warrant to purchase 41,111
---------
shares of Series B Preferred Stock, (D) a warrant to purchase
2.
<PAGE>
35,313 shares of Series C Preferred Stock, (E) a warrant to purchase 4,049
shares of Series D Preferred Stock and (F), currently outstanding options to
purchase 772,250 shares of Common Stock granted to certain officers, directors,
employees, consultants and/or advisors of the Company pursuant to the 1995 Stock
Option Plan (the "Option Plan"), there are not outstanding any options,
warrants, rights (including conversion or preemptive rights or rights of first
refusal) or agreements for the purchase or acquisition from the Company of any
shares of its capital stock. The Company has reserved 1,000,000 shares of Series
E Preferred Stock for issuance hereunder and 11,000,000 shares of Common Stock
for issuance upon conversion of the Series A, Series B, Series C, Series C1,
Series D, Series D1, Series E and Series E1 Preferred Stock. In addition to the
aforementioned options, the Company has reserved an additional 52,000 shares of
its Common Stock for issuance upon exercise of options to be granted in the
future under the Option Plan. The Company is not a party or subject to any
agreement or understanding, and, to the best of the Company's knowledge, there
is no agreement or understanding between any persons and/or entities, which
affects or relates to the voting or giving of written consents with respect to
any security or by a director of the Company.
2.3 Subsidiaries. The Company is the sole shareholder in Agile
------------
Software International Corporation, a Delaware corporation, incorporated on June
12, 1997. The Company does not presently own or control, directly or indirectly,
any interest in any other corporation, association, or business entity. The
Company is not a participant in any joint venture, partnership or similar
arrangement.
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 Investors' Rights Agreement and
the Third Amended and Restated Co-Sale Agreement (the "Co-Sale Agreement"), the
form of which is attached hereto as Exhibit E, the performance of all
---------
obligations of the Company hereunder and thereunder, and the authorization,
issuance (or reservation for issuance), sale and delivery of the Series E
Preferred Stock being sold hereunder and the Common Stock issuable upon
conversion of the Series E and/or Series E1 Preferred Stock has been taken or
will be taken prior to the Closing, and this Agreement, the Investors' Rights
Agreement and the Co-Sale Agreement constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) to the extent the indemnification provisions contained in the
Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
2.5 Valid Issuance of Preferred and Common Stock. The Series E
--------------------------------------------
Preferred Stock that is being purchased by the Investors hereunder, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on
3.
<PAGE>
transfer other than restrictions on transfer under this Agreement and the
Investors' Rights Agreement and under applicable state and federal securities
laws. The Common Stock issuable upon conversion of the Series E Preferred Stock
purchased under this Agreement, or issuable upon conversion of the Series E1
Preferred Stock, has been duly and validly reserved for issuance and, upon
issuance in accordance with the terms of the Restated Articles, will be duly and
validly issued, fully paid, and nonassessable and will be free of restrictions
on transfer other than restrictions on transfer under this Agreement and the
Investors' Rights Agreement and under applicable state and federal securities
laws.
2.6 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, the Investors' Rights Agreement or the Co-Sale
Agreement, except for the filing pursuant to Section 25102(f) of the California
Corporate Securities Law of 1968, as amended, and the rules thereunder, which
filing will be effected within fifteen (15) days of the sale of the Series E
Preferred Stock hereunder.
2.7 Litigation. There is no action, suit, proceeding or
----------
investigation pending or currently threatened against the Company that questions
the validity of this Agreement, the Investors' Rights Agreement or the Co-Sale
Agreement, or the right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company. The
foregoing includes, without limitation, actions, suits, proceedings or
investigations, pending or threatened, 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 or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or that the Company intends to initiate.
2.8 Proprietary Information and Inventions Agreement. Each employee,
------------------------------------------------
officer and consultant of the Company has executed a Proprietary Information and
Inventions Agreement in the form previously provided to counsel to certain of
the Investors. The Company, after reasonable investigation, is not aware that
any of its employees, officers or consultants are in violation thereof, and the
Company will use its best efforts to prevent any such violation.
2.9 Patents and Trademarks. To the best of its knowledge (but
----------------------
without having conducted any special investigation or patent search), the
Company has sufficient title to and ownership of all patents, trademarks,
service marks, trade names, copyrights, trade
4.
<PAGE>
secrets, information, proprietary rights and processes necessary for its
business as now conducted and as proposed to be conducted without any conflict
with or infringement of the rights of others. 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 and processes of any
other person or entity.
2.10 Compliance with Other Instruments. The Company is not in
----------------------------------
violation or default in any material respect of any provision of its Restated
Articles or Bylaws, or in any material respect of any instrument, judgment,
order, writ, decree or contract to which it is a party or by which it is bound,
or, to the best of its knowledge, of any provision of any federal or state
statute, rule or regulation applicable to the Company. The execution, delivery
and performance of this Agreement, the Investors' Rights Agreement and the Co-
Sale Agreement, and the consummation of the transactions contemplated hereby and
thereby 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 that results in the creation of any lien, charge or
encumbrance upon any 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.
2.11 Agreements; Action.
------------------
(a) Except for agreements explicitly contemplated hereby, by the
Investors' Rights Agreement and the Co-Sale Agreement, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or by which it is bound that may involve (i) obligations (contingent
or otherwise) of, or payments to the Company in excess of, $10,000, (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company or (iii) provisions restricting or affecting the development,
manufacture or distribution of the Company's products or services.
(c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $20,000 or, in the case of
indebtedness and/or liabilities individually less than $20,000, in excess of
$50,000 in the aggregate, (iii) except with respect to the purchase of shares of
stock of the Company by employees, officers or directors, made any loans or
advances to any person, other than ordinary advances for travel expenses or (iv)
sold, exchanged or otherwise
5.
<PAGE>
disposed of any of its assets or rights, other than the sale of its inventory in
the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
2.12 Related-Party Transactions. Except with respect to the purchase
--------------------------
of shares of stock of the Company, no employee, officer or director of the
Company or member of his or her immediate family is indebted to the Company, nor
is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the best of the Company's knowledge, none of said
founders, officers or director, or any members of their immediate families, has
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,
or any firm or corporation which competes with the Company, except that Bryan
Stolle owns 400 shares and Matthias Moran owns 3,000 shares of the common stock
of Sherpa Corporation, and employees, officers and directors of the Company may
own stock in publicly traded companies that may compete with the Company. To the
best of the Company's knowledge, no employee, officer or director or any member
of their immediate families is, directly or indirectly, interested in any
material contract with the Company other than as a shareholder in the Company.
The Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
2.13 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 materially and adversely affect the
business, properties, prospects or financial condition of 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.
2.14 Disclosure. The Company has fully provided the Investors with
----------
all the information that the Investors have requested for deciding whether to
purchase the Series E Preferred Stock. To the best of its knowledge, neither
this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement nor any
other statements or certificates made or delivered in connection herewith or
therewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
2.15 Registration Rights. Except as provided in the Investors'
-------------------
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
6.
<PAGE>
2.16 Corporate Documents. Except for amendments necessary to satisfy
-------------------
representations and warranties or conditions contained herein (the form of which
amendments has been approved by the Investors), the Restated Articles and the
Bylaws of the Company are in the form previously provided to counsel to certain
of the Investors.
2.17 Section 83(b) Elections. To the best of the Company's
-----------------------
knowledge, all individuals who have purchased shares of the Company's Common
Stock have timely filed elections under Section 83(b) of the Internal Revenue
Code of 1986, as amended, and any analogous provisions of applicable state tax
laws.
2.18 Employees. To the best of the Company's knowledge, no employee
---------
or consultant of the Company is in violation of any term of any employment,
employment contract, patent disclosure agreement or any other contract or
agreement relating to the relationship of any such person with the Company or
any other party because of the nature of the business conducted or to be
conducted by the Company. The Company does not have any collective bargaining
agreements covering any of its employees. Except for the Option Plan, the
Company has no employee benefit plans presently in force with respect to profit-
sharing, pensions, stock options or other stock benefits. 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.
2.19 Offering. Subject to the accuracy of the Investors'
--------
representations in Section 3 of this Agreement and in written responses to the
Company's inquiries, the offer, sale and issuance of the Series E Preferred
Stock to be issued in conformity with the terms of this Agreement and the
issuance of the Common Stock to be issued upon conversion of the Series E and/or
Series E1 Preferred Stock constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act.
2.20 Corporate Records. The minute books of the Company made
-----------------
available to the Investors contain a complete summary of all meetings or actions
by written consent of directors and shareholders since the time of incorporation
of the Company and reflect all transactions referred to in such minutes
accurately in all material respects.
2.21 Arbitration. Each employee of the Company has agreed in writing
-----------
that all disputes that arise under the terms of the Proprietary Information and
Inventions Agreement, the Restricted Stock Purchase Agreement(s) or the
Employment Agreement entered into between each employee and the Company shall be
resolved through final and binding arbitration.
3. Representations and Warranties of the Investors. Each Investor
-----------------------------------------------
hereby represents and warrants that:
3.1 Authorization. The Investor has full power and authority to
-------------
enter into this Agreement, the Investors' Rights Agreement and the Co-Sale
Agreement, and each such
7.
<PAGE>
agreement constitutes its valid and legally binding obligation, enforceable
against such Investor in accordance with its terms.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series E Preferred Stock to be received by such Investor and
the Common Stock issuable upon conversion thereof (collectively, the
"Securities") will be acquired for investment for such Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that such Investor has no present intention of selling,
granting any participation in or otherwise distributing the same. By executing
this Agreement, such Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person
with respect to any of the Securities.
3.3 Disclosure of Information. Such Investor believes it has
-------------------------
received all the information it considers necessary or appropriate for deciding
whether to purchase the Series E Preferred Stock. Such Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Series E Preferred Stock and the business, properties, prospects and financial
condition of the Company. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of each Investor to rely thereon.
3.4 Investment Experience. Such Investor is an investor in
---------------------
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series E
Preferred Stock. If other than an individual, such Investor also represents it
has not been organized for the purpose of acquiring the Series E Preferred
Stock.
3.5 Accredited Investor. Such Investor is an "accredited investor"
-------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 Restricted Securities. Such Investor understands that the
---------------------
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
such Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
8.
<PAGE>
3.7 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Investors' Rights Agreement provided and to the extent
this Section 3 and such agreement are then applicable; and:
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above, no
such registration statement or opinion of counsel shall be necessary for a
transfer by an Investor that is a partnership to a partner of such partnership
or a retired partner of such partnership who retires after the date hereof, or
to the estate of any such partner or retired partner or the transfer by gift,
will or intestate succession of any partner to his or her spouse or to the
siblings, lineal descendants or ancestors of such partner or his or her spouse,
if the transferee agrees in writing to be subject to the terms hereof to the
same extent as if he or she were an original Investor hereunder.
3.8 Legends. It is understood that the certificates evidencing the
-------
Securities may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE
144 OF SUCH ACT."
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code.
3.9 Company Counsel. Each Investor acknowledges and agrees that,
---------------
with respect to the Agreement and the transactions contemplated thereby,
Brobeck, Phleger &
9.
<PAGE>
Harrison LLP has served as counsel to the Company and has not represented any
Investor. The Investors acknowledge and agree that they have not retained legal
counsel to represent them as a group, but rather each Investor has relied upon
separate counsel for advice with respect to the Agreement and the transactions
contemplated thereby. The Investors further acknowledge and agree that certain
of them have previously been represented by Brobeck, Phleger & Harrison LLP for
legal advice, and to the extent conflicts of interest, if any, arise from such
relationship, each Investor hereby waives such conflict by signing below.
4. California Commissioner of Corporations.
----------------------------------------
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE
------------------------
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
5. Conditions of Investors' Obligations at Closing. The obligations
-----------------------------------------------
of the Investors under subsection 1.l(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 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 date of such Closing.
5.2 Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
5.3 Compliance Certificate. The President of the Company shall
----------------------
deliver to the Investors at the Closing a certificate stating that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating
that there shall have been no adverse change in the business, affairs,
operations, properties, assets or condition of the Company since the date of
this Agreement.
5.4 Qualifications. All authorizations, approvals or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
10.
<PAGE>
5.5 Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investors, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
5.6 Opinion of Company Counsel. The Investors shall have received
--------------------------
from Brobeck, Phleger & Harrison LLP, counsel for the Company, an opinion, dated
as of the Closing, in the form attached hereto as Exhibit D.
---------
5.7 Investors' Rights Agreement. The Company, each Investor and a
---------------------------
majority of the holders of the Series A, Series B, Series C and Series D
Preferred Stock, taken together as a whole and not as separate series, shall
have entered into the Investors' Rights Agreement in the form attached hereto as
Exhibit B.
- ---------
5.8 Co-Sale Agreement. Each of the Founders (as defined in the Co-
-----------------
Sale Agreement) and the Investors shall have entered into the Co-Sale Agreement.
5.9 Board of Directors. As of the Closing, the Company's Board of
------------------
Directors shall consist of Mike Moritz, James Patterson, Nancy Schoendorf, Tom
Shanahan and Bryan Stolle.
6. Conditions of the Company's Obligations at Closing. The
--------------------------------------------------
obligations of the Company to the Investors under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
the Investors, the waiver of which shall not be effective against the Company
unless in writing and signed on behalf of the Company:
6.1 Representations and Warranties. The representations and
------------------------------
warranties of each Investor contained in Section 3 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.
6.2 Payment of Purchase Price. Each Investor shall have delivered
-------------------------
the purchase price specified in Section 1.l(b).
6.3 Qualifications. All authorizations, approvals or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6.4 Waivers of Right of First Offer. Each Major Investor (as defined
-------------------------------
in the Investors' Rights Agreement) shall have waived the right of first offer
granted to such Investor pursuant to the Third Amended and Restated Investors'
Rights Agreement, dated February 6, 1997.
11.
<PAGE>
7. Miscellaneous.
--------------
7.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and each Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of such Investor or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
7.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
7.7 Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finders' fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees or representatives is responsible.
12.
<PAGE>
The Company agrees to indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.8 Expenses. Irrespective of whether the Closing is effected, the
--------
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement or the
Restated Articles, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
7.9 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issued or issuable upon conversion of the Series
E Preferred Stock. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities and the
Company.
7.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.11 Aggregation of Stock. All shares of the Preferred Stock held
--------------------
or acquired by affiliated entities or persons shall be aggregated together for
the purpose of determining the availability of any rights under this Agreement.
7.12 Entire Agreement. This Agreement and the documents referred to
----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants, except as specifically set forth herein or
therein.
13.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AGILE SOFTWARE CORPORATION
By: /s/ Bryan D. Stolle
--------------------------------------
Bryan D. Stolle
President and Chief Executive Officer
Address: One Almaden Boulevard, 12 Floor
San Jose, California 95113
INVESTORS:
SEQUOIA CAPITAL VI
SEQUOIA TECHNOLOGY PARTNERS VI
SQP 1997
SEQUOIA 1997
By: /s/
--------------------------------------
General Partner
SEQUOIA CAPITAL GROWTH FUND
SEQUOIA TECHNOLOGY PARTNERS III
By: /s/
--------------------------------------
General Partner
<PAGE>
EXHIBIT 10.14
SERIES F PREFERRED
STOCK PURCHASE AGREEMENT
------------------------
THIS SERIES F PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is made as of the 4th day of June, 1998, by and among Agile
Software Corporation, a California corporation (the "Company") and the investors
listed on Schedule A hereto (collectively, the "Investors," individually, an
----------
"Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
---------------------------
1.1 Sale and Issuance of Series F Preferred Stock.
----------------------------------------------
(a) The Company shall adopt and file with the Secretary of State of
California on or before the Closing (as defined below) the Sixth Amended and
Restated Articles of Incorporation in the form attached hereto as Exhibit A (the
---------
"Restated Articles").
(b) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally, to purchase at the Closing, and the Company agrees
to sell and issue to each Investor at the Closing, that number of shares of the
Company's Series F Preferred Stock (the "Series F Preferred Stock") set forth
opposite each Investor's name on Schedule A hereto for the purchase price set
----------
forth thereon.
1.2 Closing. The purchase and sale of the Series F Preferred Stock
-------
shall take place at the offices of Brobeck, Phleger & Harrison LLP, Two
Embarcadero Place, 2200 Geng Road, Palo Alto, California, at 1:00 P.M., on June
4, 1998, or at such other time and place as the Company and the Investors
mutually agree upon orally or in writing (which time and place are designated as
the "Closing"). At the Closing, the Company shall deliver to each Investor a
certificate representing the number of shares of Series F Preferred Stock that
each such Investor is purchasing against payment of the purchase price therefor
by check or wire transfer to an account specified by the Company.
2. Representations, Warranties and Covenants of the Company. The
--------------------------------------------------------
Company hereby represents, warrants and covenants to the Investors that, except
as set forth on a Schedule of Exceptions (the "Schedule of Exceptions")
furnished to the Investors specifically identifying the relevant subparagraph
hereof, which exceptions shall be deemed to be representations and warranties as
if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company 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. The
Company is duly qualified to transact business
<PAGE>
and is in good standing in, each jurisdiction in which the failure to so qualify
would have a material adverse effect on its business or properties.
2.2 Capitalization and Voting Rights. The authorized capital of the
--------------------------------
Company consists of or will consist of prior to the Closing:
(i) Preferred Stock. 21,055,556 shares of Preferred Stock
---------------
(the "Preferred Stock"), of which 1,500,000 shares have been designated Series A
Preferred Stock (the "Series A Preferred Stock"), 1,232,500 of which are issued
and outstanding, of which 3,000,000 shares have been designated Series B
Preferred Stock (the "Series B Preferred Stock"), 2,937,995 of which are issued
and outstanding, of which 4,000,000 shares have been designated Series C
Preferred Stock (the "Series C Preferred Stock"), 3,575,000 of which are issued
and outstanding, of which 4,000,000 shares have been designated Series C1
Preferred Stock (the "Series C1 Preferred Stock"), none of which are issued and
outstanding, of which 1,500,000 shares have been designated Series D Preferred
Stock (the "Series D Preferred Stock"), 1,350,000 of which are issued and
outstanding, of which 1,500,000 shares have been designated Series D1 Preferred
Stock (the "Series D1 Preferred Stock"), none of which are issued and
outstanding, of which 1,000,000 shares have been designated Series E Preferred
Stock (the "Series E Preferred Stock"), 1,000,000 of which are issued and
outstanding, of which 1,000,000 shares have been designated Series E1 Preferred
Stock (the "Series E1 Preferred Stock"), none of which are issued and
outstanding, of which 1,777,778 shares have been designated Series F Preferred
Stock (the "Series F Preferred Stock"), none of which are issued and outstanding
and 1,777,778 of which will be sold pursuant to this Agreement, and of which
1,777,778 shares have been designated Series F1 Preferred Stock (the "Series F1
Preferred Stock"), none of which are issued and outstanding. The respective
rights, privileges and preferences of the Series A, Series B, Series C, Series
C1, Series D, Series D1, Series E, Series E1, Series F and Series F1 Preferred
Stock will be as stated in the Company's Restated Articles.
(ii) Common Stock 29,000,000 shares of common stock ("Common
------------
Stock"), of which 3,997,566 shares are issued and outstanding.
(iii) The outstanding shares of Series A, Series B, Series C,
Series D and Series E Preferred Stock and of Common Stock are owned by the
shareholders in the numbers specified in Exhibit C hereto.
---------
(iv) The outstanding shares of Series A, Series B, Series C,
Series D and Series E Preferred Stock and of Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were issued in
accordance with the registration or qualification provisions of the Securities
Act of 1933, as amended (the "Securities Act") and any relevant state securities
laws or pursuant to valid exemptions therefrom.
(v) Except for (A) the conversion privileges of the Series A,
Series B, Series C, Series C1, Series D, Series D1, Series E, Series El, Series
F and Series F1 Preferred Stock, (B) the rights provided in Section 2 of the
Fifth Amended and Restated Investors' Rights Agreement (the "Investors' Rights
Agreement"), the form of which is attached hereto as Exhibit
-------
2.
<PAGE>
B, (C) a warrant to purchase 41,111 shares of Series B Preferred Stock, (D) a
- -
warrant to purchase 35,313 shares of Series C Preferred Stock, (E) a warrant to
purchase 4,049 shares of Series D Preferred Stock, (F)a warrant to purchase
17,828 shares of Series D Preferred Stock and (G) currently outstanding options
to purchase 554,500 shares of Common Stock granted to certain officers,
directions, employees, consultants and/or advisors of the Company pursuant to
the 1995 Stock Option Plan, as amended (the "Option Plan"), there are not
outstanding any options, warrants, rights (including conversion or preemptive
rights or rights of first refusal) or agreements for the purchase or acquisition
from the Company of any Shares of its capital stock. The Company has reserved
1,777,778 shares of Series F Preferred Stock for issuance hereunder and
12,777,778 shares of Common Stock for issuance upon conversion of the Series A,
Series B, Series C, Series C1, Series D, Series D1, Series E, Series El, Series
F and Series F1 Preferred Stock. In addition to the aforementioned options, the
Company has reserved an additional 550,209 shares of Common Stock for issuance
upon exercise of options to be granted in the future under the Option Plan and
79,000 shares of Common Stock for issuance to certain executive officers and key
employees of the Company pursuant to compensatory direct stock issuances. The
Company is not a party or subject to any agreement or understanding, and, to the
best of the Company's knowledge, there is no agreement or understanding between
any persons and/or entities, which affects or relates to the voting or giving of
written consents with respect to any security or by a director of the Company.
2.3 Subsidiaries. The Company is the sole shareholder in Agile
------------
Software International Corporation, a Delaware corporation, incorporated on June
12, 1997. The Company does not presently own or control, directly or indirectly,
any interest in any other corporation, association or business entity. The
Company is not a participant in any joint venture, partnership or similar
arrangement.
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 Investors' Rights Agreement and
the Fourth Amended and Restated Co-Sale Agreement (the "Co-Sale Agreement"), the
form of which is attached hereto as Exhibit E, the performance of all
---------
obligations of the Company hereunder and thereunder, and the authorization,
issuance (or reservation for issuance), sale and delivery of the Series F
Preferred Stock being sold hereunder and the Common Stock issuable upon
conversion of the Series F and/or Series F1 Preferred Stock has been taken or
will be taken prior to the Closing, and this Agreement, the Investors' Rights
Agreement and the Co-Sale Agreement constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) to the extent the indemnification provisions contained in the
Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
2.5 Valid Issuance of Preferred and Common Stock. The Series F
--------------------------------------------
Preferred Stock that is being purchased by the Investors hereunder, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly
3.
<PAGE>
and validly issued, fully paid and nonassessable, and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement and the Investors' Rights Agreement and under applicable state and
federal securities laws. The Common Stock issuable upon conversion of the Series
F Preferred Stock purchased under this Agreement, or issuable upon conversion of
the Series F1 Preferred Stock, has been duly and validly reserved for issuance
and, upon issuance in accordance with the terms of the Restated Articles, will
be duly and validly issued, fully paid, and nonassessable and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement and the Investors' Rights Agreement and under applicable state and
federal securities laws.
2.6 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, the Investors' Rights Agreement or the Co-Sale
Agreement, except for the filing pursuant to Section 25102(f) of the California
Corporate Securities Law of 1968, as amended, and the rules thereunder, which
filing will be effected within 15 days of the sale of the Series F Preferred
Stock hereunder.
2.7 Litigation. There is no action, suit, proceeding or investigation
----------
pending or currently threatened against the Company that questions the validity
of this Agreement, the Investors' Rights Agreement or the Co-Sale Agreement, or
the right of the Company to enter into such agreements, or to consummate the
transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition, affairs or prospects of the Company, financially or otherwise, or any
change in the current equity ownership of the Company. The foregoing includes,
without limitation, actions, suits, proceedings or investigations, pending or
threatened, 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 or government agency or instrumentality. There is no action,
suit, proceeding or investigation by the Company currently pending or that the
Company intends to initiate.
2.8 Proprietary Information and Inventions Agreement. Each employee,
------------------------------------------------
officer and consultant of the Company has executed a Proprietary Information and
Inventions Agreement in the form previously provided to counsel to certain of
the Investors. The Company, after reasonable investigation, is not aware that
any of its employees, officers or consultants are in violation thereof, and the
Company will use its best efforts to prevent any such violation.
2.9 Patents and Trademarks. To the best of its knowledge (but
----------------------
without having conducted any special investigation or patent search), the
Company has sufficient title to and ownership of all patents, trademarks,
service marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes necessary for its business as now conducted and as proposed
to be conducted without any conflict with or infringement of the rights of
others. There are no outstanding options, licenses or agreements of any kind
relating to the foregoing, nor is
4.
<PAGE>
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 and
processes of any other person or entity.
2.10 Compliance with Other Instruments. The Company is not in
---------------------------------
violation or default in any material respect of any provision of its Restated
Articles or Bylaws, or in any material respect of any instrument, judgment,
order, writ, decree or contract to which it is a party or by which it is bound,
or, to the best of its knowledge, of any provision of any federal or state
statute, rule or regulation applicable to the Company. The execution, delivery
and performance of this Agreement, the Investors' Rights Agreement and the Co-
Sale Agreement, and the consummation of the transactions contemplated hereby and
thereby 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 that results in the creation of any lien, charge or
encumbrance upon any 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.
2.11 Agreements; Action.
-------------------
(a) Except for agreements explicitly contemplated hereby, by the
Investors' Rights Agreement and the Co-Sale Agreement, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, affiliates or any affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
is a party or by which it is bound that may involve (i) obligations (contingent
or otherwise) of, or payments to the Company in excess of, $10,000, (ii) the
license of any patent, copyright, trade secret or other proprietary right to or
from the Company or (iii) provisions restricting or affecting the development,
manufacture or distribution of the Company's products or services.
(c) The Company has not (i) declared or paid any dividends or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $20,000 or, in the case of
indebtedness and/or liabilities individually less than $20,000, in excess of
$50,000 in the aggregate, (iii) except with respect to the purchase of shares of
stock of the Company by employees, officers or directors, made any loans or
advances to any person, other than ordinary advances for travel expenses or (iv)
sold, exchanged or otherwise disposed of any of its assets or rights, other than
the sale of its inventory in the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are
5.
<PAGE>
affiliated therewith) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of such subsections.
2.12 Related-Party Transactions. Except with respect to the purchase
--------------------------
of shares of stock of the Company, no employee, officer or director of the
Company or member of his or her immediate family is indebted to the Company, nor
is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them. To the best of the Company's knowledge, none of said
founders, officers or directors, or any members of their immediate families, has
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,
or any firm or corporation which competes with the Company, except that Bryan
Stolle owns 400 shares and Matthias Moran owns 3,000 shares of the common stock
of Sherpa Corporation, and employees, officers and directors of the Company may
own stock in publicly traded companies that may compete with the Company. To the
best of the Company's knowledge, no employee, officer or director or any member
of their immediate families is, directly or indirectly, interested in any
material contract with the Company other than as a shareholder in the Company.
The Company is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
2.13 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 materially and adversely affect the
business, properties, prospects or financial condition of 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.
2.14 Disclosure. The Company has fully provided the Investors with
----------
all the information that the Investors have requested for deciding whether to
purchase the Series F Preferred Stock. To the best of its knowledge, neither
this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement nor any
other statements or certificates made or delivered in connection herewith or
therewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
2.15 Registration Rights. Except as provided in the Investors'
-------------------
Rights Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
2.16 Corporate Documents. Except for amendments necessary to satisfy
-------------------
representations and warranties or conditions contained herein (the form of which
amendments has been approved by the Investors), the Restated Articles and the
Bylaws of the Company are in the form previously provided to counsel to certain
of the Investors.
2.17 Section 83(b) Elections. To the best of the Company's
-----------------------
knowledge, all individuals who have purchased shares of the Company's Common
Stock have timely filed
6.
<PAGE>
elections under Section 83(b) of the Internal Revenue Code of 1986, as amended,
and any analogous provisions of applicable state tax laws.
2.18 Employees. To the best of the Company's knowledge, no employee
---------
or consultant of the Company is in violation of any term of any employment,
employment contract, patent disclosure agreement or any other contract or
agreement relating to the relationship of any such person with the Company or
any other party because of the nature of the business conducted or to be
conducted by the Company. The Company does not have any collective bargaining
agreements covering any of its employees. Except for the Option Plan, the
Company has no employee benefit plans presently in force with respect to profit-
sharing, pensions, stock options or other stock benefits. 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.
2.19 Offering. Subject to the accuracy of the Investors'
--------
representations in Section 3 of this Agreement and in written responses to the
Company's inquiries, the offer, sale and issuance of the Series F Preferred
Stock to be issued in conformity with the terms of this Agreement and the
issuance of the Common Stock to be issued upon conversion of the Series F and/or
Series F1 Preferred Stock constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act.
2.20 Corporate Records. The minute books of the Company made
-----------------
available to the Investors contain a complete summary of all meetings or actions
by written consent of directors and shareholders since the time of incorporation
of the Company and reflect all transactions referred to in such minutes
accurately in all material respects.
2.21 Arbitration. Each employee of the Company has agreed in writing
-----------
that all disputes that arise under the terms of the Proprietary Information and
Inventions Agreement, the Restricted Stock Purchase Agreement(s) or the
Employment Agreement entered into between each employee and the Company shall be
resolved through final and binding arbitration.
2.22 Board of Directors Visitation. So long as Integral Capital
-----------------------------
Partners IV, L.P. (including any affiliated entities or persons) holds at least
50% (as adjusted for any subsequent stock splits, stock combinations,
recapitalizations or the like) of the Series F Preferred Stock purchased by it
hereunder (or the Common Stock issuable upon conversion thereof or the Series F1
Preferred Stock issuable upon conversion of the Series F Preferred Stock), it
shall (i) receive notice of each regular meeting of the Company's Board of
Directors, (ii) be entitled to attend such meetings in a visiting, non-voting
capacity and (iii) the Company shall distribute to it the board packages
prepared in connection with each such meeting at the same time as such board
packages are distributed to the other members of the Board of Directors of the
Company.
2.23 Real Property Holding Corporation. The Company covenants that
---------------------------------
it will operate in a manner such that it will not become a "United States real
property holding corporation" as that term is defined in Section 897(c)(2) of
the Internal Revenue Code of 1986, as amended, and the regulations thereunder
("FIRPTA"). The Company agrees to make determinations as to its status as a
USRPHC, and will file statements concerning those
7.
<PAGE>
determinations with the Internal Revenue Service, in the manner and at the times
required under Reg (S) 1.897-2(h), or any supplementary or successor provision
thereto. Within 30 days of a request from an Investor or any of its partners,
the Company will inform the requesting party, in the manner set forth in Reg.
(S) 1.897-2(h)(1)(iv) or any supplementary or successor provision thereto,
whether that party's interest in the Company constitutes a United States real
property interest (within the meaning of Internal Revenue Code Section 897(c)(1)
and the regulations thereunder) and whether the Company has provided to the
Internal Revenue Service all required notices as to its USRPHC status.
3. Representations and Warranties of the Investors. Each Investor
-----------------------------------------------
hereby represents and warrants that:
3.1 Authorization. The Investor has full power and authority to
-------------
enter into this Agreement, the Investors' Rights Agreement and the Co-Sale
Agreement, and each such agreement constitutes its valid and legally binding
obligation, enforceable against such Investor in accordance with its terms.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
such Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series F Preferred Stock to be received by such Investor and
the Common Stock or Series F1 Preferred Stock issuable upon conversion thereof
(collectively, the "Securities") will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in or otherwise
distributing the same. By executing this Agreement, such Investor further
represents that such Investor does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participations to such
person or to any third person with respect to any of the Securities.
3.3 Disclosure of Information. Such Investor believes it has
-------------------------
received all the information it considers necessary or appropriate for deciding
whether to purchase the Series F Preferred Stock. Such Investor further
represents that it has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of the
Series F Preferred Stock and the business, properties, prospects and financial
condition of the Company. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of each Investor to rely thereon.
3.4 Investment Experience. Such Investor is an investor in
---------------------
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Series F
Preferred Stock. If other than an individual, such Investor also represents it
has not been organized for the purpose of acquiring the Series F Preferred
Stock.
8.
<PAGE>
3.5 Accredited Investor. Such Investor is an "accredited investor"
-------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
3.6 Restricted Securities. Such Investor understands that the
---------------------
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
such Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
3.7 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, such Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and the Investors' Rights Agreement provided and to the extent
this Section 3 and such agreement are then applicable; and;
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b) above,
no such registration statement or opinion of counsel shall be necessary for a
transfer by an Investor that is a partnership to a partner of such partnership
or a retired partner of such partnership who retires after the date hereof, or
to the estate of any such partner or retired partner or the transfer by gift,
will or intestate succession of any partner to his or her spouse or to the
siblings, lineal descendants or ancestors of such partner or his or her spouse,
if the transferee agrees in writing to be subject to the terms hereof to the
same extent as if he or she were an original Investor hereunder.
3.8 Legends. It is understood that the certificates evidencing the
-------
Securities may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
9.
<PAGE>
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 of the California Corporations Code.
3.9 Company Counsel. Each Investor acknowledges and agrees that,
---------------
with respect to the Agreement and the transactions contemplated thereby,
Brobeck, Phleger & Harrison LLP has served as counsel to the Company and has not
represented any Investor. The Investors acknowledge and agree that they have not
retained legal counsel to represent them as a group, but rather each Investor
has relied upon separate counsel for advice with respect to the Agreement and
the transactions contemplated thereby. The Investors further acknowledge and
agree that certain of them have previously been represented by Brobeck, Phleger
& Harrison LLP for legal advice, and to the extent conflicts of interest, if
any, arise from such relationship, each Investor hereby waives such conflict by
signing below.
4. California Commissioner of Corporations.
----------------------------------------
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE THE
------------------------
SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
5. Conditions of Investors' Obligations at Closing. The obligations
-----------------------------------------------
of the Investors under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 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 date of such Closing.
5.2 Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
10.
<PAGE>
5.3 Compliance Certificate. The President of the Company shall
----------------------
deliver to the Investors at the Closing a certificate stating that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled and stating
that there shall have been no adverse change in the business, affairs,
operations, properties, assets or condition of the Company since the date of
this Agreement.
5.4 Qualifications. All authorizations, approvals or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
5.5 Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to the Investors, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
5.6 Opinion of Company Counsel. The Investors shall have received
--------------------------
from Brobeck, Phleger & Harrison LLP, counsel for the Company, an opinion, dated
as of the Closing, in the form attached hereto as Exhibit D.
---------
5.7 Investors' Rights Agreement. The Company, each Investor and a
---------------------------
majority of the holders of the Series A, Series B, Series C, Series D and Series
E Preferred Stock, taken together as a whole and not as separate series, shall
have entered into the Investors' Rights Agreement in the form attached hereto as
Exhibit B.
- ---------
5.8 Co-Sale Agreement. Each of the Founders (as defined in the Co-
-----------------
Sale Agreement), the Company and the Investors (as defined in the Co-Sale
Agreement) shall have entered into the Co-Sale Agreement.
5.9 Board of Directors. As of the Closing, the Company's Board of
------------------
Directors shall consist of Mike Moritz, James Patterson, Nancy Schoendorf, Tom
Shanahan and Bryan Stolle.
5.10 Minimum Investment. A minimum of $10,000,000 shall have been
------------------
raised by the Company in connection with the sale of its Series F Preferred
Stock according to the terms of this Agreement.
6. Conditions of the Company's Obligations at Closing. The
--------------------------------------------------
obligations of the Company to the Investors under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
the Investors, the waiver of which shall not be effective against the Company
unless in writing and signed on behalf of the Company:
11.
<PAGE>
6.1 Representations and Warranties. The representations and
------------------------------
warranties of each Investor contained in Section 3 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.
6.2 Payment of Purchase Price. Each Investor shall have delivered
-------------------------
the purchase price specified in Section 1. l(b).
6.3 Qualifications. All authorizations, approvals or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
6.4 Waivers of Right of First Offer. Each Major Investor (as defined
-------------------------------
in the Investors' Rights Agreement) shall have waived the right of first offer
granted to such Investor pursuant to the Fourth Amended and Restated Investors'
Rights Agreement, dated November 14, 1997.
7. Miscellaneous.
--------------
7.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and each Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of such Investor or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
7.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
12.
<PAGE>
7.6 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten days' advance written notice to the other
parties.
7.7 Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finders' fee or commission in connection with this
transaction. Each Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Investor or any of its officers, partners,
employees or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.8 Expenses. Irrespective of whether the Closing is effected, the
--------
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the Investors' Rights Agreement, the Co-Sale Agreement or the
Restated Articles, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
7.9 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Common Stock issued or issuable upon conversion of the Series
F Preferred Stock. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any securities purchased under
this Agreement at the time outstanding (including securities into which such
securities are convertible), each future holder of all such securities and the
Company.
7.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.11 Aggregation of Stock. All shares of the Preferred Stock held or
--------------------
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
13.
<PAGE>
7.12 Entire Agreement. This Agreement and the documents referred to
----------------
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants, except as specifically set forth herein or
therein.
14.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AGILE SOFTWARE CORPORATION
By: /s/ Bryan D. Stolle
---------------------------------------
Bryan D. Stolle
President and Chief Executive Officer
Address: One Almaden Boulevard, 12th Floor
San Jose, California 95113
[SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]
15
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1 of
our report dated May 28, 1999 relating to the consolidated financial
statements of Agile Software Corporation, which appears in such Registration
Statement. We also consent to the reference to us under the heading "Experts"
in such Registration Statement.
PricewaterhouseCoopers LLP
San Jose, California
August 2, 1999
