<PAGE>
As filed with the Securities and Exchange Commission on June 23, 1999
Registration No. 333-
- -------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
AGILE SOFTWARE CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<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>
----------------
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
Maximum
Title of Each Class of Aggregate Amount of
Securities to be Registered Offering Price(1) Registration Fee
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<S> <C> <C>
Common Stock ($0.001 par value)........ $58,650,000 $16,305
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</TABLE>
(1) Estimated solely for the purposes of determining the registration fee
pursuant to Rule 457(o) promulgated under the Securities Act.
----------------
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 June 23, 1999
Shares
[LOGO OF AGILE SOFTWARE APPEARS HERE]
COMMON STOCK
-----------
Agile Software Corporation is offering 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
$ and $ per share.
-----------
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 5.
-----------
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
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........................ 5
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
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Management....................... 44
Certain Transactions............. 50
Principal Stockholders........... 52
Description of Capital Stock..... 55
Shares Eligible for Future Sale.. 58
Underwriters..................... 60
Legal Matters.................... 62
Experts.......................... 62
Where to Find Additional
Information About Agile......... 62
Index to Consolidated Financial
Statements...................... F-1
</TABLE>
----------------
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.
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.
In this prospectus, "Agile," "we," "us" and "our" refer to Agile Software
Corporation. 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; and
. assumes the exercise of a warrant to purchase 60,000 shares of our
common stock which was outstanding on April 30, 1999.
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.
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 Services(TM), Agile Product Change Services(TM), Agile AML
Services(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.
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
Agile is a leading supplier of web-centric product content management
software for use within and among enterprises 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
in web-connected outsourced supply chains, as well as those managing multi-site
engineering, manufacturing, sales and distribution. 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. Agile customers include
Gateway, Texas Instruments, Philips Mobile Computing, Lucent Technologies,
Solectron, GE Marquette Medical Systems and FSI International.
The competitive environment for enterprises has intensified dramatically and
expanded globally in recent years. Many enterprises are re-engineering their
organizations by shifting from traditional vertically-integrated manufacturing
approaches, in which a manufacturer controls most phases of the manufacturing
process from raw materials to finished goods, to a more horizontally-integrated
manufacturing process with much or all of the manufacturing process 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. Outsourcing
production is geared toward creating supply chains that are more efficient,
dynamic and flexible than vertically-integrated manufacturing operations. A
critical aspect of managing the horizontally-integrated outsourced supply chain
is finding effective ways to store, access and share information within the
enterprise as well as with all supply chain partners 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. Enterprises that have
successfully implemented web-enabled customer interfaces 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. The Agile solution enables enterprises
and their supply chain partners to have more effective revenue capture by
accelerating time-to-market, more cost-effective production by increasing
throughput, reducing inventory and compressing cycle times, and more rapid
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 enterprises. 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. We seek to capitalize on network effects created
through deployment of our solution across the supply chains of our customers,
which allows non-customer participants in the supply chain to experience some
of the benefits from our solutions first hand. We will also build upon our
technology leadership position and extend our supply chain collaboration
features and functionality.
3
<PAGE>
THE OFFERING
<TABLE>
<C> <S>
Common stock offered................................ shares
Common stock to be outstanding after this offering.. shares
Over-allotment option............................... 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 16,133,298 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
534,700 shares of common stock. See "Capitalization" and "Management--Stock
Plans."
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 $
Working capital............................................. 4,174
Total assets................................................ 17,948
Long-term obligations, noncurrent........................... 3,224
Stockholders' equity........................................ 3,291
</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 shares of common stock that we are offering at an assumed
initial public offering price of $ per share, after deducting estimated
underwriting discounts and commissions and our estimated offering expenses, and
gives effect to the exercise of a warrant to purchase 60,000 shares of our
common stock. See "Capitalization."
4
<PAGE>
RISK FACTORS
You should carefully consider the following risks before you decide to buy
our common stock. The risks and uncertainties described below are not the only
ones facing us. Additional risks and uncertainties may also seriously harm our
business. 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 our:
. substantial dependence on our current suite of products;
. need to successfully introduce new products and enhance existing
products, particularly the new version of our product suite, Agile
Anywhere, which is scheduled to be shipped beginning in the quarter
ending October 31, 1999;
. need to sell additional licenses and software products to our existing
customers;
. need to expand our sales and marketing, customer support and professional
services organizations;
. need to expand our customer base outside of the electronics and medical
device industries;
. need to build strategic partnerships and relationships;
. need to effectively manage growth;
. need to expand our international operations and customer base; and
. need to attract and retain key personnel.
We may not be able to successfully address these risks, and the failure to
do so could seriously harm our business and operating results. 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 and Expect to Incur Losses in the Future
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. If our revenues grow more slowly than we anticipate or if our
operating expenses exceed our expectations, our business and operating results
could be harmed. See "Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
more detailed information.
5
<PAGE>
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, any of which could harm our
business and operating results, including the following:
. demand for our products;
. size and timing of sales and installations of our products;
. product and price competition;
. our unpredictable sales cycle;
. our ability to successfully expand our direct sales force;
. our ability to develop and market new and enhanced products on a timely
basis;
. deferral of customer orders in anticipation of product enhancements or
new products;
. continued purchases by our existing customers, including 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;
. software defects;
. technological changes in our market;
. our ability to establish and maintain relationships with our third-party
implementation partners;
. changes in our sales force incentives;
. expansion of our international sales organization and increase in
international sales;
. the loss of any key employees and timing of our new hires; and
. general economic factors.
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. A high percentage of our operating expenses are essentially fixed in
the short term. As a result, if we experience delays in recognizing revenue,
we could experience significant variations in operating results from quarter
to quarter. 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. If our revenues do not grow faster than the
increase in these expenses, our business and operating results could be
harmed.
We have experienced, and expect to continue to experience, seasonality in
our license revenues and results of operations, with a disproportionately
greater amount of our license revenues for any fiscal year
6
<PAGE>
being recognized in our fourth fiscal quarter. As a result, our first quarter
revenues can be less than those of the preceding quarter.
If we introduce products that are sold in a manner different from how we
currently market our products, we could recognize revenue differently than
under our current accounting policies. Depending on the manner in which we
sell 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 Will Depend on the Commercial Success of Our Product Suite, Which Has
Not Yet Been Shipped
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, was announced in June 1999
and is scheduled to ship in the quarter ending October 31, 1999. We believe
that revenues from this suite of products will account for a substantial
portion of our revenues for the foreseeable future. Our future financial
performance will depend on the successful introduction and customer acceptance
of Agile Anywhere, and any upgrades to these products. Our business could be
harmed if we are unable to ship or implement Agile Anywhere or any upgrades
when planned. In addition, to the extent their introduction of Agile Anywhere
causes customers to defer orders for our existing products, we may not achieve
anticipated revenues and our business may be harmed. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
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. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Implementation of Our Products By Large Customers May Be Complex and May
Create Customer Dissatisfaction with Our Products
It takes many computer systems to run an enterprise, particularly for a
business that depends on an integrated supply chain. Our products must
integrate with 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 be adversely affected.
7
<PAGE>
Due to the Relatively Small Size of Initial Orders, We Depend on Customer
Acceptance of Our Products and Future Upgrades
The size of a new customer's initial order is relatively small. Therefore,
in order to grow revenues, we depend on both sales to new customers and on
sales to our existing customers of additional user licenses and enhanced
versions of, and upgrades to, our products. Many of our current customers
implement our products on a limited basis or buy products that provide only a
portion of the features offered by our product family. Therefore, it is
important that our customers are satisfied with their initial product
implementations and that they believe that our other products or expanded use
of the product they purchased will provide them with additional benefits.
Customers could choose not to purchase any additional 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.
We Need to Establish and Maintain Relationships With Key Partners to Market
and Implement 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 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.
The Ability of Our Products to Scale to Operate in an Enterprise-Wide
Environment is Important to Our Future Success
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 on an enterprise wide-basis.
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 Rely Significantly On and Need to 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
8
<PAGE>
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, therefore, our business could be harmed.
Our Future Operating Results Are Uncertain Because We Have an Unpredictable
Sales Cycle
Our products have an unpredictable sales cycle that contributes to the
uncertainty of our future operating results. Historically, our sales cycle has
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. Many customers initially purchase a
small number of user licenses for our products before deciding whether to
deploy our products more broadly in their organization or across their entire
supply chain. Customers may also defer orders as a result of anticipated
releases of new products or enhancements by us. As a result, we have only a
limited ability to forecast the timing and size of sales of our products.
The Success of Our Business Depends on Our Key Personnel
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. If one or more members of our senior
management or any of our key employees were to resign, the loss of personnel
would harm our business. See "Management" for additional information on our
key personnel.
To Be Successful, We Must Attract and Retain Additional Qualified Personnel
Our success depends on our ability to attract and retain qualified,
experienced employees. We currently are seeking to hire a Vice President of
Sales. 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,
any of which could harm our business.
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 product content management software 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 product content management software is newly emerging.
Enterprises have not traditionally automated the product content management
processes throughout the supply chain. We cannot be certain that this market
will continue to develop and grow or that enterprises 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 content management
information as well as for collaboration among supply chain participants.
Enterprises that have already invested substantial resources in
9
<PAGE>
other methods of product content management 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.
Increasing Competition Among Product Content Management Software Providers
Could Harm Our Business
The market for product content management software is new, highly
fragmented, rapidly changing and increasingly competitive. We expect
competition to intensify, which could result in price reductions, 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 face potential competition from in-house
development efforts by potential customers or partners, vendors of engineering
information management software, and developers of general purpose groupware
software addressing only limited technology components of engineering change
management. 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. See "Business--Competition."
We May Experience Difficulties in Introducing New Products and Upgrades
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 applications. 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, any of which could harm our business.
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<PAGE>
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 hardware and software platforms 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, 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.
We Face Risks From Expansion of Our International Operations
We believe that expansion of our international operations will be necessary
for our future success. Therefore, we believe that we will need to commit
significant resources to expand our international operations. A key aspect to
our strategy is to expand our sales and support organizations internationally.
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, our business
and operating results could be harmed. 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 in multiple time zones;
. need to develop software in multiple foreign languages;
. laws and business practices favoring local competition;
. currency fluctuations;
. longer sales cycles;
. greater difficulty in collecting accounts receivable;
. political and economic instability, particularly in Asia;
. difficulties in enforcing agreements through foreign legal systems;
. unexpected changes in regulatory requirements;
. import or export licensing requirements;
. reduced protection of our intellectual property rights in some countries;
and
. 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
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<PAGE>
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 We May Increase Our Use of Software
Licensed to Us By Third Parties
We license technology on a non-exclusive basis from several businesses for
use with our products, including licenses from Microsoft Corporation and
Oracle Corporation for our servers, from RSA Data Security, Inc. for security
and encryption technology software, 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 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.
Software Defects 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 or 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.
Product Liability Litigation Could Harm Our Business
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.
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<PAGE>
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
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, 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. If we are unable to manage our growth in an efficient and
timely manner or if our current or planned personnel systems, procedures and
controls are not adequate to support our future operations, our business could
be harmed.
We Have Limited Protection of Our Intellectual Property
Our success and ability to compete depend upon our proprietary technology.
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. Our competitors may independently develop
similar technology, duplicate our products or design around any patents that
may be issued to us or our other intellectual property.
We May Be Subject to Intellectual Property Infringement Claims
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.
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<PAGE>
We integrate third-party software into our products. This third-party
software may not continue to be available on commercially reasonable terms. We
depend on third party licenses, including licenses for our servers, encryption
and security software. 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, which could substantially harm our business, operating results
and financial condition.
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 Compliance."
Future Acquisitions May Present Risks to Our Business
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 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. We cannot
assure you that any particular acquisition, even if successfully completed,
will 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."
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<PAGE>
Risks Related to the Internet on Our Business and Prospects
If Use of the Internet Does Not Grow, Our Business Would Be Harmed
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
enterprises and their supply chain partners may not adopt or continue to use
the Internet as a medium of commerce. 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
The Internet infrastructure may not be able to support the demands placed
on it by increased usage and bandwidth requirements. Other risks associated
with commercial use of the Internet could slow its growth, including:
.inadequate reliability of the network infrastructure;
.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 enterprises and their supply
claim partners. If these or any other factors cause use of the Internet for
commerce to slow or decline, our business could be harmed.
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
% of our outstanding common stock. These stockholders would be able to
significantly influence all matters requiring approval by our stockholders,
including the election of
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<PAGE>
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. See "Plan of Distribution."
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 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
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. We cannot predict that investment of the proceeds
will yield a favorable return. See "Use of Proceeds."
Substantial Sales of Our Common Stock Could Adversely Affect Our Stock
Price
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 shares of our common stock outstanding, or
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 "Management--Stock Plans" and "Shares Eligible for Future
Sale."
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 $ in net tangible book value per share, or approximately %
of the assumed offering price of $ per share. In contrast, our existing
stockholders paid an average price of $1.66 per share. Investors will incur
additional dilution upon the exercise of outstanding stock options and
warrants. See "Dilution."
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,"
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<PAGE>
"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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<PAGE>
USE OF PROCEEDS
We estimate that we will receive net proceeds of $ million from the sale
of the shares of common stock in this offering, assuming an initial public
offering price of $ per share and after deducting estimated underwriting
discounts and commissions and estimated offering expenses of $ . If the
underwriters' over-allotment option is exercised in full, we estimate that our
net proceeds will be $ million.
We intend to use the net proceeds of the offering primarily for general
corporate purposes, including working capital, sales and marketing activities,
product development and support, 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 convertible preferred stock at an exercise
price of $6.75 per share and 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
. on a pro forma as adjusted basis to reflect the application of the
estimated net proceeds from the sale of shares of common stock in
this offering, 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, 16,133,298 shares issued and
outstanding pro forma; 100,000,000 shares
authorized, shares issued and
outstanding pro forma as adjusted........... 4 16
Additional paid-in capital................... 34,814 35,219
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 3,696
-------- -------- --------
Total capitalization..................... $ 6,515 $ 6,920 $
======== ======== ========
</TABLE>
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DILUTION
Our pro forma net tangible book value at April 30, 1999 was approximately
$3.7 million or approximately $.23 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.
After giving effect to our sale of shares of common stock in this
offering at an assumed initial public offering price of $ 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 $ million, or $
per share. This represents an immediate increase in net tangible book value of
$ per share to existing stockholders and an immediate dilution in net
tangible book value of $ 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....................... $
Pro forma net tangible book value per share as of April 30, 1999.... $.23
Increase per share attributable to new investors....................
----
Pro forma net tangible book value per share after this offering.......
---
Dilution per share to new investors in this offering.................. $
===
</TABLE>
The following table sets forth, on a pro forma basis, as of April 30, 1999,
assuming conversion into common stock of all of our outstanding shares of
preferred stock, the difference between the existing stockholders and the
purchasers of shares in this offering, at the assumed initial public offering
price of $ 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.......... 16,133,298 % $26,801,000 % $1.66
New stockholders...............
---------- ----- ----------- -----
Totals....................... 100.0% $ 100.0%
========== ===== =========== =====
</TABLE>
As of April 30, 1999, there were options outstanding to purchase a total of
1,160,800 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.
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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>
Fiscal Year Ended April
Period from March 31, 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>
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 OFFINANCIAL 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 web-centric content management software for
the use within and among enterprises 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 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 licenses for concurrent users
at the time of the initial license of the software products and may purchase
additional licenses for concurrent users 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. Customers who license our products usually purchase maintenance
contracts, which provide software upgrades 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, which requires revenues earned on software arrangements
involving multiple elements to be allocated to each element based on the
relative fair values of the elements. 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, are recognized upon
shipment of the software product. 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 shipping 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
based on the mix of professional services provided by us compared to
professional services provided by third-party service providers. Since we
generally provide implementation services on a fixed-price basis, our gross
margin from these services may fluctuate based on the actual cost to provide
these services. Our overall gross profit can 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
22
<PAGE>
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 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, as well as 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
24
<PAGE>
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 1999
reflects increased license revenues and an increased range of 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, as well as 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 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 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 and 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.
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 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.
26
<PAGE>
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 scope of product sales in
each quarter. Our license revenues in the first fiscal quarter have
historically been lower than those of the immediately preceding fourth
quarter. License revenues in the first quarter of fiscal 1999 decreased 2%
from the fourth quarter of fiscal 1998. In future periods, we expect these
trends may cause first quarter revenues to be lower than the level achieved in
the preceding fourth quarter.
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.
28
<PAGE>
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 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:
. demand for our products;
. size and timing of sales and installations of our products;
. product and price competition;
. our unpredictable sales cycle;
. our ability to successfully expand our direct sales force;
. our ability to develop and market new and enhanced products on a timely
basis;
. deferral of customer orders in anticipation of product enhancements or
new products;
. continued purchases by our existing customers, including 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;
. software defects;
. technological changes in our market;
. our ability to establish and maintain relationships with our third-party
implementation partners;
. changes in our sales force incentives;
. expansion of our international sales organization and increase in
international sales;
. the loss of any key employees and timing of our new hires; and
. general economic factors.
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,
29
<PAGE>
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 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
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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 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.
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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.
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
Agile is a leading supplier of web-centric product content management
software for use within and among enterprises 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
in web-connected outsourced supply chains, as well as those managing multi-
site engineering, manufacturing, sales and distribution. 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. Agile
customers include Gateway, Texas Instruments, Philips Mobile Computing, Lucent
Technologies, Solectron, GE Marquette Medical Systems and FSI International.
Industry Background
The competitive environment for enterprises 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, enterprises are re-engineering
their organizations to address these challenges.
Many enterprises are shifting from traditional vertically-integrated
manufacturing approaches, in which a manufacturer controls most phases of the
manufacturing process from raw materials to finished goods, to a more
horizontally-integrated manufacturing process with much or all of the
manufacturing process 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.
By outsourcing their production, some enterprises have created supply
chains that are more efficient, dynamic and flexible than vertically-
integrated manufacturing operations. Use of the outsourced supply chain has
afforded enterprises the flexibility to choose best-of-breed suppliers and
partners to make each link in the supply chain more competent, innovative and
productive. As enterprises 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
enterprises 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 horizontally-integrated outsourced supply
chain is finding effective ways to store, access, and share information within
the enterprise 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 potentially vast number of information
flows that can occur in the production process.
Product Design. During the product design stage, the enterprise must
communicate large amounts of data within the enterprise as well as to supply
chain partners. The enterprise 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 divided into two classes: "buy" or "make." For
the "buy" components, also called off-the-shelf components,
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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 an enterprise 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 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 enterprises 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.
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To address these challenges, many companies have implemented products such
as supply chain management, electronic data interchange, product data
management and enterprise resource planning. However, many of these products
were not designed to interconnect multiple enterprises in a horizontally-
integrated supply chain, and therefore do not fully address the need for
supply chain collaboration. Electronic data interchange, while facilitating
interconnection, 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 an enterprise's competitiveness. An enterprise that can
disseminate information quickly and accurately to the appropriate supply chain
partners may be in a position to compete effectively. However, an enterprise
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, an enterprise 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 enterprise 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 enterprise 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
Because the Internet is ubiquitous and provides a backbone for a platform
independent communications network, it has created 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, 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.
Enterprises that have successfully implemented web-enabled customer
interfaces now face the challenge of utilizing the Internet and intranets to
gain the same level of increased efficiencies in their supply chain. A web-
centric 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, enterprises must implement a solution which will allow
them to interactively communicate information related to product design,
development and manufacturing within the enterprise and will allow them to
collaborate with their supply chain partners. At the same time, enterprises
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
Agile is a leading supplier of web-centric product content management
software for use among all supply chain members. Our products are designed to
improve the ability of supply chain members to communicate and collaborate
with one another about new or changing product content. Our solution is
designed for use over the Internet, avoiding the need to depend 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 solution to allow for rapid
implementation by enterprises 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 web-
connected outsourced supply chains, as well as those managing multi-site
engineering, manufacturing and sales and distribution. The Agile solution
delivers the following benefits to enterprises and their supply chain
partners:
More Effective Revenue Capture. With the help of Agile Anywhere and the
Internet, enterprises can respond more rapidly to changes in customer demand,
component market condition 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
enterprises to produce what they can sell, rather than sell what they can
produce. Agile Anywhere also enables enterprises 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 enterprises increase throughput, reduce inventory and
compress cycle times. Through effective collaboration, both time to market and
design effectiveness can be improved. Enterprises 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 business-to-business
collaborative supply-chain applications to global enterprises. 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 solutions 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.
Continue to build upon technology leadership position. 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 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.
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Extend supply chain collaboration and functionality. We intend to extend
our leadership position in supply chain collaboration by developing additional
product content management functionality and applications. In addition, we
intend to seek to develop new applications and services that leverage our
existing product content management suite to address additional supply chain
collaboration opportunities.
The Agile Suite of Products
The Agile Anywhere suite of products provides a comprehensive web-centric
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.
Previously known as Agile Workplace, Agile Anywhere is the latest major
release of our product suite. The Agile Anywhere suite and several of the
underlying products and features have been renamed to reflect the integration
of additional Internet standards, features and functionality. The Agile
Anywhere suite was announced in June 1999 and is scheduled to ship in the
quarter ending October 31, 1999. Agile Anywhere is designed to provide users
additional scalability and security as well as new products and features
including My Agile, Agile eXpress Viewer, Product Definition eXchange, and a
software development kit. Agile Anywhere will be provided without additional
charge to customers under a maintenance contract. In the interim, we will
continue to ship our existing Agile Workplace suite.
Agile eHub
The foundation of the suite is Agile eHub. The Agile eHub is comprised of
application services that enable users to define, store, change and manage
product content information. Agile eHub incorporates our new caching and
security technology 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 Services 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 Services 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 Services enables enterprises 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.
Agile Administrator enables enterprises to easily and rapidly configure and
modify Agile Anywhere components without writing code. Agile Administrator
speeds the implementation of the Agile Anywhere suite and minimizes
maintenance time.
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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 Windows
client.
My Agile, a web portal, allows 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. This product is expected to begin shipping in the
quarter ending October 31, 1999.
Agile eXpress Viewer allows supply chain partners to send and receive
information in the PDX format. Agile eXpress Viewer will be available for
downloading free of charge from the Agile web site. Agile eXpress Viewer is
expected to be available in the quarter ending October 31, 1999.
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 provide data exchange between systems to occur, 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 enterprises 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 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++. This product is expected to begin shipping in the
quarter ending October 31, 1999.
Initial implementations of the Agile Anywhere suite typically include the
Agile eHub and one or more server modules such as the Product Definition
Services, Product Change Services and AML Services, 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 registered subscriber
licenses and additional server modules may be purchased.
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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.
The following is a representative list of our customers that to date have
purchased over $50,000 of Agile products and services:
<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 a
web-centric 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 web front-ends 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 licensed encryption technology to maintain secure data when
transported over the Internet.
. The web front-ends are Java and html based applications that can run on
versions of Microsoft Internet Explorer and Netscape Navigator. There is
also a Windows thin client for users who prefer a native client, 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 front-end 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.
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. 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.
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.
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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, 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 strategic
marketing alliances to promote sales and marketing of our products, as well as
to increase product interoperability. We also pursue strategic 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 partners may shorten
our sales cycle because partners have generated and qualified sales leads,
made initial customer contacts and assessed needs prior to our introduction.
Our current implementation service partners include 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 product
upgrades through 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.
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.
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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,
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.
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.
Many of our actual or potential competitors 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 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.
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We integrate third-party software into our products. This third-party
software may not continue to be available on commercially reasonable terms. We
depend on third-party licenses, including licenses for our servers, encryption
and security software. 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, which could substantially harm our business, operating results
and financial condition.
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 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 believe that we have strong defenses to the
alleged claims, 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
Klaus-Dieter Laidig..... 57 Director
Michael Moritz.......... 44 Director
James L. Patterson...... 61 Director
Nancy S. 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 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.
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.
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<PAGE>
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 S. 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 Committees
Audit Committee. The board of directors has established an audit committee
consisting of Mr. Laidig and Mr. Moritz. The audit committee reviews with
Agile's 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 Agile's officers and employees and administers
Agile's employee benefit plans.
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 committee, 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.
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Executive Compensation
The following table presents information regarding the compensation paid to
our chief executive officer and each of our other highest-paid compensated
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
</TABLE>
Option Grants in Last Fiscal Year
The following table designates each grant of stock options during fiscal
1998 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 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.
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<PAGE>
<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 39,306 99,609
Carol B. Schrader....... 22,000 2.3 2.35 7/8/08 32,514 82,396
10,000 1.0 2.65 11/17/08 16,666 42,234
Dorothy O. Wise......... 25,000 2.6 2.65 11/17/08 41,664 105,585
</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, 1999" are based on the fair market value of
our common stock of $3.00 at April 30, 1999, as determined by our board of
directors, less the exercise price payable for these shares.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Shares Options at Options at
Acquired on April 30, 1999 April 30, 1999 ($)
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
</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
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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 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
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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.
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 directors 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.
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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,
50
<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 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
On May 7, 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.
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.
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<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 Agile's directors;
. all executive officers and directors as a group; and
. each person or entity who is known by Agile to beneficially own more than
5% of Agile's 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 16,133,298 shares
of common stock outstanding as of April 30, 1999 and shares outstanding
immediately following the completion of this offering, assuming the
underwriters' over-allotment option is not exercised, and assuming 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. 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%
Thomas P. Shanahan(2)............................ 410,000 2.5
Dorothy O. Wise(3)............................... 228,000 1.4
Carol B. Schrader(4)............................. 135,000 *
James L. Patterson(5)............................ 153,827 *
Nancy J. Schoendorf(6)........................... 5,280,493 32.7
c/o Mohr, Davidow Ventures
2775 Sand Hill Road
Building 1, Suite 240
Menlo Park, CA 94025
Michael Moritz(7)................................ 3,229,820 20.0
c/o Sequoia Capital
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
Klaus-Dieter Laidig(8)........................... 50,000 *
</TABLE>
52
<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(9)................................... 5,280,493 32.7%
2775 Sand Hill Road
Building 1, Suite 240
Menlo Park, CA 94025
Entities associated with Sequoia Capital(10)... 3,229,820 20.0
3000 Sand Hill Road
Building 4, Suite 280
Menlo Park, CA 94025
Entities associated with Accel Partners(11).... 1,028,115 6.4
428 University Avenue
Palo Alto, CA 94301
All executive officers and directors
as a group (8 persons)(12)................... 10,582,765 64.5
</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 exercisable within 60 days of April 30,
1999.
(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 exercisable within 60 days of
April 30, 1999.
(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
exercisable within 60 days of April 30, 1999.
(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
exercisable within 60 days of April 30, 1999, and 50,000 shares held by
Eric Schrader.
(5) 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.
(6) 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 interest arising from
her partnership interest in Mohr, Davidow.
(7) 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
53
<PAGE>
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.
(8) Represents shares subject to options exercisable within 60 days of April
30, 1999.
(9) 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.
(10) 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.
(11) 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.
(12) Shares listed as held by all directors and executive officers as a group
include 285,000 shares subject to options exercisable within 60 days of
April 30, 1999.
54
<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 Agile 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 Agile's 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.
55
<PAGE>
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.
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 such 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.
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 tradable 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
56
<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."
57
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have outstanding shares of
common stock, assuming no exercise of options after April 30, 1999. Of these
shares, the shares sold in this offering will be freely tradable without
restrictions or further registration under the Securities Act unless such
shares are purchased by affiliates of Agile, as that term is defined under
Rule 144 under the Securities Act. Shares purchased by "affiliates" are
subject to certain limitations and restrictions as described below.
Sales of Restricted Stock
The remaining 16,133,298 shares of common stock held by existing
stockholders were issued and sold by us in reliance upon exemptions from the
registration requirements of the Securities Act. All of these shares will be
subject to "lock-up" agreements described below on the effective date of the
offering. Upon expiration of the lock-up agreements 180 days after the
effective date of the offering, shares will become eligible for sale,
subject in most cases to the limitations of Rule 144. In addition, holders of
stock options could exercise their options and sell the shares issued upon
exercise as described below.
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares for at
least one year is entitled to sell within any three-month period, a number of
shares that does not exceed the greater of:
. 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after this offering; or
. the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.
Sales under Rule 144 are also subject to certain other requirements
regarding the manner of sale, notice filing and the availability of current
public information about us.
Under Rule 144(k), a person who is not deemed to have been one of our
affiliates 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,
including the holding period of any prior owner other than an affiliate, is
entitled to sell such shares without complying with the manner of sale, notice
filing, volume limitation or notice provisions of Rule 144. Therefore, unless
otherwise restricted, "Rule 144(k) shares" may be sold immediately upon the
completion of this offering.
Prior to this offering, there has been no public market for our common
stock, and the effect, if any, that the sale or availability for sale of
shares of additional common stock will have on the trading price of our common
stock cannot be predicted. Nevertheless, sales of substantial amounts of these
shares in the public market, or the perception that these sales could occur,
could adversely affect the trading price of our common stock and could impair
our future ability to raise capital through an offering of our equity
securities.
Options
As of April 30, 1999, there were a total of 1,159,725 shares of common
stock subject to outstanding options under our 1995 Stock Option Plan, 107,987
of which were vested and no longer subject to a right of repurchase. However,
all of these shares are subject to lock-up agreements. Immediately after the
completion of this offering, we intend to file registration statements on Form
S-8 under the Securities Act to register all of the shares of common stock
issued or reserved for future issuance under our 1995 Stock Option Plan and
1999 Employee Stock Purchase Plan. On the date 180 days after the effective
date of the offering, a total of shares of common stock subject to
outstanding options will be vested. After the effective dates of the
registration statements on Form S-8, shares purchased upon exercise of options
granted pursuant to the 1995 stock option plan and 1999 employee stock
purchase plan generally would be available for resale in the public market.
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<PAGE>
In general, under Rule 701, any Agile employee, director, officer,
consultant or advisor who purchases shares from us in connection with a
compensatory stock or option plan or other written agreement before the
effective date of the offering is entitled to resell such shares 90 days after
the effective date of this offering in reliance on Rule 144, without having to
comply with certain restrictions, including the holding period, contained in
Rule 144.
The Securities and Exchange Commission has indicated that Rule 701 will
apply to typical stock options granted by an issuer before it becomes subject
to the reporting requirements of the Securities Exchange Act of 1934, along
with the shares acquired upon exercise of such options, including exercises
after the date of this prospectus. Securities issued in reliance on Rule 701
are restricted securities and, subject to the contractual restrictions
described above, beginning 90 days after the date of this prospectus, may be
sold by persons other than affiliates, subject only to the manner of sale
provisions of Rule 144 and by affiliates under Rule 144 without compliance
with its one year minimum holding period requirement.
Lock-up Agreements
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.
59
<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.....................................
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 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 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.
60
<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.
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
61
<PAGE>
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.
62
<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)
<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 web-centric product content management software for use
within and among enterprises in a manufacturing supply chain. The Company's
suite of products is designed to improve the ability of supply chain members
to communicate with one another about new or changing product content.
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. Share and per share
information for the each of the three years in the period ended April 30, 1999
has 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. License revenues are recognized when persuasive evidence
of an arrangement exists, the fee is fixed and determinable, collectibility is
probable, and delivery and acceptance of the software products have occurred.
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 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 ("SOP") No. 97-2, "Software Revenue Recognition" and SOP
98-4, "Deferral of the Effective Date of a Provision of SOP No. 97-2." Prior
to 1999, the Company recognized revenues in accordance with SOP No. 91-1,
"Software Revenue Recognition." In December 1998, the American Institute of
Certified Public Accountants ("AICPA") issued SOP No. 98-9, "Modification of
SOP No. 97-2, Software Revenue Recognition, with Respect to Certain
Transactions." The provisions of SOP No. 98-9 will be adopted for transactions
entered into during the fiscal year beginning May 1, 1999. The adoption of SOP
No. 98-9 is not expected to have a material impact on the Company's results of
operations, financial position or cash flows.
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
F-10
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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.
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>
F-11
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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>
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:
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. 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
F-12
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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.
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.
F-13
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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.
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.
F-14
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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 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.
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. 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 $2.07
</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 not have been
materially different from that reported.
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.
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.
F-17
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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
From time to time, in the normal course of business, various claims are
made against the Company. In the opinion of management, there are no pending
claims the outcome of which is expected to result in a material adverse effect
on the financial position or results of operations of the Company.
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.
F-18
<PAGE>
AGILE SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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 534,700 shares of Common Stock at exercise
prices ranging from $5.00 to $8.00 per share.
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-19
<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........................................ *
Printing and engraving expenses................................... *
Legal fees and expenses........................................... *
Accounting fees and expenses...................................... *
Director and officer Securities Act liability insurance........... *
Transfer agent and registrar fees................................. *
Miscellaneous expenses............................................ *
-------
Total........................................................... $ *
=======
</TABLE>
--------
* To be filed by amendment.
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.
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 Amended and Restated Articles of Incorporation of Agile Software
Corporation, as amended to date.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
3.2* Form of Certificate of Incorporation of Agile, as proposed to be
filed.
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 and form of Stock Option
Agreement thereunder.
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
(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.
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
II-3
<PAGE>
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 23rd day of June, 1999.
Agile Software Corporation
/s/ Bryan D. Stolle
By: _________________________________
Bryan D. Stolle
Chief Executive Officer and
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Bryan D. Stolle and Thomas P.
Shanahan as his true and lawful attorney-in-fact and agent, with full power of
substitution, for him in any and all capacities, to sign any and all
amendments to this Registration Statement (including post-effective amendments
or any abbreviated registration statement and any amendments thereto filed
pursuant to Rule 462(b) increasing the number of securities for which
registration is sought), and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, with full power to
act alone, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully for
all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Bryan D. Stolle Chief Executive Officer, June 23, 1999
____________________________________ President and Director
Bryan D. Stolle (Principal Executive
Officer)
/s/ Thomas P. Shanahan Chief Financial Officer, June 23, 1999
____________________________________ Secretary and Director
Thomas P. Shanahan (Principal Financial and
Accounting Officer)
/s/ Klaus-Dieter Laidig Director June 23, 1999
____________________________________
Klaus-Dieter Laidig
/s/ Michael Moritz Director June 23, 1999
____________________________________
Michael Moritz
/s/ James L. Patterson Director June 23, 1999
____________________________________
James L. Patterson
/s/ Nancy J. Schoendorf Director June 23, 1999
____________________________________
Nancy J. Schoendorf
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Amended and Restated Articles of Incorporation of Agile Software
Corporation, as amended to date.
3.2* Form of Certificate of Incorporation of Agile, as proposed to be
filed.
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 and form of Stock Option
Agreement thereunder.
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
<PAGE>
EXHIBIT 1.1
DRAFT JUNE 22, 1999
__________ Shares
AGILE SOFTWARE CORPORATION
COMMON STOCK, $.001 PAR VALUE
UNDERWRITING AGREEMENT
__________, 1999
<PAGE>
_____________, 1999
Morgan Stanley & Co. Incorporated
Deutsche Bank Securities Inc.
Hambrecht & Quist LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Agile Software Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters") _______________ shares of its Common Stock, $.001
par value (the "Firm Shares"). The Company also proposes to issue and sell to
the several Underwriters not more than an additional ______________ shares of
its Common Stock, $.001 par value (the "Additional Shares") if and to the extent
that you, as Managers of the offering, shall have determined to exercise, on
behalf of the Underwriters, the right to purchase such shares of common stock
granted to the Underwriters in Section 2 hereof. The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the "Shares." The
shares of Common Stock, $.001 par value, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "Common Stock."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "Prospectus."
If the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "Rule 462 Registration Statement"), then any reference herein to the
term "Registration Statement" shall be deemed to include such Rule 462
Registration Statement.
Morgan Stanley & Co. Incorporated ("Morgan Stanley") has agreed to
reserve a portion of the Shares to be purchased by it under this Agreement for
sale to the Company's directors, officers, employees and business associates and
other parties related to the Company (collectively, "Participants"), as set
forth in the Prospectus under the heading "Underwriters" (the "Directed Share
Program"). The Shares to be sold by Morgan Stanley pursuant to the Directed
Share Program are referred to hereinafter as the "Directed Shares." Any Directed
2
<PAGE>
Shares not orally confirmed for purchase by any Participant by the end of the
business day on which this Agreement is executed will be offered to the public
by the Underwriters as set forth in the Prospectus.
1. Representations and Warranties. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) the Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole; all of the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are
3
<PAGE>
fully paid and non-assessable and are owned directly by the Company, free
and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock outstanding prior to the issuance of
the Shares have been duly authorized and are validly issued, fully paid and
non-assessable.
(h) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the certificate of incorporation or by-
laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(l) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under
4
<PAGE>
the Securities Act, complied when so filed in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder.
(m) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(p) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement.
(q) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or
with any person or affiliate located in Cuba.
(r) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (1) the Company and
its subsidiaries have not incurred any material liability or obligations,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (2) the Company has not purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock other than
ordinary and customary dividends; and (3) there has not been any material
change in the capital stock, short-term
5
<PAGE>
debt or long-term debt of the Company and its subsidiaries, except in each
case as described in the Prospectus.
(s) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries, in each
case except as described in the Prospectus.
(t) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a material adverse
affect on the Company and its subsidiaries, taken as a whole.
(u) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, except as described in the Prospectus, or,
to the knowledge of the Company, is imminent; and the Company is not aware
of any existing, threatened or imminent labor disturbance by the employees
of any its principal suppliers, manufacturers or contractors that could
have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(v) The Company and its subsidiaries are insured by the insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any of its subsidiaries has been
refused any insurance coverage sought or applied for; and neither the
Company nor any of its subsidiaries has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, except as described in the Prospectus.
(w) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities
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necessary to conduct their respective business, and neither the Company nor
any of its subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
Company and its subsidiaries, taken as a whole, except as described in the
Prospectus.
(x) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's general
or specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (3)
access to assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(y) The Company has reviewed its operations and that of its
subsidiaries to evaluate the extent to which the business or operations of
the Company or any of its subsidiaries will be affected by the Year 2000
Problem (that is, any significant risk that computer hardware or software
applications used by the Company and its subsidiaries will not, in the case
of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000); as a result of such review, (i) the Company has
no reason to believe, and does not believe, that (A) there are any issues
related to the Company's preparedness to address the Year 2000 Problem that
are of a character required to be described or referred to in the
Registration Statement or Prospectus which have not been accurately
described in the Registration Statement or Prospectus and (B) the Year 2000
Problem will have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business or operations of the Company and
its subsidiaries, taken as a whole, or result in any material loss or
interference with the business or operations of the Company and its
subsidiaries, taken as a whole; and (ii) the Company reasonably believes,
after due inquiry, that the suppliers, vendors, customers or other material
third parties used or served by the Company and such subsidiaries are
addressing or will address the Year 2000 Problem in a timely manner, except
to the extent that a failure to address the Year 2000 Problem by any
supplier, vendor, customer or material third party would not have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, business or operations of the Company and its subsidiaries, taken
as a whole.
(z) As of the date the Registration Statement became effective, the
Common Stock was authorized for listing on the Nasdaq National Market upon
official notice of issuance.
(aa) Substantially all of the outstanding shares of Common Stock, and
all securities convertible into or exercisable or exchangeable for Common
Stock, are subject
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to valid, binding and enforceable agreements (collectively, the "Lock-up
Agreements") in substantially the form attached as Exhibit A.
Furthermore, the Company represents and warrants to Morgan Stanley
that (i) the Registration Statement, the Prospectus and any preliminary
prospectus comply, and any further amendments or supplements thereto will
comply, with any applicable laws or regulations of foreign jurisdictions in
which the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, are distributed in connection with the Directed Share Program,
and that (ii) no authorization, approval, consent, license, order, registration
or qualification of or with any government, governmental instrumentality or
court, other than such as have been obtained, is necessary under the securities
laws and regulations of foreign jurisdictions in which the Directed Shares are
offered outside the United States.
The Company has not offered, or caused the Underwriters to offer,
Shares to any person pursuant to the Directed Share Program with the specific
intent to unlawfully influence (i) a customer or supplier of the Company to
alter the customer's or supplier's level or type of business with the Company,
or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
2. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedule I hereto
opposite its name at $______ a share (the "Purchase Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, up to _______________
Additional Shares at the Purchase Price. If you, on behalf of the Underwriters,
elect to exercise such option, you shall so notify the Company in writing not
later than 30 days after the date of this Agreement, which notice shall specify
the number of Additional Shares to be purchased by the Underwriters and the date
on which such shares are to be purchased. Such date may be the same as the
Closing Date (as defined below) but not earlier than the Closing Date nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 180 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or
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contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or (ii) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Shares to be sold hereunder or (B) the
issuance by the Company of shares of Common Stock upon the exercise of an option
or warrant or the conversion of a security outstanding on the date hereof of
which the Underwriters have been advised in writing.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
$_____________ a share (the "Public Offering Price") and to certain dealers
selected by you at a price that represents a concession not in excess of $______
a share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $_____ a share, to any
Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares shall be made
to the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on ____________, 1999, or at
such other time on the same or such other date, not later than _________, 1999,
as shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than _______, 1999, as shall be designated in
writing by you. The time and date of such payment are hereinafter referred to as
the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The obligations of
the Company to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the
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Registration Statement shall have become effective not later than [_____] (New
York City time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Section 5(a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of Gray Cary Ware & Freidenrich LLP, outside counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct
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of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(ii) each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(iii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(iv) the shares of Common Stock outstanding prior to the
issuance of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable;
(v) all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly by
the Company, free and clear of all liens, encumbrances, equities or
claims;
(vi) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of
such Shares will not be subject to any preemptive or similar rights;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or, to the best of such
counsel's knowledge, any agreement or other instrument binding upon
the Company or any of its subsidiaries that is material to the Company
and its subsidiaries, taken as a whole, or, to the best of such
counsel's knowledge, any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for
the performance by the Company of
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its obligations under this Agreement, except such as may be required
by the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares;
(ix) the statements (A) in the Prospectus under the captions
"Business - Legal Proceedings," "Description of Capital Stock,"
"Shares Eligible for Future Sale" and "Underwriters" and (B) in the
Registration Statement in Items 14 and 15, in each case insofar as
such statements constitute summaries of the legal matters, documents
or proceedings referred to therein, fairly present the information
called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;
(x) after due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement that are not described or filed as
required;
(xi) the Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended;
(xii) the Company and its subsidiaries (A) are in compliance with
any and all applicable Environmental Laws, (B) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (C) are
in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and
(xiii) such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules and other financial and statistical data included therein as
to which such counsel need not express any opinion) comply as to form
in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder, (B) has no reason
to believe that (except for financial statements and schedules and
other financial and statistical data as to which such counsel need not
express any belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement became
effective contained any untrue statement of a
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material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading and (C) has no reason to believe that (except for financial
statements and schedules and other financial and statistical data as
to which such counsel need not express any belief) the Prospectus
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(d) The Underwriters shall have received on the Closing Date an
opinion of Fenwick & West LLP, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in Sections 5(c)(vi),
5(c)(vii), 5(c)(ix) (but only as to the statements in the Prospectus under
"Description of Capital Stock" and "Underwriters") and 5(c)(xiii) above.
With respect to Section 5(c)(xiii) above, Gray Cary Ware & Freidenrich
LLP and Fenwick & West LLP may state that their opinion and belief are
based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto and
review and discussion of the contents thereof, but are without independent
check or verification, except as specified.
The opinion of Gray Cary Ware & Freidenrich LLP described in Section
5(c) above shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(e) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from PricewaterhouseCoopers LLP, Independent Accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(f) The Lock-Up Agreements, each substantially in the form of Exhibit
A hereto, between you and certain shareholders, officers and directors of
the Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before the
date hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares and other matters related to the issuance of the Additional Shares.
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6. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, four signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 6(c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the twelve-
month period ending ________, 2000 that satisfies the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.
(f) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of its obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's
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accountants in connection with the registration and delivery of the Shares
under the Securities Act and all other fees or expenses in connection with
the preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters and dealers,
in the quantities hereinabove specified, (ii) all costs and expenses
related to the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) the cost of
printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities
laws and all expenses in connection with the qualification of the Shares
for offer and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all
filing fees and the reasonable fees and disbursements of counsel to the
Underwriters incurred in connection with the review and qualification of
the offering of the Shares by the National Association of Securities
Dealers, Inc., (v) all fees and expenses in connection with the preparation
and filing of the registration statement on Form 8-A relating to the Common
Stock and all costs and expenses incident to listing the Shares on the
Nasdaq National Market, (vi) the cost of printing certificates representing
the Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation,
expenses associated with the production of road show slides and graphics,
fees and expenses of any consultants engaged in connection with the road
show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any
such consultants, and the cost of any aircraft chartered in connection with
the road show, and (ix) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision
is not otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 7 entitled "Indemnity and
Contribution", and the last paragraph of Section 9 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements
of their counsel, stock transfer taxes payable on resale of any of the
Shares by them and any advertising expenses connected with any offers they
may make.
(g) that in connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. Morgan Stanley will notify the
Company as to which Participants will need to be so restricted. The Company
will direct the transfer agent to place stop transfer restrictions upon
such securities for such period of time.
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(h) the Company agrees: (i) to enforce the terms of each Lock-Up
Agreement and (ii) issue stop-transfer instructions to the transfer agent
for the Common Stock with respect to any transaction or contemplated
transaction that would constitute a breach of or default under the
applicable Lock-Up Agreement. In addition, without the prior written
consent of Morgan Stanley, the Company agrees: (i) not to amend or
terminate, or waive any right under, and Lock-Up Agreement, or take any
other action that would directly or indirectly have the same effect as an
amendment or termination, or waiver of any right under, any Lock-Up
Agreement, that would permit any holder of shares of Common Stock, or
securities convertible into or exercisable or exchangeable for Common
Stock, to (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
or (2) enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, or (ii) not to consent to any of the
foregoing.
(i) the Company agrees to place a restrictive legend on any shares of
Common Stock acquired pursuant to the exercise, after the date hereof and
prior to the expiration of the 180-day period after the date of the
Prospectus, of any option granted under the Company's 1995 Stock Option
Plan, which legend shall restrict the transfer of such shares prior to the
expiration of such 180-day period. In addition, the Company agrees that,
without the prior written consent of Morgan Stanley, it will not release
any stockholder or option holder from the market standoff provision imposed
by the Company pursuant to its 1995 Stock Option Plan earlier than 180 days
after the date of the initial public offering of the Shares.
(j) to pay all fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and stamp
duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
Furthermore, the Company covenants with Morgan Stanley that the
Company will comply with all applicable securities and other applicable laws,
rules and regulations in each foreign jurisdiction in which the Directed Shares
are offered in connection with the Directed Share Program.
7. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration
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Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 7(a) or 7(b), such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 7(a), and by the Company, in the case of
parties indemnified pursuant to Section 7(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is
17
<PAGE>
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause 7(d)(i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
7(d)(i) above but also the relative fault of the Company on the one hand and of
the Underwriters on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 7(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by
18
<PAGE>
it and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 7 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (iii) acceptance of and payment for any
of the Shares.
8. Directed Share Program Indemnification. (a) The Company agrees
to indemnify and hold harmless Morgan Stanley and each person, if any, who
controls Morgan Stanley within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act ("Morgan Stanley Entities"),
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) (i) caused
by any untrue statement or alleged untrue statement of a material fact contained
in any material prepared by or with the consent of the Company for distribution
to Participants in connection with the Directed Share Program or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
caused by the failure of any Participant to pay for and accept delivery of
Directed Shares that the Participant agreed to purchase; or (iii) related to,
arising out of, or in connection with the Directed Share Program, other than
losses, claims, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of Morgan Stanley Entities.
(b) In case any proceeding (including any governmental investigation)
shall be instituted involving any Morgan Stanley Entity in respect of which
indemnity may be sought pursuant to Section 8(a), the Morgan Stanley Entity
seeing indemnity, shall promptly notify the Company in writing and the Company,
upon request of the Morgan Stanley Entity, shall retain counsel reasonably
satisfactory to the Morgan Stanley Entity to represent the Morgan Stanley Entity
and any others the Company may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any Morgan Stanley Entity shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Morgan Stanley Entity unless (i) the Company shall have agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Company and the Morgan
Stanley Entity and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
Company shall not, in respect of the legal expenses of the Morgan Stanley
Entities in connection with any proceeding or related
19
<PAGE>
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all Morgan
Stanley Entities. Any such separate firm for the Morgan Stanley Entities shall
be designated in writing by Morgan Stanley. The Company shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Company agrees to indemnify the Morgan Stanley Entities from and against any
loss or liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time a Morgan Stanley Entity shall have requested
the Company to reimburse it for fees and expenses of counsel as contemplated by
the second and third sentences of this paragraph, the Company agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by the Company of the aforesaid request and (ii) the Company shall not
have reimbursed the Morgan Stanley Entity in accordance with such request prior
to the date of such settlement. The Company shall not, without the prior written
consent of Morgan Stanley, effect any settlement of any pending or threatened
proceeding in respect of which any Morgan Stanley Entity is or could have been a
party and indemnity could have been sought hereunder by such Morgan Stanley
Entity, unless such settlement includes an unconditional release of the Morgan
Stanley Entities from all liability on claims that are the subject matter of
such proceeding.
(c) To the extent the indemnification provided for in Section 8(a) is
unavailable to a Morgan Stanley Entity or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then the Company in lieu of
indemnifying the Morgan Stanley Entity thereunder, shall contribute to the
amount paid or payable by the Morgan Stanley Entity as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Morgan Stanley Entities on the other hand from the offering of the Directed
Shares or (ii) if the allocation provided by clause 8(c)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 8(c)(i) above but also the
relative fault of the Company on the one hand and of the Morgan Stanley Entities
on the other hand in connection with any statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Morgan Stanley Entities on the other hand in connection with
the offering of the Directed Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Directed Shares (before
deducting expenses) and the total underwriting discounts and commissions
received by the Morgan Stanley Entities for the Directed Shares, bear to the
aggregate Public Offering Price of the Directed Shares. If the loss, claim,
damage or liability is caused by an untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact, the
relative fault of the Company on the one hand and the Morgan Stanley Entities on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement or the omission or alleged omission
relates to information supplied by the Company or by the Morgan Stanley Entities
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
20
<PAGE>
(d) The Company and the Morgan Stanley Entities agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Morgan Stanley Entities were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
Section 8(c). The amount paid or payable by the Morgan Stanley Entities as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
the Morgan Stanley Entities in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 8, no
Morgan Stanley Entity shall be required to contribute any amount in excess of
the amount by which the total price at which the Directed Shares distributed to
the public were offered to the public exceeds the amount of any damages that
such Morgan Stanley Entity has otherwise been required to pay. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(e) The indemnity and contribution provisions contained in this
Section 8 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Morgan Stanley Entity or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Directed Shares.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 8(a)(i) through 8(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their
21
<PAGE>
respective names in Schedule I bears to the aggregate number of Firm Shares set
forth opposite the names of all such non-defaulting Underwriters, or in such
other proportions as you may specify, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the number of Shares that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such number of
Shares without the written consent of such Underwriter. If, on the Closing Date,
any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and
the aggregate number of Firm Shares with respect to which such default occurs is
more than one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you and the Company for the purchase of such Firm
Shares are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. If, on the
Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
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<PAGE>
13. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
Very truly yours,
AGILE SOFTWARE CORPORATION
By:____________________________
Name:
Title:
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Deutsche Bank Securities Inc.
Hambrecht & Quist LLC
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By:__________________________
Name:
Title:
23
<PAGE>
SCHEDULE I
Number of
Firm Shares
Underwriter To Be Purchased
Morgan Stanley & Co. Incorporated
Deutsche Bank Securities Inc.
Hambrecht & Quist LLC
_______________
Total ........
===============
<PAGE>
Exhibit A
[FORM OF LOCK-UP LETTER]
_____________, 1999
Morgan Stanley & Co. Incorporated
Deutsche Bank Securities Inc.
Hambrecht & Quist LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated ("Morgan
Stanley") proposes to enter into an Underwriting Agreement (the "Underwriting
Agreement") with Agile Software Corporation, a Delaware corporation (the
"Company"), providing for the public offering (the "Public Offering") by the
several Underwriters, including Morgan Stanley (the "Underwriters"), of shares
(the "Shares") of the Common Stock, par value $0.001 per share, of the Company
(the "Common Stock").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering (the "Prospectus"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement or (b) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering. In addition, the
undersigned agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the Prospectus, make any
demand for or exercise
<PAGE>
any right with respect to, the registration of any shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
_________________________
(Name)
_________________________
(Address)
<PAGE>
EXHIBIT 3.1
EIGHTH AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF AGILE SOFTWARE CORPORATION,
a California Corporation
The undersigned, Bryan D. Stolle and Thomas P. Shanahan, hereby state that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of said corporation.
TWO: The Articles of Incorporation of said corporation shall be
amended and restated to read in full as follows:
ARTICLE I
The name of this corporation is Agile Software Corporation.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
A. Classes of Stock. This corporation is authorized to issue two classes
----------------
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the corporation is authorized to issue is
50,175,556 shares. 29,000,000 shares shall be Common Stock and 21,175,556 shares
shall be Preferred Stock.
B. Rights, Preferences and Restrictions of Preferred Stock. The
-------------------------------------------------------
Preferred Stock authorized by these Eighth Amended and Restated Articles of
Incorporation may be issued from time to time in one or more series. The rights,
preferences, privileges and restrictions granted to and imposed on the Series A
Preferred Stock, which series shall consist of 1,500,000 shares, the Series B
Preferred Stock, which series shall consist of 3,000,000 shares, the Series C
Preferred Stock, which series shall consist of 4,000,000 shares, the Series C1
Preferred Stock, which shall consist of 4,000,000 shares, the Series D Preferred
Stock, which series shall consist of 1,500,000 shares, the Series D1 Preferred
Stock, which series shall consist of 1,500,000 shares, the Series E Preferred
Stock, which series shall consist of 1,000,000 shares, the Series E1 Preferred
Stock, which series shall consist of 1,000,000 shares, the Series F Preferred
Stock, which series shall consist of 1,837,778 shares and the Series F1
Preferred Stock, which series shall consist of 1,837,778 shares, are as set
forth below in this Article III(B).
The Board of Directors is hereby authorized to fix or alter the rights,
preferences, privileges and restrictions granted to or imposed upon additional
series of Preferred Stock, and the number of shares constituting any such series
and the designation thereof, or of any of them.
<PAGE>
Subject to compliance with applicable protective voting rights which have been
or may be granted to the Preferred Stock or series thereof in Certificates of
Determination or the corporation's Articles of Incorporation (the "Protective
Provisions"), but notwithstanding any other rights of the Preferred Stock or any
series thereof, the rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, pari passu with (including, without
---- -----
limitation, inclusion of provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent)
or senior to any of those of any present or future class or series of Preferred
Stock or Common Stock. Subject to compliance with applicable Protective
Provisions, the Board of Directors is also authorized to increase or decrease
the number of shares of any series (other than the Series A, Series B, Series C,
Series C1, Series D, Series D1, Series E, Series E1, Series F and Series F1
Preferred Stock) prior or subsequent to the issue of that series, but not below
the number of shares of such series then outstanding. In case the number of
shares of any series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
1. Dividend Provisions. Subject to the rights of series of Preferred
-------------------
Stock which may from time to time come into existence, the holders of
outstanding Preferred Stock shall be entitled to receive in any fiscal year,
when, as and if declared by the Board of Directors, out of any assets at the
time legally available therefor, dividends in cash at a rate of (i) $0.01 per
share of Series A Preferred Stock, (ii) $0.01 per share of Series B
Preferred Stock, (iii) $0.01 per share of Series C and Series C1 Preferred
Stock, (iv) $0.01 per share of Series D and Series D1 Preferred Stock, (v) $0.01
per share of Series E and Series E1 Preferred Stock and (vi) $0.01 per share of
Series F and Series F1 Preferred Stock, prior and in preference to any
declaration or payment of any dividend (payable other than in Common Stock or
other securities or rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock of this
corporation) on the Common Stock of this corporation or, if greater (as
determined on a per annum basis and on an as converted into Common Stock basis),
an amount equal to that paid on any other outstanding shares on this
corporation. The right to such dividends on shares of Preferred Stock shall not
be cumulative and no right shall accrue to holders of shares of Preferred Stock
by reason of the fact that dividends on such shares are not declared in any
prior year, nor shall any undeclared or unpaid dividend bear or accrue interest.
2. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up of this
corporation, either voluntary or involuntary, subject to the rights of series of
Preferred Stock that may from time to time come into existence, the holders of
Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series F
and Series F1 Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of this corporation to the
holders of Common Stock by reason of their ownership thereof, (A) in the case
of the Series A Preferred Stock, an amount per share equal to the sum of (i)
$0.10 for each outstanding share of Series A Preferred Stock (the "Original
Series A Issue Price") and (ii) an amount equal to declared but unpaid dividends
on such share, (B) in the case of the Series B Preferred Stock, an amount per
share equal to the sum of (i) $0.354 for each outstanding share of Series B
Preferred Stock (the "Original Series B Issue Price") and (ii) an amount equal
to declared but unpaid dividends on such share, (C) in the case of the Series C
and Series C1
2
<PAGE>
Preferred Stock, an amount per share equal to the sum of (i) $1.16 for each
outstanding share of Series C Preferred Stock and Series C1 Preferred Stock (the
"Original Series C Issue Price" and the "Original Series C1 Issue Price,"
respectively) and (ii) an amount equal to declared but unpaid dividends on such
share, (D) in the case of the Series D and Series D1 Preferred Stock, an amount
per share equal to the sum of (i) $2.964 for each outstanding share of Series D
Preferred Stock and Series D1 Preferred Stock (the "Original Series D Issue
Price" and the "Original Series D1 Issue Price," respectively) and (ii) an
amount equal to declared but unpaid dividends on such share, (E) in the case of
the Series E and Series E1 Preferred Stock, an amount per share equal to the sum
of (i) $5.00 for each outstanding share of Series E Preferred Stock and Series
E1 Preferred Stock (the "Original Series E Issue Price" and the "Original Series
E1 Issue Price," respectively) and (ii) an amount equal to declared but unpaid
dividends on such share and (F) in the case of the Series F and Series F1
Preferred Stock, an amount per share equal to the sum of (i) $6.75 for each
outstanding share of Series F Preferred Stock and Series F1 Preferred Stock (the
"Original Series F Issue Price" and the "Original Series F1 Issue Price,"
respectively) and (ii) an amount equal to declared but unpaid dividends on such
share. If upon the occurrence of such event, the assets and funds thus
distributed among the holders 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
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then, subject to the rights of series of
Preferred Stock that may from time to time come into existence, the entire
assets and funds of the corporation legally available for distribution shall be
distributed ratably among the holders 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 in proportion to the preferential amount each such holder is
otherwise entitled to receive.
(b) After the distribution described in subsection (a) of this Section 2
has been paid, subject to the rights of series of Preferred Stock which may from
time to time come into existence, the remaining assets of the corporation
available for distribution to shareholders shall be distributed 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 of Common Stock pro rata based on
the number of shares of Common Stock held by each (assuming full conversion of
all such Series B, Series C, Series C1, Series D, Series D1, Series E, Series
E1, Series F and Series F1 Preferred Stock) until, (i) with respect to the
holders of Series B Preferred Stock, such holders shall have received an
aggregate of $0.708 per share (including amounts paid pursuant to subsection (a)
of this Section 2), (ii) with respect to the holders of Series C and Series C1
Preferred Stock, such holders shall have received an aggregate of $2.32 per
share (including amounts paid pursuant to subsection (a) of this Section 2),
(iii) with respect to the holders of Series D and Series D1 Preferred Stock,
such holders shall have received an aggregate of $5.928 per share (including
amounts paid pursuant to subsection (a) of this Section 2), (iv) with respect to
the holders of Series E and Series E1 Preferred Stock, such holders shall have
received an aggregate of $10.00 per share (including amounts paid pursuant to
subsection (a) of this Section 2); and (v) with respect to the holders of Series
F and Series F1 Preferred Stock, such holders shall have received an aggregate
of $13.50 per share (including amounts paid pursuant to subsection (a) of this
Section 2). Thereafter, subject to the rights of series of Preferred Stock that
may from time to time come into existence, if assets remain in this corporation,
the holders of the Common Stock of this corporation shall receive all of the
remaining assets of this corporation pro rata based on the number of shares of
Common Stock held by each.
3
<PAGE>
(c)(i) For purposes of this Section 2, a liquidation, dissolution or
winding up of this corporation shall be deemed to be occasioned by, or to
include, (A) the acquisition of the corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation, but excluding any
merger effected exclusively for the purpose of changing the domicile of the
corporation), or (B) a sale of all or substantially all of the assets of the
corporation; unless the corporation's shareholders of record as constituted
------
immediately prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as consideration for the
corporation's acquisition or sale or otherwise) hold at least 50% of the voting
power of the surviving or acquiring entity.
(ii) In any of such events, if the consideration received by the
corporation is other than cash, its value will be deemed its fair market value.
Any securities shall be valued as follows:
(A) Securities not subject to investment letter or other similar
restrictions on free marketability:
(1) If traded on a securities exchange or on the Nasdaq
National Market, the value shall be deemed to be the average of the closing
prices of the securities on such exchange over the 30-day period ending three
days prior to the closing;
(2) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the 30-day period ending three days prior to the closing; and
(3) If there is no active public market, the value shall be
the fair market value thereof, as reasonably determined in good faith by the
Board of Directors of the corporation.
(B) The method of valuation of securities subject to investment
letter or other restrictions on free marketability (other than restrictions
arising solely by virtue of a shareholder's status as an affiliate or former
affiliate) shall be to make an appropriate discount from the market value
determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as reasonably determined in good faith by the Board of
Directors of the corporation.
(iii) In the event the requirements of this section 2(c) are not
complied with, this corporation shall forthwith either:
(A) cause such closing to be postponed until such time as the
requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the rights,
preferences and privileges of the holders 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 shall revert to and be the same as such rights, preferences and
privileges existing immediately prior to the date of the first notice referred
to in subsection 2(c)(iv) hereof.
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<PAGE>
(iv) In the event a consolidation or merger of the corporation is
to be treated as a liquidation pursuant to paragraph (c)(i) above, this
corporation shall give each holder of record of Preferred Stock written notice
of such impending transaction not later than 20 days prior to the shareholders'
meeting called to approve such transaction, or 20 days prior to the closing of
such transaction, whichever is earlier, and shall also notify such holders in
writing of the final approval of such transaction. The first of such notices
shall describe the material terms and conditions of the impending transaction
and the provisions of this Section 2, and the corporation shall thereafter give
such holders prompt notice of any material changes. The transaction shall in no
event take place sooner than 20 days after the corporation has given the first
notice provided for herein or sooner than ten days after the corporation has
give notice of any material changes provided for herein: provided, however, that
such periods may be shortened upon the written consent of the holders of
Preferred Stock that are entitled to such notice rights or similar notice rights
and that represent at least a majority of the voting power of all then
outstanding shares of Preferred Stock.
3. Redemption. The Preferred Stock is not redeemable.
----------
4. Conversion. The holders 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 shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. 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 shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share at the office of this corporation or
any transfer agent for such stock, into such number of fully paid and
nonassessable share of Common Stock as is determined by dividing the Original
Issue Price for such series by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The initial Conversion Price per share for shares of
Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series
E1, Series F and Series F1 Preferred Stock, respectively, shall be the
applicable Original Issue Price for such series: provided, however, that (i) the
Conversion Price for the Series A, Series B, Series C1, Series D1, Series E1 and
Series F1 Preferred Stock shall be subject to adjustment as set forth in
subsections 4(e), 4(f) and 4(h) and (ii) the Conversion Price for the Series C,
Series D, Series E and Series F Preferred Stock shall be subject to adjustment
as set forth in subsections 4(d), 4(e), 4(f) and 4(h).
(b) Automatic Conversion. 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 shall automatically be converted into shares of Common Stock at
the Conversion Price at the time in effect for such series of Preferred Stock
immediately upon the earlier of (i) the corporation's sale of its Common Stock
in a firm commitment underwritten public offering pursuant to a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
the public offering price of which is not less than $8.78 per share (adjusted to
reflect subsequent stock dividends, stock splits or recapitalizations) and
$20,000,000 in the aggregate (ii) in the case of the Series A, Series B, Series
C, Series C1, Series D, Series D1, Series E and Series E1 Preferred Stock, the
date specified by written consent or agreement of the holders of a majority of
the then outstanding shares of Series A, Series B, Series C, Series C1, Series
D, Series D1,
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<PAGE>
Series E and Series E1 Preferred Stock (voting together as a single class and
not as separate series, and on an as-converted basis) or (iii) in the case of
the Series F and Series F1 Preferred Stock, the date specified by written
consent or agreement of the holders of a majority of the then outstanding shares
of Series F and Series F1 Preferred Stock (voting together as a single class and
not as a separate series and on an as-converted basis).
(c) Mechanics of Conversion. Before any holder of Preferred Stock shall
-----------------------
be entitled to convert the same into shares of Common Stock, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of this corporation or of any transfer agent for such Preferred Stock, and shall
give written notice to this corporation at its principal corporate office of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be issued.
This corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Preferred Stock, or to the nominee or nominees of
such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date. If the conversion is in
connection with an underwritten offering of securities registered pursuant to
the Securities Act, the conversion may, at the option of any holder tendering
Preferred Stock for conversion, be conditioned upon the closing with the
underwriters of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock upon conversion of the
Preferred Stock shall not be deemed to have converted such Preferred Stock until
immediately prior to the closing of such sale of securities.
(d) Conversion Price Adjustments of Preferred Stock. The Conversion Price
-----------------------------------------------
of the Series C, Series D, Series E and Series F Preferred Stock shall be
subject to adjustment from time to time as follows:
(i) (A) If after the date upon which any shares of the Series F
Preferred Stock were first issued (the "Purchase Date") the corporation issues
(or is deemed hereunder to have issued) any shares of Additional Stock (as
defined below in subsection 4(d)(ii)), without consideration or for a
consideration per share less than the Conversion Price for any of the Series C,
Series D, Series E or Series F Preferred Stock in effect immediately prior to
each such issuance of any such Additional Stock, then the Conversion Price for
each such share of Series C and/or Series D and/or Series E and/or Series F
Preferred Stock in effect immediately prior to each such issuance shall
forthwith (except as otherwise provided in this clause (i)) be adjusted to a
price determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (including shares of Common Stock deemed
issued pursuant to subsection 4(d)(i)(E) below) plus the number of shares of
Common Stock (including shares of Common Stock deemed issued pursuant to
subsection 4(d)(i)(E) below) which the aggregate consideration received by the
corporation for such issuance would purchase at such Conversion Price; and the
denominator of which shall be the number of shares of Common Stock (including
shares of Common Stock deemed issued pursuant to subsection 4(d)(i)(E) below)
outstanding immediately prior to such issuance plus the number of shares of such
Additional Stock so issued.
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<PAGE>
No adjustment shall be made to the Conversion Price of the Series A, Series B,
Series C1, Series D1, Series E1 and Series F1 Preferred Stock pursuant to this
subsection 4(d)(i).
(B) No adjustment of the Conversion Price for the Series C,
Series D, Series E or Series F Preferred Stock shall be made in an amount less
than one cent per share, provided that any adjustments which are not required to
be made by reason of this sentence shall be carried forward and shall be either
taken into account in any subsequent adjustment made prior to three years from
the date of the event giving rise to the adjustment being carried forward, or
shall be made at the end of three years from the date of the event giving rise
to the adjustment being carried forward. Except to the limited extent provided
for in subsections (E)(3) and (E)(4), no adjustment of such Conversion Price
pursuant to this subsection 4(d)(i) shall have the effect of increasing the
Conversion Price above the Conversion Price in effect immediately prior to such
adjustment.
(C) In the case of the issuance of Additional Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by this corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.
(D) In the case of the issuance of Additional Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined by the
corporation's Board of Directors in good faith irrespective of any accounting
treatment.
(E) In the case of the issuance (whether before, on or after the
Purchase Date) of options, warrants or other rights to purchase or subscribe for
Common Stock, securities by their terms convertible into or exchangeable for
Common Stock, or options, warrants or other rights to purchase or subscribe for
such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 4(d)(i) and subsection 4(d)(ii):
(1) The aggregate maximum number of shares of Common Stock
deliverable upon exercise (assuming the satisfaction of any conditions
to exercisability, including without limitation, the passage of time,
but without taking into account potential antidilution adjustments) of
such options, warrants or other rights to purchase or subscribe for
Common Stock shall be deemed to have been issued at the time such
options, warrants or rights were issued and for a consideration equal
to the consideration (determined in the manner provided in subsections
4(d)(i)(C) and 4(d)(i)(D)), if any, received by the corporation upon
the issuance of such options, warrants or other rights plus the
minimum exercise price provided in such options, warrants or other
rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(2) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability,
including,
7
<PAGE>
without limitation, the passage of time, but without taking into
account potential antidilution adjustments) for any such convertible
or exchangeable securities or upon the exercise of options, warrants
or other rights to purchase or subscribe for such convertible or
exchangeable securities and subsequent conversion or exchange thereof
shall be deemed to have been issued at the time such securities were
issued or such options, warrants or other rights were issued and for a
consideration equal to the consideration, if any, received by the
corporation for any such securities and related options, warrants or
other rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the corporation (without
taking into account potential antidilution adjustments) upon the
conversion or exchange in full of such securities or the exercise in
full of any related options, warrants or other rights (the
consideration in each case to be determined in the manner provided in
subsections 4(d)(i)(C) and 4(d)(i)(d)).
(3) In the event of any change in the number of shares of
Common Stock deliverable or in the consideration payable to this
corporation upon exercise of such options, warrants or other rights or
upon conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Conversion Price of the Series C,
Series D, Series E or Series F Preferred Stock, to the extent in any
way affected by or computed using such options, warrants or other
rights or securities, or options, warrants or other rights related to
such securities, shall be recomputed to reflect such change; but no
further adjustment shall be made for the actual issuance of Common
Stock or any payment of such consideration upon the exercise of any
such options, warrants or other rights or the conversion or exchange
of such securities.
(4) Upon the expiration of any such options, warrants or
other rights, the termination of any such rights to convert or
exchange or the expiration of any options, warrants or other rights
related to such convertible or exchangeable securities, the Conversion
Price of the Series C, Series D, Series E or Series F Preferred Stock,
to the extent in any way affected by or computed using such options,
warrants or other rights or securities, or options, warrants or other
rights related to such securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and convertible
or exchangeable securities which remain in effect) actually issued
upon the exercise of such options, warrants or other rights upon the
conversion or exchange of such securities or upon the exercise of the
options, warrants or other rights related to such securities.
(5) The number of shares of Common Stock deemed issued and
the consideration deemed paid therefor pursuant to subsections
4(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any
change, termination or expiration of the type described in either
subsection 4(d)(i)(E)(3) or (4).
8
<PAGE>
(ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to subsection 4(d)(i)(E)) by this
corporation after the Purchase Date other than:
(A) Common Stock issued pursuant to a transaction described in
subsection 4(e) hereof:
(B) up to 4,375,000 shares of Common Stock issuable or issued
to officers, employees, consultants or directors of the Company, directly
or pursuant to a plan, arrangement or agreement approved by the Board of
Directors of this corporation;
(C) shares of Common Stock issued or issuable (x) in a public
offering registered under the Securities Act, before or in connection with
which all outstanding shares of Preferred Stock will be converted to Common
Stock or (y) upon exercise of warrants or rights granted to underwriters in
connection with such a public offering; or
(D) the issuance of stock, warrants or other securities or
rights as approved by the Board of Directors to persons or entities with
which the Company has business relationships provided such issuances are
for other than primarily equity financing purposes.
(e) Adjustment of Conversion Price for Dividends, Distributions and Common
----------------------------------------------------------------------
Stock Equivalents. In the event the corporation should at any time or from time
- -----------------
to time after the Purchase Date fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision if no record date is fixed), the Conversion
Price 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 shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of each such series shall be increased in proportion to
such increase of the aggregate of shares of Common Stock outstanding and those
issuable with respect to such Common Stock Equivalents.
(f) Adjustment of Conversion Price for Combination of Common Stock. If
--------------------------------------------------------------
the number of shares of Common Stock outstanding at any time after the Purchase
Date is decreased by a combination of the outstanding shares of Common Stock,
then, following the record date of such combination, or the date of such
combination if no record date is fixed, the Conversion Price for the 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 appropriately increased so that the
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<PAGE>
number of shares of Common Stock issuable on conversion of each share of each
such series shall be decreased in proportion to such decrease in outstanding
shares.
(g) Other Distributions. In the event this corporation shall declare a
-------------------
distribution payable in securities of other persons, evidences of indebtedness
issued by this corporation or other persons, or assets (excluding cash
dividends), then, in each such case for the purpose of this subsection 4(g), the
holders of the Preferred Stock shall be entitled to a proportionate share of any
such distribution as though they were the holders of the number of shares of
Common Stock of the corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the corporation entitled to receive such distribution (or the
date of such distribution if no record date is fixed).
(h) Recapitalization. If at any time or from time to time there shall be a
----------------
recapitalization of the Common Stock (other than a subdivision, combination or
merger or sale of assets transaction provided for elsewhere in this Section 4 or
Section 2), provision shall be made so that the holders of the Preferred Stock
shall thereafter be entitled to receive upon conversion of the Preferred Stock
the number of shares of stock or other securities or property of the
corporation, or otherwise, to which a holder of Common Stock deliverable upon
conversion would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 4 with respect to the rights of the holders of the Preferred Stock
after the recapitalization to the end that the provisions of this Section 4
(including adjustment of the Conversion Price then in effect and the number of
shares issuable upon conversion of the Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
(i) No Impairment. This corporation will not, by amendment of its Articles
-------------
of Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by this corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Preferred Stock against impairment.
(j) No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
(i) No fractional shares shall be issued upon conversion of the
Preferred Stock, and the number of shares of Common Stock to be issued shall be
rounded to the nearest whole share (with one-half (1/2) being rounded upward).
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of the Preferred Stock pursuant to this Section 4, this
corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms
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<PAGE>
hereof and prepare and furnish to each holder of Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. This corporation shall,
upon the written request at any time of any holder of Preferred Stock, furnish
or cause to be furnished to such holder a like certificate setting forth (A)
such adjustment or readjustment, (B) the Conversion Price at the time in effect
and (C) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of a share of
Preferred Stock.
(k) Notice of Record Date. In the event of any taking by this corporation
---------------------
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, this corporation shall
mail to each holder of Preferred Stock, at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
(l) Reservation of Stock Issuable Upon Conversion. This corporation shall
---------------------------------------------
at all times reserve and keep available out of it, authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares 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, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares 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; and if at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then outstanding
shares 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, in addition to such
other remedies as shall be available to the holder of such Preferred Stock, this
corporation will take such corporate action as may, in the opinion of its
counsel, be necessary, to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes.
(m) Notices. Any notice required by the provisions of this Section 4 to be
-------
given to the holders of shares 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 deemed given if deposited in the United States mail, postage prepaid,
and addressed to each holder of record at his or her address appearing on the
books of this corporation.
(n) Special Mandatory Conversion.
----------------------------
(i) At any time following the Purchase Date, if (a) the holders of
shares of Series C, Series D, Series E or Series F Preferred Stock are entitled
to exercise the right of first offer (the "Right of First Offer") set forth in
Section 2.4 of the Fifth Amended and Restated Investors' Rights Agreement, of
even date with the Purchase Date, by and between this corporation and certain
investors, as amended from time to time (the "Rights Agreement"), with respect
to an equity financing of the corporation (the "Equity Financing"), (b) the
Equity Financing would result in a Conversion Price adjustment to the Series C,
Series D, Series E or
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Series F Preferred Stock, as provided, in subsection 4(d)(i) herein, (c) this
corporation has complied with its notice obligations under the Right of First
Offer (or such notice obligations have been waived) with respect to such Equity
Financing and requests, in writing, to each such holder that such holder
exercise its Right of First Offer, and this corporation thereafter proceeds to
consummate the Equity Financing and (d) such holder (a "Non-Participating
Holder") does not by exercise of such holder's Right of First Offer acquire his,
her or its pro rata share offered in such Equity Financing (a "Mandatory
Offering"), then, all of such Non-Participating Holder's shares of Series C,
Series D, Series E or Series F Preferred Stock, as the case may be, shall
automatically and without further action on the part of such holder be
converted, effective upon, subject to and concurrently with, the consummation of
the Mandatory Offering (the "Mandatory Offering Date") into an equivalent number
of shares of Series C1, Series D1, Series E1 or Series F1 Preferred Stock, as
the case may be; provided, however, that no such conversion shall occur in
-------- -------
connection with a particular Equity Financing with respect to a particular
holder if, pursuant to the written request of this corporation to all such
holders (on an equivalent basis), such holder agrees in writing to waive his,
her or its Right of First Offer with respect to such Equity Financing. Upon
conversion pursuant to this subsection 4(n)(i), the shares of Series C, Series
D, Series E and Series F Preferred Stock so converted shall be cancelled and not
subject to reissuance.
(ii) The holder of any shares of Series C, Series D, Series E, or
Series F Preferred Stock converted pursuant to this subsection 4(n) shall
deliver to this corporation during regular business hours at the office of any
transfer agent of the corporation for the Series C, Series D, Series E or Series
F Preferred Stock, or at such other place as may be designated by the
corporation, the certificate or certificates for the shares so converted, duly
endorsed or assigned in blank or to this corporation. As promptly as practicable
thereafter, this corporation shall issue and deliver to such holder, at the
place designated by such holder, a certificate or certificates for the number of
full shares of Series C1, Series D1, Series E1 or Series F1 Preferred Stock to
be issued and such holder shall be deemed to have become a shareholder of record
of Series C1, Series D1, Series E1 or Series F1 Preferred Stock, as the case may
be, immediately prior to the close of business on the Mandatory Offering Date.
(iii) In the event any shares of Series C1, Series D1, Series E1 or
Series F1 Preferred Stock are issued, concurrently with such issuance, this
corporation shall use its best efforts to take all such action as may be
required, including amending its Articles of Incorporation, (a) to cancel all
authorized shares of Series C1, Series D1, Series E1 or Series F1 Preferred
Stock that remain unissued after such issuance, (b) to create and reserve for
issuance upon conversion pursuant to this subsection 4(n) of any Series C,
Series D, Series E or Series F Preferred Stock a new series of Preferred Stock
equal in number to the number of shares of Series C1, Series D1, Series E1 or
Series F1 Preferred Stock so cancelled and designated Series C2, Series D2,
Series E2 or Series F2 Preferred Stock, with the designations, powers,
preferences and rights and the qualifications, limitations and restrictions
identical to those then applicable to the Series C1, Series D1, Series E1 or
Series F1 Preferred Stock, except that the Conversion Price for such shares of
Series C2, Series D2, Series E2 or Series F2 Preferred Stock shall be the Series
C, Series D, Series E or Series F Conversion Price, respectively, in effect
immediately prior to such issuance and (c) to amend the provisions of this
subsection 4(n) to provide that any subsequent conversion pursuant to this
subsection 4(n) will be into shares of Series C2, Series D2, Series E2 or Series
F2 Preferred Stock. This corporation shall take the same actions with
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<PAGE>
respect to the Series C2, Series D2, Series E2 or Series F2 Preferred Stock and
each subsequently authorized series of Preferred Stock upon initial issuance of
shares of the last such series to be authorized. The right to receive any
dividend declared but unpaid at the time of conversion on any shares of
Preferred Stock converted pursuant to the provisions of this subsection 4(n)
shall accrue to the benefit of the new shares of Preferred Stock issued upon
conversion thereof.
5. Voting Rights.
-------------
(a) General Voting Rights. Each holder of Series A Preferred Stock,
---------------------
each holder of Series B Preferred Stock, each holder of Series C Preferred
Stock, each holder of Series C1 Preferred Stock, each holder of Series D
Preferred Stock, each holder of Series D1 Preferred Stock, each holder of Series
E Preferred Stock, each holder of Series E1 Preferred Stock, each holder of
Series F Preferred Stock and each holder of Series F1 Preferred Stock shall
have the right to one vote for each share of Common Stock into which such Series
A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1,
Series F or Series F1 Preferred Stock, as the case may be, could then be
converted. Except as otherwise provided by law, holders of 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 shall have full voting rights and powers equal to the voting
rights and powers of the holders of Common Stock, and shall be entitled,
notwithstanding any provision hereof, to notice of any shareholders' meeting in
accordance with the bylaws of this corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any questions upon which
holders of Common Stock have the right to vote. Fractional votes shall not,
however, be permitted and any fractional voting rights available on an as-
converted basis (after aggregating all shares into which shares of Series A,
Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1, Series
F and Series F1 Preferred Stock, as the case may be, held by each holder could
be converted) shall be rounded to the nearest whole number (with one-half (1/2)
being rounded upward).
(b) Voting for the Election of Directors. As long as 50% or more of
------------------------------------
the shares of Series A Preferred Stock originally issued remain outstanding, the
holders of such shares of Series A Preferred Stock shall be entitled to elect
one director of this corporation at each annual election of directors. As long
as 50% or more of the shares of Series B Preferred Stock originally issued
remain outstanding, the holders of such shares of Series B Preferred Stock shall
be entitled to elect one director of the corporation at each annual election of
directors. As long as 50% or more of the shares of Series C Preferred Stock and
Series C1 Preferred Stock originally issued remain outstanding, the holders of
such shares of Series C Preferred Stock and Series C1 Preferred Stock, voting
together as a single class, shall be entitled to elect one director of the
corporation at each annual election of directors. The holders of outstanding
Common Stock shall be entitled to elect one director of the corporation at each
annual election of directors. 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, the holders of Common Stock and the holders of any series of
Preferred Stock that may from time to time come into existence (voting together
as a single class and not as separate series, and on an as-converted basis),
shall be entitled to elect any remaining directors of the corporation.
13
<PAGE>
In the case of any vacancy (other than a vacancy caused by removal) in the
office of a director occurring among the directors elected by the holders of a
class or series of stock pursuant to this subsection (5)(b), the remaining
directors so elected by that class or series may, by affirmative vote of a
majority thereof (or the remaining director so elected if there be but one, or
if there are no such directors remaining, by the affirmative vote of the holders
of a majority of the shares of that class or series), elect a successor or
successors to hold office for the unexpired term of the director or directors
whose place or places shall be vacant. Any director who shall have been elected
by the holders of a class or series of stock or by any directors so elected as
provided in the immediately preceding sentence hereof may be removed during the
aforesaid term of office, either with or without cause, by, and only by, the
affirmative vote of the holders of the shares of the class or series of stock
entitled to elect such director or directors, given either at a special meeting
of such shareholders duly called for that purpose or pursuant to a written
consent of shareholders, and any vacancy thereby created may be filled by the
holders of that class of stock represented at the meeting or pursuant to
unanimous written consent.
6. Protective Provisions. Subject to the rights of series of Preferred
---------------------
Stock which may from time to time come into existence, so long as at least 50%
of the shares of Preferred Stock originally issued are outstanding (as
appropriately adjusted for any stock splits, stock combinations,
recapitaliziations or the like), the corporation shall not, without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Preferred Stock
(voting together as a single class and not as separate series, and on as-
converted basis):
(a) sell, convey or otherwise dispose of or encumber all or substantially
all of its property or business or merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary corporation) or effect any
transaction or series of related transactions in which more than 50% of the
voting power of the corporation is disposed of;
(b) alter or change the rights, preferences or privileges of the shares of
Series A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series
E1, Series F or Series F1 Preferred Stock so as to affect adversely the shares;
or
(c) authorize or issue, or obligate itself to issue, any other equity
security, including any other security convertible into or exercisable for any
equity security having a preference over, or being on a parity with, the Series
A, Series B, Series C, Series C1, Series D, Series D1, Series E, Series E1,
Series F or Series F1 Preferred Stock with respect to voting, dividends or upon
liquidation.
Subject to the rights of series of Preferred Stock which may from time to
time come into existence, as so long as, in the aggregate, at least 50% of the
shares of Series F Preferred Stock and Series F1 Preferred Stock originally
issued are outstanding (as appropriately adjusted for any stock splits, stock
combinations, recapitalizations or the like), the corporation shall not, without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least a majority of the then outstanding shares of Series F
and Series F1 Preferred Stock (voting together as a single class and not as
separate series), (i) increase the total number of authorized shares of Series F
or Series F1 Preferred Stock or (ii) decrease the public
14
<PAGE>
offering price set forth in subsection 4(b) herein at which the shares of
Preferred Stock shall automatically be converted into shares of Common Stock.
7. Status of Converted Stock. In the event shares of Series A, Series B,
-------------------------
Series C, Series C1, Series D, Series D1, Series E, Series E1, Series F or
Series F1 Preferred Stock shall be converted pursuant to Section 4 hereof, the
shares so converted shall be cancelled and shall not be issuable by the
corporation. The Articles of Incorporation of this corporation shall be
appropriately amended to effect the corresponding reduction in the corporation's
authorized capital stock.
8. Repurchase of Shares. In connection with repurchase by this
--------------------
corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California General Corporation Law
shall not apply in whole or in part with respect to such repurchases.
C. Common Stock.
------------
1. Dividend Rights. Subject to the prior rights of holders of all classes
---------------
of stock at the time outstanding having prior rights as to dividends (as set
forth in Section 1 of Division (B) of this Article III hereof), the holders of
the Common Stock shall be entitled to receive, when and as declared by the Board
of Directors, out of any assets of the corporation legally available therefor,
such dividends as may be declared from time to time by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding up of
------------------
the corporation, the assets of the corporation shall be distributed as provided
in Section 2 of Division (B) of this Article III hereof.
3. Redemption. The Common Stock is not redeemable.
----------
4. Voting Rights. The holder of each share of Common Stock shall have the
-------------
right to one vote, and shall be entitled to notice of any shareholders' meeting
in accordance with the bylaws of this corporation, and shall be entitled to vote
upon such matters and in such manner as may be provided by law.
ARTICLE IV
1. The liability of the directors of this corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
2. This corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the California Corporations Code) through bylaw
provisions, agreements with the agents, vote of shareholders or disinterested
directors, or otherwise in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to applicable
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to the corporation and its shareholders.
15
<PAGE>
THREE: The foregoing amendment has been approved by the Board of
Directors of said corporation.
FOUR: The foregoing amendment was approved by the holders of the
requisite number of shares of said corporation in accordance with Sections 902
and 903 of the California General Corporation Laws: the total number of
outstanding shares of each class entitled to vote with respect to the foregoing
amendment was 4,220,275 shares of Common Stock, 1,232,500 shares of Series A
Preferred Stock, 2,937,995 shares of Series B Preferred Stock, 3,575,000 shares
of Series C Preferred Stock, no shares of Series C1 Preferred Stock, 1,350,000
shares of Series D Preferred Stock, no shares of Series D1 Preferred Stock,
1,000,000 shares of Series E Preferred Stock, no shares of Series E1 Preferred
Stock, 1,777,778 shares of Series F Preferred Stock and no shares of Series F1
Preferred Stock. The number of shares voting in favor of the foregoing amendment
equaled or exceeded the vote required, such required vote being a majority of
the outstanding shares of Common Stock, Series A, Series B, Series C, Series C1,
Series D, Series D1, Series E, Series E1, Series F or Series F1 Preferred Stock
voting as a single class and on an as-converted basis.
16
<PAGE>
The undersigned certify under penalty of perjury that they have read the
foregoing Eighth Amended and Restated Articles of Incorporation and know the
contents thereof, and that the statements therein are true.
IN WITNESS WHEREOF, the undersigned have executed this certificate at San
Jose, California on May 10, 1999.
/s/ Bryan D. Stolle
------------------------------
Bryan D. Stolle, President
/s/ Thomas P. Shanahan
------------------------------
Thomas P. Shanahan, Secretary
[SEAL APPEARS HERE]
17
<PAGE>
EXHIBIT 3.3
BYLAWS
OF
AGILE SOFTWARE CORPORATION
ARTICLE I - OFFICES
-------------------
Section 1. The principal executive offices of AGILE SOFTWARE CORPORATION
(the "Corporation") shall be at such place inside or outside the State of
California as the Board of Directors may determine from time to time.
Section 2. The Corporation may also have offices at such other places as
the Board of Directors may from time to time designate, or as the business of
the Corporation may require.
ARTICLE II- SHAREHOLDERS' MEETINGS
---------------------------------
Section 1. Annual Meetings. The annual meeting of the shareholders
---------------
of the Corporation 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 and at such time as may be fixed
from time to time by the Board of Directors and stated in the notice of the
meeting. If the annual meeting of the shareholders be not held as herein
prescribed, the election of directors may be held at any meeting thereafter
called pursuant to these Bylaws.
Section 2. Special Meetings. Special meetings of the shareholders, for
----------------
any purpose whatsoever, unless otherwise prescribed by statute, may be called at
any time by
<PAGE>
the Chairman of the Board, the President, or by the Board of Directors, or by
one or more shareholders holding not less than ten percent (10%) of the voting
power of the Corporation.
Section 3. Place. All meetings of the shareholders shall be at any
-----
place within or without the State of California designated either by the Board
of Directors or by written consent of the holders of a majority of the shares
entitled to vote thereat, given either before or after the meeting. In the
absence of any such designation, shareholders' meetings shall be held at the
principal executive office of the Corporation.
Section 4. Notice. Notice of meetings of the shareholders of the
------
Corporation shall be given in writing to each shareholder entitled to vote,
either personally or by first-class mail (unless the Corporation has 500 or more
shareholders determined as provided by the California Corporations Code on the
record date for the meeting, in which case notice may be sent by third-class
mail) or other means of written communication, charges prepaid, addressed to the
shareholder at his address appearing on the books of the Corporation or given by
the shareholder to the Corporation for the purpose of notice. Notice of any such
meeting of shareholders shall be sent to each shareholder entitled thereto not
fewer than ten (10) (or, if sent by third-class mail, 30) nor more than 60 days
before the meeting. Said notice shall state the place, date and hour of the
meeting and, (1) in the case of special meetings, the general nature of the
business to be transacted, and no other business may be transacted, or (2) in
the case of annual meetings, those matters that the Board of Directors, at the
time of the mailing of the notice, intends to present for action by the
shareholders, but subject to Section 601(f)
2.
<PAGE>
of the California Corporations Code any proper matter may be presented at the
meeting for shareholder action, and (3) in the case of any meeting at which
directors are to be elected, the names of the nominees intended at the time of
the mailing of the notice to be presented by management for election.
Section 5. Adjourned Meetings. Any shareholders' meeting may be
------------------
adjourned from time to time by the vote of the holders of a majority of the
voting shares present at the meeting either in person or by proxy. Notice of any
adjourned meeting need not be given unless a meeting is adjourned for forty-five
(45) days or more from the date set for the original meeting.
Section 6. Quorum. The presence in person or by proxy of the persons
------
entitled to vote a majority of the shares entitled to vote at any meeting
constitutes a quorum for the transaction of business. The shareholders present
at a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
In the absence of a quorum, any meeting of shareholders may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat,- but no other
business may be transacted, except as provided above.
Section 7. Consent to Shareholder Action. Any action that may be taken at
-----------------------------
any meeting of shareholders may be taken without a meeting and without prior
notice,
3.
<PAGE>
if a consent in writing, setting forth the action so taken, shall be signed by
the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted; provided,
--------
however, that (1) unless the consents of all shareholders entitled to vote have
- --------
been solicited in writing, notice of any shareholder approval without a meeting
by less than unanimous written consent shall be given as required by the
California Corporations Code, and (2) directors may not be elected by written
consent except by unanimous written consent of all shares entitled to vote for
the election of directors.
Any written consent may be revoked by a writing received by the Secretary
of the Corporation prior to the time that written consents of the number of
shares required to authorize the proposed action have been filed with the
Secretary.
Section 8. Waiver of Notice. The transactions of any meeting of
----------------
shareholders, however called and noticed, and whenever held, shall be as valid
as though had at a meeting duly held after regular call and notice, if a quorum
be present either in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in person or by
proxy, signs a written waiver of notice, or a consent to the holding of the
meeting, or an approval of the minutes thereof. All such waivers, consents, or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 9. Voting. The voting at all meetings of shareholders need
------
not be by ballot, but any qualified shareholder before the voting begins may
demand a stock
4.
<PAGE>
vote whereupon such stock vote shall be taken by ballot, each of which shall
state the name of the shareholder voting and the number of shares voted by such
shareholder, and if such ballot be cast by a proxy, it shall also state the name
of such proxy.
At any meeting of the shareholders, every shareholder having the right to
vote shall be entitled to vote in person, or by proxy appointed in a writing
subscribed by such shareholder and bearing a date not more than eleven (11)
months prior to said meeting, unless the writing states that it is irrevocable
and satisfies Section 705(e) of the California Corporations Code, in which event
it is irrevocable for the period specified in said writing and said Section
705(e).
Section 10. Record Dates. In the event the Board of Directors fixes
------------
a day for the determination of shareholders of record entitled to vote as
provided in Section 1 of Article V of these Bylaws, then, subject to the
provisions of the General Corporation Law of the State of California, only
persons in whose name shares entitled to vote stand on the stock records of the
Corporation at the close of business on such day shall be entitled to vote.
If no record date is fixed:
The record date for determining shareholders entitled to notice of or to
vote at a meeting of shareholders shall be at the close of business on the
business day next preceding the day notice is given or, if notice is waived, at
the close of business on the business day next preceding the day on which the
meeting is held;
The record date for determining shareholders entitled to give consent to
corporate action in writing without a meeting, when no prior action by the Board
of
5.
<PAGE>
Directors is necessary, shall be the day on which the first written consent is
given; and
The record date for determining shareholders for any other purpose shall be
at the close of business on the day on Which the Board of Directors adopts the
resolution relating thereto, or the sixtieth (60th) day prior to the date of
such other action, whichever is later.
A determination of shareholders of record entitled to notice of or to vote
at a meeting of shareholders shall apply to any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting,
but the Board of Directors shall fix a new record date if the meeting is
adjourned for more than forty-five (45) days.
Section 11. Cumulative Voting for Election of Directors. Provided
-------------------------------------------
the candidate's name has been placed in nomination prior to the voting and one
or more shareholders has given notice at the meeting prior to the voting of the
shareholder's intent to cumulate the shareholder's votes, every shareholder
entitled to vote at any election for directors shall have the right to cumulate
such shareholder's votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which the
shareholder's shares are normally entitled, or distribute the shareholder's
votes on the same principle among as many candidates as the shareholder shall
think fit. The candidates receiving the highest number of votes of the shares
entitled to be voted for them up to the number of directors to be elected by
such shares are elected.
6.
<PAGE>
ARTICLE III - BOARD OF DIRECTORS
--------------------------------
Section 1. Powers. Subject to any limitations in the Articles of
------
Incorporation or these Bylaws and to any provision of the California
Corporations Code requiring shareholder authorization or approval for a
particular action, the business and affairs of the Corporation shall be managed
and all corporate powers shall be exercised by, or under the direction of, the
Board of Directors. The Board of Directors may delegate the management of the
day-to-day operation of the business of the Corporation to a management company
or other person provided that the business and affairs of the Corporation shall
be managed and all corporate powers shall be exercised, under the ultimate
direction of the Board of Directors.
Section 2. Number, Tenure and Qualifications. The number of directors
---------------------------------
that shall constitute the whole board shall be not less than three (3) nor more
than five (5), the exact number of directors to be fixed from time to time
within such limit by a duly adopted resolution of the Board of Directors or
shareholders. The exact number of directors presently authorized shall be three
(3) until changed within the limits specified above by a duly adopted resolution
of the Board of Directors or shareholders. Directors need not be shareholders.
Directors shall hold office until the next annual meeting of shareholders
and until their respective successors are elected. If any such annual meeting is
not held, or the directors are not elected thereat, the directors may be elected
at any special meeting of shareholders held for that purpose.
7.
<PAGE>
Section 3. Regular Meetings. A regular annual meeting of the Board
----------------
of Directors shall be held without other notice than this Bylaw immediately
after, and at the same place as, the annual meeting of shareholders. The Board
of Directors may provide for other regular meetings from time to time by
resolution.
Section 4. Special Meetings. Special meetings of the Board of Directors
----------------
may be called at any time by the Chairman of the Board, or the President or any
Vice President, or the Secretary or any two (2) directors. Written notice of the
time and place of all special meetings of the Board of Directors shall be
delivered personally or by telephone or telegraph to each director at least
forty-eight (48) hours before the meeting, or sent to each director by first-
class mail, postage prepaid, at least four (4) days before the meeting. Such
notice need not specify the purpose of the meeting. Notice of any meeting of the
Board of Directors need not be given to any director who signs a waiver of
notice, whether before or after the meeting, or who attends the meeting without
protesting prior thereto or at its commencement, the lack of notice to such
director.
Section 5. Place of Meetings. Meetings of the Board of Directors may
-----------------
be held at any place within or without the State of California, which has been
designated in the notice, or if not stated in the notice or there is no notice,
the principal executive office of the Corporation or as designated by the
resolution duly adopted by the Board of Directors.
Section 6. Participation by Telephone. Members of the Board of Directors
--------------------------
may participate in a meeting through use of conference telephone or similar
communications equipment, so long as all members participating in such meeting
can
8.
<PAGE>
hear one another.
Section 7. Quorum. A majority of the Board of Directors shall constitute
------
a quorum at all meetings. In the absence of a quorum a majority of the directors
present may adjourn any meeting to another time and place. If a meeting is
adjourned for more than twenty-four (24) hours, notice of any adjournment to
another time or place shall be given prior to the time of the reconvened meeting
to. the directors who were not present at the time of adjournment.
Section 8. Action at Meeting. Every act or decision done or made by
-----------------
a majority of the directors present at a meeting duly held at which a quorum is
present is the act of the Board of Directors. A meeting at which a quorum is
initially present may continue to transact business notwithstanding the
withdrawal of directors, if any action taken is approved by at least a majority
of the required quorum for such meeting.
Section 9. Waiver of Notice. The transactions of any meeting of the Board
----------------
of Directors, however called and noticed or wherever held, are as valid as
though had at a meeting duly held after regular call and notice if a quorum is
present and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice, a consent to holding the meeting, or
an approval of the minutes thereof. All such waivers, consents and approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 10. Action Without Meeting. Any action required or permitted to
----------------------
be taken by the Board of Directors may be taken without a meeting, if all
members of the Board individually or collectively consent in writing to such
action. Such written
9.
<PAGE>
consent or consents shall be filed with the minutes of the proceedings of the
Board. Such action by written consent shall have the same force and effect as a
unanimous vote of such directors.
Section 11. Removal. The Board of Directors may declare vacant the
-------
office of a director who has been declared of unsound mind by an order of court
or who has been convicted of a felony.
The entire Board of Directors or any individual director may be removed
from office without cause by a vote of shareholders holding a majority of the
outstanding shares entitled to vote at an election of directors; provided,
---------
however, that unless the entire Board is removed, no individual director may be
- --------
removed when the votes cast against removal, or not consenting in writing to
such removal, would be sufficient to elect such director if voted cumulatively
at an election at which the same total number of votes cast were cast (or, if
such action is taken by written consent, all shares entitled to vote were voted)
and the entire number of directors authorized at the time of the director's most
recent election were then being elected.
In the event an office of a director is so declared vacant or in case the
Board or any one or more directors be so removed, new directors may be elected
at the same meeting.
Section 12. Resignations. Any director may resign effective upon giving
------------
written notice to the Chairman of the Board, the President, the Secretary or the
Board of Directors of the Corporation, unless the notice specifies a later time
for the effectiveness of such resignation. If the resignation is effective at a
future time, a
10.
<PAGE>
successor may be elected to take office when the resignation becomes effective.
Section 13. Vacancies. Except for a vacancy created by the removal
---------
of a director, all vacancies in the Board of Directors, whether caused by
resignation, death or otherwise, may be filled by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director, and each
director so elected shall hold office until his successor is elected at an
annual, regular or special meeting of the shareholders. Vacancies created by the
removal of a director may be filled only by approval of the shareholders. The
shareholders may elect a director at any time to fill any vacancy not filled by
the directors. Any such election by written consent requires the consent of a
majority of the outstanding shares entitled to vote.
Section 14. Compensation. No stated salary shall be paid directors,
------------
as such, for their services, but, by resolution of the Board of Directors, a
fixed sum and expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of such Board; provided that nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 15. Committees. The Board of Directors may, by resolution
----------
adopted by a majority of the authorized number of directors, designate one or
more committees, each consisting of two (2) or more directors, to serve at the
pleasure of the Board of Directors. The Board of Directors may designate one or
more directors as alternate members of any committee, who may replace any absent
member at any
11.
<PAGE>
meeting of the committee. The appointment of members or alternate members of a
committee requires the vote of a majority of the authorized number of directors.
Any such committee, to the extent provided in the resolution of the Board of
Directors, shall have all the authority of the Board of Directors in the
management of the business and affairs of the Corporation, except with respect
to (a) the approval of any action requiring shareholders' approval or approval
of the outstanding shares, (b) the filling of vacancies on the Board or any
committee, (c) the fixing of compensation of directors for serving on the Board
or a committee, (d) the adoption, amendment or repeal of Bylaws, (e) the
amendment or repeal of any resolution of the Board that by its express terms is
not so amendable or repealable, (f) a distribution to shareholders, except at a
rate or in a periodic amount or within a price range determined by the Board,
and (g) the appointment of other committees of the Board or the members thereof.
ARTICLE IV - OFFICERS
---------------------
Section 1. Number and Term. The officers of the Corporation shall be
---------------
a Chairman of the Board, a President, one or more Vice Presidents, a Secretary
and a Chief Financial Officer, all of which shall be chosen by the Board of
Directors. In addition, the Board of Directors may appoint such other officers
as may be deemed expedient for the proper conduct of the business of the
Corporation, each of whom shall have such authority and perform such duties as
the Board of Directors may from time to time determine. The officers to be
appointed by the Board of Directors shall be chosen annually at the regular
meeting of the Board of Directors held after the annual meeting of shareholders
and shall serve at the pleasure of the Board of Directors. If officers are
12.
<PAGE>
not chosen at such meeting of the Board of Directors, they shall be chosen as
soon thereafter as shall be convenient. Each officer shall hold office until his
successor shall have been duly chosen or until his removal or resignation.
Section 2. Inability to Act. In the case of absence or inability to
----------------
act of any officer of the Corporation and of any person herein authorized to act
in his place, the Board of Directors may from time to time delegate the powers
or duties of such officer to any other officer, or any director or other person
whom it may select.
Section 3. Removal and Resignation. Any officer chosen by the Board
-----------------------
of Directors may be removed at any time, with or without cause, by the
affirmative vote of a majority of all the members of the Board of Directors.
Any officer chosen by the Board of Directors may resign at any time by
giving written notice of said resignation to the Corporation. Unless a different
time is specified therein, such resignation shall be effective upon its receipt
by the Chairman of the Board, the President, the Secretary or the Board of
Directors.
Section 4. Vacancies. A vacancy in any office because of any cause
---------
may be filled by the Board of Directors for the unexpired portion of the term.
Section 5. Chairman of the Board. The Chairman of the Board shall
---------------------
preside at all meetings of the Board.
Section 6. President. The President shall be the general manager and
---------
chief executive officer of the Corporation, subject to the control of the Board
of Directors, and as such shall preside at all meetings of shareholders, shall
have general supervision of the affairs of the Corporation, shall sign or
countersign or authorize another officer to sign all certificates, contracts,
and other instruments of the
13.
<PAGE>
Corporation as authorized by the Board of Directors, shall make reports to the
Board of Directors and shareholders, and shall perform all such other duties as
are incident to such office or are properly required by the Board of Directors.
Section 7. Vice President. In the absence of the President, or in
--------------
the event of such officer's death, disability or refusal to act, the Vice
President, or in the event there be more than one Vice President, the Vice
Presidents in the order designated at the time of their selection, or in the
absence of any such designation, then in the order of their selection, shall
perform the duties of President, and when so acting, shall have all the powers
and be subject to all restrictions upon the President. Each Vice President shall
have such powers and discharge such duties as may be assigned from time to time
by the President or by the Board of Directors.
Section 8. Secretary. The Secretary shall see that notices for all
---------
meetings are given in accordance with the provisions of these Bylaws and as
required by law, shall keep minutes of all meetings, shall have charge of the
seal and the corporate books, and shall make such reports and perform such other
duties as are incident to such office, or as are properly required by the
President or by the Board of Directors.
The Assistant Secretary or the Assistant Secretaries, in the order of
their seniority, shall, in the absence or disability of the Secretary, or in the
event of such officer's refusal to act, perform the duties and exercise the
powers and discharge such duties as may be assigned from time to time by the
President or by the Board of Directors.
14.
<PAGE>
Section 9. Chief Financial Officer. The Chief Financial Officer may
-----------------------
also be designated by the alternate title of "Treasurer." The Chief Financial
Officer shall have custody of all moneys and securities of the Corporation and
shall keep regular books of account. Such officer shall disburse the funds of
the Corporation in payment of the just demands against the Corporation, or as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Board of Directors from time to time as
may be required of such officer, an account of all transactions as Chief
Financial Officer and of the financial condition of the Corporation. Such
officer shall perform all duties incident to such office or that are properly
required by the President or by the Board of Directors.
The Assistant Treasurer or the Assistant Treasurers, in the order of
their seniority, shall, in the absence or disability of the Chief Financial
Officer, or in the event of such officer's refusal to act, perform the duties
and exercise the powers of the Chief Financial Officer, and shall have such
powers and discharge such duties as may be assigned from time to time by the
President or by the Board of Directors.
Section 10. Salaries. The salaries of the officers shall be fixed
--------
from time to time by the Board of Directors and no officer shall be prevented
from receiving such salary by reason of the fact that such officer is also a
director of the Corporation.
Section 11. Officers Holding More than One Office. Any two or more
-------------------------------------
offices may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity.
15.
<PAGE>
Section 12. Approval of Loans to Officers. */ The Corporation may,
----------------------------- --
upon the approval of the Board of Directors alone, make loans of money or
property to, or guarantee the obligations of, any officer of the Corporation or
its parent or subsidiary, whether or not a director, or adopt an employee
benefit plan or plans authorizing such loans or guaranties provided that (i) the
Board of Directors determines that such a loan or guaranty or plan may
reasonably be expected to benefit the Corporation, (ii) the Corporation has
outstanding shares held of record by 100 or more persons (determined as provided
in Section 605 of the California Corporations Code) on the date of approval by
the Board of Directors, and (iii) the approval of the Board of Directors is by a
vote sufficient without counting the vote of any interested director or
directors.
ARTICLE V - MISCELLANEOUS
-------------------------
Section 1. Record Date and Closing of Stock Books. The Board of
--------------------------------------
Directors may fix a time in the future as a record date for the determination of
the shareholders entitled to notice of and to vote at any meeting of
shareholders or entitled to receive payment of any dividend or distribution, or
any allotment of rights, or to exercise rights in respect to any other lawful
action. The record date so fixed shall not be more than sixty (60) nor less than
ten (10) days prior to the date of the meeting or event for the purposes of
which it is fixed. When a record date is so fixed, only shareholders of record
at the close of business on that date are entitled to notice of and to vote at
the meeting or to receive the dividend, distribution, or allotment of rights, or
__________________
*/ This section is effective only if it has been approved by the shareholders
- --
in accordance with Sections 315(b) and 152 of the California Corporations Code.
16.
<PAGE>
to exercise the rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after the record date.
The Board of Directors may close the books of the Corporation against
transfers of shares during the whole or any part of a period of not more than
sixty (60) days prior to the date of a shareholders' meeting, the date when the
right to any dividend, distribution, or allotment of rights vests, or the
effective date of any change, conversion or exchange of shares.
Section 2. Certificates. Certificates of stock shall be issued in
------------
numerical order and each shareholder shall be entitled to a certificate signed
in the name of the Corporation by the Chairman of the Board or the President or
a Vice President, and the Chief Financial Officer, the Secretary or an Assistant
Secretary, certifying to the number of shares owned by such shareholder. Any or
all of the signatures on the certificate may be facsimile. Prior to the due
presentment for registration of transfer in the stock transfer book of the
Corporation, the registered owner shall be treated as the person exclusively
entitled to vote, to receive notifications and otherwise to exercise all the
rights and powers of an owner, except as expressly provided otherwise by the
laws of the State of California.
Section 3. Representation of Shares in Other Corporations. Shares of
----------------------------------------------
other corporations standing in the name of this Corporation may be voted or
represented and all incidents thereto may be exercised on behalf of the
Corporation by the Chairman of the Board, the President or any Vice President
and the Chief Financial Officer or the Secretary or an Assistant Secretary.
17.
<PAGE>
Section 4. Fiscal Year. The fiscal year of the Corporation shall end
-----------
on the 31st day of December.
Section 5. Annual Reports. The Annual Report to shareholders,
--------------
described in the California Corporations Code, is expressly waived and dispensed
with.
Section 6. Amendments. Bylaws may be adopted, amended, or repealed
----------
by the vote or the written consent of shareholders entitled to exercise a
majority of the voting power of the Corporation. Subject to the right of
shareholders to adopt, amend, or repeal Bylaws, Bylaws may be adopted, amended,
or repealed by the Board of Directors, except that a Bylaw amendment thereof
changing the authorized number of directors may be adopted by the Board of
Directors only if these Bylaws permit an indefinite number of directors and the
Bylaw or amendment thereof adopted by the Board of Directors changes the
authorized number of directors within the limits specified in these Bylaws.
Section 7. Indemnification of Corporate Agents. The Corporation
-----------------------------------
shall indemnify each of its agents against expenses, judgments, fines,
settlements and other amounts, actually and reasonably incurred by such person
by reason of such person's having been made or having threatened to be made a
party to a proceeding to the fullest extent permissible under the California
Corporations Code and the Corporation shall advance the expenses reasonably
expected to be incurred by such agent in defending any such proceeding upon
receipt of the undertaking required by subdivision (f) of Section 317 of the
California Corporations Code. The terms "agent", "proceeding" and "expenses"
made in this Section 7 shall have the same meaning as such terms in said Section
317.
18.
<PAGE>
CERTIFICATE OF ADOPTION
OF BYLAWS
OF
AGILE SOFTWARE CORPORATION
The undersigned, Thomas P. Shanahan, hereby certifies that he is the
duly elected and acting Secretary of Agile Software Corporation, a California
corporation (the "Corporation"), and that the Bylaws attached hereto were duly
adopted by an Action by Unanimous Written Consent in Lieu of the Organizational
Meeting by the Sole Director of the Corporation effective as of March 13/th/,
1995.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name
this 13/th/ day of March, 1995.
/s/ Thomas P. Shanahan
-----------------------------
Thomas P. Shanahan, Secretary
<PAGE>
EXHIBIT 10.4
ALMADEN FINANCIAL PLAZA
OFFICE LEASE
1. PARTIES
1.1 This Lease is entered into as of this 30th day of May, 1996, in the
City of San Jose, County of Santa Clara, State of California, by and between
NORTH BLOCK PARTNERSHIP
(hereinafter referred to as "Landlord") and
AGILE SOFTWARE, a California Corporation
(hereinafter referred to as "Tenant").
2. PREMISES
2.1 In consideration of their respective agreements contained herein,
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord premises
described as the twelfth (12) floor of the building described as:
ONE ALMADEN BOULEVARD, SUITE 1200
SAN JOSE, CALIFORNIA 95113
comprising approximately 13,000 rentable square feet and described in Exhibit A
attached. Said premises are herein referred to as the "Premises" and the
building in which the Premises are located is herein referred to as the
"Building".
3. TERM
3.1 The Term of this Lease shall be for a period of five (5) years
commencing on the date defined in Article 4 which date will be set forth in the
Confirmation of Lease Commencement to be hereinafter attached to this Lease. A
copy of such form of Confirmation of Lease Commencement is attached hereto as
Exhibit "D". If the Term expires on a date other than the last day of the month,
the Term shall continue up to and including the last day of that month.
4. LEASE COMMENCEMENT
4.1 The Term of this Lease shall commence on July 15, 1996.
4.2 The Lease Commencement Date and Lease Expiration Date as prescribed
herein shall be confirmed by Landlord to Tenant in a written Confirmation of
Lease Commencement which shall be prepared by Landlord, served on Tenant,
executed by Tenant within fifteen (15) days, returned to Landlord and attached
to this lease after Tenant takes occupancy.
4.3 Possession - Tenant agrees that if Landlord is unable to deliver
----------
possession of the Premises to Tenant on the date above specified for the
commencement of the Term of this Lease, this Lease shall not be void or
voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting therefrom, but the Commencement Date of the Term shall be delayed by
the same number of days that the Tenant's possession of the Premises was delayed
by Landlord's inability to deliver possession, and in such event Tenant shall
not be liable for any rent until such time as Landlord tenders delivery of
possession of the Premises to Tenant with Landlord's work therein, if any,
substantially completed. The above notwithstanding, there shall be no delay in
commencement of the Term or in Tenant's liability for payment of rent if
Landlord is unable to deliver possession of the Premises due to any act,
omission or delay of Tenant. In the event that Tenant commences occupancy of the
Premises on any date other than the commencement date of the Term pursuant to
this Paragraph 4, Landlord and Tenant shall promptly execute a written amendment
to this Lease setting forth and confirming the date occupancy commenced.
<PAGE>
5. RENT
5.1 Commencing on the first day of the Term of this Lease, Tenant shall
pay to Landlord as monthly installments of Rent in advance, due and payable on
the first day of each calendar month in lawful money of the United States the
following sums:
<TABLE>
<CAPTION>
PERIOD RATE MONTHLY RENT
------ ---- ------------
<S> <C> <C>
Months 01-03 0.85 $11,050.00
Months 04-06 1.20 $15,600.00
Months 07-12 1.45 $18,850.00
Months 13-36 1.55 $20,150.00
Months 37-60 1.70 $22,100.00
</TABLE>
5.2 All rent, including Rent and escalation, due under this Lease shall be
paid at the address set out after the name of the Landlord or such other address
as may be designated in writing by Landlord.
If the date of commencement occurs on a day other than the first day of a
calendar month, the rent for such first month shall be prorated at the monthly
rate agreed upon in this lease agreement divided by the total number of days in
the first month times the number of days occupied during the first month.
If the date of expiration occurs on a day other than the last day of a calendar
month, the rent for such last month shall be prorated at the monthly rate agreed
upon in this lease agreement divided by the total number of days in the last
month times the number of days occupied during the last month.
6. TAXES AND OPERATING EXPENSES ESCALATION
6.1 Tenant shall pay to Landlord its pro rata share (as defined in
Section 6.2 below) of the following expenses ("Expenses") paid or incurred, by
Landlord on the Building, land, parking, and appurtenant site improvements
whereon the Premises are located (the "Property") to the extent of the Expenses
exceed the expenses paid or incurred in the calendar year 1996 hereinafter
defined as "Base Year".
6.1.1. All real property taxes paid by Landlord that are levied upon and/or
assessed against the Property, including any taxes which may be levied on rents
(other than state or federal income taxes), the use or occupation of the
Building, vehicles utilizing parking areas, the making of this Lease, and the
occupancy of Tenant, Tenant shall be responsible for and charged separately for
any real property tax assessed on tenant improvements installed by Tenant in
accordance with Article 13 herein. If the local taxing authority issues a
separate tax statement for Tenant's improvements, Tenant shall pay those taxes
directly prior to delinquency. Notwithstanding the foregoing, the following
shall be excluded from real property taxes as defined herein:
(a) Any charges or penalties or interest accrued through Landlord's
nonpayment or late payment of taxes or assessments.
(b) Any taxes arising from or applicable to all other real and personal
property of the Landlord.
(c) Any real property tax assessed on tenant improvements installed by
or at the cost and expense of any other tenant of the Building.
6.1.2 Any tax, fee, charge, or excise, however designated, by any
governmental or public authority applicable to the Property that is a direct or
indirect substitute in whole or in part for or in addition to real property
taxes. Estate, inheritance, transfer, gift, or franchise taxes levied on
Landlord shall not be included in Expenses, provided such taxes are not levied
to replace real property taxes, or relate to environmental or energy charges.
6.1.3 If, during the Term of this Lease, Landlord makes capital
improvements to the Building, Premises, or common areas as required by any new
or existing federal, state, city, or county legislation for reasons of energy
conservation, handicapped access, or other reasons of public health, safety, and
welfare, Landlord may amortize such capital improvement costs over the useful
life of the capital improvement as determined by generally accepted accounting
principles and include the amortized cost in Expenses. Any work necessary to
correct latent defects in the Building or to correct Landlord's failure to
construct the Building in accordance with applicable building codes and
standards, shall be excluded from Expenses.
6.1.4 All insurance premiums of fire, earthquake, extended coverage,
liability, and any other insurance that Landlord reasonably maintains on the
Building.
<PAGE>
6.1.5 The cost of all Building services, including, without limitation,
elevator maintenance, engineering wages and benefits, maintenance and repair,
supplies, janitorial wages and benefits, utilities for heating and ventilation,
window cleaning, miscellaneous operating expenses, landscaping and common area
expenses, security, utilities provided to all common areas, the salaries of the
building manager and other building and parking personnel, and administration
and management fees. Any building services may be performed by Landlord or its
affiliates or agents provided such charges and fees do not exceed those charges
and fees of independent contractors in similar buildings in the San Jose area.
6.2 Tenant's pro rata share of Taxes and Operating Expenses shall be
dividends of those fractions represented by Tenant's total net rentable square
feet as of Lease Commencement Date (defined as 13,000 Square Feet) increased by
the portion of any Expansion Space upon exercise of any Expansion Option,
divided by the total net rentable square feet of the building (153,683 Square
Feet which based on space originally leased would be 8.46%). If less than one
hundred percent (100%) of the net rentable area of the building is serviced as
applicable during any calendar year or portions thereon, there will be a
proportional decrease to the total net rentable area of the building for
variable expenses only based on the ratio of the Tenant's total net rentable
square footage bears to the total net rentable area of the Building actually
serviced as applicable. Variable expenses shall be defined as all utilities,
janitorial, janitorial supplies, Building services, and Building supplies which
are provided to the Property. Therefore, Tenant is only responsible for its pro
rata share of expenses on occupied or serviced areas and not for vacant areas,
which is Landlord's responsibility.
6.3 The amount of Additional Rent to be paid by Tenant shall be
determined and payable as follows:
6.3.1 After the end of each calendar year during the Lease Term, Landlord
shall deliver to Tenant a statement of the actual Operating Expenses for the
preceding calendar year which shall become the current year's estimate of
Operating Expenses ("Estimated Expenses"), and Landlord's statement of Tenant's
Pro rata Share of the increase, if any, in the Estimated Expenses over the Base
Year Expenses (the "Excess Expenses"). For purpose hereof, the term "Base Year
Expenses" shall mean the Expenses incurred during calendar year 1996.
6.3.2 If the Estimated Expenses as determined for any calendar year are
less than the actual Operating Expenses incurred by Landlord during that
calendar year, then Tenant shall pay its pro rata share of such difference
within thirty (30) days on receipt of Landlord's statement delivered pursuant to
Subparagraph 6.3.1.
6.3.3 Tenant shall also pay, within thirty (30) days of receipt of such
statement, an amount equal to one-twelfth (1/12th) of its Pro rata Share of the
Excess Expenses times the number of months (including the month in which payment
is made) since the first such month of the year.
6.3.4 Thereafter, with each payment of Rent, Tenant shall pay one-twelfth
(1/12) of its Pro rata Share of the Excess of Expenses.
6.3.5 If the Estimated Expenses as determined for any calendar year exceed
the actual operating Expenses incurred by Landlord during that calendar year,
then Tenant's Pro rata Share of such difference shall be credited against its
next payment of Rent.
6.3.6 Landlord's and Tenant's obligation to make any payment pursuant to
subparagraph 6.3.2 and 6.3.5 above shall survive the termination of this Lease.
If after termination of this Lease, actual Operating Expenses for the calendar
year of the termination are less than Estimated Expenses for such year, Landlord
shall pay Tenant in cash its Pro rata share of such difference. If actual
expenses are higher than Estimated Expenses, then Tenant shall pay Landlord in
cash its Pro rata Share of such difference. Any payment pursuant to this
subparagraph shall be prorated based upon the number of months of the Term in
the year of termination.
6.4 Landlord shall maintain complete and accurate records of all
Expenses. Tenant or its representative shall have the right to inspect
Landlord's records of the Expenses once each year during reasonable business
hours and following thirty (30) days' notice to Landlord.
6.5 For purposes of computing Tenant's pro rata share of Excess Expenses
under this Lease, the maximum increase in the Building's Operating Expenses for
any one year over the prior year shall be limited to ten percent (10%). This
provision limits the base for calculating Tenant's pro rata share and shall not
be construed to limit any annual increase in Tenant's pro rata share of the
Excess Expenses.
<PAGE>
7. CONSIDERATION
7.1 Upon occupancy of the Premises by Tenant, Tenant shall deposit with
landlord the sum of Eleven Thousand Fifty hundred and No/100ths Dollars
($11,050.00) which shall be credited to the first monthly installment of Rent
due hereunder under section 5.1 hereof, and upon execution of this Lease by
Tenant the additional sum of Twenty-Two Thousand One Hundred and No/100ths
Dollars ($22,100.00), ("Security Deposit") to secure the faithful performance by
Tenant under this Lease. If Tenant shall at any time fail to make payment or
fail to keep or perform any Term, covenant, and condition on its part may be
made or performed or kept under this Lease, including without limitation,
payment of Rent, maintenance of the Premises in good repair, and surrendering
the Premises in a clean condition, Landlord may, but shall not be obligated to
and without waiving or releasing Tenant from any obligation under this Lease,
and without waiving its right to treat such failure as a default hereof, use,
apply or retain the whole or any part of the Security Deposit reasonably
necessary to remedy such failure of Tenant. In such event, Tenant shall, within
five (5) days of written demand by Landlord, remit to Landlord sufficient funds
to restore said Security Deposit and Landlord may commingle it, use it in
ordinary business, transfer or assign it, or use it in any combination of those
ways. No interest shall accrue on the Security Deposit. Should Tenant comply
with all of said Terms, covenants, and conditions, and promptly pay all of the
rental herein provided as it falls due, and at the end of the Term of this
Lease, then said Security Deposit shall be returned to Tenant within thirty (30)
following the termination of this Lease and vacating of the Premises by Tenant.
8. LATE CHARGE
8.1 Lessee hereby acknowledges that late payment by Lessee to Lessor of
Base Rent, Lessee's Share of Operating Expense increases or other sums due
hereunder will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed on Lessor by the terms of any mortgage or trust
deed covering the Building. Accordingly, if any installment of Base Rent,
Operating Expense increase, or any other sum due from Lessee shall not be
received by Lessor or Lessor's designee within ten (10) days after such amount
shall be due, then, without any requirement for notice to Lessee, Lessee shall
pay to Lessor a late charge equal to 5% of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the costs Lessor will incur by reason of late payment by Lessee. Acceptance of
such late charge by Lessor shall in no event constitute a waiver of Lessee's
default with respect to such overdue amount, nor prevent Lessor from exercising
any of the other rights and remedies granted hereunder.
9. USE
9.1 Tenant shall use and occupy the Premises during the Term for general
office purposes and no other purpose without the prior written consent of
Landlord. Tenant shall not use, suffer or permit the Premises or any part
thereof to be used for any other purpose or purposes without obtaining written
consent of Landlord, which consent shall not be unreasonably withheld.
9.2 Nothing contained in this Lease shall be construed to prohibit or
limit Landlord from using or leasing any portion of the Building, development,
or project of which the Premises are a part, or any other property owned or
controlled by him, for any lawful purpose.
9.3 Should Tenant commit or permit any act or acts upon the Premises or
use the Premises or permit the Premises to be used in any manner which will
increase the existing rate of insurance on the Building, any part thereof or its
contents or any part thereof, such additional expense shall be paid by Tenant to
Landlord within ten (10) days of delivery to Tenant of notice of such increase.
Tenant shall not, however, commit any acts which will cause the cancellation of
any insurance policy. Tenant shall not sell or permit to be kept, used or sold
in or about the Premises any article which may be prohibited by the standard
form of fire insurance policies, as such now or are hereafter provided, covering
the Building, any part thereof, or its contents.
9.4 Tenant shall not commit or suffer to be committed any waste upon the
Premises or any public or private nuisance or any other act or thing which may
disturb the quiet enjoyment of any other tenant in the Building in which the
Premises are located. Tenant shall not use the Premises or permit the Premises
to be used in whole or in part for any purpose that is deemed to be in violation
of any laws, ordinances, regulations or rules of any public authority or
organization at any time. A judgment of any court of competent jurisdiction or
the admission by Tenant in any judicial or administrative action or proceeding
against Tenant that Tenant has violated any such laws, ordinances, regulations,
or rules in the use of the Premises shall be deemed to be a conclusive
determination of that fact between Landlord and Tenant.
9.5 Upon the expiration or sooner termination of this Lease, Tenant shall
quit and surrender the Premises to Landlord in good condition and repair
reasonable wear and tear excepted.
<PAGE>
10. BUILDING SERVICES
10.1 Landlord agrees to furnish heating, ventilating and air
conditioning to the Premises to an extent lawfully permitted for the comfort and
occupation of the Premises to during the hours 7:00 a.m. to 6:00 p.m., Monday
through Friday and from 9:00 a.m. through 3:00 p.m. on Saturdays, legal holidays
excepted. Tenant agrees to keep the corridor doors closed. Tenant agrees not to
install any equipment which gives off heat in an amount which would place an
overload on the central building facilities; and in all respects to conform with
any reasonable rules and regulations Landlord shall make for the use of the
heating and air conditioning systems and will not install equipment which would
place an overload on the structure of the Building. Tenant will have the right
to require and pay for at its cost and expense heating and air conditioning
delivered to the floor or floors in which its Premises are located at times
other than those specified herein, provided it gives Landlord twenty-four (24)
hours notice of such requirements during weekdays and forty-eight (48) hours
during weekends and holidays.
10.1.1 The charge for after hours operation of the Building's system,
heating and air conditioning, if required by Tenant, will be $27.50 per hour.
Tenant acknowledges that there is supplemental heating and air conditioning
servicing the Premises, which is separately metered and when activated Tenant
shall pay the utility costs to operate this supplemental system.
10.2 Landlord shall provide water, electricity, and use of elevators
twenty-four (24) hours per day, seven (7) days a week.
10.2.1 Landlord shall maintain, in good condition, the following:
(a) The structural parts and exterior walls of the Premises which
structural parts include the foundations, bearing walls, subfloor, roof,
and windows (except if caused by acts of Tenant or its invitees).
(b) The unexposed electrical, plumbing and sewage systems including
without limitation, those portions of the systems lying outside Premises;
(c) Utilities and building standard lamp replacement on a scheduled
basis;
(d) Heating, ventilating and air conditioning systems of the Building;
(e) The landscaping, parking, loading areas, walks and driveways of
Premises;
(f) Elevators
10.3 Landlord agrees to furnish, or cause to be furnished, the Premises
with electricity necessary for lighting and fractional horsepower office
machines, water, and elevator service in the Building. Janitorial service will
be furnished five (5) times weekly, legal holidays excepted, time and days to be
at Landlord's option. Window cleaning, inside and outside, will be furnished two
(2) times per year. No electric current will be furnished for high-energy
consumption equipment such as electronic business machines or computers (other
than electric typewriters, word processors, adding machines, copy machines, fax
machine, desk-top computers, servers, or printers using 110 volts 20 amp
circuits) or for hot plates or electric heaters (see Exhibit B attached hereto).
10.4 If Tenant shall require electric current for purposes other than
those specified above, it is understood that Landlord may cause an electric
meter to be installed in the Premises for that equipment and kept in repair at
the sole cost and expense of the Tenant, so Tenant agrees to pay Landlord for
all such electric current consumed for any such other purposes at the rates
charged for similar services by the local public utility plus any additional
expense incurred in installing and maintaining such meter and keeping account of
the current so consumed. Statements of Landlord for such consumption of electric
current shall be rendered to Tenant not less frequently than quarter annually,
and final statements shall be rendered to Tenant on or before the last days of
the fourth month after expiration of the Lease. The amount of such statements
shall be paid by Tenant within fifteen (15) days after the same have been
rendered.
10.5 Landlord shall not be liable for any damage to person or property
of any nature whatsoever, or compensation or claim for abatement of Rent or
otherwise by reason of any inconvenience, annoyance, injury, or loss arising
from the installation, operation, and maintenance of any equipment or service
provided under this Article 10 or otherwise or from any failure to keep said
equipment or service in operation when such failure is occasioned by act or
neglect of Tenant or by repairs, removals, improvements needful in the judgment
of Landlord or by any power failure, labor controversy or by any accident or
casualty whatsoever, or for any other reason whatsoever and howsoever occurring
beyond Landlord's reasonable control. If interruptions, curtailment or stoppage
of any equipment or service extends beyond five (5) working days after written
notification is received by Landlord and is caused by Landlord or its agents',
employees', or contractors' negligence in properly maintaining or otherwise
timely commencing
<PAGE>
repair of any item of equipment, then Tenant shall be entitled to a pro
rata adjustment of rent for the period of any such curtailment or stoppage of
service.
10.6 Landlord shall not be required to furnish and Tenant shall not be
entitled to receive any such service provided for in this Article 10 during any
period when Tenant is in default under the provisions of this Lease.
11. CONDITION OF PREMISES AND REPAIRS
11.1 Tenant shall be deemed to have agreed by accepting occupancy that the
Premises are in good order, condition, and repair except for latent defects and
except for items as to which Tenant has notified Landlord in writing prior to
the date on which Tenant occupies the Premises. Tenant, at Tenant's expense,
shall keep the interior, non-structural portions of the Premises in good order,
condition, and repair, including all fixtures, and equipment installed by Tenant
except for normal wear and tear. In the event Tenant fails to maintain the
Premises in good order and repair, except for reasonable wear and tear, Landlord
shall give Tenant notice to make such repairs or perform such maintenance as
Landlord deems appropriate. In the event Tenant fails to do so within fifteen
(15) days of receipt of notice, or if such repairs cannot be reasonably made
within such a period and if Tenant has not commenced to make the repairs and/or
has not diligently prosecuted the repairs to completion, Tenant shall be in
material breach and default of this Lease, and Landlord shall have the option,
but not the obligation, to make such repairs or perform such maintenance at the
expense of Tenant and the cost thereof shall be deemed to be, and shall be paid,
as additional rent, with the rent next due following the delivery of notice to
Tenant of said cost. Landlord shall have no liability to Tenant for any damage,
inconvenience, or interference with the use of the Premises by Tenant as a
result of making any such repairs or performing such maintenance. Landlord's
right to perform such repair is in addition to a cumulative with all other
rights Landlord has hereunder and at law and in equity, and Landlord may elect
to utilize any number of such other remedies with or without so performing such
work.
12. ALTERATIONS
12.1 Tenant, at its expense, may make changes, additions and
improvements to the Premises provided any change, addition or improvement shall:
(a) Be made only with the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed, and which
shall include approval of space plans and final working drawings,
if applicable; and
(b) comply with all applicable governmental regulations and carry
certification from the Tenant's designer or architect that the
changes, additions or improvements to the Premises, to the best of
the certifier's knowledge, meet the requirements of the Americans
with Disabilities Act; and
(c) equal or exceed the current construction standards for the
building; and
(d) be performed by licensed contractors who have, prior to commencing
work, delivered to Landlord evidence of insurance coverage in
amount and form satisfactory to Landlord, which current insurance
requirements are described in Article 12.1.1 of this Lease.
12.1.1 Commercial General Liability Insurance - Landlord's current
--------------------------------------
insurance requirements for contractors working in the Building, which may be
changed from time to time as is reasonably necessary, are as follows:
Each contractor or subcontractor shall secure and maintain, at its own expense,
a commercial general liability policy which insures against bodily injury,
property damage, personal injury and advertising injury claims arising from work
conducted or service provided on behalf of the Tenant, with a combined single
limit of $1,000,000 per occurrence, a general aggregate limit of $2,000,000,
and a products/completed operations aggregate limit of $2,000,000. Any general
aggregate limit shall apply per project (contractor). Such insurance shall
include Landlord, Landlord's Agents or Representatives and the
Engineer/Architect as additional insureds and certificate holders. Such
insurance shall include the following coverage extensions:
(a) Contractual liability;
(b) Broad form property damage liability,
(c) Personal and advertising injury liability; and
(d) Coverage for liability arising from independent contractors.
Coverage may not be written on a claims made basis without prior approval of
Landlord.
<PAGE>
High Risk
- ---------
Any contractors or subcontractors whose work or services listed on the "High
Risk Schedule" attached as Exhibit E-1 are required to provide a combined single
limit of $5,000,000 per occurrence, a general aggregate limit of $5,000,000 and
a products/completed operations aggregate of $5,000,000. All other requirements
remain unchanged.
Business Auto Liability
- -----------------------
Contractors and subcontractors shall secure and maintain, at their own expense,
a business auto liability policy which insures against bodily injury and
property damage claims arising out of maintenance, use or operation of "any
auto." A combined single limit of liability for bodily injury and property
damage of $1,000,000 per accident shall be furnished. Such insurance shall
include Landlord and Landlord's Agents or Representatives as additional insureds
and certificate holders.
Workers Compensation & Employers Liability
- ------------------------------------------
Contractors and subcontractors shall secure and maintain, at its own expense,
workers compensation insurance and employers liability insurance. The workers
compensation insurance must satisfy the Contractor's/Subcontractor's workers
compensation obligation to its employees in the states in which they operate on
the Tenant's behalf. Employers liability insurance must be secured with minimum
limits of $1,000,000 for bodily injury by accident, $1,000,000 each employee for
bodily injury by disease, and a $1,000,000 policy limit for bodily injury be
disease or by Contractor's/Subcontractor's employees.
Certificate of Insurance
- ------------------------
Contractors/Subcontractors shall furnish certificates of insurance, evidencing
such policies required above prior to commencement of work or services and prior
to each renewal thereafter. Such insurance shall be written with insurers
licensed to do business in the state in which the property is located, with a
Best Insurance Reports rating of "A," "VIII" or better unless otherwise approved
by Landlord, Landlord's Agents or Representatives. Such policies shall be
endorsed and such certificates shall provide that no cancellation, non-renewal
or material reduction in coverage can take effect unless 30 days prior written
notice by registered mail to furnished to the Landlord.
12.1.2 Tenant or Tenant's contractor(s) shall apply for and obtain any and
all permits required for any alteration. Copies of each permit, the signed,
approved inspection records and a Certificate of Occupancy issued by the
Building Department shall be provided to Landlord at the completion of work and
prior to Tenant's occupancy of the Premises.
12.1.3 Within sixty (60) days of the completion of any alterations to the
Premises, Tenant shall provide Landlord with a copy of the construction contract
for the alteration along with copies of lien releases evidencing Tenant's full
payment under that contract.
12.1.4 Within sixty (60) days of completion of any alterations to the
Premises, Tenant shall provide to Landlord one (1) set of reproducible sepia "as
built" drawings and two (2) "as built" copies of drawings showing all
alterations, improvements, and changes to the Building and Premises.
12.2 Tenant shall have the right at any time during the Term of this
lease to remove its trade fixtures and personal property from the Premises
provided that such removal shall not damage or mar the Premises. Tenant, upon
the termination of this lease or the expiration of the Term hereof or upon
vacating the Premises for any reason, shall quit and surrender the Premises in
good order, condition, and repair, reasonable wear and tear excepted. Upon the
termination of this Lease or the expiration of the Term, Landlord shall have the
option to require Tenant to remove from the Premises, at Tenant's expense, all
trade fixtures placed on the Premises by Tenant, with the Premises thereafter to
be restored or repaired as required in Article 11.1 by Landlord, at the expense
of the Tenant.
12.3 Tenant shall keep the Premises and the Building of which the
Premises are a part free and clear of any liens and shall indemnify, hold
harmless, and defend Landlord from any liens and encumbrances arising out of any
work performed or materials furnished by or at the direction of Tenant. In the
event any lien is filed, Tenant shall do all acts necessary to discharge any
lien within ten (10) days of filing, or if Tenant desires to contest any lien,
then Tenant shall deposit with Landlord within ten (10) days of filing the lien
such security as Landlord shall demand to insure the payment of the lien claim.
In the event Tenant shall fail to pay any lien claim when due or shall fail to
deposit the security with Landlord within the aforesaid ten (10) day period, the
Tenant shall be in default of this Lease. In addition to any other remedies
Landlord may have under this Lease for the default, Landlord shall also have the
right to expend all sums reasonably necessary to discharge the lien claim and to
notify the Tenant of the amount of such sums. Thereafter, Tenant shall pay as
additional rental, when the next rental payment is due, all sums expended by
Landlord in discharging any lien, including actual attorneys' fees and costs.
<PAGE>
13. TAXES
13.1 Tenant shall pay, or cause to be paid, before delinquency, any and all
taxes levied or assessed and which become payable during the Term hereof upon
all Tenant's leasehold improvements, equipment, furniture, fixtures and personal
property located in the Premises; except taxes attributed to Landlord's tenant
improvement allowance given to the original tenant of the Premises. In the event
any or all of the Tenant's leasehold improvements, equipment, furniture,
fixtures, and personal property shall be assessed or taxed with the Building,
Tenant shall pay to Landlord its share of such taxes within ten (10) days after
delivery to Tenant by Landlord of a statement in writing setting forth the
amount of such taxes applicable to Tenant's property. If the local taxing
authority issues a separate tax statement for Tenant's improvements, Tenant
shall pay those taxes directly prior to delinquency. Failure of Tenant to so pay
timely all or any part of the taxes it is obligated to pay hereunder shall be a
material breach and default of this Lease.
14. ASSIGNMENT AND SUBLETTING
14.1 Tenant shall not voluntarily or by operation of law assign, transfer,
mortgage, sublet or otherwise transfer or encumber all or any part of Tenant's
interest in this Lease or in the Premises, without Landlord's prior written
consent, which Landlord shall not unreasonably withhold or delay. Landlord shall
respond to Tenant's request for consent hereunder in a timely manner and any
attempted assignment, transfer, mortgage, encumbrance or subletting without such
consent shall be void, and shall constitute a breach of this Lease.
14.2 If Tenant wishes to sublet any portion of the Premises ("Proposed
Sublease Space"), Tenant shall give to Landlord, at least thirty (30) days prior
to the proposed effective date of such subletting ("Proposed Effective Date") a
notice of intention to sublease ("Notice of Intention"), which states the
Proposed Effective Date and fully describes the Proposed Sublease Space and the
proposed subtenant. Tenant shall also provide Landlord any reasonable additional
information requested by Landlord concerning the proposed sublease or the
proposed sublessee immediately upon request.
14.3 If Tenant wishes to sublet the whole Premises for the entire remaining
term, as to the whole Premises, Landlord shall have the right, to be exercised
by giving notice ("Recapture Notice") to Tenant within fifteen (15) working days
after receipt of Tenant's Notice of Intention, to recapture the Premises. If
such Recapture Notice is given, it shall serve to cancel and terminate the
entire remaining Term of this Lease as of the Proposed Effective Date and as
fully and completely as if said Date had been definitely fixed for the
expiration of the Term of this Lease and all option rights of Tenant under this
Lease with respect to the space shall also terminate retroactively as of the
date Tenant gave its Notice of Intention. If such Recapture Notice is not given
within 15 working days after receipt of Tenant's Notice of Intention, to
recapture the Premises then approval to sublease shall be deemed given.
14.4 As to a portion of the Premises, upon receiving Tenant's Notice of
Intention, Landlord will not unreasonably withhold or delay its consent to
Tenant's subletting the Proposed Sublease Space pursuant to the Proposed
Agreement as provided in its Notice of Intention subject, however, to all the
other provisions of this Article.
14.5 In the event of any assignment or sublease of all or any portion of
the Premises ("Transferred Space") where the rental reserved and all other
consideration paid by or on behalf of the assignee or subtenant for such
assignment or sublease, no matter how characterized and without regard to
whether such appears in the assignment or sublease, exceed or are in addition to
the rental reserved in the Lease or prorate portion of such rental, as the case
may be, for such Transferred Space, Tenant shall pay Landlord, as additional
rent, immediately after Tenant receives the same, fifty percent (50%) of such
excess after first deducting the cost amortized on a straight line basis over
the remaining term of the lease of (i) the Broker's commission paid by Tenant
with regard to the transfer, (ii) and the cost of improvements made to the
Premises by Tenant at Tenant's expense for the purpose of subletting or
assigning of the rental reserved or other consideration for the assignment or
sublease over the rental reserved in this Lease applicable to the Transferred
Space.
14.6 That Tenant (and any guarantor of this Lease) remains fully liable
during the unexpired Term of the Lease. Regardless of the Landlord's consent, no
subletting or assignment shall release Tenant of Tenant's obligation or alter
the primary liability of Tenant to pay the rent and to perform all other
obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any other person shall not be deemed to be a waiver by Landlord of
any provisions hereof. Consent to one assignment or subletting shall not be
deemed consent to any subsequent assignment or subletting. In the event of
default by any assignee of Tenant or any successor of Tenant, in the performance
of any of the terms hereof, Landlord may proceed directly against Tenant without
the necessity of exhausting remedies against said assignee. Landlord may consent
to subsequent assignments or subletting of this Lease or amendments or
modifications to this Lease with assignees of Tenant, without notifying Tenant,
or any
<PAGE>
successor of Tenant, and without obtaining its or their consent thereto and such
action shall not relieve Tenant of liability under this lease.
14.7 Tenant shall have the right to enter into a sublease, subject to the
Landlord's approval as defined herein and which approval will not be
unreasonably withheld or delayed, provided that the proposed tenant is generally
compatible with the use and tenant mix of the Building and that existing tenants
would not be adversely affected by the sublease tenant's use and occupancy of
the Premises. Tenant shall not sublease the Premises to any other Tenant that is
or in the future will be prohibited by virtue of restrictive clause(s) in any
other tenant lease and Landlord reserves the right to deny the right to sublease
to such tenant(s) unless express permission and waiver are received from the
tenant or tenants holding such restrictive clause(s). For purpose of this
Section 14.7 any use permitted in Section 9.1 shall be deemed a compatible use
and tenant mix of the building.
14.9 Attorney's Fees: In the event Tenant shall assign or sublet the
Premises or request the consent of Landlord to any assignment or subletting or
if Tenant shall request the consent of Landlord for any act Tenant proposes to
do then Tenant shall pay Landlord's reasonable attorney's fees incurred in
connection therewith, such attorney's fees not to exceed Three Hundred Fifty
($350.00) Dollars for each such request.
15. HOLDING OVER
15.1 Any holding over after the expiration of this Lease by Tenant with the
consent of the Landlord shall be deemed to be a tenancy from month to month and
except for the Term thereof shall be on the same terms and conditions specified
herein, so far as applicable, except for Rent which shall be at 125% month's
rent due under this agreement.
16. NOTICES
16.1 All notices required or permitted by this Lease shall be in writing
and may be delivered in person (by hand or by messenger or courier service) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 16.
Either Party may by written notice to the other specify a different address for
notice purposes, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for the purpose of mailing or
delivering notices to Lessee. A copy of all notices required or permitted to be
given to Lessor hereunder shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter designate by
written notice to Lessee.
16.2 Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt
card, or if no delivery date is shown, the postmark thereon. If sent by regular
mail the notice shall be deemed given forty-eight (48) hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given twenty-four (24) hours after delivery of the same
to the United States Postal Service or courier. If any notice is transmitted by
facsimile transmission or similar means, the same shall be deemed served or
delivered upon telephone confirmation of receipt of the transmission thereof,
provided a copy is also delivered via delivery or mail. If notice is received on
a Saturday, Sunday or legal holiday, it shall be deemed received on the next
business day.
16.3 Notices for Landlord shall be addressed to:
NORTH BLOCK PARTNERSHIP
c/o Stephen T. Wong
LaSalle Advisors Limited Partnership
888 S.W. Fifth Avenue, Suite 1280
Portland, OR 97204
c/o Robert E. Cullen North Block Partnership
c/o Wolff Senson Buttery c/o Wolff Senson Buttery
99 Almaden Boulevard, Suite 1075 11828 La Grange Ave., #200
San Jose, CA 95113 Los Angeles, CA 90025
16.3 Notices for Tenant, prior to its occupancy of the Premises, shall be
addressed to:
AGILE SOFTWARE
2 North First Street
San Jose, CA 95113
<PAGE>
17. SIGNS
17.1 Tenant may not place or permit to be placed in, upon, about, or
outside the Premises or any part of the Building in which the Premises are
located, any sign(s) unless the prior written consent of Landlord is obtained.
17.2 Tenant shall pay all permit and license fees which may be required to
be paid for the erection and maintenance of any and all such signs, and such
signs shall be legally permitted to be installed. Tenant agrees to exonerate,
save harmless, protect and indemnify Landlord from and against any and all
losses, damages, claims, suits, or actions for any damage or injury to person or
property caused by the erection and maintenance of such signs or parts thereof,
and insurance coverage for such signs shall be included in the public liability
policy which Tenant is required to furnish under Sections 20.1 and 20.2 hereof:
17.3 Landlord hereby agrees to install a building directory in the lobby of
the Building, which building directory shall list, one time only at Landlord's
expense in one location, both the name of the Tenant and each of Tenant's
partners, principals, and key executives. Each directory shall be listed
alphabetically from A through Z, and all names shall be of uniform size and
style.
18. RIGHT OF ENTRY
18.1 Landlord and its agents shall have the right at any reasonable time
upon reasonable notice and accompanied by Tenant, except for janitors,
emergencies and in response to Tenant's request for repairs, to enter upon the
Premises for the purposes of inspection, serving, or posting notices,
maintaining the Premises, making any necessary or appropriate repairs,
alterations, or additions to any portion of the Premises (including the erection
and maintenance of scaffolding, partitions, and repair equipment as shall be
required), complying with laws, ordinances, and regulations, protecting the
Premises, or for any other lawful purpose, including showing the Premises to
prospective purchasers or tenants, so long as such entry and activity do not
interfere with the business activities of Tenant on the Premises. Tenant shall
not, in such event, claim or be allowed or paid any damages for any injury or
inconvenience occasioned thereby.
19. INDEMNIFICATION
19.1 Tenant shall indemnify and hold harmless Landlord from any and all
claims arising from Tenant's use of the Premises or from the conduct of its
business or from any activity, work, or other things done, permitted or suffered
by Tenant in or about the Premises, and shall further indemnify and hold
harmless Landlord against and from any and all claims arising from any breach or
default to the performance of any obligation on Tenant's part to be performed
under the terms of this Lease, or arising from any act or negligence of the
Tenant, and from all costs, attorneys fees, and liabilities, incurred in or
about the defense of any such claim or any action or proceeding brought thereon.
Tenant upon notice from Landlord shall defend the same at Tenant's expense by
counsel reasonably satisfactory to Landlord. Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to property or
injury to persons in, upon, or about the Premises, from any cause other than
Landlord's negligence or intentional misconduct; and Tenant hereby waives all
claims in respect thereof against Landlord. Tenant shall give prompt notice to
Landlord of any casualty or accident in or about the Premises of which it has
knowledge or notice. This indemnity is conditioned upon Landlord giving Tenant
prompt notice of any claim being asserted or claimed against Landlord for which
Tenant might be called upon to indemnify Landlord.
19.2 Landlord shall indemnify and hold harmless Tenant from any and all
claims arising from Landlord's work, or other things done, permitted or suffered
by Landlord in or about the Premises, and shall further indemnify and hold
harmless Tenant against and from any and all claims arising from any breach or
default to the performance of any obligation on Landlord's part to be performed
under the terms of this Lease, or arising from any act or negligence of the
Landlord, and from all costs, attorneys fees, and liabilities, incurred in or
about the defense of any such claim or any action or proceeding brought thereon.
Landlord upon notice from Tenant shall defend the same at Landlord's expense by
counsel reasonably satisfactory to Tenant.
20. INSURANCE
20.1 Landlord's Insurance - Landlord shall secure and maintain.
--------------------
(a) All risk property insurance on the Project. Landlord shall not be
obligated to insure any furniture, equipment trade fixtures, machinery,
goods, or supplies which Tenant may keep or maintain in the Premises or any
alteration, addition, or improvement which Tenant may make upon the
Premises. In addition, Landlord shall secure and maintain rental income
insurance.
If the annual cost to Landlord for such property or rental income insurance
exceeds the standard rates because of the nature of Tenant's operations,
Tenant shall, upon receipt of appropriate invoices, reimburse Landlord for
such increased cost.
<PAGE>
(b) Commercial general liability insurance. Such insurance shall be in
addition to, and not in lieu of, insurance required to be maintained by
Tenant. Tenant shall not be named as an additional insured on any policy of
liability insurance maintained by Landlord.
20.2 Tenant's Insurance. Tenant shall secure and maintain, at tenant's
------------------
expense:
(a) All risk property insurance on all of Tenant's fixtures and personal
property in the Premises and on any alterations, additions or improvements
made by Tenant upon the Premises, all for the full replacement cost
thereof. Tenant shall use the proceeds from such insurance for the
replacement of fixtures and personal property and for the restoration of
Tenant's improvements, alterations, additions to the leased premises.
Landlord shall be named as loss payee as respects alterations, additions or
improvements.
(b) Extra expense insurance to cover the cost of Tenant's relocation due
to destruction of the Premises.
(c) Workers compensation and employers liability insurance. The employers
liability insurance shall afford limits not less than $500,000 per
accident, $500,000 per employee for bodily injury by disease, and $500,000
policy limit for bodily injury by disease. Such insurance shall comply with
Tenant's obligations to the employees under California law.
(d) Commercial general liability insurance which insures against claims
for bodily injury, personal injury, advertising injury and property damage
based upon, involving or arising out of the use, occupancy or maintenance
of the Premises and the Project. Such insurance shall afford, at a minimum,
the following limits:
Each Occurrence $1,000,000
General Aggregate 2,000,000
Personal & Advertising Injury Liability 1,000,000
Fire Damage Legal Liability 50,000
Medical Payments 5,000
Any general aggregate limit shall apply on a per-location basis.
Such insurance shall name Landlord; its trustees, officers, directors
agents and employees; Landlord's Mortgagees; and Landlord's Representatives
as additional insureds.
This coverage shall include blanket contractual liability, broad form
property damage liability and shall contain an exception to any pollution
exclusion which insures damage or injury arising out of heat, smoke or
fumes from a hostile fire. Such insurance shall be written on an occurrence
basis and contain a standard separation of insureds provision.
(e) Business auto liability which insures against bodily injury and
property damage claims arising out of the ownership, maintenance or use of
"any auto". A minimum of a $1,000,000 combined single limit per accident
shall apply.
(f) Umbrella excess liability insurance, on an occurrence basis, that
applies excess of required commercial general liability, business auto
liability and employers liability policies, which insures against bodily
injury, property damage, personal injury and advertising injury claims with
the following minimum limits:
Each Occurrence $2,000,000 minimum
Annual Aggregate 2,000,000 minimum
These limits shall be in addition to and not including those stated for
underlying commercial general liability, business auto liability and
employers liability, business auto liability and employers liability
insurance. Such policy shall name Landlord; its trustees, officers,
directors, agents and employees; Landlord's Mortgagees; and Landlords'
Representatives as additional insureds.
(g) General insurance requirements. All policies required to be carried
by Tenant hereunder shall be issued by and binding upon an insurance
company licensed to do business in the state of California with a rating of
at least "A VIII" or better as set forth in the most current issue of
Best's Insurance Reports, unless otherwise approved by Landlord. Tenant
shall not do or permit anything to be done that would invalidate the
insurance policies required.
<PAGE>
Liability insurance maintained by Tenant shall be primary coverage without
right of contribution by any similar insurance that may be maintained by
Landlord.
Certificates of insurance, acceptable to Landlord, evidencing the existence
and amount of each insurance policy required hereunder shall be delivered
to Landlord prior to delivery or possession of the Premises and ten days
prior to each renewal date. Certificates of insurance shall include an
endorsement for each policy showing that Landlord; its trustees, officers,
directors, agents and employees; Landlord's Mortgagees; and Landlord's
Representatives are included as additional insureds on liability policies
and that Landlord is loss payee for property insurance. Further, the
certificates must include an endorsement for each policy whereby the
insurer agrees not to cancel, non-renew or materially reduce the limits of
the policy on the premises without at least 30 days prior written notice to
Landlord and Landlord's Representative.
In the event that Tenant fails to provide evidence of insurance required to
be provided by Tenant hereunder, prior to commencement of the term and
thereafter during the term, within 10 days following Landlord's request
thereof, and 30 days prior to the expiration date of any such coverage.
Landlord shall be authorized (but not required) to procure such coverage in
the amount stated with all costs thereof to be chargeable to Tenant and
payable upon written invoice thereof.
The limits of insurance required by this lease, or as carried by Tenant,
shall not limit the liability of Tenant or relieve Tenant of any obligation
thereunder, except to the extent provided for under Waiver of Subrogation.
Any deductibles selected by tenant shall be the sole responsibility of
Tenant.
20.3 Waiver of Subrogation - Anything in this lease to the contrary
---------------------
notwithstanding, Landlord and Tenant each waives all rights of recovery, claim,
action or cause of action against the other, its agents (including partners,
both general and limited), trustees, officers, directors, employees, for any
loss or damage that may occur to the Premises, or any improvements thereto, or
the Project or any personal property of such party therein, by reason of any
peril required to be insured against under this lease, regardless of cause of
origin, including negligence of the other party. Tenant and Landlord covenants
that, to the fullest extent permitted by law, no insurer shall hold any right of
subrogation against the other. Tenant shall advise its insurers of the foregoing
and such waiver shall be permitted under any policies maintained by Tenant
pursuant to Paragraph 20.2(a) and Paragraph 20.2(b)
21. ESTOPPEL CERTIFICATE
21.1 Tenant shall execute, acknowledge and deliver to Landlord within ten
(10) days of request by Landlord from Lease Commencement Date or payment in
full by Landlord of any contribution toward Tenant Improvements, if any, the
attached form of Estoppel unmodified and in full force and effect (or if there
have been modifications that the same are in full force and effect as modified),
the date of commencement of this Lease, the date on which rent has been paid,
and any such other information as Landlord shall reasonably request. Also, at
any time if requested by Landlord, Tenant shall execute and return to Landlord
within ten (10) days the same or a similar form of Estoppel Certificate. It is
acknowledged by Tenant that any such statement is intended to be delivered by
Landlord and relied upon by prospective purchasers, mortgages, beneficiaries
under deeds of trust or assignees thereof. Failure of Tenant to timely execute
and return said Certificate to Landlord within said ten (10) days shall be
deemed approval of same by Tenant and all information set forth on said
Certificate shall be conclusively binding on Tenant.
22. SUBORDINATION AND NON-DISTURBANCE
22.1 Tenant shall, subject to the conditions set forth below, at the
request of Landlord, in writing, cause its interest to become subordinate to any
such first mortgage or first deed of trust which has been or shall be placed on
the land and building or land or building of which the Premises form a part.
Tenant shall, at any time hereinafter on demand, execute any instruments,
releases, or other documents that may be required by any mortgagee, mortgagor,
or trustor or beneficiary under any such first deed of trust or first mortgage
for the purpose of subjecting and subordinating this Lease to the lien of any
such first mortgage or first deed of trust, provided, however, that such
instrument must provide in effect that: (a) in the event of foreclosure or other
action taken under the mortgage or deed of trust by the holder thereof, this
Lease and the rights of Tenant hereunder (including the right, if any, to extend
the Term thereof and for additional space) shall not be disturbed but shall
continue in full force and effect so long as Tenant shall not be in default
hereunder, and (b) such holder shall permit insurance proceeds and condemnation
proceeds to be used for any restoration and repair required by this Lease; and
(c) no property owned or removable by Tenant shall be subject to any lien of the
mortgage or deed of trust. Tenant agrees that if the mortgagee, beneficiary, or
any person claiming under the mortgagee or beneficiary shall succeed to the
interest of Landlord in this Lease, Tenant will recognize said mortgagee,
beneficiary, or person as its landlord under the terms of this Lease, provided
that said mortgagee, beneficiary, or person for the period during which
<PAGE>
beneficiary, trustee, or person shall hold Landlord's interest in the
Premises shall assume all of its obligations of Landlord hereunder.
23. COMPLIANCE WITH LAWS AND RULES
23.1 Tenant, at Tenant's sole cost, shall comply at all times with all
laws, ordinances, orders, and regulations of all governmental and public
authorities with respect to the use of the Premises and any associated adjacent
Parking Facilities structure controlled or managed by Landlord and the use and
occupation thereof by Tenant. A judgment of any court of competent jurisdiction
or the admission by Tenant in any judicial or administrative action or
proceeding against Tenant that Tenant has violated any such laws, ordinances, or
order or regulations, shall be deemed to be conclusive as to Landlord and
Tenant.
23.2 Tenant and Tenant's agent, servants, and employees, visitors, and
licensees shall observe and comply strictly with all reasonable rules and
regulations now adopted or which are adopted hereafter for the care, protection,
cleanliness, and proper operation of the Building. A copy of the current Rules
and Regulations is attached as Exhibit B. Landlord shall have no obligation to
Tenant as a result of the violation of any such rules by any tenant or any other
person. Landlord shall maintain a copy of such rules in the office of Landlord
for inspection by Tenant at any reasonable time. Each and every such rule shall
be deemed a material term of this Lease.
24. DESTRUCTION
24.1 In the event of damage causing a partial destruction of the Premises
during the Term of this Lease from any cause as to which repairs can be made
within (90) days from the date of the damage under the applicable laws and
regulations of governmental authorities, Landlord shall repair said damage
promptly and within a reasonable period of time, but Tenant and Tenant's
insurance carrier will be solely responsible for repair and replacement, if any,
of Tenant's improvements, furniture, fixtures, or any other work required in the
Premises, and shall repair and replace within said ninety (90) days following
full access to the Premises by Tenant, all improvements made at Tenant's expense
and all furniture and fixtures in the Premises. Any such partial destruction
shall in no way void this Lease, except that Tenant shall be entitled to a
proportionate reduction of rent while such repairs are being made such
proportionate reduction to be based upon the extent to which the portion of the
Premises not usable by Tenant bears to the total area of the Premises, provided
that if such damage is caused by negligence or greater culpability of Tenant,
his agents, servants, employees, invitees, or permitees then Tenant shall not be
entitled to abatement of rent not covered by insurance. Tenant shall be liable
to Landlord for any and all damage caused by negligence or greater culpability
of Tenant, his agents, servants, employees, invitees, or permitees and the cost
of repairing same and Tenant shall be entitled to no reduction in rent.
24.2 If such repairs cannot be made within ninety (90) days, Landlord may,
at its option, make the same within the period of no more than one hundred
twenty (120) days, this Lease continuing in full force and effect and the rent
to be proportionately rebated as provided in the previous Section. In the event
that Landlord does not so elect to make such repairs which cannot be made in
ninety (90) days, or such repairs cannot be made under such laws and
regulations, or in the event Landlord does not make the repair within one
hundred twenty (120) days, this Lease may be terminated at the option of either
party.
24.3 With respect to any partial destruction which Landlord is obligated to
repair or may elect to repair under the terms of this Article, the provisions of
any statute or law permitting Tenant to terminate this Lease are waived by
Tenant. In the event that the Building which the Premises are situated is
destroyed to the extent of thirty-three and one-third percent (33-1/3%) or more
of the then replacement cost thereof, the Landlord may elect to terminate this
Lease, whether the Premises are injured or not.
24.4 A total destruction of the Premises or of the Building shall terminate
this Lease as of the date of such total destruction. The determination that such
total destruction has occurred shall be made by Landlord in its sole discretion
which shall be reasonably exercised.
24.5 Except as stated in Section 24.1 herein with respect to reduction of
rent as therein provided, Tenant shall not have any claim whatsoever against
Landlord for any damages, nor shall Tenant be released or discharged from any of
its obligations, liabilities, or indebtedness hereunder, should the possession
by Tenant of the Premises be disturbed or interfered with or affected in any
manner whatsoever, and irrespective of how caused, or by whom, excepting only
the negligent, intentional, or willful interference in the possession of Tenant
by Landlord.
24.6 Upon termination of this Lease pursuant to Article 24, an equitable
adjustment shall be made concerning advance rent and any advance payments made
by Tenant to Landlord. Landlord shall, in addition, return to Tenant so much of
Tenant's security deposit as to which Landlord is not entitled hereunder.
<PAGE>
24.7 Tenant waives the provisions of California Civil Code Sections 1932
(2) and 1933 (4) and any successor statutes or other statutes or laws which may
now or during the Term of this Lease exist and which relate to termination of
leases when the thing leased is destroyed, in whole or in part, and agrees that
such event shall be governed solely by the terms of this Lease.
24.8 Anything contained in this Article to the contrary notwithstanding,
Landlord shall not have any obligation whatsoever to repair, reconstruct, or
restore the Premises when the damages from any casualty covered by this Article
occurs during the last twelve (12) months of this Lease or any extensions
thereof. Tenant shall have the right to cancel this lease if Landlord elects not
to make repairs under Section 24.2.
25. CONDEMNATION
25.1 If any part of the Premises shall be taken or condemned for public or
quasi-public use by right of eminent domain, with or without litigation, or
transferred by agreement in connection with such public or quasi-public use,
this Lease, as to the part so taken or condemned or transferred shall terminate
as of the date title shall vest in the condemnor or transferee and the rent
payable hereunder shall be adjusted so that tenant shall be required to pay for
the remainder of the Term only such portion of the rent as the area in the part
remaining that remains useable by Tenant for its business purposes after the
taking or condemnation or transfer bears to the area of the entire Premises as
of the date title shall vest in the condemnor.
25.2 In the event of such partial taking or condemnation by judgment,
verdict or agreement, Landlord and Tenant each shall have the option to
terminate this Lease as of the date title shall vest in the condemnor or
transferee. If all of the Premises shall be so taken, condemned, or transferred
or such part thereof be so taken, condemned, or transferred so that there does
not remain a portion susceptible of occupation hereunder, this Lease shall
terminate as of the date title shall vest in the condemnor or transferee and
Tenant shall have no responsibility to pay rent from the date of such
termination.
25.3 All compensation awarded upon such condemnation or taking shall go to
the Landlord and the Tenant shall have no claim thereto, and the Tenant hereby
irrevocably assigns and transfers to Landlord any right to compensation or
damages to which Landlord may become entitled during the Term hereof by reason
of the condemnation of all or part of the Premises. Notwithstanding anything in
the foregoing to the contrary, Tenant, if not in default hereunder, shall have
the right to receive that portion of the award made expressly for the moving or
relocation expenses of Tenant, the trade fixtures of Tenant, any improvements
paid for by Tenant and business disruption of Tenant.
26. INABILITY TO PERFORM
26.1 This Lease and the obligation of Tenant hereunder shall not be
affected or impaired because Landlord is unable to fulfill any of his
obligations hereunder or is delayed in doing so, if such inability or delay is
caused by reason of unavailability or scarcity of material, strike, or other
labor troubles, or any other causes beyond the reasonable control of Landlord.
If Landlord is unable to give possession of the Premises to Tenant as provided
for under Article 4 hereof within 45 days after the estimated Lease Commencement
Date set forth therein, this Lease shall automatically terminate, and Landlord,
by reason thereof shall not be subject to any liability therefor except that
Landlord shall return to Tenant all monies which Landlord has theretofore
received from Tenant as prepaid rent or as a security deposit.
27. INVOLUNTARY TERMINATION
27.1 This Lease, at the option of Landlord, shall cease and terminate upon
the happening of any of the following events:
(a) The filing of a petition for any proceeding under the Bankruptcy Act
or any amendment thereto by Tenant or Lease Guarantor or any other person
against Tenant or any Lease Guarantor, and same is not discharged within
ninety (90) days of filing.
(b) A finding or judgment of insolvency of Tenant or any Lease Guarantor.
(c) An assignment for the benefit of creditors by Tenant or any Lease
Guarantor.
(d) The levying of a writ of execution on the business of Tenant or any
Lease Guarantor or on the assets of Tenant or any Lease Guarantor which
represents thirty-three and one-third percent (33-1/3%) or more of net
worth of that Tenant or Lease Guarantor.
(e) The appointment of a receiver to take possession of the Premises or
the assets of Tenant or any Lease Guarantor which represents thirty-three
and one-third percent (33-1/3%) or more of the net worth of that Tenant or
Lease Guarantor.
<PAGE>
28. DEFAULT
28.1 Tenant shall be in material default of this lease, if Tenant fails to
observe or perform any of the covenants, conditions or provisions of this Lease
to be observed or performed by Tenant other than the payment of rent where such
failure shall continue for a period of thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, that if the nature of
Tenant's noncompliance is such that more than thirty (30) days are reasonably
required for its cure, then Tenant shall not be deemed to be in default if
Tenant commenced such cure within said thirty (30) day period and thereafter
diligently pursues such cure to completion. To the extent permitted by law, such
thirty (30) day notice shall constitute the sole and exclusive notice required
to be given Tenant under applicable Unlawful Detainer statutes. If Tenant shall
fail to make any payment of rent or any other payment required to be made by
Tenant, as and when due, where such failure shall continue for a period of three
(3) business days after written notice thereof from Landlord to Tenant, or if
Tenant should abandon, vacate, or surrender the Premises or be dispossessed by
any process of law, or Tenant shall fail to perform timely any of its other
terms or obligations under this Lease, the same shall constitute an act of
default and Tenant shall be in material breach of this Lease, and Landlord, in
addition to all other rights or remedies provided by law, shall have the
following rights:
28.1.1 In the event Tenant commits an act of default and abandons the
Premises, Landlord may elect to continue this Lease in full force and effect and
not terminate Tenant's right to possession of the Premises, in which event
Landlord shall have the right to enforce any rights and remedies granted by this
Lease and by law against Tenant, including without limitation, the right to
collect when due rental and other sums payable hereunder, provided that after
the occurrence of the act of default and abandonment of the Premises by Tenant
and for so long as Landlord does not terminate Tenant's right to possession of
the Premises, Tenant shall have the right to assign or sublet this Lease upon
the prior written consent of Landlord, which consent Landlord will not
unreasonably withhold. Landlord shall not be deemed to have elected to terminate
Tenant's right to possession unless Landlord gives Tenant written notice of such
election to terminate and in no event shall Landlord's acts of maintenance or
preservation of the Premises, efforts to relet the Premises, or obtaining the
appointment of a receiver to protect the interest of Landlord under the Lease be
deemed to constitute such termination.
28.1.2 Landlord may elect by written notice to Tenant to terminate the
Lease at any time after the occurrence of an act of default, and in such event
Landlord may, at Landlord's option and to the extent permitted by law, declare
this Lease and Tenant's right to possession terminated, re-enter the Premises,
remove Tenant's property therefrom and store it for Tenant's account and at
Tenant's expense, eject all persons from the Premises, and recover damages from
Tenant without hindrance, and Landlord shall not thereby be liable in damages
for such re-entry or be guilty of trespass or forcible entry. In the event
Landlord elects to so terminate this Lease and Tenant's right to possession, or
they are terminated by operation of law, such termination shall cancel all
Tenant's options, if any, to extend the Term.
28.1.3 In the event Landlord elects to so terminate this Lease and Tenant's
right to possession in accordance with the foregoing paragraph, or the same are
terminated by operation of law, Landlord may recover as damages from Tenant the
following:
(i) The worth at the time of award of the unpaid rent and other
sums due hereunder which had been earned at the time of termination
of the Lease; plus
(ii) The worth at the time of the award of the amount by which
the unpaid rent and other sums due hereunder which would have been
earned after the date of termination of this Lease until the time of
the award exceeds the amount of such loss of rental and other sums
due that Tenant proves could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by which unpaid
rental and other sums due hereunder for the balance of the Term
after the time of award exceeds the amount of loss of such rental
and other sums that Tenant proves could be reasonably avoided; plus
(iv) Any other amount, including attorney's fees and court costs,
necessary to compensate Landlord for all detriment proximately
caused by Tenant's act of default or which in the ordinary course of
things would be likely to result therefrom, including but not
limited to the cost of reletting and remodeling the Premises for a
new tenant and brokerage fees involved in same.
28.1.4 The "worth at the time of award" of the amounts referred to in
subparagraphs 28.1.3 (i) and 28.1.3 (ii) above is computed by allowing
interest, at the maximum rate allowable in California as of the date of this
Agreement for business loans, from the date(s) such unpaid rental and other sums
became due. The "worth at the time of award" of the amount referred to in
subparagraph 28.1.3 (iii) above is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).
<PAGE>
29. ATTORNEY'S FEES AND HOLD HARMLESS
29.1 Tenant agrees that if Landlord is involuntarily made a party defendant
to any litigation concerning this Lease or the Premises or the Building in which
the Premises are a part by reason, in whole or in part, of any act of omission
of Tenant and not because of any act or omission of Landlord, the Tenant shall
hold harmless the Landlord from all liability by reason thereof, including
reasonable attorney's fees incurred by Landlord in such litigation and all
taxable court costs. Landlord agrees that if Tenant is involuntarily made a
party defendant to any litigation concerning this Lease or the Premises or the
Building in which the Premises are a part by reason, in whole or in part, of any
act of omission of Landlord and not because of any act or omission of Tenant,
the Landlord shall hold harmless the Tenant from all liability by reason
thereof, including reasonable attorney's fees incurred by Tenant in such
litigation and all taxable court costs. If legal or equitable action shall be
brought by Landlord for unlawful detainer of the Premises, for the breach of any
term, covenant or provision hereof, the party prevailing in said action
(Landlord or Tenant as the case may be) shall be entitled to recover from the
party not prevailing costs of suit and a reasonable attorney's fee which shall
be fixed by the Judge of the Court, or any court-appointed arbitrator or any
Judge pro tem.
30. WAIVER
30.1 No covenant, term, or condition or the breach thereof shall be deemed
to be waived by Landlord, except by written consent of Landlord, and any waiver
or breach of any covenant, term, or condition shall not be deemed to be a waiver
of any preceding or succeeding breach of the same or any other covenant, term,
or condition. Acceptance of all or any portion of rent at any time shall not be
deemed to be a waiver of any covenant, term, or condition except as to the rent
payment accepted.
31. QUIET POSSESSION
31.1 Upon commencement of the Term of this Lease and Tenant's timely paying
the Rent, Operating Expenses Escalation payments and other sums provided
hereunder and timely observing and performing all of the covenants, conditions,
and provisions on Tenant's part to be observed and performed hereunder, Tenant,
so long as not in default hereunder, shall have quiet possession of the Premises
for the entire Term hereof, subject to all the provisions of the Lease.
32. SALE BY LANDLORD
32.1 In the event of a sale or conveyance by Landlord of the Building
containing the Premises, the same shall operate to release Landlord from any
future liability upon any of the covenants or conditions, express or implied,
herein contained in favor of Tenant, and in such event Tenant agrees to look
solely to the responsibility of the successor in interest to Landlord in and to
this Lease. This Lease shall not be affected by any such sale, and Tenant agrees
to attorn to the purchaser or assign.
33. BROKER REPRESENTATION
33.1 Landlord and Tenant agree that neither party has appointed a real
estate broker to represent it in the negotiation and consummation of the Lease
except for Colliers Parrish International, Inc. representing the Landlord and
Ritchie Commercial representing the Tenant which commission shall be paid by
Landlord.
35. CONDITION OF PREMISES
35.1 Following execution of this Lease, Landlord shall at its sole cost and
expense make the following tenant improvements prior to occupancy:
1. Touch-up paint in the entire Premises.
2. Steam clean the carpet.
3. Ensure that all electrical, mechanical and other systems serving the
floor are in good working order.
36. MISCELLANEOUS
36. 1 The captions of the paragraphs contained in this Lease are for
convenience only and shall not be deemed to be relevant in resolving any
question of interpretation or construction of any paragraph of the Lease.
36.2 All of the terms, covenants, and conditions of the Lease shall be
binding upon and inure to the benefit of the parties hereto and their heirs,
executors, and administrators, successors, and assigns, except that nothing in
this provision shall be deemed to permit any assignment, subletting or use of
the Premises other than expressly provided herein.
<PAGE>
36.3 This Lease shall be governed and interpreted solely by the laws of the
State of California then in force. Each number, singular or plural, as used in
this Lease shall include all numbers and each gender shall be deemed to include
all genders.
36.4 Time is of the essence of this Lease and of each and every provision
hereof, except as to the conditions relating to the delivery of possession of
the Premises to Tenant. Each term and covenant contained in this Lease to be
performed by Tenant is a condition and any breach of such after notice and the
applicable grace period is a material breach of this Lease. If Tenant shall
consist of more than one person or organization, each such term and covenant
shall be deemed to be the joint and several obligation of each such person or
organization. All rights and remedies granted to Landlord by law or equity or
under the Lease shall be cumulative and non-exclusive of any other remedy.
36.5 In the event Tenant hereunder shall be a corporation, the Tenant
hereby covenants and warrants that Tenant is a duly qualified corporation and
all steps have been taken prior to the date hereof to qualify Tenant to do
business in California and all franchise and corporate taxes have been paid to
date, and all future forms, reports, fees, and other documents necessary to
comply with applicable law will be filed when due. Each individual executing
this Lease on behalf of said corporation, warrants that the execution and
delivery of this Lease by him has been duly authorized by the Board of Directors
of the Tenant. If Tenant is a corporation Tenant shall, within thirty (30) days
after execution of this Lease, deliver to Landlord a certified copy of a
resolution of the Board of Directors said corporation authorizing or ratifying
execution of this Lease.
36.6 If Tenant is a partnership, joint venture, or other unincorporated
association, each individual executing this Lease on behalf of Tenant represents
that this Lease is binding upon Tenant; furthermore, Tenant agrees that the
execution of any written consent hereunder, or of any written modification or
termination of this Lease, by a general partner of Tenant or any authorized
agent of Tenant, shall be binding upon Tenant.
36.7 The submission of this document for examination and negotiation does
not constitute an offer to lease, or a reservation of, or option for, the
Premises; and this document shall become effective and binding only upon
execution and delivery hereof by Tenant and by Landlord (or, when duly
authorized, by Landlord's agent or employee). No act or omission of any agent of
Landlord or of Landlord's broker shall alter, change, or modify any of the
provisions hereof.
36.8 If any provision of this Lease shall be determined to be void by any
court of competent jurisdiction, then such determination shall not affect any
other provisions of this lease and all other provisions shall remain in full
force and effect; and it is the intention of the parties hereto that if any
provision of this Lease is capable of two constructions, only one of which would
render the provision valid, then the provision shall have the meaning which
renders it valid.
36.9 Tenant agrees and covenants to comply with all of Landlord's rules and
regulations as set forth in Exhibit B attached hereto. Landlord shall have the
right from time to time to promulgate amendments and additional new rules and
regulations for the care, safety, maintenance, and cleanliness of the Premises
and the Building, or for the preservation of good order. On delivery of a copy
of such reasonable amendments and reasonable new rules and regulations to
Tenant, Tenant shall comply with same. A violation of any such rules and
regulations which continue beyond a reasonable cure period after written notice
by Landlord to Tenant shall constitute a default by Tenant under this Lease. If
there is a conflict between the said rules and regulations and any of the
provisions of this Lease, the provisions of the Lease shall prevail.
36.10 The laws of the State of California shall govern the validity,
performance and enforcement of this Lease. Should either party institute a legal
suit or action for enforcement of any obligation contained herein, it is agreed
that the venue of such suit or action shall be in the county in which the
Premises are located. This Lease is the result of negotiations between the
parties hereto and shall not be construed either for or against Landlord or
Tenant, but this Lease shall be interpreted in accordance with the general tenor
of the language in an effort to reach an equitable result.
37. PARKING
37.1 Tenant shall be granted twenty-six (26) free employee parking spaces.
Such spaces shall be for passenger vehicles which fit inside the parking
structure only and shall be located in Park Center Plaza Garage III.
37.2 In addition, Tenant is granted the right to purchase up to twenty-six
(26) additional employee parking spaces at the current rate. Landlord, at
Landlord's sole option, may assign up to thirteen (13) of these spaces as roof
top only parking. Tenant shall also have the right to purchase additional spaces
at current market rates on an "as available" basis.
<PAGE>
37.3 Tenant is granted the use of all spaces subject to the reasonable
rules and regulations for operation of the parking facilities.
37.4 Tenant agrees not to assign, sublet, or in any way transfer the right
to use of the parking spaces, except to any successor to Tenant's Premises.
38. HAZARDOUS MATERIALS
38.1 Landlord warrants that, to the best of its knowledge, the Premises are
free of Hazardous Substances at the time of delivery to Tenant.
38.2 Tenant shall not cause or permit any Hazardous Substances to be used,
stored, generated, or disposed of on or in the Premises by Tenant, Tenant's
agents, employees, contractors, or invitees without first obtaining Landlord's
written consent. If Hazardous Substances are used, stored, generated, or
disposed of on or in the Premises except as permitted above, or if the Premises
become contaminated in any manner for which Tenant is legally liable, Tenant
shall indemnify and hold harmless the Landlord from any and all claims, damages,
fine, judgments, penalties, costs, liabilities or losses (including, without
limitation, a decrease in value of the Premises, damages caused by loss or
restriction of rentable or usable space, and any and all sums paid for
settlement of claims, attorneys' fees, consultants' fees, and experts' free)
arising during or after the Lease Term and arising as a result of that
contamination by Tenant. This indemnification includes, without limitation, any
and all costs incurred because of any investigation of the site or any cleanup
removal, or restoration mandated by a federal, state, or local agency or
political subdivision.
38.3 Without limitation of the foregoing, if Tenant causes or permits the
presence of any Hazardous Substance on the Premises and that results in
contamination, Tenant shall promptly, at its sole expense, take any and all
necessary actions to return the Premises to the condition existing prior to the
presence of any such Hazardous Substance on the Premises. Tenant shall first
obtain Landlord's approval for any such remedial action.
38.4 As used herein, "Hazardous Substances" means any substance that is
toxic, ignitable, reactive, or corrosive and that is regulated by any local
government, the state of California, or the United States Government. "Hazardous
Substance" includes any and all materials or substances that are defined as
"hazardous waste," extremely hazardous waste" or a "hazardous substance"
pursuant to state, federal or local governmental law. "Hazardous Substance"
includes, but is not restricted to, asbestos, polychlorobiphenyls ("PCBs") and
petroleum.
38.5 Without limitation of the foregoing, it is understood that Tenant may
use or store Hazardous Substances which are required for the operation of normal
office equipment, including, but not limited to copiers, printers, fax machines,
etc.
39. SEE ADDENDUM
<PAGE>
NORTH BLOCK PARTNERSHIP,
a California limited partnership
By: PROPERTY SAN JOSE ONE CORPORATION,
an Oregon corporation, sole General Partner
By: LaSalle Advisors Limited
Its: Advisor and Duly Authorized Agent
/s/
-------------------------------
Its: Stephen T. Wong
Date: 6/5/96
-------------------------------
By: /s/
-------------------------------
Diane R. McMahon
Its: Vice President
Date: 6/5/96
-------------------------------
TENANT: Agile Software, a California Corporation
By: /s/
---------------------------------
By:__________________________________
Date: 5/31/96
------------------------------
<PAGE>
ADDENDUM TO LEASE
THIS ADDENDUM is made March 20, 1996 by and between NORTH BLOCK
PARTNERSHIP ("Landlord"), and AGILE SOFTWARE, a California Corporation
("Tenant") to that lease herewith (the "Lease") between Landlord and Tenant
affecting certain real property commonly known as the ONE ALMADEN BOULEVARD
Building, located in the City of San Jose, County of Santa Clara, State of
California. The following provisions are hereby added to the Lease:
1. LEASE BUY-OUT: Tenant shall have a one (1) time right to cancel the Lease at
the end of the thirty-sixth (36th) month by performing the following:
a) Six (6) months advance written notice to Landlord.
b) Payment to Landlord of a Lease Cancellation Fee of Fifty Eight Thousand
Five Hundred and No/100ths Dollars ($58,500.00) which is the equivalent of
three (3) months rent at $1.50 per square foot.
c) Repayment of deferred rent to Landlord in the amount of Forty Eight
Thousand Seven Hundred Fifty and No/100ths Dollars ($48,750.00) such that
upon Lease Cancellation, Tenant shall have paid an average of $1.50 per
square foot over the thirty-six (36) month Lease Term.
d) Payment to Landlord of the costs of unamortized tenant improvements,
furniture costs and leasing commissions using a straight-line method with
sixty (60) months as the amortization period.
2. OPTION TO RENEW:
a) Provided Tenant is not in default under this Lease, Tenant shall have an
option to extend this Lease for one (1) additional three (3) year period
except that the new rent for the option period will be ninety-five percent
(95%) of the then prevailing market rate. Tenant must exercise its option
to renew no later than four (4) months prior to the termination of the
original term of the Lease.
b) In the event Tenant notifies Landlord of its intention to exercise its
option to extend the term of the Lease, Tenant and Landlord shall meet and
agree as to the new rent for the first year of the option period, in the
event the parties fail to agree within thirty (30) days following written
notice by the Tenant of Tenant's intention to exercise the option to
renew, then each shall appoint an licensed appraiser. It shall be the duty
of the appointed appraisers to appraise the fair market rental value of
the demised Premises, using values that are reasonable and comparable for
rentals in the Downtown San Jose office market. The base rent for the
first year of the option period shall be the average of the fair market
rental values determined by the two appraisers, provided such values do
not vary from each other by more than 10%. Should the variance be greater
than 10%, the two appraisers shall jointly appoint a third appraiser, who
shall evaluate the appraisals submitted and select one of the appraisals
as correct. The third appraiser's decision shall be binding upon Landlord
and Tenant. Landlord and Tenant shall share equally in the payment of all
appraisal fees pursuant to this subparagraph.
3. EXPANSION
a) From time to time, during the Term of this Lease, Landlord will provide
Tenant with lease expiration dates for the next twelve (12) months and a
listing of current vacancies in the Building covering spaces greater than
5,000 square feet. Such information will be provided upon written request
from Tenant no more frequently than quarter-annually. The provision of
this information shall in no way infringe upon any rights of existing
tenants concerning such vacant space nor affect Landlord's right to lease
any such space in any manner it sees fit.
4. LETTER OF CREDIT: In order to secure the full and faithful performance of
Tenant's obligations under this Lease (including, without limitation,
Tenant's obligation to repay Landlord the sum of Thirty-Nine Thousand Dollars
($39,000) which Landlord has advanced for the purchase of certain furniture,
fixtures and equipment), Tenant shall cause to be issued and shall deliver to
Landlord within two weeks of lease execution an irrevocable Letter of Credit
issued to and for the benefit of Landlord by Comerica Bank in an amount of
not less than Two Hundred Thirty Four Dollars ($234,000), and valid for a
term not less than thirty six (36) months, provided however, that the face
amount of such Letter of Credit shall decline to zero on a straight-line
basis over such thirty six month term. Should Comerica Bank notify Landlord
of its election not to renew such Letter of Credit after the first year of
its term, Tenant shall have thirty (30) days in which to deliver to Landlord
an equivalent Letter of Credit to replace the original. Should Tenant fail to
replace the non-renewed Letter of Credit within such 30 day period, Landlord
shall be entitled to draw the full scheduled amount available under that
Letter of Credit, regardless of whether Tenant is then in default of this
Lease, and hold such sum as additional Security Deposit under the terms of
this Lease.
5. FURNITURE: Tenant shall deal directly with Accel to purchase their work
stations. Landlord agrees to reimburse Tenant in the amount of Thirty-Nine
Thousand and No/100ths Dollars ($39,000.00) towards the cost of furniture
Tenant is purchasing from Accel Technologies, Inc. Landlord will tender a
check in this amount within five (5) days from the date Tenant occupies the
Premises and delivers to Landlord a Bill of Sale.
<PAGE>
AGREED & ACCEPTED:
- -----------------
LANDLORD: NORTH BLOCK PARTNERSHIP TENANT: AGILE SOFTWARE, a California
Corporation
By: /s/ By: /s/
----------------------------------- ------------------------------
Title: Vice Presidents Title: President & CEO
-------------------------------- ---------------------------
Date: 6/5/96 Date: 5/31/96
-------------------------------- ---------------------------
<PAGE>
FIRST AMENDMENT TO OFFICE LEASE
This First Lease Amendment (the "First Amendment") made and entered into the
15th day of October, 1996 by and between NORTH BLOCK PARTNERSHIP ("Landlord")
and AGILE SOFTWARE, a California Corporation ("Tenant").
WITNESSETH:
-----------
Reference is made to that certain Office Lease by and between Landlord and
Tenant made and entered into on May 30, 1996, covering 13,0000 rentable square
feet on the twelfth floor of the building at One Almaden Boulevard, San Jose,
California, which is hereby amended as follows:
1. PREMISES
1.1 In consideration of their respective agreements contained herein,
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
premises located on the eleventh floor of the Building, comprising
approximately 2,477 rentable square feet designated as Suite 1101, and
described on the attached Exhibit A-1 (the "Suite 1101 Additional
Premises").
1.2 Effective on the Suite 1101 Commencement Date, the Suite 1101
Additional Premises shall form a part of the Premises under the Lease and
shall increase the size of the Premises to 15,477 rentable square feet.
2. TERM
2.1 The term of this lease of the Suite 1101 Additional Premises shall
commence on November 15, 1996 (the "Suite 1101 Commencement Date") and
shall run through July 31, 2001.
2.2 Tenant agrees that if Landlord is unable to deliver possession of the
Suite 1101 Additional Premises to Tenant on the date above specified for
the Suite 1101 Commencement Date, this Amendment shall not be void or
voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting therefrom, but in such event Tenant shall not be liable for rent
on the Suite 1101 Additional Premises until such time as Landlord tenders
delivery of possession of those Premises to Tenant with Landlord's work
therein substantially completed. The above notwithstanding, there shall be
no delay in commencement of the Term or in Tenant's liability for payment
of rent if Landlord is unable to deliver possession of the Suite 1101
Additional Premises due to any act, omission or delay of Tenant. Should
Landlord tender possession of the Suite 1101 Additional Premises to Tenant
prior to the date specified for commencement of the term thereof; and
Tenant elects to accept such prior tender, such early occupancy shall be
subject to all of the terms, covenants and conditions of this Lease, except
the payment or rent, and shall not alter or affect the expiration date of
the Term as set forth in Paragraph 2.1 above. In the event that Tenant
commences occupancy of the Suite 1101 Additional Premises on any date other
than the commencement date of the Term pursuant to this Paragraph 2,
Landlord and Tenant shall promptly execute a written document confirming
the date occupancy commenced.
3. RENT
3.1 Effective upon the Suite 1101 Commencement Date, the monthly base rent
due and payable under this shall be as follows:
PERIOD SUITE 1101 SUITE 1200 TOTAL
------ ---------- ---------- -----
11/15/96 - 01/14/97 $3,715.50 $15,600.00 $19,315.50
01/15/97 - 07/14/97 3,715.50 18,850.00 22,565.50
07/15/97 - 07/14/99 3,963.20 20,150.00 24,113.20
07/15/99 - 07/31/2001 4,334.75 22,100.00 26,434.75
4. TENANT IMPROVEMENT'S
4.1 Landlord shall, at its own cost and expense, construct certain
improvements in the Suite 1101 Additional Premises prior to Tenant's
occupancy. The improvements to be constructed are delineated in the
attached Exhibit E-1.
5. SUBSTITUTED PREMISES
5.1 Landlord shall have the right one (1) time during the Term hereof, upon
giving Tenant not less than three (3) months prior written notice, to
provide and furnish Tenant with space elsewhere within the Building of
substantially the same size and of similar desirability and containing
similar improvements as the Suite 1101 Additional
<PAGE>
Premises and remove and place Tenant in such space with Landlord to pay all
reasonable costs and expenses incurred as a result of such removal of
Tenant. Should Tenant be provided a notice that Landlord intends to
relocate Tenant, then Tenant will have the right to terminate the Lease of
the Suite 1101 Additional
Premises only. Tenant will have thirty (30) days after receipt of (i)
notice from Landlord and (ii) space plan of alternative space together with
specific information on the improvements to be installed by Landlord in the
alternative space to exercise the right to terminate. Should Tenant refuse
to permit Landlord to move Tenant to such new space at the end of said
three (3) month period, Landlord shall have the right to cancel and
terminate this Lease of the Suite 1101 Additional Premises effective three
(3) months from the date of original notification by Landlord. If Landlord
moves Tenant to such new space, this Lease and each and all of its terms,
covenants, and conditions shall remain in full force and effect and be
deemed applicable to such new space, and such new space shall thereafter be
deemed to be the "Premises" as though landlord and Tenant had entered into
an express written amendment of this Lease with respect thereto.
5.2 Landlord and Tenant acknowledge that Landlord shall not exercise its
rights under Section 5.1 of this Amendment for the purpose of providing the
Suite 1101 Additional Premises to Virtual Chips. Furthermore, Landlord
shall not exercise those rights for the purpose of providing the Suite 1101
Additional Premises to an assignee or sublessee of Virtual Chips unless the
existing lease between Landlord and Virtual Chips has been terminated.
6. OPTION TO RENEW
6.1 Landlord and Tenant agree that the Option to Renew the Lease of the
twelfth floor Premises does not apply to the Suite 1101 Additional
Premises.
7. PARKING
7.1 Effective upon the Suite 1101 Commencement Date, Tenant will be granted
an additional five (5) free employee parking spaces, bringing the total of
free parking spaces under the Lease to (31).
OTHER THAN THE FOREGOING, all other terms, covenants and conditions of the
Lease as far as applicable remain unchanged.
IN WITNESS WHEREOF, the parties hereto have subscribed their names and
executed this First Amendment the day and year written below.
NORTH BLOCK PARTNERSHIP
a California limited partnership
By: PROPERTY SAN JOSE ONE CORPORATION,
an Oregon corporation, sole General Partner
By: LaSalle Advisors Limited
Its: Advisor and Duly Authorized Agent
By: /s/ Stephen T. Wong
------------------------------
Stephen T. Wong
Its: Vice President.
Date: 10/22/96
----------------------------
By: /s/ Diane R. McMahon
------------------------------
Diane R. McMahon
Its: Vice President
Date: 10/22/96
----------------------------
AGILE SOFTWARE, a California Corporation
Tenant
By: /s/
------------------------------
Its: President
-------------------------
<PAGE>
SECOND AMENDMENT TO OFFICE LEASE
This Second Lease Amendment (the "Second Amendment") made and entered into
the 12th day of March, 1998 by and between NORTH BLOCK PARTNERSHIP ("Landlord")
and AGILE SOFTWARE, a California Corporation ("Tenant").
WITNESSETH:
-----------
Reference is made to that certain Office Lease by and between Landlord and
Tenant made and entered into on May 30, 1996, Addendum to Lease dated March 20,
1996, and First Amendment dated October 15, 1996, covering 13,000 rentable
square feet on the twelfth floor and 2,477 rentable square feet on the eleventh
floor of the building at One Almaden Boulevard, San Jose, California, which is
hereby amended as follows:
1. TERM
1.1 The term of the Lease is hereby extended for a period of thirteen (13)
months beginning August 1, 2001 and expiring on August 31, 2002 (the
"Extended Term").
2. RENT
2.1 Monthly base Rent for the Extended Term will be $27,935.99, which is
calculated at the rate of $1.805 per rentable square foot.
3. LEASE BUY-OUT (DELETION)
3.1 Article 1 of the Addendum to Lease dated March 20, 1996 entitled "Lease
Buy-Out" is hereby deleted in its entirety.
4. OPTION TO RENEW
4.1 Paragraph 2 a) of the Addendum to Lease dated March 20, 1996 is hereby
deleted and is replaced with the following new paragraph 2a):
"Provided Tenant is not in default under this Lease, Tenant shall have
an option to extend the Term of this Lease on the same terms and
conditions for one (1) additional three (3) year period ("Second
Extended Term") except that the rent for the Second Extended Term
period will be one-hundred percent (100%) of the then prevailing market
rate. Tenant shall exercise its option to renew, if at all, by written
notice to Landlord no later than six (6) months prior to the expiration
of the Extended Term. Landlord and Tenant acknowledge that the option
described in this Paragraph 2 a.) does not apply to the Suite 1101.
Premises unless Tenant exercises the option described in Article 5 of
the Second Amendment to this Lease.
5. OPTION TO EXPAND AND EXTEND TERM - 11TH FLOOR
5.1 Provided Tenant is not in default under this Lease and provided that
Phoenix Technologies or its successor does not exercise its option to
extend its lease of Suite 1100, Tenant shall have the option, upon the
expiration of the Extended Term, to add Suites 1100 and 1101 to the
Premises under lease for the Second Extended Term. Suite 1100 is currently
occupied by Tenant under a sublease with Phoenix Technologies and Suite
1101 is currently occupied by Tenant under this Lease but is not subject to
the Option to Renew (Article 2 of Addendum to Lease). The option described
in this paragraph 5.l applies to Suites 1100 and 1101 together and may not
be exercised for either suite separately.
5.2 Tenant acknowledges that if Tenant exercises the option described in
the foregoing Paragraph 5.1, the eleventh floor Premises consisting of
Suites 1100 and l101 shall be deemed to contain a total of 13,000 rentable
square feet and that Rent and Operating Expense Escalation for the Second
Extended Term shall be based on a total of 26,000 rentable square feet
under this Lease.
5.3 Tenant further acknowledges that if this option is exercised, free
parking shall be allocated in the ratio described in paragraph 37.1 of
this Lease, so that Tenant shall be granted fifty-two (52) free employee
parking spaces during the Second Extended Term.
OTHER THAN THE FOREGOING, all other terms, covenants and conditions of the
Lease as far as applicable remain unchanged.
IN WITNESS WHEREOF, the parties hereto have subscribed their names and
executed this Second Amendment the day and year written below.
<PAGE>
NORTH BLOCK PARTNERSHIP
a California limited partnership
By: Second Tower
Its General Partner
By: /s/ Lewis N. Wolff
-------------------
Lewis N. Wolff
AGILE SOFTWARE, a California Corporation
By: /s/
--------------------------
Its: CFO
-------------------------
<PAGE>
THIRD AMENDMENT TO OFFICE LEASE
This Third Amendment to Office Lease ("Third Amendment") is made and
entered into this 18th day of September, 1998 by and between North Block
Partnership ("Landlord") and Agile Software, a California Corporation
("Tenant").
RECITALS
1. Tenant and Landlord are parties to that certain Office Lease by and between
Landlord and Tenant dated May 30, 1996, Addendum to Lease dated March 20,
1996, First Amendment dated October 15, 1996 and Second Amendment dated March
12, 1998 covering 13,000 rentable square feet on the twelfth floor and 2,477
rentable square feet on the eleventh floor at One Almaden Boulevard, San
Jose, California, ("Building") comprising 15,477 rentable square feet.
2. Tenant wishes to lease from Landlord and Landlord wishes to lease to Tenant
certain additional office premises located on the sixth floor of the
Building. Those premises consist of 4,685 rentable square feet designated
Suite 600 (the "Suite 600 Additional Premises") which is currently leased to
the Accel Technologies, Inc. through September 30, 1998. Accel Technologies
Inc. desires to surrender the Premises. Landlord is willing to recapture the
Additional Premises and to lease the Additional Premises to Tenant.
Therefore, Tenant and Landlord agree to amend the Lease as follows:
1. CONTINGENCY
1.1 This Third Amendment shall be contingent upon Landlord's execution of a
lease amendment with Accel Technologies terminating that lease. None of the
terms, covenants or conditions of this Third Amendment shall have any effect
unless and until such amendment is executed.
2. PREMISES
2.1 Upon the commencement date described herein, the Suite 600 Additional
Premises as depicted in the attached Exhibit A-3 will be added to the
Premises under the Lease and will become subject to all the applicable terms
thereof. When the Suite 600 Additional Premises have been added to the Lease,
the total area of the Premises under Lease shall be 20,162 rentable square
feet.
3. TERM
3.1 The term for the Suite 600 Additional Premises shall be for a period of
forty-seven (47) months and eight (8) days, commencing September 23, 1998 and
expiring concurrently with the Term of the Lease on August 31, 2002.
4. RENT
4.1 Effective September 23, 1998, Rent for the Suite 600 Additional Premises
shall be as follows:
Month Per Sq. Ft. Base Rent
----- ----------- ---------
09/23/98- 12/31/99 $1.85 $8,667.25
01/01/00- 08/31/02 $1.95 $9,135.75
5. TAXES AND OPERATING EXPENSES ESCALATION
5.1 Effective September 23, 1998, and continuing throughout the Term of the
Lease, Tenant shall pay to Landlord its prorata share of Expenses for the
Suite 600 Additional Premises to the extent the Expenses exceed the Expenses
for calendar year 1998. Therefore, in Article 6 of the Lease, all references
to Base Year, Real Estate Tax Base Year, or Base Year Expenses shall be
changed to calendar year 1998 only insofar as they relate to the Suite 600
Additional Premises. Tenant's prorata share for the Suite 600 Additional
Premises per Section 6.2 of the Lease shall be calculated using 4,685
rentable square feet as the numerator. None of the foregoing shall alter the
Base Year or Tenant's obligations applicable to the Premises on the Suite
1100 and Twelfth Floor of the Building.
<PAGE>
6. CONSIDERATION
6.1 Upon execution of this Amendment, Tenant shall deposit with Landlord the
sum of Eight Thousand Six Hundred Sixty Seven and 25/100 Dollars ($8,667.25)
to be credited to the first monthly installment of Rent for the Suite 600
Additional Premises and the additional sum of Nine Thousand One Hundred
Thirty Five and 75/100 Dollars ($9,135.75) to serve as additional security
deposit.
7. CONDITION OF PREMISES
7.1 Tenant accepts the Suite 600 Additional Premises strictly "as-is".
8. PARKING
8.1 Effective September 23, 1998 and continuing throughout the Term of this
Lease, the number of parking spaces that Landlord shall provide Tenant shall
be increased by nine (9) such that when the area of the Premises under Lease
becomes 20,162 rentable square feet, Tenant shall be entitled to a total of
forty (40) spaces.
9. BROKER REPRESENTATION
9.1 Landlord and Tenant agree that neither party has appointed a real estate
broker to represent it in the negotiation and consummation of this Third
Amendment and that neither party shall be responsible for payment of real
estate commission(s) pursuant to this Third Amendment.
OTHER THAN THE FOREGOING, all other terms, covenants and conditions of the
Lease as far as applicable remain unchanged.
IN WITNESS WHEREOF, the parties hereto have subscribed their names and
executed this Third Amendment the day and year written below.
NORTH BLOCK PARTNERSHIP
a California limited partnership
By: Second Tower
Its General Partner
By: /s/ Lewis N. Wolff
-------------------
Lewis N. Wolff
AGILE SOFTWARE, a California Corporation
Tenant
By: /s/
--------------------------
Its: CFO
-------------------------
Date: 9-19-98
-------
<PAGE>
FOURTH AMENDMENT TO OFFICE LEASE
This Fourth Amendment to Office Lease ("Fourth Amendment") is made and
entered into this 6th day of April, 1999 by and between North Block Partnership
("Landlord") and Agile Software, a California Corporation ("Tenant").
RECITALS
1. Tenant and Landlord are parties to that certain Office Lease by and between
Landlord and Tenant dated May 30, 1996, Addendum to Lease dated March 20,
1996, First Amendment dated October 15, 1996, Second Amendment dated March
12, 1998 and Third Amendment dated September 18, 1998 covering 13,000
rentable square feet on the twelfth floor, 2,477 rentable square feet on the
eleventh floor and 4,685 rentable square feet on the sixth floor of the
building located at One Almaden Boulevard, San Jose, California, ("Building")
2. Tenant wishes to lease from Landlord and Landlord wishes to lease to Tenant
certain additional office premises located on the third floor of the
Building. Those premises consist of 13,000 rentable square feet designated
Suite 300 (the "Suite 300 Additional Premises"). The Suite 300 Additional
Premises are currently leased to Sequoia Insurance and subleased to Winston
Advertising, with terms expiring March 31, 2001. Tenant intends to sub-
sublease the Suite 300 Additional Premises from Winston through March 31,
2001.
Therefore, Tenant and Landlord agree to amend the Lease as follows:
1. CONTINGENCY
1.1 This Third Amendment shall be contingent upon Tenant's execution of a
sub-sublease with Winston Advertising covering the Suite 300 Additional
Premises through March 31, 2001. None of the terms, covenants or conditions
of this Third Amendment shall have any effect unless and until such sub-
sublease is fully executed and approved by Landlord.
1.2 In the event that the master lease governing Tenant's sub-sublease of
the Suite 300 Additional Premises terminates for any reason prior to March
31, 2001 and provided that Tenant is not then in default under the terms of
the Lease, Tenant shall have the option of (a) terminating this Fourth
Amendment or (b) electing to advance the commencement date of this Fourth
Amendment to the date of termination of such master lease.
1.3 Landlord represents and warrants that as of the date of execution of
this Fourth Amendment, Landlord is not aware of any uncured default by any
tenant, assignee, or subtenant under the master lease for the Suite 300
Additional Premises.
2. PREMISES
2.1 Upon the commencement date described herein, the Suite 300 Additional
Premises as depicted in the attached Exhibit A-4 will be added to the
Premises under the Lease and will become subject to all the applicable terms
thereof. When the Suite 300 Additional Premises have been added to the Lease,
the total area of the Premises under Lease shall be 33,162 rentable square
feet.
3. TERM
3.1 The term for the Suite 300 Additional Premises shall be for a period of
seventeen (17) months, commencing April 1, 2001 and expiring concurrently
with the Term of the Lease on August 31, 2002.
4. RENT
4.1 Effective April 1, 2001, and continuing throughout the Term, base Rent
for the Suite 300 Additional Premises shall be twenty-nine thousand two
hundred fifty dollars ($29,250.00) per month, calculated at the rate of $2.25
per rentable square foot.
5. TAXES AND OPERATING EXPENSES ESCALATION
5.1 Effective April 1, 2001 and continuing throughout the Term of the Lease,
Tenant shall pay to Landlord its prorata share of Expenses for the Suite 300
Additional Premises to the extent the Expenses exceed the Expenses for
calendar year 1998. Therefore, in Article 6 of the Lease, all references to
Base Year, Real Estate Tax Base Year, or Base Year Expenses shall be changed
to calendar year 1998 insofar as they relate to the Suite 300 Additional
Premises. Tenant's prorata share for the Suite 300 Additional Premises per
Section 6.2 of
Page 1 of 3
<PAGE>
the Lease shall be calculated using 13,000 rentable square feet as the
numerator. None of the foregoing shall alter the Base Year or Tenant's
obligations applicable to any other portion of the Premises under this Lease.
6. CONSIDERATION
6.1 Upon execution of this Amendment, Tenant shall deposit with Landlord the
sum of twenty-nine thousand two hundred fifty dollars ($29,250.00) to serve
as additional Security Deposit.
7. CONDITION OF PREMISES
7.1 Tenant accepts the Suite 300 Additional Premises strictly "as-is".
7.2 Tenant acknowledges that Landlord may, during the Term of the Lease and
at its own expense, elect to remove the stairwell connecting the Suite 300
Additional Premises with the fourth floor of the Building. If such removal is
accomplished, the scope of work will include the removal of the stairwell and
the patching of walls, carpet and ceiling in way of the removal only. Any
additional work desired by Tenant must be accomplished at Tenant's expense.
The scope of work of any such removal will include restoration of such area
including, without limitation, painting, so that the restored area reasonably
matches the surrounding premises. In addition, such work shall be performed
by Landlord in a manner that does not unreasonably interfere with Tenant's
use of the Premises.
8. PARKING
8.1 Effective April 1, 2001 and continuing throughout the Term of this
Lease, the number of parking spaces that Landlord shall provide Tenant shall
be increased by twenty-six (26), such that when the area of the Premises
under Lease becomes 33,162 rentable square feet, Tenant shall be entitled to
a total of sixty-six (66) spaces.
9. EXPANSION OPTION - TENTH FLOOR
9.1 Provided Tenant is not then in default hereunder, Tenant shall have the
option to lease the entire tenth floor of the Building, comprising 13,000
rentable square feet, upon expiration of the existing lease covering that
floor which is scheduled to expire on September 30, 2001. This option shall
be subject to all of the following conditions:
(a) Tenant shall exercise such option, if at all, by giving Landlord
written notice of its exercise of option, on or before December 31,
2000.
(b) Tenant's exercise of this option for the tenth floor is contingent upon
the concurrent exercise of Tenant's options for the twelfth floor per
Paragraph 4.1 of the Second Amendment and for the eleventh floor in
accordance with and as conditioned by Article 5 of the Second
Amendment. Notwithstanding the foregoing, Tenant's options concerning
the eleventh and twelfth floors will not be affected if Tenant declines
to exercise the option described in Paragraph 9.1 of this Fourth
Amendment.
(c) Any lease of the tenth floor by Tenant shall be on the same terms and
conditions as this Lease, as far as applicable, except for:
(1) Rent, which shall be one hundred percent (100%) of the then
prevailing market rate, and shall be determined in accordance with
Paragraph 2(b) of the Addendum to Lease dated March 20, 1996. Upon
determination of the Rent for the premises covered by the option,
Landlord and Tenant shall execute an amendment to this Lease
setting forth their agreement.
(2) Parking, which shall include only twenty-six spaces in
consideration of the lease of the tenth floor.
(d) The term of any lease of the tenth floor pursuant to this option shall
commence immediately upon the expiration of the existing lease for that
floor, which is scheduled for September 30, 2001, and shall expire
concurrent with the Second Extended Term on August 31, 2005.
(e) Upon exercise of its option for the tenth floor, Tenant shall deposit
with Landlord the sum of $30,000 to serve as additional Security
Deposit under the Lease.
Page 2 of 3
<PAGE>
Upon execution of the amendment discussed in Paragraph 9.1(c) (1)
above, Tenant shall deposit with Landlord an amount equal to the
first month's Rent due for the tenth floor, which shall be credited
to said first monthly installment of Rent due thereunder.
10. OPTION TO EXTEND TERM - SUITE 300
- -------------------------------------
10.1 Provided Tenant is not then in default hereunder, Tenant shall have the
option to extend its lease of the Suite 300 Additional Premises for one (1)
additional period of three (3) years, subject to the following conditions:
(a) Tenant shall exercise such option, if at all, by giving Landlord
written notice of its exercise of option, on or before August 31,
2001.
(b) The extension of the Term of Tenant's lease of the Suite 300
Additional Premises pursuant to this option shall be on the same
terms and conditions as this Lease, as far as applicable, except for
Rent, which shall be one hundred percent (100%) of the then
prevailing market rate, and shall be determined in accordance with
Paragraph 2(b) of the Addendum to Lease dated March 20, 1996. Upon
determination of the Rent for the premises covered by the option,
Landlord and Tenant shall execute an amendment to this Lease setting
forth their agreement.
11. BROKER REPRESENTATION
11.1 Landlord and Tenant agree that neither party has appointed a real
estate broker to represent it in the negotiation and consummation of this
Fourth Amendment except Mark Ritchie of Ritchie Commercial, whose fee shall
be paid by Landlord pursuant to a separate agreement.
OTHER THAN THE FOREGOING, all other terms, covenants and conditions of the
Lease as far as applicable remain unchanged.
IN WITNESS WHEREOF, the parties hereto have subscribed their names and
executed this Third Amendment the day and year written below.
NORTH BLOCK PARTNERSHIP
a California limited partnership
By: Second Tower
Its General Partner
By: /s/ Lewis N. Wolff
-------------------
Lewis N. Wolff
AGILE SOFTWARE, a California Corporation
Tenant
By: /s/
-----------------------------
Its: CFO
----------------------------
Date: 4-9-99
------
Page 3 of 3
<PAGE>
SUBLEASE AGREEMENT
------------------
This Sublease Agreement ("Sublease") is dated as of March 1, 1998 (the
"Effective Date") by and between Phoenix Technologies Ltd., a Delaware
corporation ("Sublessor") and Agile Software, a California corporation
("Sublessee").
1. PROVISIONS CONSTITUTING SUBLEASE
--------------------------------
1.1 This Sublease is and at all times shall be subject and
subordinate to the Almaden Financial Plaza Office Lease dated as of May 9, 1996
between North Block Partnership as landlord ("Landlord") and Virtual Chips, Inc.
(to which Sublessor is the successor by acquisition) as tenant ("Tenant") (the
"Master Lease"). A copy of the Master Lease is attached hereto as EXHIBIT A.
---------
Sublessor shall comply with all of the provisions of the Master Lease and shall
perform all the obligations on the part of the "Tenant" under the Master Lease
other than the obligations of Tenant contained in the following paragraphs of
the Master Lease: paragraphs 1, 3, 4, 5, 7, 8, 12 (with respect to the
obligation to restore any condition that exists as of the Sublease commencement
date or the date Sublessee occupies the Subleased Premises if Sublessee occupies
the Subleased Premises before the Sublease commencement date) 15, 19.1 (with
respect to events occurring prior to the Sublease commencement date), 21.1, 29.1
(to the extent attributable to Sublessor) and 37.2 and 37.3 (with respect to the
obligations of Sublessor to indemnify, defend and hold harmless the Landlord for
violations of paragraphs 37.2 and 37.3 caused by Sublessor). Such obligations
shall continue to be obligations of Sublessor and Sublessor covenants and agrees
to perform such obligations and to maintain the Master Lease in full force and
effect for the term of this Sublease (except for breaches of the Master Lease
caused by any breach of this Sublease by Sublessee). Sublessee and Sublessor
each shall indemnify and hold the other harmless from and against all liability,
costs, damages, claims, demands and expenses, including reasonable attorney's
fees and costs, arising out of such party's failure to comply with or to perform
its obligations hereunder or the obligations of the "Tenant" under the Master
Lease (to the extent such obligation has been allocated to a party under this
Sublease). In the event of the termination of Sublessor's interest as Tenant
under the Master Lease for any reason other than a voluntary termination of the
Master Lease by Sublessor without Sublessee's consent or a breach by Sublessor
of its obligations under the Master Lease (except for breaches resulting from
Sublessee's breach of this Sublease) or this Sublease, then this Sublease shall
terminate concurrently therewith without any liability of Sublessor to
Sublessee.
1.2 Except for paragraphs 1, 3, 4, 5, 7, 8, 15, 16.4, the first
sentence of paragraph 21.1, 33, 34, 37.1, the Addendum to Lease, Exhibit D
(Confirmation of Lease Commencement) and Exhibit E (Improvements Work Letter) of
the Master Lease, all of the terms and conditions contained in the Master Lease
are incorporated herein as terms and conditions or this Sublease and along with
all of the following paragraphs set out in this Sublease shall be the complete
terms and conditions of this Sublease. For purposes of such incorporation, all
references in the Master Lease to the "Lease" shall be deemed to refer to this
Sublease and all references in the Master Lease to "Landlord" and "Tenant" shall
be deemed to refer to Sublessor and Sublessee, respectively, except that any
reference to "Landlord" in Sections 10.5, 11, 14.1
<PAGE>
14.2, 14.3, 14.4, 14.6, 14.7, 14.8, 14.9, 18, 19.1, 26.1, 37.2, (expect to the
extent that losses are occasioned by the acts or omissions of Sublessor) and
37.3 of the Master Lease shall be deemed to refer to both Landlord and Sublessor
and any reference to "Landlord" in Sections 10.1, 10.2, 10.3, 10.4, 12, 14.5,
17, 20.1, 20.2, 21.1, 22, 23.1, 24.1, 24.2, 24.3, 24.4, 24.5, 24.7, 24.8, 32 and
35.9 of the Master Lease shall be deemed to refer to Landlord only.
2. PREMISES
--------
2.1 Sublessor leases to Sublessee and Sublessee hires from Sublessor
the premises consisting of approximately ten thousand three hundred seventeen
(10,317) square feet, commonly known as Suite 1100, as more particularly shown
on EXHIBIT B (the Subleased Premises"), located on the eleventh (11/th/) floor
---------
of the building at One Almaden Boulevard, San Jose, California (the "Building"),
together with the parking rights contained in paragraph 36 of the Master Lease.
Upon commencement of the term of this Sublease, Sublessor shall transfer title
to the personal property (the "Personal Property") described in EXHIBIT C in its
---------
"as is" condition for the sum of One Dollar ($1.00). Upon request of Sublessee,
Sublessor shall execute and deliver to Sublessee a bill of sale transferring
title to the Personal Property to Sublessee. Upon expiration or earlier
termination of this Sublease, Sublessee shall remove the Personal Property and
restore any damage caused by such removal at its sole cost.
2.2 Sublessee accepts the Subleased Premises, and all improvements
included therein, in their present condition, "as is," without representation or
warranty by Sublessor as to the condition of the Subleased Premises or as to the
use or occupancy which may be made thereof. Sublessee acknowledges (a) that it
has been advised by Sublessor to satisfy itself with respect to each and every
condition of the Subleased Premises and the present and future suitability or
the Subleased Premises for Sublessee's intended use, (b) that Sublessee has made
such investigations of the Subleased Premises as it deems necessary and assumes
all responsibility for the results of such investigations, and (c) that neither
Landlord nor Sublessor, or any of their agents, has made any oral or written
representations or warranties with respect to such matters other than as set
forth in this Sublease, if any. Sublessor shall have no obligation whatsoever to
construct or make any alterations or improvements to the Subleased Premises.
2.3 Except to the extent that the Hazardous Substances (as defined
in paragraph 37.4 of the Master Lease) in question was released, emitted, used,
----
stored, manufactured, transported or discharged by Sublessee, or its agents,
employees or contractors, as between Sublessor and Sublessee, Sublessee shall
not be responsible for and hereby is released by Sublessor from any claim,
remediation obligation, removal obligation, monitoring cost, investigation
obligation liability, cause of action, penalty, attorneys' fee, cost, expense or
damage owing or alleged to be owing to any third party with respect to any
Hazardous Substances present on or about the Subleased Premises, the Building or
the soil, groundwater or surface water thereof, without regard to whether the
Hazardous Substances were present on the Subleased Premises, the Building as of
the commencement date or this Sublease or whether the presence of the Hazardous
Substances was caused by any person other than Sublessor. Nothing contained in
this paragraph shall be construed as to permit Sublessee to use, store or
transport Hazardous Substances on the Subleased Premises. Sublessee's rights
with respect to the use of
<PAGE>
Hazardous Substances on the Subleased Premises are set forth in paragraph 37 of
the Master Lease.
3. TERM.
----
3.1 The term of this Sublease shall commence on March 1, 1998, and
shall terminate fifty-three months thereafter, unless sooner terminated pursuant
to any provision hereof. Upon execution of this Sublessee and payment of the
advance rent described in paragraph 4.1, Sublessee shall be given access to the
Subleased Premises for the purpose of preparing the Subleased Premises for
occupancy, provided, however, that Sublessee shall not be required to pay rent
of additional charges prior to commencement of the Sublease on March 1, 1998.
3.2 If Sublessee remains in possession of all or any party of the
Subleased Premises upon expiration of the term of this Sublease, with the
consent of Sublessor, such tenancy shall be month-to-month only and shall not
constitute a renewal or extension for any further term. If as a result of
Sublessee's continued possession Sublessor must pay holdover rent pursuant to
paragraph 15.1 of the Master Lease, the monthly rent shall be increased to an
amount equal to one hundred twenty-five percent (125%) of the monthly rent
payable during the last month of the term and any other sums due under this
Sublease shall be payable in the amount and at the times specified in this
Sublease. Such month-to-month tenancy shall be subject to every other term,
condition, and covenant contained herein. If Sublessee fails to surrender the
Subleased Premises to Sublessor upon the expiration of the term, despite demand
to do so by Sublessor, Sublessee shall indemnify and hold Sublessor harmless
from all loss or liability resulting from Sublessee's failure to surrender.
3.3 Notwithstanding any option to extend the term set forth in the
Addendum to the Master Lease, Sublessee shall have no option to extend the term
of this Sublease.
4. RENT.
----
4.1 Sublessee shall pay to Sublessor as rent for the Subleased
Premises the following amounts:
Period Rate/sq. ft. Monthly Rent
------ ------------ ------------
Effective Date - February 28, 1999 $ 1.63 $16,816.71
March 1, 1999 - August 31, 2000 $ 1.73 $17,848.41
September 1, 2000 - July 3l, 2002 $1.805 $18,622.19
Each monthly rent payment shall be paid in advance, on the first day of each
month of the term hereof. Sublessee shall pay Sublessor upon the execution
hereof the sum of Sixteen Thousand Eight Hundred Sixteen and 71/100 Dollars
($16,816.71) as rent for the first month of the term. Rent for any period during
the term hereof which is for less than one month shall be prorated based on the
actual number of days in such month. Rent shall be payable without notice or
demand and without any deduction, offset, or abatement in lawful money of the
United States
<PAGE>
of America to Sublessor at the address stated herein or to such other persons or
at such other places as Sublessor may designate in writing; provided, however,
that to the extent that Sublessor's rent is abated for any reason under the
Master Lease, Sublessee's rent hereunder shall likewise abate.
4.2 It is understood and agreed that the rent paid by Sublessee
pursuant to paragraph 4.1 represents base rent only and does not include any
expenses payable by Sublessor as described in paragraph 6 of the Master Lease.
Sublessee shall be responsible for all such expenses and shall pay such expenses
to Sublessor by the date that Sublessor is required to pay same to Landlord
under the Master Lease.
4.3 Sublessee acknowledges that late payment by Sublessee to
Sublessor of rent and other charges provided for under this Sublease will cause
Sublessor to incur costs not contemplated by this Sublease, the exact amount of
such costs being extremely difficult or impracticable to fix. Therefore, if any
installment of rent or any other charge due from Sublessee is not received by
Sublessor within ten (10) days after the day on which such payment was due, and
Sublessee is notified of such nonreceipt, Sublessee shall pay to Sublessor an
additional sum equal to five percent (5%) of the amount overdue as a late
charge. The parties agree that this late charge represents a fair and reasonable
estimate of the costs that Sublessor will incur by reason of the late payment by
Sublessee.
Initials:
- --------
/s/ /s/
- --------------------------- ---------------------------
Sublessor Sublessee
5. SECURITY DEPOSIT. Upon execution of this Sublease, Sublessee shall
----------------
deposit with Sublessor the sum of Sixteen Thousand Eight Hundred Sixteen and
7l/100 Dollars ($16,816.71) as security for Sublessee's faithful performance of
Sublessee's obligations hereunder. If Sublessee fails to pay rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Sublease, Sublessor may use, apply or retain all or any portion of said
deposit for the payment of any rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by reason of
Sublessee's default, or to compensate Sublessor for any loss or damage which
Sublessor may suffer thereby. If Sublessor so uses or applies all or any
portion of said deposit, Sublessee shall within ten (10) days after written
demand therefor deposit cash with Sublessor in an amount sufficient to restore
said deposit to the full amount hereinabove stated and Sublessee's failure to do
so shall be a breach of this Sublease. Sublessor shall not be required to keep
said deposit separate from its general accounts. Said deposit or so much thereof
as had not theretofore been applied by Sublessor shall be returned without
payment of interest for its use, to Sublessee within ten (10) days after the
expiration or the term hereof or ten (10) days after the date Sublessee has
vacated the Premises, whichever is later.
<PAGE>
6. DAMAGE AND DESTRUCTION. In the event of the occurrence of an event
----------------------
set forth in paragraph 24 of the Master Lease, Sublessor agrees not to exercise
any right to terminate the Master Lease unless and until requested to do so by
Sublessee. Sublessee acknowledges, however, that Sublessor shall have no
obligation to repair or restore the Subleased Premises following any such damage
or destruction. Sublessor's only obligation in such event shall be to notify
Sublessee or Landlord of the other party's election under paragraph 24 of the
--
Master Lease.
7. PARKING. Sublessee's parking rights shall be as provided in
-------
paragraph 36 of the Master Lease.
8. LANDLORD'S CONSENT. Sublessee acknowledges that this Sublease is
------------------
subject to the consent of the Landlord under the Master Lease. Accordingly, this
Sublease shall not be effective unless and until Landlord has consented to this
Sublease in writing. Sublessor shall use diligent efforts to obtain such consent
as soon as reasonably possible following execution of this Sublease by Sublessor
and Sublessee. Sublessor shall have no liability whatsoever to Sublessee,
however, if Sublessor is unable to obtain such consent from Landlord. If
Sublessor is unable to obtain Landlord's consent by March 10, 1998, this
Sublease shall terminate. Sublessee has requested the right to occupy the
Subleased Premises as of March 1st, 1998. Accordingly, upon execution of this
Sublease, Sublessee shall have the right to occupy the Subleased Premises under
the terms and conditions set forth herein prior to obtaining Landlord's consent;
provided, however, that Sublessee shall defend, indemnify and hold Sublessor
harmless from any and all claims, losses, damages and costs resulting from such
early occupancy, including without limitation, any liabilities resulting from
failure to obtain Landlord's prior consent to such occupancy. This indemnity
obligation shall survive the termination of this Sublease.
9. ADDRESSES FOR NOTICES. Any notice shall be served by certified
---------------------
mail, return receipt requested, overnight courier or hand delivery. Notices
shall be deemed effective when received if served by hand delivery, one day
after being sent if delivered by overnight carrier or three (3) days after
deposit in the U.S. Mail if sent by certified mail. Sublessor's address for
notices, and the address to which Sublessee shall make all payments of Rent due
hereunder, shall be 411 East Plumeria Drive, San Jose, CA 95134, Attn: Director,
Corporate Services. Notice sent to Sublessor shall include a copy to the
attention of the General Counsel. Sublessee's address for notices shall be the
address for the Subleased Premises. Either party may change the address for
notices (or for rent payments) by giving written notice as set forth in this
section.
10. SUBLESSOR'S OBLIGATIONS. With respect to work, services, repairs,
-----------------------
restoration or the performance of any other obligation of Landlord under the
Master Lease (including without limitation the obligations of Landlord in
paragraphs 6, 10 and 24 of the Master Lease) (collectively, "Master Lessor
- -- --
Obligations"), the sole obligation of Sublessor shall be to use its best efforts
to cause Master Lessor to perform such Master Lessor Obligations as and when
requested to do so by Sublessee; provided, however, that in no event shall
Sublessor be liable to Sublessee for Master Lessor's failure to perform the
same. If, notwithstanding Sublessor's efforts, Master Lessor shall continue to
fail to perform any Master Lessor
<PAGE>
Obligation, upon written request from Sublessee, Sublessor shall either assign
Sublessor's rights under the Master Lease to the extent necessary to permit
Sublessee, at Sublessee's sole cost, to institute legal proceedings against
Master Lessor to obtain the performance of such Master Lessor obligation (or
assign any rights or remedies of Sublessor to obtain such performance); or
Sublessor may, in its sole discretion, itself institute legal proceedings to
enforce the performance of such Master Lessor Obligation. In the event that such
legal proceedings are required, Sublessor and Sublessee agree to cooperate with
each other in good faith in the course and conduct of such legal proceedings
(including any settlement thereof).
11. DEFAULT: BREACH AND REMEDIES. The provisions set forth in section
----------------------------
28 of the Master Lease are incorporated into this Sublease as if set forth fully
herein. In the event Sublessee breaches any obligation of this sublease
(including the terms of the Master Lease incorporated herein), Sublessor shall
have the rights and remedies available to Landlord under the Master Lease.
12. SUBLESSOR'S REPRESENTATION. Sublessor represents and warrants
--------------------------
that the Master Lease is in full force and effect, and there exists under the
Master Lease no default or event of default by either Landlord, to the best of
Sublessor's knowledge, or Sublessor, has any event occurred, or any
circumstances exist, which, with the giving of notice or passage of time or
both, could constitute such a default or event of default. Sublessor represents
and warrants that it is successor by acquisition to Virtual Chips, Inc., the
original Tenant under the Master Lease, and as such full power and authority to
enter into this Sublease.
13. SUBLESSEE'S INSURANCE. Sublessor shall be named as an additional
----------------------
insured on all insurance policies required to be carried by Sublessee pursuant
to this Sublease (including without limitation the policies required to be
carried pursuant to paragraphs 12 and 20.2 of the Master Lease). Sublessee shall
deliver to Sublessor copies of any certificate of insurance or notices related
to insurance policies required to be given to Landlord pursuant to this Sublease
(including the provisions of the Master Lease incorporated herein) in the time
and manner such certificates or notices are required to be given to Landlord.
14. MERGER. This Sublease (including the applicable provisions of the
------
Master Lease) contains all agreements between Sublessor and Sublessee with
respect to Sublessee's hiring of the Subleased Premises, and no other prior or
contemporaneous agreement or understanding shall be effective.
15. Provided Sublessee is not in default, Sublessor will not exercise
its option to renew under Addendum to lease for Master Lease.
<TABLE>
<CAPTION>
SUBLESSOR SUBLESSEE
- --------- ---------
<S> <C>
Phoenix Technologies Ltd., a Delaware Agile Software Corporation, a California
corporation corporation
</TABLE>
By /s/ Stuart J. Nichols By /s/ T.P. SHANAHAN
------------------------------- ------------------------------
Name Stuart J. Nichols Name T.P. SHANAHAN
----------------------------- -----------------------------
Its VP General Counsel & Secretary Its CFO
------------------------------ -----------------------------
<PAGE>
SUB-SUBLEASE
Sub-sublandlord:
Winston Marketing & Communications, Inc.
Sub-subtenant:
Agile Software, Inc.
Subject Property:
One Almaden Plaza, Suite 300
San Jose, California
Date: February 19, 1999
THIS SUB-SUBLEASE (this "Sub-Sublease") is entered into as of the 9th day of
April, 1999, by and between (i) Winston Marketing & Communications, Inc., a
California corporation ("Winston"), and (ii) Agile Software, Inc. ("Agile"), and
is made with reference to the following facts:
RECITALS
A. Citation Insurance Company, a California corporation ("Citation"), is the
tenant and North Block Partnership is the landlord pursuant to that certain
Lease dated July 9, 1990 (the "Master Lease"), in which Citation leased certain
space in an office building located at One Almaden Boulevard, San Jose,
California, which promises are more particularly described in the Master Lease.
A copy of the Master Lease is attached hereto as Exhibit A.
---------
B. Pursuant to that certain Sublease Agreement dated September 5, 1997 (the
"Sublease"), Citation subleased to Winston Marketing & Communications, Inc.
("Winston")
Page 1 of 14
<PAGE>
the premises described in the Master Lease consisting of approximately 13,000
rentable square feet, which space is more particularly described in the Sublease
(the "Subleased Premises), a floor plan of which is attached to the Sublease as
Exhibit A. A copy of the Sublease is attached hereto as Exhibit B.
---------
C. Agile desires to lease the Subleased Premises consisting of approximately
thirteen thousand (13,000) square feet from Winston and Winston desires to lease
the Subleased Premises to Agile, on the terms, covenants and conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises of the
parties contained herein, the parties hereto agree as follows:
1. Provisions Constituting Sub-sublease:
1.1 This Sub-sublease consists of all of the terms and conditions set forth
herein, and incorporates all of the terms and conditions of the Master
Lease and of the Sublease (read, with respect to the Master Lease, as if
Winston were the master landlord and Agile were the master tenant, and,
with respect to the Sublease, as if Winston were the Sublandlord and
Agile were the subtenant), with the exception of those portions of the
Master Lease and Sublease as are specifically excluded in this agreement,
or are modified by this agreement, provided however, that with respect to
the obligations of the master landlord, and representations by the master
landlord, to the tenant under the master lease, and the obligations of
the sublandlord, and representations of the sublandlord, to the subtenant
under the sublease, in the event of default or breach by the Master
Landlord or the Sublandlord with respect to such obligations and
representations, Winston's sole obligation to Agile shall be to assign
whatever
Page 2 of 14
<PAGE>
rights it may have to enforce the provisions of the Master Lease or the
Sublease, to the extent that any such rights exist and are assignable,
without cost to Winston, to Agile. Agile hereby assumes and agrees to
perform all of the obligations of "Tenant" under the Master Lease (limited
only by the extent said obligations are expressly limited to the portion of
the premises under the Master Lease which constitute the Subleased
Premises), except as such obligations may be modified by this agreement.
Agile further agrees to assume and to perform all of the obligations of
"Subtenant" under the Sublease, except as such obligations may be modified
by this agreement. Agile shall not commit or permit to be committed on the
Subleased Premises, or the building and/or real property on which the
Subleased Premises are located, any act or omission which violates any term
or condition of the Master Lease or the Sublease.
The following provisions in the Master Lease were excluded from
Winston's obligations under the Sublease and are not part of Agile's
obligations under this Sub-sublease:
Paragraphs 1, 2, 3.1, 4.1, 4.2, 5.1, 5.2, 7, 32, 33, 35 and Exhibits D
and E.
Similarly, the following provisions in the Sublease are excluded from
Agile's obligations under this Sub-sublease:
Paragraphs 3.2, 3.3, 4, 5, 6, 7, 8, 9, 10, 11, 13, 14, 15, 16, 17.
Notwithstanding any other provision of this Sub-sublease, or of the
sublease, Winston does not make any representation that the Premises comply
with ADA, or that the Premises were constructed in accordance with plans or
permits, or that there were no hazardous materials on the
Page 3 of 14
<PAGE>
Premises prior to Winston's occupancy, provided, further, that Winston
represents that it has not brought any hazardous materials on to the
Premises during its occupancy. Except as modified in this paragraph, the
provisions of Paragraph 12 of the Sublease are incorporated in this Sub-
sublease.
Except to the extent waived or consented to in writing by the other
party or parties hereto who are affected thereby, neither of the parties
hereto will, by renegotiation of the Sublease, assignment, subletting,
default or any other voluntary action, avoid or seek to avoid the
observance or performance of the terms to be observed or performed
hereunder by such party. Nothing contained in this Section 1.1 or elsewhere
in this Sub-sublease shall prevent or prohibit Winston from assigning its
interest in this Sub-sublease, provided that the assignee recognizes the
terms of this Sub-sublease.
2. Rent:
2.1 Rent:
Agile shall pay to Winston as Rent for the Subleased Premises per the
schedule below, without deductions, offset, prior notice or demand. Rent
shall be payable by Agile to Winston in consecutive monthly installments on
or before the first day of each calendar month during the Sub-sublease
Term. If the Sub-sublease commencement date or the termination date of the
Sub-sublease occurs on a date other than the first day or the last day,
respectively, of a calendar month, then the Rent for such partial month
shall be prorated and the prorated Rent
Page 4 of 14
<PAGE>
shall be payable on the Sub-sublease commencement date or on the first day
of the calendar month in which the Sublease termination date occurs,
respectively:
May 1, 1999 - March 31, 2001: $28,600.00 per month
At Sub-sublease execution, Sub-sublessee shall deliver to Sub-sublessor a
check in the amount of $57,200.00 to cover the first month's rent of
$28,600.00 and a security deposit in the amount of $28,600.00
2.2 Security Deposit:
In addition to the Rent specified above, Agile shall pay to Winston
$28,600.00 as a non-interest bearing Security Deposit. In the event Agile
has performed all of the terms and conditions of this Sub-sublease during
the term hereof, Winston shall return to Agile, within ten days after Agile
has vacated the Subleased Premises or the Sub-sublease has been terminated,
whichever occurs first, the Security Deposit less any sums due and owing to
Winston.
3. Operating Expenses:
Notwithstanding any provision in Section 6.1 of the Master Lease, Agile
shall pay all increases in the Subtenant's share of operating expenses for
the Subleased Premises for which Winston is responsible, as such expenses
are defined in the Master Lease, and as modified by the Sublease, to the
extent that such operating costs exceed the operating costs for the base
calendar year ending December 31, 1999. Upon being billed by the Master
Landlord, Winston shall bill such operating costs to Agile, to be payable
by Agile within 10 days.
Page 5 of 14
<PAGE>
4. Rights of Access and Use:
4.1 Use:
Agile shall use the Subleased Premises only for those purposes permitted in
the Master Lease, and the Sublease, unless Winston, Citation, and the
Master Landlord consent in writing to other uses prior to the commencement
thereof.
5. Sub-sublease Term:
5.1 Sub-sublease Term/Occupancy:
The Sub-sublease Term and occupancy shall be for the period commencing on
May 1, 1999, and continuing through March 31, 2001. In no event shall the
Sub-sublease Term extend beyond the Term of the Master Lease.
5.2 Inability to Deliver Possession:
Winston shall use its best efforts to deliver possession of the Subleased
Premises to Agile on the commencement date of the term. In the event
Winston is unable to deliver possession of the Subleased Premises on May 1,
1999, due to circumstances beyond the reasonable control of Winston,
Winston shall not be liable for any damage caused thereby, nor shall this
Sub-sublease be void or voidable, provided, however, that in such event,
Winston agrees to make available to Agile by May 1, 1999, at least 3,000
square feet of the Premises, in which case, the term of this Sub-sublease
shall commence on such delivery, but until such time as Winston has
delivered the entire Premises to Agile, Agile's rent and expenses under
this Sub-sublease shall be pro-rated based upon the actual amount of space
delivered to Agile, compared with the total square footage in the Premises,
and, provided, further, that if Winston is unable to
Page 6 of 14
<PAGE>
deliver the entire premises by June 1, 1999, Agile shall have the option to
terminate this Sub-sublease, which option may be exercised by written
notice to Winston at any point in time between May 1, 1999 and July 1,
1999. If Agile, with Winston's prior written consent, commences operations
in the Premises prior to commencement of the term, Agile shall do so
subject to all the covenants and conditions hereof and shall pay Rent for
such period at the same rental as that prescribed for the first month of
the term prorated at the rate of 1/30th thereof per day.
6. Notices:
All notices, demands, consents and approvals which may or are required to
be given by either party to the other hereunder shall be given in the
manner provided in the Master Lease, at the addresses shown on the
signature page hereof. Winston shall notify Agile of any Event of Default
under the Master Lease, or the Sublease, or of any other event of which
Winston has actual knowledge which will impair Agile's ability to conduct
its normal business at the Subleased Premises, as soon as reasonably
practicable following Winston's receipt of notice from the Landlord or
Citation of an Event of Default or actual knowledge of such impairment.
7. Broker Fee:
Upon execution of the Sublease, Winston shall pay Colliers International,
Inc., a licensed real estate broker, and shall cooperate with Agile's
broker, Ritchie Commercial, fees set forth in a separate agreement between
Winston and Broker, for brokerage services rendered by Broker to Winston in
these
Page 7 of 14
<PAGE>
transactions.
8. Tenant Improvements:
Winston shall deliver the Premises to Agile in an "As-is" condition with
the Premises broom clean. All tenant improvements performed by Agile shall
be done at Agile's own expense and in compliance with applicable codes and
regulations and subject to first obtaining Master Landlord's consent as
required under the Master Lease, and Citation's consent as may be required
under the Sublease.
In this regard, Agile acknowledges that it has been informed that
Citation's leased premises were originally on two different floors, which
were joined by a stairwell from what is now the Winston lobby to the
Citation floor above. When Winston subleased its premises, Citation sealed
off the stairwell at the fourth floor. As a result, the stairwell in the
Winston premises is non-functional. Agile acknowledges that the fire
marshall may require signage to the effect that the stairwell is not an
exit, or other measures to indicate that the stairwell is non-functioning,
and agrees to bear the cost of such signage/other measures which may be
required by the fire marshall or building inspector.
Winston and Agile shall negotiate separately regarding any furniture,
fixtures and equipment currently on the Premises to be acquired or leased
by Agile.
9. Trade Fixtures, Personal Property and Surrender of the Subleased Premises:
Provided that Subtenant is not then in default of any of its obligations
Page 8 of 14
<PAGE>
hereunder, and provided such removal shall not damage or mar the Premises,
Agile shall have the right at any time during the Term of this lease to
remove its trade fixtures and personal property from the Premises. In the
event of involuntary or voluntary termination of this sub-sublease, Agile
shall (a) quit and surrender the Premises in good order and condition,
reasonable wear and tear excepted, and (b), at Winston's option, Agile
shall remove from the Premises all trade fixtures placed on the Premises by
Agile, with the Premises thereafter to be restored or repaired, at Agile's
expense, to the condition in which the Premises were delivered at the
commencement of this sub-sublease. Provided, however, that in the event
that Agile has entered into an agreement with the Master Landlord to allow
it to continue possession of the Premises after the expiration of the term
of this sub-sublease, and provided further that this sub-sublease has not
been terminated prior to expiration of its term, Agile shall not be
required to (a) quit and surrender the Premises in good order and
condition, reasonable wear and tear excepted, or (b) to remove from the
Premises all trade fixtures placed on the Premises by Agile, with the
Premises thereafter to be restored or repaired, at Agile's expense, to the
condition in which the Premises were delivered at the commencement of this
sub-sublease.
Further, upon the termination of this sub-sublease, whether such
termination is voluntary or involuntary, if required by the Master
Landlord, or by Citation, Agile shall restore the Premises to the condition
in which
Page 9 of 14
<PAGE>
the Premises were delivered at the commencement of this sub-sublease,
reasonable wear and tear excepted.
10. Parking:
Winston shall assign to Agile its right to two (2) free parking spaces per
1,000 square feet leased and one (1) parking space for every 1,000 square
feet leased on the roof of the garage at $30.00 per stall, per month. Any
additional parking desired by Agile shall be separately negotiated between
Agile and the Master Landlord.
11. Alterations:
Agile shall be responsible for the installation of any and all
improvements, alterations or other work required on or to the Subleased
Premises or to any other portion of the property and/or building of which
the Subleased Premises are a part, required or reasonably necessary because
of: (1) Agile's use of the Subleased Premises or any portion thereof; (2)
the use by Agile by reason of assignment or sublease; or (3) both,
including any improvements, alterations or other work required under the
Americans With Disabilities Act of 1990. Compliance with the provisions of
this Section shall be a condition of Winston granting its consent to any
assignment or further sublease of all or a portion of the Subleased
Premises.
12. Compliance With Nondiscrimination Regulations:
It is understood that it is illegal for Winston to refuse to display or
sublease the Subleased Premises, or to assign, surrender or sell the Master
Lease, to any
Page 10 of 14
<PAGE>
person because of race, color, religion, national origin, sex, sexual
orientation, marital status or disability.
13. Toxic Contamination Disclosure:
Winston and Agile each acknowledge that they have been advised that
numerous federal, state, and/or local laws, ordinances and regulations
("Laws") affect the existence and removal, storage, disposal, leakage of
and contamination by materials designated as hazardous or toxic ("Toxics").
Many materials, some utilized in everyday business activities and property
maintenance, are designated as hazardous or toxic.
Some of the Laws require that Toxics be removed or cleaned up by
landowners, future landowners or former landowners without regard to
whether the party required to pay for "clean up" caused the contamination,
owned the property at the time the contamination occurred or even knew
about the contamination. Some items, such as asbestos or PCBs, which were
legal when installed, now are classified as Toxics, and are subject to
removal requirements. Civil lawsuits for damages resulting from Toxics may
be filed by third parties in certain circumstances.
Winston and Agile each acknowledge that Broker has no specific
expertise with respect to environmental assessment or physical condition of
the Subleased Premises, including, but not limited to, matters relating to:
(i) problems which may be posed by the presence or disposal of hazardous or
toxic substances on or from the Subleased Premises, (ii) problems which may
be posed by the Subleased Premises being within the Special Studies Zone as
Page 11 of 14
<PAGE>
designated under the Alquist-Priolo Special Studies Zone Act (Earthquake
Zones), Section 2621-2630, inclusive of California Public Resources Code,
and (iii) problems which may be posed by the Subleased Premises being
within a HUD Flood Zone as set forth in the U.S. Department of Housing and
Urban Development "Special Flood Zone Area Maps," as applicable. Winston
and Agile each acknowledge that Broker has not made an independent
investigation or determination of the physical or environmental condition
of the Subleased Premises, including, but not limited to, the existence or
nonexistence of any underground tanks, sumps, piping, toxic or hazardous
substances on the Subleased Premises. Agile agrees that it will rely solely
upon its own investigation and/or the investigation of professionals
retained by it or Winston, and neither Winston nor Agile shall rely upon
Broker to determine the physical and environmental condition of the
Subleased Premises or to determine whether, to what extent or in what
manner, such condition must be disclosed to potential sublessee's,
assignees, purchasers or other interested parties.
14. Rent Abatement and Damages to Personal Property:
In the event Winston, pursuant to the terms of the Sublease, is entitled to
and receives rent abatement, then to the extent such rent abatement affects
the Subleased Premises, Agile shall be entitled to a pro-rata rent
abatement in the same proportion that the rental abatement received by
Winston bears to the rent paid by Winston under the Sublease. In addition,
any amounts paid or credited to Winston under the terms of the Sublease for
damage to personal property shall be credited to Agile, subject to the same
limitations set forth above.
Page 12 of 14
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15. Winston's Indemnity:
So long as Agile performs its obligations hereunder, Winston covenants to
Agile that, during the term of the Sub-sublease, Winston shall fully
perform all of the covenants and obligations of Winston under the Sublease,
and that Winston shall at all times maintain the Sublease, and Winston's
right to possession of the Premises thereunder, current and in good
standing. Winston shall hold Agile, and any subtenants and/or assignees of
Agile, harmless from, and indemnify and defend Agile, and/or its subtenants
and assignees, including attorneys' fees and court costs, against, any and
all claims, damage, injury, suits, losses, judgments (including judgments
of unlawful detainer), and expenses, arising as the result of the failure
of Winston to perform all its obligations as Subtenant under the Sublease
and to maintain the Sublease and Winston's right to possession of the
Premises thereunder, current and in good standing.
16. Insurance:
Agile shall cause all insurance policies required under Section 20 of the
Master Lease to name Winston and Citation as named additional insureds.
Sub-sublandlord: WINSTON MARKETING & COMMUNICATIONS, INC.,
One Almaden Boulevard, Suite 300
San Jose, CA 95113
By: /s/ Date: 4/9/99
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Page 13 of 14
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Sub-subtenant: AGILE SOFTWARE, INC.,
One Almaden Boulevard, Suite 700
San Jose, CA 95113
By: /s/ Date: 4-9-99
---------------------------------------- ------
NOTICE TO WINSTON AND AGILE: COLLIERS INTERNATIONAL IS NOT AUTHORIZED TO GIVE
LEGAL OR TAX ADVICE; NOTHING CONTAINED IN THIS SUB-SUBLEASE OR ANY DISCUSSIONS
BETWEEN COLLIERS INTERNATIONAL AND WINSTON AND AGILE SHALL BE DEEMED TO BE A
REPRESENTATION OR RECOMMENDATION BY COLLIERS INTERNATIONAL, OR ITS AGENTS OR
EMPLOYEES AS TO THE LEGAL EFFECT OR TAX CONSEQUENCES OF THIS DOCUMENT OR ANY
TRANSACTION RELATING THERETO. ALL PARTIES ARE ENCOURAGED TO CONSULT WITH THEIR
INDEPENDENT FINANCIAL CONSULTANTS AND/OR ATTORNEYS REGARDING THE TRANSACTION
CONTEMPLATED BY THIS PROPOSAL.
This Sub-sublease is hereby approved.
CITATION INSURANCE COMPANY
By: /s/ Date: 4/14/99
-------------------------------- -------
Landlord hereby consents to Sub-sublease:
NORTH BLOCK PARTNERSHIP
a California limited partnership
By: Second Tower
Its General Partner
By: /s/ Lewis N. Wolff Date: 4/17/99
-------------------------------- ---------
Lewis N. Wolff
<PAGE>
EXHIBIT 10.5
SUBORDINATED LOAN AND SECURITY AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of February 8, 1999, is entered
into by and between Agile Software Corporation, a California corporation, with
its chief executive office, and principal place of business located at One
Almaden Boulevard, 12/th/ Floor, San Jose, California 95113 (the "Borrower") and
Comdisco, Inc., a Delaware corporation, with its principal place of business
located at 6111 North River Road, Rosemont, Illinois 60018 (the "Lender" or
sometimes, "Comdisco"). In consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
RECITALS
WHEREAS, Borrower has requested Lender to make available to Borrower a loan
in the aggregate principal amount of THREE MILLION and 00/100 DOLLARS
($3,000,000.00) in minimum installments of ONE MILLION DOLLARS ($1,000,000.00)
each (as the same may from time to time be amended, modified, supplemented or
revised, the "Loan"), which would be evidenced by Subordinated Promissory
Note(s) executed by Borrower substantially in the form of Exhibit A hereto (as
the same may from time to time be amended, modified, supplemented or restated
the "Note(s)").
WHEREAS, Lender is willing to make the Loan on the terms and conditions set
forth in this Agreement, and
WHEREAS, Lender and Borrower agree any Loan hereunder shall be subordinate
to Senior Debt (as defined herein) to the extent set forth in the Subordination
Agreement (as defined herein).
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, Borrower and Lender hereby agree as follows:
SECTION 1. DEFINITIONS
Unless otherwise defined herein, the following capitalized terms shall have
the following meanings (such meanings being equally applicable to both the
singular and plural form of the terms defined);
1.1 "Account" means any "account," as such term is defined in Section
9106 of the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest and, in any event, shall
include, without limitation, all accounts receivable, book debts and other forms
of obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to Borrower (including, without limitation, under any trade
name, style or division thereof) whether arising out of goods sold or services
rendered by Borrower or from any other transaction, whether or not the same
involves the sale of goods or services by Borrower (including, without
limitation, any such obligation which may be characterized as an account or
contract right under the UCC) and all of Borrower's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods or
services, and all of Borrower's rights to any goods represented by any of the
foregoing (including, without limitation, unpaid seller's rights of rescission,
replevin, reclamation and stoppage in transit and
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rights to returned, reclaimed or repossessed goods), and all monies due or to
become due to Borrower under all purchase orders and contracts for the sale of
goods or the performance of services or both by Borrower (whether or not yet
earned by performance on the part of Borrower or in connection with any other
transaction), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and
contracts, and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
1.2 "Account Debtor" means any "account debtor," as such term is defined
in Section 9105(1)(a) of the UCC.
1.3 "Advance" means each installment made by the Lender to Borrower
pursuant to the Loan to be evidenced by the Note(s) secured by the Collateral.
1.4 "Advance Date" means the funding date of any Advance of the Loan.
1.5. "Advance Request" means the request by Borrower for an Advance under
the Loan, each to be substantially in the form of Exhibit C attached hereto, as
submitted by Borrower to Lender from time to time.
1.6 "Chattel Paper" means any "chattel paper," as such term is defined
in Section 9105(1)(b) of the UCC, now owned or hereafter acquired by Borrower or
in which Borrower now holds or hereafter acquires any interest.
1.7 "Closing Date" means the date hereof.
1.8 "Collateral" shall have the meaning assigned to such term in Section
3 of this Agreement.
1.9 "Contracts" means all contracts, undertakings, franchise agreements
or other agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which Borrower may now or hereafter have any right,
title or interest, including, without limitation, with respect to an Account,
any agreement relating to the terms of payment or the terms of performance
thereof.
1.10 "Copyrights" means all of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (i) all copyrights, whether registered or unregistered, held pursuant
to the laws of the United States, any State thereof or of any other country;
(ii) registrations, applications and recordings in the United States Copyright
Office or in any similar office or agency of the United States, any state
thereof or any other country; (iii) any continuations, renewals or extensions
thereof; and (iv) any registrations to be issued in any pending applications.
1.11 "Copyright License" means any written agreement granting any right
to use any Copyright or Copyright registration now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest.
1.12 "Documents" means any "documents," as such term is defined in Section
9105(1)(f) of the UCC, now owned or hereafter acquired by Borrower or in which
Borrower now holds or hereafter acquires any interest.
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1.13 "Equipment" means any "equipment," as such term is defined in
Section 9109(2) of the UCC, now or hereafter owned or acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
1.14 "Excluded Agreements" means (i) any Warrant Agreement(s) executed
hereunder, and any other warrants (including without limitation, the warrant
agreements dated as of September 18, 1995, March 1, 1996, February 6, 1997 and
November 7, 1997) to acquire, or agreements governing the rights of the holders
of, any equity security of Borrower, (ii) any stock of the Borrower issued or
purchased pursuant to the Warrant Agreement, and (iii) the Master Lease
Agreement dated as of September 18, 1995 between Borrower, as lessee, and
Lender, as lessor, including, without limitation, any Equipment Schedules and
Summary Equipment Schedules to the Master Lease Agreement executed or delivered
by Borrower pursuant thereto and any other modifications or amendments thereof,
whereby Borrower (as lessee) leases equipment, software, or goods from Lender
(as lessor) to Borrower (as lessee).
1.15 "Facility Fee" means one percent (1.0%) of the principal amount of
the installment of the Loan due at the Closing Date.
1.16 "Fixtures" means any "fixtures," as such term is defined in Section
9313(1)(a) of the UCC, now or hereafter owned or acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest and, now or
hereafter attached or affixed to or constituting a part of, or located in or
upon, real property wherever located, together with all right, title and
interest of Borrower in and to all extensions, improvements, betterments,
renewals, substitutes, and replacements of, and all additions and appurtenances
to any of the foregoing property, and all conversions of the security
constituted thereby, immediately upon any acquisition or release thereof or any
such conversion, as the case may be.
1.17 "General Intangibles" means any "general intangibles," as such term
is defined in Section 9106 of the UCC, now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest and,
in any event, shall include, without limitation, all right, title and interest
which Borrower may now or hereafter have in or under any contract, all customer
lists, Copyrights, Trademarks, Patents, rights to intellectual Property,
interests in partnerships, joint ventures and other business associations,
Licenses, permits, trade secrets, proprietary or confidential information,
inventions (whether or not patented or patentable), technical information,
procedures, designs, knowledge, know-how, software, data bases, data, skill,
expertise, recipes, experience, processes, models, drawings, materials and
records, goodwill (including, without limitation, the goodwill associated with
any Trademark, Trademark registration or Trademark licensed under any Trademark
License), claims in or under insurance policies, including unearned premiums,
uncertificated securities, cash and other forms of money or currency, deposit
accounts (including as defined in Section 9105(e) of the UCC), rights to sue for
past, present and future infringement of Copyrights, Trademarks and Patents,
rights to receive tax refunds and other payments and rights of indemnification.
1.18 "Instruments" means any "instrument," as such term is defined in
Section 9105(1)(i) of the UCC, now owned or hereafter acquired by Borrower or in
which Borrower now holds or hereafter acquires any interest.
1.19 "Intellectual Property" means all Copyrights, Trademarks, Patents,
trade secrets, source codes, customer lists, proprietary or confidential
information, inventions (whether or not
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<PAGE>
patented or patentable), technical information, procedures, designs, knowledge,
know-how, software, data bases, skill, expertise, experience, processes, models,
drawings, materials and records.
1.20 "Inventory" means any "inventory," as such term is defined in
Section 9109(4) of the UCC, wherever located, now or hereafter owned or acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest,
and, in any event, shall include, without limitation, all inventory, goods and
other personal property which are held by or on behalf of Borrower for sale or
lease or are furnished or are to be furnished under a contract of service or
which constitute raw materials, work in process or materials used or consumed or
to be used or consumed in Borrower's business, or the processing, packaging,
promotion, delivery or shipping of the same, and all furnished goods whether or
not such inventory is listed on any schedules, assignments or reports furnished
to Lender from time to time and whether or not the same is in transit or in the
constructive, actual or exclusive occupancy or possession of Borrower or is held
by Borrower or by others for Borrower's account, including, without limitation,
all goods covered by purchase orders and contracts with suppliers and all goods
billed and held by suppliers and all inventory which may be located on premises
of Borrower or of any carriers, forwarding agents, truckers, warehousemen,
vendors, selling agents or other persons.
1.21 "License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest
and any renewals or extensions thereof.
1.22 "Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, levy, lien or charge of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise, against any property, any conditional sale or other title retention
agreement, any lease in the nature of a security interest, and the filing of any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.
1.23 "Loan Documents" shall mean and include this Agreement, the Note(s),
and any other documents executed in connection with the Secured Obligations or
the transactions contemplated hereby, as the same may from time to time be
amended, modified, supplemented or restated, provided, that the Loan Documents
--------
shall not include any of the Excluded Agreements.
---
1.24 "Material Adverse Effect" means a material adverse effect upon: (i)
the business, operations, properties, assets or financial condition of Borrower;
or (ii) the ability of Borrower to perform, or of Lender to enforce, the Secured
Obligations.
1.25 "Maturity Date" means the date thirty-six (36) months from the
Advance Date of each installment of the Loan.
1.26 "Patent License" means any written agreement granting any right with
respect to any invention on which a Patent is in existence now owned or
hereafter acquired by Borrower or in which Borrower now holds or hereafter
acquires any interest.
1.27 "Patents" means all of the following now owned or hereafter acquired
by Borrower or in which Borrower now holds or hereafter acquires any interest:
(a) letters patent of, or rights
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corresponding thereto in, the United States or any other county, all
registrations and recordings thereof, and all applications for letters patent
of, or rights corresponding thereto in the United States or any other country,
including, without limitation, registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country; (b) all reissues,
continuations, continuations-in-part or extensions thereof; (c) all petty
patents, divisionals, and patents of addition; and (d) all patents to issue in
any such applications.
1.28 "Permitted Liens" means any and all of the following: (i) liens in
favor of Lender, (ii) liens related to, or arising in connection with, Senior
Debt.
1.29 "Proceeds" means "proceeds," as such term is defined in Section
9306(1) of the UCC and, in any event, shall include, without limitation, (a) any
and all Accounts, Chattel Paper, Instruments, cash or other forms of money or
currency or other proceeds payable to Borrower from time to time in respect of
the Collateral, (b) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to Borrower from time to time with respect to any of the
Collateral, (c) any and all payments (in any form whatsoever) made or due and
payable to Borrower from time to time in connection with any requisition,
confiscation, condemnation seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any Person acting under color of
governmental authority), (d) any claim of Borrower against third parties (i) for
past, present or future infringement of any Copyright, Patent or Patent License
or (ii) for past, present or future infringement or dilution of any Trademark or
Trademark License or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License and (e)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
1.30 "Receivables" shall mean and include all of the Borrowers accounts,
instruments, documents, chattel paper and general intangibles whether secured or
unsecured, whether now existing or hereafter created or arising, and whether or
not specifically sold or assigned to Lender hereunder.
1.31 "Secured Obligations" shall mean and include all principal,
interest, fees, costs, or other liabilities or obligations for monetary amounts
owed by Borrower to Lender, whether due or to become due, matured or unmatured,
liquidated or unliquidated, contingent or non-contingent, and all covenants and
duties regarding such amounts, of any kind of nature, present or future, arising
under this Agreement, the Note(s), or any of the other Loan Documents, whether
or not evidenced by any Note(s), Agreement or other instrument, as the same may
from time to time be amended, modified, supplemented or restated, provided, that
the Secured Obligations shall not include any indebtedness or obligations of
Borrower arising under or in connection with the Excluded Agreements.
1.32 "Senior Creditor" means a bank, insurance company, pension fund, or
other institutional lender to be determined, or a syndication of such
institutional lenders that provides Senior Debt financing to Borrower; provided,
--------
that Senior Creditor shall not include any officer, director, shareholder,
venture capital investor, or insider of Borrower, or any affiliate of the
foregoing persons, except upon the express written consent of Lender.
1.33 "Senior Debt" means any and all indebtedness and obligations for
borrowed money (including, without limitation, principal, premium (if any),
interest, fees charges, expenses, costs, professional fees and expenses, and
reimbursement obligations) at any time
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owing by Borrower to Senior Creditor under the Senior Loan Documents, including,
but not limited to such amounts as may accrue or be incurred before or after
default or workout or the commencement of any liquidation, dissolution,
bankruptcy, receivership or reorganization by or against Borrower provided, that
Senior Debt shall not include the following indebtedness or obligations:
(a) obligations incurred after default or workout or the commencement of
any liquidation, dissolution, bankruptcy, receivership, or reorganization case
by or against Borrower, and
(b) From the date hereof, Borrower shall not incur Senior Debt in excess
of the amounts as follows:
For FYE 4/30/99: $ 6,000,000.00
For FYE 4/30/00: $10,000,000.00
For FYE 4/30/01: $15,000,000.00
1.34 "Senior Loan Documents" means the loan agreement between Borrower and
Senior Creditor and any other agreement, security agreement, document,
promissory note, UCC financing statement, or instrument executed by Borrower in
favor of Senior Creditor pursuant to or in connection with the Senior Debt or
the loan agreement, as the same may from time to time be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.35 "Subordination Agreement" means the Subordination Agreement of even
date herewith, entered into between Borrower and Lender for the benefit of
Senior Creditor.
1.36 "Trademark License" means any written agreement granting any right to
use any Trademark or Trademark registration now owned or hereafter acquired by
Borrower or in which Borrower now holds or hereafter acquires any interest.
1.37 "Trademarks" means any of the following now owned or hereafter
acquired by Borrower or in which Borrower now holds or hereafter acquires any
interest: (a) any and all trademarks, tradenames, corporate names, business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and any applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof and (b) any reissues, extensions or
renewals thereof.
1.38 "UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Illinois. Unless otherwise defined
herein, terms that are defined in the UCC and used herein shall have the
meanings given to them in the UCC.
1.39 "Warrant Agreement(s)" shall mean those agreements entered into in
connection with the Loan, substantially in the form attached hereto as Exhibit B
pursuant to which Borrower granted Lender the right to purchase that number of
shares of Series F Preferred Stock of Borrower as more particularly set forth
therein.
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SECTION 2. THE LOAN
2.1 The outstanding principal amount of the Loan, together with interest
thereon precomputed at the rate of eleven and three quarter (11.75%) percent per
annum, shall be due and payable in six (6) equal monthly installments of
interest only, payable on the first day of each month, followed by thirty (30)
equal monthly installments of principal and interest, payable on the first day
of each month, to and including the Maturity Date (each, a "Payment Date"). If
any payment under the Note(s) shall be payable on a day other than a business
day, then such payment shall be due and payable on the next succeeding business
day.
2.2 Borrower shall have the option to prepay the Loan, in whole or in
part, after twelve (12) months from the Closing Date by paying the principal
amount thereon together with all accrued and unpaid interest with respect to
such principal amount, as of the date of such prepayment, without premium. In
the event Borrower prepays the Note(s) within twelve (12) months from the
Closing Date hereof, Borrower shall pay the principal amount together with all
accrued and unpaid interest and a prepayment premium equal to one percent (1%)
of the then outstanding principal amount (the "Prepayment Penalty").
Notwithstanding the foregoing, in the event Borrower prepays the Loan in
conjunction with an initial public offering of Borrower's equity securities, the
Prepayment Penalty shall not apply.
2.3 (a) Notwithstanding any provision in this Agreement, the Note(s), or
any other Loan Document, it is not the parties intent to contract for, charge or
receive interest at a rate that is greater than the maximum rate permissible by
law which a court of competent jurisdiction shall deem applicable hereto (which
under the laws of the State of Illinois shall be deemed to be the laws relating
to permissible rates of interest on commercial loans) (the "Maximum Rate"). If
the Borrower actually pays Lender an amount of interest, chargeable on the total
aggregate principal Secured Obligations of Borrower under this Agreement and the
Note(s) (as said rate is calculated over a period of time from the date of this
Agreement through the end of time that any principal is outstanding on the
Note(s)), which amount of interest exceeds interest calculated at the Maximum
Rate on said principal chargeable over said period of time, then such excess
interest actually paid by Borrower shall be applied first, to the payment of
principal outstanding on the Note(s); second, after all principal is repaid, to
the payment of Lender's out of pocket costs, expenses, and professional fees
which are owed by Borrower to Lender under this Agreement or the Loan Documents;
and third, after all principal, costs, expenses, and professional fees owed by
Borrower to Lender are repaid, the excess (if any) shall be refunded to
Borrower, and the effective rate of interest will be automatically reduced to
the Maximum Rate.
(b) In the event any interest is not paid when due hereunder,
delinquent interest shall be added to principal and shall bear interest on
interest, compounded at the rate set forth in Section 2.1.
(c) Upon and during the continuation of an Event of Default
hereunder, all Secured Obligations, including principal, interest, compounded
interest, and professional fees, shall bear interest at a rate per annum equal
to the rate set forth in Section 2.1. plus five percent (5%) per annum ("Default
Rate").
2.4 If the Borrower has not repaid the outstanding principal amount under
the Loan in its entirety by the Maturity Date (as defined in the applicable
Note(s)), then for each additional month, or portion thereof, thereafter that
the outstanding principal is not paid, Lender shall have the right to purchase
from the Borrower, at the Exercise Price (adjusted, as set forth
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and defined in the Warrant Agreement), an additional number of shares of
Preferred Stock which number shall be determined by (i) multiplying the
outstanding principal amount which is due but unpaid by 1% and (ii) dividing the
product thereof by the Exercise Price.
SECTION 3. SECURITY INTEREST
As security for the prompt, complete and indefeasible payment when due
(whether at stated payment dates or otherwise) of all the Secured Obligations
and in order to induce Lender to make the Loan upon the terms and subject to the
conditions of the Note(s), Borrower hereby assigns, conveys, mortgages, pledges,
hypothecates and transfers to Lender for security purposes only, and hereby
grants to Lender a security interest in, all of Borrower's right, title and
interest in, to and under each of the following (all of which being hereinafter
collectively called the "Collateral"):
(a) All Receivables;
(b) All Equipment;
(c) All Fixtures;
(d) All General Intangibles;
(e) All Inventory;
(f) All other goods and personal property of Borrower whether tangible or
intangible and whether now or hereafter owned or existing, leased,
consigned by or to, or acquired by, Borrower and wherever located;
and
(g) To the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for,
and rents, profits and products of each of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BORROWER
The Borrower represents, warrants and agrees that;
4.1 Borrower owns all right title and interest in and to the Collateral,
free of all liens, security interests, encumbrances and claims whatsoever,
except for Permitted Liens.
4.2 Borrower has the full power and authority to, and does hereby grant
and convey to the Lender, a perfected security interest in the Collateral as
security for the Secured Obligations, free of all liens, security interests,
encumbrances and claims, other than Permitted Liens and shall execute such
Uniform Commercial Code financing statements in connection herewith as the
Lender may reasonably request. Except as set forth herein, no other lien,
security interest, adverse claim or encumbrance has been created by Borrower or
is known by Borrower to exist with respect to any Collateral.
4.3 Borrower is a corporation duly incorporated, legally existing and in
good standing under the laws of the State of California, and is duly qualified
as a foreign corporation in all jurisdictions in which the nature of its
business or location of its properties require such qualifications and where the
failure to be qualified would have a material adverse effect.
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4.4 Borrower's execution, delivery and performance of the Note(s), this
Agreement, all financing statements, all other Loan Documents required to be
delivered or executed in connection herewith, and the Warrant Agreement(s) have
been duly authorized by all necessary corporate action of Borrower, the
individual or individuals executing the Loan Documents and the Warrant
Agreement(s) were duly authorized to do so; and the Loan Documents and the
Warrant Agreement(s) constitute legal, valid and binding obligations of the
Borrower, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization or other similar laws
generally affecting the enforcement of the rights of creditors.
4.5 This Agreement, the other Loan Documents and the Warrant
Agreement(s) do not and will not violate any provisions of Borrower's Articles
of Incorporation, bylaws or any contract, agreement, law, regulation, order,
injunction, judgment, decree or writ to which the Borrower is subject, or result
in the creation or imposition of any lien, security interest or other
encumbrance upon the Collateral, other than those created by this Agreement.
4.6 The execution, delivery and performance of this Agreement, the other
Loan Documents and the Warrant Agreement(s) do not require the consent or
approval of any other person or entity including, without limitation, any
regulatory authority or governmental body of the United States or any state
thereof or any political subdivision of the United States or any state thereof.
4.7 No event which has had or could reasonably be expected to have a
Material Adverse Effect has occurred and is continuing.
4.8 No fact or condition exists that would (or would, with the passage
of time, the giving of notice, or both) constitute a default under the Loan
Agreement between Borrower and Senior Creditor.
4.9 Borrower has filed and will file all tax returns, federal, state and
local, which it is required to file and has duly paid or fully reserved for all
taxes or installments thereof (including any interest or penalties) as and when
due, which have or may become due pursuant to such returns or pursuant to any
assessment received by Borrower for the three (3) years preceding the Closing
Date, if any (including any taxes being contested in good faith and by
appropriate proceedings).
SECTION 5. INSURANCE
5.1 So long as there are any Secured Obligations outstanding, Borrower
shall cause to be carried and maintained comprehensive general liability
insurance against risks customarily insured against in Borrower's line of
business. Such risks shall include, without limitation, the risks of death,
bodily injury and property damage. So long as there are any Secured Obligations
outstanding, Borrower shall also cause to be carried and maintained insurance
upon the Collateral and Borrower's business, covering casualty, hazard and such
other property risks customarily insured against in Borrower's line of business
and in customary amounts. Borrower shall deliver to Lender lender's loss payable
endorsements (Form BFU 438 or equivalent) naming Lender as loss payee or
additional insured, as appropriate. Borrower shall use commercially reasonable
efforts to cause all policies evidencing such insurance to provide for at least
thirty (30) days prior written notice by the underwriter or insurance company to
9
<PAGE>
Lender in the event of cancellation or expiration. Such policies shall be issued
by such insurers as are reasonably acceptable to Lender.
5.2 Borrower shall and does hereby indemnify and hold Lender, its agents
and shareholders harmless from and against any and all claims, costs, expenses,
damages and liabilities (including, without limitation, such claims, costs,
expenses, damages and liabilities based on liability in tort, including without
limitation, strict liability in tort), including reasonable attorneys' fees,
arising out of the disposition or utilization of the Collateral, other than
claims arising at or caused by Lender's negligence or willful misconduct.
SECTION 6. COVENANTS OF BORROWER
Borrower covenants and agrees as follows at all times while any of the
Secured Obligations remain outstanding:
6.1 Borrower shall furnish to Lender the financial statements listed
hereinafter, each prepared in accordance with generally accepted accounting
principles consistently applied (the "Financial Statements"):
(a) as soon as practicable (and in any event within thirty (30) days)
after the end of each quarter, unaudited interim financial statements as of
the end of such quarter (prepared on a consolidated and consolidating
basis, if applicable), including balance sheet and related statements of
income accompanied by a report detailing any material contingencies, if
applicable (including the commencement of any material litigation by or
against Borrower) or any other occurrence that could reasonably be expected
to have a Material Adverse Effect, as applicable, all certified by
Borrower's Chief Executive Officer or Chief Financial Officer to be true
and correct;
(b) as soon as practicable (and in any event within ninety (90) days)
after the end of each fiscal year, unqualified audited financial statements
as of the end of such year (prepared on a consolidated and consolidating
basis, if applicable), including balance sheet and related statements of
income and cash flows, and setting forth in comparative form the
corresponding figures for the preceding fiscal year, certified by a firm of
independent certified public accountants selected by Borrower and
reasonably acceptable to Lender, and, if prepared, accompanied by any
management report from such accountants;
(c) at such time as is applicable, promptly after the sending or
filing thereof, as the case may be, copies of any proxy statements,
financial statements or reports which Borrower has made available to its
shareholders and copies of any regular, periodic and special reports or
registration statements which Borrower files with the Securities and
Exchange Commission or any governmental authority which may be substituted
therefor, or any national securities exchange; and
(d) promptly, any additional information, financial or otherwise
(including, but not limited, to tax returns and names of principal
creditors) as Lender reasonably believes necessary to evaluate Borrower's
continuing ability to meet its financial obligations.
6.2 Borrower shall permit any authorized representative of Lender and its
attorneys and accountants on reasonable notice to inspect, examine and make
copies and abstracts of
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<PAGE>
the books of account and records of Borrower at reasonable times during normal
business hours, provided Lender and its attorneys and accountants agree to
maintain the confidentiality of such books and records. In addition, such
representative of Lender and its attorneys and accountants shall have the right
to meet with management and officers of the Company to discuss such books of
account and records.
6.3 Borrower will from time to time execute, deliver and file, alone or
with Lender, any financing statements, security agreements or other documents;
procure any instruments or documents as may be requested by Lender; and take all
further action that may be necessary or desirable, or that Lender may request,
to confirm, perfect, preserve and protect the security interests intended to be
granted hereby, and in addition, and for such purposes only. Borrower hereby
authorizes Lender to execute and deliver on behalf of Borrower and to file such
financing statements, security agreement and other documents without the
signature of Borrower either in Lender's name or in the name of Borrower as
agent and attorney-in-fact for Borrower. The parties agree that a carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement and may be filed in any appropriate office in lieu thereof.
6.4 Borrower shall protect and defend Borrower's title as well as the
interest of the Lender against all persons claiming any interest adverse to
Borrower or Lender and shall at all times keep the Collateral free and clear
from any legal process, liens or encumbrances whatsoever (except any placed
thereon by Lender or as permitted by Lender) and shall give Lender immediate
written notice thereof.
6.5 Without Lender's prior written consent, Borrower shall not, out of the
ordinary course of business or inconsistent with past practice, (a) grant any
material extension of the time of payment of any of the Receivables, (b) to any
material extent, compromise, compound or settle the same for less than the full
amount thereof, (c) release, wholly or partly, any Person liable for the payment
thereof, or allow any credit or discount whatsoever thereon other than trade
discounts granted in the ordinary course of business of Borrower.
6.6 Borrower shall maintain and protect its properties, assets and
facilities, including without limitation, its Equipment and Fixtures, in good
order and working repair and condition (taking into consideration ordinary wear
and tear) and from time to time make or cause to be made all necessary and
proper repairs, renewals and replacements thereto and shall competently manage
and care for its property in accordance with prudent industry practices.
6.7 Borrower shall not merge with and into any other entity; or sell or
convey all or substantially all of its assets or stock to any other person or
entity without notifying Lender a minimum of thirty (30) days prior to the
closing date and either (i) requesting Lender's consent to the assignment of all
of Borrower's Secured Obligations hereunder to the successor entity in form and
substance satisfactory to Lender or (ii) coordinating prepayment of the Secured
Obligations with Lender. In the event Lender does not consent to such assignment
the parties agree Borrower shall prepay the Loan in accordance with Section 2.2
hereof.
6.8 Until such time as Borrower's securities initially are sold to the
public pursuant to an effective registration statement filed pursuant to the
Securities Act of 1933, as amended, Borrower shall not, without the prior
written consent of Lender, such consent not to be unreasonably withheld, declare
or pay any cash dividend or make a distribution on any class of stock, other
than pursuant to employee repurchase plans upon an employee's death or
termination of employment or transfer, sell, lease, lend or in any other manner
convey any
11
<PAGE>
equitable, beneficial or legal interest in any material portion of the assets of
Borrower (except inventory sold in the normal course of business or securities
sold pursuant to equity financing arrangements whereby Borrower raises
additional capital for operating purposes).
6.9 Upon the request of Lender, Borrower shall, during business hours, make
the Inventory and Equipment available to Lender for inspection at the place
where it is normally located and shall make Borrower's log and maintenance
records pertaining to the Inventory and Equipment available to Lender for
inspection. Borrower shall take reasonable action to maintain such logs and
maintenance records in a correct and complete fashion.
6.10 Borrower covenants and agrees to pay when due, all taxes, fees or
other charges of any nature whatsoever (together with any related interest or
penalties) now or hereafter imposed or assessed against Borrower, Lender or the
Collateral or upon Borrower's ownership, possession, use, operation or
disposition thereof or upon Borrower's rents, receipts or earnings arising
therefrom. Borrower shall file on or before the due date therefor all personal
property tax returns in respect of the Collateral. Notwithstanding the
foregoing, Borrower may contest, in good faith and by appropriate proceedings,
taxes for which Borrower maintains adequate reserves therefor.
6.11 Borrower shall not relocate any item of the Collateral (other than
sale of inventory in the ordinary course of business and portable Equipment used
by Borrower's employees) except: (i) with prior written notice to the Lender;
and (ii) if such relocation shall be within the continental United States, or if
such relocation shall be outside of the continental United States, with Lender's
consent. If permitted to relocate Collateral pursuant to the foregoing sentence,
unless otherwise agreed in writing by Lender, Borrower shall first (a) cause to
be filed and/or delivered to the Lender all Uniform Commercial Code financing
statements, certificates or other documents or instruments necessary to continue
in effect the perfected security interest of the Lender in the Collateral, and
(b) have given the Lender no less than fifteen (15) days prior written notice of
such relocation.
SECTION 7. CONDITIONS PRECEDENT TO LOAN
The obligation of Lender to fund the Loan on each Advance Date shall be
subject to Lender's satisfactory completion of its due diligence and approval
process, and satisfaction by Borrower or waiver by Lender, in Lender's sole
discretion, of the following conditions:
7.1 (a) The Advance Date for any installment shall occur on or before
April 30, 1999.
7.2 Document Delivery. Borrower, on or prior to the Closing Date, shall
have delivered to Lender the following:
(a) executed originals of the Agreement, the Warrant Agreement, and
any documents reasonably required by Lender to effectuate the liens of
Lender, with respect to all Collateral;
(b) copy of resolutions of Borrower's board of directors evidencing
approval of the borrowing and other transactions evidenced by the Loan
Documents and the Warrant Agreement(s);
12
<PAGE>
(c) file stamped copies of the Articles of Incorporation, as amended
through the Closing Date, of Borrower;
(d) payment of the Facility Fee;
(e) such other documents as Lender may reasonably request.
7.3 Advance Request. Borrower shall:
(a) deliver to Lender, at least five (5) business day prior to the
Advance Date, written notice in the form of an Advance Request, or as otherwise
specified by Lender from time to time, specifying the date and amount of such
Advance.
(b) deliver executed original Note(s) as set forth in Section 2, as
applicable.
(c) such other documents as Lender may reasonably request.
7.4 Perfection of Security Interests. Borrower shall have taken or caused
to be taken such actions requested by Lender to grant Lender a first priority
perfected security interest in the Collateral, subject only to Permitted Liens.
Such actions shall include, without limitation, the delivery to Lender of all
appropriate financing statements, executed by Borrower, as to the Collateral
granted by Borrower for all jurisdictions as may be necessary or desirable to
perfect the security interest of Lender in such Collateral
7.5 Absence of Events of Defaults. As of the Closing Date or the Advance
Date, no fact or condition exists that would (or would, with the passage of
time, the giving of notice, or both) constitute an Event of Default under this
Agreement or any of the Loan Documents and no fact or condition exists that
would (or would, with the passage of time, the giving of notice, or both)
constitute a default under the Senior Loan Documents between Borrower and Senior
Creditor.
7.6 Material Adverse Effect. As of the Closing Date or the Advance Date,
no event which has had or could reasonably be expected to have a Material
Adverse Effect has occurred and is continuing.
SECTION 8. DEFAULT
The occurrence of any one or more of the following events (herein called
"Events of Default") shall constitute a default hereunder and under the Note(s)
and other Loan Documents:
8.1 Borrower defaults in the payment of any principal, interest or other
Secured Obligation involving the payment of money under this Agreement, the
Note(s) or any of the other Loan Documents, and such default continues for more
than five (5) days after the due date thereof; or
8.2 Borrower defaults in the performance of any other covenant or Secured
Obligation of Borrower hereunder or under the Note(s) or any of the other Loan
Documents, and such default continues for more than twenty (20) days after
Lender has given notice of such default to Borrower.
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<PAGE>
8.3 Any representation or warranty made herein by Borrower shall prove to
have been false or misleading in any material respect; or
8.4 Borrower shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become due, or
shall file a voluntary petition in bankruptcy, or shall file any petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation pertinent to such circumstances, or shall seek
or consent to or acquiesce in the appointment of any trustee, receiver, or
liquidator of Borrower or of all or any substantial part (33-1/3% or more) of
the properties of Borrower; or Borrower or its directors or majority
shareholders shall take any action initiating the dissolution or liquidation of
Borrower; or
8.5 Sixty (60) days shall have expired after the commencement of an
action by or against Borrower seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, without such action being dismissed or all
orders or proceedings thereunder affecting the operations or the business of
Borrower being stayed; or a stay of any such order or proceedings shall
thereafter be set aside and the action setting it aside shall not be timely
appealed; or Borrower shall file any answer admitting or not contesting the
material allegations of a petition filed against Borrower in any such
proceedings; or the court in which such proceedings are pending shall enter a
decree or order granting the relief sought in any such proceedings; or
8.6 Sixty (60) days shall have expired after the appointment, without the
consent or acquiescence of Borrower, of any trustee, receiver or liquidator of
Borrower or of all or any substantial part of the properties of Borrower without
such appointment being vacated; or
8.7 The default by Borrower under any Excluded Agreement(s), any other
promissory note or agreement for borrowed money, or any other agreement between
Borrower and Lender; or
8.8 The occurrence of any default under any lease or other agreement or
obligation of Borrower involving an amount in excess of $250,000.00 or having a
Material Adverse Effect; or the entry of any judgement against Borrower
involving an award in excess of $250,000.00 that would have a Material Adverse
Effect, that has not been bonded or stayed on appeal within thirty (30) days; or
8.9 The occurrence of any material default under the Senior Loan
Documents.
SECTION 9. REMEDIES
Upon the occurrence of any one or more Events of Default, to the extent
there are then outstanding Secured Obligations and to the extent necessary to
satisfy them, Lender, at its option, may declare the Note and all of the other
Secured Obligations to be accelerated and immediately due and payable (provided,
--------
that upon the occurrence of an Event of Default of the type described in
Sections 8.4 or 8.5, the Note(s) and all of the other Secured Obligations shall
automatically be accelerated and made due and payable without any further act),
whereupon the unpaid principal of and accrued interest on such Note(s) and all
other outstanding Secured Obligations shall become immediately due and payable,
and shall thereafter bear interest at the Default Rate set forth in, and
calculated according to, Section 2.3 (c) of this Agreement. Lender may exercise
all rights and remedies with respect to the Collateral under the Loan Documents
14
<PAGE>
or otherwise available to it under applicable law, including the right to
release, hold or otherwise dispose of all or any part of the Collateral and the
right to occupy, utilize, process and commingle the Collateral.
Upon the happening and during the continuance of any Event of Default,
Lender may then, or at any time thereafter and from time to time, apply,
collect, sell in one or more sales, lease or otherwise dispose of, any or all of
the Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as Lender may elect, and any such sale
may be made either at public or private sale at its place of business or
elsewhere. Borrower agrees that any such public or private sale may occur upon
ten (10) calendar days' prior written notice to Borrower. Lender may require
Borrower to assemble the Collateral and make it available to Lender at a place
designated by Lender which is reasonably convenient to Lender and Borrower. The
proceeds of any sale, disposition or other realization upon all or any part of
the Collateral shall be distributed by Lender in the following order of
priorities:
First, to Lender in an amount sufficient to pay in full Lender's costs and
professionals' and advisors' fees and expenses;
Second, to Lender in an amount equal to the then unpaid amount of the
Secured Obligations in such order and priority as Lender may choose in its
sole discretion; and
Finally, upon payment in full of all of the Secured Obligations, to
Borrower or its representatives or as a court of competent jurisdiction may
direct.
Lender shall be deemed to have acted reasonably in the custody,
preservation and disposition of any of the Collateral if it complies with the
obligations of a secured party under Section 9207 of the UCC.
Lender's rights and remedies hereunder are subject to the terms of the
Subordination Agreement.
SECTION 10. MISCELLANEOUS
10.1 Continuation of Security Interest. This is a continuing Agreement
and the grant of a security interest hereunder shall remain in full force and
effect and all the rights, powers and remedies of Lender hereunder shall
continue to exist until the Secured Obligations are paid in full as the same
become due and payable and until Lender has executed a written termination
statement (which Lender shall execute within a reasonable time after full
payment of the Secured Obligations hereunder), reassigning to Borrower, without
recourse, the Collateral and all rights conveyed hereby and returning possession
of the Collateral to Borrower. The rights, powers and remedies of Lender
hereunder shall be in addition to all rights, powers and remedies given by
statute or rule of law and are cumulative. The exercise of any one or more of
the rights, powers and remedies provided herein shall not be construed as a
waiver of or election of remedies with respect to any other rights, powers and
remedies of Lender.
10.2 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be
15
<PAGE>
ineffective only to the extent and duration of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
10.3 Notice. Except as otherwise provided herein, all notices and service
of process required, contemplated, or permitted hereunder or with respect to the
subject matter hereof shall be in writing, and shall be deemed to have been
validly served, given or delivered upon the earlier of: (i) the first business
day after transmission by facsimile or hand delivery or deposit with an
overnight express service or overnight mail delivery service; or (ii) the third
calendar day after deposit in the United States mails, with proper first class
postage prepaid, and shall be addressed to the party to be notified as follows:
(a) If to Lender:
COMDISCO, INC.
Legal Department
Attention: General Counsel
6111 North River Road
Rosemont, IL 60018
Facsimile: (847) 518-5088
With a copy to:
COMDISCO, INC./COMDISCO VENTURES
6111 North River Road
Rosemont, IL 60018
Facsimile: (847) 518-5465
(b) If to Borrower:
AGILE SOFTWARE CORPORATION
Attention: Tom Shanahan
One Almaden Boulevard, 12/th/ Floor
San Jose, CA 95113
Facsimile: (408) 975-3949
Phone: (408) 975-3900
or to such other address as each party may designate for itself by like notice.
10.4 Entire Agreement; Amendments. This Agreement, the Note(s), and the
other Loan Documents, and the Warrant Agreement(s) constitute the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof and thereof, and supersede and replace in their entirety any prior
proposals, term sheets, letters, negotiations or other documents or agreements,
whether written or oral, with respect to the subject matter hereof or thereof
(including, without limitation, Lender's proposal letter dated November 19,
1998, all of which are merged herein and therein. None of the terms of this
Agreement, the Note(s), any of the other Loan Documents or Warrant Agreement(s)
may be amended except by an instrument executed by each of the parties hereto.
10.5 Headings. The various headings in this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.
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<PAGE>
10.6 No Waiver. The powers conferred upon Lender by this Agreement are
solely to protect its interest in the Collateral and shall not impose any duty
upon Lender to exercise any such powers. No omission, or delay, by Lender at any
time to enforce any right or remedy reserved to it, or to require performance of
any of the terms, covenants or provisions hereof by Borrower at any time
designated, shall be a waiver of any such right or remedy to which Lender is
entitled, nor shall it in any way affect the right of Lender to enforce such
provisions thereafter.
10.7 Survival. All agreements, representations and warranties contained
in this Agreement, the Note(s), the other Loan Documents and the Warrant
Agreement(s) or in any document delivered pursuant hereto or thereto shall be
for the benefit of Lender and shall survive the execution and delivery of this
Agreement and the expiration or other termination of this Agreement.
10.8 Successor and Assigns. The provisions of this Agreement, the other
Loan Documents and the Warrant Agreement(s) shall inure to the benefit of and be
binding on Borrower and its permitted assigns (if any). Borrower shall not
assign its obligations under this Agreement, the Note(s), any of the other Loan
Documents or the Warrant Agreement(s), without Lender's express written consent,
and any such attempted assignment shall be void and of no effect. Lender may
assign, transfer, or endorse its rights hereunder and under the other Loan
Documents or Warrant Agreement(s) without prior notice to Borrower, and all of
such rights shall inure to the benefit of Lender's successors and assigns.
10.9 Further Indemnification. Borrower agrees to pay, and to save Lender
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all excise, sales or other similar taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.
10.10 Governing Law. This Agreement, the Note(s), the other Loan
Documents and the Warrant Agreement(s) have been negotiated and delivered to
Lender in the State of Illinois, and shall not become effective until accepted
by Lender in the State of Illinois. Payment to Lender by Borrower of the Secured
Obligations is due in the State of Illinois. This Agreement, the Note(s), the
other Loan Documents and the Warrant Agreement(s) shall be governed by, and
construed and enforced in accordance with, the laws of the State of Illinois,
excluding conflict of laws principles that would cause the application of laws
of any other jurisdiction.
10.11 Consent To Jurisdiction And Venue. All judicial proceedings arising
in or under or related to this Agreement, the Note(s), any of the other Loan
Documents or Warrant Agreement(s) may be brought in any state or federal court
of competent jurisdiction located in the State of Illinois. By execution and
delivery of this Agreement, each party hereto generally and unconditionally: (a)
consents to personal jurisdiction in Cook County, State of Illinois; (b) waives
any objection as to jurisdiction or venue in Cook County, State of Illinois; (c)
agrees not to assert any defense based on lack of jurisdiction or venue in the
aforesaid courts; and (d) irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement, the Note(s), the other Loan
Documents or Warrant Agreement(s). Service of process on any party hereto in any
action arising out of or relating to this agreement shall be effective if given
in accordance with the requirements for notice set forth in Section 10.3, above
and shall be deemed effective and received as set forth in Section 10.3, above.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of either party to bring proceedings
in the courts of any other jurisdiction.
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<PAGE>
10.12 Mutual Waiver Of Jury Trial. Because disputes arising in connection
with complex financial transactions are most quickly and economically resolved
by an experienced and expert person and the parties wish applicable state and
federal laws to apply (rather than arbitration rules), the parties desire that
their disputes be resolved by a judge applying such applicable laws. EACH OF
BORROWER AND LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY
OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR
ANY OTHER CLAIM (COLLECTIVELY, "CLAIMS") ASSERTED BY BORROWER AGAINST LENDER OR
ITS ASSIGNEE AND/OR BY LENDER OR ITS ASSIGNEE AGAINST BORROWER. This waiver
extends to all such Claims, including, without limitation, Claims which involve
persons or entities other than Borrower and Lender; Claims which arise out of or
are in any way connected to the relationship between Borrower and Lender; and
any Claims for damages, breach of contract arising out of this Agreement, any
other Loan Document or any of the Excluded Agreements, specific performance, or
any equitable or legal relief of any kind.
10.13 Confidentiality. Lender acknowledges that certain items of
Collateral, including, but not limited to trade secrets, source codes, customer
lists and certain other items of Intellectual Property, and any Financial
Statements provided pursuant to Section 6 hereof, constitute proprietary and
confidential information of the Borrower (the "Confidential Information").
Accordingly, Lender agrees that any Confidential Information it may obtain in
the course of acquiring, perfecting or foreclosing on the Collateral or
otherwise provided under this Agreement, provided such Confidential Information
is marked as confidential by Borrower or Lender is otherwise notified that such
information is Confidential Information at the time of disclosure, shall be
received in the strictest confidence and will not be disclosed to any other
person or entity in any manner whatsoever, in whole or in part, without the
prior written consent of the Borrower, unless and until Lender has acquired
indefeasible title thereto.
10.14 Counterparts. This Agreement and any amendments, waivers, consents
or supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Borrower and the Lender have duly executed and delivered
this Agreement as of the day and year first above written.
BORROWER: AGILE SOFTWARE CORPORATION
Signature: /s/ T. Shanahan
---------------------------
Print Name: T. SHANAHAN
--------------------------
Title: CFO
-------------------------------
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Accepted In Rosemont, Illinois:
- ------------------------------
LENDER COMDISCO, INC.
Signature: /s/ James P. Labe
----------------------------
Print Name: JAMES P. LABE
---------------------------
PRESIDENT
Title: COMDISCO VENTURES DIVISION
--------------------------------
19
<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.
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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.
6
<PAGE>
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS AND INVENTORY)
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;
7
<PAGE>
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>
the manner specified in said promissory note(s) in the event Bank exercises the
aforementioned option, and in the event Bank does not, such loans shall bear
interest at the rate and be payable in the manner specified in the Agreement.
4. Borrower represents and warrants to Bank that:
(a) it has good and indefeasible title to the Equipment;
(b) the Equipment is and will be free and clear of all liens, security
interests, encumbrances and claims, except as held by Bank,
(c) the Equipment shall be kept only at the following locations:__________
_____________________________________________________________________.
(d) the owners or mortgagees of the respective locations are: AGILE
-----
SOFTWARE CORPORATION
--------------------------------------------------------------------------.
(e) 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 Equipment and Borrower agrees to reimburse Bank for its
reasonable costs and expenses in so doing.
5. Borrower shall keep and maintain the Equipment in good operating condition
and repair, make all necessary replacements thereto so that the value and
operating efficiency thereof shall at all times be maintained and preserved.
Borrower shall not permit any items of Equipment to become a fixture to real
estate or accession to other property, and the Equipment is now and shall at all
times remain and be personal property.
6. Borrower, at its expense, shall keep and maintain: the Equipment 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 and interest in properties in similar businesses for the full
insurable value thereof; and business interruption insurance and public
liability and property damage insurance relating to Borrowers ownership and use
of its 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 payment of all premiums thereof. All such policies of insurance (except
those of public liability and property damage) shall contain an endorsement in a
form satisfactory to Bank showing loss payable to Bank and all proceeds payable
thereunder shall be payable to Bank and upon receipt by Bank shall be applied on
the account of Borrower's Obligations. To secure the payment of Borrower's
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 directs all insurers under such policies of insurance
to pay all proceeds thereof directly to Bank. Borrower hereby irrevocably
appoints Bank (and any of Bank's officers, employees or agents designated by
Bank) as Borrower's attorney-in-fact for the purpose of making, settling and
adjusting claims under such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance. 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 canceled,
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 defaults by Borrower hereunder, may at
any time or times hereafter, but shall have no obligations 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, including reasonable attorney's fees, court costs, expenses
and other charges relating thereto, shall be a part of Borrower's Obligations
and payable on demand.
7. Until default by Borrower under the Agreement or this Rider, Borrower may,
subject to the provisions of the Agreement and this Rider and consistent
therewith, remain in possession thereof and use the Equipment referred to herein
in the ordinary course of business at the location or locations hereinabove
designated.
8. All of the terms, conditions, warranties, covenants, agreements and
representations of the Agreement are incorporated herein and reaffirmed.
9. Upon a default by Borrower under the Agreement or this Rider, Borrower upon
request of Bank to do so, agrees to assemble and make the Equipment or any part
thereof available to Bank at a place designated by Bank.
10. Borrower shall upon demand by Bank immediately deliver to Bank and properly
endorse, any and all evidences of ownership, certificates of title or
applications for titles to any of the aforesaid items of Equipment.
11. Bank shall not in any way or manner be liable or responsible for (a) the
safekeeping of the Equipment; (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 by any person whomsoever. All risk of Loss,
damage or destruction of the Equipment shall be borne by Borrower.
Borrower(s): AGILE SOFTWARE CORPORATION
By: /s/ By:________________________________
--------------------------------
By:________________________________ By:________________________________
Accepted this 24TH day of SEPTEMBER 1997 at Bank's place of business in SAN
---- -------------- ---
JOSE, CA 95113
- -------------------
By:________________________________
R. CLAY JONES, VICE PRESIDENT
<PAGE>
EXHIBIT 10.8
AGILE SOFTWARE CORPORATION
FIFTH AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
June 4, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Registration Rights........................................ 1
1.1 Definitions.......................................... 1
1.2 Request for Registration............................. 2
1.3 Company Registration................................. 4
1.4 Obligations of the Company........................... 4
1.5 Furnish Information.................................. 6
1.6 Expenses of Demand Registration...................... 6
1.7 Expenses of Company Registration..................... 6
1.8 Underwriting Requirements............................ 6
1.9 Delay of Registration................................ 7
1.10 Indemnification...................................... 7
1.11 Reports Under Securities Exchange Act of 1934........ 9
1.12 Form S-3 Registration................................ 10
1.13 Assignment of Registration Rights.................... 11
1.14 Limitations on Subsequent Registration Rights........ 11
1.15 "Market Stand-Off" Agreement......................... 11
1.16 Termination of Registration Rights................... 12
2. Covenants of the Company................................... 12
2.1 Delivery of Financial Statements..................... 12
2.2 Inspection........................................... 13
2.3 Termination of Information and Inspection Covenants.. 13
2.4 Right of First Offer................................. 14
3. Miscellaneous.............................................. 15
3.1 Successors and Assigns............................... 15
3.2 Governing Law........................................ 16
3.3 Counterparts......................................... 16
3.4 Titles and Subtitles................................. 16
3.5 Notices.............................................. 16
3.6 Expenses............................................. 16
3.7 Amendments and Waivers............................... 16
3.8 Severability......................................... 16
3.9 Aggregation of Stock................................. 16
3.10 Entire Agreement; Amendment; Waiver.................. 17
3.11 Termination of Prior Agreement....................... 17
</TABLE>
Schedule A Schedule of Investors
i.
<PAGE>
FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
------------------------------------------------------
THIS FIFTH AMENDED AND RESTATED INVESTORS' RIGHTS 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 (the "Investors").
RECITALS
--------
WHEREAS, certain of the Investors (the "Prior Investors") possess
registration rights, information rights, rights of first offer and other rights
pursuant to that certain Fourth Amended and Restated Investors' Rights
Agreement, dated as of November 14, 1998, among the Company and such Prior
Investors (the "Prior Agreement");
WHEREAS, certain of the Investors (the "Series F Investors") are a
party to the Series F Preferred Stock Purchase Agreement of even date herewith
(the "Series F Agreement") between the Company and the Series F Investors,
pursuant to which the Series F Investors are purchasing shares of Series F
Preferred Stock of the Company;
WHEREAS, in order to induce the Company to enter into the Series F
Agreement and to induce the Series F Investors to invest funds in the Company
pursuant to the Series F Agreement, the Prior Investors hereby agree to waive
their rights under the Prior Agreement, and the Investors and the Company hereby
agree that this Agreement shall govern the rights of the Investors to cause the
Company to register shares of Common Stock issued or issuable to such persons
and certain other matters as set forth herein;
NOW, THEREFORE, in consideration of the promises, covenants and
conditions set forth herein, the parties hereto hereby agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
-------------------
1.1 Definitions. For purposes of this Section 1:
-----------
(a) The term "Securities Act" means the Securities Act of 1933, as
amended.
(b) The term "Form S-3" means such form under the Securities Act as
in effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
(c) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.13 hereof.
<PAGE>
(d) The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(e) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means (i) the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock, (ii) the
Common Stock issuable or issued upon conversion of the Series B Preferred Stock,
(iii) the Common Stock issuable or issued upon conversion of the Series C
Preferred Stock, (iv) the Common Stock issuable or issued upon conversion of the
Series D Preferred Stock, (v) the Common Stock issuable or issued upon
conversion of the Series E Preferred Stock, (vi) the Common Stock issuable or
issued upon conversion of the Series F Preferred Stock, (vii) any shares of
Common Stock issuable or issued upon the conversion of the Preferred Stock
issued upon conversion of the Series C, Series D, Series E, Series F or any
successive series of Preferred Stock and (viii) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of the shares referenced in (i), (ii),
(iii), (iv), (v), (vi) and (vii) above, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which his or her
rights under this Section 1 are not properly assigned as provided herein;
provided, however, that Common Stock and other securities shall only be treated
as Registrable Securities if and so long as (A) they have not been sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction and (B) the registration rights associated with such
securities have not been terminated pursuant to Section 1.16 hereof.
(g) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding which
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities which are, Registrable Securities.
(h) The term "SEC" shall mean the Securities and Exchange Commission.
1.2 Request for Registration.
------------------------
(a) If the Company shall receive at any time after the earlier of (i)
June 2, 1999 or (ii) three months after the effective date of the first
registration statement for a public offering of securities of the Company (other
than a registration statement relating either to the sale of securities to
employees of the Company pursuant to a stock option, stock purchase or similar
plan or a SEC Rule 145 transaction) a written request from the Holders of at
least 30% of the Registrable Securities then outstanding that the Company file a
registration statement under the Securities Act covering the registration of at
least 30% of the Registrable Securities then outstanding (or a lesser percent if
the anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $10,000,000), then the Company shall:
2.
<PAGE>
(i) within ten days of the receipt thereof, give written
notice of such request to all Holders; and
(ii) effect as soon as practicable, and in any event within
60 days of the receipt of such request, the registration under the Securities
Act of all Registrable Securities which the Holders request to be registered,
subject to the limitations of subsection 1.2(b), within 20 days of the mailing
of such notice by the Company in accordance with Section 3.5.
(b) If the Holders initiating the registration request hereunder (the
"Initiating Holders") intend to distribute the Registrable Securities covered by
their request by means of an underwriting, they shall so advise the Company as a
part of their request made pursuant to subsection 1.2(a) and the Company shall
include such information in the written notice referred to in subsection 1.2(a).
The underwriter will be selected by the Company and shall be reasonably
acceptable to a majority in interest of the Initiating Holders. In such event,
the right of any Holder to include his or her Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed to by a majority in interest of
the Initiating Holders and such Holder) to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall furnish to
the Holders requesting a registration statement pursuant to this Section 1.2 a
certificate signed by the Chief Executive Officer of the Company stating that,
in the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer taking action
with respect to such filing for a period of not more than 120 days after receipt
of the request of the Initiating Holders; provided, however, that the Company
may not utilize this right more than once in any 12-month period.
(d) In addition, the Company shall not be obligated to effect, or to
take any action to effect, any registration pursuant to this Section 1.2:
3.
<PAGE>
(i) after the Company has effected two registrations
pursuant to this Section 1.2 and such registrations have been declared or
ordered effective;
(ii) during the period starting with the date 60 days prior
to the Company's good faith estimate of the date of filing of, and ending on a
date 180 days after the effective date of, a registration subject to Section 1.3
hereof; provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective; or
(iii) if the Initiating Holders propose to dispose of shares
of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 1.12 below.
1.3 Company Registration. If (but without any obligation to do so)
--------------------
the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
stock or other securities under the Securities Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely to the sale of securities to participants in a Company stock plan, a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities or a registration in which the
only Common Stock being registered is Common Stock issuable upon conversion of
debt securities which are also being registered), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within 20 days after mailing of such notice
by the Company in accordance with Section 3.5, the Company shall, subject to the
provisions of Section 1.8, cause to be registered under the Securities Act all
of the Registrable Securities that each such Holder has requested to be
registered.
1.4 Obligations of the Company. Whenever required under this Section
--------------------------
1 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to 120 days or until the
distribution contemplated in the Registration Statement has been completed;
provided, however, that such 120-day period shall be extended for a period of
time equal to the period the Holder refrains from selling any securities
included in such registration at the request of an underwriter of Common Stock
(or other securities) of the Company.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
4.
<PAGE>
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or other trading market on
which similar securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Use its best efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities pursuant to this Section 1, on
the date that such Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this Section 1, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
5.
<PAGE>
1.5 Furnish Information.
--------------------
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 if, due to the
operation of subsection 1.5(a), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 1.2(a) or subsection
1.12(b)(2), whichever is applicable.
1.6 Expenses of Demand Registration. All expenses other than
-------------------------------
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, reasonable fees and disbursements of counsel for the
Company (including fees and disbursements of counsel for the Company in its
capacity as counsel to the selling Holders hereunder; if Company counsel does
not make itself available for this purpose, the Company will pay the reasonable
fees and disbursements of one counsel for the selling Holders) shall be borne by
the Company; provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to Section 1.2 if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (in which case all
participating holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear and pay
--------------------------------
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to registrations pursuant
to Section 1.3 for each Holder (which right may be assigned as provided in
Section 1.13), including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees relating or apportionable
thereto and the reasonable fees and disbursements of counsel for the Company in
its capacity as counsel to the selling Holders hereunder (if Company counsel
does not make itself available for this purpose, the Company will pay the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them), but excluding underwriting discounts and commissions relating
to Registrable Securities.
1.8 Underwriting Requirements. In connection with any offering
-------------------------
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by
6.
<PAGE>
the Company. If the total amount of securities, including Registrable
Securities, requested by shareholders to be included in such offering exceeds
the amount of securities sold other than by the Company that the underwriters
determine in their sole discretion is compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize the success
of the offering (the securities so included to be apportioned pro rata among the
selling shareholders according to the total amount of securities entitled to be
included therein owned by each selling shareholder or in such other proportions
as shall mutually be agreed to by such selling shareholders) but in no event
shall (i) the amount of securities of the selling Holders included in the
offering be reduced below 20% of the total amount of securities included in such
offering, unless such offering is the initial public offering of the Company's
securities in which case the selling shareholders may be entirely excluded if
the underwriters make the determination described above and no other
shareholder's securities are included or (ii) notwithstanding (i) above, any
shares being sold by a shareholder exercising a demand registration right
similar to that granted in Section 1.2 be excluded from such offering. For
purposes of the preceding parenthetical concerning apportionment, for any
selling shareholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and shareholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling shareholder," and any pro-rata reduction with
respect to such "selling shareholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling shareholder," as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to obtain
---------------------
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and the Company will pay to
each such Holder, underwriter or controlling person, as incurred, any legal or
other expenses
7.
<PAGE>
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 1.10(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing persons
may become subject under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will pay, as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection 1.10(b) in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this subsection 1.10(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; provided, however, that in no event shall any indemnity under this
subsection 1.10(b) exceed the gross proceeds from the offering received by such
Holder.
(c) Promptly after receipt by an indemnified party under this Section
1.10 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.10, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not
8.
<PAGE>
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.
(f) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1 and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after 90 days after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by the Company), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such
9.
<PAGE>
other reports and documents so filed by the Company and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
1.12 Form S-3 Registration. In case the Company shall receive from any
---------------------
Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within 15
days after receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 1.12: (1) if Form S-3 is
not available for such offering by the Holders; (2) if the Holders, together
with the holders of any other securities of the Company entitled to inclusion in
such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $500,000; (3) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that, in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than 90 days after receipt of
the request of the Holder or Holders under this Section 1.12; provided, however,
that the Company shall not utilize this right more than once in any 12 month
period; (4) if the Company has, within the 12 month period preceding the date of
such request, already effected two registrations on Form S-3 for the Holders
pursuant to this Section 1.12; or (5) in any particular jurisdiction in which
the Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. All expenses incurred in connection with a registration
requested pursuant to Section 1.12, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees and
the reasonable fees and disbursements of counsel for the selling Holder or
Holders and counsel for the Company, shall be borne pro rata by the Holder or
Holders participating in the Form S-3 Registration. Registrations effected
pursuant to this Section 1.12 shall not be counted as demands for registration
or registrations effected pursuant to Sections 1.2 or 1.3, respectively.
10.
<PAGE>
1.13 Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who acquires all of the Registrable Securities
previously held by such Holder, or who, after such assignment or transfer, holds
at least 100,000 shares of Registrable Securities (subject to appropriate
adjustment for stock splits, stock dividends, combinations and other
recapitalizations), provided that: (a) the Company is, within 20 days after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.15 below;
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act. For the purposes of determining
the number of shares of Registrable Securities held by a transferee or assignee,
the holdings of transferees and assignees of a partnership who are partners or
retired partners of such partnership (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire Registrable
Securities by gift, will or intestate succession) shall be aggregated together
and with the partnership; provided that all assignees and transferees who would
not qualify individually for assignment of registration rights shall have a
single attorney-in-fact for the purpose of exercising any rights, receiving
notices or taking any action under this Section 1.
1.14 Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.2 or Section 1.3
hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his or her securities will not reduce the amount of the
Registrable Securities of the Holders which is included or (b) to make a demand
registration which could result in such registration statement being declared
effective prior to the earlier of either of the dates set forth in subsection
1.2(a) or within 120 days of the effective date of any registration effected
pursuant to Section 1.2.
1.15 "Market Stand-Off" Agreement. Each Investor hereby agrees that,
----------------------------
during the period of duration specified by the Company and an underwriter of
Common Stock or other securities of the Company, following the effective date of
a registration statement of the Company filed under the Securities Act, it shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except Common Stock included
in such registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
11.
<PAGE>
(b) all officers and directors of the Company and all other persons
with registration rights (whether or not pursuant to this Agreement) enter into
similar agreements;
(c) such market stand-off time period shall not exceed 180 days; and
(d) such market stand-off shall not apply to securities purchased in
an underwritten public offering or in the open market following the Company's
initial public offering.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 1.15 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or to a registration relating solely to a Commission Rule 145
transaction on Form S-14 or Form S-15 or similar forms which may be promulgated
in the future.
1.16 Termination of Registration Rights.
----------------------------------
(a) No Holder shall be entitled to exercise any right provided for in
this Section 1 after three years following the consummation of the sale of
securities pursuant to a registration statement filed by the Company under the
Securities Act in connection with the initial firm commitment underwritten
offering of its securities to the general public.
(b) In addition, the right of any Holder to request registration
pursuant to Section 1.2 or inclusion in any registration pursuant to Section 1.3
shall terminate on the closing of the first Company-initiated registered public
offering of Common Stock of the Company if all shares of Registrable Securities
held or entitled to be held upon conversion by such Holder may immediately be
sold under Rule 144 during any 90-day period, or on such date after the closing
of the first Company-initiated registered public offering of Common Stock of the
Company as all shares of Registrable Securities held or entitled to be held upon
conversion by such Holder may immediately be sold under Rule 144 during any 90-
day period; provided, however, that the provisions of this Section 1.16(b) shall
not apply to any Holder who owns more than 2% of the Company's outstanding stock
until such time as such Holder owns less than 2% of the outstanding stock of the
Company.
2. Covenants of the Company.
------------------------
2.1 Delivery of Financial Statements. The Company shall deliver to
--------------------------------
each Investor:
(a) as soon as practicable, but in any event within 90 days after the
end of each fiscal year of the Company, an income statement for such fiscal
year, a balance sheet of the Company and statement of shareholders' equity as of
the end of such year, and a schedule as to
12.
<PAGE>
the sources and applications of funds for such year, such year-end financial
reports to be in reasonable detail, prepared in accordance with generally
accepted accounting principles ("GAAP"), and audited and certified by
independent public accountants of nationally recognized standing selected by the
Company;
(b) as soon as practicable, but in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Company, an
unaudited profit or loss statement, schedule as to the sources and application
of funds for such fiscal quarter and an unaudited balance sheet as of the end of
such fiscal quarter;
(c) (i) so long as such Investor holds at least 100,000 shares of
Preferred Stock (either in the form of Preferred Stock or Common Stock issued
upon conversion thereof, and as adjusted for subsequent stock splits,
recombinations, reclassifications or the like), within 30 days of the end of
each month, an unaudited income statement and schedule as to the sources and
application of funds and balance sheet for and as of the end of such month, in
reasonable detail, and (ii) so long as such Investor holds at least 250,000
shares of Preferred Stock (either in the form of Preferred Stock or Common Stock
issued upon conversion thereof, and as adjusted for subsequent stock splits,
recombinations, reclassifications or the like), upon request, Board of
Directors' packages;
(d) the financial statements called for in subsections (b) and (c) of
this Section 2.1 shall be prepared in accordance with GAAP consistently applied
with prior practice for earlier periods (with the exception of footnotes that
may be required by GAAP) and shall fairly present the financial condition of the
Company and its results of operations for the period specified, subject to year-
end audit adjustment; and
(e) such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as such Investor or any
assignee of such Investor may from time to time request, provided, however, that
the Company shall not be obligated under this subsection (e) or any other
subsection of Section 2.1 to provide information which it deems in good faith to
be a trade secret or similar confidential information.
(f) Each Investor agrees that information obtained by such Investor
pursuant to this Section 2.1 that is or would reasonably be perceived to be
proprietary to the Company will not be disclosed by such Investor without the
prior written consent of the Company.
2.2 Inspection. The Company shall permit each Investor, at such
----------
Investor's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by such Investor; provided, however, that the Company shall not be obligated
pursuant to this Section 2.2 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information.
2.3 Termination of Information and Inspection Covenants. The
---------------------------------------------------
covenants set forth in Sections 2.1 and 2.2 shall terminate as to the Investors
and be of no further force or effect when the first sale of securities pursuant
to a registration statement filed by the Company
13.
<PAGE>
under the Securities Act in connection with the firm commitment underwritten
offering of its securities to the general public is consummated or when the
Company first becomes subject to the periodic reporting requirements of Sections
12(g) or 15(d) of the Exchange Act, whichever event shall first occur.
2.4 Right of First Offer. Subject to the terms and conditions
--------------------
specified in this Section 2.4, the Company hereby grants to each Major Investor
(as hereinafter defined) a right of first offer with respect to future sales by
the Company of its Shares (as hereinafter defined). For purposes of this Section
2.4, a "Major Investor" shall mean (i) any Investor who holds at least 100,000
shares of the original investment such Investor made or makes in the Company
pursuant to the Series A Preferred Stock Purchase Agreement dated April 7, 1995
(the "Series A Agreement"), the Series B Preferred Stock Purchase Agreement
dated June 2, 1995 (the "Series B Agreement"), the Series C Preferred Stock
Purchase Agreement dated January 16, 1996 (the "Series C Agreement"), the Series
D Preferred Stock Purchase Agreement dated February 6, 1997 (the "Series D
Agreement"), the Series E Preferred Stock Purchase Agreement dated November 14,
1997 (the "Series E Agreement") or the Series F Agreement and (ii) any person
who acquires at least 100,000 shares of the Series A Preferred Stock (or the
Common Stock issued upon conversion thereof), the Series B Preferred Stock (or
the Common Stock issued upon conversion thereof), the Series C Preferred Stock
(or the Common Stock issued upon conversion thereof), the Series D Preferred
Stock (or the Common Stock issued upon conversion thereof), the Series E
Preferred Stock (or the Common Stock issued upon conversion thereof) or the
Series F Preferred Stock (or the Common Stock issued upon conversion thereof)
issued pursuant to the Series A Agreement, the Series B Agreement, the Series C
Agreement, the Series D Agreement, the Series E Agreement or the Series F
Agreement, as applicable. For purposes of this Section 2.4, an Investor includes
any general partners and affiliates of an Investor. An Investor shall be
entitled to apportion the right of first offer hereby granted it among itself
and its partners and affiliates in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock (the "Shares"), the Company shall first make an offering of such Shares to
each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice (the "Notice") to the Major
Investors stating (i) its bona fide intention to offer such Shares, (ii) the
number of such Shares to be offered and (iii) the price and terms, if any, upon
which it proposes to offer such Shares.
(b) By written notification received by the Company, within 20
calendar days after giving of the Notice, each Major Investor may elect to
purchase or obtain, at the price and on the terms specified in the Notice, up to
that portion of such Shares which equals the proportion that the number of
shares of Common Stock issued and held, or issuable upon conversion of the
Preferred Stock then held, by such Major Investor bears to the total number of
shares of Common Stock of the Company then outstanding (assuming full conversion
of all convertible securities). The Company shall promptly, in writing, inform
each Major Investor which decides to purchase all the shares available to it
(the "Fully-Exercising Investor") of any other Major Investor's failure to do
likewise. During the ten-day period commencing after such
14.
<PAGE>
information is given, each Fully-Exercising Investor shall be entitled to obtain
that portion of the Shares for which Major Investors were entitled to subscribe
but which were not subscribed for by the Major Investors which is equal to the
proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion of the Preferred Stock then held, by such Fully-
Exercising Investor bears to the total number of shares of Common Stock issued
and held, or issuable upon conversion of the Preferred Stock then held, by all
Fully-Exercising Investors who wish to purchase some of the unsubscribed shares.
(c) With respect to Shares referred to in the Notice that are not
elected to be obtained as provided in subsection 2.4(b) hereof, the Company may,
during the 30-day period following the expiration of the period provided in
subsection 2.4(b) hereof, offer the remaining unsubscribed portion of such
Shares to any person or persons at a price not less than, and upon terms no more
favorable to the offeree than, those specified in the Notice. If the Company
does not enter into an agreement for the sale of the Shares within such period,
or if such agreement is not consummated within 30 days of the execution thereof,
the right provided hereunder shall be deemed to be revived and such Shares shall
not be offered unless first reoffered to the Major Investors in accordance
herewith.
(d) The right of first offer in this Section 2.4 shall not be
applicable (i) to the issuance or sale of shares of Common Stock (or options
therefor) to consultants, directors, officers, advisors or employees for the
primary purpose of soliciting or retaining their employment, (ii) to or after
consummation of a bona fide, firmly underwritten public offering of shares of
Common Stock registered under the Securities Act pursuant to a registration
statement filed on Form S-1 which results in gross cash proceeds to the Company
in excess of $20,000,000 and a public offering price of not less than $8.78 per
share (as adjusted for any subsequent stock dividends, stock splits,
recapitalizations or the like), (iii) to the issuance of securities pursuant to
the conversion or exercise of convertible or exercisable securities, (iv) to the
issuance of securities in connection with a bona fide business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise, (v) to the issuance of stock, warrants or other
securities or rights to persons or entities with which the Company has business
relationships or (vi) to the sale and issuance of the Series F Preferred Stock.
(e) The right of first offer set forth in this Section 2.4 may not be
assigned or transferred, except that (i) such right is assignable by each Holder
to any wholly owned subsidiary or parent of, or to any corporation or entity
that is, within the meaning of the Securities Act, controlling, controlled by or
under common control with any such Holder and (ii) such right is assignable
between and among any of the Holders.
3. Miscellaneous.
-------------
3.1 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 shares of Registrable 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,
15.
<PAGE>
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
3.2 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.
3.3 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.
3.4 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.
3.5 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.
3.6 Expenses. 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 attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 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
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities then outstanding, each future holder of all such
Registrable Securities and the Company.
3.8 Severability. If one or more provisions of this Agreement is 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.
3.9 Aggregation of Stock. All shares of Registrable Securities 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.
16.
<PAGE>
3.10 Entire Agreement; Amendment; Waiver. This Agreement (including
-----------------------------------
the exhibits hereto, if any) constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
3.11 Termination of Prior Agreement. This Agreement amends, restates
------------------------------
and supersedes the Fourth Amended and Restated Investors' Rights Agreement among
the Company and the Prior Investors, dated November 14, 1997.
17.
<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
INVESTORS' RIGHTS AGREEMENT]
<PAGE>
EXHIBIT 21.1
LIST OF SUBSIDIARIES
--------------------
Agile Software International Corporation (A Delaware Corporation)
<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
June 23, 1999
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<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> APR-30-1999
<CASH> 10,003
<SECURITIES> 0
<RECEIVABLES> 5,475
<ALLOWANCES> 495
<INVENTORY> 0
<CURRENT-ASSETS> 15,607
<PP&E> 4,088
<DEPRECIATION> 2,115
<TOTAL-ASSETS> 17,948
<CURRENT-LIABILITIES> 11,433
<BONDS> 3,224
0
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<OTHER-SE> 3,275
<TOTAL-LIABILITY-AND-EQUITY> 17,948
<SALES> 10,859
<TOTAL-REVENUES> 16,807
<CGS> 819
<TOTAL-COSTS> 5,985
<OTHER-EXPENSES> 22,428
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 178
<INCOME-PRETAX> (11,428)
<INCOME-TAX> 0
<INCOME-CONTINUING> (11,428)
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<NET-INCOME> (11,428)
<EPS-BASIC> (.78)
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